Court orders security for costs, cites cost of enforcing costs award
Case Comment – Lesecq v. Ottawa Montessori School, 89 O.R. (3d) 62, 2008 CanLII 580 (S.C.)
Background
Security for costs may be ordered to prevent a party who is not under the immediate jurisdiction of a court or tribunal from escaping responsibility for an adverse cost award. Orders to post security for costs are common in personal injury actions where a plaintiff has been injured within the jurisdiction (frequently while on holiday) and then returns to his or her jurisdiction of residence after commencing an action or damages. In the absence of security, a party could escape an adverse cost award where his or her assets are located in a jurisdiction that would not recognize a cost award issued by an Ontario court.
A common response to a security for costs motion is that an adverse cost award issued by an Ontario court is enforceable in a jurisdiction in which the adverse party has assets. If an Ontario cost award is enforceable in a jurisdiction where an adverse party has assets, then, until recently, the motion could reasonably expected to be dismissed.
The Procedural Consideration in Lesecq v. Ottawa Montessori School
The plaintiffs in Lesecq commenced an action against Ottawa Montessori School and others for damages founded on the defendants’ alleged negligence and breach of contract. The plaintiffs were ordinarily resident in France and had substantial exigible assets under French jurisdiction, including an apartment in Paris in which two of the plaintiffs (the third was a minor) had equity of 310,000 euros. By the time the parties appeared before the Master, the claim had been transferred into Simplified Procedure.
The moving parties (the school and others) and respondents each presented affidavit evidence of two French lawyers. Both the moving parties’ and respondents’ expert affiants agreed that an adverse cost award in this case would be enforceable in France. However, the respondents’ expert was more equivocal, deposing that additional costs and procedural steps would be required to enforce an Ontario cost award in France.
The court in Lesecq placed significant weight on three key considerations inherent in enforcing an Ontario cost award in France:
- A party must make a petition for exequatur;
- French counsel would have to be retained; and
- The possiility of one or more appeals exists.
The court found that despite the non-minor plaintiffs’ assets in France and the experts’ agreement that, in this case, an Ontario cost award would be enforceable in France, the court ordered the plaintiffs to post security in the amount of $10,000. The Master wrote that the sum of $10,000 “… will provide the Defendants with a sufficient security to retain counsel in France to bring the exequatur petition should that prove to be necessary” (at para. 19).
Analysis
The case of Hallum v. Canadian Memorial Chiropractic College indicates that once a moving party has established the existence of one of the criteria enumerated in clauses (a) to (f) of subrule 56.01(1) of Ontario’s Rules of Civil Procedure, the court has discretion whether to make an Order for security. As stated earlier, a strong reason to decline to exercise discretion exists where the jurisdiction in which the adverse party’s assets are located are subject to attachment by virtue of a reciprocal enforcement agreement between states or the domestic law of the foreign state.
In rendering his decision in Lesecq, the Master was guided by Pitkeathly v. 1059288 Ontario Inc. in which the court concluded that the discretion to order security of costs against an extra-provincial resident of Canada must be informed by the relative ease with which a party may enforce a judgment obtained in one province against assets located in another. The Master then added his own additional criterion that must be considered in exercising discretion under subrule 56.01(1): the available measures of enforcement, whether domestic or otherwise (para. 22).
The additional procedural steps required under French law to enforce an Ontario cost award appears to have significantly influenced the Master’s decision despite analogous steps being required in almost every jurisdiction in which a foreign judgment may be enforced. In fact, it is possible that the enforcement of an Ontario cost award is relatively straightforward in France because, as pointed out in Lesecq, the procedural steps required for enforcement are codified in Article 509 of France’s Code of Civil Procedure. In giving significant weight to the procedural steps required for enforcement, the Lesecq decision has greatly reduced the potency of the argument that security is not warranted because the cost award will be enforceable where the adverse party has exigible assets.
Conclusion
The decision in Lesecq has signalled that Ontario lawyers moving or responding to a motion for security for costs must now be prepared to consider the procedural steps (and hence, cost) involved in enforcing a cost award abroad. Where previously, an adverse party could rely on the enforceability of a cost award in the relevant foreign jurisdiction to defeat a motion for security for costs, the same party would now be well-advised to be prepared to ante up.
Wade Morris
Toronto Insurance Litigation Lawyer