2270752 Ontario Inc. v. Century 21 New Star Realty Inc.

Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20240531 DOCKET: C70464 & C70496

Before: Huscroft, Coroza and Monahan JJ.A.

DOCKET: C70464 BETWEEN 2270752 Ontario Inc. Plaintiff (Respondent)

and

Century 21 New Star Realty Inc., Baljit Dhaliwal* and Arvinder Dhaliwal Defendants (Appellant*)

DOCKET: C70496 AND BETWEEN 2270752 Ontario Inc. Plaintiff (Respondent)

and

Baljit Dhaliwal, Arvinder Dhaliwal* and Equity Financial Trust Company Defendants (Appellant*)

Counsel: Brian Radnoff and Vanessa Ford, for the appellant Arvinder Dhaliwal Joel Levitt, for the appellant Baljit Dhaliwal Michael Simaan, for the respondent

Heard: May 29, 2024

On appeal from the judgment of Justice Jana Steele of the Superior Court of Justice, dated February 28, 2022.

Reasons for Decision

[1] This is an appeal from the judgment of the trial judge awarding the respondent $600,000 in damages and setting aside the transfer of the appellants’ matrimonial home as a fraudulent conveyance. The appeal was dismissed with reasons to follow. These are our reasons.

[2] The trial judge found that Baljit Dhaliwal (“Baljit”) failed to return $600,000 he obtained from the respondent pursuant to a joint venture to build a gas station that was never built. Knowing that the respondent would sue him for breach of trust, Baljit fraudulently conveyed the matrimonial home to his wife Arvinder Dhaliwal (“Arvinder”) for $2.00 through an interim separation agreement.

[3] Arvinder argues that the trial judge erred in finding that she did not pay good consideration for the transfer and that her decision was fundamentally unfair, as Arvinder will lose equity she has built up between the transfer and the judgment and be liable on a mortgage required for the transfer.

[4] Baljit argues that a proper review of the monies moving between the parties showed that only $50,000 was owing to the respondent, and that the trial judge erred in finding that he intended to fraudulently convey the matrimonial home and that his wife was aware of this intention.

[5] In essence, both appellants challenge the trial judge’s findings of fact.

[6] The trial judge found that evidence of the breach of trust by Baljit and his fraudulent conveyance of the matrimonial home to Arvinder was “overwhelming”. She found the evidence of both Baljit and Mr. Kasal, the vice president of the respondent, to be inconsistent and evasive, noting that Baljit’s evidence was at times “completely unbelievable and tailored to the moment”. Where the evidence was in conflict, she preferred the evidence of the 100% shareholder of the respondent, Mr. Malik, which was “straightforward and sensible”. These credibility findings were open to her and there is no basis for this court to interfere with them.

[7] As for the conveyance of the family home, the trial judge found multiple badges of fraud and that the appellants failed to rebut the evidence of fraudulent intent. Arvinder refused to produce her family law file, bank statements, and accounting records. The interim separation agreement dealt only with the matrimonial home and debts, ignoring the issue of equalization in circumstances where Arvinder would have owed Baljit a substantial equalization payment. The trial judge found, further, that the exception for conveyances made for good consideration, in good faith, to a person without knowledge of the transferor’s intention did not apply.

[8] The trial judge’s findings are subject to review only for palpable and overriding error. We are satisfied that there is no such error.

[9] We do not accept that the fraudulent conveyance finding was fundamentally unfair to Arvinder. As this court explained recently in Bank of Montreal v. Iskenderov, 2023 ONCA 528, 168 O.R. (3d) 1, at paras. 42-44, an order under the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 does not have the effect of changing title. Creditors simply regain the ability to execute against the property for payment of debts owed to them by the transferor of the property. In effect, “[t]he conveyance is set aside but only as against creditors or others.”

[10] The appeal is dismissed. The respondent is entitled to costs in the agreed amount of $7,500, all inclusive, from each appellant ($15,000 in total).

“Grant Huscroft J.A.”

“S. Coroza J.A.”

“P.J. Monahan J.A.”