You don’t often hear about a motion for security for costs in estate litigation (if nothing else the parties are usually very much present in the jurisdiction and have some financial worth). However, estate litigants have been ordered to post security for costs just as in any other civil litigation. Equally, estate litigants have successfully defeated motions for security for costs. Rosen v. Muller is such a case and makes for interesting reading.
In Rosen v. Muller, Greta Rosen was the daughter of the late Dina Muller and her mother’s estate trustee. Greta was also the sister of the defendant, Eugene Muller, who married and later divorced Rochelle Rabinowitz.
Dina had a modest estate. Her estate’s sole asset was a $100,000 mortgage. Greta, as estate trustee, sought to recover from Eugene and Rochelle the amount that remained due and payable under the mortgage. In response, Rochelle defended the mortgage enforcement action and brought a motion for security for costs.
Rule 56 is the governing rule of civil procedure regarding security for costs. It states that the court may make such order for security for costs as is just where it appears that the plaintiff/applicant (1) is not ordinarily resident in Ontario or (2) the plaintiff/applicant is a nominal plaintiff/applicant and there is good reason to believe that the plaintiff/applicant has insufficient assets in Ontario to pay a cost award (i.e. a portion of the legal fees of the winning party).
Despite the fact that Greta had an apartment in Toronto and spent some time in the city, Rochelle claimed that Greta resided in Israel. While the court quite sensibly recognized that a person could have more than one residence at a time, the court ultimately concluded that Greta spent most of her time in Tel Aviv and was therefore not ordinarily resident in Ontario. However, an estate trustee cannot be ordered to post security for costs personally. Greta was after all acting in her capacity as trustee, not personally. The court therefore declined to order that Greta post security for costs on the grounds that she was not ordinarily resident in Ontario.
The court then considered whether Greta was a nominal (i.e. token) plaintiff and if there was good reason to believe that Greta had insufficient assets in Ontario to pay a cost award should Rochelle successfully defend the mortgage enforcement action.
The court agreed that an estate trustee was in fact a nominal plaintiff. But once again, Greta could not be ordered to post security personally (even if she had no assets in Ontario), as she was not acting in her personal capacity.
However, the court correctly noted that an estate can be ordered to post security for costs in the appropriate circumstances.
Rochelle claimed that the mortgage was a sham and no funds were ever advanced. However, Rochelle failed to lead evidence in her affidavit to support her claim that the mortgage was, in fact, a sham. As such, the court held that the estate did have an asset in Ontario sufficient to pay a cost award; namely, the very mortgage that Rochelle claimed was a sham (a claim that she could not ultimately prove). The court therefore declined to order the estate to post security.
Finally, Rochelle submitted that the estate’s action was frivolous and vexatious because the action was brought after the limitation period had expired and therefore security for costs should be posted pursuant to subrule 56(1)(e). Once again, Rochelle failed to persuade the court of her position. The court held that the 10 year limitation period to recover a sum of money secured by a mortgage had not expired. The estate’s mortgage action was therefore not frivolous and vexatious and security for costs was not required.
Happy Litigating.
