Executive Summary: Key Legal and Evidentiary Issues

• The Province sought security for costs, alleging Julmac lacked sufficient ties and assets in New Brunswick to cover a potential costs award.

• Julmac argued it had a substantial business presence and significant assets in the province, challenging the motion as strategic and unjustified.

• Evidence showed Julmac is based in Alberta and Ontario, with no real property or verifiable unencumbered assets in New Brunswick.

• The court accepted that Julmac failed to prove it had sufficient realizable assets within the province.

• Procedural rules allowed the court to order security for costs where the plaintiff is non-resident and lacks sufficient in-province assets.

• The court balanced fairness and risk, ultimately finding security appropriate but adjusted the amount sought downward based on evidentiary gaps.

Facts and outcome of the case

This case arises from a contractual dispute between Julmac Contracting Ltd., a construction company incorporated in Alberta, and the Province of New Brunswick. Julmac had been awarded several public bridge rehabilitation contracts in New Brunswick. Following a deterioration of relations during these projects, Julmac sued the Province on December 27, 2023, claiming unfair and dishonest contractual treatment. The claim sought $29.4 million in damages.

The Province responded by filing a motion for security for costs under Rule 58 of the Rules of Court, arguing that Julmac is an out-of-province litigant with insufficient assets in New Brunswick to satisfy a potential costs award if it lost the case. The Province contended that Julmac had no real property in New Brunswick, used Ontario-based business addresses, and communicated using affiliated companies’ email domains. They also presented lien claims and lawsuits filed by Julmac’s subcontractors, suggesting financial instability.

In its defense, Julmac submitted affidavits stating it maintained assets and heavy equipment in New Brunswick worth over $3.5 million, some stored at a personal residence. It also claimed current project bids and performance bonds as evidence of solvency and denied the liens reflected insolvency. Julmac argued that the motion was an attempt to derail litigation on the merits and pointed to its ongoing operations and past compliance with cost orders.

The court assessed whether Julmac was ordinarily resident in New Brunswick and whether it had sufficient assets in the province. It found that Julmac’s operational presence was no longer substantial and that its claims of asset ownership lacked sufficient documentary proof. It noted that assets may belong to an affiliated company, and Julmac failed to produce supporting financial records or ownership documentation. The court emphasized that speculative receivables tied to the ongoing litigation did not count toward sufficient assets.

Applying Rule 58, the court determined the Province had satisfied the conditions for seeking security for costs: Julmac was a non-resident corporation with insufficient proven assets in the jurisdiction. The court further held that ordering security was fair, given the complexity and expected expense of the litigation, and noted that Julmac did not claim it would be barred from proceeding if security was ordered.

Although the Province initially sought $2.4 million in security, the court reduced this amount. It revised downward the estimated costs of expert reports and e-discovery due to insufficient supporting detail and accepted a more conservative approach using Scale 3 of Tariff A. Ultimately, the court ordered Julmac to post $1,200,000 in security by way of a letter of credit within 30 days. It also awarded $2,500 in motion costs plus reasonable disbursements to the Province. Failure to comply would stay the proceedings.

This decision resolved only the procedural motion for security for costs. The underlying $29.4 million breach of contract action remains pending.