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Appeals - Security for Costs (5). Stride v. Syra Group Holdings
In Stride v. Syra Group Holdings (Ont CA, 2025) the Ontario Court of Appeal dismisses a respondent's security for costs motion in an appeal:THE GENERAL LEGAL PRINCIPLES
[8] There is a two-step process required before a discretionary order is made to order security for costs against an appellant pursuant to r. 61.06(1). “The first question is whether the requirements of r. 61.06(1)(a), (b), or (c) are met. If so, the second question is whether it would be just to order security, considering the circumstances and the interests of justice”: Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2021 ONCA 474, 156 O.R. (3d) 551, at para. 17. The relevant factors in deciding whether it would be just to order security are not closed: Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at paras. 24-25.
ANALYSIS
A. Rule 61.06(1)(b)
[9] Rule 61.06(1)(b) permits an order for security for costs to be made only when such an order “could be made against the appellant under rule 56.01”. A r. 56.01 security for costs order can be made only on motion by “the defendant or respondent in a proceeding”. Since Ms. Stride was not a defendant or respondent in the action that led to the order now under appeal, she could not have obtained a security for costs order against Syra Group under r. 56.01. Therefore, I cannot make a security for costs order against Syra Group pursuant to r. 61.06(1)(b): Donaldson International Livestock Ltd. v. Znamensky Selekcionno-Gibridny Center LLC, 2010 ONCA 137, 101 O.R. (3d) 314, at para. 13; Rathod v. Chijindu, 2024 ONCA 317, at para. 4, motion to review dismissed, 2024 ONCA 420.
B. Rule 61.06(1)(c)
[10] A security for costs order can be granted under r. 61.06(1)(c) if there is a “fairly compelling reason” that is distinct from rr. 61.06(1)(a) and (b) and that is related to the purpose for ordering security for costs, which is to address an unacceptable risk that any costs ordered on the appeal will not be obeyed: Combined Air Mechanical Services Inc. v. Flesch, 2010 ONCA 633, 268 O.A.C. 172, at para. 8; Thrive Capital Management Ltd., at paras. 18, 23.
[11] The requirement that the basis for a r. 61.06(1)(c) order must be “distinct” ensures that “a party seeking an order for security for costs under rule 61.06(1)(c) may not resort to what are in effect the same grounds that would support a rule 56.01 order when it is barred ... from relying on subrule 1(b)”: Donaldson International, at para. 17. It follows that a r. 61.06(1)(c) order cannot rest solely on two of the grounds advanced by Ms. Stride, namely, the alleged failure of Syra Group to pay an order for costs in the same proceeding (see r. 56.01(1)(c)),[1] and her claim that there is “good reason to believe that [Syra Group, a corporation] has insufficient assets in Ontario to pay the costs” (see r. 56.01(1)(d)).
[12] The remaining basis that Ms. Stride pursued as providing “other good reason” for a security for costs order is her claim that there is good reason to believe that Syra Group is “liquidating [its] assets to avoid payment of the Judgment and/or Costs Awards.” Conduct by an appellant showing that they are taking steps to put assets out of reach of creditors is a material consideration in a r. 61.06(1)(c) application: Thrive Capital Management Ltd., at para. 23. Ms. Stride has raised concern in this regard. Websites formerly linked to Syra and its associate, Equity Builders, included buildings in numerous cities in Syra’s portfolio but those websites were taken down after the trial. Photographic images from May 14, 2024, were also put into evidence before me of Mona Singh, the CFO of Syra, gathering documents and removing boxes from the Etobicoke office of the apartment building where Ms. Stride resides.
[13] Notwithstanding this evidence, and related unsupported or less relevant allegations by Ms. Stride that Syra has made other efforts to prevent recovery, I have two concerns about making a r. 61.06(1)(c) order on this basis. First, judges of this court who have made or refused to set aside security for costs orders because of a concern that a costs award may be evaded or disobeyed have tended to do so after finding that the appeal is weak, without merit, or unlikely to succeed: see, for example, York University v. Markicevic, 2017 ONCA 651, at paras. 52, 58; Gardiner Miller Arnold LLP v. Kymbo International Inc., 2006 CarswellOnt 9436 (C.A.), at paras. 9-12; Lavallee v. Isak, 2022 ONCA 290, at paras. 34-38; Henderson v. Wright, 2016 ONCA 89, 345 O.A.C. 231, at para. 27; Perron v. Perron, 2011 ONCA 776, 345 D.L.R. (4th) 513, at paras. 21-23; Gauthier Estate v. White, 2022 ONCA 846, at paras. 20-21; 798839 Ontario Ltd. v. Platt, [2014] O.J. No. 6077 (C.A.), at para. 53. This is sensible since the strength of the appeal bears directly on the risk that an adverse costs award will be made against the appellant but then left unpaid. Ms. Stride has not suggested that Syra’s appeal is weak. I have examined the grounds of appeal, and they are not clearly without apparent merit. This is not a case where there is a demonstrated, substantial likelihood that a costs award will be made against Syra, a consideration that certainly would have enhanced the case for a security for costs order.
[14] Second, although there is reason to apprehend that Syra may be taking steps to avoid payment of the trial judgment and costs, the circumstantial case that it is in fact doing so is not strong. Although Ms. Stride alleges dishonest conduct by Syra in the conduct of its litigation as well as breaches of court orders, there have been no firm findings of fraud, contempt, or breach of court orders made against Syra, which would strengthen the application. In the absence of indications that its appeal is weak, I would require more compelling proof of evasion by Syra before I would find there to be “other good cause” for making a security for costs order.
[15] I am mindful that the decision to make a security for costs order is discretionary, and that each case turns on its own facts, but in the circumstances, I am not persuaded that the justice of this case requires such an order to be made. . Gaudette v. 1929853 Ontario Limited
In Gaudette v. 1929853 Ontario Limited (Ont Divisional Ct, 2025) the Divisional Court dismissed a motion for security for costs on an appeal:The law
[5] Rule 61.06 addresses security for costs in appeals. The rule provides as follows:1) In an appeal where it appears that,a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;
b) an order for security for costs could be made against the appellant under rule 56.01; or
c) for other good reason, security for costs should be ordered, a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just
1.1) If an order is made under subrule (1), rules 56.04, 56.05, 56.07 and 56.08 apply, with necessary modifications.
2) If an appellant fails to comply with an order under subrule (1), a judge of the appellate court on motion may dismiss the appeal. [6] Rule 56.01 sets out factors the court may consider in determining security for costs. It provides as follows: 1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,a) the plaintiff or applicant is ordinarily resident outside Ontario;
b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;
c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;
d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;
e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
f) a statute entitles the defendant or respondent to security for costs. [7] If the moving party satisfies the court that security for costs is warranted, the onus shifts to the responding party to demonstrate an order should not be made. This may be achieved by either demonstrating they have sufficient assets in Ontario to make unnecessary an order for security for costs or by leading evidence of their impecuniosity. With respect to the latter, the responding party must also “show why justice demands” they be allowed to proceed without posting security, notwithstanding their impecuniosity: Warren Industrial Feldspar Co. Ltd. v. Union Carbide Canada Ltd., 1986 CanLII 2683 (ON SC), 54 O.R. (2d) 213 [1986] O.J. No. 2364 (Ont. H.C.J.).
[8] If the responding party fails to meet its onus, the court must then determine the amount and form of such security: Rules of Civil Procedure, r. 56.04. . Bogue v. Miracle
In Bogue v. Miracle (Ont CA, 2024) the Ontario Court of Appeal allows a motion for security for costs on appeal:[17] A single judge of this court has discretion to award security for costs of an appeal pursuant to r. 61.06(1):61.06(1) In an appeal where it appears that,
(a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;
(b) an order for security for costs could be made against the appellant under rule 56.01; or
(c) for other good reason, security for costs should be ordered,
a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just. [18] In Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2021 ONCA 474, 156 O.R. (3d) 551, at para. 17, Zarnett J.A. described the two-step reasoning process to be followed in assessing whether to make an order pursuant to r. 61.06(1):The ordering of security for costs is discretionary; a two-step reasoning process is involved. The first question is whether the requirements of r. 61.06(1)(a), (b), or (c) are met. If so, the second question is whether it would be just to order security, considering the circumstances and the interests of justice: Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at paras. 18-19. [19] Mr. Bogue submits that security for costs may be ordered under r. 61.06(1) (a), (b) and (c).
....
[22] Mr. Bogue also relies on r. 61.06(1)(b) on the basis that r. 56.01(1)(c) applies:56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,
(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part; ....
[25] Turning to r. 61.06(1)(c), there is “other good reason” to grant security for costs.
[26] Under r. 61.06(1)(c), the reason must be a “fairly compelling reason” and one that is related to the purpose for ordering security: Combined Air Mechanical Services Inc. v. Flesch, 2010 ONCA 633, 268 O.A.C. 172, at para. 8.
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