Combined Air Mechanical Services Inc. et al. v. Flesch et al., (2010) 268 O.A.C. 172 (CA)

• Judge: Laskin, J.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 28, 2010
• Jurisdiction: Ontario
• Citations: (2010), 268 O.A.C. 172 (CA);2010 ONCA 633

Combined Air Mechanical v. Flesch (2010), 268 O.A.C. 172 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. OC.011

Combined Air Mechanical Services Inc., Dravo Manufacturing Inc. and Combined Air Mechanical Services (plaintiffs/appellants/responding parties) v. William Flesch, WJF Investments Inc., Service Sheet Metal Inc. and James Searle (defendants/respondents/ moving parties )

(M39163; C51986; 2010 ONCA 633)

Indexed As: Combined Air Mechanical Services Inc. et al. v. Flesch et al.

Ontario Court of Appeal

Laskin, J.A.

September 30, 2010.

Summary:

Searle, Searle's company (the Searle defendants), Flesch and Flesch's company obtained orders for summary judgment dismissing the actions against them (see [2010] O.T.C. Uned. 1729). The Searle defendants were awarded $20,000 in costs (see [2010] O.T.C. Uned. 2785). The plaintiffs appealed. The Searle defendants moved for an order requiring the plaintiffs to post security for the $20,000 in costs together with $6,420 for the costs of the appeal.

The Ontario Court of Appeal, per Laskin, J.A., dismissed the motion.

Practice - Topic 8209

Costs - Security for costs - Security for costs of an appeal - Grounds for - Special circumstances or other good reasons - Civil Procedure Rule 61.06 gave a judge jurisdiction to order security for costs in three categories of cases: (1) where it appeared that there was good reason to believe that the appeal was frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal; (2) where it appeared that an order for security for costs could be made against the appellant under rule 56.01; and (3) where it appeared that for other good reasons security for costs should be ordered - The Ontario Court of Appeal, per Laskin, J.A., stated that "The court does not have a closed list of cases in which security for costs has been ordered under the residual category. The list of reasons justifying security under the residual category is open ended. However, the 'other good reason' must be related to the purpose for ordering security: that a respondent is entitled to a measure of protection for costs incurred and to be incurred in the proceeding, which is now on appeal. And, the 'other good reason' should be a fairly compelling reason, as the respondent cannot meet the requirements of either of the first two categories. Security for costs awards under the residual category are not to be made routinely." - See paragraph 8.

Practice - Topic 8209

Costs - Security for costs - Security for costs of an appeal - Grounds for - Special circumstances or other good reasons - A partnership acquisition agreement contained an indemnification clause that if Flesch (one of two selling partners) and his company breached the agreement's restrictive clauses or otherwise wronged the purchasers, Searle (the second selling partner) and his company (the Searle defendants) were required to pay one third of any damages awarded to the purchasers - The purchasers sued the Searle defendants, Flesch and Flesch's company for damages - The defendants obtained summary judgment - The Searle defendants were awarded $20,000 in costs - The purchasers appealed - The Searle defendants moved for security for the $20,000 in costs together with $6,420 for the costs of the appeal, relying on the residual category of "other good reasons" in Civil Procedure Rule 61.06 - They asserted that security should be awarded for the costs award because most, if not all, of the $20,000 pertained to the purchasers' now abandoned claim for breach of the restrictive covenants and other wrongdoing - The Ontario Court of Appeal, per Laskin, J.A., dismissed the motion - The request for security for the appeal costs had no merit - The Searle defendants were properly respondents on the appeal because of their potential liability under the indemnification clause - The court rejected the argument respecting the $20,000 cost award where (1) the Searle defendants were properly parties to the appeal; (2) the $20,000 was not wholly attributable to the abandoned claim; and (3) if the appeal succeeded, the purchasers might be entitled to have the $20,000 reduced and even offset by a costs award in their favour.

Statutes Noticed:

Civil Procedure Rules (Ont.) - see Rules of Civil Procedure (Ont.).

Rules of Civil Procedure (Ont.), rule 61.06 [para. 6].

Counsel:

Daniel Chitiz and Alastair McNish, for the moving parties;

J. Gardner Hodder, for the responding parties.

This motion was heard in Chambers on September 28, 2010, by Laskin, J.A., of the Ontario Court of Appeal, who released the following judgment on September 30, 2010.