Good News For Corporate Plaintiffs In Alberta?

A defendant seeking a security for costs order against a corporate plaintiff faces a more stringent test than other defendants, the Alberta Court of Queen's Bench recently held in Amex Electrical Ltd v 726934 Alberta Ltd, 2014 ABQB 66.

In Amex, the Court considered an application by certain defendants for a security for costs order against a corporate plaintiff. In a detailed decision, the Court noted the potential applicability of two statutory provisions: section 254 of the Alberta Business Corporations Act, RSA 2000, c. B-9, and Rule 4.22 of the Alberta Rules of Court. These provisions state:

Security for costs

254 In any action or other legal proceeding in which the plaintiff is a body corporate, if it appears to the court on the application of a defendant that the body corporate will be unable to pay the costs of a successful defendant, the court may order the body corporate to furnish security for costs on any terms it thinks fit.

Considerations for security for costs order

4.22 The Court may order a party to provide security for payment of a costs award if the Court considers it just and reasonable to do so, taking into account all of the following:

(a) whether it is likely the applicant for the order will be able to enforce an order or judgment against assets in Alberta;

(b) the ability of the respondent to the application to pay the costs award;

(c) the merits of the action in which the application is filed;

(d) whether an order to give security for payment of a costs award would unduly prejudice the respondent's ability to continue the action;

(e) any other matter the Court considers appropriate.

In considering the test applicable to the facts before it, the Court noted that the tests espoused by the two provisions are "completely different" (para. 54). Section 254 sets a more stringent threshold ("unable to pay the costs") while Rule 4.22 adopts a more lenient standard ("just and reasonable"). Rule 4.22 could apply on its face to a corporate plaintiff; however, the Court concluded that section 254 "is the sole standard which applies if the respondent in a security-for-costs application is a corporate plaintiff". Rule 4.22 applies in all other fact patterns (subject to other statutes). In so finding, the Court reasoned that it must interpret all applicable statutory provisions harmoniously, and apply the principle that a general enactment should not be interpreted as applying to cases dealt with in a more specific enactment. As a...