Executive Summary: Key Legal and Evidentiary Issues

• Compliance with a prior security for costs order requiring a $100,000 deposit into court within 60 days was central to whether the appeal could proceed.
• Invocation of r. 61.06(2) of the Rules of Civil Procedure to seek dismissal of the appeal due to non-payment of the ordered security for costs.
• Assessment of whether the party subject to the security order could show a “compelling reason” why dismissal should not follow non-compliance.
• Evidentiary reliance on the absence of any deposit, unanswered requests for confirmation of payment, and proof that the dismissal motion was properly served.
• Significance of counsel’s attendance to advise the court that he lacked instructions from his clients, leaving the motion effectively unopposed.
• Determination that, in the interests of justice, the appeal should be dismissed and costs awarded to the moving party.

Facts and procedural background

R & P Petroleum Inc. commenced civil proceedings against Eternal Vibes Inc., carrying on business as Phoenix Fuel, and an individual, Ishvinder Singh Virk. The dispute arose in a commercial context involving business parties, but the decision in issue deals exclusively with procedural matters rather than the underlying merits of the claim. As the litigation progressed, concerns were raised about the defendants’ and appellants’ ability or willingness to satisfy any potential costs award against them. This led R & P Petroleum to seek security for costs, a mechanism in Ontario civil procedure designed to protect a responding party from the risk that an unsuccessful litigant will be unable to pay costs.

On September 16, 2025, a court order was made requiring Eternal Vibes Inc. and Ishvinder Singh Virk to post security for costs in the amount of $100,000. The order directed that this sum be paid into court within 60 days. This security was not itself a damages or compensatory award; rather, it was a protective measure ensuring that funds would be available to satisfy potential costs if the appellants were ultimately unsuccessful in the litigation or appeal. Despite the clear terms of the order and the fixed timeline for compliance, the required deposit was not made.

As the payment deadline approached and passed, R & P Petroleum sought confirmation from the opposing parties that they would comply with the order and pay the $100,000 into court. Those inquiries went unanswered. The failure to respond, combined with the absence of any payment into court by the deadline, prompted R & P Petroleum to bring a motion in the Court of Appeal under r. 61.06(2) of the Rules of Civil Procedure. That rule allows a single judge of the Court of Appeal to dismiss an appeal where there has been non-compliance with an order requiring security for costs, unless the defaulting party can demonstrate a compelling reason why dismissal should not be ordered.

The motion in the Court of Appeal

The motion was brought in connection with the appeal bearing court file number COA-25-CV-0527. R & P Petroleum, as the moving party, relied on the earlier security for costs order and the appellants’ failure to pay the ordered amount into court within the 60-day period. The moving party provided evidence that the deadline had expired without payment, and that reasonable follow-up requests for confirmation of payment had been ignored. The motion materials were duly served on the responding parties, Eternal Vibes Inc. and Mr. Virk.

At the hearing of the motion before Paciocco J.A., counsel of record for the responding parties, Mr. Singh, attended. However, he advised the court that he did not have instructions from his clients despite efforts to obtain them. In practical terms, this meant that the appellants did not present any evidence or argument to explain or justify their non-compliance with the security for costs order, nor did they attempt to demonstrate a compelling reason why their appeal should not be dismissed under r. 61.06(2). No one appeared to substantively oppose the motion to dismiss the underlying appeal.

In assessing the motion, the Court of Appeal applied the framework articulated in One Clarendon Inc. v. Finlay, 2024 ONCA 414, which holds that a single judge may dismiss an appeal where the moving party proves non-compliance with a security for costs order and the defaulting party fails to discharge its onus of showing a compelling reason why such a dismissal order should not be made. In this case, the Court of Appeal was satisfied that the payment deadline had passed, that the $100,000 had not been paid into court, and that no explanation, evidence, or argument had been advanced to justify the non-compliance or to resist dismissal.

Outcome and reasons

Paciocco J.A. concluded that the conditions of r. 61.06(2) were met. There was clear non-compliance with the prior security for costs order, and the parties subject to that order failed to provide any basis on which the court could or should excuse their default. Given that the motion was properly served, that counsel had attempted to obtain instructions without success, and that the appellants chose not to participate meaningfully in the motion, the court determined that it was in the interests of justice to bring the appeal to an end.

Accordingly, the Court of Appeal ordered that the appeal, under file number COA-25-CV-0527, be dismissed. As a result, the appellants were precluded from pursuing the appeal further, and the underlying security for costs order, which they had failed to satisfy, stood as an unfulfilled procedural precondition. The decision does not discuss any insurance policy, contractual clauses, or specific policy terms; the judgment is confined to procedural and costs issues arising from non-compliance with the security for costs order and contains no analysis of policy wording or coverage questions.

The court then turned to the matter of costs. R & P Petroleum sought a costs award covering both the motion and the appeal. In the absence of any submissions from the opposing parties, and given their procedural default and failure to comply with the security for costs order, the Court of Appeal granted the request. It ordered that Eternal Vibes Inc. and Ishvinder Singh Virk jointly pay combined costs for the motion and the appeal in the amount of $6,000, inclusive of taxes and disbursements, in favour of R & P Petroleum. Thus, the successful party in the proceedings was R & P Petroleum Inc., and the total quantified amount ordered in its favour in this decision was $6,000 by way of costs; the earlier $100,000 security for costs was a required deposit that was never paid and not an amount awarded as damages or costs to R & P Petroleum.