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Court of Appeal Orders Security for a Trial Judgment for the First Time in Ontario

Scales of justice with gavel on one side and a pile of cash notes on the other side

In a recent decision, the Ontario Court of Appeal held that a party could not appeal a trial judgment unless they posted security for the judgment itself. This was the first time this remedy has been granted in Ontario.

In Wiseau Studio, LLC v. Harper, 2021 ONCA 31, the plaintiffs lost a claim against a group of defendants who succeeded in getting judgment by counterclaim. The trial judgment was rendered after the plaintiffs engaged in substantial litigation misconduct. The plaintiffs then commenced a frivolous appeal and the defendants successfully moved for security of the trial judgment.

In 2003, a California-based movie studio called Wiseau Films and its principal, Tommy Wiseau (the “Plaintiffs”) released a feature film called “The Room”, which later went on to become a cult hit. Four Ontario documentary filmmakers and their production company (the “Defendants”) completed a documentary on the movie in 2016 called “Room Full of Spoons”, which is the Defendants’ only material asset. Wiseau Films brought an action against the Defendants in 2017 and they were unable to release the documentary as a result. The Defendants counterclaimed for the resulting damages.

In 2017, when the parties were close to reaching a production deal, Wiseau films obtained an ex parte injunction to restrain the release of the documentary. In the years that followed, the Plaintiffs engaged in protracted improper litigation conduct, including failing to pay costs awards, seeking improper adjournments, disparaging the Defendants on social media and to third parties and unlawfully attacking the jurisdiction of the action.

The action was tried in January 2020. The Plaintiffs’ claim was dismissed and the Defendants were granted judgment on their counterclaim for over $1 million, including $200,000 in punitive damages for litigation misconduct, $550,000 USD in damages for the improper injunction, $25,488.36 USD in pre-judgment interest, and $481,521.80 CDN in costs.  The Plaintiffs refused to provide any information about their assets when the Defendants sought to enforce the judgment.

The Plaintiffs then commenced a frivolous appeal of the judgment and the Defendants brought a successful motion for security of both the costs of the trial and appeal and the amount of the trial judgment itself. As a result, the Plaintiffs were required to post security for the judgment against them before being permitted to continue with the appeal.

In granting the Defendants’ motion, Justice Thorburn noted that “security for judgment is an extraordinary remedy that should only be granted in exceptional circumstances”. At the time, the remedy had never been awarded in Ontario and the court therefore looked to other jurisdictions and noted that it had been granted: (a) where there are no assets in the jurisdiction against which to enforce a judgment and the appeal has little merit; (b) to preserve assets that would otherwise be destroyed, disposed of, or dissipated prior to the resolution of the appeal; and (c) to encourage respect for the judicial process and avoid abuse of process.

In this case, it was held that this was one of those rare and exceptional circumstances where the remedy was warranted. Most notably, Justice Thorburn held that there was no evidence the Plaintiffs had any assets in Ontario, the Defendants would suffer prejudice if they were not granted security and the appeal itself was frivolous.

In granting the remedy, the Court made it very clear that it is to be invoked very sparingly, but in this case, the interests of justice weighed in favour of making the order.

Although this case reinforces the rule that security for a judgment is not an easily attainable goal and an extraordinary remedy not typically available in the ordinary course, it also serves as a reminder that parties can face harsh consequences for engaging in litigation misconduct, particularly when they have no assets in the jurisdiction and the merits of their position being advanced in the litigation is tenuous.

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Peter Campbell, BDO Canada LLP