A three member panel of the Ontario Court of Appeal has vacated the recent order of Epstein J.A. that granted Chevron’s motion for $1,000,000 in security for costs for the plaintiffs’ appeal of the ruling dismissing their action to enforce the $9 billion Equadorian judgment in Canada. (Yaiguaje v Chevron 2017 ONCA 827, Hoy A.C.J.O., Cronk and Hourigan JJ.A).
The panel pointed out that the broad discretionary power to award security includes the power to not order security even if the requirements of the rule are met. The panel emphasized that the justness of the order sought is the “overarching principle”, and that the Rules make clear that “security should be ordered only where the justness of the case demands it.”
The panel pointed to several unique circumstances of this case. They include 1.) the fact the damages if collected would go not to the plaintiffs directly but into a trust for environmental rehabilitation and health care, thereby making the case public interest litigation, 2.) environmental devastation caused by Texaco (taken over by Chevron) severely hampered the plaintiffs’ ability to earn a living, 3.) Chevron’s huge revenues, which make it clear Chevron did not need the protection of security, 4.) the plaintiffs’ loss of third party funding support, and 5.) the fact the appeal is not wholly devoid of merit. (Most of these factors are reasons I gave in my previous posting as to why the Court should reverse the order for security).
Plainly Chevron sought the order as a tactic to bring the litigation to an end, without a hearing on its merits. This ruling is a timely reminder that courts are to focus on the justness of security, and to be vigilant to ensure security for costs is not used for that.