HULTINK v TRAFIGURA CANADA LIMITED

The Defendants appealed the Applications Judge’s decision denying their Application for Security for Costs under Rule 4.22. On Appeal, the Court considered whether the Applications Judge erred in declining to order Security for Costs.

Justice Malik confirmed the two-step test to determine whether security should be ordered: first, the Court considers the factors set out in Rule 4.22(a)-(e) and, second, the Court determines whether it is just and reasonable to order the security that includes balancing a defendant’s interest in recovering costs, with a plaintiff’s access to justice. Malik J. emphasized that once a defendant establishes a basis for security pursuant to Rule 4.22, the evidentiary burden shifts to the plaintiff to show that the security should not be ordered.

The Court reviewed the Applications Judge’s reasons for denying Security for Costs. Justice Malik agreed with the findings that the Plaintiff had no exigible assets in Alberta, that the merits of the Action were neutral, and that ordering security in the amount of $100,000 would unduly prejudice the Plaintiff in continuing the Action. However, Malik J. determined that the Applications Judge erred in accepting the Plaintiff’s assertion that she could pay a future costs award when the Plaintiff’s evidence was unsubstantiated and lacked sufficient financial disclosure. The Court emphasized that the bare assertion of ability to pay, without any supporting evidence of assets, liabilities, and available income, was insufficient to meet the Plaintiff’s evidentiary burden in showing a security Order was not required.

Justice Malik determined that it was just and reasonable to order Security for Costs because of the absence of exigible assets in Alberta and the lack of reliable evidence that the Plaintiff could satisfy a costs award. The Court rejected the Plaintiff’s argument that she did not have the means to provide security, noting that if she could pay a future costs award, which she asserted, then she should be able to provide a modest amount of security.

Malik J. granted the Appeal and ordered stepped Security for Costs in the amount of $20,000 to cover litigation costs up to trial. The Plaintiff was granted 90 days to provide the security. The Action was stayed until the Order for Security for Costs was complied with. However, if the Plaintiff failed to comply, the Action would be automatically dismissed.