CITATION: James Nord v. Ralitza Kaneva 2015 ONSC7511

COURT FILE NO.: CV-15-524817

DATE: December 1, 2015

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: James Nord as Trustee for the Jefferson 2007 Living Trust v. Ralitza Kaneva;

BEFORE: MASTER C. WIEBE

COUNSEL: Pulat Yunusov for Ralitza Kaneva; Jonathan P.M. Collings for James Nord as Trustee for the Jefferson 2007 Living Trust;

HEARD: November 25, 2015 at Toronto, Ontario.

REASONS FOR DECISION

I. INTRODUCTION

[1] There are two motions before me in this matter. The first is a motion by the plaintiff, James Nord, trustee for the Jefferson 2007 Living Trust (“the Trust”), for an order amending the Statement of Claim to add himself in his capacity as Estate Trustee for the Estate of Peter Jefferson (“the Estate”) as plaintiff to the action, and to amend the ex parte order of Master Roger, as he then was, dated April 17, 2015 (which order granted a certificate of pending litigation in relation to the subject land) to add the Estate to the certificate. The plaintiff argues that the subject property is being held in constructive trust for either the Trust or the Estate.

[2] The second motion is by the defendant, Ralitza Kaneva (“Ralitza”), for an order setting aside the order of Master Roger, as he then was, issued on April 17, 2015, authorizing the registration of a certificate of pending litigation, discharging the same certificate of pending litigation, and requiring the plaintiff to post $22,822.89 as security for a potential partial indemnity award of costs in this action in favour of the defendant.

[3] For the reasons stated herein, I grant the Kaneva motion in its entirety, but only the portion of the Trust’s motion that amends the Statement of Claim.

II. BACKGROUND

[4] A certain Peter Jefferson (“Peter”) was born in Bulgaria and moved to the Napa area of California, U.S.A., in the 1960’s, where he became an engineer and acquired several assets, including several real estate properties. Peter knew and had a close business and personal relationship with the family of which Ralitza was a member. Ralitza and Peter knew each other for some time.

[5] Peter also had a close relationship with one Zlatka Jefferson (“Zlatka”) who claims in her affidavit in this motion that she married Peter while he was on a visit to Bulgaria in the 1982 and moved to California to live with Peter at that time. Peter and Zlatka had a son in 1994 whose name is Vladimir (“Vlad”). Vlad presently lives in California as well.

[6] Ralitza lived in Toronto in the late 1990’s. Between 1997 and 2003, she took courses at York University with a view to getting a PhD in clinical psychology, and had a scholarship to do so. She has a brother named Ivaylo Kaneva (“Ivaylo”).

[7] It is undisputed that in 1999 Peter gave Ralitza USD $129,000. The intention Peter had in making this payment is the major issue in this case. Ralitza asserts in her affidavit in these motions that Peter intended to gift USD $100,000 to her and USD $29,000 to Ivalyo, all without any terms or conditions. She states that at that time Peter expressed a desire to her that she use the money to buy a condominium in Toronto, but that this was not a condition of the “gift.”

[8] Ralitza proceeded to use the money to buy a condominium with the address of Unit 612, 7 Carleton Street, Toronto (“the Property”) on May 28, 1999 for a purchase price of CAD $179,750. The purchase price was almost entirely Peter’s “gift.” Ralitza states that she bought the Property for herself and her brother. The title to the Property was taken entirely in Ralitza’s name without any indication on title that it was being held in trust for anyone. She sent the purchase documents (including the deed) to Peter in 1999. She then proceeded to live in the Property and pay all fees, costs and taxes associated with it. She acquired her degree and developed a career. She still lives in the Property.

[9] Zlatka asserts in her affidavit that Peter told her in 1999 and thereafter that he had “invested” this USD $129,000 in Toronto real estate by having Ralitza use the money to buy a condominium in her name, live there rent-free, and sell it (liquidating the “investment”) when “Peter told Ralitza that he wanted her to sell the condo.” The purpose of this “investment,” according to Zlatka, was Vlad’s education. There is no dispute that the Property is now worth almost $500,000.

[10] Zlatka also asserts that Ralitza admitted Peter’s beneficial interest in the Property with the following statements Ralitza made in an undated letter (“the Letter”) she wrote to Peter shortly after the purchase: “. . . on May 28^th we closed the deal and the apartment was “mine” (but you know very well whose it is in fact”; “I also enclose a copy of the Tranfer/Deed of Land because this is really the official document making me “owner” of the apartment”; “. . . I realize that you had a great confidence in me by entrusting me with such a large amount of money . . .”; “at least I hope that you wouldn’t lose and it will make me very happy if it happens that you win more than you have expected.” Ralitza asserts that the vague references to a trust refer to Ivaylo’s share in the Property, which she admits she is holding for her brother.

[11] Zlatka also asserts in her affidavit (without advising as to the source of her information and belief) that in the summer of 2009 Peter had lunch with Vlad, who was 16 years old at the time, and told him at that time that the Property belonged to him, Peter, and that Ralitza would liquidate the Property upon Peter’s command. Zlatka was not present at this lunch. There is no affidavit from Vlad, who is now in a post-secondary school in California.

[12] Peter signed a Declaration of Trust on January 9, 2007. He revised it and signed an Amended and Restated Declaration of Trust on December 9, 2009 (“the Declaration”), shortly before his death. This is the document that forms the basis of the Trust. In clause 2.1, the Declaration describes the properties that are to be included in the Trust. Three real estate properties in California and several “investments” are listed. The Property is not included in this list. Interestingly, the Declaration expressly states that Zlatka is not Peter’s spouse, is not Vlad’s mother and is to be excluded from the Trust.

[13] On the same day, December 9, 2009, Peter signed his Last Will and Testament (“the Will”) wherein, in clause 2.1, he expressly stated that all property in his estate on death (“the Estate”) was to be in the Trust. He also reiterated that Zlatka was entirely disinherited.

[14] Peter died shortly after signing these documents in 2009. It is undisputed that he never instructed Ralitza to sell the Property.

[15] Zlatka sued the Trust in California in 2011. She succeeded in getting a court order giving her an income of $2,000 per month plus a life estate in one of Peter’s lands in California. It is undisputed that she has an interest in the outcome of this action, as the liquidated net equity in the Property would enhance the principal of the Trust from which her income is paid.

[16] The initial trustee of the Trust and estate trustee of the Estate was one Helen Tucker. On July 14, 2011, the lawyer for the Trust and the Estate sent Ralitza a letter which referenced the Letter, asserted that the Trust was the “owner” of the Property in light of Peter’s “investment” in it, and offered to have Ralitza purchase the Property. Ralitza did not respond to this letter.

[17] Ms. Tucker was replaced as trustee and estate trustee by James Nord (“the Trustee”), a resident of Napa, California. On March 26, 2015, Mr. Nord commenced this action in Ontario on behalf of the Trust (not the Estate) seeking a declaration that the Property belonged beneficially to the Trust, and that it be sold with the proceeds to be distributed to the Trust. Damages are claimed as an alternative. Interestingly, the purchase was described as having taken place in May, 2000, a year after it in fact took place.

[18] Two days later, on March 28, 2015, the Trustee moved without notice before Master Roger in Ottawa seeking an order that a certificate of pending litigation (“CPL”) be registered on the title to the Property. The Trustee asserted his claim to the Property on the basis of unjust enrichment and constructive trust. The only evidence presented on this motion was an affidavit from Mr. Nord himself wherein he stated that the “sole source of my knowledge of the facts set out in this Affidavit” was the Letter. He described the purchase as having taken place in May, 2000. He did not disclose the Declaration, the Will and any evidence from Zlatka and Vlad. He stated that in letter Ralitza “admitted” that Peter paid “the vast majority” of the purchase price for the Property and that the Property belonged to Peter. He made reference to the July 14, 2011 letter to Ralitza from the Trust and the Estate, and the fact that Ralitza did not answer it. Mr. Nord swore that “there is a real risk that the Defendant may move to encumber the Property without notice to the Plaintiff,” but provided no corroboration for this statement. The Master gave the order, which was issued on April 17, 2015.

[19] On August 14, 2015, Ralitza delivered a Statement of Defence wherein she inter alia raised the issue that the Property was not a part of the Trust. As a result, the parties convened a conference call with me on August 24, 2015 to set a schedule for their two motions, namely the Trustee’s motion for an order amending the Statement of Claim and the CPL to add the Estate, and Ralitza’s motion for security for costs and a discharge of the CPL.

[20] As a preliminary issue, Mr. Yunusov challenged the admissibility of the key hearsay aspects of Zlatka’s affidavit, particularly the hearsay evidence of the lunch between Peter and Vlad in 2009. The challenge was on the basis that Zlatka did not specify the source of her information and belief as required by the Rules, particularly since Zlatka subsequently admitted not being present at the lunch. Mr. Collings argued that I should admit the entire affidavit, as flimsy hearsay evidence is not uncommon in estate litigation, given the absence of the deceased.

III. ISSUES

[21] Having reviewed the facta and heard the arguments, I believe that the following are the issues to be determined:

a) Should the key hearsay aspects of Zlatka’s affidavit be struck?

b) Should the Estate be added as a party plaintiff?

c) Should the CPL be discharged due to material non-disclose at the ex parte motion?

d) Should Ralitza be granted security for costs?

IV. ANALYSIS

(a) Should key hearsay aspects of Zlatka’s affidavit be struck?

[22] As a preliminary issue, Mr. Yunusov challenged the admissibility of the key hearsay aspects of Zlatka’s affidavit, particularly Zlatka’s own hearsay evidence of conversations she had with Peter about the Property, her hearsay evidence of the lunch between Peter and Vlad in 2009, and her hearsay evidence of what one Ekaterina Radevo remembered being told by Peter about the Property. The challenge was on the basis that Zlatka did not specify the source of her information and belief as required by the Rules.

[23] Mr. Collings argued that I should admit the entire affidavit, as flimsy hearsay evidence is not uncommon in estate litigation, given the absence of the deceased. He pointed to the decision of the court in Eagles v. Allain [2009] N.B.J. 106 (N.B.Q.B.). In that case, court allowed obviously hearsay evidence proffered by an estate in response to a motion for summary judgment. The hearsay evidence was about conversations the deponents had with the deceased. The governing rule expressly excluded hearsay evidence from motions for summary judgment. Justice McNally allowed the evidence in the exercise of his discretion primarily because of the test of necessity, namely absence of the deceased and the need to allow the estate to proffer this evidence in order to defend itself against the motion.

[24] I am deeply troubled by Zlatka’s affidavit. Mr. Yunusov’s argued that the impugned portions of Zlatka’s affidavit are worse that the hearsay evidence in Eagles. As to the 2009 lunch, Zlatka admitted in answer to written interrogatories in this motion to not being present. Nevertheless, she made no effort to describe how she got the information she presented. Mr. Yunusov pointed me to the decision of Justice Granger in Cameron v. Taylor, 1992 CarswellOnt 3660 at paragraph 24 for the proposition that paragraphs in affidavits for use on motions which fail to state the source of the information and belief as to contentious matters should be struck. I agree with this argument.

[25] I have decided to exclude paragraphs 20, 21 and 22 of Zlatka’s affidavit from consideration in this motion. These paragraphs concern the key alleged lunch Peter had with Vlad a few months before Peter died in 2009 wherein Peter allegedly articulated his intentions about the Property to Vlad. By not identifying the source of her information, Zlatka makes it difficult to weigh this evidence. If the source was Peter, the court could make an exception to the hearsay rule and consider it, as the court did in Eagles. If the source was Vlad, the court could, on the other hand, draw an adverse inference that Vlad’s evidence does not support the Trust’s case, as Vlad is alive and should in that case have given his own affidavit. As it is, the court is left speculating on what to do with this evidence, which is not proper. Those paragraphs are struck.

[26] The other impugned aspects of Zlatka’s affidavit will remain. As to Zlatka’s recollection of her conversations with Peter, I view this as being on the same level as the evidence that was admitted in Eagles, namely necessary evidence of the deceased. As to the evidence about Ms. Radevo’s memory, I am satisfied that Zlatka gleaned that evidence from Ms. Radevo. While this amounts to double hearsay, the source of the hearsay is sufficiently clear to allow the evidence in. While the foundation for this hearsay evidence was not properly stated in accordance with the Rules, I will consider it nevertheless. The potential lack of foundation for the hearsay evidence will be used in assessing the weight to be given.

(b) Should the Estate be added to the Statement of Claim?

[27] The test for amendments to pleadings was well summarized by Master MacLeod in his decision in Plante v. Industrial Alliance Life Insurance Co., 2003 64295 (ON SC), [2003] O.J.No. 3034 are paragraphs 21-27. The test is threefold: the amendments must not result in irremediable prejudice such as with the passage of a limitation period; the amendments must be legally tenable, with the court assuming that the pleaded facts are true; and the amendments must comply with the rules of pleading, namely they must contain sufficient particularity to sustain the allegations.

[28] I will deal with the issue of legal tenability first. Master MacLeod made it clear that this issue was not a matter of evidence, but rather whether the pleaded facts created a tenable cause of action. It is not necessary for the moving party to prove the pleaded facts or cause of action. On this basis, I am satisfied that the Trust has pleaded a tenable cause of action in unjust enrichment and constructive trust in favour of the Estate. The key pleadings in the proposed Amended Statement of Claim are the following: the allegation that any residual assets that do not form the Trust fall into the Estate (which would include the Property); the allegation that Peter paid for most of the purchase price of the Property; the allegation that Ralitza admitted in the Letter that the Property belonged to Peter; and the allegation that Ralitza has failed to “compensate” Peter “or the Estate” for his contribution. This all forms the elements of unjust enrichment, namely enrichment, corresponding deprivation with lack of juristic reason for the enrichment. This part of the test is satisfied.

[29] I will now deal with the question of irremediable prejudice. Mr. Yunusov argued that there are two limitation periods that bar the joinder of the Estate. The first one is the two year period under the Trustee Act, R.S.O. 1990, c. T.23, s. 38(1) and (3) for “all torts or injuries to the person or the property of the deceased,” which limitation period runs from the death of the deceased. I am satisfied that this limitation period does not apply here. The section pertains to “wrongs done to the deceased in his or her lifetime;” see Dundas v. Zurich Canada 2012 ONCA 181, [2012] O.J. No. 1321 (Ont.C.A.) at paragraph 57. It is clear to me that any alleged wrong in this matter did not occur before Peter’s death. The evidence indicates that the alleged constructive trust was to be in effect until Peter or his successor told Ralitza to sell the Property. There is no dispute that that did not happen before Peter’s death.

[30] The second limitation is in the Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 4, which specifies that “an action to recover land” must be brought within ten years from the date such action “first accrued” to the person making the claim. For the purpose of unjust enrichment, the “accrual” of the cause of action occurs when there is enrichment, corresponding deprivation and lack of juristic reason for the deprivation. This may occur with a marital breakdown; see McConnell v. Huxtable, 2014 ONCA 86 (Ont.C.A.) at paragraph 52. In the case before me, again it is clear that the alleged deprivation could not happen until there has been a demand by Peter or his estate to Ralitza to sell the Property. This did not happen, arguably, before the within action was brought in 2015. This limitation period does not apply.

[31] Mr. Yunusov raised another issue that pertains to the question of irremediable prejudice. He argued that the Estate is barred from commencing an action in Ontario because it has not obtained an Ontario probate order. It appears that the Will was probated in California, but not in Ontario. There is divergent authority on this point. In Tansill v. King, 1947 CarswellOnt 320 (Ont. Master) the court held that foreign executor cannot sue in Ontario without first obtaining probate in Ontario. On the other hand, the Supreme Court made an exception to this rule for negotiable instruments in Crosby v. Prescott 1923 546 (SCC), [1923] S.C.R. 446 at paragraph 37 (S.C.C.). I do not find that this issue represents a bar to the joinder of the Estate to this action. Rule 9.03 makes it clear that a failure by the estate trustee to obtain an Ontario probate before commencing an action is not a nullity and can be corrected by subsequently obtaining the probate, and that the subsequent probate will cause the action to be properly commenced from its original date.

[32] As to the test of whether the rules of pleading have been abided by, there was no argument on this point. I am satisfied that the proposed Amended Statement of Claim contains enough particularity to sustain a claim of unjust enrichment and constructive trust.

[33] I, therefore, find that the Trust’s motion to amend the Statement of Claim must be granted on condition that the Ontario probate of the Estate is obtained in reasonable time.

(c) Should the CPL be discharged due to material non-disclosure at the ex parte motion?

[34] Rule 39.01(6) states the following: “Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on a motion or application.” In 830356 Ontario Inc. v. 156170 Canada Ltd. [1995] O.J. No. 687 (Ont.G.D.) at paragraph 17, Justice Chadwick stated, and I accept, that the test as to whether “full and fair disclosure” was made on the ex parte motion does not turn on whether the omitted disclosure “would or would not” have resulted in the issuance of the CPL, but rather whether the omitted disclosure “might” have impacted the original granting of the order.

[35] Mr. Yunusov made much of the misrepresentation by the Trust of the date of the purchase of the Property, namely the statement in the Nord affidavit in the ex parte motion that the purchase happened in May, 2000. In oral argument, he stated that this was material because it pertained to the ultimate limitation period of 15 years specified in the Limitations Act, 2002, S.O. 2002, c.24. I do not accept this argument. The ultimate limitation period in that statute starts to run for causes of action that pre-date January 1, 2004 from that date. This misrepresentation is, therefore, not material to any issue in this case.

[36] However, there was the absence of two other material pieces of evidence that I find in reading the material and hearing argument to be critical. They are the following:

a) Declaration and Will: The Declaration is the core document behind the Trust. It and the Will are the only documents in any of the ones produced to me that contain Peter’s own signature. They were created on December 9, 2009, namely ten years after the purchase of the Property and the alleged creation of the constructive trust and on the eve of Peter’s death, and with the benefit of legal counsel. They were not produced to Master Roger.

In reviewing the Declaration and Will, I am satisfied that Peter intended that the Trust would contain the totality of his property. Clause 2.1 of the Will states that all of the residue and remainder of his estate he gave to the Trust. These documents represent the clearest statement of what Peter viewed to be his property.

What makes this important is that the Trust makes no reference to the Property, expressly or impliedly. Three real estate properties owned by Peter in California at that time are listed, but not the Property. Under the heading, “investments,” eight assets are listed, but again there is no reference to the Property. This last point is important because of Zlatka’s repeated evidence that Peter considered the Property to be an “investment.” If Peter had “invested” USD$129,000 in a Toronto condominium in 1999, a value which at the time of the motion had increased to close to $500,000, one would have expected Peter to refer to it in the Declaration. That he did not is critical evidence as to whether he considered the Property his own.

Mr. Collings argued that the Declaration in clause 2.2 authorized the Trust to acquire “future property” and that the acquisition of such future property is what the Trust is doing in this action. I disagree. In my view, such “future property” as described in the Declaration concerns property not in the Trust at the time of the Declaration. The Trust alleges that Peter beneficially owned the Property from 1999, namely that it was a property Peter owned beneficially at the time of the Declaration. It is not listed.

b) Zlatka’s evidence: Zlatka’s consistent evidence in her affidavit on this motion was that Peter told her and Ekaterina Radevo that the alleged constructive trust would last “until Peter told Ralitza that he wanted to sell the condo.” This evidence was also not produced to Master Roger.

This is also material because there was no evidence before me in this motion that Peter or the Trust had made a demand to Ralitza to sell the Property prior to the time of the motion before Master Roger. The July 14, 2011 letter from the Trust to Ralitza was just an invitation to her to have her “buy” the Property. It was not a demand. There was no evidence that the Trust had served its Statement of Claim, dated March 26, 2015 (two days before the motion), on Ralitza at the time of the ex parte motion on March 28, 2015. Therefore, while the Statement of Claim might amount to a “demand” to sell, it had not been served on Ralitza.

This means that, even if the Trust had disclosed the Declaration and Will and had convinced the Master that the Trust had a reasonable claim to an in interest in the Property on account of the equitable doctrines of unjust enrichment and constructive trust, the facts on which it relies concerning this trust would have undercut the Trust’s position with the Master. The Trust was arguably suffering no deprivation at the time of the ex parte motion.

[37] Either of these two pieces of evidence “might” very well have caused Master Roger to deny the motion.

[38] Mr. Collings argued that I need to determine whether this oversight was deliberate, unintentional, careless, negligent, reckless, a result of being duped, or completely inadvertent. If there was inadvertence, I should not discharge the CPL on this ground. As Justice Corbett stated in Bank of Montreal v. Juroviesky [2014] O.J. No. 1129 (S.C.J.) at paragraph 33, “the nature of the error, and the degree of advertence will play a large role in the court’s response.” Master Haberman stated the following in 1376273 Ontario Inc. v. Woods Property Development Inc. [2014] O.J. No. 2372 (Ont. Master) at paragraph 62, “counsel can only tell the court what they know, what they learn from their client and what they anticipate their opponent will allege.”

[39] I have taken care to review the non-disclosure of material facts in this case. Surprisingly, little evidence was presented on this issue. Mr. Collings did not dispute that the Declaration and Will were at the time of the time of the ex parte motion within the possession of the Trust and capable of being accessed by the Trust. He admitted frankly that they were material documents that should have been produced. He argued, however, that there was no evidence of inadvertence on the part of the Trust.

[40] I note that Mr. Yunusov filed a brief of answers to written interrogatories that he obtained from, amongst others, Mr. Nord. In this brief, Mr. Nord admitted being appointed trustee on March 20, 2014, namely a year before the ex parte motion. He also admitted having access to Peter’s files from the date of his appointment. Presumably, these files contained the Declaration and the Will. Mr. Nord also admitted accessing these files “as needed.” Unfortunately, he was not asked as to why he had not disclosed the Declaration, the Will and Zlatka’s evidence to Master Roger.

[41] Based on this evidence, I am nevertheless driven to the conclusion that the Trust was at best grossly reckless, and at worse deliberate, in its non-disclosure of the Declaration, the Will and Zlatka’s evidence. Mr. Nord must have known of the existence and the contents of both the Declaration and the Will, as those are the documents that constitute his authority to act. It would be reckless of Mr. Nord not to know the contents of these documents. That Zlatka’s evidence was available to the Trust seems clear from her availability to give evidence for the Trust in this motion. I have already discussed how critically material these two pieces of evidence were to the outcome of the ex parte motion.

[42] I also note that there was no urgency to the ex parte motion. Mr. Nord deposed in this affidavit on the ex parte motion that there was “a real risk that the Defendant may move to encumber the Property without notice to the Plaintiff.” When asked in written interrogatories about the source of his belief in this risk, Mr. Nord replied that, “it is well known that individuals frequently borrow money against properties which are in their names.” There was in fact no urgency. There was no sale financing of the Property that was underway or even contemplated. Mr. Nord could have taken the time he needed to adduce all of the material facts and documents on the ex parte motion, or he could have, on the other hand, served the motion material. Instead, he chose to move without notice relying exclusively on the Letter.

[43] Mr. Collings argued in oral argument that it does not matter that there was material non-disclosure by the Trust at the ex parte motion as, according to him, the Trust has proven in this motion that it has a reasonable claim to an interest in the Property. He did not present authority for this proposition. In his decision in 830356 Ontario Inc. v. 156170 Canada Ltd. [1995] O.J. No. 687, Justice Chadwick underlined how serious a matter a motion without notice is. He quoted Rule 39.01(6) which, again, justifies the discharge of a CPL simply on the grounds of non-disclosure of material facts. He described this onus on the moving party as a “heavy one.” In that case, His Honour set aside a CPL obtained by a purchaser of a property on an ex parte motion on the grounds that the supporting affidavit had not highlighted the portion of an attached letter written by the purchaser on the closing date of the transaction in which the purchaser admitted that he considered the agreement of purchase and sale null and void. The non-disclosure in the case before me is, in my view, worse than in the case before Justice Chadwick. Here Master Roger did not even have the critical evidence which undermined the Trust’s position in the motion material that was before him. By not meeting its onus under Rule 39.01(6), the Trust needs to bear the consequences of the rule.

[44] I rule that the order of Master Roger issued April 17, 2015 must be set aside, and that the CPL must be discharged and vacated, all due to the material non-disclosure by the Trust at the ex parte motion before Master Roger.

[45] Because of this ruling, I need not, and I do not, embark on the other aspects of the analysis of the question of whether to remove the CPL that was argued before me.

(d) Should Ralitza be granted security for costs?

[46] Ralitza seeks an order requiring the Trust, and now the Estate, to post $22,822.89 with the court as security for an eventual partial indemnity costs award in this action against the plaintiffs. Ralitza relies upon the grounds described in Rule 56.01(1)(a), (d) and (e) as follows: (a) the plaintiffs are not resident in Ontario; (d) the plaintiffs are nominal parties and there is good reason to believe that they have insufficient assets in Ontario to pay Ralitza’s costs; (e)there is good reason to believe that the action is frivolous and vexatious and the plaintiffs have insufficient assets in Ontario to pay Ralitza her costs.

[47] The plaintiffs admit that Ralitza has a prima facie case for an order for security for costs under grounds (a) and (d), but not (e). They argue, however, that I should exercise my discretion not to order security for costs as, they say, it would not be “just” to do so in the circumstances of this case. Mr. Collings argued that the assets of the Trust and Estate are in California, that these assets are more than sufficient to pay Ralitza’s costs, and that the enforcement of an Ontario judgment in California, a reciprocating jurisdiction, would be without difficulty. They presented the affidavit of a California family law lawyer, Colleen Clark. Ms. Clark deposed that she is an expert in California law and that the enforcement of an Ontario judgment in California would not be difficult.

[48] I note that Ms. Clark admitted in answer to written interrogatories that she has never been retained to enforce a foreign judgment in California. She also admitted that it would cost Ralitza between USD$1,500 and USD$6,000 to enforce an Ontario judgment against the plaintiffs in California.

[49] Mr. Collings relied upon the decision of Justice Galligan in Smallwood v. Sparling, (1983) 42 O.R. (2d) 5s (H.C.) at page 4 for the proposition that in Ontario a non-resident plaintiff with sufficient assets in a reciprocating jurisdiction will not be required to post security for costs. However, I also note that His Honour drew an exception to this proposition where “realization upon them [the foreign assets] could be inconvenient.”

[50] It is undisputed that the plaintiffs have no assets in Ontario, other than of course the contested Property. As to the sufficiency of the California assets, Mr. Nord deposed in his affidavit in this motion and in answer to written interrogatories that the three California real estate assets are unencumbered other than by Zlatka’s life estate in in the San Jose property, and that the three properties are conservatively worth USD$2,200,000. Concerning the “investments,” Mr. Nord deposed in his affidavit that there are now two investments worth in excess of USD $328,000, and attached recent statements of these investments to confirm that figure. It would appear that the assets of the Trust are more than sufficient to pay Ralitza’s costs.

[51] I am nevertheless not prepared to exercise my discretion in favour of the plaintiff here. At present, Ralitza is a full-time student at the University of Toronto with two years remaining in her program. Having to pay a California lawyer USD$6,000 to enforce a costs award should she succeed is no small matter for her. Also, the consequence of not recovering a costs award is no small matter for her. Mr. Yunosov referred me to the case of Connor Estate v. Connor, 2014 ONSC 510 (S.C.J.) at paragraph 19, where the court held that the additional cost and expense of hiring counsel in the reciprocating jurisdiction is a factor to be considered in ordering security for costs against a foreign plaintiff. He also referred me to the decision in Breatross Estate v. Woolfson, 2013 ONSC 6819 (S.C.J.) where the court in that case considered the necessity of “further legal proceedings” to enforce a costs award as a factor in ordering security for costs.

[52] In Breatross there was the added factor that the court found a significant risk of a cost award in favour of the defendant in awarding security for costs. All I will say on this issue is that I believe, for the reasons stated under issue (c) above, that there is such a risk in this case as well.

[53] As to the quantum of costs, Mr. Collings took no issue with the quantum being sought by Ralitza, namely partial indemnity costs security of $22,822.89. His only further submission was that I should order that the security be ordered in stages. This is often done by the courts where there will be protracted litigation and substantial costs. I do not find that to be the case here. There has been substantial production and discovery in the context of this motion. Whether, and, if so, to what extent, there will be further production and discovery is an open question. In my view, this case appears to be headed for an early trial. Furthermore, the amount of requested security for the entire action is not an onerous amount.

[54] I, therefore, order that the Trust and the Estate post security for Ralitza’s partial indemnity costs in the amount of $22,822.89.

V. CONCLUSION

[55] I, therefore, grant the Trust’s motion to amend the Statement of Claim by adding the Estate, on condition that the Ontario probate for the Estate is obtained in reasonable time. I deny the remainder of that motion.

[56] I grant the entirety of Ralitza’s motion, namely an order setting aside the order of Master Roger issued April 17, 2015, discharging the CPL, and requiring that the Trust and the Estate post $22,822.89 for a partial indemnity award of costs in favour of Ralitza in this action.

[57] Concerning the costs of these motions, both counsel submitted costs outlines at the end of the argument. Ralitza’s costs outlines shows partial indemnity costs of $14,252.88 and substantial indemnity costs of $22,578.72. The costs outline of the Trust shows full indemnity costs of $20,088.27, substantial indemnity costs of $18,371.74 and partial indemnity costs of $13,322.16.

[58] If costs cannot be resolved between the parties, those parties seeking costs of these motions must serve and file a written submission of no more than two pages concerning same on or before December 11, 2015. Any responding submissions must be in writing, cannot be longer than two pages and must be served and filed on or before December 21, 2015. Any reply cannot be longer than one page and must be served and filed on or before December 23, 2015.

DATE: December 1, 2015

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MASTER C. WIEBE