In Brewer v. Canada Corp No. 343827-9, Justice Bell of the Superior Court of Justice considered the merits of a motion for security for costs as a result of a Plaintiff being a resident outside of Ontario. Justice Bell ultimately decided that the Plaintiff was required to post security and that they shall not take any further steps in the action until the specified amount was posted and proof was provided to Defendants’ counsel.
The Plaintiff, Ms. Brewer, alleged that she was injured while dining at the 360 Restaurant in the CN Tower in Toronto, Ontario. The Plaintiff alleged that when she turned around to speak to another guest, her foot hit “the uneven and rotating floor” and as a result, she fell, hitting her head.
The Plaintiff commenced her action in August of 2018. In September of 2018, the Defendants put Ms. Brewer on notice that they considered her claim unmeritorious and that they intended to seek an order for security for costs on the basis that she lived in Florida and was therefore an out-of-province resident.
The Defendants continued to reiterate their concern regarding recovering the costs of their litigation and requested that Ms. Brewer post $35,000.00 as security towards the costs of the action. The Plaintiff failed to respond to this request until April of 2020.
Plaintiff’s counsel advised the Defendants that Ms. Brewer was impecunious and could not afford to post the $35,000.00. Counsel for the Defendants requested records in support of the impecuniosity claim in order to move forward with scheduling examinations for discovery. The records were not produced by Ms. Brewer and the Defendants maintained their position with respect to scheduling examinations for discovery given that the security for costs issue was still pending.
In March of 2021, Ms. Brewer served the Defendants with a notice of examination requiring their attendance on August 11, 2021. The Defendants then brought their motion for security for costs.
Rule 56.01 (1)(a) of the Rules of Civil Procedure provides that the court, on motion by the Defendant, may make such order for security for costs as is just where it appears that the Plaintiff is ordinarily a resident outside of Ontario.
It is important to note that Rule 56.01 (1) does not create a prima facie right to security for costs. The rule triggers an inquiry in which the court, using its broad discretion, considers multiple factors to make such order as is just in the circumstances, taking into account the merits of the claim, the financial circumstances of the Plaintiff, and the possibility of an order for security for costs preventing the claim from proceeding.
The Court of Appeal in Yaiguaje v. Chevron Corp, 2017 ONCA 827 analyzed Rule 56, stating that an order for security for costs should only be made where the justness of the case demands it. The court must consider the justness of the order holistically, examining all circumstances of the case and considering the overriding interest of justice to determine whether or not it is just for the order to be made.
The initial onus is on the Defendant to show that the Plaintiff falls within one of the enumerated categories of Rule 56.01. Once the Defendant meets the initial onus, the Plaintiff can rebut the onus and avoid security for costs by showing that they have sufficient assets in Ontario or a reciprocating jurisdiction to satisfy the costs order, the order is unjust or unnecessary, or the plaintiff should be permitted to continue with the action despite their impecuniosity.
Because the Plaintiff is ordinarily a resident in Florida, the Defendants met their initial onus that the Plaintiff falls under Rule 56.01 (1)(a). The issue that Justice Bell needed to consider was whether it was just to order the security for costs.
Justice Bell first considered whether the Plaintiff was impecunious. After a review of Ms. Brewer’s assets versus her debts, Justice Bell concluded that her assets exceeded her debts by approximately $106,000.00. As Justice Perell stated in Montrose Hammond & Co. v. CIBC World Markets Inc., 2012 ONSC 4869, “a litigant who relies on impecuniosity bears the onus of proof on this point and must do more than adduce some evidence of impecuniosity and must satisfy the court that it is genuinely impecunious with full and frank disclosure of its financial circumstances.” A security for costs motion requires a rigorous standard of financial disclosure and Justice Bell concluded that the Plaintiff’s financial disclosure did not meeting the “robust particularity” standard. There were inconsistencies between the Plaintiff’s sworn statement and the 2019 statement of income and the Plaintiff failed to provide medical evidence to demonstrate her inability to return to work.
With respect to the merits of the claim, Justice Bell stated that it is a relevant consideration in a motion for security for costs. If a Plaintiff demonstrates impecuniosity, they can resist the motion by showing that the claim is not plainly devoid of merit. If impecuniosity if not established, closer scrutiny is warranted, and the relevant question becomes whether a plaintiff has demonstrated a good chance of success. Justice Bell declined to comment on the merits of the claim as the evidence filed on the motion was insufficient and the examinations for discovery had not been conducted.
Finally, with respect to the justness of the security for costs order, Justice Bell reiterated that the court must take a holistic approach. The Plaintiff argued that her impecuniosity was directly linked to the accident at the Defendants’ premises and that the Defendants were now attempting to use her financial circumstances against her to prevent the matter from continuing. The record, however, did not support Ms. Brewer’s argument that the motion was a defence litigation tactic to prevent her from continuing her case. The Defendants gave notice at the outset of the litigation of their intention to seek security for costs and the Plaintiff ignored their repeated requests for supporting documentation.
After considering all relevant factors, Justice Bell concluded that it was just in the circumstances that the Plaintiff be required to post security for costs in an amount that included costs incurred by the Defendants to date (not including the subject motion) and costs projected to be incurred up to and including documentary discovery and examinations for discovery. Justice Bell ordered that the plaintiff post security in the amount of $17,000.00 within 60 days of the release of the endorsement.