Carmen Shoukralla v. Michael Shoukralla

COURT FILE NO.: FS-09-350889

DATE: 20140714

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Carmen Shoukralla, Applicant

AND:

Michael Shoukralla, Respondent

AND:

Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung, Respondents

BEFORE: Justice Croll

COUNSEL: G. William McKechnie, for the Applicant

Michael Shoukralla, self-represented

V. Opara, for the Respondents Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung

HEARD: June 6, 2014

REASONS on Summary Judgment Motion

[1] This summary judgment motion was brought at the conclusion of trial. Ms. Shoukralla seeks to set aside the transfer of 2544 Eglinton Avenue West from Mr. Shoukralla to the Respondents, Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung. The factual background is set out in my reasons in the trial decision, which is being released at the same time as this decision. By necessity, much of the factual background is repeated in this decision.

Background facts

[2] The Applicant Carmen Shoukralla and the Respondent Michael Shoukralla were married on March 19, 1994. They separated 15 years later, on June 26, 2009. They have three children: Michelle Michael Shoukralla; Diadem Jolia Shoukralla; and Samy Cezar Shoukralla.

[3] Ms. Shoukralla brought an Application in which she seeks the following relief:

i. sole custody of Michelle Michael Shoukralla, Diadem Jolia Shoukralla and Samy Cezar Shoukralla;

ii. child support in the amount of $685 per month based on an imputed income of $35,000 annually, such support to be retroactive to July 2009;

iii. an equalization payment in the amount of $269,706.37 less the advance payment of $99,474.84 received pursuant to court order;

iv. the sum of $30,394 as reimbursement for advances made on behalf of the Respondent; and

v. an order that the property at 2544 Eglinton Avenue West, Toronto, be sold and that the proceeds be available to satisfy the equalization payment and the arrears of child support, and to secure future child support.

[4] On the date of separation in June 2009, the parties jointly owned the matrimonial home at 22 Rowntree Avenue, Toronto, and Mr. Shoukralla owned 2544 Eglinton Avenue West, Toronto, and 211 Fourteenth Street, Simcoe. The 2544 Eglinton Avenue West property is the subject of this summary judgment motion.

2544 Eglinton Avenue West

[5] Pursuant to an order of Czutrin J. dated January 11, 2011, Mr. Shoukralla was prohibited from selling, encumbering or registering mortgages on any properties without further court order.

[6] Despite this order, in February 2013, Mr. Shoukralla listed the Eglinton Avenue West property for sale for $850,000. In March 2013, he reduced the price to $799,000. He apparently received a conditional offer to purchase this property for between $750,000 and $800,000 from a James O’Malley. When this prospective purchaser did a Phase 1 Environmental Site Assessment, it was discovered that there is the potential for asbestos containing materials to be present in the building. As a result, the transaction did not proceed.

[7] However, on the second day of a trial that commenced on September 16, 2013, Mr. Shoukralla revealed during cross-examination that he had transferred the Eglinton Avenue West property to three purchasers on August 30, 2013, for $350,000. This was the first time that Ms. Shoukralla or her counsel became aware that Mr. Shoukralla no longer owned this property. The transfer occurred one week after the trial management conference on August 23, which Mr. Shoukralla did not attend, and some two weeks before the trial commenced. While Mr. Shoukralla stated that he was unable to attend the trial management conference because he was in hospital, he did not advise the court, Ms. Shoukralla or her counsel of his situation. No medical evidence was provided to explain his non-attendance at the trial management conference.

[8] It was Mr. Shoukralla’s evidence that it was necessary to sell the property quickly because the City of Toronto was threatening to sell the property by auction due to outstanding taxes. He provided no documentation to support what he says was the City’s position.

[9] The three purchasers to whom Mr. Shoukralla sold the Eglinton Avenue West property, Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung are all tenants of the property. It is alleged that Ms. Bautista is, or was, Mr. Shoukralla’s girlfriend. There is also evidence to suggest a close personal relationship between Mr. Shoukralla and Ms. Aung. Ms. Shoukralla sought to serve a notice of motion to question Ms. Bautista; however, service could not be affected. In an affidavit of service dated November 22, 2011, process server Christian Paesch indicates that when he attended at Ms. Bautista’s apartment at 2544 Eglinton Avenue West, the adult male who answered the door advised that Ms. Bautista did not live there. However, the adult male did contact Ms. Bautista by telephone. According to Mr. Paesch, the adult male advised her by telephone not to accept the package, and Ms. Bautista refused to make arrangements to accept service. Pursuant to the request to admit dated January 22, 2013, Mr. Shoukralla is deemed to admit that he frustrated service of a notice of motion to examine Ms. Bautista.

[10] According to Mr. Shoukralla, after payment of outstanding taxes, utilities and funds owed to Ms. Bautista on account of earlier loans, his net proceeds on the sale of the Eglinton Avenue property were nil. Again, Mr. Shoukralla provided no documentation of any loans to him from Ms. Bautista.

[11] In this regard, Mr. Shoukralla testified that Ms. Bautista had loaned him $290,000, which increased to $300,000 or $330,000 with interest. He advised that Ms. Bautista is employed as a caregiver, yet according to Mr. Shoukralla at trial, she was able to loan him this significant amount because she received contributions from her friends and relatives. However, notwithstanding this apparent pooling of funds, Mr. Shoukralla insisted that Ms. Bautista’s participation was as a lender, and not an investor.

[12] Interestingly, Mr. Shoukralla’s financial statement dated April 4, 2011, which is the most current financial statement he filed, shows a personal loan from a private lender, with $290,000 owing on valuation date and $150,000 owing on April 4, 2011. Mr. Shoukralla had counsel at the time he completed the April 2011 financial statement, yet his evidence at trial was that the information about the balance remaining was mistyped.

[13] Throughout his evidence, Mr. Shoukralla insisted that the $350,000 he received for the Eglinton Avenue property was a fair price, given the environmental issues.

[14] As indicated, the relief sought by Ms. Shoukralla included an order that 2544 Eglinton Avenue West be sold and the proceeds be available to satisfy the equalization payment and the arrears of child support, and to secure future child support. Given the disclosure at trial that the Eglinton Avenue West property had already been sold, Ms. Shoukralla brought a motion for a certificate of pending litigation to be registered on title. That order was granted on September 18, 2013.

[15] In addition, in light of the eleventh hour revelation that the Eglinton Avenue West property had been sold, Ms. Shoukralla sought to adjourn the trial in order to bring a motion to add Ms. Dumolong, Ms. Bautista, and Ms. Aung as parties and to bring this summary judgment motion to set aside the sale to them. Ms. Shoukralla also sought the adjournment in order to bring a motion for contempt of Mr. Shoukralla. Given the relief sought, the adjournment was granted.

[16] Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung were added as parties pursuant to an order I made on October 29, 2013. In my endorsement, I stated as follows:

None of the 3 people whom the Applicant seeks to add as a party attended today, and no material was filed on their behalf. Pursuant to my endorsement of September 18, 2013, they were each served by registered mail and regular mail addressed to 2544 Eglinton Avenue West. Counsel for the Applicant advises that the registered mail was returned “unclaimed”, and that the regular mail was not returned. Counsel for the Applicant also advises that he has been in contact with the lawyer who did the real estate transaction in which the 3 women purchased the Eglinton Avenue West property, and that this is the only address that the real estate solicitor has for the 3 women. More significantly, the Respondent today confirmed that each of the 3 women live at that address. As indicated, there have been service issues in the past and there are allegations, which the Respondent denies, that he controls access to the mail at that address. Given these circumstances, and the fact that the regular mail has not been returned, I am satisfied that the service requirements have been met and that each of Luzviminda Jardenil Bautista, Gina Tumulak Aung and Margelyn Delfin Dumolong have actual notice of this motion, or are deemed to have notice. As such, the motion proceeded in their absence.

[17] On October 29, 2013, Ms. Shoukralla was granted leave to amend the Application to include the following relief:

8(b). An Order to set aside a transfer dated August 30, 2013, made between Michael Shoukralla and Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung and registered at the Land Registry Office at Toronto on August 30, 2013, as instrument number AT3395222 for the sale lands and premises known municipally as 2544 Eglinton Avenue West, Toronto.

8(c). An injunction restraining Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung from selling or otherwise dealing with the said lands.

20. The conveyance referred to in paragraph 8(b) was made with intent to defeat or defraud the Applicant of her just and lawful claims herein.

21. Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung had, at the time of the conveyance, notice and knowledge of the intent to defeat or defraud the Applicant and acted in bad faith.

[18] On October 29, 2013, I also made a finding that Mr. Shoukralla was in contempt of the court order made by Czutrin J. on January 11, 2011. He was sentenced for that contempt on November 28, 2013. At that time, I stated the following:

As described by counsel for Ms. Shoukralla, Mr. Shoukralla is immoveable. He continues to deny that he has done anything improper, despite my findings. As was the case at the contempt finding in Geremia v. Harb, 2007 30750 (ON SC), [2007] O.J. No. 3019 (S.C.) at para. 25, “There was not a hint of remorse, only a redoubled intention to prove [his] conduct correct. The entire contempt exercise seemed to be wasted on [him].”

Especially aggravating is Mr. Shoukralla’s continued denial of a relationship with the purchasers, in particular Ms. Aung, despite evidence to the contrary. Instead, his evidence consistently returns to allegations as to how Ms. Shoukralla misused funds in the past, allegations that are completely irrelevant to the contempt proceedings.

While I appreciate that incarceration will have an impact on Mr. Shoukralla’s relationship with his son, the risk of incarceration has been made clear to Mr. Shoukralla throughout. Quite frankly, he should have considered the potential damage to the relationship with his son over the past 4 weeks when he was warned about the possibility of jail and given the opportunity to take steps to purge his contempt.

In addition, while Mr. Shoukralla points to medical reasons for his continued non-compliance with the court order, I note there has been no current or relevant medical evidence provided to the court to explain any of his actions. As well, I have observed Mr. Shoukralla in court on numerous days. I am satisfied that he understands the proceedings, and the consequences. He has simply chosen to ignore them.

In considering the appropriate remedy today, the sentencing principles of deterrence, denunciation and integrity to the legal system are at the forefront. As stated in Surgeoner v. Surgeoner, [1992] O.J. No. 299 (Gen. Div.) at paras. 5-6:

No society which believes in a system of even-handed justice can permit its members to ignore, disobey, or defy its laws and its courts’ orders at their whim because in their own particular view it is right to do so. A society which countenances such conduct is a society tottering on the precipice of disorder and injustice.

The need for the sanction of contempt proceedings is of significant importance in the field of family law. There is an undertow of bitterness and sense of betrayal which often threatens to drown the process and the parties themselves in a sea of anger and “self-rightness”. In this environment it is all too easy for a spouse to believe that he or she “knows what is right”, even after a matter has been determined by the court, and to decide to ignore, disobey or defy that determination.

In my view, a conditional sentence would not bring home to Mr. Shoukralla the seriousness of his conduct. He is not working, he lives in a building with friends, and to confine him to his home would not be meaningful enough to adequately punish his blatant disregard for this Court.

In these circumstances, I have no alternative but to sentence Mr. Shoukralla for a period of incarceration for 90 days in a provincial correctional institution.

[19] Despite my order finding that the Dumolong, Bautista and Aung Respondents had been served with the notice of motion to add them as parties, Mr. Opara, who appeared for the first time at the summary judgment motion on April 8, 2014, advised that he only learned of the action when he searched the court files at the request of his clients. In any event, the summary judgment motion was adjourned to June 6, 2014, to allow the Dumolong, Bautista and Aung Respondents to reply.

Summary Judgment

[20] Sections 2 and 3 of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, provides that “Every conveyance…made with intent to defeat…or defraud creditors or others of their just and lawful actions [is] void as against such persons and their assigns” unless the conveyance occurred with “good consideration and in good faith to a person not having at the time of the conveyance to the person notice or knowledge of the intent set forth in that section.”

[21] Ms. Shoukralla qualifies as a “creditor or other” for purposes of the Fraudulent Conveyances Act as she had an existing claim against Mr. Shoukralla at the time of the impugned conveyance. See Stone v. Stone (2001), 2001 24110 (ON CA), 55 O.R. (3d) 491 at paras 23-35.

[22] In the absence of direct proof, intent to defraud can be inferred by the suspicious circumstances surrounding the conveyance. As stated by Rouleau J. in Conte Estate v. Alessandro, [2002] O.J. No. 5080, aff’d [2004] O.J. No. 3275 (C.A.) at paras. 20-22:

These suspicious facts or circumstances are sometimes referred to as the “badges of fraud.” These badges of fraud are evidentiary indicators of fraudulent intent and their presence can form the prima facie case needed to raise a presumption of fraud. Once there is a presumption, the burden of explaining the circumstantial evidence of fraudulent intent falls on the parties to the conveyance.

[23] In this case, there are numerous “badges of fraud”. In particular, I note the following:

i. There was a court order prohibiting the sale of 2544 Eglinton Avenue West;

ii. The court order was registered on title;

iii. The conveyance occurred two weeks prior to the start of trial;

iv. Mr. Shoukralla did not file a fresh financial statement prior to the trial and did not attend the trial management conference;

v. Mr. Shoukralla did not disclose the conveyance until testifying during his cross-examination at trial;

vi. Mr. Shoukralla continues to live at the Eglinton Avenue property, as do the Respondents Dumolong, Bautista, and Aung;

vii. Mr. Shoukralla has a relationship with the Respondents Dumolong, Bautista and Aung;

viii. The Respondents Dumolong, Bautista and Aung occupied 2544 Eglinton Avenue West prior to the conveyance to them;

ix. The true consideration paid, if any, by the purchasers is unclear;

x. Mr. Shoukralla testified at trial that he is now bankrupt.

[24] Further, where the transferor is transferring the only asset he has remaining with which to pay his debts, there is a presumption of an intent to defeat creditors: see Conte Estate, at para. 24. Mr. Shoukralla was firm in his evidence that he had no other assets.

[25] The Respondents Dumolong, Bautista and Aung reject the above presumptive “badges”. In response to the motion, an affidavit has been filed by Ms. Dumolong. In that affidavit, she states that the Respondents Dumolong, Bautista and Aung were not aware of this matter, and were not aware that Mr. Shoukralla was separated from Ms. Shoukralla. Ms. Dumolong also denies that the Respondents Dumolong, Bautista and Aung were aware of the order of Justice Czutrin dated January 11, 2011.

[26] In her affidavit, Ms. Dumolong attests that from November 10, 2006 until September 1, 2008, the Respondent Bautista entered into six different loan agreements with Mr. Shoukralla, for a total amount of $290,000, which was secured by the Eglinton Avenue West property, and that on April 30, 2010 and April 30, 2012, the Respondent Aung entered into two loan agreements with Mr. Shoukralla, for a total amount of $90,000, again secured by the property. Ms. Dumolong also attests that on April 30, 2013, she entered into a loan agreement with Mr. Shoukralla for $45,000, also secured by the property.

[27] Ms. Dumolong also denies that any of the Respondents Dumolong, Bautista or Aung has a relationship with Mr. Shoukralla, apart from that of landlord and tenants. This statement is in conflict with Exhibit 2 filed at the contempt sentencing hearing, which Mr. Shoukralla agreed was a Facebook photo of himself and Ms. Aung. In this photo, they are shown in very friendly poses, including hugging and kissing.

[28] Ms. Dumolong’s affidavit states that although the charge on the Eglinton Avenue property and the transfer to the Respondents Dumolong, Bautista and Aung were registered on August 30, 2013, the Respondents Dumolong, Bautista and Aung in fact made their payments to Mr. Shoukralla before the registration of the Czutrin J. order on August 23, 2013. Her affidavit also states that discussion about the transfer occurred before the August 23 registration.

[29] Overall, the Respondents Dumolong, Bautista and Aung submit they paid valuable consideration for the Eglinton Avenue West property in good faith and with no knowledge of any intent to defraud. They submit that this is not a proper case for summary judgment to set aside the transfer, and seek the opportunity to cross-examine Ms. Shoukralla and have a trial of the issues.

[30] Both parties take the position that this motion is governed by Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[31] In the recent Supreme Court decision of Hryniak v. Maudlin, 2014 SCC 7, 366 D.L.R. (4th) 641, Justice Karakatsanis stated, at para. 4, “In my view, a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.”

[32] The test under the Ontario amendments to the summary judgment motion under Rule 20 has shifted from whether the case presents a genuine issue for trial, to whether there is a genuine issue requiring a trial. It remains the case that each party must “put their best foot forward”, and cannot wait for the possibility that more favourable facts may develop at trial. Accordingly, it must be assumed that if the matter were to go to trial, neither Ms. Shoukralla nor the Respondents Dumolong, Bautista and Aung would produce additional evidence. See Rogers Cable TV Ltd. v. 373041 Ontario Ltd. (1994), 1994 7367 (ON SC), 22 O.R. (3d) 25, at para. 4.

Analysis

[33] I do not accept the evidence that the Respondents Dumolong, Bautista and Aung had no notice of the matter until counsel searched the court files. They were served with all documentation by regular and registered mail at their last known address. I have indicated on the past appearances, including my October 29, 2013 order, that I have been satisfied that the Respondents Dumolong, Bautista and Aung have been served. Further, there would be no reason to direct counsel to search a court file if the parties in fact had no notice of the various proceedings.

[34] I also do not accept the evidence of the Respondents Dumolong, Bautista and Aung that they were unaware that Mr. Shoukralla was separated. All three respondents live at 2544 Eglinton Avenue West where Mr. Shoukralla resides. The Facebook page filed indicates that, at least at one time, Mr. Shoukralla and Ms. Aung were in a friendly relationship. Mr. Shoukralla exercises access to his son Samy at the apartment building on alternate weekends and mid-week. It is not reasonable to accept that the Respondents Dumolong, Bautista and Aung were unaware that Mr. Shoukralla was separated.

[35] The affidavit of Ms. Dumolong attaches as exhibits the various loan documentation she asserts was in place at the relevant times. However, in cases of non-arm’s length transactions, independent corroborative evidence is strongly recommended, although not required, if the respondents’ evidence is to be found credible: see Conte Estate, at para. 23

[36] In this case, I find that the Respondents Dumolong, Bautista and Aung were non-arm’s length to Mr. Shoukralla. Furthermore, there is no corroborative evidence to support the alleged loan agreements and I note that the quantum of the loans alleged on this motion differs from that to which Mr. Shoukralla testified at trial. As indicated, at trial, Mr. Shoukralla’s evidence was that Ms. Bautista had loaned him $290,000, which increased to between $300,000 and $330,000 with interest. His financial statement indicated $290,000 owing on valuation date, with $150,000 owing on April 4, 2011. In contrast, Ms. Dumolong attests to loans made by all three respondents totaling $425,000.

[37] Significant as well is that there are no cancelled cheques, bank statements, or other evidence as to the purpose of the loans or whether any payments were made. There is no reporting letter, statement of adjustments or other information from the real estate solicitor to shed light on what occurred. There is, as well, no evidentiary connection between the purported loans and the property transfer.

[38] In addition, the submission that the Respondents should be exempt from knowledge of the order of Czutrin J. because the transactions occurred prior to the registration of that order on title is simply not correct in law. Pursuant to s. 71(2) of the Land Titles Act, R.S.O. 1990, c. L.5, the Respondents Dumolong, Bautista and Aung are deemed to have had notice of the order of Czutrin J. prior to the conveyance to them of 2544 Eglinton Avenue West.

[39] Further, the response to the motion is simply one affidavit from Ms. Dumolong, despite there being three respondents, and much of the information in that affidavit is not personal to Ms. Dumolong. For example, when describing the loan agreements entered into by the Respondents Bautista and Aung, Ms. Dumolong does not provide the source of her information or how she has knowledge of the agreements. I accept that on November 22, 2011, Ms. Bautista indicated to a process server that she did not want to become involved in this matter, which may, in part, explain her failure to file her own evidence in response.

[40] Overall, on the evidence before me, I am satisfied that it can be inferred that Mr. Shoukralla transferred the property at 2544 Eglinton Avenue West, with the intent to defeat the claims of Ms. Shoukralla. It is reflective of his pattern of behaviour in this case, which includes issues relating to disclosure; lack of cooperation with the court ordered sale of the matrimonial home, requiring further court intervention; attempts to obstruct service on Ms. Bautista; his failure to pay court ordered child support and costs; and his utter disregard for the process, as evidenced by his failure to file any materials and his conviction for contempt. Further, Mr. Shoukralla appears to take some perverse pride in repeatedly stating that he has no money.

[41] The Respondents Dumolong, Bautista and Aung have not rebutted the evidentiary presumption that they were privy to Mr. Shoukralla’s fraudulent intention to defeat Ms. Shoukralla’s claims. The Respondents Dumolong, Bautista and Aung all live at the same address as Mr. Shoukralla, and I accept that there is a personal relationship between Mr. Shoukralla and one, if not all, of them. There is conflicting evidence as to the quantum that was supposedly lent and, in any event, regardless of quantum, there is no persuasive independent evidence from which to conclude that any consideration passed between the parties. Rather, the only evidence is self-serving uncorroborated loan documentation propounded by one of the three Respondents. The submission of counsel for the Respondents Dumolong, Bautista and Aung that he did not have time to gather the necessary evidence is not an acceptable justification for such a deficient evidentiary record and in any event, time constraints were never raised in the Respondents’ material filed on the motion.

Conclusion

[42] I return to the principles in Hryniak. I am satisfied that the conveyance of the property at 2544 Eglinton Avenue West was made by Mr. Shoukralla with the intent to defeat the claim of Ms. Shoukralla and the Respondents Dumolong, Bautista and Aung had knowledge of this intent. There is no genuine issue requiring a trial. Accordingly, I grant summary judgment setting aside the transfer dated August 30, 2013, made between Michael Shoukralla and Margelyn Delfin Dumolong, Luzviminda Jardenil Bautista, and Gina Tumulak Aung, and registered in the Land Registry Office at Toronto on August 30, 2013, as instrument number AT3395222 for the sale of lands and premises known municipally as 2544 Eglinton Avenue West, Toronto.

[43] Pursuant to my reasons set out in the companion trial decision, also released today, there shall be an order vesting the registered interest of Michael Shoukralla in 2544 Eglinton Avenue West, Toronto, Ontario in the name of Carmen Shoukralla. The Applicant may sign all documents required to give effect to this vesting order on behalf of both herself and the Respondents Shoukralla, Dumolong, Bautista and Aung, without their consent.

Costs

[44] If the parties are unable to agree on the issue of costs, the Applicant Carmen Shoukralla shall provide written submissions within 15 days of the release of these reasons, and all Respondents are to respond in writing to those submissions within 10 days thereafter, with a 5 day right of reply to the Applicant. Submissions shall not exceed 3 pages in length.

Croll J.

Date: July 14, 2014