Paul Jonathan Saguil

The defendants appealed a master's order dismissing their motions for security for costs against corporate plaintiffs who had ceased operations and lacked assets in Ontario.

The defendants argued that the plaintiffs were not impecunious because the principals had personal assets, including an unencumbered home and retirement savings.

The court held that the master did not err in concluding the plaintiffs were genuinely impecunious and that requiring security would force abandonment of the claim.

The court accepted that the principals' assets were effectively constrained by debts, potential tax liabilities, and the need to fund the litigation.

Because the claim was not plainly devoid of merit, the master properly exercised discretion to refuse security for costs.

The defendants brought parallel motions for security for costs under Rule 56.01(1)(d) of the Rules of Civil Procedure against corporate and partnership plaintiffs who alleged losses exceeding $1,000,000 arising from a trading incident involving brokerage services and trading software.

The defendants argued that the plaintiffs lacked sufficient assets in Ontario to satisfy a potential costs award.

The court reviewed the financial circumstances of the plaintiffs and their principals and considered whether they could reasonably post security or obtain a letter of credit.

Finding that ordering security would effectively force abandonment of a claim that was not plainly devoid of merit, and that the plaintiffs were effectively impecunious, the court declined to require security for costs.

The motions were dismissed and costs awarded to the plaintiffs.