Ruling imposes no cost consequences but warns parties to verify their work
In a case potentially involving artificial intelligence (AI) use, the Alberta Court of Appeal cautioned the applicants to review their work to ensure they were referring to real and relevant case authorities, as they could face serious penalties for misleading it.
In Iyer v Nazir, 2026 ABCA 92, the ongoing dispute involved the ownership of a residential property. The plaintiffs were C. Reddy and A. Iyer, while the defendants were I. Nazir, M. Maqsood, and R.M. Nazir. I. Nazir held title to the disputed property.
In their claim filed on Oct. 11, 2022, the plaintiffs alleged that V. Iyer – A. Iyer’s brother– was the true property owner. They argued that certain facially valid land transfers, which amounted to a ruse to evade creditor claims against V. Iyer, did not extinguish V. Iyer’s title.
At a May 2025 hearing before the Alberta Court of King’s Bench, I. Nazir applied for security for costs against the plaintiffs. V. Iyer applied for his addition as a plaintiff in the proceeding.
The applications judge adjourned the first hearing so that V. Iyer could file additional evidence. The applications judge ordered the applicants – V. Iyer and the plaintiffs – to pay $1500 in costs before the next hearing date.
In August 2025, the applications judge dismissed V. Iyer’s application for his addition as a plaintiff. The applications judge ordered:
- either or both of the plaintiffs to pay security for costs of $29,127 within 60 days, failing which the judge would dismiss their claim
- V. Iyer to pay the application costs of $3,000
- the plaintiffs to pay the application costs of $900
Noting that V. Iyer had admitted he had not paid the $1500 in costs previously ordered because he thought I. Nazir owed him money, the applications judge described V. Iyer’s conduct as “an absolute thumbing of one’s nose at a court order.”
The applicants filed a notice of appeal beyond the 10-day deadline under r 6.14(2) of the Alberta Rules of Court, Alta Reg 124/2010.
Contingent on their posting of the security for costs within 30 days, the chambers judge granted the plaintiffs an extension of time to file their notice of appeal, but denied their stay application.
While the plaintiffs argued that they had Alberta property against which the defendants could register to secure their interests, the chambers judge noted that the plaintiffs could recover the security they provided if they succeeded on appeal.
The applicants applied for permission to appeal the chambers judge’s refusal to stay the applications judge’s security for costs order against them.
The applicants asserted that the chambers judge erred by refusing the stay and effectively ended their application for appellate review and thus their entire claim against the respondents, as they could not liquidate their assets to post security by the deadline.
I. Nazir sought to dismiss the application with costs, alleging that the chambers judge had understood and applied the appropriate test for granting a stay.
Permission rejected
The Court of Appeal of Alberta deferred to the chambers judge’s decision and denied the applicants permission to appeal.
The appeal court ruled that the applicants failed to establish any reasonable chance of success in their appeal or identify any errors in the chambers judge’s reasoning, beyond simply claiming that the decision was wrong and unfair.
The appeal court noted that the chambers judge heard the submissions, reviewed the materials, and knew about:
- the evidence before the applications judge
- the applications judge’s reasons for ordering security for costs
- the applicants’ arguments on appeal
- the difficulty – but not impossibility – involved in the applicants paying the amount awarded
The appeal court noted that the chambers judge tried to make the applicants’ situation better by giving them leave to file the appeal late and additional time to pay the award for security for costs, resulting in the applicants’ mixed success.
Possible AI use
The Alberta Court of Appeal held that the applicants relied on numerous non-existent case authorities in their reply memorandum.
The appeal court explained that the citations provided for these cases pertained to actual cases, which involved legal areas irrelevant to the application and had styles of cause different from those listed in the applicants’ brief.
The appeal court pointed out that someone generating submissions with AI assistance could end up citing non-existent case authorities.
While imposing no cost consequences in this case, the appeal court directed the applicants to consider its findings in DJ v SN, 2025 ABCA 383, and Reddy v Saroya, 2026 ABCA 20.
