1536466 Alberta Ltd Plaintiff - v. -, 2017 ABQB 176

Court of Queen’s Bench of Alberta Citation: 1536466 Alberta Ltd v Prestigious Properties Inc, 2017 ABQB 176 Date: 20170315 Docket: 1603 05096 Registry: Edmonton Between: 1536466 Alberta Ltd Plaintiff - and - Prestigious Properties Inc Defendant/Plaintiff by Counterclaim - and - 1536466 Alberta Ltd, Cold Lake Estates Inc, and Charles Ryan Defendants by Counterclaim _______________________________________________________ Reasons for Decision of W.S. Schlosser , Master, Court of Queen's Bench of Alberta _______________________________________________________ [ 1 ] This is an application for security for costs under

Section 254 of the Alberta Business Corporations Act, RSA 2000, c B-9 . The

section provides: 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.

[ 2 ] The Applicant relies on an affidavit that proves the central element of that section; being that it appears that the Respondent/Plaintiff by Counterclaim will be unable to pay the costs of the successful Applicant/Defendant by Counterclaim. But the affidavit does not go far enough. [ 3 ] There is no doubt that a security for costs application should be made at the earliest opportunity: Amex Electrical Ltd v 726934 Alberta Ltd , 2014 ABQB 66 at paras 74 (

g) and 75(a).

Section 254 of the Alberta Business Corporations Act does not specify the time (neither does rule 4.22). The application can be brought before a defence is filed, as is the case here. [ 4 ] Old Rule 594 read: 594 The application for security may be made at any time after the service of the statement of claim and shall be supported by an affidavit of the defendant or his agent, who can speak positively as to the facts, alleging that there is a good defence to the action on the merits and specifying the nature thereof. (Emphasis added ) [ 5 ] The old Rule contains good advice. The merits of the lawsuit are relevant to a security for costs application ( Amex at para 74(

c) and the cases cited there; especially Attila Dogan Construction v AMEC Americas Limited , 2011 ABQB 175 ): though the Court is not to go into the merits of the lawsuit too deeply. [ 6 ] Neither the Alberta Business Corporations Act nor the new Rules say anything about evidence; perhaps on the basis that the ‘No evidence - No Order’ rule is trite law. The need for some evidence is probably implicit in the Amex Electrical case, which is now read almost as if it were a statute. [ 7 ] In this case, the Applicant’s affidavit is silent on the merits. We do not have the benefit of a Statement of Defence.

I acknowledge that this is an application in a Counterclaim, and that the Court knows something about the balance of the lawsuit from earlier proceedings. However, unless it is patently a Rule 3.68 situation (for example) the Court needs to know something of the merits of the defence, not just about the solvency of a corporate Plaintiff. [ 8 ] The application is dismissed with leave to re-apply, either with a further and better affidavit or with reference to other materials already filed in this action. [ 9 ] Costs are in the cause. Heard on the 10 th day of March, 2017.

Dated at the City of Edmonton, Alberta this 15 th day of March, 2017. W.S. Schlosser M.C.Q.B.A. Appearances: G. James Thorlakson Dentons Canada LLP for the Plaintiff/Defendant by Counterclaim, 1536466 Alberta Ltd Sandeep Dhir, Q.C., Lindsey Miller Field LLP for the Defendant/Plaintiff by Counterclaim, Prestigious Properties Inc

Nestor Makuch Wheatley Sadownik for the Defendants by Counterclaim, Cold Lake Estates Inc and Charles Ryan