Background:

• Plaintiff: Neuhaus Management Ltd. (NML), a residential property developer.
• Defendants: Wei (Emily) Ding, daughter of Shuanghhuai Gong (purchaser under the original agreement) and Power of Attorney; Yang Wang, Ding’s husband.
• In 2016, Gong contracted with NML to buy a property, which was delayed by various factors and damaged by fire in 2019.
• Revised terms were set, but financing issues arose, leading NML to terminate the agreement. Gong later acquired the property through a power of sale from a different company.
• NML claims that Ding and Wang conspired with Gong to breach the contract.

Legal Issue: The Defendants requested security for costs, fearing that NML might not have enough assets to cover potential costs if the case was decided in the Defendants' favor.

Court’s Analysis:

• The court assessed whether security for costs was justified, focusing on Rule 56.01, which allows such orders if the plaintiff corporation appears to lack sufficient assets.
• Based on prior statements from NML’s president about financial strain, the court found a reasonable basis to grant the security request.
• The court balanced the defendants' rights to protection against unenforceable costs with NML’s right to pursue claims.

Decision: The court ordered NML to post security totaling $30,000, structured in three installments, to safeguard against unenforceable costs.

Key Legal Principles:

• Security for Costs: Discretionary and aimed at ensuring a fair trial without financially disadvantaging either party.
• Burden of Proof: The initial onus lies with defendants to show reasonable grounds for financial concerns, which they met in this case.