Application for Security for Costs Denied in Vancouver Estate Litigation

In a recent Vancouver estate litigation matter, Nordgren v. Hjukstrom Estate, 2019 BCSC 1, one of Onyx Law Group’s team of estate lawyers successfully argued against an application for security for costs which was brought against her clients. Janis Ko represented the plaintiffs in this case, the siblings and nephews of Mr. Hjukstrӧm who died in BC on June 29, 2017. Mr. Hjukstrӧm had named Kenth Lundbӓck, whom Mr. Hjukstrӧm believed to be his son, as the sole residual beneficiary of his estate and trust valued at over $8 million. The plaintiffs brought a Vancouver estate litigation claim, challenging the gifts to Kenth, asserting that Kenth and his mother had perpetuated a fraud on Mr. Hjukstrӧm for over 50 years.

Will challenge based on fraud and misrepresentation

Mr. Hjukstrӧm was born in Sweden, where he resided until the 1950s. He had a romantic relationship with Ingrid Jonsson at times during his life. Mr. Hjukstrӧm immigrated to British Columbia from Sweden in the 1950s and established a successful business here. In 1964, Ms. Jonsson wrote to Mr. Hjukstrӧm, telling him that he was the father of her son, Kenth, who was born in 1961. Ms. Jonsson emphasized that nobody else knew Mr. Hjukstrӧm was Kenth’s father, and that nobody else needed to know. Over the following years, Mr. Hjukstrӧm made a series of wills in which he made Kenth and Ms. Jonsson the primary beneficiaries of his estate. Following Ms. Jonsson’s death in 2008, Mr. Hjukstrӧm made wills in which Kenth was the primary beneficiary. After Mr. Hjukstrӧm died, one of the plaintiffs contacted the executor of Mr. Hjukstrӧm’s estate about whether Kenth was truly Mr. Hjukstrӧm’s son. Forensic DNA testing showed that Mr. Hjukstrӧm was not Kenth’s biological father. The plaintiffs filed a notice of civil claim commencing Vancouver estate litigation, alleging that Kenth and Ms. Jonsson made misrepresentations to Mr. Hjukstrӧm that Kenth was his biological son for the purpose of financial gain and that the gift to Kenth of the residue of Mr. Hjukstrӧm’s estate and trust should be set aside.

Application for security for costs in Vancouver estate litigation matter

The defendants in this Vancouver estate litigation action (both Kenth and Mr. Hjukstrӧm’s executor) applied for orders that the plaintiffs pay security for costs in the amount of $50,000 and $44,049.60, respectively. The defendants pointed to the fact that the plaintiffs resided in Sweden and had no connection to BC other than their Vancouver estate litigation claim. In response to the defendants’ applications, the plaintiffs provided affidavit evidence which demonstrated that one of the plaintiffs in particular was financially secure and that the plaintiffs would not be unable or unwilling to pay costs if such were ordered. In his affidavit, one of the plaintiffs committed that he would pay whatever costs were ordered against the plaintiffs even if the other plaintiffs did not pay. The defendants did not challenge the affidavit evidence and their application for security for costs in the Vancouver estate litigation claim was ultimately dismissed. There was simply no evidence that the plaintiffs would be unlikely to pay a costs order.

Purpose of an order for security for costs

The purpose of an order for security for costs is to protect a party from the likelihood that in the event of its success it will be unable to recover its costs from the unsuccessful party. However, a just balance must be struck between the potential inability to recover costs and not stifling legitimate claims. As a threshold requirement, the onus is on the applicant to show on a prima facie basis, that in the event of its success it would likely be unable to recover its costs. If that threshold is met, the next step would be to assess the risk of a legitimate claim being stifled. The relevant factors are: the ability of the plaintiff to post the security sought and the merits of the plaintiff’s claim; whether it is plain and obvious that the claim lacks merit such that the concern not to frustrate legitimate claims is engaged with less force. The mere fact that a party resides outside of BC and has no assets within BC is insufficient to meet the threshold. In Nordgren v. Hjukstrom Estate, Madam Justice Gropper rejected the defendants’ applications, holding that the defendants failed to meet the threshold requirement. There was no dispute that the plaintiffs reside outside of the jurisdiction and have no exigible assets in BC, but the defendants had not established that the plaintiffs were impecunious or that they would be unlikely to pay costs.

Take home point on security for costs in Vancouver estate litigation matters

Lack of exigible assets within BC is not sufficient to establish a prima facie case for security for costs where the plaintiff resides out of the jurisdiction. As is demonstrated by the decision in Nordgren, there must at least be some proof that the plaintiff is impecunious or otherwise unable to pay costs if ordered. If the defendant fails to provide evidence to meet that threshold, their application for security for costs will be dismissed.