Underlying application involved woman's challenge against her late mother's will
A party recently sought security for costs upon raising the novel argument that the lack of mutuality of obligation and remedy between her and the opposing party constituted “other good reason” under Ontario’s Rules of Civil Procedure.
In Di Nunzio v. Di Nunzio, 2022 ONCA 618, a woman’s final will made the respondent, who was the woman’s daughter, the sole trustee and beneficiary. The appellant, who was the respondent’s sister, had been entitled to one-third of their mother’s estate in earlier wills.
The appellant filed an application challenging the will. When she was unsuccessful she appealed, arguing that the application judge failed to apply or misapplied the doctrine of suspicious circumstances.
The respondent, relying on r. 61.06(1)(a) and (c) of the Rules of Civil Procedure, moved for an order requiring the appellant to post $25,000 for security for costs of the appeal and $111,395.45 for the costs of the application within 30 days.
Alternatively, the respondent requested a declaration that there was no mutuality of remedy in the circumstances and an order for the appellant to elect within 30 days either to relinquish her claim for costs or to post the security for costs.
Relating to lack of mutuality, the respondent was arguing that “if [the appellant] is successful on appeal, she can recover the costs of the application and the appeal from [the respondent], and if [the appellant] is not successful, she will walk away without having to pay [the respondent’s] costs of the application and appeal because she has no assets.”
No evidence appeal was in bad faith
The Court of Appeal ruled in the appellant’s favour and awarded her partial indemnity costs of the motion – fixed at $3,900 – inclusive of harmonized sales tax and disbursements.
The appellate court held that the respondent did not meet the threshold requirements of r. 61.06(1)(a) relating to frivolous and vexatious appeals. While the appellant lacked sufficient assets in Ontario or elsewhere to pay the costs of the appeal or the application, her appeal was not frivolous and vexatious. There was no evidence of the appellant’s bad-faith motivation or intention to annoy or embarrass the respondent.
The appeal was not readily recognizable as lacking merit, the appellate court added. The appellant was trying to reverse the application judge’s order because she believed that the judge improperly applied the doctrine of suspicious circumstances. Even if she had a low chance of success, this was not enough to make her appeal vexatious.
Next, the Court of Appeal determined that the respondent failed to comply with the requirements of r. 61.06(1)(c). According to the appellate court, what the respondent called lack of mutuality:
- did not amount to “other good reason” to entitle her to security for costs or to the alternative remedy she sought
- was essentially a disparity in the parties’ financial resources or circumstances
- was the reason for the filing of most motions for security for costs.
Agreeing with the respondent’s novel argument would significantly broaden the scope of r. 61.06(1), the appellate court concluded. Lastly, the court rejected the respondent’s contention that, since this was a novel case, it was inappropriate to award costs of the motion.