Yesterday the Ontario Court of Appeal vacated an earlier order of a single justice requiring the Lago Agrio plaintiffs to give security for the costs of the appeal. This will allow the LAPs to proceed with their appeal without paying nearly $1 million to cover their costs in case they lose—and without having to disclose whether they have any third-party litigation financing supporting their efforts.
The gist of the court’s decision is that while it’s true that the plaintiffs didn’t show that they were impecunious, the question of security for costs is always one addressed to the judge’s discretion, and the overriding consideration is whether such an order is just. Here, the court held, because the litigation is essentially public interest litigation, and because Chevron doesn’t need the money and apparently sought security as a way to bring the litigation to a close, the order was not just. I think this is a defensible decision, though one that could have come out either way, especially given the deference due to the single justice’s decision.
Two points of interest in the new decision: First, the court held, correctly I think, that the LAPs’ claim is not frivolous. This is of course a low bar, but it must come as some relief to the LAPs, after the first judge held they were unlikely to succeed. I would rather be told I’m likely to lose than that I’m guaranteed to lose! Second, the court noted but was unmoved by the LAPs’ failure to disclose whether they have third-party funding. If I were on the bench, that would have been a key consideration for me in deciding on the justice of the order. What makes the order potentially unjust is the plaintiffs’ apparent poverty, since we ought to prefer litigation be decided on the merits without regard to the plaintiffs’ financial means. But if there is a pot of litigation funding out there, the question of justice is a lot murkier. It seems right that security should not be invariably required just because there is third-party funding, but on the other hand the existence of funding seems like a key fact.