Alberta Court Confirms Security For Costs Test For Corporations

In a recent decision, Embedia Technologies v. Blumell, the Alberta Court of King's Bench clarified the test for security for costs against a corporation, concluding that the test under s. 254 of the Alberta Business Corporations Act (ABCA) does not represent a higher hurdle than the test that otherwise exists under Rule 4.22 of the Alberta Rules of Court.

Background

Historically, security for costs has been a useful tool for defendants to seek against a plaintiff who appears to be unlikely to pay costs if unsuccessful at trial. Such an application prevents a plaintiff from commencing an action, putting the defendant through significant defence costs, and being unable to pay those costs if the plaintiff is unsuccessful at trial.