4.22: Considerations for security for costs order

Case Summary

The Plaintiff wife in a matrimonial Action sought an Order directing that the parties’ rental property be sold and that the sale proceeds be held in trust as Security for Costs. The Defendant husband was living in the property and was receiving the rental proceeds since the matrimonial home had been sold by consent with the proceeds being held in trust by Plaintiff’s counsel. The Defendant argued that his only source of income was the rental property, and selling it would seriously affect his ability to proceed with the litigation. Justice Lee considered the factors in Rule 4.22, noting that the husband had paid all previous Court Orders, and that, although the husband’s financial circumstances were still unclear, he had assets in Alberta which acted as security. The proceeds from the sale of the matrimonial home were also still held in trust. As a result, pursuant to Rule 4.22(a) and (b), the Plaintiff had the ability to enforce Cost awards and the husband was not impecunious and had the ability to pay. With respect to the merits of the Action under Rule 4.22(c), Justice Lee held that, although the Defendant’s outstanding property claims appeared “somewhat dubious”, it would be premature to assume that the Plaintiff would be entirely successful. Finally, Lee J. noted that, under Rule 4.22(d), an Order for Security for Costs would prejudice the Defendant because a sale or lien disruption of the property would damage his ability to continue paying for the Action. Pursuant to Rule 4.22(e), the sale of the property would also result in the husband becoming homeless which would necessitate further expenses and would result in problems visiting with his children. Justice Lee noted the discretionary nature of the Rule and concluded that Security for Costs was not appropriate in the circumstances.

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