W. Deley

The defendant brought a motion under Rule 56.01 of the Rules of Civil Procedure seeking security for costs against corporate plaintiffs who had commenced a $25 million breach of contract action relating to an option agreement concerning several properties.

The defendant demonstrated that the plaintiffs had outstanding unpaid costs orders totalling more than $61,000 from earlier litigation involving substantially similar issues and the same defendant.

The court found that the plaintiffs had not established impecuniosity or demonstrated a strong likelihood of success on the merits, noting potential res judicata concerns and a possible limitations defence.

Delay in bringing the motion did not bar relief because the litigation had largely been inactive and the delay was partly attributable to the plaintiffs.

The court ordered the plaintiffs to post $25,000 as security for costs covering documentary discovery and examinations for discovery, failing which the action would be stayed.

The defendants moved for an order requiring the corporate plaintiff to post security for costs under Rule 56.01 of the Rules of Civil Procedure.

The defendants relied primarily on Rule 56.01(1)(c), arguing that the plaintiff had outstanding unpaid costs awards from prior litigation involving the same parties.

The court found that the defendants established entitlement to security for costs given the unpaid costs orders and the absence of evidence demonstrating that the plaintiff’s claim had a good chance of success.

The plaintiff, which conceded it was not impecunious, failed to provide supporting evidence for serious allegations of improvident power-of-sale transactions and misconduct by the defendants.

The court ordered the plaintiff to post $25,000 in security for costs within 30 days, failing which the action would be stayed.