4.22: Considerations for security for costs order
4.23: Contents of security for costs order
10.22: Action for payment of lawyer’s charges

Case Summary

The Defendants applied for a Security for Costs order against the Plaintiffs six years after the Action had commenced. The Plaintiffs resisted the Application on the basis of delay, and the Defendants countered by arguing that they only became aware of the Plaintiffs’ impecuniosity after being served with a Notice to Pay from the CRA in regards to the Plaintiffs.

Master Robertson applied the factors for granting a Security for Costs order enumerated under Rule 4.22. Firstly, it was evident that the Plaintiffs would not be able to pay a Costs award. The individual Plaintiff made only a modest income, had little equity in his home, and he was facing a Notice to Pay from the CRA. Moreover, the corporate Plaintiff’s financial statements showed no meaningful assets that could be used to pay a Costs award.

Second, the merits of the Action were not decisive one way or the other in regards to Security for Costs. Master Robertson noted that Security for Costs may be appropriate where there is no merit to a claim or where a defence is “weak at best.” However, neither of these descriptors applied in this case.

Third, Master Robertson considered whether a Security for Costs award would unduly prejudice the Plaintiffs’ ability to continue the Action. The Court is supposed to balance the presumption that a successful litigant is entitled to Costs without denying litigants the right to pursue their claims. In this case, the Plaintiff’s argued that they would be prevented from pursuing their claim due to their impecuniosity. However, Master Robertson determined that “it is their impecuniosity that justifies the requirement for security for costs.”

Finally, Rule 4.22(e) requires the Court to consider any other factor the Court deems appropriate before granting a Security for Costs award. Master Robertson addressed the issue of the delay in bringing the Application and confirmed that the delay had been sufficiently explained.

Master Robertson granted the Application but only awarded Security for Costs for the steps to be taken until preparation for Trial. The Master also advised that an additional Application for Security for Costs should be expected if the matter was not resolved before Trial. In closing, the Court confirmed that the Defendants’ Counterclaim for unpaid legal fees would not be struck if the Action was dismissed for failure to post security for Costs, and that Rule 10.22 would continue to apply to the Counterclaim, prohibiting any Default Judgment in the absence of a defence without the Court’s permission. Master Robertson also confirmed that Rule 4.23(4) continued to apply, allowing the Court to adjust the security ordered if necessary.

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