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Digest of the Week – Existence of individual plaintiff does not alter well-established test to be applied on an application for security for costs

Digest of the Week – Existence of individual plaintiff does not alter well-established test to be applied on an application for security for costs

The existence of an individual plaintiff does not alter the well-established test to be applied on an application for security for costs.



Ocean Pastures Corp. v. Old Masset Economic Development Corp.
2016 CarswellBC 33
British Columbia Court of Appeal


Business associations --- Legal proceedings involving business associations — Practice and procedure in proceedings involving corporations — Costs — Security for costs — General principles

Plaintiffs, company and its individual owner, brought action against corporate and individual defendants — Defendants applied for security for costs from apparently impecunious plaintiffs — Chambers judge recognized that defendants had met normal test for security for costs from companies but refused to order security on basis of individual plaintiff's role as sole shareholder and source of any security — Corporate defendants' applications were dismissed and individual defendants' applications were granted in total amount of $8,000 due to weaknesses of claims against them — Corporate defendants appealed — Appeal allowed — Existence of individual plaintiff did not alter well-established test to be applied on application for security for costs against corporate plaintiff — Test provided degree of protection and comfort to party sued by impecunious corporation — Precedent relied on by chambers judge was wrongly decided and should not be followed — Chambers judge fell into error by conflating claims on individual and corporate plaintiff, failing to recognize that separate claims of individual would continue regardless of whether corporation posted security — Fact that individual plaintiff might be only person who could post security for corporate plaintiff did not impact principles governing circumstances in which corporation could be obliged to post security — Plaintiff company would be ordered to post security for costs in sum of $25,000 for each corporate defendant, with its action stayed until security was posted.
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