Date: 19980729
Docket: T-1145-98
OTTAWA, Ontario, this 29th day of July, 1998
PRESENT: The Honourable Mr. Justice Rouleau
BETWEEN:
RICHTER & ASSOCIÉS INC., ès-qualité as trustee
in bankruptcy to the estate of Trekka Canada Inc.
Plaintiff
AND:
GUARDIAN INSURANCE LIMITED, THE LONDON ASSURANCE
Defendants
ORDER AND REASONS FOR ORDER
ROULEAU, J.
[1] I entertained this application on July 13, 1998 at Montreal. The defendants were seeking an order that the plaintiff provide security for costs in the amount of $50,000. The plaintiff, Richter & Associés Inc., is the trustee in bankruptcy of the estate of Trekka Canada Inc. and alleges in its Statement of Claim that it has a good cause of action. They are seeking to recover in excess of 2.6 million Canadian dollars.
[2] The defendants, on the other hand, submit that the action is without merit; that in order to properly defend the action it will be necessary to interview clients and witnesses who are all offshore and that this will involve considerable expense.
[3] Counsel for the plaintiff agrees that the trustee in bankruptcy is impecunious but submits that it has a duty to pursue all claims that could help realize an asset for the estate and, because of this duty, counsel argues that it should be exempt from providing any security.
[4] Rule 416(1)(b) of the Federal Court Rules provide as follows:
| 416.(1) Where, on the motion of a defendant, it appears to the Court that ... (b) the plaintiff is a corporation, an unincorporated association or a nominal plaintiff and there is reason to believe that the plaintiff would have insufficient assets in Canada available to pay the costs of the defendant if ordered to do so, |
416.(1) Lorsque, par suite d'une requête du défendeur, il paraît évident à la Cour que l'une des situations visées aux alinéas a) à h) existe, elle peut ordonner au demandeur de fournir le cautionnement pour les dépens qui pourraient être adjugés au défendeur: ... (b) le demandeur est une personne morale ou une association sans personnalité morale ou n'est demandeur que de nom et il y a lieu de croire qu'il ne détient pas au Canada des actifs suffisants pour payer les dépens advenant qu'il lui soit ordonné de le faire. |
[5] The most recent jurisprudence supports the defendants' position. In the case of Superstars Mississauga Inc. v. Ambler-Courtney Ltd., 15 O.R. (3d) 437, a decision of the Ontario Court, General Division, the Court wrote at page 438:
| There was good reason to believe that the numbered company, the general partner of M, had insufficient assets in Ontario to pay the costs of the defendants. The defendants had raised a prima facie case for believing this, and the plaintiffs, which did not file any material dealing with their financial position, failed to meet the onus on them to rebut that case. |
[6] I am satisfied that the plaintiff may have a duty to pursue all legal remedies. However, he is still not exempt if the Court has reason to believe that the plaintiff would have insufficient assets in Canada available to pay the costs of the defendants if ordered to do so.
[7] I have been convinced by counsel for the defendants that his clients as well as the witnesses are mostly offshore. The evidence before this Court is contained in an affidavit of Laurent Fortier, a solicitor who supports this allegation which has not been contradicted. I am nevertheless satisfied that a lesser amount than that requested should be satisfactory to underwrite the first steps that would be required by these defendants to properly defend the action.
[8] IT IS HEREBY ORDERED THAT The plaintiff shall post security for costs in this action in the amount of $25,000; that 60 days after the date of payment in, the defendants shall file their Statement of Defence; and that the defendants shall be at liberty in due course to file a further application for increased costs upon satisfying the Court.
JUDGE
OTTAWA, Ontario
July 29, 1998