Executive Summary: Key Legal and Evidentiary Issues

• Whether “other good reason” under r. 61.06(1)(c) justified security for costs given the appeal’s weak merits and serious collection risk
• Extent to which the appellants’ challenges to mortgage enforcement, the sale to 286 Limited, and alleged evidentiary and legal errors raised any arguable grounds of appeal
• Impact of very large unpaid costs, prior failure to comply with a security for costs order, and refusal to give financial disclosure on the risk of non-payment
• Effect of the appellants’ bare, unproven claim of impecuniosity on the access-to-justice analysis and on their burden to show inability to pay
• Fair allocation of security for costs where World Financial was both enforcing its mortgage judgment and responding to broad counterclaim/third-party allegations
• Proportionality and fairness of the $90,000 total security and $7,500 motion costs awarded against the appellants

Facts of the case

In 2017, Marguerite Alfred, through her company 2573138 Ontario Ltd. (257 Limited), borrowed money from World Financial Solutions Inc. (World Financial) to buy a resort property. Ms. Alfred personally guaranteed the loan, and World Financial took mortgages over the resort and her home. No payments were ever made on the mortgage, so World Financial commenced a mortgage enforcement action in March 2018. The defendants, Ms. Alfred and 257 Limited, raised numerous defences that the courts later viewed as weak and overly technical.

World Financial took possession of the resort in November 2018 and installed Elise Blouin as property manager. On October 28, 2021, it sold the resort to 2868395 Ontario Limited (286 Limited), a company incorporated by Ms. Blouin while she was an undischarged bankrupt. The appellants later attacked the legality of that sale and the status of 286 Limited, focusing on the bankruptcy context and title issues.

The proceedings expanded when, on January 31, 2023, the appellants issued a broad third-party claim against multiple parties, including Ms. Blouin, Sieta & Pikes Development Limited, 286 Limited, and 2664358 Ontario Limited (266 Limited). Some third-party claims by 257 Limited were struck on December 20, 2024, after it failed to comply with an August 12, 2024 security for costs order. All third-party claims that Ms. Alfred personally brought were dismissed on April 11, 2025 for lack of standing. The remaining third-party defendants became the respondents on the later appeal.

On April 12, 2024, the appellants served a Counterclaim contesting the sale to 286 Limited and alleging, among other things, conspiracy between World Financial and the third parties, failure to account for funds received while in possession, and invalidity of the resort mortgage because World Financial’s principal, Sunil Bhardwaj, had obtained a 25 percent share interest in 257 Limited. The appellants tried to characterize part of this as a shareholder oppression-type claim, and also alleged procedural and evidentiary errors in the way the enforcement process and sale were carried out.

On April 11, 2025, World Financial and the third-party defendants moved for summary judgment. On May 30, 2025, the motion judge granted summary judgment, dismissing the appellants’ defences to mortgage enforcement, ordering possession and sale of the secured properties, dismissing the third-party claims, and directing a reference only on the accounting issues (how money was handled after World Financial took possession). Costs were awarded against the appellants. On June 30, 2025, the appellants appealed, challenging the validity of the sale to 286 Limited, the conduct of World Financial, alleged evidentiary and legal errors, and the costs award (though they did not seek leave to appeal the costs order separately).

Issues on appeal and framing of the motion

The appeal raised four main themes: the legal status of 286 Limited and the effect of Ms. Blouin’s bankruptcy; alleged defects in the sale and failure to account; attacks on the validity of the mortgage given the 25 percent share interest; and broad complaints that the motion judge misinterpreted evidence, relied on non-existent evidence, gave inadequate reasons, and misapplied the law. Some of these issues overlapped with the still-pending accounting reference, which had not yet been decided.

While the appeal was pending, World Financial and the remaining third-party respondents moved in the Court of Appeal for security for costs under rule 61.06(1). Although they had initially relied on all branches of that rule, by the hearing they limited their argument to r. 61.06(1)(c), the “other good reason” ground. They argued that the appeal had little chance of success and that there was a serious and demonstrated risk that the appellants would not pay any costs awarded. The record showed large unpaid costs orders totalling about $336,346, prior failure to comply with a security for costs order that had led to third-party claims being struck, and refusal by the appellants to provide meaningful financial disclosure. The moving parties also noted that the appellants’ own litigation choices had turned a straightforward mortgage enforcement case into a complex, multi-party appeal, driving up potential appellate costs.

The appellants resisted by asserting that they were impecunious and that ordering security would effectively bar their access to the Court of Appeal. They argued that the ongoing accounting reference might result in money being found owing to them and that this should factor into the assessment of non-payment risk. However, they filed no detailed financial disclosure to substantiate genuine inability to pay, and they offered no concrete basis to show that the reference was likely to generate funds sufficient to cover costs.

Court of Appeal’s reasoning on security for costs

The Court of Appeal applied the familiar two-stage framework: first, whether a ground under r. 61.06(1) was made out; second, whether, taking all circumstances into account, it was just to order security.

On the first stage, the court held that r. 61.06(1)(c) was properly engaged. The moving parties did not claim the appeal was “frivolous and vexatious” or that the appellants lacked assets in Ontario (which would invoke r. 61.06(1)(a) and rule 56.01). Nor did they rely on rule 56.01 as a standalone basis under r. 61.06(1)(b). Instead, they invoked the line of authority allowing security where there is a low-merit appeal combined with a serious, evidence-based risk that costs will not be collected. The large unpaid costs, non-compliance with a prior security order, and refusal to provide financial information were treated as evidence of that risk, not as independent triggers.

The court then assessed the merits and found that the appeal had a low prospect of success. It pointed to an earlier stay-pending-appeal motion decision that had already concluded there were no plausible grounds of appeal. Many of the appellants’ points attempted to re-argue factual findings or discretionary determinations without showing arguable error. Parts of the appeal addressed issues—such as the outcome of the accounting reference—that had not yet been determined. Some claims appeared to fall outside the appellants’ standing. The challenge to the costs award was also weak because no leave had been sought, meaning that the costs issue rose or fell with the merits of the main appeal.

On risk of non-payment, the court emphasized the sizeable unpaid costs awards, the earlier unsatisfied security for costs order, and the appellants’ refusal to disclose finances. Although the appellants claimed to be impecunious, they bore the onus of proving this and had offered only bare assertions, despite continuing to fund significant litigation. Their argument that a future accounting might generate set-off funds was too speculative, unsupported by concrete evidence. In this context, the court presumed they had the abstract ability to pay but were unlikely to actually do so absent a security order.

Justice and allocation of security

At the second stage, the court considered whether ordering security was just overall. It weighed the respondents’ interest in not being forced to incur substantial further costs on a weak appeal against the appellants’ interest in accessing an appellate hearing. It recognized that true impecuniosity can weigh strongly against security, but found that the appellants had not met their evidentiary burden and that their own conduct had caused much of the complexity driving up anticipated costs.

A particular issue was how to treat World Financial, the original plaintiff in the mortgage enforcement action. The court reiterated the principle that a party should not normally be forced to give security simply to continue defending itself, and that an appeal is often just a step in the same proceeding. World Financial’s attempt to uphold its enforcement judgment fit within that principle. However, the appeal did not concern only straightforward enforcement: World Financial was also defending against wide-ranging allegations arising from the Counterclaim and intertwined third-party issues, which substantially expanded the scope and expense of the appeal beyond basic mortgage enforcement.

The court therefore drew a distinction. It held that it would not be just to require security for the portion of World Financial’s appellate costs tied directly to maintaining the enforcement order. But it was just and within the court’s discretion to order security for the additional costs arising from the more complex counterclaim and third-party-related issues the appellants had injected into the litigation. By contrast, the third-party respondents (286 Limited, Ms. Blouin, Sieta & Pikes, and 266 Limited) were being drawn into an appeal on issues that primarily concerned them, so full security was appropriate in their favour.

Outcome and financial orders

The motion for security for costs was granted. The Court of Appeal ordered the appellants, Ms. Alfred and 257 Limited, to post security as follows: $20,000 in favour of World Financial, $35,000 in favour of 286 Limited, and $35,000 in favour of the remaining third-party respondents collectively, for a total of $90,000 in security for costs. The security had to be deposited with the Accountant of the Superior Court of Justice, in a form acceptable to each moving party, within 30 days. Until then, the appellants were barred from taking any further steps in the appeal, other than a motion to review the security order. If they failed to post the required security, the appeal would be dismissed automatically, without a further motion.

The court also awarded costs of the motion, inclusive of taxes and disbursements, in the amount of $2,500 to World Financial, $2,500 to 286 Limited, and $2,500 to the remaining third-party respondents, for a total of $7,500 in motion costs. No new damages were awarded in this appellate decision; the underlying judgment and reference order remained as set by the summary judgment judge. In sum, the successful parties on the motion—World Financial and the third-party respondents—obtained an order requiring the appellants to post $90,000 as security for costs and to pay $7,500 in costs of the motion, for a combined total of $97,500 ordered in their favour in this decision.