The case involved a dispute between Embedia Technologies Corporation and Embedia Sales Corp. (collectively, Embedia) and several Defendants, who applied for Security for Costs against Embedia.

The Court noted case law that indicates that an Application for Security for Costs against a corporate Plaintiff could only be sought under Section 254 of the Alberta Business Corporations Act (ABCA). However, the Court also acknowledged other cases which stated that an Application for Security for Costs against a corporate Plaintiff can be sought under both Section 254 of the ABCA and Rule 4.22. The Court noted that the reason for this is due to the perception that Applications under Section 254 are more difficult for the Applicant than Applications under Rule 4.22. The Court questioned whether a material difference exists between an Applicant establishing on the balance of probabilities that the Plaintiff would be unable to pay a Costs Award, and establishing that the Defendant is not likely to be able to enforce a Costs Award, ultimately concluding that there is no material difference between the provisions of Rule 4.22 and Section 254.

Applications Judge Prowse found that the Defendants met the burden to show that Embedia would be unable to pay a Costs Award. The Court considered the financial evidence before it, including Embedia's financial statements and expert opinion, and found Embedia's reliance on speculative purchase orders insufficient to counter the expert's conclusions. The Court ruled that it would be unjust to permit Embedia to pursue litigation without the means to cover Costs in the event of an unsuccessful outcome. Further, the Court found no evidence that ordering Security for Costs would unduly prejudice Embedia's ability to continue the Action.

The amount of Security for Costs was set according to the stages of litigation, with an initial sum of $126,000 awarded.