Midland Resources Holding Limited v. Bokserman, 2022 ONCA 73

Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220128 DOCKET: C69468 & C69481

Pardu, Roberts and Miller JJ.A.

BETWEEN

Midland Resources Holding Limited Plaintiff (Respondent)

and

Eugene Bokserman and Elena Krasnov Defendants (Appellants)

Counsel: Gregory Sidlofsky, for the appellants Kayla Theeuwen and Ken Prehogan, for the respondent Michael Shtaif, acting in person as intervenor

Heard: January 18, 2022 by video conference

On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated May 3, 2021 and the costs order dated May 25, 2021.

REASONS FOR DECISION

1On February 19, 2014, the appellant Bokserman learned that judgment would soon issue against him for $1,500,000 in favour of Midland Resources Holding Limited [Midland Guernsey]. On March 4, 2014, Bokserman and his wife Krasnov transferred their jointly held home [Rollscourt] into her name alone. The home was Bokserman’s only significant asset.

2In 2018, Midland Guernsey started a fraudulent conveyance action against Bokserman and his wife, after discovering that the transfer of title had occurred, apparently for no consideration.

3In 2019, Midland Guernsey assigned its rights to the original judgment to a British Virgin Islands company, Midland Resources Holding Limited, [Midland BVI]. Midland BVI obtained an order in this action to continue the proceedings in late 2019 and served the order on Bokserman and Krasnov. Midland Guernsey was wound up and dissolved in accordance with an order of the Royal Court of Guernsey dated November 13, 2019.

The motion judge’s decision

4The respondent moved successfully for summary judgment. At the hearing, the summary conviction judge refused to admit fresh evidence proffered by the appellants. The appellants attempted to demonstrate that Midland Guernsey had not complied with the legal requirements of its home jurisdiction, Guernsey, to validly transfer its interest in the judgment to Midland BVI because it had failed to give notice of the assignment to the judgment debtors.

5The summary judgment motion had been set for an earlier date, but the appellants fired their lawyers on the eve of that hearing and moved for an adjournment, which Pinto J. granted on the condition that they not file any additional material on the summary judgment motion.

6The motion judge found that the Rollscourt conveyance was fraudulent and granted Midland BVI a tracing order and constructive trust over a portion of a new property purchased by Krasnov with proceeds from a later sale of Rollscourt. He found that Krasnov must have known that the conveyance was intended to defeat Midland BVI’s claim; this was clear from her instructions to her lawyer to complete the conveyance quickly and her failure to advise the lawyer of the 2014 judgment. The motion judge held there was no proof Krasnov actually paid Bokserman $391,625 as she claimed, and there was no proof that any money paid was not simply returned to their joint family funds. The land transfer tax document claimed the consideration was for $2.00 and “natural love and affection.”

Arguments on appeal

7The appellants argue that the motion judge erred by:

1. Granting summary judgment despite conflicting evidence on whether the Rollscourt conveyance was fraudulent;
2. Dismissing the appellants’ motion to file additional evidence;
3. Determining that Midland BVI’s claim was not statute-barred; and
4. Awarding Midland BVI $175,000 in costs on a substantial indemnity basis.

8We do not accept these arguments.

Did the motion judge err in concluding on the summary judgment motion that the transfer was fraudulent?

9Despite the contents of the land transfer tax documents, Krasnov produced an agreement and promissory note purporting to record that she purchased Bokserman’s interest in the property for $391,625, calculated on the basis of 50% of the 2012 appraised value of the property less the amount owing on encumbrances. The promissory note required Krasnov to pay Bokserman $20,000.00 per month until the total was paid. She said she did not want to fund his appeal from the original judgment. Krasnov told the lawyer retained for the transfer that she wanted the transaction completed quickly. Neither Bokserman nor Krasnov told the lawyer of the 2014 judgment. Krasnov claimed that it never occurred to her that the transfer would frustrate Midland BVI’s ability to collect on the judgment, although she knew the judgment would be enforceable and that Bokserman had no other assets.

10The appellants argue that the motion judge made findings of credibility on contested evidence and disregarded supporting documents filed by the appellants. They say he ought to have ordered a trial.

11In Purcaru v. Seliverstova, 2016 ONCA 610, 80 R.F.L. (7th) 28, at para. 5, this court held that a plaintiff challenging a transaction as fraudulent has the burden of proving “on the 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, R.S.O. 1990, c. F.29. If the plaintiff establishes, however, that the transaction is tainted by one or more “badges of fraud” that could “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”: para. 5. Badges of fraud may include such matters as non-arms length transactions or transactions without consideration: para. 6. Here the defendants conceded that there were “badges of fraud” which were associated with the transfer of property to Krasnov alone.

12Rule 20.04(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that a court shall grant summary judgment if:

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to the claim or defence[.]

13Rule 20.04(2.1) enables a summary judgment motion judge to weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence unless it is in the interests of justice for such powers to be exercised only at trial: Rules of Civil Procedure.

14This was not a trial requiring assessment of competing narratives of an event or of opposing parties’ credibility. The appellants failed to satisfy the motion judge that they lacked a wrongful intent. They had full opportunity to advance any evidence about their intent that was relevant. They were cross-examined and the motion judge was well equipped to evaluate their evidence. A summary judgment motion was a proportionate and efficient way to deal with the dispute.

15The motion judge’s conclusion that Krasnov had not proven that she really paid Bokserman for the transfer and that the impugned transfer was intended to shield Bokserman’s interest in Rollscourt from enforcement of the judgment against him was amply supported by the evidence, and no error on his part has been shown. Although the agreement stated that “[t]he parties are signing this separation agreement voluntarily” the parties never separated. This lends further support to the motion judge’s conclusion that the agreement did not reflect reality.

Did the motion judge err in refusing to admit the fresh evidence?

16Authorized by an order of the Royal Court of Guernsey dated August 13, 2019, Midland Guernsey assigned all its rights in the judgment against Bokserman to Midland BVI. On October 9, 2019 Midland Guernsey moved in this action for an Order to Continue this action on behalf of Midland BVI. The order was issued and entered on December 16, 2019, and then served on the appellants. The order recites the fact of the assignment and provides on its face that a party who wishes to set aside or vary this order must make a motion to do so immediately after the order comes to the party’s attention.

17On January 11, 2021, despite the order of Pinto J. stipulating that no further material could be filed on the summary judgment motion, the appellants served a motion for leave to admit fresh evidence. They say the assignment of the judgment was not validly signed because it was not witnessed and in any event was ineffective because it did not comply with Guernsey law requiring notice to the judgment debtors.

18The motion judge discounted the evidence of a former romantic partner of a signing party to the assignment, saying she did not witness the document, contrary to her purported signature on the assignment. There was an undisclosed history between the signing party and his romantic partner as well as ongoing legal feuding; the motion judge concluded that it was inappropriate to give any weight to the romantic partner’s testimony.

19Further, the motion judge refused to admit the evidence concerning Guernsey law and the validity of the assignment of the judgment in that jurisdiction. He saw no basis upon which an Ontario court could rule on the validity of a transfer authorized by a Guernsey court for assets within that jurisdiction, particularly when no steps had been taken in that jurisdiction to set aside the assignment or authorization.

20Midland BVI resurrected Midland Guernsey to give the required notice of the assignment the appellants say was lacking. The fresh evidence from the appellants’ Guernsey counsel indicated that the restoration of Midland Guernsey on February 5, 2021 enabled that corporation to validly give notice of the assignment of the judgment to Midland BVI. The fresh evidence also indicated that the assignment had been perfected and taken effect as of February 2021.

21The motion to introduce fresh evidence was served over a year after the Order to Continue was obtained and less than a month before the date fixed for argument of the summary judgment motion. The appellants filed the motion in spite of the endorsement of Pinto J. stipulating that no further evidence could be filed. There was thus a sufficient basis to refuse to admit the fresh evidence.

22One of the purposes of giving notice when a corporation divests itself of assets or dissolves is to ensure that creditors of a company are not left without recourse. The appellants are not creditors but were debtors of Midland Guernsey.

23Dealing with the possibility of prejudice from the debtors’ point of view, there were no payments on the judgment made to Midland Guernsey because Bokserman did not have notice of the assignment to Midland BVI.

24There is no indication that failure to give Bokserman notice in August 2019 prejudiced him in any way, especially as the Order to Continue, advising of the assignment, was served some four months later.

25In any event, given that any procedural flaws associated with the earlier assignment have been corrected, there is no doubt that a new order to continue could validly be issued. An order to continue, signed by the Registrar, is in the nature of an administrative action. If necessary, it would have been reasonable to issue a new order to continue: Outfront Media Canada LP v. Clarity Outdoor Media Inc., 2017 ONSC 2136, at para. 68.

26This discretionary decision to refuse to admit the fresh evidence is entitled to deference. Informed by the context, and reading the reasons as a whole, we are not persuaded that the motion judge erred in principle or misapprehended the evidence, or that his decision to refuse to admit the evidence was unreasonable. In the absence of the fresh evidence and of an order setting aside the order to continue, his conclusion that Midland BVI had standing to continue the action was appropriate.

Did the motion judge err in concluding that the action was not barred by the expiry of a limitation period?

27The appellants took the position before the motion judge that the respondent commenced its action after the expiry of the two-year limitation period stipulated by the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s. 4.

28The judgment against Bokserman was issued and entered on April 14, 2014. The respondent obtained a writ of seizure and sale against Bokserman and filed it on May 2, 2014. Bolstered by the affidavit of a lawyer indicating that it was his practice to conduct title searches of property owned by judgment debtors frequently, even if there was nothing to indicate that a creditor ought to do so, the appellants argued that the respondent ought to have performed a title search when it filed the writ of seizure and sale and would have discovered the impugned transfer had been registered on March 5, 2014. The respondent issued the Statement of Claim in this action on April 12, 2018, nearly four years after the writ of seizure and sale was filed.

29The respondent points out that Bokserman took the position that the original judgment was not enforceable until his appeals and requests for reconsideration of the appeals were completed in January 2018. He refused to attend a judgment debtor examination before that date.

30The motion judge stated that the 10-year limitation period under s. 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, was applicable to claims under the Fraudulent Conveyances Act to set aside a conveyance of real property, citing Anisman v. Drabinsky, 2020 ONSC 1197, 76 C.B.R. (6th) 230 (“Anisman (ONSC)”), aff’d 2021 ONCA 120 (“Anisman (ONCA)”).

31In any event, the motion judge held that the claim was not discoverable until this court dismissed Bokserman’s request for reconsideration of the dismissal of his appeal on January 15, 2018. He concluded that nothing could have alerted the respondent of the need to search for title to any properties known to be associated with Bokserman before that date, as the latter took the position that there was nothing to enforce.

32Here the argument turned upon a finding as to when the respondent ought to have known of the material facts upon which a plausible inference of liability on the part of the appellants could be drawn: Grant Thornton v. New Brunswick, 2021 SCC 3, 461 D.L.R. (4th) 613, at para. 3. This was not a determination made upon an assessment of the actual subjective intention of a party, but rather was founded on largely uncontested facts. Moreover, the motion judge was not obliged to accept the evidence of a lawyer that the respondent ought to have begun a title search for any properties in which Bokserman may have had an interest as soon as it filed a writ of seizure and sale against him.

33This determination was suitable for a summary judgment motion, and the motion judge did not err in dealing with the issue.

34We have not had the benefit of full argument on the issue of whether the Real Property Limitations Act applies to proceedings under the Fraudulent Conveyances Act. Under these circumstances, prudence dictates that we refrain from opining on that issue. In any event, as in Anisman (ONCA), the further conclusion that the claim was not discoverable until the judgment was final because the appeal process was exhausted was reasonable and was not tainted by palpable and overriding error.

Should leave to appeal costs be granted?

35We would not grant leave to appeal the award of substantial indemnity costs in the sum of $175,000 against the appellants. A successful prosecution of an action to set aside a fraudulent conveyance is by its nature suitable for an award of substantial indemnity costs. We are not persuaded that there are strong grounds upon which this court could find that the motion judge erred in exercising his discretion: McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2008 ONCA 597, 95 O.R. (3d) 365, at paras. 23-26.

36Nor would we accede to the intervenor’s request that we grant leave to appeal the $30,000 in costs ordered against him. The arguments he made before the motion judge were lengthy and went well beyond what was in issue in this case.

37Over $8 million (U.S.) remains unsatisfied on the original judgment against Shtaif. No payments have been made towards the judgment. The core of Shtaif’s argument in this court and before the motion judge is that Certificates of Judgment issued on October 15, 2019 and February 5, 2020 by the Registrar of the Superior Court of Justice should be set aside on the ground that Midland BVI was not a valid assignee of the judgment, had no standing to obtain those certificates, and failed to make full and fair disclosure in obtaining them. His real concern is the use that might be made of those certificates in Alberta where Midland BVI is taking steps to register that judgment.

38Obtaining a certificate of a court document is not a step in a court proceeding. Anyone may obtain a certified copy of a court document without standing or explanation. Rule 4.03 of the Rules of Civil Procedure provides that “[t]he registrar shall provide a certified copy of a document that is in the court file to a person who is entitled to see the document under s. 137 of the Courts of Justice Act, R.S.O. 1990, c. C.43, if the person files a requisition…and pays the prescribed fee, if any.” Section 137 of the Courts of Justice Act provides that a person is entitled to see any document filed in a civil proceeding in a court, unless other legislation provides otherwise or there is a sealing order.

39A nosy neighbour, a business competitor, a journalist, or an ex-spouse can all get certified copies of court documents without explanation or standing. There is no basis to set aside the certified copies of the judgments issued here.

40The issue of a certificate of judgment is an administrative act which simply attests that judgment was in fact granted in Ontario. There can be no doubt here that the certificates reflect that judgment.

41The intervenor makes an argument about the viability of proceedings against him in Alberta. He is not a party to the present action. The Alberta courts will make their own assessment of the proceedings against the intervenor, based on the evidence and arguments before them. Nothing in this decision binds or precludes the Alberta courts from proceeding as they see fit.

42It does not appear that any order was made granting Shtaif leave to intervene in this court. Nonetheless his factum was filed and we permitted him to make his legal argument. His arguments in this court extended well beyond what was in issue in this case. An order granting intervenor status in the trial court does not mean that status continues to an appellate court. The issues may be quite different on appeal.

43The appeal is accordingly dismissed, with costs payable by the appellants to the respondent in the sum of $16,777 on a partial indemnity basis, and costs payable by the intervenor in favor of the respondent in the sum of $8,000.00.