Guangdong Maxome Industrial Ltd. v. Sante Manufacturing Inc.

Decision 1: Concede Entitlement, Contest Quantum

The conventional approach when a foreign plaintiff faces a security for costs motion is to fight on all fronts — argue that the plaintiff should not have to post security at all. We took a different approach. Guangdong is a Chinese company with no Ontario assets and no reciprocal enforcement arrangement between Canada and China. These facts were not in dispute. Wasting the court's time contesting the obvious would have undermined our credibility.

Instead, we acknowledged that the defendant had established a prima facie entitlement to security under Rule 56.01, but argued that the appropriate quantum was zero — or at most, a nominal amount of approximately $10,000. This reframed the entire motion from “should there be security?” to “how much security makes sense given these specific facts?” — a question that favoured our client significantly.

Decision 2: The Defendant Already Has Our Client's Property

The most powerful argument was hiding in plain sight. Sante Manufacturing had taken delivery of USD $126,000 worth of Guangdong's goods and never paid for them. Those goods were sitting in Canada — in the defendant's possession. The defendant was, in effect, holding our client's property as involuntary security.

We argued that ordering additional security on top of $126,000 in unpaid goods would be unjust. The defendant was asking the court to protect it from the risk of an uncollectable costs order while simultaneously refusing to pay for goods it had received. Justice Trimble agreed: the defendant “has security enough.” This argument worked because it turned the defendant's own conduct into the dispositive fact.

Decision 3: Positioning for Summary Judgment

From the outset, we signalled to the court that Guangdong intended to bring a motion for Summary Judgment. This was strategically important for two reasons. First, it demonstrated that our client was pursuing the most efficient path to resolution — not dragging the litigation out. Second, it affected the costs analysis: if the case was going to be resolved on a Summary Judgment motion rather than a full trial, the defendant's potential costs exposure would be significantly lower, undermining the justification for $150,000 in security.

Justice Trimble also noted an important principle that our firm had established in a prior case: security for costs should not be used as “a litigation tactic to prevent a case from being heard on its merits.” The court cited China Yantai Friction Co. v. Novalex Inc., 2021 ONSC 3571 — a decision from one of our own cases — in support of this principle.

1. Security for costs is a tactic, not an inevitability. Many foreign plaintiffs assume that being a non-resident automatically means posting large security deposits. It does not. Ontario courts have discretion, and the quantum can range from the full amount requested down to zero. The key is understanding what factors the court considers — the strength of the claim, the defendant's conduct, the availability of assets, and whether the motion is being used as a litigation weapon — and building your response around those factors.

2. Use the facts creatively — the defendant's own conduct may be your best defence. In this case, the strongest argument against security was not a legal technicality. It was a fact: the defendant was holding $126,000 of our client's goods. That fact transformed the entire motion. When preparing for security for costs disputes, look beyond the legal test and examine what the defendant actually has in its possession, what it owes, and whether ordering security would produce an unjust result.

3. Chinese companies can enforce their rights in Ontario courts — but they need lawyers who understand cross-border litigation. The absence of a reciprocal enforcement treaty between Canada and China creates real procedural hurdles. Security for costs is the most common one. But these hurdles are navigable with the right strategy. The difference between posting $150,000 and posting nothing was not the law — it was how the facts were presented to the court.