In a hefty security for costs award in favour of multiple
defendants, the Alberta Court of Queen's Bench recently held
that the Court may consider the global effect of the costs of
multiple proceedings by a single corporate plaintiff in deciding
whether security for costs is appropriate.
In Geophysical Service Incorporated v Encana
Corporation, 2016 ABQB 49, the plaintiff appealed 26
orders for security for costs granted in 17 actions commenced by
Geophysical Services Incorporated (GSI) amounting to a combined
total of $1,910,550.24. The Court applied section 254 of the
Alberta Business Corporations Act, RSA 2000, c B-9 as
"the sole standard applicable in a security for costs action
against a corporate plaintiff." The test under section 254 has
The defendant must establish on a balance of probabilities that
a corporate plaintiff likely will be unable to pay the costs of a
successful defendant; then
The court will consider discretionary factors to determine if
it would be unfair to require security for costs to be paid.
GSI argued that the test under section 254 did not allow the
Court to consider the estimated collective costs of all the
defendants in the multiple actions. The Court disagreed, and held
that section 254:
although typically applied in the context of a single action,
does not require such a narrow reading;
is a "remedial provision that should be read in a broad,
"is broad enough to permit the Court to consider the
overall impact of costs awards to successful defendants in other
actions that have been brought by a corporate plaintiff."
If a "defendant in one action can establish that either it,
a co-defendant in that action, or a defendant in another action
brought by the plaintiff will be unable to recover its costs if
successful", the Court may award security for costs. The award
may include costs for past steps. However, costs for interlocutory
applications should be excluded as such costs are generally payable
forthwith. If more than one defendant chooses to be represented by
the same law firm, security for costs will be a single award for
all of those parties, though will reflect an increased scope of
The Court also advocated for a practical approach to evidence in
a security for costs application. GSI argued that evidence from one
application should not be considered in the appeal of another
application. The Court disagreed, and held that the goals of fair
and timely justice, as well as a lack of prejudice to GSI, meant
that the Court could consider evidence from all of the applications
on appeal. Ultimately, the Court upheld the Chambers decision with
a modest reduction to a total amount of security of
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