Whether There Is A Time Limit On Applying For Securities For Costs?

Gregory M. Sidlofsky, Counsel to Charles B. Wagner & Associates, discusses whether there is a time limit on applying for securities for costs.

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The longer the defendant delays in requesting security for costs, the more likely a court is going to say the request is too late, but technically, there is no rule that says there are only a certain number of days in which to apply.

If the defendant has a good reason, he can apply for security for costs right before the trial. For example, perhaps the defendant receives information that the corporate plaintiff has suffered some sort of financial problem in the recent past. It does not matter that the action has been proceeding for two years already. The defendant is still able to bring a motion for security for costs.

Generally, however, a defendant does not want to wait that long. He does not want to incur all of the expense and aggravation of defending a claim if he thinks there is a chance he can get it settled early on. So basically, the defendant receives the claim, files his defence and then very quickly moves for security for costs.

As for the plaintiff, it is important to underscore that this it is a very significant tool in a commercial litigator’s arsenal, and if any foreign plaintiff is planning litigation in Ontario, the lawyer has to address the issue with the client prior to the start of the case. Any litigator is going to proceed with a request for security when there is a foreign plaintiff. For lawyers on the plaintiff’s side, it is important to have that discussion with the client about what to expect. A security for costs order is really issued at the discretion of the court. One court might order $10,000 in security and other court might order $40,000, even when the facts are exactly the same. It is difficult to predict what the court is going to do. But the client needs to understand that there is every reason to believe, that as a foreign plaintiff, he is going to be required to post security, even though the lawyer cannot know exactly how much it’s going to be. At any point in the case, the plaintiff has to be prepared to respond to a request for security, whether there are attempts to settle the lawsuit before it comes to court, or whether it’s at a later point in the proceedings. The defendant can request security at any point.

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This article is taken from a April 30, 2008 interview with Gregory M. Sidlofsky, Commercial Lawyer with Charles B. Wagner & Associates, a Mississauga, Ontario Commercial Law Firm. 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.

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