Index

June 22, 2020

Assets as a Test for Security for Costs


June 19, 2020

What is This Case About?


June 11, 2020

Cross-Examining Child Witnesses


May 20 , 2020

Formal Offers


May 13 , 2020

Vexatious or Self-Represented Litigants


January 7, 2020

G.S.T. and Costs


December 20 , 2019

Electronically Navigating the
Handbook


October 7 , 2019

Questioning is a Bad Word


July 29 , 2019

Dismissal for Delay


May 7 , 2019

Rule 4.31 Fallacies


March 18 , 2019

More Dangers in Oral Fee Agreements


February 11 , 2019

Weir-Jones Decisions


January 9 , 2019

Discouraging Settlements


November 30, 2018

European Court Helps You Twice?


November 23 , 2018

Courts Overruling Tribunals


November 16 , 2018

New Evidence on Appeal


October 30 , 2018

Schedule C's Role


July 17 , 2018

Loopholes in Enforcing Settlements


May 7 , 2018

Enforcement of Procedure Rules


April 16, 2018

Limping Lawsuits are Often
Doomed


April 3 , 2018

Court of Appeal Tips for
Summary Decisions


March 19, 2018

Serious Dangers in Chambers
Applications


February 13 , 2018

Court Backlog


December 18 , 2017

Lowering the Status of Courts


September 15 , 2017

Access to Court Decisions


July 4 , 2017

Strictissimi Juris


June 14 , 2017

Why Don't Your Clients Settle?


June 5 , 2017

Gap in Rules About Parties


June 5, 2017

Personal Costs Against
Solicitors


April 26, 2017

Clogged Courts


April 11, 2017

Dismissal for Want of
Prosecution


January 6, 2017

Incomplete Disclosure


December 15, 2016

Mediation


November 23, 2016

Is Contract Interpretation Law?

 

Welcome

Côté’s Commentaries

© 2016-2020 J.E. Côté

ASSETS AS A TEST FOR SECURITY FOR COSTS

A very recent decision helps clarify our thinking about inability to pay as a test for security for costs.

On an application to make a plaintiff or appellant post security for costs, often one or both parties argue about assets of the plaintiff or appellant. The result is often frustrating or baffling, with an apparent Catch-22. The applicant seeking security says that the respondent has no assets, so any costs order against the respondent cannot be enforced. Hence security is needed. The respondent says that he or she has no assets and so cannot put up security. So security would unfairly bar the suit or appeal. The ground for granting security seems to become the ground to deny security. (Speaking very generally, the latter seems to me illogical.)

But even if inability to post security were sometimes a logical defence if, properly framed, there is not a complete contradiction. The two opposing “inability” questions are somewhat different. Here are three substantive differences:

a. The applicant for security need only show that execution (enforcement) of any costs award in his or her favor would likely fail. Or that it would force the costs recipient to try to enforce the costs award in another jurisdiction. Complete absence of assets or income need not be shown.

b. “Inability” to post security requires looking broadly at ability. Is there any way that the person asked for security could obtain any kind of security? Could friends or associates give or lend security? Who is funding the litigation? Ability to fund a suit or appeal and inability to post security are inconsistent with each other. Security can take many forms, such as a company’s shareholders agreeing to be personally liable for any later costs award against the company.

c. The relevant times are different. Ability to post security is about posting security now. At the time of the application for security, the lawsuit itself, or other circumstances, may tie up the plaintiff or appellant’s assets. But inability to enforce a later costs award is about ways of later enforcing collection, often after the suit or appeal is over. At that later time, the assets may not be tied up any more. Or the person seeking costs (and security) may be able to enforce payment by some kind of set-off. Or that party owed costs or the court may then control sufficient assets. This latter circumstance about timing is relied on in Hicks v. Gazley 2020 ABCA 239, Edm 2003 0084 AC (one JA Jun 16) (¶ 13).

Though the facts in the Hicks case may be narrow, it helps one see the real issues more clearly.

– Hon. J.E. Côté

 

The Commentaries are intended to call the attention of lawyers to promising or threatening developments in the law, in civil procedure, in developing their skills, or simply to describe something curious, funny or intriguing.

Justice Côté recently retired from the Court of Appeal of Alberta and currently acts as an arbitrator, mediator, or referee under Rules 6.44 and 6.45 of the Alberta Rules of Court.

He may be contacted through Juriliber at email: info@juriliber.com or phone 780-424-5345.