The defendant trustee in bankruptcy moved for security for costs against a corporate plaintiff under Rule 56.01(d) of the Rules of Civil Procedure, alleging the plaintiff lacked sufficient assets in Ontario to satisfy a potential costs award.
The court held the defendant established good reason to believe the plaintiff had insufficient assets, triggering the second stage of the analysis.
However, the plaintiff demonstrated sufficient assets through equity in the shareholder’s condominium and ownership of moulds with significant value.
Alternatively, the court held that even if the plaintiff were impecunious, it would be unjust to order security for costs where the alleged wrongful conduct of the defendant contributed to the plaintiff’s financial circumstances and such an order could prevent the action from proceeding.