The moving defendants sought security for costs against two corporate plaintiffs in a commercial dispute concerning the ownership of intellectual property and assets purchased from a bankrupt entity.
One plaintiff corporation was a non‑resident company with assets outside Ontario but had refused to disclose details of assets within the jurisdiction, while the other corporation appeared to have no assets and had never conducted business.
Applying Rule 56.01 of the Rules of Civil Procedure, the court held that the defendants met the initial burden for security for costs and that the plaintiffs failed to establish an exception that would make such an order unjust.
Considering the uncertainty of success at trial and the risk of unenforceable costs, the court ordered staged security payments tied to pre‑trial and trial phases.
The principal plaintiff was required to post security totaling amounts for discovery, trial preparation, and trial attendance, failing which its action would be stayed.
