Security for Costs -- A Exception to the Impecuniosity Exception

Today's British Columbia Court of Appeal decision in Buchy v. Villars, 2008 BCCA 237 deals with a narrow issue of British Columbia appeal practice but the reasoning has broader application to cases involving impecunious parties.

Security for appeal costs is commonly ordered in British Columbia. A ground for not ordering such security is that the effect of such an order will be to stop a meritorious appeal.

Specifically, under s. 24 of the Court of Appeal Act, an order for security for costs of an appeal can be made. The appellant against which such an order is sought bears the onus of showing why security should not be required: Kedia v. Shandro Dixon Edgson, 2007 BCCA 57 (CanLII), 2007 BCCA 57 at para. 4 (C.A. Chambers), Smith J.A.

Generally, the considerations are the appellant's ability to post security and the likelihood of costs awarded being recovered from it, as well as the merits and the timeliness of the application: Southeast Toyota Distributors, Inc. v. Branch 1997 CanLII 2402 (BC C.A.), (1997), 45 B.C.L.R. (3d) 163 (C.A.); Milina v. Bartsch (1985), 5 C.P.C. (2d) 124 at 125 (B.C.C.A. Chambers), Seaton J.A.; and M.(M.) v. F.(R.) (1997), 43 B.C.L.R. (3d) 98 at 101 (C.A. Chambers), Esson J.A.

In Ontario an impecunious plaintiff can also argue against the posting of security if the effect will be to stop an otherwise legitimate case.

It is important to note that where an appeal is without merit the hesitation to order security will not exist. Put otherwise, an impecunious party with an obviously bad cause will not be allowed to proceed without posting security.

The Court writes:

[12] An appellant which is without the financial ability to post security will not for that reason alone be precluded from pursuing a meritorious appeal. But adverse financial circumstances will generally not defeat an application for security where an appeal is virtually without any merit. A successful plaintiff should not be required to respond to an unmeritorious appeal when there is no real prospect of recovery: Richland Construction Inc. v. Manningwa Developments Inc. (1996), 71 B.C.A.C. 311 at paras. 12-13 (C.A. Chambers), Finch J.A. (as he then was).