Court of Appeal for Ontario

Date: 2023-03-02 Docket: C70907

Before: Brown, Sossin and Copeland JJ.A.

Between:

Daniel Jovkovic Applicant (Respondent)

and

Carmen DaSilva and Silverio Manuel DaSilva Respondents (Appellant)

Counsel: Michael A. van Bodegom and Brandon J. Carter, for the appellant James R.D. Clark, for the respondent

Heard: February 15, 2023

On appeal from the judgment of Justice Alissa K. Mitchell of the Superior Court of Justice, dated May 27, 2022, with reasons reported at 2022 ONSC 2691.

Reasons for Decision

Background facts

[1] The appellant, Carmen DaSilva, and her husband, Silverio Manuel DaSilva, married in 1985. In November 2004, they acquired property located at 87 Light Drive, Cambridge, Ontario as joint tenants (the “Property”). The transfer recorded the consideration for the purchase as $237,000.

[2] On June 10, 2016, Mr. DaSilva transferred his one-half interest in the Property to his wife (the “Transfer”). The document registered on title listed the consideration for the Transfer of his half-interest as $0.00. It was not disputed that at the time of the Transfer the fair market value of the Property was $380,000.

[3] Approximately a year before the Transfer, the respondent, Daniel Jovkovic, had commenced an action against Mr. DaSilva seeking damages of $600,000. In January 2019, Mr. Jovkovic obtained judgment against Mr. DaSilva and his corporation for approximately $427,000.

[4] On September 11, 2017, Ms. DaSilva granted a mortgage on the Property in the amount of $550,000 to the Royal Bank of Canada. Mr. DaSilva filed an assignment in bankruptcy two months later, on November 10, 2017.

[5] In June 2021, Mr. Jovkovic obtained authorization under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), to commence a proceeding for an order that Mr. DaSilva’s Transfer of his one-half interest in the Property to his wife was void as a transfer for undervalue. Mr. Jovkovic commenced an application, in which other creditors joined. By judgment dated May 27, 2022, the application judge declared, pursuant to s. 96 of the BIA, that the Transfer was a transfer for undervalue, void against the trustee, and set it aside.

[6] Ms. DaSilva appeals. She contends that the application judge erred: (i) by declaring that the Transfer was a “transfer at undervalue”; (ii) in finding that Mr. DaSilva was insolvent at the time of the Transfer; and (iii) in finding that Mr. DaSilva’s conduct was indicative of an intention to defraud, defeat or delay his creditors. For the reasons that follow, we are not persuaded by any of these grounds of appeal.

First ground of appeal:

[7] Ms. DaSilva contends the application judge erred in finding the Transfer was one at undervalue because she treated the value of her husband’s one-half interest in the Property as 50% of the gross fair market value of the Property without taking into account the amount of the encumbrances on the Property.

[8] We see no error. For the purposes of BIA s. 96(1) a “transfer at undervalue” means a disposition of property for which no consideration is received by the debtor or for which the consideration received is conspicuously less than the fair market value of the consideration given by the debtor. In the present case, Mr. DaSilva transferred his half-interest to his wife for no consideration, as recorded on the registered transfer. Neither in her affidavit nor cross-examination did Ms. DaSilva suggest that any contemporaneous consideration accompanied the Transfer. In any event, there is no dispute at the time of the Transfer there was equity in the property. Even using the calculations advanced by Ms. DaSilva in her factum, the consideration her husband received was conspicuously less than the fair market value of what he transferred to Ms. DaSilva.

[9] Ms. DaSilva also argues that there was no evidence to support the application judge’s finding, at para. 15, that Mr. and Ms. DaSilva contributed equally towards the costs and expenses of the Property during the 12-year period prior to the Transfer. We disagree. Clear evidence can be found in Mr. DaSilva’s answer to the Official Receiver’s Question 44: “Have you financially contributed in any way to the upkeep of this property from the date of purchase? […] Answer: We both contributed with our employment income. We paid the bills from our joint account.”

[10] Finally, Ms. DaSilva characterizes as unfounded the application judge’s statement that she “did not file documentary evidence to support the amount she claims to have paid to acquire the property which she argues justifies her exclusive ownership in the property.” A review of the documentary record supports the accuracy of the application judge’s statement. Prior to living at the Property, Mr. and Ms. DaSilva resided at a property on Middlemiss Crescent in Cambridge. The Middlemiss property was acquired in 1995, with title placed in Ms. DaSilva’s name. The Middlemiss residence was sold in 2004, with the net sale proceeds applied to the acquisition of the Property. Although Ms. DaSilva filed a lawyer’s reporting letter for the 2004 sale of the Middlemiss property, the letter did not disclose the source of the non-mortgage funds used to buy the Middlemiss property in 1995.

Second ground of appeal:

[11] As to the finding that Mr. DaSilva was insolvent at the time of the Transfer, the application judge did not reverse the onus of proof as Ms. DaSilva argues. The statements at para. 14 of her reasons that neither Mr. DaSilva nor Ms. DaSilva filed certain kinds of evidence were mere factual statements about what evidence was not in the record, not indications that the application judge reversed the onus of proof.

[12] The application judge explained in detail why she concluded Mr. DaSilva was insolvent at the time of the Transfer. Her findings were firmly anchored in the record as a whole, including the answers given by Mr. DaSilva on his examination by the Official Receiver and the evidence of other creditors. We see no palpable and overriding error.

Third ground of appeal:

[13] Finally, Ms. DaSilva argues that the application judge erred in finding that her husband’s conduct was indicative of an intention to defraud, defeat or delay his creditors. As the application judge made clear in her reasons, she disposed of the application on the basis that Mr. DaSilva was insolvent at the time of the Transfer. Her comments about his intention to defeat creditors were obiter.

Disposition

[14] For these reasons, the appeal is dismissed.

[15] Ms. DaSilva also sought leave to appeal the application judge’s award of partial indemnity costs to the respondent of $28,500. We see no basis upon which to grant leave to appeal the cost award. The application judge’s cost reasons disclose no error in principle or unreasonableness. Leave to appeal costs is dismissed.

[16] Based on the agreement of the parties, Mr. Jovkovic, as the successful party, is entitled to his costs of the appeal fixed in the amount of $7,500, inclusive of disbursements and taxes.

“David Brown J.A.”

“L. Sossin J.A.”

“J. Copeland J.A.”