Whether There Is Anything That Can Support The Plaintiff’s Request For Waiving The Fees

Gregory M. Sidlofsky discusses whether there is anything that can support the plaintiff’s request for waiving the fees.

The plaintiff may have a very legitimate reason for bringing a suit against the defendant, and may not have the money to pay the security for costs. This may be why he is suing in the first place, perhaps because of financial constraints caused by the actions of the defendant.

The court may order security for costs, if it is just, and that clause “if it is just” is really where all of the case law focuses. However, the plaintiff can also claim to be impecunious, or without money, and in such a situation, the court might determine it would not be “just” or reasonable to order security for costs if it results in a meritorious claim being unable to proceed.

But this raises other issues. The plaintiff cannot simply say “I am impecunious, I do not have any assets, so please do not make an order for security.” There is a pretty high hurdle that a plaintiff has to jump over to prove that it is, in fact, impecunious. The plaintiff has to open up all of its financial records, disclose any bank accounts, assets, or properties. Everything must be examined in order to establish for the court that the plaintiff is in fact impecunious.

If the plaintiff is a corporate entity created for the sole purpose of engaging in litigation, the court is not going to care that it is impecunious. They are going to make an order that someone must post the security on behalf of the corporation, whether the money comes from share holders, directors, or anyone else associated with that corporation. It does not matter and no one is going to inquire, but the money still has to be posted in order for the plaintiff to continue.

In some cases, however, it is not clear cut. The plaintiff is a corporation, which was not just created for the purpose of litigation, but is an existing, functioning corporation. It has its own direct claim, but it does not have the money to post security, so it opens up its books and establishes for the court that it is in fact impecunious. Then it has to show that its case has merit in order to proceed with the lawsuit. It is not a high threshold to satisfy the court that the claim is not almost certain to fail, that it has a good chance of success. That is what the case law uses as its bench mark. If the corporation can do that, if it can satisfy the court that it is impecunious but its claim has merit, then the court is not going to order security for costs.

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This article is taken from a April 30, 2008 interview with Gregory M. Sidlofsky. Note that laws vary from province to province. Please consult with a lawyer in your own area to be sure of the laws and specific issues in your own jurisdiction. The article is provided as an information service only and should not be used as legal advice.