A while ago I blogged about the role of costs in civil litigation. (Click here to view the blog.) Today I want to explore this topic further.
Typically, a successful party is presumed to be entitled to party-to-party costs (e.g. 2/3 of the actual amount being paid) against the unsuccessful party. This generally serves as a deterrent to prevent parties from bringing frivolous proceedings before the courts.
But what about corporations and individuals that do not have assets in Ontario? Does it mean that they can bring whatever they want before the court and get away from the cost consequences? No, it doesn’t.
Under the Rules of Civil Procedure, the responding party is allowed to ask that “security for costs” be posted in advance of the hearing on a motion. This rule applies if one of the following conditions is satisfied:
- The plaintiff is a resident outside Ontario.
- Prior order for costs is unpaid.
- Moving party is a corporation or a nominal plaintiff, and there is good reason to believe that the plaintiff has insufficient assets in Ontario
- There is good reason to believe that the action or application is without merit
If the plaintiff is successful in the end, the plaintiff is entitled to have the money back. If the plaintiff is not successful, the security will be used to satisfy any of the costs awarded to the defendant.
