Executive Summary: Key Legal and Evidentiary Issues

• SvN Architects + Planners Inc. sought security for costs against the appellants in advance of their appeal.
   
• Rule 61.06(1)(a) required proof that the appeal was both frivolous and vexatious, with insufficient assets to cover costs.
   
• Evidence showed the appellants declined to disclose their assets after public searches turned up none.
   
• Findings from the underlying trial, including credibility determinations, supported a conclusion that the appeal lacked merit.
   
• No indication emerged that the appeal was being pursued to annoy or embarrass the respondent.
   
• Ultimately, the motion for security for costs failed on the vexatiousness element, and the appellants were awarded costs.
   

Facts of the case

This endorsement arises from a motion brought by the respondent, SvN Architects + Planners Inc., seeking security for costs in connection with an appeal filed by 2524991 Ontario Corporation and Qingxin Shao. The underlying dispute stemmed from a decision of Deputy Judge E. Prattas dated September 29, 2025, issued after a three-day trial, in which SvN successfully sued the appellants for unpaid invoices for professional architectural services totaling $29,094.98, plus interest and costs. The appellants subsequently appealed that decision. In support of its motion, SvN estimated its costs of the appeal at $17,500 and stated that it had conducted public searches for the appellants' assets in Ontario without success, and that the appellants had declined to provide any information about their assets when asked.

Policy and legislative provisions at issue

SvN relied on rule 61.06(1)(a) of the Rules of Civil Procedure, arguing there was good reason to believe the appeal was frivolous and vexatious and that the appellants had insufficient assets in Ontario to satisfy a costs award. SvN also invoked rule 61.06(1)(c) as an alternative basis for security for costs. The applicable test was described as having been summarized in Heidari v. Naghshbandi, 2020 ONCA 757, at paragraphs 5 to 10.

Reasoning and analysis

Justice Matheson noted that under rule 61.06(1)(a), three criteria must all be satisfied: good reason to believe the appeal is frivolous, good reason to believe it is vexatious, and good reason to believe the appellants have insufficient assets to pay costs. The "good reason to believe" standard, per Heidari, requires only a tentative rather than definitive conclusion. On the frivolousness criterion, the court found it met, pointing to the appellants' intention to raise arguments conflicting with the trial evidence and findings, the trial judge's refusal to permit late amendments to the statement of defence after shifting defences over a three-day trial, the lack of an arguable foundation for the proposed appeal of the unjust enrichment finding, the trial judge's credibility findings, and the adequacy of the trial judge's reasons for a Small Claims Court decision. However, the court did not find the vexatiousness criterion met, observing that the appeal had been conducted appropriately and in a timely manner, that numerous grounds of appeal are not necessarily a sign of vexatiousness, and that the remedy sought (permitting an amendment and ordering a new trial) was not necessarily vexatious, as any such remedy would ultimately be for the appeal court to decide. Because the second criterion failed, the court did not need to address the third criterion regarding insufficient assets. Turning to rule 61.06(1)(c), the court held that SvN had not met the very high threshold of showing it would be "nearly impossible" to collect costs.

Ruling and overall outcome

The motion for security for costs was dismissed. The appellants, 2524991 Ontario Corporation and Qingxin Shao, were the successful party on the motion and were awarded costs in the agreed-upon total sum of $4,500, all inclusive.