Motions for Security of Costs
Appeal Security for Costs A respondent to an appeal should consider whether or not to bring a motion requiring the appellant to post security of costs, essentially a payment made by the appellant into court underwriting the costs award against the appellant which might follow if the appeal is ultimately unsuccessful.
An order for security for costs is appropriate when it is unfair to expose the respondent to the risk that the appellant will not satisfy the costs of the appeal if the appeal is unsuccessful.
Security of costs on appeal is governed by Rule 61.06(1)(a) and (c) of the Rules of Civil Procedure.
For such an order to be granted under 61.06(1)(a), the motion judge must
- have good reason to believe the appeal has no merit and is therefore frivolous and vexatious, and
- have good reason to believe the appellant has insufficient assets in Ontario to cover the costs of the appeal.
Of course, on a practical level it is impossible for a motions judge to assess adequately the merits of an appeal, considering the transcripts and volume of material which will be placed before the appellate court.
In light of this, a judge hearing a motion for security for costs may reach the tentative conclusion that an appeal appears to be so devoid of merit as to give “good reason to believe that the appeal is frivolous and vexatious” without being satisfied that the appeal is actually totally devoid of merit.
Where the appeal has a low prospect of success, more is required to establish the appeal as frivolous and vexatious.
“The words “frivolous and vexatious” imply that the appeal must not only have a minimal chance of success; there must be good reason, on the facts surrounding the litigation, or from the conduct of the appellant, which could lead to a finding that the appeal is without merit and is brought for some other purpose than as is on its face, such as to harm a party or delay the proceedings or a given result.”
Baker v. Rego, 2013 ONSC 3309 (CanLII) at para 22
While an appellant may not be able to establish sufficient liquid assets to cover the cost of the appeal, and thus leave the respondent with a formidable collection problem if the appeal is unsuccessful, the appellant may have equitable room in her assets to pay a costs award. In such circumstances, the appellant should be in a position to provide security for costs by, for example, posting a letter of credit.
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