The moving party insurer sought an order requiring the corporate plaintiff to post security for costs under Rule 56.01(d) of the Rules of Civil Procedure on the basis that the plaintiff lacked sufficient assets in Ontario to satisfy a potential costs award.
The evidence established that the plaintiff corporation was impecunious and had significant writs of execution registered against it.
The moving party further argued that the plaintiff’s lawyers, acting under a deferred fee arrangement and standing to benefit from any recovery, should be required to post security as creditors of the plaintiff.
The court held that although creditors may in some circumstances be required to post security, solicitors acting under deferred fee arrangements are not analogous to creditors or shareholders with control over litigation.
Ordering lawyers to post security would create a significant disincentive to such retainers and undermine access to justice.
The motion for security for costs was dismissed.
