SUPREME COURT OF PRINCE EDWARD ISLAND. Citation: Widelitz v. Cox & Palmer 2010 PESC 43 Date: Docket: S1-GS Registry: Charlottetown

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1 SUPREME COURT OF PRINCE EDWARD ISLAND Citation: Widelitz v. Cox & Palmer 2010 PESC 43 Date: Docket: S1-GS Registry: Charlottetown Between: Kenneth Widelitz Plaintiff And: Cox & Palmer Defendant BEFORE: The Honourable Justice John K. Mitchell (In Chambers) Appearances: Paul J.D. Mullin, Q.C. for the Plaintiff John W. Hennessey, Q.C. for the Defendant Place and date of hearing - Charlottetown, Prince Edward Island October 6, 2010 Place and date of judgment - Charlottetown, Prince Edward Island October 22, 2010

2 SECURITY FOR COSTS - sufficiency of assets - assets conveniently realizable - severance of joint tenancy. CASES CONSIDERED: Atlantic Golf Construction Ltd. v. Lakeside Development Corporation (1993), 1993 CarswellPEI 27, 116 Nfld. & P.E.I.R. 254 (P.E.I.S.C.); MacArthur v. Atlantic Canada Home Inc. (1999), 1999 CarswellPEI 100 (P.E.I.S.C.); Severance v. Oliver 2007 P.E.S.C.A.D. 21; Barnard v. Testori Americas Corp (1998), 1998 CarswellPEI 84, 177 Nfld. & P.E.I.R. 354 (P.E.I.S.C.); MacDonald Estate v. Canada, [1969] B.C.J. No. 96 (B.C.S.C.); Sunglo Lumber v. McKenna (1974), 48 D.L.R. (3d) 154 (B.C.S.C.). STATUTES CONSIDERED: Reciprocal Enforcements of Judgments Act, R.S.P.E.I. 1988, Cap. R-6; Judgment and Execution Act, R.S.P.E.I. Cap. J-2; Prince Edward Island Rules of Civil Procedure, Rules 56.01, and Mitchell J.: [1] Ken Widelitz is a lawyer and investment advisor who ordinarily resides in California, U.S.A. He has commenced an action against Cox & Palmer seeking damages of $36, Cox & Palmer bring this motion seeking security for costs. Rule provides that the court may make an order for security for costs as is just where the plaintiff is ordinarily resident outside the Province of Prince Edward Island. [2] The initial onus on this application is on Cox & Palmer to show there is good reason to believe that Widelitz does not have sufficient assets in the jurisdiction or in a reciprocating jurisdiction to pay their costs should Cox & Palmer be successful at trial. To do this, Cox & Palmer must establish what those costs might reasonably be at the end of the trial (Atlantic Golf Construction Ltd. v. Lakeside Development Corporation (1993), 1993 CarswellPEI 27, 116 Nfld. & P.E.I.R. 254 (P.E.I.S.C.)). Thereafter the onus shifts to Widelitz to show either that he has sufficient assets either within the province or a reciprocating jurisdiction or that he is impecunious and an injustice would result if he were not allowed to proceed with his action (MacArthur v. Atlantic Canada Home Inc. (1999), 1999 CarswellPEI 100 (P.E.I.S.C.). Estimated Costs [3] Cox & Palmer filed their estimated bill of costs to the end of trial. They estimate four days of discovery and seven days of trial. The legal work is to be handled by a senior barrister of 28 years, assisted by a junior associate. They estimate time and disbursements on a partial indemnity basis to be $65, The actual solicitor-client costs, excluding disbursements, are estimated at $85,800.

3 Page: 2 [4] Widelitz believes that discoveries will last three days only and the trial four days. He believes that there will be three or possibly four witnesses. He does not believe the issues are very complicated. [5] While counsels estimate of time is a factor to be considered, I am well aware that estimating trial time, especially at such an early stage, is a somewhat speculative venture. In estimating costs, one must be mindful that at the end of the day the costs should reflect what the losing party would expect to pay as a reasonable and fair amount required to indemnify the successful party against costs incurred as a result of participating in the litigation (Severance v. Oliver 2007 P.E.S.C.A.D. 21). [6] To arrive at an amount reflecting what a party would reasonably expect to pay, one should consider not only counsels estimate of time but the factors set out in Rule which deal with some of the factors which a court may consider in assessing costs. Those factors include the complexity of the proceeding and the amount involved in the proceeding. [7] Having read the Statement of Claim and the Statement of Defence, it appears to me that the matter is not at all complex. At the crux of the matter is the advice given or not given concerning an expert s report. This is a question of fact. [8] There should, as well, be some relationship between the amounts claimed and the costs paid. One would not normally expect to pay costs of $65,000 on a $36,000 claim. I take counsels point that this is a matter of principle for Widelitz and as such that he might reasonably expect to pay more, principles being expensive. Nonetheless, there should be some relationship between the amount claimed and the costs awarded. [9] I applaud the use of junior counsel where it reduces costs and promotes efficiency. The draft bill of costs filed by Cox & Palmer includes 70 hours preparation each for junior and senior counsel and has both junior and senior counsel present during the whole of the trial for a further 70 hours each. [10] There are, in my view, very few trials in this Province so complicated that they require two lawyers in attendance throughout the trial. This is not one of them. I have no doubt that the attendance would be of great benefit to junior counsel who would have an opportunity to see first hand two senior and competent counsel in action. It is not, however, reasonable to expect a losing party to pay for the education of his opponent s junior counsel. [11] Therefore, in estimating the costs which one might reasonably expect to pay at

4 Page: 3 the conclusion of this trial I would reduce the preparation time for junior and senior counsel as the matter is not complicated, deduct a considerable portion of junior counsel s time for attendance at the trial, reduce the trial time to four days and take into account the amount of money being claimed. Taking all this into account, I find at this stage a fair estimate of the costs which the losing party might reasonably expect to pay will be in the range of $25,000. Does the Plaintiff Have Sufficient Assets? [12] Widelitz has filed evidence as to his assets. He s filed a January 2009 appraisal of his home in California, which is jointly owned with his wife, together with a trust deed showing the amount of encumbrances on that home. The equity is in the range of $1.1 Million. As California is not a reciprocating state under the Reciprocal Enforcements of Judgments Act, this evidence only goes to the issue of impecuniosity. Both parties agree that Widelitz is not impecunious. [13] Widelitz and his wife jointly own property at Bloomfield Corner, Prince Edward Island, appraised at $96,000. As the balance of the mortgage on the property is approximately $35,000, the equity in the property is approximately $61,000. [14] There are a few radio towers on the property. Widelitz states that he spent approximately $100,000 in developing what he calls his antennae farm on the property. He refers to these items as items which are attachable. I have insufficient evidence on this motion as to the value of the towers or even whether or not they form part of the real estate. I will therefore not take them into account. [15] I conclude that Mr. Widelitz and his wife have assets in the Province to the value of at least $61,000. Conveniently Realizable [16] Widelitz not only has to show that he has assets within the jurisdiction but that those assets are conveniently realizable (Barnard v. Testori Americas Corp (1998), 1998 CarswellPEI 84, 177 Nfld. & P.E.I.R. 354 (P.E.I.S.C.). Cox & Palmer takes the position that the equity Widelitz holds in real estate is not conveniently realizable because it is in joint ownership. They take the position that no one will purchase a joint ownership. This raises the question of when the joint tenancy is severed. [17] A judgment of the Supreme Court operates as a lien and a charge over the judgment debtor s real property from the moment a minute of judgment is filed (s. 3 and s. 9 Judgment and Execution Act). The effect of filing the minute of judgment is

5 Page: 4 to bind the lands and to prevent the judgment debtor from defeating the judgment by transferring or further encumbering the lands. Filing of the judgment or writ of execution does not sever the joint tenancy (MacDonald Estate v. Canada, [1969] B.C.J. No. 96 (B.C.S.C.) and Re Young Estate [1968] 66 W.W.R. 193 (B.C.C.A.). [18] However, once the next step is taken to sell the land, the joint tenancy is severed (Sunglo Lumber v. McKenna (1974), 48 D.L.R. (3d) 154 (B.C.S.C.). That step in this Province would generally be by way of advertising under Rule [19] Thus I conclude that Widelitz s interest in the property is exigible without any unusual or cumbersome delays. In this case, assuming the full value of $96,000 was realized on a sale, the first monies would go to pay out the balance of mortgage and costs of the sale, and the balance would be split half to Widelitz s judgment creditor and the other half to his wife. Widelitz s portion would be $30,500 less half costs of sale. Conclusion [20] Widelitz is a person who is ordinarily resident outside Prince Edward Island and who does have sufficient assets within this jurisdiction to pay any reasonable costs which may be awarded against him, and I therefore dismiss the motion with costs in the cause. October 22, 2010 J.