Federal Court Tackles Issue of Fixing Security for Costs
SECURITYFORCOSTS
by
HuguesG.Richard
LEGERROBICRICHARD,Lawyers
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TheGeneralRulesandOrdersoftheFederalCourtofCanadaatsection
446(1)(a)statethefollowing:”Where,onanapplicationofadefendant,it
appearstotheCourtthattheplaintiffisordinarilyresidentoutofthe
jurisdiction,if,havingregardtoallthecircumstancesofthecase,itseemsjust
todoso,theCourtmayordertheplaintifftogivesuchsecurityforthe
defendant’scostsoftheactionorotherproceedingasseemsjust.”
Thedefendant’scostsarethoseprovidedforundersections344and346of
thesaidRulesandOrders.
OnNovember30,1988,Mr.JusticeAddyinthematterofA-LokProducts
Corporation-and-Press-SealGasketCorporation&al.,CourtNo:T-1832-87
hadtodecidewhatwouldconstitutethereasonableamountofsecurityfor
costsunderthecircumstancesofthecase.
Theactionwasforaninfringementofapatentrelatingtogasketsealsforuse
insealingjointsbetweensewerpipesandmanholecovers.
Theplaintiffwasanon-residentandhadalreadypaidintoCourt$2,000.00as
securityforcosts.Oneofthedefendantsappliedforanorderforadditional
securityforcostsintheamountof$70,816.84.
ThetrialJudgenotedtheextensiveamendmentstoRules344and346which
tookeffectonApril2,1987andtherevisedandexpandeditemsofTariffBto
whichthoseRulesrefer.Heconcededthatnotonlydidtheseamendments
provideforsubstantialincreasesintaxablepartyandpartycostsbut,more
importantly,broughtintoplayacompletenewphilosophyregardingtaxation
ofcosts.Beforetheamendments,theCourthadlittlelatitudeinawarding
costs.Formerly,thecostsborelittlerelationtorealityandweretobeapplied
moreorlessautomatically,regardlessofconsiderationssuchastheamount
ofworkinvolved,thecomplexityorimportanceoftheissue,theconductof
thepartiesthroughouttheproceedings,etc.UnderthenewRules,itwould
seemabundantlyclearthatagreatnumberofareashavebeencreated
wherediscretionarypowersmaybeexercised.
Anexaminationofthoseareaswherediscretionarypowersmaybeexercised
indicatesthatthenewprinciplescannotbeproperlyapplieduntilafterthe
eventshaveactuallyoccurredandinsomecasesalsoonlyafterthetrialor
hearinghasbeencompleted.ThenewRulesrenderthefixingofanamount
assecurityforcostsconsiderablymoredifficultthanitwasinthepast.
TheCourtmustattempttoarriveatanequitableamountinthelightofits
viewofthesituationasitexistsatthepresenttimebutsubjecttoadditional
uncertaintiesastohowthenewlycreatedconsiderationsmighteventually
influencethevariousamounts.Itmustalsobeborneinmindthatfuture
applicationsregardingsecurityforcostsmaybemadeatalaterdateasthe
situationdevelops.
Inthecaseatbar,themaximumamountprovidedforinTariffBhadbeen
claimedforeachitem.TheCourtfoundthatatthisstageoftheproceedings
(discoveryofthedefendantnothavingbeencompletedanddiscoveryof
theplaintiffnothavingbegun)willrarelybeinapositiontofindthatthe
maximumamountsshouldgovern.Thefutureisalwaysdifficulttopredictand
asomewhatconservativeapproachshouldbeadopted,aspreviously
stated,sincethedefendantcanalwaysapplyforanincreaseatalater
stage,shouldthesituationwarrantit.
TheCourtheldthatthecostsoftranslatingintoEnglishanexaminationwhich
washeldinFrenchduetothefactthatasolicitordidnothaveasufficient
knowledgeoftheFrenchlanguagetofullyunderstandthetranscriptwasnot
ajustificationfortheadversepartybeingsaddledwiththecostoftranslation
forthatpurpose.
Afterhavingexaminedalloftheitemsforwhichsecurityforcostswasbeing
asked,theCourtdecidedthattakingintoaccountthe$2,000.00alreadypaid
intocourt,theplaintiffshouldbeobligedtopayinassecurityforcosts,an
additionalsumof$9,500.00insteadof$70,816.84aswasappliedfor.
Anon-residentinstitutinganactionbeforetheFederalCourtofCanada
shouldalwaysbemindfulofthesecurityforcostswhichwillhavetobepaid
anduntilsuchpaymentismade,theplaintiffisgenerallyprohibitedfrom
takinganyfurtherproceedingsintheactionasinstituted.
Publishedat(1989),3W.I.P.R.52underthetitleFederalCourtTacklesIssueof
FixingSecurityforCosts.
LEGERROBICRICHARD,1989.
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