Executive Summary: Key Legal and Evidentiary Issues

• Whether section 134(2) of the Courts of Justice Act empowers a single judge to order security for a costs award before a leave to appeal motion reaches a panel.
   
• Justice Parghi's finding that Iberbanco displayed willful disregard for court orders and made misrepresentations to the court underlies the elevated costs award under appeal.
   
• Iberbanco's failure to adduce evidence of assets in Ontario weighed against it on the security for costs application.
   
• Statutory interpretation of the phrase "pending the appeal" in section 134(2) determined whether the interim order power applies before leave to appeal is granted.
   
• Prior appellate authority in Wiseau Studio, LLC v. Harper informed the test for ordering security for costs.
   
• Requests to enforce unpaid amounts and to secure a future costs appeal were found premature and were not decided.
   

Facts of the case

Labyrinth Partners Ltd. and Athena Advisory Ltd. brought a motion before the Court of Appeal for Ontario alleging they were victims of an international fraud scheme in which their funds were diverted through Iberbanco Ltd., a registered money service business, to a pretender "bank" operating as Seker IBU, Sekerbank IBU, Seker Bank, and Seker International. In an endorsement dated February 4, 2026, Parghi J. granted relief against Iberbanco. Iberbanco's appeal of that decision was dismissed by the Divisional Court, and no leave to appeal to the Court of Appeal was sought from that ruling. Parghi J. then ordered costs against Iberbanco on April 7, 2026, fixing the amount at $185,000 on an elevated basis, roughly $6,000 less than the moving parties had sought. Iberbanco sought leave to appeal the costs decision, and that leave motion was the only matter still pending. The moving parties asked the motion judge to order the responding parties to pay $292,846.12 into court, covering amounts owed under the February and March 2026 orders plus the $185,000 costs award and $35,000 in anticipated security for the costs appeal; to order Iberbanco to pay US$371,850.83 into court, matching funds Iberbanco had been directed to have a U.K. insolvency administrator pay into court; or, alternatively, to require an irrevocable letter of credit covering both sums. Lauwers J.A. found these requests premature, leaving only the question of whether Iberbanco should be required to post security for the $185,000 costs order pending its leave to appeal motion.

Policy and legislative provisions at issue

The moving parties relied on sections 133 and 134 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Section 133 bars an appeal without leave from a consent order or from an order where the appeal concerns only costs left to the court's discretion. Section 134(1) sets out the powers available to a court hearing an appeal, including making any order the lower court could have made or any other order considered just. Section 134(2), the central provision, allows a court to which a motion for leave to appeal is made, or to which an appeal is taken, to make any interim order considered just "to prevent prejudice to a party pending the appeal." Iberbanco's counsel argued this power only takes effect once leave has been granted and a notice of appeal filed, treating the closing words "pending the appeal" as a precondition rather than a description of the order's duration.

Reasoning and analysis

Lauwers J.A. rejected Iberbanco's reading of section 134(2) on textual, contextual, and purposive grounds. Textually, the phrase describing "a court to which a motion for leave to appeal is made" only makes sense if the power exists before leave is granted. Contextually, the words "pending the appeal" fix how long any order lasts rather than when the power arises. Purposively, section 134 exists to prevent prejudice to a party, a purpose served by allowing security to be ordered at the leave stage. The reasoning drew on Wiseau Studio, LLC v. Harper, in which Thorburn J.A. had ordered security for a trial judgment exceeding $480,000, describing security for judgment as an extraordinary remedy reserved for exceptional circumstances. On review, the Wiseau panel set aside the security for judgment order after an earlier admission that the appeal was frivolous had been withdrawn, but upheld the separate order for security for costs at both the trial and appeal level. Applying these principles, Lauwers J.A. found no evidence that Iberbanco had assets in Ontario. Iberbanco had faulted the moving parties for not pursuing enforcement while offering no evidence of its own Ontario assets, a stance the court linked to Parghi J.'s earlier finding that Iberbanco had "sought to hide the ball" in the underlying proceeding.

Ruling and overall outcome

Lauwers J.A. concluded that a court seized of a leave to appeal motion has the power under section 134(2) to order security for a costs award even before the leave motion is heard by a panel. The motion was allowed, and Iberbanco was ordered to pay $185,000 into court, or provide suitable security, within 30 days, failing which its motion for leave to appeal would be dismissed as abandoned. Labyrinth Partners Ltd. and Athena Advisory Ltd. were the successful parties on the motion, and Iberbanco was ordered to pay them a further $7,000 in costs of the motion itself.