“Orders for security for costs are an exercise in judicial discretion based on circumstances specified by section 24(13) of the Family Law Rules which reads as follows:
ORDER FOR SECURITY FOR COSTS
(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors:
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- A party ordinarily resides outside Ontario.
- A party has an order against the other party for costs that remains unpaid, in the same case or another case.
- A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.
- There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.
- A statute entitles the party to security for costs. O. Reg.114/99, r. 24(13).
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In Izyuk v. Bilousov, 2015 ONSC 3684 (S.C.J.), Pazaratz J. noted the purpose of an order for security of costs is to protect a party from nuisance or irresponsible litigation, conducted without regard to the merits of the case or the costs likely to be incurred. It requires the court to apply the following analysis:
a. The initial onus is on the party seeking security for costs to show that the other party falls within one of the enumerated grounds.
b. If the onus is met, the court has discretion to grant or refuse an order for security.
c. If the court orders security, it has wide discretion as to the quantum and means of payment of the order. Clark v Clark2014 ONCA 175 (CanLII).
d. The order must be “just” and be based on one or more of the factors listed in subrule 24(13). Hodgins v Buddhu[2013] O.J. No. 1261 (OCJ).
Orders for security for costs are a blunt instrument. They are not intended to act as a roadblock to genuine claims: Izyuk v. Bilousov, supra, at para. 37. They should be used sparingly and carefully because they may well have the effect of barring a party from access to the court process for a proper review of existing orders – something, for example, to which a party is entitled respecting child support orders if there has been a change in circumstances. See: Gauthier v. Gauthier, 2019 ONCA 722.
In most instances the merits of a case should not be determined by a party’s inability to post security for costs. Bragg v. Bruyere, 2007 ONCJ 515. But litigants should not be permitted to use the court as a playground. Court proceedings are expensive, time consuming, and disruptive. They should not be launched frivolously or without due regard to the impact on the responding party. McGraw v Samra, 2004 ONCJ 164 (CanLII), [2004] O.J. No. 3610 (OCJ).
The mere satisfaction of the criteria in Rule 24(13) is not sufficient to merit an order for security for costs. It must also be just to make the order and generally in family law proceedings courts do not wish to see proceedings determined on their merits by an inability to post security for costs. Hodgin v. Buddhu, [2013] O.J. No.1262 (O.C.J.)
When proceeding under Rule 24(13) the opposing party need only prove that there is “good reason to believe” the action is a waste of time or is a nuisance. In the case of Wreggbo v. Vinton, 2013 ONCJ 250, 2013 CarswellOnt 5833, Justice Katarynych stated at paragraph 11:
In relation to the latter basis, the subrule allows either a showing of good reason to believe that there is either nuisance afoot or a wasting of the court’s time. As a matter of common sense, a nuisance claim is one so devoid of merit that it is a waste of the court’s time. It wholly undercuts the primary objective of the Rules to allow a “nuisance claim” that is by its nature a waste of time, to go forward to trial with a security for costs order “hobbling” the trial court, as Superior Court Justice Quinn characterized the dilemma in the Stefureak case. See Stefureak v. Chambers, 2005 Canlii 7890 (ON SC). [emphasis omitted]
Further, the court in Wreggbo noted that whether an order for security for costs is “just” in any particular case is an objective determination, based on the record before the court, set in the context of the procedural law established by the Rules and the substantial law governing the claims for which the security is sought (para.11). The court stated that whether a claim has merit is not a litigant’s “take my word for it” type of consideration but rather that:
[13] Merit is unfolded – or not – in the quality of the disclosure of information provided about the claim to the other party. It is an information sharing that, as part of a party’s “just dealing” responsibility, positions the other party to make a responsibly informed response to the claim. It is an information-sharing that flows into the judicial conferencing process, as a matter of “just dealing” to inform the court’s opinion on the merits of competing claims, and the means by which the parties make visible their attempt to work with the case management judge to meet the primary objective of the Rules.
[14] Withholding of information reasonably needed by the other party or the court itself to take a responsible stance on the likely merits of any particular claim is unjust, within the meaning of the Rules.
[15] It skids the claim into the mischief zone. Once in the mischief zone, it is nuisance and wastes not just the court’s time and resources, but also the time and resources of the other party.
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[20] So it is that the state of information disclosure between the parties and to the case management court over the course of the litigation is relevant to the adjudication of a security for costs motion. The underlying question is whether the claim needs a trial.”