Executive Summary: Key Legal and Evidentiary Issues

• The case concerns allegedly negligent property appraisals performed by the defendant for financing of properties acquired by TDCI Bracebridge Inc., and the plaintiffs’ alleged reliance on those appraisals to their detriment.
• A procedural issue is whether the defendant satisfied the initial onus under Rule 56.01(1)(a), (d) and (e) of the Rules of Civil Procedure to justify an order for security for costs against the corporate plaintiffs.
• The timing of the security for costs motion, brought in November 2024 after discoveries, mandatory mediation, and the action being set down for trial with an April 2026 trial date, raised concerns about undue and unexplained delay.
• Evidence about Beaver Valley Holdings Limited’s registered office in Collingwood, its Ontario bank accounts, and its assets held in a Collingwood mortgage investment trust was central to assessing whether there was good reason to believe the plaintiffs lacked sufficient exigible assets in Ontario.
• The defendant’s reliance on historic receivership reports for TDCI from 2015–2016 and on the plaintiffs’ refusal to answer certain discovery questions about assets was found insufficient to meet the requirement of “proven facts” rather than “mere conjecture, hunch or speculation” regarding asset insufficiency.
• Beaver Valley’s sworn undertaking to indemnify TDCI for any costs award, combined with documentary proof of over $745,000 in exigible Ontario assets and the absence of outstanding debts or creditors, undermined the defendant’s request for security for costs.

Facts of the case

This action arises from a dispute over property appraisals performed by the defendant, Robin Craig Spencer Jones carrying on business as InFocus Appraisals, for financing of properties acquired by TDCI Bracebridge Inc. Beaver Valley Holdings Limited is the sole shareholder of TDCI. The plaintiffs assert that they relied on the allegedly negligent appraisals to their detriment. The defendant denies liability on the basis that he had no duty of care to the plaintiffs; that they unreasonably relied on the appraisals, which were prepared solely for financing purposes; that the damages sought are too remote; that the fraud by a non-party who stole mortgage funds was an unforeseeable intervening act; and that losses were due to acts by the now-deceased former principal of the plaintiffs.
The action was commenced in 2017. Following a request to inspect documents, the defendant’s statement of defence was delivered in November 2017. Productions were exchanged in 2018 and the plaintiffs were examined for discovery in mid-2022. During those examinations, the plaintiffs’ representatives were specifically asked about TDCI’s assets and the investment business of Beaver Valley, and those questions were refused as irrelevant. No motion to compel answers to those questions was brought. A mandatory mediation occurred in mid-2023. Shortly after the unsuccessful mediation, the plaintiffs set the action down for trial.
In early 2024, the defendant sought to bring a summary judgment motion. At a case conference before Akbarali J., the proposed summary judgment motion was denied and a trial was directed. Trial has been scheduled for April 2026.

The security for costs motion

The defendant brought a motion seeking $350,000 in security for costs from the plaintiffs ahead of trial. The defendant’s lawyer confirmed at the hearing that security was sought under subrules 56.01(1)(a), (d) and (e) of the Rules of Civil Procedure, RRO 1990, Reg 194. Those provisions allow the court, on motion by a defendant, to order security for costs where it appears that the plaintiff is ordinarily resident outside Ontario, is a corporation (or nominal plaintiff) with good reason to believe there are insufficient assets in Ontario to pay the defendant’s costs, or where there is good reason to believe the action is frivolous and vexatious and the plaintiff has insufficient assets in Ontario to pay costs.
In support of the motion, the defendant filed a preliminary affidavit of eight pages attaching over 9,000 pages of exhibits, and a supplementary affidavit of three pages attaching about 60 more pages of exhibits. The need for such voluminous materials on the motion was described by the court as unclear. The defendant relied, among other things, on TDCI having undergone receivership proceedings prior to the action being commenced, referring to reports of TDCI’s receiver from 2015 and 2016 showing TDCI’s financial picture from ten years earlier. The defendant acknowledged that, during discoveries in 2022, Marina Adshade confirmed that neither TDCI nor Beaver Valley were in insolvency or receivership proceedings. The defendant nonetheless argued that there was good reason to believe the plaintiffs lacked sufficient assets in Ontario and that security for costs was warranted.

Legal framework for security for costs

Associate Justice Todd Robinson summarized the legal framework for security for costs under Rule 56.01. Granting security for costs is a discretionary decision. There are two stages to the analysis. At the first stage, there is an initial onus on the moving party to demonstrate that the responding party fits within one or more of the provisions of subrule 56.01(1). Doing so triggers an enquiry into security for costs. At the second enquiry stage, the plaintiff bears the onus of demonstrating that an order for security for costs would be unjust.
The court explained that, at the second stage, determining the justness of a security for costs order requires a holistic approach, in which all circumstances of the case are examined and guided by the overriding interests of justice. Although the decision referred to factors that courts have considered—such as merits of the claim, delay in bringing the motion, the impact of a defendant’s conduct on the available assets of the plaintiff, access to justice concerns, and the public importance of the litigation—the decision emphasized that those factors are not static and that each case must be decided on its own facts.
On the evidentiary standard, the court noted that case law has consistently held that a moving defendant must satisfy their initial onus under subrule 56.01(1) based on “proven facts” and not on “mere conjecture, hunch or speculation.” A bald assertion that a party has insufficient assets, on its own, is insufficient. While the moving defendant need not go so far as to prove that there are insufficient assets, they must at least prove facts from which a court can conclude that there is good reason to believe that is the case.

Delay in bringing the motion

The court placed significant weight on delay. The motion for security for costs was brought in November 2024, about two years after the questions related to the assets and business of the plaintiffs were refused on discovery in mid-2022. The allegations that the claim is frivolous, vexatious, and an abuse of process were grounded in the same defences pleaded by the defendant in 2017. The court found that, based on the record, there had been no change in the defendant’s position on the merits of the claim since that time and certainly not since discoveries in 2022.
No cogent explanation was provided for why a security for costs motion was not brought sooner, particularly before the action was set down for trial. The court held there had been no change in circumstances since the discovery phase was completed. The court rejected the submission that the proposed summary judgment motion should be considered, and noted that the delay in seeking summary judgment had also not been adequately explained. In addition, security for costs was not raised at the time of seeking summary judgment, even as alternative relief. The court observed that, by implication, the defendant was content to incur the costs of an opposed summary judgment motion without security, but was now unwilling to proceed to trial without it.
The decision notes that the action is ready for trial and substantially all litigation steps have been completed except for trial. Both sides have incurred considerable litigation expenses to get to that point. The court referred to case law supporting that a defendant should not be permitted to “wait in the bushes” while the plaintiff expends significant sums advancing a case to the point of trial, then surprise the plaintiff with a motion for security for costs, and concluded that this is what the defendant had done in this case. The court found no cogent or convincing explanation for the delay in bringing the motion, which was based on positions, facts, and information that had been known to the defendant for years. Regardless of whether the defendant’s position had merit, the court held that in these circumstances an order for security for costs would be unjust at this late stage.

Residency and corporate structure

Although the court had already found that delay made an order for security unjust, Associate Justice Robinson went on to address the defendant’s threshold onus under Rule 56.01(1)(a), (d) and (e). Both plaintiffs are corporations. The record supports that Beaver Valley maintains a registered office address in Collingwood. There was no evidence supporting the assertion that the address is a nominal mailing address, and no evidence tendered by the defendant on what is located there. From the responding evidence, Beaver Valley has several active bank accounts in Collingwood. The court observed that the fact that directors and officers may be ordinarily resident in British Columbia is, in the circumstances, immaterial, as Beaver Valley is a separate legal entity from the individuals who operate it. The defendant tendered no cogent evidence to support a finding that Beaver Valley is not a going concern. On the record, Beaver Valley appears to have a historical and ongoing connection to Collingwood, Ontario, and to have substantial exigible assets in Ontario.
TDCI’s residency status was described as less clear. Its registered corporate address is a law firm, with its listed sole director and officer remaining a deceased individual. Marina Adshade provided an affidavit setting out that she is the current director and is a resident of British Columbia. These facts raised concerns about whether TDCI is properly viewed as being ordinarily resident in Ontario. However, TDCI and Beaver Valley are pursuing a joint claim. The court accepted the plaintiffs’ argument that security for costs should not be ordered where multiple plaintiffs pursue a joint claim, so long as one of them ordinarily resides in Ontario, since any one of the plaintiffs can be called upon to satisfy either a joint or joint and several cost order in its entirety, relying on Vogel v. Trinity Capital Corp.

Financial capacity and the “good reason to believe” standard

The defendant sought security for costs on the basis that the plaintiffs are corporations and that there was good reason to believe they have insufficient assets in Ontario to pay the defendant’s costs, and that there was good reason to believe the action is frivolous and vexatious and the plaintiffs have insufficient assets in Ontario to pay costs.
The court noted that the plaintiffs were not obliged to tender evidence of their assets to meet the defendant’s initial onus. The moving defendant had the onus of demonstrating good reason to believe that the plaintiffs lack sufficient assets in Ontario to satisfy a costs award. It would reverse the threshold onus to require a plaintiff to prove sufficiency of assets or to draw an adverse inference from the plaintiffs resisting pre-judgment asset examination. Nevertheless, in assessing whether the defendant met his threshold onus, the court considered the entire evidentiary record, including the responding materials.
The defendant’s evidence consisted primarily of the fact that TDCI underwent receivership proceedings prior to this action being commenced, supported by the receiver’s reports from 2015 and 2016, and the plaintiffs’ refusal to voluntarily provide information on their assets and operations during discoveries. The defendant pointed to the plaintiffs’ discovery refusals and asked the court to draw an adverse inference. The court agreed with the plaintiffs that drawing such an adverse inference at this stage would reverse the defendant’s threshold onus.
In contrast, the plaintiffs provided evidence that Beaver Valley has exigible assets held in Ontario in excess of $745,000, held in Beaver Valley’s bank account and a mortgage investment trust in Collingwood. The undisputed evidence of Ms. Adshade was that neither Beaver Valley nor TDCI have any outstanding debts or creditors. Ms. Adshade also expressly stated in her affidavit that Beaver Valley will indemnify TDCI if a costs award is ordered against TDCI and the court finds that liability is several and not joint. The court characterized this as a sworn statement against interest that may be relied upon by the defendant in its costs submissions at trial.
The defendant argued that such an undertaking must be supported by proof that it is a satisfactory substitute for security and that a bald assertion of ability to pay is insufficient, relying on Vogel v. Trinity Capital Corp. The court agreed with that principle but found that the plaintiffs had provided the necessary support. The account statements tendered demonstrated exigible assets more than twice the amount of security for costs sought by the defendant. The defendant tendered no evidence disputing the plaintiffs’ evidence or supporting a likelihood that Beaver Valley’s disclosed assets would be depleted.
The court concluded that the defendant failed to meet his threshold onus with respect to insufficiency of assets. That finding was sufficient to dispose of security for costs under subrules 56.01(1)(d) and (e). Having found that the defendant failed to establish good reason to believe that the corporate plaintiffs lack sufficient assets in Ontario, the court held it was unnecessary to address whether the claim is frivolous, vexatious, or an abuse of process, as both elements are required for an order under subrule 56.01(1)(e).

Outcome and costs

Associate Justice Robinson dismissed the defendant’s motion for security for costs. The court found that the defendant had unduly delayed in bringing the motion when the grounds to do so existed well before trial was scheduled and before summary judgment was raised, and that a security for costs order at this late stage of the proceeding would be unjust. The court also found that the defendant had not met his threshold onus to show good reason to believe the plaintiffs lacked sufficient exigible assets in Ontario.
On costs, prior to the motion being argued, the parties agreed that the successful side would be entitled to their costs of the motion on a partial indemnity basis as set out in their respective costs outlines. The court accordingly fixed costs of the motion to the plaintiffs in the amount of $11,081.18, including HST and disbursements. The defendant’s motion was dismissed and the defendant was ordered to pay to the plaintiffs their costs of the motion fixed in the amount of $11,081.18, including HST and disbursements, payable within forty-five days.