Key Legal Points:

1. Applicable Legal Standards:

   • The application was brought under both Rule 4.22 of the Alberta Rules of Court and section 254 of the Alberta Business Corporations Act (ABCA).
   • Rule 4.22 sets a lower standard for proving inability to pay compared to section 254.

2. Financial Evidence:

   • Draper relied on expert analysis of Embedia’s financial records, concluding Embedia lacked cash or assets to cover costs and could not borrow sufficient funds.
   • Embedia countered with pending purchase orders but offered no definitive proof of financial improvement.

3. Decision Basis:

   • The court found on a balance of probabilities that Embedia could not pay costs if the defense succeeded.
   • The court deemed it unjust to let Embedia proceed without sufficient financial security.

4. Quantum of Security:

   • The court awarded $126,000 for the first litigation stage, broken into:
     • $100,000 (taxable fees)
     • $10,000 (expert fees for questioning)
     • $10,000 (transcript costs)
     • $6,000 (GST).
   • Payment split into two $63,000 tranches, with conditions for stays if payments are missed.