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Security for Costs Construction

Yuanda Canada Enterprises Ltd. Pier 27 Toronto Inc. 2017 Ont SCJ (Master)

Motion for security for costs against a B.C corporate plaintiff whose substantial lien had been bonded off by a non-party. The Master held that the test to obtain leave for the motion was whether the defendant had established that it had good reason to believe that the plaintiff had insufficient assets in Ontario to pay costs. This meant that the defendant had to show indicia of insolvency, not just rely on conjecture or speculation. The motion was unsuccessful because the admitted holdback was $1.3 million. The defendants claimed setoff and a counterclaim for far more than that. This was not sufficient because the defendants did not show that they had retained the basic holdback (and therefore did not necessarily have a setoff right). Further, the security to vacate the lien was posted by a non-party and usual procedural fairness to level the playing field did not arise. In obiter, the Master also noted that most of the action would have been taken up with the counterclaim and that he was loathe to have the plaintiff pay security for costs to defend itself.

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