Impecuniosity Found on Appeal in Motion for Security for Costs
Nicholas v. Environmental Systems (International) Limited, 2009 FC 1160 (Mosley, J.)

November 13, 2009

Peter Clyne (ex gratia only for motion) for the Plaintiff
Sarah M. Huggins (Torys LLP) for the Defendants

This was an appeal from the decision of a prothonotary where Justice Mosley set aside the ruling that the Plaintiff must post additional security for costs in the underlying copyright/moral rights action.

The Plaintiff was an individual, representing himself, and normally resident outside Canada, and therefore Rule 416 of the Federal Court Rules applied such that the defendant is prima facie entitled to security. Several years earlier in the proceeding, Prothonotary Tabib required the Plaintiff post $20,000 in security.

In the motion at issue, the Defendants sought additional security, calculated on the high end of Column V of Tariff B, on the grounds they had already spent $400,000 and expected to spend a further $100,000 in the action. The Defendants argued the action should have been brought under simplified procedure, if at all, and the Plaintiff has pursued his case in an unnecessarily cumbersome way.

The Plaintiff filed a voluminous response and argued that the motion be denied because the action had merit and that he had demonstrated impecuniosity on the basis of continued unemployment, indebtedness, and inability to raise funds.

Prothonotary Aalto had allowed the motion on the basis that the burden to show impecuniosity was on the plaintiff and there was no need to review Prothonotary Tabib ruling on this issue. He ordered further security of $36,000.

Justice Mosley considered whether the prothonotary’s decision was “clearly wrong” based on an incorrect principle of law or upon a misapprehension of the facts.

Impecunious has been defined to mean, someone “in need of money, poor, penniless, impoverished or needy”. A plaintiff has a high burden to show impecuniousity to avoid paying security.  It must be shown that if security is required to be paid, the suit would be stopped.

Justice Mosley held that the facts presented by the Plaintiff showed he was impecunious with no sources of funds, no assets and substantially in debt or in arrears. The earlier ruling for a modest security did not mean the Plaintiff would be able to pay further security.
Justice Mosley thought it necessary to emphasize that he was not influenced by the substantial materials on the merit of the Plaintiff’s case as the issue had not been dealt with by the prothonotary.

By: Alan Macek, Dimock Stratton LLP