Security for costs is the payment of money or other security into court by a plaintiff or plaintiff by counterclaim to cover future costs orders made in favour of a successful defendant. Forcing a plaintiff to post security to cover your client’s costs is important for ensuring that your client is not left with an unenforceable costs order after successfully defeating a claim. It is also a useful tool in defending your client against frivolous claims. However, far more than just an effective costs-protection device, a successful security for costs motion can demoralize a plaintiff and even make the plaintiff think twice about continuing to pursue its claim. But when should such a motion be brought?
Would an Ontario court enforce a Heter Iska? When a religious Jew lends another Jew money they often enter into an agreement called a Heter Iska. Faced with the biblical prohibition against charging interest on loans and the reality that lenders are more likely to lend people money when interest can be charged, the Rabbis created a halachic mechanism to still allow a lender to profit from the loan and not charge interest. This halachic document is called the Heter Iska. The Heter Iska characterizes the lender as an investor who provides capital for a business venture. The Heter Iska provides that the investor transfers ½ of the money as an interest-free loan, is to be repaid even in the case of total loss; the other ½ of the money is the investor’s share of the business venture, which entitles the investor to receive profit that not coincidentally is equivalent to the interest a lender would charge. Thus, at the end, the investor’s money would be returned, and any profits (or losses) would be shared. This halachic mechanism serves to ensure that Jews will not have a financial disincentive to loan one another money.
In 2006 Ferrara clearly knew someone thought his lawyer, Stephen A. Schwartz, was negligent. Arguably Ferrara would have to sue Schwartz by 2008 or his action would be statute barred. The Ontario Court of Appeal concluded that the limitation period was not triggered until 2009 which meant that Ferrara had until 2011 to start the law suit. In making that decision there was a divergence from a group of cases that suggested that the limitation period would have been triggered in 2006. But, that’s the end of the story. Let’s start at the beginning and review the implications on the issue of discoverability.
Izzie Schwartz hired Selila Ness to work for his travel agency doing business in Israel and the United States called “Izzie Travels”. Soon, Izzie recognized Selila’s talent and delegated complete control of his business to her. He trusted her with his client lists, introduced her to his contacts and Selila managed the business Izzie built. After ten years Selila quit. She moved to Ontario and created her own Travel Agency. Selila used all of Izzie’s contacts, made use of his client lists and was a complete success. That success came at Izzie’s expense. Selila’s contract with Izzie provided that she would not complete with Izzie Travels in any similar activity for a period of three years. Since Selila was in Ontario he sued her in that jurisdiction.