The Defendants applied for Security for Costs as against the Plaintiff, relying on s. 254 of the Business Corporations Act, RSA 2000, c B-9. Eamon J. noted that Security for Costs may be obtained against a corporate entity pursuant to s. 254 of the Business Corporations Act, or under Rule 4.22. There was little evidence before the Court regarding the Plaintiff’s ability to pay Costs. The Defendants’ witness deposed that the Plaintiff held no exigible assets in Alberta and would be unable to pay Costs if awarded. Eamon J. held that bald statements of belief without proper grounds have no evidentiary value pursuant to Rule 13.18.

Justice Eamon considered Rule 4.22, and observed that the Court is permitted to make an Order for Security for Costs where it is just and reasonable to do so. Rule 4.22 is directed at all litigants, natural or artificial (such as corporations, whose shareholders may attempt to litigate with impunity to Costs). The Court’s powers to manage litigation can only be achieved if the Rules govern all persons who come to the Court for resolution of a Claim as set out in Rule 1.1(2). Rule 4.22 should be read in light of the foundational Rules, in particular Rule 1.2(2)(d) which encourages “open and timely dialogue” about material issues. The Respondent to a Security for Costs Application may be expected to inform the Court about its ability to pay.

Eamon J. determined that uncertainty arising from a party’s failure to engage in an open dialogue about ability to pay Costs may be a component of justice and reasonableness under Rule 4.22. Eamon J. considered the applicable evidentiary and other standards in s. 254 of the Business Corporations Act and Rule 4.22, and held that “impecunious companies should not receive the same generous treatment as impecunious individuals”. His Lordship observed that the price of incorporation is not a “bonus of immunity from R 4.22”. The Defendants failed to meet the more stringent evidentiary burden under s. 254, and as such, the Application was dismissed.