Merits of appeal in security for costs motion

The interesting decision in Unique Labeling Inc. v. GCAN Insurance Company, 2009 ONCA 591 stands for the proposition that unless a corporate party otherwise liable to post security for costs on an appeal shows that it has no access to funds, the Court will not consider the appeal's underlying merits.

The Court writes:

20]          If the corporate plaintiff fails to discharge its evidentiary burden of showing it has no access to funds to post security for costs, Ontario courts do not appear to inquire into the merits of the appeal or consider other factors:  see Smith Bus Lines Ltd. v. Bank of Montreal (1987), 61 O.R. (2d) 688 (H.C.J.), at p. 706; The Honourable Mr. Justice Todd L. Archibald and Christian Vernon, "The End of the Action at its Beginning: The Relationship between Security for Costs Motions and the Insolvent Corporate Plaintiff" in The Honourable Mr. Justice Todd L. Archibald and The Honourable Mr. Justice Randall Scott Echlin, eds., Annual Review of Civil Litigation, 2009 (Toronto, Carswell) (forthcoming), at section G.6.  This approach was specifically not followed by the Manitoba Court of Appeal in ABI Biotechnology Inc. v. Apotex Inc. et al. (1995), 41 C.P.C. (3d) 394, at para. 19, where other relevant factors were considered, such as the merits of the case, the purposes of the application for security for costs, the size and nature of the corporation, and the hardships to the plaintiffs if security was ordered. 
James Morton
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