Wednesday, July 2, 2008

Security for Costs in Civil Appeals

Security for costs on appeal will be ordered rarely. The provisions of Rule 61.06 are quite restrictive and the Court will hesitate to risk stifling an otherwise meritorious appeal by ordering costs. In Ontario the fairly recent decision in Chuang v Royal College (2005), 77 O.R. (3d) 280 makes it clear that an unpaid cost award will not, by itself, justify security, but where that is combined with bad conduct relating to the case security for costs may well be appropriate.

The recent Nova Scotia Court of Appeal decision in Smith v. Michelin North America (Canada) Inc., 2008 NSCA 52 (CanLII) reflects a similar approach:

[33] To obtain an order for security, the applicant generally must demonstrate that special circumstances exist to justify it. This usually requires showing more than a risk that the appellant will be unable to pay a costs award made on appeal. It is usually necessary for respondents to show that an appellant has acted in an insolvent manner towards them such as, for example, by failing to pay an award of costs made at trial: see, e.g. Leddicote v. Nova Scotia (Attorney General), 2001 NSCA 152 (CanLII), 2001 NSCA 152, 198 N.S.R. (2d) 101 (C.A. Chambers); Branch Tree Nursery and Landscaping Ltd. v. J & P. Reid Developments Ltd., 2006 NSCA 131 (CanLII), 2006 NSCA 131, 250 N.S.R. (2d) 35 (Chambers); Williams Lake Conservation Co. v. Halifax (Regional Municipality), 2005 NSCA 44 (CanLII), 2005 NSCA 44, 231 N.S.R. (2d) 320 (C.A. Chambers); Frost v. Herman (1976), 18 N.S.R. (2d) 167 (N.S.S.C.A.D. Chambers); Arnoldin Construction & Forms Ltd. v. Alta Surety Co. 1994 CanLII 4089 (NS C.A.), (1994), 134 N.S.R. (2d) 318 (C.A. Chambers).

[34] In exercising the discretion to make an order for security, the court proceeds with caution because of the risk that the order may effectively stifle the appeal: 2301072 Nova Scotia Ltd. v. Lienaux, 2007 NSCA 28 (CanLII), 2007 NSCA 28, 252 N.S.R. (2d) 193 (C.A. Chambers) at para. 6.


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