OCA refuses to order security for costs against law firms
The Ontario Court of Appeal, in the recent decision of Indcondo Building Corporation v. Sloan et. al, held for the first time that a law firm working under a contingency fee agreement was not required to post security for costs on behalf of an impecunious client. The moving parties argued that Ontario should adopt the approach taken in the United States, where law firms have in some circumstances been required to post security for costs on behalf of a client. Read Story in Law Times
Read Ontario Court of Appeal Decision
In successfully responding to the security for costs motion, James Zibarras and Trung Nguyen from Brauti Thorning Zibarras argued that requiring law firms to post security for costs on behalf of impecunious clients would create a barrier to access to justice by creating a significant disincentive for law firms to enter into contingency fee agreements.
It was further argued that the Ontario Legislature, in amending the Solicitor’s Act to allow contingency fee agreements, created a carefully balanced legislative scheme which considered the issue of costs and, after much consultation with the legal community, carefully regulated what may and may not be included in contingency agreements.
In his decision, Justice Armstrong commented that “the lawyer who acts on a contingency fee basis is already carrying the significant risk of not being paid and, as in this case, being stuck with the costs of paying the disbursements. To add the additional burden of posting security for costs would no doubt have a chilling effect on those lawyers who might otherwise make their services available on a contingency basis – thus creating another problem for access to justice.”