The Rules of Civil Procedure allow a defendant or respondent to seek an order requiring that the plaintiff or applicant post security for costs in certain circumstances. The Rule is designed to give protection to a defendant or respondent for costs in the event that the claim is dismissed with costs against the plaintiff or applicant. The security posted is available to satisfy any costs award made in favour of the defendant or respondent.

Rule 61, which governs appeals, also allows a respondent in an appeal to seek security for costs. Security may be required where “there is good reason to believe that the appeal is frivolous and vexations AND the appellant has insufficient assets in Ontario to pay the costs of the appeal”. This test is in addition to other instances where security may be required under Rule 56, which include:

• The plaintiff or applicant is ordinarily resident outside of Ontario;
• The plaintiff or applicant has another proceeding pending for the same relief;
• The defendant or respondent has an unpaid order for costs against the plaintiff or applicant;
• The plaintiff or applicant is a corporation or nominal plaintiff or applicant and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay a costs award;
• There is good reason to believe that the action or application is frivolous and vexatious and the plaintiff or applicant has insufficient assets in Ontario to pay a costs award.

The Court of Appeal recently made a security for costs award in an estate litigation matter. In Ducharme Estate v. Thibodeau, 2022 ONCA 6651 (CanLII), the applicant challenged the validity a will. She filed a Notice of Objection. On the eve of the contested hearing to determine the validity of the will, the applicant withdrew the Notice of Objection. Costs of $47,000 were awarded against her. A Certificate of Appointment was issued.

The applicant then appealed, notwithstanding the fact that she consented to the withdrawal of the Notice of Objection. The respondent asked for security for costs.

The Court of Appeal ordered that the applicant/appellant pay $20,000 as security for costs. The Court of Appeal concluded that there was good reason to believe that the appeal was devoid of merit, in that the applicant/appellant consented to the withdrawal of the Notice of Objection, and filed no materials with the court below to support a challenge to the will. 

The Court also referred to a second ground for requiring security for costs: it felt that the appeal was “vexatious” in that the substantive appeal of the determination of the validity of the will was only brought so as to allow for an appeal of the costs determination. Parties are only allowed to appeal a costs order with leave of the court. This leave is rarely granted. However, a party can advance a costs appeal if it is coupled with a “substantive” appeal. “The substantive appeal appears to be so bereft of merit that there is reason to believe that the decision to bring it may have been a vexatious strategy to advance a costs appeal without having to seek leave to appeal costs, which is rarely granted.”

In addition to having to post security for costs, the applicant/appellant was ordered to pay the costs of the motion in the amount of $5,100. 

In many cases, an order requiring a party to post security for costs puts an end to the litigation. A party may not want to “pay to play” in advance.

Thank you for reading.

Paul Trudelle