Esfahani v. Samimi et al., 2015 ONSC 657

COURT FILE NO.: CV-12-462210

DATE: 20150311

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Djalaleddin Esfahani, Plaintiff

AND:

Kamran Samimi, Marina Samimi, Danny Aria Samimi,

Layla Sabet, Shariar Moshtael and Klaus Hartman, Defendants

BEFORE: Sean F. Dunphy, J

COUNSEL: Raymond G. Colautti, for the Plaintiff

Arnold H. Zweig, for the Defendants (Samimi, Sabet and Moshtael)

Maxwell C. Diamond, for the Defendant Hartman

HEARD: January 28-30 and February 5, 2015

Judgment on trial of an issue

[1] This summary judgment matter came on as a mini-trial of an issue pursuant to terms agreed between the parties in September, 2013. The Statement of Claim alleges that a number of real estate and related transactions effected by the defendants were undertaken with the intent to hinder, defeat and delay the claims of the plaintiff against Kamran Samimi (“Kamran”). The issue referred to this court was stated by the parties as follows:

“Did the Defendants, or any of them engage in a series of transactions as detailed in the responding parties’ motion record with the intent to defeat, delay, hinder or prejudice the Plaintiff from receiving payment from Kamran Samimi for the outstanding Judgment of Justice Nolan or enforcing same”?

[2] On the eve of the hearing of the trial on this issue, the parties brought to the court’s attention a very material fact known to them but not previously disclosed to the court. The defendant Kamran made an assignment in bankruptcy in November, 2013 shortly after the parties settled upon the agreed issue to be tried and was automatically discharged on August 6, 2014. In response to the defendant serving a short affidavit attesting to the fact of bankruptcy and discharge of Kamran, the plaintiff served a motion seeking leave to continue with the action.

[3] At the opening of the hearing, the plaintiff was given leave to amend his motion to continue to add thereto a claim that the bankruptcy and discharge of Kamran did not discharge the claims made against him in this action as same are preserved pursuant to s. 178(1)(d) of the Bankruptcy and Insolvency Act (“BIA”).

[4] After a short reserve, I advised the parties that I would hear the trial of the issue as framed by the parties since the Statement of Claim on its face included claims against other parties besides the discharged bankrupt, whether or not the claims against Kamran survived discharge pursuant to s. 178(1)(d) of the BIA as alleged. I indicated then that I would issue reasons on the “bankruptcy” issue at a later date.

[5] This judgment combines my ruling on that preliminary “bankruptcy” motion as well as the mini-trial on the “fraudulent conveyance” issue as stated by the parties.

Background Facts

[6] The plaintiff Esfahani is a judgment creditor of Kamran. He originally obtained judgment in Germany in March, 2007 and proceeded to bring an action in Ontario to enforce the German judgment. He served his claim in Ontario in June, 2008 and, after a contested hearing, was successful in getting an order of this court enforcing the German judgment on December 24, 2009. The plaintiff has not collected anything at all on that judgment which has continued to accrue interest. The unpaid amount currently stands somewhat above $600,000.

[7] The plaintiff alleges that Kamran entered into a number of transactions with the other defendants with the idea of putting substantially all of his assets out of reach of collection efforts. These transactions are said to have been undertaken by the parties with the intent to hinder, defeat or delay Kamran’s creditors within the meaning of s. 2 of the Fraudulent Conveyances Act, R.S.O 1990, c.F-29 (the “FCA”). The Statement of Claim is not however limited to the FCA and contains other allegations in a similar vein, including of conspiracy.

[8] The plaintiff also brought a claim against Mr. Klaus Hartman, the lawyer who represented Kamran in defending the enforcement proceeding before Nolan J. and the lawyer who represented some or all of the parties in many of the challenged transactions. By agreement between the parties, there has been a stand-still as regards proceedings against Mr. Hartman. The defendants have waived any privilege they may have in relation to Mr. Hartman’s files and Mr. Hartman has made his file available for inspection and his testimony available at trial. There was some issue about the timing of Mr. Hartman’s release of documents as many were released on the eve of the hearing, but this did not appear to interfere unduly with the fair hearing of the matter. Mr. Hartman will be bound by the outcome of the mini-trial as regards any findings of fact, but no relief regarding the claim against him is being sought. He has been represented at the hearing, but has not taken part in any cross-examinations.

[9] The challenged transactions concern:

a. Transactions involving the residence of Kamran and his wife Marina Samimi (“Marina”) at 161 Owen Blvd, Toronto;

b. Transactions between Danny Samimi (“Danny”), his father Kamran and his step-mother Marina involving 159 Owen Blvd., Toronto; and

c. Transactions between Kamran and Marina on the one hand and Layla Sabet and her husband Shariar Moshtael on the other involving a property at 165 Banff Rd, Toronto.

[10] In addition to having before me the record of affidavits and cross-examination transcripts as agreed between the parties, I had the benefit of the viva voce testimony of the defendants Kamran, Marina, Danny, Mr. Moshtael and Layla Sabet as well as Layla Sabet’s father Mr. Nostratollah Sabet and the defendant (but not party to this motion) Mr. Hartman.

Issues

(a) Bankruptcy Issue

[11] I must start by reiterating my profound disappointment in the parties that the fact of the bankruptcy was not brought up by either party prior to the eve of this hearing. While I appreciate that the assignment in bankruptcy of the defendant Kamran occurred on November 6, 2013 and thus after the agreement to set down this trial of an issue in September, 2013, the intervening year could have been used either to continue the proceeding in the name of a trustee in bankruptcy who might have supplemented it with an action under s. 96 or by way of assignment under s. 38. The plaintiff was the only listed creditor in the bankruptcy, duly filed and proved its claim and appointed the sole inspector. The trustee could have been financed by the plaintiff or replaced or an assignment of the causes of action sought. Any or all of these would have been a more efficient use of the intervening year after the assignment in bankruptcy leading up to the hearing of this trial of an issue. Any or all of these continue to be more efficient options available to the plaintiff, notwithstanding the discharge of Kamran and his trustee in bankruptcy in August, 2014 rather than seeking to pursue whatever untested residual civil claims might be said to remain with the plaintiff in his own right notwithstanding the bankruptcy. The FCA and BIA provide remedies which specifically address the precise conduct the plaintiff complains of in this action and provide powerful and tailored tools designed to be used in appropriate cases. Civil conspiracy, by contrast, offers an uncertain and ill-suited path to address the merits of these claims.

[12] There being no motion before me to determine which, if any of the pleaded civil conspiracy claims or other claims have any viability separate and apart from a claim under FCA (or the BIA), I must proceed on the basis that such claims remain in play. Absent such a motion, I must deal with the factual issue the parties have placed before me by their consent and on the basis that its resolution ought to shorten or simplify considerably the resolution of the claims between the parties by whichever path they may ultimately determine to follow.

[13] The plaintiff sought to argue that the fraudulent conveyance claim brought against Kamran bankrupt was a “fraud” claim and thus unaffected by Kamran’s discharge from bankruptcy on August 7, 2014 pursuant to s. 178(1)(d) of the BIA. I cannot accept that this is so.

[14] The plaintiff’s claim is under a German judgment enforced by the Ontario Superior Court. This is a claim provable in bankruptcy and was in fact so proved. Indeed, on the record, it was the only proved claim in the bankruptcy of Kamran. There is no suggestion made here that the underlying claim of the plaintiff leading to the German judgment was itself related to fraud.

[15] The plaintiff’s ordinary civil claim did not morph into an undischarged fraud claim merely because of the difficulties he encountered in collecting upon it. In Tucker v Aero Inventory (UK) Limited, 2011 ONSC 4223 Justice Morawetz concluded that only a trustee in bankruptcy had standing to bring a preference action under s. 95 of the BIA. I find the same reasoning applies to an action under the FCA once bankruptcy has intervened. The effect of the assignment in bankruptcy on November 6, 2009 was to replace the plaintiff’s claim under the judgment debt against Kamran personally with a claim provable against the bankruptcy estate created by his assignment in bankruptcy. That claim had the potential to be satisfied in whole or in part from any of the assets available to the trustee who wielded – and could wield still – all of the remedial weaponry afforded by the BIA and the FCA.

[16] An action under the FCA cannot belong simultaneously to the plaintiff and to the trustee to satisfy the same claim (the judgment debt which is a claim provable in bankruptcy and subject to payment from the bankruptcy estate). If one of them were to grant a release, what would the impact be upon the other? Post-bankruptcy, an FCA claim can only belong to the trustee. Section 38 of the BIA provides a ready answer to a creditor who wishes to continue or commence an FCA action after bankruptcy of the debtor should the trustee fail to pursue it.

[17] The discharge of Kamran on August 7, 2014 is irrelevant on this analysis since the discharge applies only to claims against Kamran and an FCA action is only in a very derivative sense an action “against” the bankrupt. An FCA action is certainly not itself a claim provable in bankruptcy that is subject to discharge. A claim under the FCA is effectively an enforcement tool and not a free-standing source of liability as regards the bankrupt. It enables the bankrupt’s property or its proceeds to be traced into the hands of third parties who may have participated in transfers of the kind described by the statute.

[18] The simple fact is that while the discharge may have freed Kamran of the plaintiff’s judgment debt, it has not re-vested in him any assets held on his behalf by third parties which are or were available to a trustee employing s. 96 of the BIA or the FCA nor has Kamran’s discharge divested the trustee in bankruptcy or a creditor bringing a s. 38 BIA application of the right to pursue those claims now or then. The discharge of the trustee is similarly not relevant since the trustee can be re-appointed or a new one appointed in his stead should the court so direct on the plaintiff’s motion. The plaintiff has and had a ready path opened for him by the assignment in bankruptcy of Kamran. The gift horse so offered was eschewed in favour of striking out upon the bramble-strewn path of civil conspiracy and other claims.

[19] In summary, I cannot agree with the plaintiff’s contention that the discharge of Kamran does not affect the plaintiff’s claim against Kamran in his own capacity. The judgment debt stands discharged unless the bankruptcy court orders otherwise and an action to pursue claims against others under the FCA belongs solely to the bankruptcy estate (acting through its trustee or a s. 38 assignee). The discharge of the trustee or of the bankrupt is of no moment to this finding since the bankruptcy estate continues to own the FCA claim whether it pursues it or not. If trustee will not pursue it, the plaintiff as sole creditor against the estate has all necessary remedies under the BIA to seek the reappointment of the trustee, the appointment of a new trustee or an assignment under s. 38. Any such motions belong before a bankruptcy court.

[20] While I dismiss this aspect of the plaintiff’s motion accordingly, I make no comment on the other causes of action alleged in the Statement of Claim which do not purport to arise solely under the FCA as the matter was not before me nor was it argued. I shall now proceed to consider the issue that the parties have brought before me to resolve.

(b) Fraudulent Conveyance Issue

[21] The issue for trial as stated by the parties’ agreement does not in fact refer to the FCA by name and I was not called upon to make any actual rulings of liability under that statute per se. The agreement between the parties recognized that, depending upon the outcome of this hearing, a further application might be required at another time to determine the actual amounts, if any, of liability. The findings I have been asked to consider making at this hearing – intention to defeat, hinder or delay the payment of the plaintiff’s claim by Kamran – are of course a nearly direct quote from the FCA but could be equally applicable to claims, for example, under s. 96(1)(b) of the BIA or possibly civil conspiracy claims asserted by the plaintiff should these have any stand-alone existence separate and apart from the FCA (the existence of such separate claims not being ruled upon here). In the case of each transaction reviewed, I have made separate and distinct determinations of the existence or absence of the described fraudulent intent (“to defeat, delay, hinder or prejudice the Plaintiff from receiving payment from Kamran Samimi”) as stated by the question placed before the court by the parties.

[22] The findings that I have been asked to make in this case are thus findings of fact regarding the nature of the transactions and the intentions of each of the parties to them. The liability of some or all of the parties, if any, flowing from such findings is another matter for another day.

(i) Overall Findings Regarding Kamran and Marina

[23] I am quite satisfied from the evidence that Kamran has conducted himself throughout the period when transactions are brought under review (2007- 2011) with a view to carrying on his business activities as normally as possible while so arranging his affairs as to leave the smallest possible economic trail for the plaintiff as judgment creditor to follow. Where Kamran has appeared on the face of transactions, he has taken steps to provide himself with cover or else has been “in front” for as little time as possible. I am not unaware of the fact that a financial crisis of global proportions impacted credit markets for much of the time frame under review and that, upon occasion, the imperative of obtaining credit where available may have trumped the imperative of maintaining secrecy regarding Kamran’s economic interest.

[24] Kamran has known since at least March, 2007 that the plaintiff, a former business associate of his in Germany, had obtained a significant judgment against him. By June of 2008, Kamran knew that the plaintiff was taking steps to enforce that judgment in Ontario. Kamran had a number of business activities that were potentially affected by the judgment and thus had a choice to make – take steps to satisfy the judgment or take steps to frustrate and confuse the foreign judgment creditor as to his assets while funding litigation to forestall collection. He chose the latter course. While Kamran sought to oppose the enforcement proceedings, he was ultimately unsuccessful and the judgment of Nolan J. enforcing the German judgment was issued on December 24, 2009.

[25] The plaintiff notes that Mr. Hartman handled Kamran’s commercial affairs during this time frame while coordinating his litigation efforts aimed at resisting enforcement of the judgment.

[26] Mr. Hartman’s evidence was that Kamran rarely sought his advice and was a sophisticated client. Mr. Hartman did retain litigation counsel for Kamran and assisted in the communication of advice and instructions between such counsel and Kamran from time to time. Mr. Hartman disclosed that a review of his files indicated that he had undertaken 17 transactions involving 13 properties for Kamran, his wife Marina or son Danny between 2003-2010.

[27] While I was asked to infer that Mr. Hartman must have made known details of Kamran’s difficulties in relation to the German judgment to the other parties with whom he also dealt, I find it unnecessary to go to such lengths. Mr. Hartman denies any such conversations took place. He characterized his own role as being almost purely transactional (drawing up documents, registering mortgages or transfers, contacting and retaining litigation counsel) - a role which involved little or no advice being asked for or given to this sophisticated client. His evidence in this regard did not appear to me to be out of line with my own observations or the business conduct of Kamran or the other defendants and I am generally inclined to accept Mr. Hartman’s description of his own circumscribed role by and large.

[28] A review of transactions involving the three properties discussed below leaves me with no doubt that Kamran had a material interest in all three properties at various points in time which might have been utilized to pay some or all of the plaintiff’s claim. Instead, transactions were undertaken with others which certainly had the effect of ensuring Kamran’s interest disappeared from view as soon as reasonably practicable, consistent with the imperative of obtaining necessary financings.

[29] I have no hesitation in concluding in respect of each of the transactions below that Kamran had the intent of placing his interest in the relevant transactions in the names of other parties at his direction with a view to defeating, hindering or delaying the plaintiff (his only disclosed material unsecured creditor) from collecting upon his claim.

[30] My conclusions regarding Kamran arise from a review of the totality of the evidence regarding Kamran as well as from a careful consideration of his testimony, including oral testimony at the hearing before me. I found Kamran to be entirely lacking in candour and to be evasive and was unable to accept his evidence on any material matter unless satisfactorily corroborated.

[31] Marina too was a combative and evasive witness. She denied having contributed funds to the 165 Banff purchase whereas Mr. Hartman’s trust ledger and the bank documents produced conclusively demonstrated that she did. Her memory was strategically weak where difficult issues arose on cross-examination but was adamant about others. She claimed that the CIBC mortgage obtained over 161 Owen was to provide her with a line of credit although the documents filed by Mr. Hartman clearly show that the line of credit was for her husband and she was not even shown as a beneficiary or signatory thereto. Her breezy explanation about this mortgage – discussed further below – lacked any credibility or air of reality.

[32] Two instances among many serve to illustrate my conclusions regarding the credibility of both Kamran and Marina. These are the matter of the CIBC mortgage over the family home at 161 Owen Blvd. and the transfer to Marina of Kamran’s alleged nominee interest in 165 Banff.

[33] As noted, 161 Owen Blvd. was the family home. The record shows that Marina was the purchaser of record in 2004. A mortgage for the entire amount of the purchase price (i.e. 100% financing) was placed on title. There is no evidence before me as to who made the mortgage payments or what other collateral was provided to obtain a 100% financed mortgage of a residential purchase. In her testimony before me, Marina said that she had been looking to use the home as collateral to obtain additional credit in late 2008, the value of 161 Owen Blvd. having gone up considerably since 2004. Her mortgage broker (the same broker utilized by Kamran) advised her that Kamran could get a better rate than she could so the transaction was done that way. While she testified to this occurring in 2009, the record indicates mortgage commitments from CIBC were obtained by Kamran commencing in September, 2008 with closing ultimately occurring on January 2, 2009.

[34] Both Kamran and Marina claimed that CIBC insisted that they would only provide the requested mortgage (of $1.22 million) to Kamran and not to Marina. No explanation for this curious preference of a major Canadian bank was tendered. This availability of financing to Kamran and not Marina is said to have been the motive for transferring the home from Marina to Kamran on January 2, 2009. This simplistic explanation, if true, appears like the 13th chime of the grandfather clock that makes all of the others suspect.

[35] Consider for a moment what the record before the court suggests about the creditworthiness of Kamran and Marina in September, 2008-January, 2009. Kamran testified to the following family income as declared to Canada Revenue Agency between 2006-2009 at the hearing:

Year

Kamran

Marina

2009

$0

$12,631

2008

$22,154

$21,719

2007

$22,004

$9,320

2006

$25,600

$28,731

[36] The idea that Kamran with essentially minimal to no income and no (disclosed) assets according to his judgment debtor examination was nevertheless the preferred credit of a major Canadian bank (CIBC) is, to put it mildly, incredible. The idea that his credit would have had enjoyed such lofty standing at the very height of the most profound worldwide financial crisis in over 70 years beggars belief.

[37] If Kamran and Marina were being truthful in suggesting that CIBC requested the mortgage be advanced to Kamran instead of Marina, then I can only conclude that Kamran disclosed to CIBC his true beneficial interest in 161 Owen as well as evidence of assets and revenues quite opposite that represented in all of his sworn examinations in this proceeding, to say nothing of his bankruptcy proceedings. If the story regarding CIBC demanding Kamran’s credit in lieu of Marina’s is untrue, then Kamran and Marina have both been deliberately and materially untruthful in their testimony before this court. In either event, the credibility of both Kamran and Marina simply cannot survive careful analysis of this transaction.

[38] Both witnesses denied having copies of any mortgage applications relating to this mortgage and claimed complete ignorance as to its contents. The suggestion made was that somehow the mortgage broker prepared the application without either of them knowing what the contents were. That hardly seems credible. There was no credible explanation as to why his mortgage broker’s files could not have been produced to verify such a material issue to this litigation. The files relating to the mortgage which were produced in court from Mr. Hartman did contain a copy of Kamran’s signed representation to CIBC dated December 24, 2008 acknowledging the truth of the matters set forth in the application he now claims he is unable to produce.

[39] I cannot accept without further proof the suggestion that CIBC asked Marina to transfer the home she allegedly owned as sole beneficial owner to Kamran in order to grant Kamran a mortgage without so much as a covenant from Marina. This is all the more improbable given the mortgage commitments from the beginning included a $120,000 line of credit in Kamran’s name alone. The sworn description of the transaction by both Kamran and Marina at trial simply does not pass the test of commercial common sense and I cannot accept it as truthful or complete. I can only conclude that Kamran represented that he was either the legal owner or beneficial owner soon to become legal owner when the mortgage application was made and Marina was aware of and approved that representation.

[40] The failure to produce the mortgage application files by Kamran and Marina on this (or indeed any) of the mortgage issues raised by the case casts a very serious shadow on the sincerity and credibility of both. It is highly likely that mortgage application files for loans such as these would have included such matters as balance sheets and statements of assets and income from the applicant(s). Given the volume and size of transactions undertaken by Kamran and Marina in this time frame – and in particular in relation to the CIBC mortgage, I am entitled to draw adverse inferences (and do draw them) that such documentation would have shown representations made by Kamran to CIBC of interests held by him in respect of both 161 Owen and 165 Banff. There is no other credible explanation for CIBC agreeing to grant a substantial five year mortgage to Kamran over 161 Owen in November, 2008 when he did not then own it, still less had he represented to them that he would simply acquire it temporarily from his wife for a few months as a bare trustee. I find that it is highly probable that he represented to CIBC that he had a beneficial interest in both properties and that he failed to disclose the plaintiff’s judgment against him which was then outstanding and in the process of being enforced in Ontario.

[41] The credibility of Kamran and Marina was also severely strained in accounting for the transfer of Kamran’s interest in 165 Banff to Marina on December 19, 2008. The evidence at the hearing suggested that the motion for summary judgment served by the plaintiff to enforce the German judgment in early January, 2009 would have become known to Kamran’s counsel in late 2008 and the obvious suggestion plaintiff’s counsel sought to establish was that the transfer of 165 Banff into Marina’s name in December, 2009 was undertaken in response to the potential threat such a motion might pose.

[42] In his judgment debtor examination in January, 2012, Kamran offered little in the way of explanation regarding this transaction. He said that he transferred nominee title to his wife because he had “done his job” (referencing the building of 165 Banff) and “wanted to give it to them” (i.e. Layla Sabet and Mr. Moshtael) but could not since Mr. Moshtael “did not have his immigration”.

[43] Little of this original explanation under oath survived subsequent revisions. The evidence later demonstrated that Mr. Moshtael had obtained his Canadian permanent resident status in November 24, 2008 (i.e. prior to the transfer). There was no impediment to Layla Sabet and Mr. Moshtael taking title to 165 Banff and no evidence was led by any of them to substantiate any attempts by them to get a mortgage over 165 Banff in that time frame (or ever).

[44] Furthermore, if Kamran was a mere nominee as he claimed, what impediment existed to transferring to them on demand? The mortgage financing in place had allegedly been put in place on behalf of Ms. Sabet and Mr. Moshtael if the nominee agreement was to be accepted at face value. Why would a transfer to his spouse – without any indication of consent of the mortgagee – be any simpler to have accomplished than a transfer to the alleged beneficial owner whose instructions he was bound to follow under the alleged nominee agreement? Once again, the explanation tendered fails the commercial common sense test. On the other hand, his behavior would appear quite reasonable if Kamran had a beneficial interest in the property to protect.

[45] In his testimony in court Kamran resisted suggestions that the building project at 165 Banff was complete by December, 2008 despite two Tarion documents certifying substantial completion in early September, 2008 and completion in December, 2008. At a minimum, his oral testimony in court on this subject was at variance with what he swore to on his judgment debtor examination. His motive in seeking to allege a delay in completion was not only contrary to all of the Tarion evidence and his own earlier sworn testimony, it was without apparent object and did little to enhance his credibility before this court.

[46] The suggested connection between Ms. Sabet and Mr. Moshtael obtaining financing and the transfer of the nominee agreement to Marina was neither credible nor corroborated by any objective evidence. The judgment debtor examination explanation of this transaction was simply not credible.

[47] In a later cross examination (December 20, 2012), Kamran came up with a modified explanation, one which he maintained at trial. He claimed that the transfer of the nominee interest was needed because “I want to go out of the country and the house was finished and we are waiting if they get the mortgage. Any time when they get the mortgage, they can transfer to themselves”. Mr. Moshtael’s immigration status gave way to Kamran’s travels as the reason for the transfer. He went on to describe not a planned trip but actually travelling to Germany and France and staying about six or seven months. He repeated the story (albeit with less detail) on cross-examination at the hearing. The story of actually travelling to Germany for six months or even six days in that time frame was a figment of his imagination.

[48] Kamran’s passport was in evidence and showed no such travel in that time frame, with the first overseas trip being a brief trip to Germany in June, 2009. When challenged on cross-examination with this rather obvious fact, he suggested that perhaps his Iranian passport might show other trips since he used his Iranian passport for trips to Iran. The offered explanation was nothing of the sort since his sworn testimony was that he had actually travelled to Germany necessitating the transfer to Marina in order to allow Mr. Moshtael and Ms. Sabet to arrange a transfer immediately upon a financing window opening. He was nevertheless asked to locate the Iranian passport and bring it to court. When the Iranian passport was produced and inspected, it provided no corroboration of his story despite some minor confusion regarding the translation.

[49] I find that Kamran’s story of a trip to Germany motivating the transfer to Marina was a fabrication. Marina’s affidavit repeated the same false story, a factor negatively impacting her credibility as well. She sought to explain the discrepancy on her cross-examination by suggesting that Kamran’s plans had changed but offered no more details. Kamran’s sworn testimony was not regarding a planned trip but an actual trip. Her attempt at an explanation after the fact was no more credible than his.

[50] For these reasons as well as my general assessments of credibility of both witnesses on the totality of the evidence (some of which is reviewed further below), I found myself unable to attach any credibility to the statements of Kamran or Marina in relation to contentious matters without reliable, objective independent corroboration (and, for the reasons expressed below, corroboration from Ms. Sabet or Mr. Moshtael would not constitute such corroboration on my findings).

[51] Marina was involved in a significant number of transactions with her husband. They were clearly partners both in marriage and in business. She came across as a strong, assertive woman. She was also somewhat combative under cross-examination, seldom willing to make any admission unless shown chapter and verse of documents to prove even things which she likely well knew. Her explanations regarding her own involvement in the above two transactions, as well as her explanations of the transactions discussed further below, were simply not credible.

[52] Marina admitted to knowing that her husband was having some “trouble” in Germany but claimed to know nothing of the plaintiff’s judgment nor even anything of the litigation in Canada to enforce that judgment until the very end (i.e. December, 2009). I cannot accept her claim to ignorance of such a material fact regarding her husband’s business affairs. She was a co-owner of his construction company and her fingerprints are on multiple aspects of virtually all of the transactions examined. I find that she knew in reasonable detail and at or about the same time as Kamran, the nature of the plaintiff’s claim against Kamran and the timing of the various steps taken to obtain and enforce the plaintiff’s judgment. I cannot infer anything less from her degree of involvement with his business affairs and from my observations of the testimony of both.

[53] Where I find that the effect of a transaction was to hinder, defeat or delay the plaintiff in the collection of his claims (as each of the examined transactions was), my finding thus extends to a finding that the participation of Kamran or Marina as the case may be in such transactions was undertaken with that intent. I cannot make any material distinction between the intent of Kamran or Marina as regards any of the examined transactions.

(ii) 159 Owen Blvd.

[54] 159 Owen Blvd. is a property adjacent to the Samimi family residence at 161 Owen Blvd. On March 28, 2007 the property was purchased by Danny and Kamran as joint tenants. The price was $858,000 and no mortgage financing appears on title in connection with the closing. No adequate corroboration of Kamran’s claim that the funds for his side of the purchase came from Marina was offered and I discount Kamran’s self-serving allegations in that regard. Kamran was legal and beneficial owner of at least a 50% interest in 159 Owen upon its purchase.

[55] The full purchase file for this transaction was not produced. However, I find that Kamran had agreed to purchase the property some considerable time prior to the March 8, 2007 German judgment. Evidence at the hearing showed decisions by the planning authorities in January, 2007 rejecting applications made by Kamran (alone) to seek approval for a scheme to subdivide the two lots (i.e. 159 and 161 Owen) into three. Since planning meetings at the City of Toronto take some time to be arranged, it is thus probable that Kamran possessed a sufficient interest in 159 Owen Blvd. to have made the applications to the City which were rejected in January, 2007 well prior to January, 2007. These applications thus pre-dated the judgment being issued against him in Germany.

[56] Kamran’s status as sole applicant in proceedings involving both 159 and 161 Owen Blvd. before the City of Toronto (and subsequently the Ontario Municipal Board), while not conclusive, nevertheless corroborates the inference I have made based on all of the evidence that Kamran had a significant beneficial interest in both properties.

[57] On July 4, 2007 Kamran’s appeal of the adverse planning decision of the City was heard by the Ontario Municipal Board. On July 11, 2007, Kamran transferred his mortgage-free interest in 159 Owen Blvd. to Marina for no consideration. Danny’s interest remained unaffected by this transfer, changing from a 50% joint ownership interest with his father to a 50% joint ownership interest with his step-mother. Two days later (i.e. July 13, 2007), the decision of the OMB rejecting the appeal was released.

[58] Danny’s testimony in relation to this transaction was fairly straightforward and largely credible. He stated that he had earned a profit of something in the order of $100,000 from a condominium investment his parents had made for him a few years previously and that the profit he earned was re-invested in 159 Owen Blvd. to help finance that purchase. While $100,000 is a long way from purchasing a one-half interest in a property acquired jointly and without financing for $858,000, there is no reason to doubt that Danny had a substantial beneficial interest in 159 Owen Blvd. by reason of profit earned on a transaction pre-dating the German judgment. I also find no reason to doubt his evidence that he had no knowledge of his father’s financial difficulties with the plaintiff at any material time. To all appearances, he received substantial benefit from his father if his only contribution was approximately $100,000 towards a half-interest in a property worth at least four times that amount, but I can find no reason to impute fraudulent intent to him.

[59] Danny testified that the subdivision proposal that his father had made was intended to produce the result that each of Danny, Marina and Kamran would have one lot. This testimony was confirmed by Marina. The evidence indicates that the parties were careful about keeping separate names on the two parcels of land due to concerns about application of the Planning Act, R.S.O. 1990, c. P-13. Such concerns would be precisely the sort of thing that Kamran and Marina would have been very familiar with given their extensive real estate experience, including Marina having acquired her license as a real estate agent in 2005. Why then the transfer in July, 2007 to Marina creating the very Planning Act issue they had hitherto been seeking to avoid?

[60] Kamran claimed in his evidence that the transfer happened as a result of the OMB decision. He had no explanation as to how that could be so given that the decision of the OMB was not released until July 13th (and Mr. Hartman’s file indicates work on the transfer began as early as July 6th). Marina persisted in claiming the OMB decision was the cause of the decision to transfer, claiming that she had attended the July 4th hearing and could see which way things were headed by reason of the objections raised at the hearing.

[61] While Marina’s claimed prescience in reading the intent of administrative tribunals prior to a release of reasons may be one of interest to administrative law lawyers everywhere, the attribution of this excuse to the hurried decision to transfer the property to her immediately without waiting even a few days or weeks to see what the decision might be strains credulity.

[62] Further, there is simply no logical nexus between the OMB proceedings or decision and the transfer of the property to Marina. She was, at that time, the sole registered owner of the abutting property at 161 Owen Blvd. and such a transfer would only create future problems with the Planning Act subdivision restrictions down the road.

[63] On the evidence I conclude that Kamran in fact had a beneficial as well as legal title to the 159 Owen Blvd. property immediately prior to its July 11th transfer to Marina. I reject the unsubstantiated bald claim that Marina had supplied all of the funding for this purchase with funds that were unquestionably hers and hers alone. Kamran’s beneficial interest is confirmed by the title to the property, his prosecution of the applications before the City of Toronto and the OMB as principal, the lack of any evidence of Marina having provided all of the purchase price from funds not traceable to her husband and by the evidence that each family member was intended to end up with one lot if the subdivision had been approved. Nothing whatever in the evidence confirms Marina’s alleged initial beneficial interest and I do not accept that suggestion.

[64] If Kamran had a beneficial interest prior to the transfer to Marina on July 11th, I am compelled to infer that the transfer without consideration of that interest to Marina despite the known risk of Planning Act complications entailed by such a transfer was motivated by a desire to remove this asset from sight in light of the German judgment. I find that the sole reason for the hasty transfer of Kamran’s interest in 159 Owen Blvd. to Marina at this time was to remove Kamran’s beneficial interest from the list of assets the plaintiff might eventually look to in collecting upon its judgment. In this, the intent to defeat, delay or hinder the plaintiff in collection of his claim from Kamran is established as against both Kamran and Marina.

(iii) 161 Owen Blvd.

[65] I have already discussed the transactions involving the mortgage of 161 Owen Blvd. in assessing the credibility of Marina and Kamran and shall not repeat those findings here. I have concluded that Kamran in fact had a beneficial (and for three months legal) interest in 161 Owen Blvd. at all material times. Considering in particular the transfer of a fee simple interest in the property to him by Marina and his mortgage of the property to CIBC as sole owner, I conclude that he was at all material times the sole beneficial owner of the property, assuming legal title for the brief interlude between January and March, 2009.

[66] In support of this conclusion, the following summary of factors may be noted:

a. The fact that the defendants produced no objective evidence to establish that Marina purchased the property originally from her own funds or what the source of such funds might have been in 2004;

b. The fact that Kamran made application to the City of Toronto and the OMB in respect of the property in 2007 as owner;

c. The fact that Kamran applied to the CIBC in or about September, 2008 for a mortgage in respect of 161 Owen Blvd. (when the property was not then in his legal name) and has failed to produce any application representations or documentation provided to CIBC despite signing a declaration to CIBC on December 24, 2008 certifying the truth of his representations to them;

d. The fact that Kamran received almost $300,000 in proceeds of the CIBC mortgage (the solicitor’s trust report confirming payment to him even if he may have directed the funds thereafter be paid to Marina) on January 2, 2009 as well as a $120,000 line of credit in his sole name of which he has provided no accounting;

e. The fact that Kamran made no declarations to CIBC of his alleged nominee status nor were any made on title or documented by his lawyer (although other alleged nominee arrangements were documented in that time frame by him);

f. The fact that Kamran transferred the property back to Marina on March 4, 2009 (only three months after the CIBC mortgage) and the lack of any acknowledgement that CIBC was notified of or approved the re-transfer if, as alleged, CIBC had required Kamran as a mortgagor in the first place;

g. The fact that Mr. Hartmans’ file indicates that the account rendered to Kamran for professional fees in relation to the re-transfer of 161 Owen Blvd. to Marina in March, 2009 makes mention of preparation of a promissory note not produced; and

h. The fact that Kamran was aware of the German judgment of the plaintiff and had taken steps to retain counsel and defend enforcement of that judgment in Ontario throughout the time frame when the mortgage was being put in place and the property transferred and re-transferred.

[67] In his argument, Mr. Zweig suggested that Marina in fact received the proceeds of the 161 Owen Blvd. mortgage. This is true to a point. The portion of her bank records produced did indeed appear to show a deposit of the net balance of the initial advance under the CIBC mortgage (after repayment of the prior mortgage). However, Mr. Hartman’s file shows Kamran as the client, his report addressed to Kamran indicated the balance had been paid “to you” and he testified that he would never disburse trust funds to a non-client. The inference I draw is that the funds came to Kamran, whether he issued a direction to pay them to Marina or whether he endorsed Mr. Hartman’s trust cheque to the same effect matters little. The fact that the proceeds were immediately transferred to Marina for safekeeping rather than being kept in Kamran’s name is quite in keeping with the desire to shelter assets from the plaintiff. Leaving the funds in Kamran’s hands, after all, would simply have provided a target for the plaintiff to attempt to seize. Further, neither Marina nor Kamran have provided any explanation regarding the $120,000 line of credit created by CIBC in Kamran’s name alone.

[68] In conclusion regarding 161 Owen Blvd., I find that Kamran was the owner of 161 Owen Blvd on March 4, 2009 at the time he transferred it to Marina for no consideration. I find that Kamran and Marina shared a joint intent in undertaking the transfer to Marina in March 4, 2009 of hindering, defeating or delaying the plaintiff’s efforts at obtaining payment of his claim.

[69] This transaction coming less than five years prior to the bankruptcy of Kamran and thus squarely within the purview of a much simpler s. 96 BIA proceeding, I find the plaintiff’s preference for civil rather than bankruptcy proceedings puzzling. However, the legal question at least does not arise in these proceedings.

(iv) 165 Banff Rd.

[70] A great deal of time at the hearing was consumed by a minute analysis of transactions involving 165 Banff Rd. While it is not possible based on the evidence presented to establish precisely what interest Kamran held in that property from time to time, or where the proceeds of that interest have come to rest, I am left with little doubt that (i) Kamran had a beneficial interest of some dimension, whether tied to profits or capped in amount, I cannot yet determine on the evidence before me; (ii) Mr. Moshtael was aware of that interest and negotiated or agreed to it with Kamran; (iii) Mr. Moshtael acted throughout in relation to this property as his wife’s agent; and (iv) Mr. Moshtael was willing to assist Kamran in disguising his interest in the transaction for reasons not fully explained.

[71] This transaction involved the Samimi family and the Sabet families. While both share Iranian origins, I unhesitatingly accept Mr. Sabet Senior’s evidence and that of his daughter that the families were not originally known to each other but became friends as a result of their mutual involvement in the purchase and eventual development and sale of 165 Banff.

[72] Mr. Sabet (Ms. Sabet’s father) purchased the 165 Banff Rd. property on November 30, 2006 for $575,000. While his evidence was generally straightforward as to most matters, his evidence was confusing and somewhat lacking in candour when it came to describing his alleged intention to help his daughter with this purchase. It was not disputed that he held the property only briefly and sold it (at least as to legal title) to Kamran less than a year later at a fairly material level of profit which he was paid in full at closing. He claimed no knowledge of the agreements between Kamran and Mr. Moshtael, so he had little concrete to add to the matters most at issue in the case.

[73] Having purchased the property (evidently primarily for its land value, the house being in very poor shape at the time), he hired engineers to begin the process of seeking approvals necessary to demolish the existing structure. In the course of his inquiries, he came across Kamran as a prospective builder. He liked what he heard and saw. Mr. Sabet also formed the view that the property might provide an opportunity for his daughter and her new husband Mr. Moshtael. Mr. Moshtael was then in the midst of attempting to regularize his immigration status following his marriage to Ms. Sabet (he did not obtain permanent resident status until November, 2008).

[74] On September 17, 2007 Mr. Sabet sold the 165 Banff Rd. property to Kamran for $700,000 under an agreement of purchase and sale signed in August. That same day, Kamran signed a nominee agreement in a form which he and Mr. Moshtael brought with them to Mr. Hartman whereby Kamran acknowledged holding the property as bare trustee. The nominee agreement was not registered on title nor was it disclosed to HSBC who provided the mortgage financing ($560,000 of the $700,000 purchase price) at closing.

[75] The source of the remaining funds used to purchase the 165 Banff property was never explained satisfactorily and none of the stories offered by the witnesses succeeded in sensibly explaining the rationale for the use of the nominee agreement. Immediately prior to the purchase, Kamran and Mr. Moshtael opened a joint account. Funds of unidentified provenance were deposited into this account. Mr. Hartman’s files demonstrated that Marina provided at least $50,000 of the initially required capital (approximately $140,000 being required over the amount financed by way of mortgage to complete the sale). Mr. Moshtael could not demonstrate that he or his wife as much as half of the initial funding to purchase the property and denied that Marina had provided any of it (although the record makes it quite certain that she did). That failure is telling. I find that the Moshtael/Sabet family did not in fact purchase the property outright on September 17, 2007, although they clearly acquired an interest of some kind at that time.

[76] Where then was the benefit to his daughter in this purchase and sale? The most credible answer lies in the testimony of Mr. Moshtael. While I did not find him to be candid or credible on most critical points, I was able to accept some of his testimony as reasonable. His professional credentials from Germany were not recognized in Canada. Kamran was his elder but with a similar background to his own (coming from Iran to Canada via Germany). Mr. Sabet introduced Kamran and Mr. Moshtael to each other. I find that the intended benefit from Mr. Sabet was the fact that the property would provide Mr. Moshtael with an opportunity to gain experience as a builder in Canada by working together with Kamran. How that partnership between Kamran and Mr. Moshtael was actually structured is not known since neither was forthright in describing this transaction.

[77] Upon all of the evidence, I have concluded that the nominee agreement executed on September 17, 2007 was a sham. On its face, it excluded a beneficial interest in favour of Kamran which on the evidence he plainly had and all of his actions both before and afterwards in relation to the property were consistent with such an interest. I find that the only plausible explanation for this agreement was to provide a shield to be used in the event that the plaintiff attempted to collect upon his judgment. No other explanation is credible since it is plain and obvious that Kamran alone, or Kamran and Marina together, at all times held a material undisclosed interest in the property from the beginning and retained an interest throughout until the ultimate sale.

[78] While the parties’ lack of candour prevents me from discerning the exact nature of the interest held by Kamran in this project, I have no hesitation in finding that Kamran alone or Kamran and Marina together held a significant interest in the project throughout. Since that interest is flatly contradicted by the September 17, 2007 nominee agreement, the only conclusion possible is that the latter was a sham and that the parties to it created the sham for a reason. No reason other than to assist Kamran in defeating, hindering or delaying the plaintiff of his claims is plausible in the circumstances, notwithstanding Mr. Moshtael’s denials of knowledge of the judgment (which I do not accept).

[79] In addition to my negative assessments of the credibility of the parties who testified as to the details of these transactions, the following findings of fact eminently supported by the evidence in this case all point inexorably to the finding that either Kamran alone or Kamran and Marina together held a continuous interest in the property at 165 Banff from September 17, 2007 until its sale on February 23, 2011 and thus that the nominee agreement was a sham:

a. The lack of any solid or credible evidence to corroborate the bare assertion that Ms. Sabet or Mr. Moshtael would have been unable to finance the purchase in their own name in September, 2007 – Layla Sabet purchased a property down the street for a higher price with 100% mortgage financing a short time later and no actual evidence of any attempt by her to secure a mortgage for 165 Banff was claimed or demonstrated;

b. The fact that the defendants had the nominee agreement already drafted when they jointly came to see Mr. Hartman in connection with closing and asked for no advice in relation to it;

c. The fact that while Kamran was on title as legal owner, no disclosure of his alleged nominee status was made to HSBC when the initial purchase financing mortgage was taken out in September, 2007 nor to TD Bank when the HSBC mortgage was refinanced by TD on August 20, 2008 and Kamran;

d. The fact that Kamran received proceeds of $314,661 from the TD refinancing (i.e. after repayment of HSBC) which funds have not been credibly accounted for (note – while this transaction was clearly at issue, none of the defendants listed or produced any relevant documents regarding use of the TD mortgage proceeds in their sworn affidavit of documents);

e. The lack of any directions in writing or otherwise from Mr. Moshtael and Ms. Sabet under the nominee agreement relating to either mortgage or their proceeds notwithstanding Kamran’s alleged role as mere nominee (indeed, there is little indication that the nominee agreement was ever actually followed in any material way in administering the property);

f. The fact that Kamran registered the new house with the Tarion new home warranty programme on September 17, 2007 (Ex. 19) showing himself as Vendor, his company MKS Enterprises Ltd. as builder and an estimated contract price of $450,000 without mention of any interest of Mr. Moshtael or Ms. Sabet;

g. The fact that the same September, 2007 Tarion registration referred to an estimated contract price of $450,000 and yet no construction agreement of any kind was produced to substantiate this alleged contract;

h. The fact that the alleged construction agreement between Mr. Moshtael and Layla Sabet and MKS Enterprises that was ultimately produced dates from October, 2008 - a point at which the house construction had already been certified substantially complete to Tarion under its new home warranty programme;

i. The fact that there was thus NO identified construction agreement between Kamran or his building company MKS Enterprises and Mr. Moshtael or Layla Sabet for the substantially the entire period of time during which the old house was being demolished and the new one actually being built;

j. The fact that the alleged building contract and stipulates a fixed contract price of only $58,000 including GST and makes no mention of Kamran’s building expenses (he testified to purchasing supplies frequently using his own funds or credit);

k. The fact that the alleged MKS builders fee was only paid following sale in 2011 and was then paid to Marina personally in April 2011;

l. The fact that Kamran claimed to have received no remuneration whatsoever in respect of the building project which he supervised closely and alleges he spent considerable sums of his own funds to pay for;

m. The fact that Mr. Moshtael was unable to substantiate with documents even as much as the $270,000 that he claimed he or Layla Sabet had actually advanced as their contribution towards the cost of building the house;

n. The lack of any credible explanation (unrelated to Kamran’s legal difficulties with the plaintiff) to explain the shift in gears resulting in Marina becoming the alleged nominee instead of Kamran on December 19, 2008 when the house was substantially complete, the claimed rationale of Kamran’s alleged travel to Germany having been shown to be a fabrication;

o. The fact that Marina granted Mr. Moshtael and Ms. Sabet a mortgage on May 4, 2009 in the amount of $270,000 – an amount alleged to represent the Moshtael/Sabet family investment in the project – without explaining how this could possibly be consistent with the bona fides of the (unregistered) nominee agreement dated December 19, 2008 which purported to acknowledge Mr. Moshtael and Layla Sabet’s ownership interest and the mortgagor’s entire lack of any beneficial interest to be subject to the mortgage;

p. The fact that Kamran by the admission of all undertook the major part of the building project, dealt with and paid suppliers with his own funds and apparently received no payment or remuneration of any kind in his own name and allegedly;

q. The fact that Kamran’s name was the only one on title during the entire construction phase of the project, there was no building mortgage (or at least not prior to substantial completion when the TD mortgage was put in place) and by Kamran’s own evidence he expended his own money on the construction clearly suggests that significant financial contributions towards the project necessarily came from sources other than Mr. Moshtael and Layla Sabet, leading to the inescapable inference that Kamran had a material financial stake in the project undocumented by the nominee agreement;

r. The fact that no party was able satisfactorily to explain the promissory note dated January 14, 2010 (Ex. 23) in the amount of $220,000 payable to Marina and Danny Samimi and that these same two names appear not coincidentally to be named in the Tarion Certificate of Completion (Ex. 20) dated December 9, 2008 as the “registered owners” of the completed house built by MKS Enterprises; and

s. The fact that nobody was able to explain the genesis of the notes (Ex. 26) of Mr. Hartman (dating somewhere during the lifetime of the TD mortgage between August 20, 2008 and November 20, 2009) evidencing a meeting regarding the possible tax arising from a sale of the property which appears to contemplate Marina having a half interest in any profit to be generated on a potential sale after repayment of existing mortgages.

[80] I did not find Mr. Moshtael to be a credible witness. He was evasive on occasion and his participation in this proceeding has been marked by less than complete candour. In particular, his 2012 affidavit of documents failed to list the bank accounts that emerged in the evidence as being of critical materiality. His explanations of the transactions involving 165 Banff were simply not credible. Where did the nominee agreement come from that it was brought fully drafted to Mr. Hartman for witnessing? If it was not to be placed on title or disclosed to lenders, why show it to Mr. Hartman at all? Why was the nominee agreement not registered on title? Where did the closing funds come from in September 2007? Where did the construction funds come from prior to the TD mortgage which came about only after the project was already substantially complete? What became of the proceeds of the TD mortgage? What was the explanation for the second nominee agreement in December, 2008? Where did the rest of the funding for the project come from if the Moshtael/Sabet family provided only the $270,000 evidenced by the 2009 mortgage? Why would the beneficial owners have been seeking a mortgage from the bare trustee/nominee in the first place and why in 2009 when the project had already been completed months earlier? Why was the alleged construction agreement entered into after construction was complete or nearly complete? Why was the payment of the construction fee made to Marina by personal cheque? Why was there not a single written direction of any kind to Kamran or Marina concerning a single step taken in relation to the property as provided for in the two nominee agreements? Why provide a SIGNED promissory note to Marina in 2010 when he claimed that he was merely negotiating a loan that never materialized and why was the note not retrieved if the loan did not move forward? Promissory notes are customarily signed at closing of a loan and not as the opening salvo in negotiations. None of these critical issues were credibly addressed by Mr. Moshtael. His evidence left more questions than answers and what answers he gave were simply not consistent with common sense or the documents.

[81] I cannot speculate as to why Mr. Moshtael chose to assist Kamran in trying to evade payment of his judgment debt, but I am satisfied that he did so.

[82] Layla Sabet made no claims to having had detailed or even much specific knowledge of the transactions surrounding the acquisition and development of 165 Banff. She was (and is) a professional woman. She was then in the process of winding down her optometrist practice prior to the birth of her first child in early October, 2007 and then arranging to move into their new home at 149 Banff in December. While she claimed that financing of both the home she purchased for the family to live in at 149 Banff (100% financed and closed in December, 2007) and the purchase of the land at 165 Banff from her father was beyond her credit means in 2007, she made no claim to having even attempted to do so nor could she demonstrate which came first in time (the 165 Banff purchase agreement having been signed by Kamran in August, 2007 long before the 149 Banff property was closed in December).

[83] Surely one would have expected at least some material amount of effort to have been expended by her or on her behalf to find financing in her own name if not in the name of her husband before resorting to asking a new acquaintance to hold the property under an unregistered nominee agreement as a favour. Kamran’s name appears on the agreement of purchase and sale from Mr. Sabet in August, 2007, so the alleged decision to have Kamran act as nominee would have to have been even further in the past than the already drafted (but not executed) agreement the parties brought to Mr. Hartman on September 17, 2007.

[84] In the circumstances, I must find that Ms. Sabet either knew the true state of affairs or simply delegated responsibility for negotiating matters in relation to this project to her husband who was intended to work on it with Kamran and is thus bound by her husband’s state of knowledge. I accept that the latter is more probable and is indeed consistent with her testimony before me.

[85] Having concluded that Mr. Moshtael did have knowledge of Kamran’s interest in the building project and of his attempts to defeat, hinder or delay the plaintiff in collection of his claims, Mr. Moshtael’s cooperation in that endeavor was thus given with the same intent. I have no hesitation in attributing his knowledge to his wife as regards dealings in 165 Banff Rd. given her delegation to him of matters in relation to Kamran and this project.

[86] The foregoing findings make it abundantly clear that Kamran had an interest in the 165 Banff Rd. property which the nominee agreements were clearly designed to mask. No other explanation is commercially reasonable or plausible. There is no indication in the record that more than lip service was ever paid to the two nominee agreements. What has become of the proceeds of the sale of 165 Banff Rd. is not before me.

(v) Conclusion re fraudulent conveyance issues

[87] Mr. Zweig placed considerable emphasis in his able defence of this matter upon the absence of badges of fraud. Kamran’s interests, he argued, were plain. If he were seeking to judgment-proof himself, why would he have put his name forward on any of these transactions? What interest would Ms. Sabet or Mr. Moshtael have had in trying to help him?

[88] Badges of fraud are merely commonly employed shorthand to give voice to the deductions that common sense dictates. Ascertaining the state of mind of the debtor or his or her counterparts in transactions will always be difficult as little direct evidence will be available. The courts can and must rely on the surrounding circumstances and the inferences they suggest (see Indcondo Building Corp. v. Sloan, 2014 ONSC 4018 per Penny J. at para. 50-51).

[89] To the extent badges of fraud are sought in these transactions, the following catalogue may serve:

a. “donor continued in possession and continued to use the property as his own”

• 161 Owen – Kamran’s 5 year line of credit with CIBC secured by this property would have continued past his transfer to Marina and no evidence was presented as to when if ever it was repaid and of course Kamran continued to live at 161 Owen after transferring his title to Marina.

b. “the transaction was secret”

• 165 Banff – both nominee agreements were kept secret from the banks with the inference being the property was shown to the banks as belonging to Kamran for financing purposes while the nominee agreement was kept available to be used to defeat the claims of the plaintiff should he attempt to assert any.

• 161 Owen – similar to Banff only not even the pretence of a formal nominee agreement.

c. “the transaction was made in the face of threatened legal proceedings”

• All of the transactions were undertaken in the face of the German judgment and the transfers and mortgages at 165 Banff Rd. and 161 Owen Blvd. were obtained in the face of pending enforcement proceedings in Toronto and placed substantial sums under the control of Kamran;

d. “the transfer documents contained false statements as to consideration”

• See (b) above re secret nominee agreements to the extent allegedly bona fide; see as well conclusions re adverse inferences regarding representations made to CIBC in order to obtain 161 Owen mortgage

e. “the consideration is grossly inadequate”

• 159 Owen was owned outright without mortgage financing yet Kamran’s interest was transferred for no consideration

• Kamran transferred 161 Owen to Marina for no consideration and no contemporary evidence that he had no beneficial interest

f. “there is unusual haste in making the transfer”

• Speed of transfer of 159 Owen interest after difficult OMB hearing but prior to actual decision and despite risk of creating Planning Act issues down the road

• Inference that transfer of nominee interest to Marina re 165 Banff motivated by prospect of summary judgment motion

• Speed with which Kamran transferred 161 Owen to Marina after CIBC financing successfully put in place in early 2009

g. “some benefit is retained under the settlement by the settlor”

• Extensive funds made available to Kamran from mortgage financing on 165 Banff and 161 Owen Blvd

• Evidence from Mr. Hartman’s notes suggesting Marina retained a profit interest in 165 Banff following transfer to Ms. Sabet and Mr. Moshtael

• Mysterious discussion of promissory note arising from 165 Banff Rd.

[90] I have found that all of these circumstances have raised a very powerful inference of fraud in each of the examined cases and the defendants have failed to adduce credible evidence to offer alternative explanations inconsistent with fraud. I have no hesitation in holding that on the preponderance of all of evidence, fraud in the sense of intending to deceive the plaintiff as to the true nature of Kamran’s interests is far and away the most probable view to explain the objective facts uncovered and I have rejected as self-serving and lacking in credibility the protestations of different intent (see Indcondo at para 57-59). The evidence in this case is strong and convincing.

Disposition

[91] The plaintiff’s motion to continue or to declare the plaintiff’s claim as against Kamran to be unaffected by Kamran’s discharge from bankruptcy under s. 178(1)(d) of the BIA is dismissed. The plaintiff has all the remedies he requires under the BIA and only the trustee of Kamran (or a s. 38 BIA assignee) can pursue claims under the FCA or s. 96 of the BIA. This court can only deal with the proceedings before it and must leave it to the parties to fashion the appropriate motions under the appropriate statute. No finding is made in relation to the remaining claims in the Statement of Claim.

[92] The court accordingly answers the factual issues stated by the parties in the trial of an issue on the “fraudulent conveyance” questions as follows:

a. The conveyance of the property known as 161 Owen Blvd from Kamran to Marina on March 4, 2009 was made by Kamran and received by Marina with the shared intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims;

b. The grant of the mortgage by Kamran to CIBC in respect of 161 Owen Blvd on January 2, 2009 was made by Kamran and proceeds thereof received by him with the intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims (with no such intent imputed to CIBC);

c. The conveyance of the property known as 159 Owen Blvd from Kamran to Marina on July 11, 2007 was made by Kamran and received by Marina with the shared intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims;

d. The granting of the mortgage in respect of the property known as 165 Banff Rd from Kamran to TD Bank on August 20, 2008 was made by Kamran and proceeds thereof received by him with the intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims (no such intent imputed to TD);

e. The conveyance of the property known as 165 Banff Rd from Kamran to Marina on December 19, 2008 was made by Kamran and received by Marina with the shared intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims;

f. The conveyance of the property known as 165 Banff Rd. from Marina to Mr. Moshtael and Ms. Sabet on November 20, 2009 was made with the shared intent to defeat, hinder or delay the plaintiff as creditor of Kamran from receiving payment of his claims;

g. The court was not requested to make nor has the court made any findings regarding the proceeds of disposition of any of the properties or mortgages in respect thereof; and

h. This court has no basis to conclude that the defendant Danny Samimi had any knowledge, information or belief that any transaction he participated in with Kamran may have had as its purpose or effect the defeating, hindering or delaying of the plaintiff as creditor of Kamran from receiving payment of his claim.

[93] The defendant Hartman participated in the hearing as a witness only and no findings were sought nor are any made regarding his actions. Similarly, the trustee in bankruptcy of Kamran was not served with these proceedings and was not heard on the motion. I advised the parties that I was not contemplating making any order whatsoever in relation to the conduct of the trustee. Should the plaintiff wish to seek relief in respect of the trustee, or seek appointment of a different trustee there is an appropriate forum, court and statute available to do so.

[94] This motion did not raise the issue of the certificates of pending litigation which had been placed on these properties in the course of this litigation. The properties at 159 Owen and 165 Banff were both sold in the first half of 2011 and there is no suggestion made before me that the purchasers were anything but bona fide purchasers for value without notice of any of the claims raised by this case. As the matter was not before me, I make no findings in that regard beyond underlining the fact that my findings here should not in any way be taken as going to the point of establishing any existing interest of Kamran in either of the two properties which were sold in 2011. Counsel at the hearing indicated that they foresaw little issue between them in resolving the Certificates of Pending Litigation and I trust that this will be attended to co-operatively if there is no dispute between them.

[95] The parties also indicated that, depending upon this court’s ruling, they had reached agreement as to costs consequences of this proceeding including as to amount. Accordingly, the matter of costs is reserved to be dealt with by written submissions if the parties are unable to resolve the question in accordance with their prior agreement within two weeks.

[96] In the interest of certainty, I direct that, absent such agreement, any party requesting costs shall submit its written submissions to the opposite party by March 27, 2015. The responding party shall deliver its submissions in response to the request by April 3, 2015 and any reply shall be delivered by April 10, 2015. In each case, submissions shall be limited to three pages exclusive of a draft Bill of Costs. The requesting party shall take responsibility for collecting the submissions of all parties and delivering them to my attention via email (with a copy to all parties) by April 10, 2015.

[97] Judgment to issue in accordance with these reasons.

Sean F. Dunphy, J

Date: March 11, 2015