Respondents worried appellant would not pay costs if she lost appeal
The Nova Scotia Court of Appeal has emphasized that an order requiring a party to post security for costs while their appeal was being litigated should be granted only under “special circumstances.”
In Withenshaw v. Withenshaw, 2022 NSCA 62, Gail, Garry, and George Withenshaw were siblings who had been engaged in litigation over their mother’s estate and assets. Gail Withenshaw’s conduct while she acted as attorney under a power-of-attorney granted by her late mother was contested in court and a decision was rendered ordering Gail to pay costs and disbursements. However, Gail did not pay the amount required under the court’s order. Instead, she filed an appeal of the decision. Garry and George requested the court to order Gail to post security for costs under the Civil Procedure Rules.
Security for costs discretionary
The appeal court noted that an order requiring a party to post security for costs is discretionary. The applicant must first establish “special circumstances” warranting advance payment of costs. Under case law, “special circumstances” are those that affect the degree of risk that, if the party is unsuccessful in their appeal, the respondent will be unable to collect their costs. Case law also provides that 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 their recovery of prospective appeal costs.
Garry and George Withenshaw argued that Gail’s failure to pay the costs was sufficient evidence of her acting in an insolvent fashion to establish that necessary “special circumstances” to support granting an order for security for costs.
On the other hand, Gail argued that mere non-compliance with the order was not sufficient to establish insolvent behaviour. She asserted that before she could be ordered to pay the amount of a potential cost award in advance, Garry and George must show that diligent attempts were made to collect from her without success.
No justifiable ‘special circumstances’
The appeal court ruled that the fact that the underlying judgment had not been satisfied was not, by itself, sufficient to establish “special circumstances” that justify requiring security for costs. The court said, “it is clear that something more is needed than what is found in this case.”
The court considered that Gail immediately took steps to advance an appeal and that she owned unencumbered land against which the costs judgment had been registered. Gail was also receiving pension income. The record further showed that a hearing of the appeal was likely to happen within the next few months. Consequently, the court concluded no “special circumstances” existed to justify paying security for costs. Garry and George Withenshaw failed to establish a sufficient objective risk they would not be able to recover appeal costs if they were successful on the appeal.