Legal Blog

Costs Against a Non-Party

Quest Management Services Inc. v Quest Management Systems 2017 SCJ

Costs can be awarded against a non-party (the “NP”) on two grounds. First, the actual plaintiff is a straw man. Under this principle, three criteria must be met: i) the NP must have standing to  bring the action himself, ii) the actual plaintiff (the straw man) is not the true plaintiff, and iii) the straw man has been put forward to protect the NP from costs liability. Second, the plaintiff’s conduct of the litigation is based on fraud or is an abuse of court process. In this case, the corporate plaintiff was the proper plaintiff. The sole shareholder would not have had a cause of action himself. However, because the plaintiff had given an undertaking to the court to pay damages if the injunction were improper and had no funds to do so, the judge concluded that the representations to the court were fraudulent and the sole shareholder was liable on this basis alone. The court also concluded that the injunction request itself was brought for the sole purpose of a fishing expedition to cross-examine the defendant to determine whether there was a basis for an injunction and that this was an abuse of process sufficient to ground personal liability. Note: the request for costs personally came from after-acquired information based on a judgment debtor examination. The costs award was amended under Rule 59.06(2)(a).

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.