Executive Summary: Key Legal and Evidentiary Issues

• Motions sought by defendants for security for costs under Civil Procedure Rule 45.

• Plaintiffs opposed motions, asserting their right to continue proceedings without preconditions.

• Defendants argued undue difficulty in recovering costs if successful in defence.

• Court analyzed Plaintiffs' financial position and any outstanding cost orders relevant to the moving parties.

• Determination hinged on balancing fairness with access to justice, as emphasized in Rule 45 and case law.

• Motions dismissed due to lack of evidence of insolvency or unpaid judgments to moving parties; costs awarded to Plaintiffs.

Background and claims

This case arises from two related actions filed by DLF Law Practice Incorporated (DLF) and Donn Fraser, following the dissolution of the law firm Mac, Mac & Mac (MMM), where Fraser was a partner through his professional corporation DLF. After the dissolution, several former partners of MMM joined Patterson Law. The Plaintiffs allege that the dissolution was unlawfully orchestrated by these former partners, resulting in substantial loss and damages to the Plaintiffs.

In Action No. 525281, the Plaintiffs claim against Patterson Law and certain of its partners for the tort of conspiracy and for accessory liability for assisting in fiduciary breach by the former MMM partners who became partners in Patterson Law.

Action No. 521514 involves a separate defamation claim by the Plaintiffs against Julie MacPhee. The claim concerns internal communications within MMM authored by Ms. MacPhee about Mr. Fraser.

The Defendants in both actions, represented by various counsel including Gavin Giles, K.C. and Michael Scott, moved for orders requiring the Plaintiffs to post security for costs, citing concerns about recovering costs should they succeed in defending the actions.

Security for costs motion

The motions were assessed under Civil Procedure Rule 45, which provides for judicial discretion to require security for costs in circumstances where a defendant may face undue difficulty realizing on a costs award. The rule mandates consideration of fairness and does not permit security for costs to function as a financial barrier to access to justice.

Justice Norton reviewed guiding principles from decisions including Blackhawk Construction Limited v. Martin, Rapid Camp Ltd. v. Dalhousie University, SaltWire Network Inc. v. Groupe Des Médias Transcontinental de la Nouvelle-Écosse Inc., and Fraser v. MacIntosh. He noted that the Court must ensure a fair balance between protecting defendants and allowing plaintiffs of modest means to proceed with their claims.

Discussion of applicable legal standards

The Court found no evidence that either Plaintiff had acted in an insolvent manner toward the moving parties. Furthermore, there were no unpaid judgment debts or outstanding costs awards owed to these Defendants. Although there was evidence of outstanding costs awards against the Plaintiffs in other proceedings, those awards were either under appeal or within the time to consider appeal, which the Court held was materially different from the facts in Fraser v. MacIntosh.

Justice Norton concluded that, based on all the circumstances, it would not be fair or just to grant the motions for security for costs.

Outcome

The motions for security for costs were dismissed. The Plaintiffs, DLF Law Practice Incorporated and Donn Fraser, were awarded costs under Tariff C in the amount of $750 from the McInnes Cooper Clients and $750 from Patterson Law, payable forthwith and in any event of the cause.