The Various Grounds For Pursuing Security For Costs

Gregory M. Sidlofsky, Counsel to Charles B. Wagner & Associates, explains the various grounds for pursuing security for costs.

There are several grounds that the court considers in its decision to order security for costs.

  • The plaintiff, who initiated the lawsuit, resides outside of Canada.
  • There is another proceeding for the same relief that’s pending in Ontario or elsewhere. You may be sued here and in the US for the same issue, but the courts in Ontario do not take kindly to a multiplicity of proceedings. A defendant should only have to face one action for the same relief, so the courts will order security for costs.
  • A defendant already has a cost order against that plaintiff whether it is in the same proceeding or even another proceeding, the courts will order security for costs
  • The plaintiff is a corporation or a nominal plaintiff and there is good reason to believe that the plaintiff has insufficient assets in Ontario. The defendant is being sued by a corporation and knows that they do not have an active business, or maybe their business is not worth much, so the defendant will move for security for costs.
  • There are several statutes that allow defendants to claim security for costs, for example, the Libel and Slander Act, the Public Authorities Protection Act, and the Public Officers Act. So where the statute allows for it specifically, a defendant can claim it.

It is also important to note that once the defendant satisfies the threshold for obtaining security for costs, the onus shifts to the plaintiff to justify why it would not be just to order security for costs. That shift in responsibility is considered very important because the threshold for convincing the court that the criteria for getting security is not that high. For example, when there is a corporation without sufficient assets, you do not actually have to prove that it has insufficient assets, you just have to establish the appearance of insufficient assets and once you do that, the onus shifts to the plaintiff to either prove its assets or to prove impecuniosity or some other reason why it would not be just to order security.

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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.