4.22: Considerations for security for costs order

Case Summary

The Defendants sought Security for Costs. The Plaintiff argued that he was not required to pay Security for Costs as his claim was based in oppression under section 243(3) of the Alberta Business Corporations Act, RSA 2000, c B-9 (the “Act”). The Defendants argued that the oppression claims were limitation barred and, therefore, hopeless.

Master Schulz noted that, a “complainant” is not required to pay Security for Costs in any Application brought pursuant to the Act dealing with oppression claims and derivative Actions; s.243(3) is “proscriptive and a complete answer to an application for security for Costs”. However, “merely uttering the word “oppression” is not sufficient to invoke the protection of s. 243(3)”, the Claim must be examined in its entirety to determine what portion of it, if any, is based in oppression. Where the core of the Action is an oppression claim, an Application for Security for Costs will fail. Master Schulz examined the Claim in its entirety and determined that the Plaintiff met the definition of a “complainant” under the Act and, despite the existence of other causes of action, the bulk of the Claim was founded in oppression. Master Schulz also noted that an arguable defence was a factor to be considered under Rule 4.22; however, where s.243(3) of the Act applied, an arguable limitations defence was no longer a consideration when assessing whether or not to order Security for Costs. Master Schulz dismissed the Application for Security for Costs.

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