This was an Appeal of the Applications Judge’s Decision dismissing the Defendants’ Application for Security for Costs. The Plaintiffs, Dr. Arraf and his professional corporation, filed a Statement of Claim against the Defendants, alleging wrongful and/or constructive dismissal and seeking damages. After ending his relationship with the Defendants, Dr. Arraf moved to Texas, where he now works and owns property. He no longer owns property in Alberta but has a bank account containing $77,255.21 and an RRSP account valued at $192,339.08 in Alberta. His professional corporation does not own any property or assets.

The Applications Judge noted that Dr. Arraf's Alberta funds were easily movable but found this insufficient to grant the Application. The Decision relied on the fact that Montana, where Dr. Arraf claimed to own property, is a reciprocating jurisdiction under Alberta's Reciprocal Enforcement of Judgments Act, RSA 2000, c R-6 (“REJA”), allowing Alberta Judgments to be enforced in Montana. The Applications Judge concluded that Dr. Arraf’s high income and assets in a reciprocating jurisdiction justified denying the Security for Costs Application.

The Court noted that under Rule 6.14, an Appeal of an Applications Judge’s Decision was de novo, and that the standard of review was correctness. The Court further noted that an Appeal from an Applications Judge’s Decision is an Appeal on the record of proceedings before the Applications Judge.

The Court noted that as both Dr. Arraf and his professional corporation were named Respondents, and that both Rule 4.22 and section 254 of the Alberta Business Corporations Act, RSA 2000, c B-9 (the “ABCA”) were argued, the law under both pieces of legislation should be considered, while the tests under both are discretionary. The Court further noted that Rule 4.22 involves a two-step test, weighing various factors to determine if it is just and reasonable to award Security for Costs, while section 254 of the ABCA is a more stringent test, focusing on the corporation’s inability to pay Costs.

Applying the factors provided in Rule 4.22, including the likelihood of enforcing the Judgment in Alberta, the Respondents’ ability to pay a Costs Award, the merits of the Action, prejudice to the Respondents, and other factors (such as Montana being a reciprocating jurisdiction without evidence about the assets in Montana and whether they could be conveniently realized upon), the Court allowed the Appeal and ordered Security for Costs.