Security for costs is not to stifle an arguable appeal. When security would prevent the prosecution of an arguable appeal, and no other circumstances justify security, then security should be denied

Fotherby v. Cowan, 2012 NSCA 77 provides a useful review of the principles related to security for costs on appeal.  While arising in Nova Scotia the principles are relevant across the common law provinces – in summary, security for costs should not be just an implement for the respondent to stifle an arguable appeal.  When security would prevent the prosecution of an arguable appeal, and no other circumstances justify security, then security should be denied.  The Court writes:

Security for Costs - Principles

[10]         Rule 90.42 says:

Security for costs

90.42 (1) A judge of the Court of Appeal may, on motion of a party to an appeal, at any time order security for the costs of the appeal to be given as the judge considers just.

[11]         Disabled Consumer Society of Colchester v. Burris, 2009 NSCA 21 (CanLII), 2009 NSCA 21, summarized the principles that govern the exercise of the judge's discretion under Rule 90.42(1):

[11]     The case law from this court, discussing the principles governing security, derives from the former Rule 62.13, replaced by Rule 90.42 on January 1, 2009. The former Rule 62.13(1) permitted a judge to order security for costs "as the judge considers just".  In my view, the test has not changed, and the case law under the former Rule 62.13 applies to this application under the new Rule 90.42.

[12]     The starting principle is that security for costs on appeal is ordered only where the evidence shows "special circumstances".  Frost v. Herman (1976), 18 NSR (2d) 167 (CA) at p. 168 per Macdonald, J.A., which has been followed in many later rulings of this court.

[13]     The meaning of "special circumstances" may differ with the context. DCS' concern is that Ms. Burris will be unable to satisfy any costs award, including appeal costs if her appeal fails.  As stated in Williams Lake Conservation Co. v. Chebucto Community Council of Halifax (Regional Municipality), 2005 NSCA 44 (CanLII), 2005 NSCA 44, at ¶ 11:

[11]     Generally, a risk, without more, that the appellant may be unable to afford a costs award is insufficient to establish "special circumstances".  It is usually necessary that there be evidence that, in the past, "the appellant has acted in an insolvent manner toward the respondent" which gives the respondent an objective basis to be concerned about his recovery of prospective appeal costs.  The example which most often has appeared and supported an order for security is a past and continuing failure by the appellant to pay a costs award or to satisfy a money judgment:  Frost v. Herman, at ¶ 9‑10; MacDonnell v. Campbell,2001 NSCA 123 (CanLII), 2001 NSCA 123, at ¶ 4‑5; Leddicote, at ¶ 15‑16; White, at ¶ 4‑7; Monette v. Jordan1997 CanLII 573 (NS CA), (1997), 163 N.S.R. (2d) 75, at ¶ 7; Smith v. Heron, at ¶ 15‑17; Jessome v. Walsh, at ¶ 16‑19.

[14]     Balanced with that principle is a concern that the security for costs not deny access to justice.  In Smith v. Michelin North America (Canada) Inc, 2008 NSCA 52 (CanLII), 2008 NSCA 52, Justice Cromwell said:

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.

Where security would prevent the prosecution of an arguable appeal, and no other circumstances justified security, this court has denied security for appeal costs: Crandall v. Atlantic School of Theology 1993 CanLII 3226 (NS CA), (1993), 122 NSR (2d) 359 (CA), at ¶ 3 per Jones JA;Ryan v. Ryan 2000 NSCA 10 (CanLII), 2000 NSCA 10, at ¶ 38‑41 per Pugsley, J.A.

See also Disabled Consumer Society, paras 19-21.