Docket: CACV2198 Chase Bryant Inc. Respondent/Appellant - v. -, 2013 SKCA 105

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 105 Date: 2013-10-15 Between: Docket: CACV2198 Chase Bryant Inc. Respondent/Appellant - and - Polymicron Technologies Inc., Whitefox Technologies Ltd., Whitefox Technologies U.S.A. Inc., and Whitefox Air Inc. Applicants/Respondents Before: Whitmore J.A. (in Chambers) Counsel: William Selnes for the Respondent/Appellant Deron Kuski for the Applicants/Respondents Application: From: 2011 SKQB 411 Heard: October 9, 2013 Disposition: Allowed

Written Reasons: October 15, 2013 By: The Honourable Mr. Justice Whitmore Whitmore J.A. I. Introduction [ 1 ] This is an application by the respondents Polymicron Technologies Inc., Whitefox Technologies Ltd., Whitefox Technologies U.S.A. Inc. and Whitefox Air Inc. (hereinafter referred to as the respondents) for security for costs and trial costs in the appeal of this matter. II.

Background [ 2 ] The appellant, Chase Bryant, commenced an action in the Court of Queen’s Bench for ownership of an aircraft. [ 3 ] The action was dismissed and the trial judge stated that the appellant had failed to satisfy him on a balance of probabilities that it owned the aircraft. III. Issue [ 4 ] Should the respondent be granted an order for security for costs and trial costs of the appeal, and if so, in what amounts? IV. Analysis Security for Costs [ 5 ] Rule 53 states: 53(1) The court or a judge may in special circumstances order that security be given for the costs of an appeal.

(2) Where a judge makes an order under this rule and the order is not complied with, the party in whose favour the order was made may apply to the court on 10 days notice to have the appeal dismissed. [ 6 ] The rule requires that before security for costs can be awarded, special circumstances must exist. [ 7 ] As Richards J.A., as he then was, stated in the governing decision of this Court, Farmers of North America Inc. v. Bushell , 2013 SKCA 65 , 417 Sask.

R. 91: 10 Second, I also agree that, before making an order for security for costs, a Chambers judge must be satisfied there is a meaningful risk that, absent an order, costs will not be recovered or that they will be recovered only with significant or unusual difficulty. 11 Third, … it is necessary to consider and balance two interests: the right of the respondent to a measure of financial security and the competing right of the appellant to pursue relief.

When an appellant has a reasonable chance of success, a judge should be reluctant to make an order for security for costs if the result of the order would be to deny an impecunious or financially strapped appellant his or her day in court. 12 Fourth, "special circumstances" is a flexible concept. I endorse Conrad J.A.'s observation that [ Freyberg v. Fletcher Challenge Oil and Gas Inc ., 2003 ABCA 208 , 330 A.R. 130]: [19] ... special circumstances is not a closed category and depends upon the facts of the particular case.

It is necessary to balance the rights of both the parties, and provide a just and reasonable compromise. If, after considering all of the relevant factors of a particular case, the court finds special circumstances exist, the court may exercise its discretion to grant security.... [ 8 ] The respondents were awarded costs at the trial in the amount of $18,074.50, but no payment has been made to date.

The respondents have registered the order for costs against two properties of the appellant in British Columbia, but no funds have been recovered. [ 9 ] The respondents allege the appellant has no assets in Saskatchewan. The respondents also claim that they have garnisheed the TD Bank in Duncan, British Columbia, where Chase Bryant has its account, but no funds were available. [ 10 ] The Queen’s Bench decision was rendered October 21, 2011 and the appellant served a notice of appeal on the respondents on November 12, 2011.

No steps were taken to advance the appeal until the appellant received a notice dated March 6, 2013 that the Registrar had referred the matter to the Court of Appeal for dismissal on the basis that the appeal appeared to have been abandoned.

[ 11 ] The fact that Chase Bryant has failed to pay the costs awarded against it is a matter of concern. In addition, the trial judge’s comments in his judgment regarding Chase Bryant and its chief witness at the trial are also of concern. The trial judge had this to say about the appellant’s witness: 31 In that regard, the claim of the plaintiff is based solely on the credibility of Robert Gunderson. He was, to say the least, a very unsatisfactory witness. It must also be noted that an injunction was issued against him in British Columbia in 1999.

A Benchers Bulletin from the Law Society of British Columbia states as follows: In October the Supreme Court ordered that Robert Arnold Gunderson (aka Bob Gunderson) and his business Norman Wright International, of Victoria, be prohibited from appearing as counsel or advocate, drawing, revising or settling a document for use in a judicial or extra-judicial proceeding, drawing, revising or settling a document relating in any way to proceedings under a statue or documents relating to real or personal estate, negotiating for the settlement of a claim or demand for damages, giving legal advice, or offering or holding out as entitled or qualified to offer these services: The Law Society of British Columbia v.

Gunderson (October 7, 1999) BCSC Vancouver Registry A983044. [ 12 ] In fact, the trial decision is full of unconcealed scepticism of the trial judge for the testimony of Mr. Gunderson. Mr. Gunderson testified he had resigned as an officer and director of Chase Bryant Inc. in September 1997.

The trial judge said: 7 … However, the records for the corporation from the Ministry of Finance in British Columbia show that as recently as May 25, 2010, Gunderson is shown as a director in the last annual report filed October 7, 2007. 8 Furthermore, he sought leave in 2002 to represent the plaintiff before the Tax Court of Canada. Bowman A.C.J. found that "Mr.

Gunderson is a 25% shareholder of [Chase Bryant] and is also a director". [ 13 ] Further, in commenting on the appellant’s witness the trial judge stated at para. 28: Incredibly Gunderson, when cross examined, stated that he was not a witness on behalf of the plaintiff. In fact he tried to disassociate himself from any responsibility to prove the plaintiff's case despite the fact that he created all the documents relied on by the plaintiff to support its claim.

He kept repeating that he was not asked to provide the lacking documents or that the plaintiff should have provided the documents. [ 14 ] The appellant argues that if the respondents seek security for costs of the trial they should have done so prior to the trial. [ 15 ] In response, the respondents state that after the notice of appeal was filed, no steps were taken by the appellant until faced with a hearing in June 2013 to show cause why the appeal should not be dismissed.

The respondents requested security for costs at the hearing in June 2013 but were requested by this Court to make a separate application. [ 16 ] The appellant has suffered no prejudice as a result of this application coming at this time. [ 17 ] I am satisfied that the refusal of the appellant to pay the costs ordered and the failure of the appellant to proceed with this appeal, along with the credibility issues of the appellant amount to special circumstances within the meaning of Rule 53. [ 18 ] I am also of the view that the respondents’ fears that it will be impossible to collect on any costs which may be ordered on this appeal are well grounded, notwithstanding the fact that the respondents have registered the order for costs against properties of the appellant.

There is no evidence as to the value of these properties or the nature and amount of any encumbrances against them. [ 19 ] Chase Bryant has not satisfied its onus to establish that the appeal has a reasonable prospect of success. Neither has it argued that the payment of trial costs or security for costs will impair its ability to proceed with the appeal. Trial Costs [ 20 ] This Court has the discretion to award security for costs in an appropriate amount. In the case of Freyberg v.

Fletcher Challenge Oil and Gas Inc. , 2003 ABCA 208 , 330 A.R. 130, Conrad J.A. noted that trial costs may be ordered as security in special circumstances. [ 21 ] In Pivotal Capital Advisory Group Ltd. v. NorAmera BioEnergy Corp. , 2008 ABCA 279 , Rowbotham J.A. stated: 8 This is an appeal based primarily, if not exclusively, on findings of fact. The standard of review is a high one; palpable and overriding error. Credibility was involved. The trial judge made significant findings including the following:

(1) Scraper, who is the principal of NorAmera, did not disclose the fact of additional financing when asked at examinations-for-discovery and repeatedly refused to provide financing documents;

(2) Allen, who was the principal of Pivotal , was described by the trial judge as an exemplary witness and, where her testimony conflicted with that of Scraper, the trial judge preferred the evidence of Allen; (3) all three of NorAmera's witnesses were found to have a vested interest in the outcome of the litigation, and

(4) Scraper's testimony was filled with inconsistencies and, when not directly contradicting himself, he was equivocal, evasive and illusive. Moreover, the trial judge found the behaviour of NorAmera, and Scraper in particular, to be reprehensible. . . . 10 This then leads to the question of the amount of security which should be posted. This Court has a discretion to award trial costs as an appropriate amount. I refer in particular to the judgment of Wittmann, J.A. in Ellis [2001 ABCA 45]. I am mindful of the comments of Conrad, J.A. in Freyberg v.

Fletcher Challenge Oil and Gas , 2003 ABCA 208 , 330 A.R. 130 (C.A.) and of O'Leary, J.A. in Sorrel 1985 Limited Partnership v. Sorrel Resources Ltd. , 1998 ABCA 103 , 219 A.R. 2, to the effect that an appellate court cannot be seen as an agency to ensure the collection of trial costs. Conrad, J.A. in Freyberg and Côté, J.A. in Verth v. Howrie [(1995), 1995 ABCA 306

, 169 A.R. 398], speak of trial costs being ordered as security in special circumstances. I conclude that this is one. 11 NorAmera has no assets in Alberta, unlike Lady Freyberg, who had at least an interest in royalties and land in Alberta. Pivotal suedin Alberta because the contract required it to do so. Moreover, the trial judge made serious findings regarding the credibility of theprincipal of NorAmera and other witnesses and found its positions on issues to be untenable and its conduct reprehensible.

I conclude,given these findings, that this is a special circumstance in which this Court should order security for costs in the amount of trial costs andI do so. [22] The appeal of this matter is based mainly on findings of fact. Credibility is involved. The trial judge made adverse findings againstthe appellant’s witness Gunderson, and put his credibility in serious question. V.

Conclusion [23] The circumstances of this action are comparable to those in Pivotal and warrant an order for trial costs. [24] Accordingly, the appellant shall provide, as security for costs, the trial costs in the amount of $18,074.50, plus the sum of $10,000as security for costs. [25] The appellant shall pay the amounts provided for by this order to the lawyer on the other side to be held in trust pending furtherorder of the Court within 90 days of the date of this order. [26] The appeal is stayed until the security provided by this order is paid. [27] If the appellant does not pay the security within the terms of the order, the respondents may apply to strike the appeal inaccordance with Rule 53. [28] Costs of this application shall be costs in the cause.

DATED at the City of Regina, in the Province of Saskatchewan, this 15th day of October, A.D. 2013. “Whitmore J.A.”_____________________ Whitmore J.A.