2017 NLCA 29, 2017 NLCA 29

Coast to Coast Contractors Inc. (applicant/appellant) v. Millbrook Development Company Inc. (respondent) (16/81) Indexed As: Coast to Coast Contractors Inc. v. Millbrook Development Company Inc. 2017 NLCA 29 1 C.A.N.L.R. 703 Court of Appeal of Newfoundland and Labrador Harrington J.A. April 28, 2017

Summary: The respondent, MDC, applied to this Court seeking an order for security for costs by reason of special circumstances under rule 43 of the Court of Appeal Rules , NLR 38/16. In support of its application, MDC relied on testimony at trial of the owner of CTC, the appellant. He allegedly testified that CTC was no longer an active company and did not own any property. Counsel for CTC submitted by affidavit that the appellant was still an active company and that the evidence at trial indicated that the appellant continued to be an active company. Held: Application dismissed.

Harrington J.A.: The primary concern of CTC as well as this Court is the lateness of the steps taken by counsel for MDC in seeking an order for security for costs. The Court has previously found that, generally speaking, an application for security for costs should be made after a notice of appeal is filed, but before other appellate costs are incurred although a significant change in circumstances between the time when the appellant filed the notice of appeal and when the respondents applied for security for costs may explain the delay.

Rule 43 provides that no security for costs shall be required by the court unless “special circumstances” exist.

This Court has previously held that impecuniosity along with extra-provincial residency rendering enforcement difficult could constitute special circumstances, but such impecuniosity must be clearly established although evidence showing a reasonable prospect that the appellant may not be able to pay costs, coupled with the silence of that party in putting forward some plausible basis to the contrary in the face of such inference, or at least pointing to other countervailing consideration would nevertheless justify allowing him or her to proceed with the appeal.

Special circumstances have not been established in this case. MDC had insufficient grounds to seek security for costs against CTC under Rule 43 at this late date. The application was dismissed. Cases cited: NPV Management Ltd. v. Anthony , 2007 NLCA 66 , 270 Nfld. & P.E.I.R. 355 Newfoundland and Labrador Housing Corporation v. Humby , 2012 NLCA 16 , 320 Nfld. & P.E.I.R. 253 Jardin Direct Inc. v. Floradin Florists Ltd. , 2008 NLCA 31 , 276 Nfld. & P.E.I.R. 186 Brace v. Snow , 2010 NLCA 16 , 295 Nfld. & P.E.I.R. 249 Counsel:

Adam J. Crocker, for the applicant/appellant; David Hearn and Bryinne McCoy, for the respondent. This application was heard and decision rendered orally on April 25, 2017 by Harrington J.A. The following Memorandum of Disposition was filed on April 28, 2017 by Harrington J.A. ______________________________________________________________ Harrington J.A.: [ 1 ] The respondent applied to this Court seeking an order for security for costs by reason of special circumstances under rule 43 of the Court of Appeal Rules , NLR 38/16.

The application was made approximately two months before the date set by this Court for the hearing of the appeal.

For reasons which follow, the Court finds that special circumstances have not been demonstrated and therefore the request for security for costs is dismissed. [ 2 ] In the summer of 2009, the applicant, Millbrook Development Company Inc. (MDC) and Coast to Coast Contractors Inc. (CTC) entered into a verbal agreement whereby CTC would construct residences on building lots on an 18 acre parcel of land owned by MDC in the Town of Kippens. [ 3 ] CTC appealed the decision of the Trial Division judge filed May 25, 2016 dismissing its claim for breach of contract and party- and-party costs and awarding damages for breach of contract and party-and-party costs to the respondent, MDC.

The appeal by CTC is set for hearing by this Court on May 18, 2017. CTC has filed an appeal book, a factum and a transcript of evidence. [ 4 ] The MDC seeks an order for security for costs by reason of special circumstances pursuant to rule 43 of the recently enacted Court of Appeal Rules , NLR 38/16. MDC filed an application for security for costs with a return date of April 25, 2017. [ 5 ] In support of its application, MDC relies on testimony at trial by Shawn Simon, owner of CTC. When cross-examined in April 2015, Mr.

Simon is alleged to have testified that CTC was no longer an active company and did not own any property. Counsel for CTC submits by affidavit that the appellant is still an active company. He deposed that the company had the means to produce a transcript of evidence as well as an appeal factum. The primary objection of counsel for CTC is the lateness of the application by MDC seeking security for costs when a date has already been set for hearing of the appeal.

Counsel for CTC submits that no special circumstances have been demonstrated by MDC that would justify an order for security for costs in these circumstances. [ 6 ] Counsel for CTC submits that the evidence at trial indicated that the appellant continued to be an active company.

By way of affidavit, the principal of CTC deposed that the company had the means to have a transcript of the trial evidence prepared and to have counsel prepare and file an appeal factum which represents costs incurred by CTC since the notice of appeal was filed. [ 7 ] The primary concern of CTC as well as this Court is the lateness of the steps taken by counsel for Millbrook in seeking an order for security for costs. This issue was addressed by this Court in NPV Management Ltd. v.

Anthony , 2007 NLCA 66 , 270 Nfld. & P.E.I.R. 355 , where an order for security for costs was refused because the application was made at too late a stage in the litigation process after the expense of preparing documentation for the appeal had been incurred. Welsh J.A. wrote at para. 6: Having considered the submissions of the parties, I am not satisfied that the applicants have demonstrated special circumstances that would warrant an order for security for costs. A number of factors lead me to this conclusion.

First, the appellant recently paid a substantial sum, undermining the respondents’ allegation that the appellant is impecunious and would not pay costs if so ordered in the appeal. Second, the respondents’ applications were deficient in that they requested security for costs without specifying an appropriate quantum for the order. After some discussion at the hearing, counsel for the respondents suggested security for costs of $7300. The appellant, having had no notice of the amount the respondents were seeking, submitted an amount of $5000 to $6000 would be more realistic.

Third, the respondents, as is their right, delayed in making their applications for security for costs until after all the materials had been filed and all the costs of the appeal had been incurred except for the cost of appearances at the hearing. Generally speaking, it could be expected that an application of this type would be made after a notice of appeal is filed, but before other appellate costs are incurred.

In this case, there is nothing to indicate a significant change in circumstances between the time when the appellant filed the notice of appeal and when the respondents applied for security for costs. (Emphasis added.) [ 8 ] The Chief Justice in Newfoundland and Labrador Housing Corporation v. Humby , 2012 NLCA 16 , 320 Nfld. & P.E.I.R. 253 made reference to the decision of this Court in NPV Management Ltd.

He held that Newfoundland and Labrador Housing Corporation should be disentitled to security for costs because the application was made too late in the process after the opposing party had incurred the expense of preparing the documentation for the appeal. He noted that rule 57.13 (now rule 43 ), provides that no security for costs shall be required by the court unless “special circumstances” exist. The Chief Justice cited the reasons in Jardin Direct Inc. v.

Floradin Florists Ltd. , 2008 NLCA 31 , 276 Nfld. & P.E.I.R. 186 holding that impecuniosity along with extra-provincial residency, rendering enforcement difficult, could constitute special circumstances. [ 9 ] Further, the Chief Justice wrote that impecuniosity alone could be a ground for awarding security on the basis of special circumstances. However, he also wrote that such impecuniosity must be clearly established although the presentation of evidence

showing a “reasonable prospect” that the appellant may not be able to pay costs, coupled with silence of that party in putting forward some “plausible basis to the contrary” in the face of such inference, or at least “pointing to other countervailing consideration would nevertheless justify allowing him or her to proceed with the appeal” may be sufficient for the Court to conclude that special circumstances exist.” See Brace v.

Snow , 2010 NLCA 16 , 295 Nfld. & P.E.I.R. 249 at para. 21 . [ 10 ] With respect to this appeal, it is clear that CTC had the intention to appeal as evidenced by its own actions in continuing to instruct counsel to proceed with an appeal, incurring the costs of producing a transcript of evidence and professional fees associated with the preparation of a factum and a memorandum of authorities. [ 11 ] This Court finds that MDC has insufficient grounds to seek security for costs against CTC under rule 43 at this late date. The application is dismissed. Application dismissed .