PR CONSTRUCTION LTD v COLONY MANAGEMENT INC

This decision dealt with Applications seeking Security for Costs from one of the Respondents, Colony, in relation to the joint Appeal of a Trial Judgment brought by both Respondents, Colony and The Guarantee Company of North America (“GCNA”).

The Court reviewed its authority to award Security for Costs under Rules 14.67(1) and the factors for consideration set out in Rule 4.22.

As a threshold issue, the Court concluded that it could order Security for Costs against Colony individually, even though Colony and GCNA were pursuing a joint Appeal with shared counsel. The wording of Rule 4.22 authorized the Court to order “a party” to pay Security for Costs where it is “just and reasonable” to do so. The Applicants raised concerns about Colony’s ability to pay costs on Appeal, but not about GCNA. Therefore, Justice Ho found it appropriate to consider Security for Costs against only Colony.

Applying the Rule 4.22 factors, the Court granted Security for Costs against Colony. Justice Ho determined that given Colony’s lack of assets, the Applicants would be unlikely to be able to enforce a Costs award. Similarly, there was no evidence that Colony would be able to pay a Costs award. The Court found that no prejudice would result from granting the Application, including to GCNA. GCNA would not be frustrated in its Appeal because it could choose to provide funding to Colony for any Security of Costs Order granted.

The Applicants sought Security for Costs on the same level as the scale awarded at Trial pursuant to Rule 14.88(3). However, the Court exercised its discretion to award a lower amount on two grounds. First, the Applicants were making Cross-Appeals that would increase the hearing time and complexity of the matter. Second, the amounts sought by the Applicants were excessive.

The Court mentioned that, in the course of its Applications, the Applicants had breached Rule 4.28 by disclosing a Formal Offer to Settle related to the Appeal, but not yet accepted, to the Court. In accordance with Rule 14.90(1), Justice Ho struck the Offer from the record and did not consider it in the calculation of Security for Costs.

The Court confirmed that if Colony failed to post security, its Appeal would be deemed abandoned in accordance with Rule 14.67(2).