Executive Summary: Key Legal and Evidentiary Issues

• Security for costs ordered against an out-of-province, self-represented plaintiff under Rule 56.01 due to residence in Alberta and absence of assets in Ontario.
• Plaintiff failed to provide the detailed financial disclosure required to establish impecuniosity and avoid posting security.
• Negligence and statutory claims against the bank found not to meet the “good chance of success at trial” threshold for resisting security for costs.
• Evidence of alleged negligent “financial advice” consisted only of pleadings and correspondence, with no proof of a special relationship or duty of care beyond the usual debtor-creditor banking relationship.
• Documents showed the Agreement of Purchase and Sale was firm and not conditional on financing, undermining the argument that the bank’s pre-approval “locked” the plaintiff into the deal.
• Court concluded that, given the high quantum of claimed damages and weak prospects of success, it was just to require the plaintiff to post $51,600 in staged security for the bank’s costs.

Facts of the case

Andrea Burke commenced a civil action against the Bank of Montreal (BMO) arising from a failed purchase of a pre-construction residential property with a purchase price of $989,900. She had entered into an Agreement of Purchase and Sale (APS) with the builder, signing the APS around September 25, 2017. She later sought mortgage financing from BMO to complete the transaction. When financing did not materialize and she failed to close, she lost her $106,000 deposit and became exposed to potential vendor damages.

In her Statement of Claim, Ms. Burke alleged that BMO caused her loss by refusing to provide mortgage financing after having advised her that she was “financially fit” to purchase the property. She claimed that this alleged reassurance induced her to enter into and remain bound by the APS. She pleaded that BMO was negligent and in breach of its duty of care, seeking $500,000 in damages for negligence and breach of duty of care and a further $350,000 for health issues said to be brought on by severe anguish and stress.

BMO denied these allegations in its Statement of Defence. It asserted that it did not mislead Ms. Burke regarding either her pre-approval or her mortgage application. According to BMO, her mortgage application was ultimately declined because she failed to meet the terms and conditions attached to her pre-approval, which affected her eligibility for mortgage financing. BMO also pleaded that at no material time was she receiving financial advice about her debts and obligations from any BMO financial advisor, and it denied any breach of the Consumer Protection Act or other legislation.

Procedurally, after BMO delivered its defence in late 2021, Ms. Burke noted BMO in default when she did not consent to further procedural steps, forcing BMO to bring a motion to set aside the noting in default. The court granted that relief in December 2022. Ms. Burke served her Reply in January 2023, and the parties then proceeded to mediation in March 2024. In March 2025, Ms. Burke advised that she was ready to proceed with examinations for discovery and informed BMO’s counsel that she had moved from Ontario to Edmonton, Alberta.

Allegations of negligence and statutory breach

Ms. Burke’s pleaded theory was that BMO owed her a duty of care in “calculating and providing financial advice” and that BMO’s pre-approval process and communications fell below the applicable standard of care. In particular, she asserted that a BMO financial advisor told her she was “financially fit” to purchase the property and that BMO failed to include all required debts in its assessment, leading to an inaccurate pre-approval for an amount she could not actually qualify for. She claimed that the issuance of the pre-approval letter, and BMO’s advice that she qualified, “locked her into the deal” with the builder.

In addition to negligence, Ms. Burke referenced breach of the Consumer Protection Act, Ontario’s Consumer Protection Act, 2002, although she did not plead specific statutory provisions. In her Reply, she also referred to the federal Bank Act and the “rules” of the former Financial Services Commission of Ontario (FSCO), now the Financial Services Regulatory Authority of Ontario (FSRA), again without identifying specific sections or rules allegedly breached. The court noted that the case law and legal argument relating to the special nature of bank–customer relationships and fiduciary duties were not substantively developed by the parties.

BMO’s defence relied on established appellate authority that the relationship between a bank and its customer is generally a commercial debtor–creditor relationship and, absent a special relationship or exceptional circumstances, no duty arises to provide proactive financial advice or to discourage a customer from taking on a loan. The court cited Baldwin v Daubney and the earlier Pierce v Canada Trustco jurisprudence for the principle that a bank ordinarily owes no duty to advise a customer not to enter into a transaction or to decline financing, unless a special relationship or fiduciary duty is properly pleaded and supported.

Security for costs motion and procedural context

After Ms. Burke’s move to Alberta, BMO reviewed its position on costs risk. By July 2, 2025, BMO’s counsel had confirmed that Ms. Burke was now ordinarily resident in Edmonton, Alberta. They wrote to her invoking Rule 56.01 of the Ontario Rules of Civil Procedure, which permits a defendant to seek security for costs where, among other grounds, the plaintiff is ordinarily resident outside Ontario or has insufficient assets in Ontario to satisfy a future costs award. Counsel asked Ms. Burke to provide proof of sufficient assets in Ontario to satisfy any costs order; failing that, they indicated they would seek instructions to bring a motion for security for costs.

On July 3, 2025, Ms. Burke confirmed by email that she had no assets to post as security in Ontario. As of the motion date, BMO had already incurred $70,115.94 in costs, inclusive of disbursements and HST, in defending the action. It estimated additional costs to trial in the range of $80,000 to $100,000. BMO then moved promptly for an order requiring Ms. Burke to post security for costs totaling $60,000 in three tranches linked to the litigation steps: an initial payment, a further amount before discoveries, and a final amount before trial.

The court accepted that BMO had moved reasonably quickly once it had a factual basis to seek security, serving its Notice of Motion just over three weeks after Ms. Burke’s confirmation that she had no assets in Ontario. While there was an earlier period of inactivity between March and July 2025, the action did not advance during that period, and there was no evidence of prejudice to Ms. Burke from the timing of the motion.

Legal framework on security for costs

The court set out the governing test under Rule 56.01(1)(a) and (d). The first stage requires the defendant to show that it appears the case falls within one of the enumerated grounds—here, that the plaintiff is ordinarily resident outside Ontario and/or has insufficient assets in Ontario to satisfy costs. Once that threshold is met, the onus shifts to the plaintiff to demonstrate that an order for security would be unjust.

Drawing from Coastline Corporation Ltd. v Canaccord Capital Corporation and related authorities, the court summarized the three main ways a plaintiff can rebut the presumption in favour of security for costs: by proving sufficient assets in Ontario or a reciprocating jurisdiction to satisfy any costs award; by proving impecuniosity coupled with a claim that is not plainly devoid of merit; or, where the plaintiff is not impecunious but has limited means, by demonstrating a strong case with a good chance of success at trial. The jurisprudence stresses that impecuniosity requires detailed, documentary financial disclosure, including tax returns, banking records, and evidence of income, expenses, liabilities, and borrowing capacity. Bare assertions that funds are unavailable are insufficient.

The court also emphasized that when assessing whether there is a “good chance” of success, it must go beyond the minimal “not devoid of merit” standard but avoid a full summary judgment-style merits analysis. The focus is primarily on the pleadings and motion record, and the merits should only be decisive when success or failure appears obvious on the material before the court.

Application of the test to Ms. Burke’s claim

On the evidence, Ms. Burke admitted she had moved to Edmonton and had lived there since April 2024. She also confirmed that she did not own assets in Ontario. Alberta is a reciprocating jurisdiction for enforcement of judgments, but Ms. Burke provided no evidence of assets there or elsewhere. She expressly stated she had no assets or savings and furnished no supporting financial documentation. Accordingly, the court found that BMO had established both that she was ordinarily resident outside Ontario and that there was good reason to believe she had insufficient assets in Ontario to pay costs, thus satisfying Rule 56.01(1)(a) and (d).

The onus then shifted to Ms. Burke to show that a security for costs order would be unjust. She did not provide tax returns, bank statements, income records, or any detailed description of her financial circumstances. Without that level of disclosure, she could not meet the high threshold for proving impecuniosity that would allow her to avoid posting security on the basis that justice demanded her claim be heard. At most, she had shown that she lacked liquid assets in Ontario, not that she was unable, in an absolute sense, to raise the required security.

Because Ms. Burke claimed to have no assets to post in Ontario and had not proven impecuniosity in the technical sense, the court turned to the alternative question—whether she could avoid security by demonstrating a strong claim with a good chance of success. The court reviewed the pleadings and the limited additional documents that Ms. Burke had appended to her claim and later provided. It held that, when considered against the backdrop of BMO’s detailed defence and the applicable banking law authorities, her case did not reach the “good chance of success at trial” threshold.

Assessment of the negligence theory and documentary record

The court treated Ms. Burke’s claim as fundamentally one of negligence, supplemented by unparticularized statutory breach. It noted that her “evidence” on the motion consisted solely of allegations in the Statement of Claim, Reply, and factum, without a supporting affidavit. Under the Bruno Appliance and Furniture line of authority, when a plaintiff’s position relies only on pleaded allegations that are squarely denied by the defendant, without corroborating evidence, the pleadings alone cannot support a finding of a good cause of action or a strong likelihood of success.

Even if the court were to assume that the documents appended to the Statement of Claim—such as the APS and BMO’s Preliminary Mortgage Approval Notice—were admissible on the motion, they did not show that BMO provided the kind of personalized financial advice that could give rise to a special relationship or an expanded duty of care. The documents indicated that Ms. Burke signed the APS before she obtained mortgage pre-approval or approval from BMO. Neither the APS nor the pre-approval letter appeared to contain any specific advice about her “financial fitness” or recommendations about whether she should enter into or remain in the APS.

The court also considered email correspondence in which Ms. Burke asserted that BMO had misadvised her and was responsible for her inability to close and her lost deposit. However, BMO’s email responses did not concede that any such advice had been given. On the contrary, its defence asserted that it was not providing her with financial advice about her overall debt picture or obligations. Without independent evidence supporting Ms. Burke’s account, the court found no basis on the record to infer a special or advisory relationship beyond the usual lender–borrower dynamic.

On damages, the medical note Ms. Burke attached to her claim did not link her health issues causally to BMO’s conduct. Further, BMO’s defence raised limitation period arguments under the Limitations Act, 2002, alleging that some or all claims were discoverable more than two years before the claim was issued. Nothing in Ms. Burke’s materials meaningfully addressed or undermined those limitation defences, adding to the court’s concern about her ultimate prospects.

Arguments about the Agreement of Purchase and Sale and “locking in”

At the motion hearing, Ms. Burke advanced a theory that BMO’s mortgage pre-approval “locked” her into the APS. She contended that, had she not obtained and provided BMO’s pre-approval letter to the builder, she would not have been bound to complete the purchase and could have either found alternative financing or extricated herself without losing her deposit. She relied on a clause in Schedule “B” to the APS that required her to provide, within 20 days of acceptance, evidence satisfactory to the vendor of her ability to complete the transaction, including a commitment letter from her proposed mortgagee and proof of funds for the remaining purchase price.

The court parsed her argument into two possibilities: either that providing BMO’s pre-approval restricted her to using BMO as lender for this transaction, or that the APS only became binding once she supplied that pre-approval, such that withholding it might have allowed her to avoid the deal altogether. It rejected both variants.

First, nothing in the APS required Ms. Burke to obtain financing exclusively from BMO or from any institution that had issued a pre-approval letter. The contract required satisfactory evidence of financing, but did not specify a single lender. Her suggestion that she could and would have obtained alternative financing if not for BMO’s involvement was purely speculative, and she provided no evidence of any other lender prepared to fund her purchase.

Second, the APS was a firm agreement that was not conditional on financing. The vendor’s condition that she deliver evidence of financing was designed to assure the vendor of her ability to close, not to make the contract conditional from her perspective. The court found that the APS was binding upon execution, regardless of whether she obtained mortgage pre-approval or financing from BMO or any other lender. When she ultimately failed to close, she became liable to the vendor for damages along the lines recognized in 2174372 Ontario Ltd. v Akbari, where a purchaser who fails to complete a firm agreement faces well-established contractual consequences.

Conclusion on merits and overall justness of security for costs

Taking all of these factors together, the court concluded that Ms. Burke had not demonstrated a good chance of success at trial on negligence or on any of her statutory theories under the Consumer Protection Act, the Bank Act, or FSCO/FSRA rules. The materials did not show any breach of a specific statutory provision or regulatory rule, nor did they support an expanded duty of care beyond the ordinary bank–customer relationship. In the absence of a special relationship or exceptional circumstances, the bank’s role in offering or declining credit remained a commercial one, and the authorities did not support imposing liability for failing to provide or continue financing in such circumstances.

In assessing the justness of ordering security for costs, the court emphasized that Ms. Burke’s claim sought substantial damages totaling $850,000, while her evidence on both liability and causation was thin and largely unsupported by admissible material. BMO had already incurred significant defence costs and faced further substantial expense through discovery and trial. Against this backdrop, and given that Ms. Burke had not met the tests for avoiding security, the court held that the interests of justice favoured granting BMO’s motion.

As to quantum and timing, the court accepted that it was appropriate to order security for the entire proceeding but to structure it as a “pay-as-you-go” series of installments, consistent with the usual practice when an action is still in early to mid stages. It found BMO’s proposed amounts largely reasonable in light of its actual and projected partial indemnity costs, but it modestly reduced the requested sum for the discovery phase to better reflect partial indemnity rather than full actual fees.

In the result, the court ordered Ms. Burke to post security for BMO’s costs in three tranches: $10,000 within thirty days of the order, $11,600 at least seven days before examinations for discovery, and $30,000 at least seven days before trial. The total ordered security was therefore $51,600, with the defendant Bank of Montreal emerging as the successful party on the motion and obtaining this staged protection for its litigation costs, although no damages or final cost award on the underlying claim were determined at this stage.