CNOOC Petroleum North America ULC (the “Applicant”), as Plaintiff/Defendant by Counterclaim, sought over $2 million in Security for Costs against 801 Seventh Inc. (the “Respondent”) for future steps in the underlying litigation, which included Questioning and Trial.

Justice Dilts reviewed the applicable jurisprudence and emphasized that Security for Costs is discretionary and involves balancing of the right of one party’s economic security with another party’s right to legal process. As both parties were corporate entities, Her Ladyship noted that there were two possible pathways to Security for Costs: either under Rule 4.22, or under section 254 of the Alberta Business Corporation Act, RSA 2000, c B-9. Dilts J. found that pursuant to either path, the Applicant bears the initial burden to establish, on a balance of probabilities, that it is just and equitable to order Security for Costs or that the Respondent will be unable to pay its Costs. If the Applicant satisfies this initial threshold question, only then does the burden shift to the Respondent.

Justice Dilts reviewed the facts underpinning the Action and was satisfied that the Respondent remained in good standing with its lenders and had recourse to lands and buildings to satisfy a Costs Award. Her Ladyship also noted that certain lands and buildings at issue not only had inherent value but that they may have revenue generating capability in the future. Accordingly, Her Ladyship concluded that the Applicant had failed to meet its initial onus of proving, on a balance of probabilities, that it was just and equitable to order Security for Costs or that the Respondent would be unable to pay its Costs. Accordingly, the Application for Security for Costs was dismissed.