4.22: Considerations for security for costs order
10.48: Recovery of goods and services tax

Case Summary

The Plaintiffs brought an Application for Security for Costs in each of two related Actions which concerned entitlement to mineral interests as between lessors, active lessees, and a top lessee. The Respondent was the top lessee and a corporate entity, prompting the Court’s consideration of section 254 of the Business Corporations Act, RSA 2000, c B-9, which provides for a Security for Costs award against a corporate Plaintiff.

Master Robertson noted conflicting authority on the interplay between Rule 4.22, respecting Security for Costs generally, and section 254. While section 254 was technically not in issue as the Respondent corporation was a Defendant and not a Plaintiff, Master Robertson was nonetheless prepared to read section 254 and Rule 4.22 together.

Master Robertson also noted conflicting authority as to the proof of a Respondent’s inability to pay which shifts the evidential onus to the Respondent. The Court did not require proof on a balance of probabilities, but rather “a reasonable basis to show, or at least there is enough evidence to infer, that the respondent Alberta-based litigant has insufficient assets, the burden then shifts to the respondent to demonstrate that it does have sufficient assets.”

The Court then applied the factors set out in Rule 4.22 to the circumstances. There was enough evidence for the Court to be satisfied of the Respondent’s impecuniosity, shifting the onus to the Respondent, but little evidence on any other key point. The Court saw fit to draw an adverse inference against the Plaintiffs, assuming the strength of the Respondent’s position, ultimately declining to grant Security for Costs. In passing, the Court observed that the Plaintiffs’ claim for GST was inappropriate, as Rule 10.48 “prevents the recovery of GST in a costs award where the party claiming the costs receives an input tax credit under the Excise Tax Act”.

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