Canada: Alberta Court Of Queen's Bench Offers Clarification On Security For Costs And Security For Judgment

In 1400467 Alberta Ltd v Adderley, 2014 ABQB 439, Madam Justice Veit explained the circumstances in which a defendant will be ordered to pay security for costs and security for judgment. An order for security for costs requires the ordered party to pay money to the court or a trust account in an amount representing part or all of the opposing party's legal costs; security for judgment requires money to be paid in the requested amount of judgment. These orders effectively ensure that the party who successfully applies for the order can collect money owed to them by the opposing party when a judgment or a costs order has been rendered.

Originally, the action commenced when the defendants allegedly breached a non-compete contract entered into with the plaintiff. The defendants then counterclaimed that the plaintiff had breached the purchase and sale agreement featuring the transfer of a multi-million-dollar business. The plaintiff, 1400467 Alberta Ltd., asked the court to order the defendants to pay security for costs in the amount of $200,000, as well as security for judgment in the amount of $1.5 million.

The plaintiff was concerned that because the defendants reside and hold assets in Saskatchewan, it may have difficulty enforcing a potential judgment outside Alberta. Fueling this concern were the facts that the defendants had only provided the plaintiff with limited financial information in previous steps of the litigation, and that one defendant had recently divested 50% of his interest in a main asset.

Security for Costs

The Alberta Rules of Court, Rule 4.22, outlines what a judge must consider when awarding security for costs. The judge must consider:

  1. whether it is likely the applicant for the order will be able to enforce an order or judgment against assets in Alberta;
  2. the ability of the respondent to the application to pay the costs award;
  3. the merits of the action in which the application is filed;
  4. whether an order to give security for payment of a costs award would unduly prejudice the respondent's ability to continue the action;
  5. any other matter the Court considers appropriate.

Although Rule 4.22 empowers a judge to order security for costs, Justice Veit quickly outlined that "even where a defendant fails to satisfy any of the specific factors mentioned in the rule," a judge should still not automatically order security for costs. In fact, regardless of Rule 4.22, the general rule is that a plaintiff cannot require a defendant to provide security for the plaintiff's costs, even if the defendant resides in another jurisdiction than the plaintiff. Few exceptions to this general rule exist; they include:

  • When providing security for costs is required by statute (for example the Patent Act RSC 1985, c P-4, requires plaintiffs to give security for costs in certain actions against patentees);
  • A "near miss" situation on a summary judgment application. This occurs when a judge denies summary judgment even though the applicant was just short of meeting the onus required. As the applicant will likely be successful at trial, the defendant must post security for costs.
  • When the defendant has an extensive track record of "flouting" court rules or orders.

The reasoning behind the general rule stems from the fact that the plaintiff has both the choice to commence the action, and the decision in which location to do it in; a defendant is involuntarily brought into the matter. As such, the plaintiff cannot then call upon the defendant to provide security for their costs, when it was the plaintiff who initiated the action to begin with. In application, the plaintiff here chose to commence their action in Alberta instead of Saskatchewan, and as such cannot effectively argue that they are entitled to security for costs because it is more difficult for them to enforce an Alberta judgment in Saskatchewan.

In addition, Justice Veit also clarified that the inability of a respondent to pay costs is not reason by itself to order security for costs, under Rule 4.22(b). However, if a defendant is arranging their finances to avoid paying a judgment, a court may see it fit to order security for costs.

Justice Veit applied the factors laid out in Rule 4.22 to the case at hand, and concluded that none of the facts of the case would result in it being fair and just to order security for costs; none of the exceptions to the general rule against a defendant paying security for costs to the plaintiff applied either. As such, the court declined to order the defendants to pay security for the plaintiff's costs.

Security for Judgment

The plaintiff also sought security for judgment in the amount of $1.5 million dollars. Similar to security for costs, Justice Veit emphasized that it is also very rare for a judge to order security for judgment. While the order is rare, there are some cases in which a court will feel such an order is appropriate. Although this list is not exhaustive, such circumstances include:

  • When appellants are only allowed to appeal a decision on the explicit condition that they post security for judgment;
  • When a court is convinced that assets are being "dissipated, or hidden, or dealt with in a way such as to escape judgment";
  • If the court is very suspicious that the defendant has no defense. This is similar to the "near miss" situation mentioned above.

The plaintiff argued that the second exception applied, being that the defendants had organized their assets to make it more difficult to enforce a judgment against them. Justice Veit concluded that it was not particularly important whether or not the defendants could satisfy the judgment, but instead whether the defendants were acting improperly as to intentionally shield assets. As it was not established that the defendants had acted improperly, Justice Veit declined to order security for judgment against them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions