4.22: Considerations for security for costs order
12.36: Advance payment of costs

Case Summary

The Plaintiff, Ms. Milavsky, commenced an Action for Divorce and Division of Matrimonial Property in June of 2009, which was expanded in May 2010 to include a Claim of Unjust Enrichment against three trusts settled by the Defendant, the late Mr. Milavsky. The litigation had an extensive history, and was scheduled for an 8 week Trial. Ms. Milavsky applied for the Defendant Estate to pay $1,000,000 in advance Costs in order to fund the complex Estate and Trust litigation.

Ms. Milavsky characterized the Action as a matrimonial property claim, and argued that the Action against the trusts was ancillary and, therefore, that Rule 12.36 should apply. The Estate argued that Rule 12.36 did not apply. The Respondent Trusts characterized the Claim against them as solely a civil one to which the test under Rule 4.22 applies.

Justice Tillman held that the Claim against the Estate was primarily a matrimonial property Action to which Rule 12.36 applied. Under Rule 12.36, the Court has wide discretion to order advance Costs, and the primary consideration is whether the Applicant has sufficient resources to pay for their part of the litigation. The purpose of advance Costs awards under Rule 12.36 is to “level the playing field”, and no consideration is given to the merits of the Claim. Justice Tillman noted that Ms. Milavsky was 68 years old, earned no employment income, and had an income that was insufficient to keep up with the escalating legal fees required to advance her Claim. This evidence was sufficient to meet the test for advance Costs.

Tilleman J. observed that, under Rule 4.22, an Applicant must meet the three criteria set out by the Supreme Court of Canada in British Columbia (Minister of Forests) v Okanagan Indian Band 2003 SCC 71, which are:

(i)                  The applicant is impecunious to the extent that they would be deprived of the opportunity to proceed with the case without the order,

(ii)                The applicant has a prima facie case of sufficient merit,

(iii)              There must be special circumstances sufficient to satisfy the Court that the case is within the narrow class of cases where the extraordinary exercise of its powers is appropriate.

Justice Tillman held that Ms. Milavsky did not meet the test as set out in Okanagan Indian Band. In the result, advance Costs were payable by the Estate, but not by the Trusts.

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