Legal Blog

Security for Costs

K Lee & Associates v. Lee 2019 Ont SCJ (MC)

Motion for security for costs under Rule 56.01 is a 2 part exercise. The defendant first must demonstrate that the plaintiff falls within one of the criteria for security and, if done, the onus shifts to the plaintiff to demonstrate that it would be unjust to require the posting of security for costs. Normally this 2^nd part involves a demonstration that the plaintiff is impecunious and neither it nor any of its shareholders can afford to pay the security for costs. In this case, the plaintiff admitted that it had no assets in Ontario, but stated that it was not impecunious in that it could ultimately raise the funds. It was therefore easy for the Master to find that the defendant met its onus and that there was no reason for the plaintiff not to post security for costs. Since the real driver of the action was whether the defendant received and retained funds to which she was not entitled, the counterclaim did not add any complexity to the action and therefore was not accounted for when security for costs was set. The Master ordered an initial amount to be paid into court but noted that there would be progressive security as the action commenced.

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