Law Times

Law Times • November 13, 2017 Page 3 www.lawtimesnews.com Plaintiffs no longer need to post security for costs OCA lifts roadblock for Chevron case BY ALEX ROBINSON Law Times T he Court of Appeal has set aside an order that could have ended a group of Ecuadorian plaintiffs' attempts to enforce a US$9.5-million judgment against Chevron in Ontario. In October, a judge ordered the plaintiffs to post more than $900,000 as security for costs of the proceeding, as they had failed to show their claim had a good chance of success. But a panel of three Court of Appeal judges reversed that de- cision, finding that the order was unjust because of the unique cir- cumstances of the case. "The history of this litigation, which has been ongoing for al- most 25 years, makes clear that Chevron Corporation has and, it may be anticipated, will em- ploy all available means to resist enforcement of the Ecuadorian judgment," the decision said in Yaiguaje v. Chevron. "This, of course, is within its rights. However, this reality makes it difficult to accept that the motion for security for costs was anything more than a mea- sure intended to bring an end to the litigation." This most recent decision lifts a barrier that might have spelled the end of the long legal saga that has made its way up to the Supreme Court of Canada and back. The 47 plaintiffs, who repre- sent 30,000 villagers, have been seeking to enforce an Ecuador- ian judgment that concerned environmental damage in their region for which they claimed Texaco — which merged with Chevron — was responsible. As Chevron has no assets in Ecuador, the plaintiffs turned to Chevron Canada, the com- pany's seventh-level subsidiary, for remedy. Chevron has argued that the Ecuadorian judgment was a product of fraud. In a decision earlier this year, an Ontario Superior Court judge dismissed the claim in a summary judgment motion. The recent Court of Appeal decision means an appeal of the lower court's decision can now go ahead. The decision has given lawyers pause over concerns that it may have set a lower bar for successfully resisting security for costs motions, which could in turn open the door to more unmeritorious litigation. Jack Coop, a partner with Fo- gler Rubinoff LLP, who was not involved in the case, says that while the court had the best inten- tions to do what is just, it may have inadvertently changed the factors or principles for such motions. "As someone who litigates a lot of environmental civil ac- tions, we do want to be assured that cost rules are being applied fairly and equally to all groups, including even meritorious en- vironmental groups," he says. In the decision, the Court of Appeal found that the case is "public interest litigation" and that all the circumstances of the indi- vidual case should be considered. While the plaintiffs had not proven they were impecunious, the court determined it was ob- vious that the Chevron compa- nies would not require protec- tion for costs awards that "could amount to a minuscule fraction of their annual revenues." The decision also said that there should be no "bright line rule" that a litigant must prove they do not have access to third- party funding in order to suc- cessfully resist such a motion. John Polyzogopoulos, a partner with Blaney McMur- try LLP, says the decision tells judges they should not be afraid to depart from the normal ap- plication of the rules relating to security for costs in cases that fall under "public interest litiga- tion," affect vulnerable people or in which the defendant is wealthy and does not need pro- tection for costs. "In addition, novel or difficult arguments should not be pre- cluded from being heard by secu- rity for costs award where it is in the public interest for those argu- ments to be considered and ruled upon," says Polyzogopoulos, who was not involved in the case. The Court of Appeal also said that, at this stage, it is not pos- sible to say whether the case is devoid of merit and the fact that the plaintiffs' legal arguments may be "innovative and untest- ed" does not preclude them from being potentially successful. It added that it would not be just to thwart a potential ad- vancement in the law because of procedural or tactical reasons. Andrew Kalamut, a lawyer with McCarthy Tétrault LLP, says the court effectively opened the door for the appeal by saying it is possible common law and the test with respect to piercing the corporate veil may change. He says the decision could result in fewer security for costs motions being awarded. "If there are fewer security for costs motions, that means that actions may go on longer than they potentially should," says Kalamut, who was not involved in the case. Morgan Crinklaw, a spokes- man for Chevron Corporation, says the recent Court of Appeal decision had no bearing on the legitimacy of the enforceability of the Ecuadorian judgment. "The Ecuadorian judgment, which the plaintiffs are seeking to enforce in Canada, has been found by the U.S. courts to be the product of fraud and unen- forceable in the United States," he said in an emailed statement. "The plaintiffs are trying to use the Canadian court system to legitimize the fraudulent Ec- uadorian judgment." In Argentina, a court recently dismissed the plaintiffs' attempts to enforce the judgment there. A lawyer representing Chev- ron Canada did not respond to re- quests for comment by deadline. Alan Lenczner, one of the law- yers representing the Ecuadorian plaintiffs, declined to comment as the matter is proceeding. LT NEWS Andrew Kalamut says the decision could result in fewer security for costs motions being awarded. 561-391-3344 f 561-948-4713 d 561-910-7861 Florida Probate and Tax Planning Services STEVEN Z. GARELLEK Florida Bar Board Certified in International Law Member of the Florida, Ontario, and New York Bar 200 East Palmetto Park Road, Suite 103, Boca Raton, FL 33432 ntitled-2 1 2017-09-13 1:45 PM 9 TH ANNUAL DEALING WITH THE LEASE: SPECIALTY LEASES COURSE HIGHLIGHTS • Restaurant leases • Movie theatres • Medical offices leases • Street retail • Pop up and temporary in-line leases • Gas stations • Unique locations DATE & LOCATION Toronto: November 22, 2017 Vantage Venues 150 King St West, 27th Floor Toronto, ON M5H 1J9 *Discount applies to in-class only FOR QUESTIONS AND GROUP RATES, PLEASE CONTACT: Toll-Free: 1-877-298-5868 • Direct: 416-609-5868 Fax: 416-609-5841 • Website: cpdcentre.ca Email: lexpert.questions@thomsonreuters.com Register online at www.lexpert.ca/Lease COURSE LEADER: STEPHEN J. MESSINGER, SENIOR PARTNER, MINDEN GROSS LLP Toronto • Webinar | November 22, 2017 Untitled-1 1 2017-11-09 2:08 PM In-class and online programs recognized by Law Societies Executive Education to Navigate the Canadian Legal Landscape Visit Lexpert.ca to find out more The Ecuadorian judgment, which the plaintiffs are seeking to enforce in Canada, has been found by the U.S. courts to be the product of fraud and unenforceable in the United States. Morgan Crinklaw

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