Unprecedented Decision: Security for Judgment

The BarristonBlog

Unprecedented Decision: Security for Judgment

02 Mar, 2021

On January 15, 2021, the Ontario Court of Appeal released its decision granting security for judgement for the first time by a court in Ontario.

Background

In 2016, a group of Ontario documentary filmmakers completed their film Room Full of Spoons. This was a film on the 2003 cult classic The Room starring Tommy Wiseau. Originally panned by critics and not widely seen, it later gained a fandom through the publicity it had received for being a poor film.

On June 14, 2017 Wiseau Films obtained an injunction preventing the release of the documentary. Several months later on November 1, 2017, this injunction was dissolved on the basis of Wiseau Films having not made proper disclosure and engaging in litigation misconduct.

In its decision, the court reiterated several cases reinforcing that an order for security for judgment is an extraordinary remedy only to be granted in exceptional circumstances. The court noted the similarities between such an order and the also uncommonly granted Mareva injunctions in how they both restrain appellants from disposing of assets so that they can satisfy a judgement later awarded against them.

The court relied on the decision in First Majestic Silver Corp. et al. v. Davila, 2013 BCCA 312, which set out the principles determining when security for judgement will be awarded, those being:

        1. That the onus is on the applicant to show that it is in the interests of justice to order posting for security of a trial judgment and/or of trial costs.
        2. That the applicant must show prejudice if the order is not made.
        3. That in determining the interests of justice, the judge should consider the merits of the appeal, as well as the effect of an order for security for judgement on the ability of the appellant to continue with its appeal.


The Court’s Finding on the Facts

Noting the exceptional nature of the circumstances required for an order for security for judgment to be granted, the court went on to apply the above noted principles to the case at hand, finding that this was a case befitting such an order.

The court noted the fact that Wiseau Films is out of jurisdiction, and that it had refused to advise the court whether it had any assets in the jurisdiction. From these factors the court inferred that Wiseau Films had no assets in the jurisdiction.

Further, Wiseau Films also admitted that it paying security for judgment would not prevent it from pursuing its appeal.

The court cited evidence that the filmmakers would suffer prejudice if the order were not granted, mentioning that on several occasions judges in the earlier proceedings had noted many tactical attempts by Wiseau Films to obstruct the release of the film, that the film had been in production for years and that it had now been over four years since the completion of the film, yet it was still unable to air, and that a significant judgment award may never be recovered should the order not be granted.

The court further noted that Wiseau Films demonstrated a lack of intention to pay an award ordered by the court. Wiseau had at one point said that it was laughable to ask if a piece of land known to have once been his primary address, and labelled by the court as a significant asset, was still his address. Wiseau had also suggested that the filmmakers should commence proceedings in the US to recover a judgment if Wiseau’s appeal failed in Ontario. Additionally, costs had previously been ordered against Wiseau Films, yet the company had only paid these costs after having been notified that their action would be dismissed if they failed to pay them.

Finally, the court stated that the amended notice of appeal was frivolous and failed to identify any errors in the reasons of the trial judge.

Impact of the Decision

The decision in this case should provide future parties to litigation with some comfort that their ability to protect themselves against frivolous lawsuits has now been bolstered. Previously in Ontario, parties facing such litigation, even if successful, were not offered this remedy to help guarantee that a judgement awarded in their favour would be able to be satisfied.

Further, it was significant that Wiseau Films was based out of the USA with no demonstrable assets existing in jurisdiction. Given Wiseau Films’ refusal to conduct itself reasonably in its litigation efforts, it was not an unreasonable fear that they may be unwilling to later cooperate with any satisfaction owed by them relating to an awardable remedy.

Based on this decision, future litigants should not be concerned that the potential for this remedy looms so heavily over them and will prevent them from advancing legitimate claims. This was a case of exceptional circumstances, and a remedy intended to be granted only in exceptional circumstances, as emphasized by this court in its decision, and previous decisions by other courts.

While the court intends that this remedy remains scarcely invoked in Ontario courts, this precedent nonetheless now may make it more available for those seeking to benefit from it in the future. And as in this case, the intent will be to grant it where it is in the interests of justice to do so.

– Charles Lund & Joshua Valler

facebook-icon twitter-icon linkedin-icon