Jones J

4.22: Considerations for security for costs order
10.52: Declaration of civil contempt
10.53: Punishment for civil contempt of Court

Case Summary

The parties were involved in a complex corporate commercial dispute. The Plaintiff obtained a Mareva Injunction and an Attachment Order effectively freezing the Defendants’ assets. The parties re-appeared before Justice Jones for the determination of four Cross-Applications. Among other things, the Defendants applied for Security for Costs, and the Plaintiff cross-applied to find the Defendants in civil contempt for an alleged breach of the Attachment Order.

The Defendants’ argued that Security for Costs should be granted pursuant to the overlapping tests enumerated in Rule 4.22 and contained in section 254 of the Alberta Business Corporations Act, RSA 2000, c B-9 (the “ABCA”). The Defendants stated that both statutory provisions connect with the common purpose of avoiding the mischief of a limited company with few assets to “enjoy the proceeds to a lawsuit if it wins and walk away if it loses”. The Plaintiff argued that the more stringent test under section 254 of the ABCA was applicable, and that the Defendants had not satisfied the Court “that the Plaintiff ‘will be’ unable to pay costs”.

Justice Jones considered the test under both enactments and prior leading authority, and stated that the tests under Rule 4.22 and section 254 ABCA were discrete. Jones J. held that the test under section 254 of the ABCA was applicable because the Plaintiff is a corporation. However, His Lordship was sufficiently concerned about the Plaintiff’s ability to discharge Costs, so directed the Plaintiff to post Security for Costs regardless.

With respect to the Plaintiff’s Application for civil contempt, the Court considered Rule 10.52(3) and Rule 10.53, and considered the test for contempt: whether there is an existing prohibition of the Court; whether there was notice of it to the contemnor; and, whether there was an intentional act which constitutes a breach of the Order. Jones J. held that in this case, the circumstances did not justify such a finding, as there was reasonable doubt that the Defendants were in breach of the Order. The Plaintiff’s Application for contempt was therefore dismissed.

View CanLII Details