It’s no secret that litigation can be a costly process. When one party is successful in a civil case, it is not uncommon for them to request, and be granted, costs payable by the other party to cover all or part of their expenses from engaging in litigation. In some cases where there may be a question of that party’s ability or willingness to pay those costs, a court has the authority to make an order for security for costs.
Less common, however, is a court order for security for judgment. This order is similar to security for costs, but it relates to the damages awarded as part of the court’s determination of the matter, rather than the associated costs. When a court grants an order for security, whether for judgment or costs, this means the party named in the order must post the value of the order with the court as security against the party’s potential non-payment if left to their own devices.
The amount of a damages award is generally much more substantial than the related costs, and for this reason, an order for security for judgment is rarely made. In Ontario, an order for security for judgment had never been ordered, until a recent civil litigation matter between the respondents, who were located in Canada, and the plaintiffs, who were located in the U.S.
Security for Costs as Set Out In Ontario’s Rules of Civil Procedure
Rule 56.01 of Ontario’s Rules of Civil Procedure state that security for costs can be ordered by a court when:
(a) the plaintiff or applicant is ordinarily resident outside Ontario;
(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;
(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.
Ontario Filmmakers Sued Over Documentary by Subject
In the case at hand, the defendants in the original action were producers of a documentary film called Room Full of Spoons, which centred around the creation of a film called The Room. Since its release in 2006, The Room had gained notoriety and cult status, with ongoing screenings around the world. The production team behind the original film (Wiseau Films) learned of the documentary and successfully sought an order for an injunction preventing its release in 2017.
Upon learning that Wiseau Films had engaged in litigation misconduct and failed to make full and frank disclosure, the court dissolved the injunction preventing the release of the documentary and awarded damages and costs in favour of the documentary producers. All told, the amount owing to the documentary producers exceeded $1,000,0000.00. Following the judgment, Wiseau Films failed to present evidence it could satisfy the award and refused to appear to answer questions relating to its holdings.
Wiseau Films then filed a Notice of Appeal with respect to the trial judgment. In response, the documentary producers sought an order for security for costs and/or judgment given the other party’s refusal to comply with previous orders to pay and/or produce evidence as to its’ assets.
Court of Appeal Grants Order for Security for Judgment Citing “Exceptional Circumstances”
While the Court of Appeal acknowledged that an order for security for judgment should only be granted in rare cases, it found this case was one such instance. To justify the decision, the Court cited the following exceptional circumstances:
- Wiseau Films was located outside of Ontario and had thus far refused to provide information on any assets it held within Ontario. Further, the evidence available suggested Wiseau Films had insufficient assets in Ontario to satisfy the trial judgment.
- Wiseau Films conceded that an order for security for costs would not deter it from pursuing the appeal.
- The producers of the documentary had already had the release of their film delayed by four years due to this ongoing litigation. Further delay would further prejudice them.
- The appeal, as originally drafted, was frivolous.
Contact Prudent Law in Mississauga for Representation in Civil Litigation Matters
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