COURT OF APPEAL FOR ONTARIO
Sharpe, Lauwers and Miller JJ.A.
BETWEEN
Felicia Purcaru
Applicant (Respondent)
and
Anna Seliverstova, Marina Seliverstova, Mircea Purcaru, Redina Inc., Daribo Consulting Inc., and Dan Purcaru
Respondents (Appellants)
Gary S. Joseph and Kenneth Younie, for the appellants
Morris Cooper, for the respondent
Heard: June 22, 2016
On appeal from the order of Justice F.L. Myers of the Superior Court of Justice, dated October 29, 2015, with reasons reported at 2015 ONSC 6679.
Background
1This appeal is from an order awarding relief to the respondent under provisions of the Fraudulent Conveyances Act, R.S.O. 1990, c. F-29. The respondent’s ex-husband, Don Purcaru, and the appellant Marina Seliverstova, who had been in a relationship with Mr. Purcaru, were found to have acted in concert to convey property to Ms. Seliverstova with the intention of defeating Mr. Purcaru’s creditors, chiefly the respondent.
2Mr. Purcaru’s financial obligations to the respondent were a consequence of the end of their marriage. The respondent applied in 2004 for an order for divorce and corollary relief. After a trial in 2009, Mr. Purcaru was ordered by Paisley J. to pay the respondent in excess of $1 million in arrears of spousal and child support and for equalization of net family property, in addition to on-gong child support and awards of costs.
3In the current proceedings, the trial judge made an order voiding transfers of funds from Mr. Purcaru to Ms. Seliverstova that had enabled Ms. Seliverstova to purchase two residential condominium units in 2006 and 2008, one of which was purchased in the name of her daughter, the appellant Anna Seliverstova.
4For the reasons set out below, I would dismiss the appeal. The appeal is largely an attack on the trial judge’s determinations of credibility and factual findings related to the impugned transactions. The trial judge rejected much of Ms. Seliverstova’s testimony as “a pack of lies”, found her explanations for the impugned transactions to be “lacking of cogency and credibility”, and found that she shared Mr. Purcaru’s intention to defeat, hinder, delay or defraud his creditors. These determinations of credibility and factual findings were open to the trial judge, are entitled to deference, and there is no basis upon which this court could interfere with them. These findings are dispositive of most of the appellants’ four grounds of appeal, which are addressed below.
Ground 1: The trial judge shifted the burden of proof to the appellants
5The appellants argue that the trial judge erred by impermissibly shifting the burden of proof to them, requiring that they disprove the respondent’s allegations. I do not accept this submission. The trial judge correctly stated the law with respect to burden of proof where there is an allegation of fraudulent conveyance. It is up to the challenger of a transaction to establish on a balance of probabilities that a conveyance was made with the intent to ‘defeat, hinder, delay or defraud creditors or others’, within the meaning of s. 2 of the Fraudulent Conveyances Act. Whether Mr. Purcaru had that intention is a question of fact, to be determined from the circumstances at the time of the transactions. If a challenger raises evidence of one or more ‘badges of fraud’ that can give rise to an inference of an intent to defraud, the evidential burden then falls on those defending the transaction to adduce evidence showing the absence of fraudulent intent (Re Fancy, (1984), 1984 CanLII 2031 (ON SC), 46 O.R. (2d) 153 (H.C.J.)), Nuove Ceramiche Ricchetti S.p.A. v. Mastrogiovanni, [1988] O.J. No. 2569 (H.C.J.), pp. 4, 5).
6Among the badges of fraud identified by the trial judge in this case are: (1) the transactions between Mr. Purcaru and Ms. Seliverstova were not at arm’s length, (2) the transactions were not only secretive, they were in violation of Mr. Purcaru’s disclosure obligations under the Family Law Rules, and (3) the transactions were made without consideration.
7The evidential burden then fell on Ms. Seliverstova to adduce evidence to show that the purpose of the transactions was not to defeat Mr. Purcaru’s creditors. Both Ms. Seliverstova and Mr. Pucaru testified at trial, and their explanations were found ‘to be lacking in cogency and credibility.’ Ms. Seliverstova’s explanation of the transactions – that funds transferred to her from Mr. Purcaru were repayments of significant unsecured and undocumented loans that she had previously made to Mr. Purcaru – was rejected because it was not supported by documentary evidence and ran contrary to the evidence of how Ms. Seliverstova otherwise conducted her financial affairs. The trial judge found that she was very careful with her funds, moving funds around to take advantage of modest improvements in interest rates, borrowing from credit cards with low introductory rates, and protecting her financial interest by registering a mortgage from her daughter when she purchased a residence in her daughter’s name. He therefore found it incredible that someone who was so careful and cautious in all her financial dealings, would make large, unsecured, and undocumented loans. The trial judge found the documentary evidence proffered by Ms. Seliverstova to be incomplete and unpersuasive. He did not believe the account she gave as to the source of the funds that she used for the purchases of the two condominiums, including her evidence that funds that she had received from a bank account in Cyprus originated with her mother in Russia, rather than Mr. Pucaru. He concluded that she was acting as a conduit to put Mr. Pucaru’s assets beyond the reach of the respondent.
8In short, the trial judge found the transactions to have been fraudulent, based on inferences that he made from the factual record. As this court held in FL Receivables Trust 2002-A (Administrator of) v. Corbrand Foods Ltd., 2007 ONCA 425, such findings are entitled to deference, and there is no basis upon which we could interfere with them. There was no reversal of the burden, as argued by the appellants, or requirement that they prove a negative. The trial judge found facts that supported an inference of fraud. The explanations provided by the appellants were simply not believable.
Ground 2: The trial judge erred by not assessing the intent at the time of the transactions
9The appellants argue, rightly, that the requisite fraudulent intent is to be assessed at the time of the impugned transactions: Business Development Bank of Canada v. Samarsky, 2012 ONSC 3002, para. 22. They contend that the trial judge erred by attributing to the appellants knowledge, in 2006 and 2008, of the outcome of the family law proceedings between Mr. Purcaru and the respondent that culminated in the order of Paisley J. in 2009.
10The appellants argue that until that order was made, neither Ms. Seliverstova nor Mr. Purcaru could have known that Mr. Purcaru would have such a substantial liability to the respondent. Therefore, in 2006 and 2008 when the condominiums were purchased, they could not have formed the intent to defeat the claims of the respondent.
11I reject this argument for the reasons given by the trial judge, who found that ‘once the applicant commenced her application for divorce and corollary relief, the applicant became a contingent creditor of Dan Purcaru with 100% likelihood of obtaining some award or settlement.’ Additionally, the trial judge found, on the evidence, including Ms. Seliverstova’s attendances in court during the proceedings, that Ms. Seliverstova also knew of the divorce proceedings at the time of the transactions and engaged in the transactions with the intent to defeat the respondent’s claims against Mr. Purcaru:
The extensive efforts to which they went to launder Dan Purcaru’s funds and hide the truth of the transactions that they conducted in light of the multiple badges of fraud surrounding the transactions especially, in light of Marina Seliverstova’s knowledge of the divorce proceedings, leads me to readily conclude that Marina Seliverstova was an active and knowing participant in Dan Purcaru’s effort to defeat the rights of the applicant.
12I reject this ground of appeal.
Ground 3: Trial judge erred by speculating and making impermissible inferences
13The appellant argues that the trial judge erred in law by engaging in speculation in order to make factual findings that were not supported by the evidence.
14I do not agree. The trial judge surveyed the records of the financial dealings of Mr. Purcaru and Ms. Seliverstova that were available to him. He did not, on his reckoning, have a complete picture of their dealings. He concluded that this was deliberate:
It was painfully obvious during the trial that Dan Purcaru and Marina Seliverstova created an impenetrable web of transactions and made only partial disclosure to try to support Marina Seliverstova’s story. While Marina Seliverstova has made some disclosures which she characterized as extensive, in almost every case there are breaks or discontinuity in the line of transactions so that one can never be sure as to precisely where money originated, was mixed around, and then ended up. It might be as she claims. But it may not be so. For the reasons stated in the specific situations below, I do not accept the credibility of Marina Seliverstova’s evidence. In short, I do not believe her.
15The trial judge made findings of fact from the evidence that was before him and drew inferences from those findings. The appellants have not identified any impermissible speculation.
Ground 4: Error in fixing prejudgment interest rate
16The appellants argue that the trial judge erred in exercising his discretion to fix a rate of prejudgment interest other than the rate prescribed by s. 127 of the Courts of Justice Act, R.S.O. 1990, c. C.43. This argument was not strenuously pursued in the oral hearing, and I see no merit in it.
Fresh evidence
17The appellants sought leave to introduce as fresh evidence on the appeal an affidavit from Ms. Seliverstova providing additional bank records from Bank of Montreal and Hellenic Bank in Cyprus, in support of her argument that the funds she received from Hellenic Bank had come from her mother in Russia and not Mr. Purcaru.
18I would deny leave to introduce fresh evidence. This evidence does not satisfy the Palmer test for the admissibility of fresh evidence. It does not show the source of the funds that were in the account, and is thus of no assistance in resolving the matters in dispute in this litigation. Neither am I persuaded that it could not have been discovered previously by Ms. Seliverstova, exercising due diligence.
Disposition
19I would deny leave to introduce fresh evidence, and would dismiss the appeal. I would award costs to the respondent on a partial indemnity basis in the amount of $25,000, inclusive of disbursements and HST.
Released: “PDL” AUG 2 2016
“B.W. Miller J.A.”
“I agree. Robert J. Sharpe J.A.”
“I agree. P. Lauwers J.A.”
