4.22: Considerations for security for costs order
6.14: Appeal from master’s judgment or order

Case Summary

The Appellant appealed an Order from a Master requiring it to pay Security for Costs arguing the Master had incorrectly concluded that: Rule 4.22 governed the Application opposed to Section 254 of the Alberta Business Corporations Act (BCA); and that that there was a change in circumstances that warranted Security for Costs under Rule 4.22 after a previous Application for the same was dismissed.

Price J noted that although Rule 6.14(3) provides that an Appeal from a Master’s Decision is de novo and the applicable standard of review is correctness, where an Appeal involves essentially the same record and submissions that were before a Master, the Court is permitted to frame its decisions with reference to the Master’s decision where they are correct in law.

After reviewing the applicable case law His Lordship was not persuaded that s. 254 of the BCA rendered Rule 4.22 inapplicable as against a corporation in a Security of Costs Application. It was not an error of law to consider either s. 254 of the BCA or Rule 5.22 as the burden was the same in any event. The Master’s Decision was primarily founded on Rule 4.22 and he was entitled to inform himself of the factors applicable to both provisions.

Justice Price concurred with the Master’s analysis that while the initial Application for Costs occurred in 2006 and therefore subject to Rule 593(1) of the Old Rules, the present Application for Costs was correctly considered within the New Rules and therefore subject to the factors in Rule 4.22.

His Lordship found that the Master properly noted that the first two factors under Rule 4.22(a) and (b) were met as the Appellant was defunct and had no assets to pay the Respondent. The fourth factor in Rule 4.22(d) evaluated whether an Order to give Security for Costs would prejudice a party’s ability to continue the Action. The Appellant argued that it would have been unable to continue the litigation if the Master’s Order was upheld and the Respondent pointed to the Appellant’s actions in intermittently paying select creditors while stating it could not pay a Costs Order. The Master expressed concern with a party being able to litigate without any exposure to Costs and concluded a $50,000 Security for Costs Order was fair and reasonable. Justice Price concurred with the Master’s reasoning and conclusion and dismissed the Appeal.

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