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Appeals - Security for Costs (5). World Financial Solutions Inc. v. 2573138 Ontario Ltd.
In World Financial Solutions Inc. v. 2573138 Ontario Ltd. (Ont CA, 2025) the Ontario Court of Appeal granted a respondent's motion for security for costs on appeal:II. The General Legal Principles
[11] Before I can order security for costs the moving parties must (1) satisfy me that the legal requirements for a security for costs order are present and (2) persuade me that the order is just in the circumstances of the case, taken holistically: Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at para. 22; Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2021 ONCA 474, 156 O.R. (3d) 551, at para. 17.
[12] The legal requirements to make an order for security of costs in appeals are addressed in r. 61.06(1), which provides: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 sufficient 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 respondents, may make such order for security for costs of the proceeding and of the appeal as is just. [13] In their written materials the moving parties appeared to rely on each avenue under r. 61.06(1), but during oral argument limited their application to ground (c): the “other good reason” ground. They argue that a combination of the low prospect of success on the appeal and the unlikelihood that the appellants would pay a costs award provides a sufficient basis for making the orders sought.
III. Analysis
1. The legal requirements under r. 61.06(1)(c) are present
[14] A security for costs order can be granted under r. 61.06(1)(c) if there is a “fairly compelling reason” for doing so, distinct from the grounds present under rr. 61.06(1)(a) and (b) and where the order proactively addresses the unacceptable risk that costs ordered on appeal will not be paid: 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; Stride v. Syra Group Holdings, 2025 ONCA 265. There is no closed list of cases that can constitute “other good cause” under r. 61.06(1)(c), but its use should not be routine: Thrive Capital Management Ltd., at paras. 18-19; Combined Air Mechanical, at para. 8.
[15] Ordering security for costs under r. 61.06(1)(c) is appropriate “when an appeal has a low prospect of success coupled with an appellant who has the ability to pay costs but from whom it would be nearly impossible to collect costs”: 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.
[16] For the reasons below, I am satisfied that “other good cause” has been shown and that it would be permissible to make the orders sought. I consider each factor in turn.
i. The distinct grounds under r. 61.06(1)(c) are present
[17] Although there is overlap between some of the other avenues for achieving a costs award and the grounds being advanced before me, I am satisfied that the basis the moving parties are relying upon – the appellants’ low prospect of success and the unlikelihood that they will pay any costs award that may be made against them – is not encompassed in those other branches. The grounds proposed by the applicants for an order pursuant to r.61.06(1)(c) are therefore distinct from grounds available under the other branches of r. 61.06(1).
[18] Specifically, the moving parties do not rely on the grounds of appeal being “frivolous and vexatious” or the insufficiency of assets in Ontario; therefore, they are not relying on the grounds in r. 61.06(1)(a) or r. 56.01(e). Nor are they relying upon the grounds in r. 56.01(1)(a), (b), (d) or (f). Although they are relying upon the unpaid order for costs in this proceeding, a basis for costs under r. 56.01(1)(c), they are not using this as a standalone foundation for the orders they seek but as evidence to assist in establishing that the order is unlikely to be paid. Therefore, they are not relying on r. 61.06(1)(b). This places their submissions squarely under r. 61.06(1)(c).
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[22] The appellants, no doubt, made their impecuniosity claim in this motion to show that it would not be in the interests of justice to make such an order, given that since they cannot pay a security for costs order, making such an order would deny them access to justice on appeal. A true inability to pay is an important consideration that must be balanced alongside protecting a party against the costs of an unmeritorious appeal, before making a security for costs order: York University v. Markicevic, 2017 ONCA 651, at para. 22. However, the onus of showing impecuniosity is on the party making the allegation: Thrive Capital Management Ltd., at para. 26.
[23] I agree with the moving parties that the impecuniosity the appellants claim has not been proved. It is no more than a bald assertion made by parties that have refused requests to disclose financial information: see 2363523 Ontario Inc. v. Nowack, 2018 ONCA 414, leave to appeal refused, [2018] S.C.C.A. No. 301. I give it no credit and note that extensive legal work is still being undertaken on their behalf.
[24] The appellants argue that they would have the ability to pay the costs if the moving parties were to pay the amounts that they are owed that are the subject of their accounting claim. However, the appellants have failed to provide any realistic basis for believing that the accounting will produce funds that could be set-off by the moving parties to cover their costs.
[25] I am therefore satisfied that although the appellants must be presumed to have the ability to pay costs orders, they are unlikely to do so without a security for costs order. I am satisfied that there is a legal basis for such orders. I turn now to whether it would be just to make these orders, in all the circumstances.
2. The order is just in the circumstances
[26] The second step in the analysis requires me to determine whether an order would be just: Thrive Capital Management Ltd., at para. 31, Yaiguaje, at para. 22.
[27] The moving parties are responding to an appeal that is unlikely to succeed, being brought by appellants who are unlikely to pay costs awards, and who are pursuing what is likely to be an expensive appeal because of the complexity the appellants have introduced to what should be straightforward proceedings: Perron, at para 22.
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[30] As a matter of principle, “no party should have to give security for costs as a condition of simply defending itself ... and ... it can be said that an appeal is simply a step in the proceeding in which the defendant appealing is continuing to defend itself”: Donaldson International Livestock Ltd. v. Znamensky Selekcionno-Gibridny Center LLC, 2010 ONCA 137, 101 O.R. (3d) 314, at para. 13, citing Toronto-Dominion Bank v. Szilagyi Farms Ltd. (1988), 1988 CanLII 4745 (ON CA), 65 O.R. (2d) 433 (C.A.). For this reason, giving World Financial security for the cost it is incurring in attempting to preserve on appeal the enforcement order it secured below against the appellants as defendants would not be just.
[31] However, World Financial is also responding to grounds of appeal relating to the Counterclaim and its dealings with third parties linked to the third-party claims. These issues have materially complicated the appeal. The costs World Financial incurs in responding to these claims are not limited by the principle identified in Donaldson International Livestock Ltd. It is therefore in the interests of justice and within my discretion to impose an order for security for costs relating to those costs: Thrive Capital Management, at para. 31. . R & P Petroleum Inc. v. Eternal Vibes Inc. (Phoenix Fuel)
In R & P Petroleum Inc. v. Eternal Vibes Inc. (Phoenix Fuel) (Ont CA, 2025) the Ontario Court of Appeal illustrates the enforcement of a security for costs on appeal order upon non-payment:[1] The moving party, R & P Petroleum Inc., obtained an order for security for costs against the responding parties, Eternal Vibes Inc. and Ishvinder Singh Virk, in this action. The order, made on September 16, 2025, required a deposit of $100,000 to be paid into court within 60 days. R & P Petroleum seeks an order pursuant to r. 61.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, dismissing the action for non-payment of the required deposit within the requisite timeline.
[2] A single judge may make such an order if the party seeking dismissal establishes that the security for costs order has not been complied with, and the party subject to the order has not discharged their onus of showing a compelling reason for why the order should not be made: One Clarendon Inc. v. Finlay, 2024 ONCA 414, at para. 21.
[3] I am satisfied that the payment deadline has passed, without the ordered payment being made. The responding parties did not respond to timely requests made by the moving party for confirmation that the deposit would be paid. This motion for an order dismissing the action was served on the responding parties. Mr. Singh, who had been representing the responding parties and is still on record as counsel, attended and notified the court that he did not have instructions from his clients, despite efforts to obtain them. Therefore, no one appeared to oppose the motion to dismiss the underlying action. It is in the interests of justice to make the order in this case. . Safieh v. Hamza
In Safieh v. Hamza (Ont CA, 2025) the Ontario Court of Appeal noted that terms may be ordered when granted an extension of time, here wrt to an appeal:[10] With respect to Ms. Hamza’s cross-motion, I accept her submission that judges have discretion to impose terms when granting an extension of time. Rule 3.02(1) permits extensions to be granted “on such terms as are just”: Mauldin v. Cassels Brock & Blackwell LLP, 2011 ONCA 67, 274 O.A.C. 353, at para. 41.
[11] I find that Ms. Hamza has provided a foundation for concern that during the period of delay pending the appeal, Mr. Safieh may take steps to protect his assets from the orders under appeal. Ms. Hamza has presented evidence that during the first extension of time he was granted, he sold his home, which is his largest and most easily exigible asset. She also presented evidence that he may have misled his children by claiming to have purchased another home. During oral submissions Mr. Safieh’s lawyer confirmed, for the first time, that the house was in fact sold.
[12] There are also serious transparency issues. To date Mr. Safieh has refused to provide Ms. Hamza with disclosure arising from the sale. He also refused to attend a scheduled examination where the state of his assets could have been explored, pending this motion. Moreover, there is information that his current wife and stepchild may have left the country. This adds to the concern that he may be disposing of his assets with the intention of leaving, as well.
[13] I agree with Ms. Hamza that if this appeal is to be reinstated, and the time to file extended, conditions should be put in place to address those risks. I also agree that those conditions can be modeled on the conditions imposed in Mauldin, at para. 42, by requiring Mr. Safieh to post an irrevocable letter of credit with the court and provide the court with a written undertaking. I would also require him to make complete disclosure to Ms. Hamza relating to his assets on the terms described below. . Browne v. Picart et al.
In Browne v. Picart et al. (Ont Div Ct, 2025) the Ontario Divisional Court considered an appellate motion for security for costs [under rcp R61.06]:Issue 1 – Security for Costs
[4] Security for costs of an appeal is governed by Rule 61.06. It provides that the court may make an order for security for costs as is just in one of three situations:i) It appears that the there is good reason to believe that the appeal is frivolous and vexations and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;
ii) An order for security for costs could be made against the appellant under Rule 56.01; or
iii) For other good reason. ....
[7] Rule 61.06 requires a two-part analysis. First, the respondent bears the burden of demonstrating that the appellant falls within the criteria of the rule. Once this initial onus is satisfied, the court then considers whether the order for security for costs is just in the circumstances.
[8] The rule stipulates that the Court must assess whether it “appears” that there is “good reason to believe” the appeal is frivolous and vexatious. This language indicates a relatively low threshold, requiring only a preliminary or tentative conclusion. It does not necessitate a definitive judgment on the appeal’s merit or the appellant’s assets, but rather a reasonable basis to substantiate the belief that the appeal may be without merit or that the appellant lacks sufficient assets to cover costs.[3]
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[18] Appellate courts in Ontario have ordered security for costs when an appeal has a low prospect of success coupled with an appellant who has financial ability to pay costs but from whom it would be difficult to collect costs. [9]
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[21] Pursuant to Rule 61.06, the court is authorized to order security for costs of the appeal and costs of the proceedings below. Such an order is not intended to serve as security for the judgment under appeal. Additionally, security for costs of the proceedings below are not routinely granted, and the moving party must provide some justification if the amount sought under Rule 61.06 includes security for costs awarded in the court below.[10] . 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).
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[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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