The Background Behind A Security For Costs Claim

There are two reasons that a defendant in a lawsuit will request security for costs.

The first reason is to ensure that there is a fund of money that the defendant can turn to in order to collect his costs or at least part of his costs if he is successful. He does not want to go through a lawsuit that lasts five years and incur hundreds of thousands of dollars as a defendant only to learn at the end, when he wins, that the plaintiff does not have any money or assets, or that because the plaintiff is located in a country on the other side of the world that they cannot be touched. So knowing that there is a fund available gives some comfort to a defendant who obviously is not a willing participant in a law suit. The defendant knows that at least some of his costs are going to be recovered.

The second main reason for a defendant or a respondent to get security for costs is that it makes a plaintiff with a questionable case think twice about pursuing it. I have seen cases where the plaintiff has walked away because he did not want to post the money for a case that he now sees is not very strong. For that reason, requesting security for costs is a very powerful remedy, and it can stop a law suit in its tracks.

On the plaintiff’s side, it is important to know that posting security does not mean that he is writing a cheque to the defendant. The money to cover the security for costs motion is paid to the court or, if there is an agreement, paid into a lawyer’s trust account. It sits there, and it can sit there for a very long period of time. If the plaintiff is successful at the end of the case, he gets the money back, and in most cases will also get back a little bit of interest too. But if the plaintiff loses, then he is risking whatever money he has paid in order to pursue the case.

One would hope that the whole purpose of going through this process is a legitimate one, but that is not always the case. The purpose might not be just to make someone’s life miserable, but people do pursue cases that are questionable all the time. Requesting security for costs is a provision that makes the plaintiff think twice about proceeding.

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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.