Background
Labyrinth Partners Ltd. and Athena Advisory Ltd. alleged they were victims of an international fraud in which funds were diverted through Iberbanco Ltd., a registered money service business, to an entity falsely operating as a bank. Parghi J. granted relief against Iberbanco in February 2026. The Divisional Court dismissed Iberbanco’s appeal, and Iberbanco did not seek leave to appeal that decision to the Court of Appeal.
Parghi J. subsequently awarded the applicants $185,000 in elevated costs. She found that Iberbanco had disregarded court orders, made misrepresentations, advanced unsupported allegations that the applicants were involved in the fraud, impeded their investigation, and abused the court process. Iberbanco sought leave to appeal only that costs award.
The Court’s Holding
Lauwers J.A. granted the applicants’ motion in part. The Court ordered Iberbanco to pay $185,000 into court, or provide suitable security, within 30 days. If it does not do so, its motion for leave to appeal the costs award will be dismissed as abandoned.
The Court held that s. 134(2) of Ontario’s Courts of Justice Act authorizes an interim order for security before a leave motion has been determined. Although the applicants also sought payment or security for other judgment amounts and prospective appeal costs, those requests were premature. The only live issue was security for the existing $185,000 costs award.
Key Takeaways
- An Ontario appellate court may order security for a costs judgment before deciding whether to grant leave to appeal a discretionary costs order.
- Security for judgment is extraordinary, but the absence of Ontario assets and conduct suggesting efforts to evade or frustrate enforcement may justify it.
- The Court awarded the moving parties $7,000 in costs of the security motion.
Why It Matters
The decision confirms that the phrase “pending the appeal” in s. 134(2) does not prevent interim protective relief at the leave-to-appeal stage. A party seeking leave from a costs order can therefore be required to secure that award as a condition of continuing.
For litigants facing an appellant with no demonstrated Ontario assets, the case illustrates how serious litigation misconduct and enforcement risk can support security for an outstanding costs award.