Access to justice is a significant issue facing the legal system. In many jurisdictions, motions and trials need to be booked years in advance. One of the main problems plaguing the court system is the volume of cases. The courts employ various gatekeeping methods, such as summary dismissals, to dismiss frivolous claims.
In this blog, I want to discuss a specific gatekeeping method: the motion for security for costs. If a defendant brings this motion, the court may issue an order requiring the plaintiff to post an amount of money to cover anticipated costs, which may be awarded at trial or on a motion to dismiss.
Pursuant to Rule 56.01 of the Rules of Civil Procedure, orders for security for costs are available when:
- The plaintiff or applicant is ordinarily resident outside Ontario;
b. The plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;
c. The defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remains unpaid in whole or in part;
d. The plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that they have insufficient assets in Ontario to pay the costs of the defendant or respondent;
e. There is good reason to believe that the action or application is frivolous and vexatious, and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or
f. A statute entitles the defendant or respondent to security for costs.
Rule 56.01(d) shows that courts are cautious about allowing actions initiated by individuals or corporations that lack the funds to pursue a lawsuit. This is crucial because if a corporation loses and cannot pay the cost award, the winning party cannot sue anyone personally due to the protections of the corporate entity.
At the same time, courts strive to balance the interests of justice to ensure that a valid claim is not stayed or dismissed simply because a plaintiff lacks cash or is facing financial difficulties caused by the defendant.
If security for costs is not posted, despite being ordered, the claim of the individual who fails to post security will generally be stayed and may ultimately be dismissed.
Motions for security for costs can act as a deterrent to frivolous litigation and help solve some of the legal systems access to justice problems when used appropriately.
Ariel Dorfman, Associate Lawyer