Legal Blog

Security for Costs

Focal Elements v. TVM 2018 Ont SCJ

Owner brought a security for costs motion relating to contractor’s claim to enforce its lien. The judge first gave leave to the owner to bring the motion, both on the level playing field basis and the expediting an earlier resolution of the issues basis. The owner easily established good reason to believe that the contractor had insufficient assets in Ontario to satisfy a costs order. The contractor then had the onus to prove that it, and its shareholders, were, impecunious so that it would be inequitable to order security to be posted. Given that the contractor only produced partial financial information and information, the judge held that the contractor did not meet its onus. The judge reviewed the merits of the plaintiff’s claim on a superficial basis and could only say that the contractor might have a good chance of success on some issues and not on others. That analysis was only one aspect in the judge’s determination of whether it would be unjust to order security. Given that there was a counterclaim that could affect an increase in costs and that costs would be increased as the action continued, the judge ordered payment of $10,350 into court as security for costs for the period up to and including examinations for discovery. This case is instructive for the very detailed summary that the judge gave of the law and the considerations for a security for costs motion.

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