CITATION: Cambone v. Okoakih, 2016 ONSC 792

COURT FILE NO.: 2677/12

DATE: 2016-02-02

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GINA CAMBONE and DAVID MANNELL

Plaintiffs

– and –

JONATHAN OKOAKIH and ABISOLA OKOAKIH

Defendants

Glenn E. Cohen, for the Plaintiffs

Jonathan Speigel and Timothy Morgan, for the Defendants

HEARD: November 17-20 & 25, 2015

GRAY J.

1The Fraudulent Conveyances Act is powerful legislation that authorizes the court to set aside, for the benefit of creditors, a myriad of transactions that are entered into with the intent to defeat the claims of creditors. However, it is not intended to permit a creditor to set aside a legitimate purchase of an asset by a person who is not a debtor, with the purchaser’s own money, even if the intent was to ensure that the creditor would not have access to that asset to satisfy the creditor’s claim.

2In this case, the plaintiffs claim that the defendants purchased a home with money furnished by both of them, and made it appear that it was actually purchased by only one of them, the party who is not the debtor. At the same time, the debtor was taking steps to ensure that no assets remained in his name. In these circumstances, the plaintiffs contend, the provisions of the Fraudulent Conveyances Act are triggered, and they are entitled to relief. At the same time, they contend that they are entitled to relief under s.96 of the Bankruptcy and Insolvency Act.

Background

Background

3The defendants, Dr. Okoakih and Ms. Okoakih (hereafter, for convenience only, referred to as “Jonathan” and “Abisola”), were formerly residents of Nigeria and, in 2006 or 2007 applied to immigrate to Canada under the Investor Class. Jonathan was trained as a medical practitioner, but no longer practices medicine, and Abisola has been employed primarily in the banking business. For several years, Jonathan has been a consultant through a consulting company known as Dale & Parker Limited. More will be said about that organization later.

4On November 7, 2009, after he arrived in Canada, Jonathan executed an agreement of purchase and sale, as purchaser, for the purchase of property in Oakville at 1009 Lakeshore Road East, for the purchase price of $2,800,000. The plaintiffs in this action were the vendors. The stipulated closing date was April 1, 2010.

5On November 12, 2009, Jonathan was approved by Scotiabank, based on information he provided, for a first mortgage in the amount of $1,820,000.

6Jonathan was unable to come up with the closing funds by April 1, 2010, and he requested a brief extension to the closing date. That was refused by the plaintiffs. The deal did not close.

7The plaintiffs relisted the property, and it remained on the market for over a year. Ultimately, it was sold for less than the amount Jonathan had agreed to pay, and the plaintiffs sued Jonathan for damages. The plaintiffs brought a motion for summary judgment which was heard on October 17, 2011. As it happened, I was the motion judge. I granted judgment to the plaintiffs against Jonathan in the amount of $317,731.17, and $20,000 in costs. An appeal to the Court of Appeal was dismissed on April 12, 2012: see Mannell v. Okoakih, 2012 ONCA 259.

8On January 18, 2011, Jonathan and Abisola, as purchasers, executed an agreement of purchase and sale for property in Oakville at 225 Dunwoody Drive, for a price of $2,475,000. The transaction closed on April 29, 2011. It is this property that it is the subject matter of this action. The plaintiffs claim that the transaction, under which Abisola ultimately became the sole owner of the property, is void as against the plaintiffs, and that Jonathan should be declared to be the owner of an undivided one-half interest in the property, which would then be available to satisfy the plaintiffs’ judgment which, to this day, remains unsatisfied.

9To complete the general background, at least two examinations in aid of execution have been conducted, which have produced practically nothing in satisfaction of the judgment. The plaintiffs applied for a Bankruptcy order against Jonathan, which was granted by Newbould J. on December 9, 2013, after a contested hearing on December 3 & 4, 2013: see Re Okoakih, 2013 ONSC 7492. Pursuant to Section 38 of the Bankruptcy and Insolvency Act, the plaintiffs were granted leave on October 28, 2014 to continue this action in place of Jonathan’s Trustee in Bankruptcy.

10After judgment was delivered against Jonathan on October 17, 2011, there was some delay in having Jonathan’s solicitor approve the formal order as to form. As a result, a writ of execution was not filed until November 9, 2011. This will have some significance in view of certain other events.

11As noted, the transaction involving the Dunwoody property closed on April 29, 2011. The agreement called for a deposit of $50,000, a further deposit of $100,000 payable by February 21, 2011, and the balance of approximately $617,000 due on closing. Both deposits were paid by cheques written by Abisola. There is considerable controversy about the source of the funds, which I will discuss in a moment.

12Once again, mortgage financing was approved by Scotiabank. By letter from Scotiabank dated January 25, 2011 addressed to Jonathan and Abisola, they were advised that a first mortgage had been approved in the amount of $1,758,750. Among other things, the letter states “This mortgage pre-approval is subject to verification of downpayment, in the amount $716,250 and net worth of $354,400 in addition to downpayment. The net worth must reside in Canada.”

13The office of Russell Allegra was retained to act for Jonathan and Abisola on the transaction. Included within Russell Allegra’s office was a lawyer by the name of Frank Torchia, who testified at this trial.

14By letter dated April 19, 2011, Mr. Allegra instructed the solicitors for the vendor that title to the property would be taken in the names of both Jonathan and Abisola, in a manner to be advised. Ultimately, the vendor was directed to engross the transfer in the names of Jonathan and Abisola as tenants-in-common, with a one per cent share to Jonathan and a 99 per cent share to Abisola. It was stipulated in evidence that both parties were required to be on title at the insistence of Scotiabank, although Scotiabank was indifferent as to the percentages of ownership.

15As noted, Frank Torchia testified. He is no longer in Russell Allegra’s office.

16Mr. Torchia identified a note made in his handwriting, which is dated sometime in April, 2011 (a punched hole is in the middle of the date). The note is headed “Dr. Okakih”. In the note, the following is found:

17Mr. Torchia testified that he cannot recall the note or what it means.

18An internal document was produced that is taken from Mr. Allegra’s file. After recording the names of Jonathan and Abisola as the purchasers, beside the words “taking title” there is a note in brackets: “(see Frank’s note)”.

19Various amounts of money were transferred from Nigeria. As noted, the source of those funds is of some controversy, which will be discussed later. The funds were transferred to Jonathan, as follows:

a) January 11, 2011 - $59,985US;

b) April 5, 2011 - $99,985US;

c) April 6, 2011 - €69,990;

d) April 8, 2011 - €69,990;

e) April 8, 2011 - €69,990;

f) April 12, 2011 - €69,990;

g) April 13, 2011 - €69,990;

h) April 14, 2011 - €69,990;

i) July 11, 2011 - $50,015US;

j) July 25, 2011 - $50,005US;

k) August 15, 2011 - $50,000US;

l) September 21, 2011 - $29,802US

20Effective November 23, 2011, funds began to be transferred from Nigeria to Abisola, as follows:

a) November 23, 2011 - $15,080US;

b) December 12, 2011 - $40,150US;

c) December 30, 2011 - $30,195US;

d) January 31, 2012 - $99,985US.

21On October 28, 2011, Jonathan and Abisola attended upon a solicitor, Walter Lalka, and executed a transfer of Jonathan’s one per cent interest in the property to Abisola. Abisola wrote a cheque to Jonathan in the amount of $7,412.50, also dated October 28, 2011. As noted earlier, the plaintiffs’ writ of execution for their judgment against Jonathan was not filed until November 9, 2011. Thus, it did not affect even Jonathan’s stated one per cent interest.

22Abisola testified. She is well educated, with a BSc and an MBA. She has primarily been involved in the banking business, although she is also in business with her sister, operating a company in Nigeria called Spa One.

23Abisola started in the banking business in 1991, and ultimately became the General Manager of Oceanic Bank, which is located in Nigeria. In the 2006 annual report for Oceanic Bank, she is identified as “General Manager/Group Head, Corporate & Commercial Banking”.

24Abisola’s salary from Oceanic Bank as of September 4, 2007 was approximately 34,000,000 Nigerian Naira, or approximately $200,000 US.

25Abisola testified that while she was employed as a banker, she was involved in purchasing foreign currency for various people, for which she was paid for her services in cash. Various documents were produced in support of her testimony in this respect, although it is impossible to know, from the documents produced, whether the payments were actually in cash and if so, what happened to it.

26Abisola testified that in September, 2008, she joined Parkway Microfinance Bank as its Managing Director. She testified that her husband, Jonathan, who was and still is a director of Parkway, requested that she take the position. She testified that he made the request on behalf of a number of directors at Parkway.

27Abisola testified that Jonathan was conducting his business through a consulting company, Dale & Parker Limited, of which Jonathan owns 70 per cent and Abisola owns 30 per cent. According to the articles of association for Dale & Parker Limited, of the 500,000 issued shares, Jonathan owns 300,000, Abisola owns 150,000, and another individual owns 50,000.

28Abisola testified that after her arrival in Canada in April, 2010, she did her work for Parkway remotely. However, due to a change in operations at Parkway in January or February, 2011, she discovered she could not wake up at 3:00 a.m. for remote discussions and meetings, and she was given a “sabbatical” so that she would attend in Nigeria for three weeks every quarter. She continued to receive the same salary, which was approximately $220,000 annually. She testified that effective 2014, she is now back to the same arrangement, that is, she does her work remotely. She produced her passport, which shows her various comings and goings from and to Nigeria, Canada and a few other places.

29Abisola acknowledged that her income tax return for 2010 disclosed income of $32,828, and for 2011 it disclosed $33,125. She acknowledged that those figures are seriously inaccurate, but blamed her accountant for the misinformation. She says she now has a better accountant. She produced no revised income tax returns, and none more recent than 2011, nor was her former accountant or current accountant called to give evidence.

30In her direct evidence, Abisola said nothing further about the directorships or shareholdings of Parkway Microfinance Bank.

31Abisola testified that she and her sister own a company, Spa One Enterprises. It was established in Nigeria in 2000. It has a beauty salon, a spa and a gym. Her sister effectively runs the business while Abisola is in Canada.

32Abisola testified that she and Jonathan immigrated to Canada under the Investors Immigration program. She said Jonathan was primarily responsible.

33Abisola testified that she earned more money than Jonathan; she earned approximately 55 per cent more than he did. Notwithstanding this, she testified that Jonathan was in charge of the finances for the family. This was based on the cultural norm in Nigeria, that the male is in charge of the family and its finances. She testified that Jonathan was responsible for setting up the bank accounts in Canada, both his and hers.

34Abisola testified as to the first property purchased, that led to the aborted transaction. She said she was in Nigeria at the time. She was advised of the purchase by Jonathan, who said he liked the property. She told him to go ahead with the transaction. She said the deposit of $50,000 came from Jonathan but the additional $100,000 came from her.

35Abisola identified a letter, dated November 4, 2009, addressed to Jonathan, from Parkway Microfinance Bank, disclosing an investment of 170, 050,000 Naira, or approximately $1,164,000. She said that while the investment was in Jonathan’s name, some of the money came from her and some from investments that were in Jonathan’s name. She testified that Jonathan obtained the mortgage commitment from Scotiabank, and she was not involved. She testified that if the deal had closed, she would have been shown on title and some of her money would have been used. She identified a statement from Scotiabank for Jonathan, showing a balance as of April 17, 2010 of $555,826.32. She testified that she and Jonathan were both contributors to the fund.

36Abisola testified that ultimately Jonathan could not come up with the balance required to close the transaction. As a result of the crash in 2009, they had lost money on a number of investments, and some of their funds had to be used to retire various loans.

37Abisola testified that she was aware of the lawsuit against Jonathan following the failure to close the transaction, but she did not think it would succeed. In Nigeria, apparently it is common to back out of property transactions without penalty.

38Abisola testified that after she arrived in Canada with the children in April, 2010, she and the family lived in rented premises in a 3-bedroom apartment on Forsythe Street in Oakville. She testified that the children were unhappy living there.

39Abisola testified that both she and her husband signed the agreement of purchase and sale for the purchase of the property at Dunwoody. She said she liked the house, but her husband did not. She said she wanted her husband on title, because she was married to him and she was comfortable with having him on title. She said she had confirmed that she was able to come up with the funds for the downpayment. She had discussed the matter with her uncle in Nigeria, who promised to lend her some money, and she had some personal funds in her businesses. She testified that she supplied the deposit and the supplementary deposit totalling $150,000.

40Abisola testified that she spoke to Marco Khoshkabari, the person at Scotiabank who was responsible for arranging the mortgage, about financing. She acknowledged that the letter dated January 25, 2011 from Marco regarding the financing was addressed to both her and Jonathan. With respect to the requirement set out in Marco’s letter that there had to be a net worth of $354,400 in Canada in addition to the downpayment of $716,250, her husband had that amount in assets in Canada, consisting of certain luxury cars that he owned, including a Rolls Royce and a Range Rover. She testified that she knew her husband was intending to buy a number of luxury cars, and she agreed that he should do so.

41Abisola testified that when she and her husband signed the agreement of purchase and sale, they had not decided how to take title to the property. She said they came to a decision just before closing. In discussions with her friends, she had been advised that she should separate her assets from those of her husband, because of her husband’s financial difficulties. As a result, she and her husband would have preferred to have the title to the property in her name alone. However, Marco had said that her husband’s name had to be on title. Scotiabank did not care what percentage of ownership Jonathan had. Thus, it was decided that title would be taken 99 per cent in her name and one per cent in Jonathan’s name, and that was all right with Marco.

42Abisola testified that they met with a lawyer on April 27, 2011, to finalize the documents for closing. She said that they met with a clerk named Sara, but no lawyer was present. Various documents were signed in order to place title in her name as to 99 per cent, and Jonathan’s name as to one per cent.

43Abisola identified documents relating to her various bank accounts at Oceanic Bank, Parkway Microfinance Bank, and Standard Chartered Bank. Some of these are relevant as to the source of funds supplied to purchase the Dunwoody property. She testified that the accounts do not reflect all of the money she earned, because some of what she received was in cash from activities such as arranging foreign currency transactions.

44Abisola testified as to the source of funds for the first deposit of $50,000, the second deposit of $100,000, and the balance due on closing of over $600,000.

45Abisola testified that the first deposit of $50,000 came from her business that she owned with her sister, Spa One.

46Abisola testified that her sister, Lola Ajayi, the Managing Director of Spa One Enterprises, instructed Adymar Integrated Nigeria Limited to transfer to Jonathan the sum of $60,000US, and confirmed that $60,000US had been deposited with Adymar for that purpose. She testified that Adymar acknowledged receipt of the funds and acknowledged that the funds would be transferred to Jonathan as instructed. An internal Scotiabank document dated January 11, 2011 was produced, which showed a transfer of funds from Adymar to Jonathan in the amount of $59,985US.

47Abisola’s sister, Lola Ajayi, testified to confirm this information, but I pause at this point to mention certain difficulties with the documentary evidence.

48The original of the letter to Adymar from Lola Ajayi, dated January 11, 2011 was produced. While it clearly has a date stamp of Adymar on the original, dated January 11, 2011, the letter itself appears to be a printed copy of an original. Furthermore, the letter from Adymar acknowledging receipt of the $60,000US and the instructions to transfer the money to Jonathan, is dated January 12, 2011, and has on it a handwritten note that states “Recd by Fatai 12/1/2011”. The letter itself states “Kindly note that the funds will be treated as soon as possible.” The Scotiabank document reflects a transfer to Jonathan’s Scotiabank account, which was effected on January 11, 2011. No explanation was offered as to the clear conflict in the dates.

49Abisola testified that the supplementary deposit of $100,000 came from funds with Standard Chartered Bank. She testified that the Standard Chartered Bank account in Nigeria was a joint account held by herself and Jonathan, but all the funds in the account came from her. They also had an account with Standard Chartered Bank in London, England, but it was not possible to get the bank records for that account. She testified that she wanted the account in both names so that Jonathan would have a right of survivorship.

50Abisola testified that funds totalling £105,000 was transferred from the account in Nigeria to the account in London. Apparently, the only document that could be obtained from Standard Chartered Bank in London was a single page with the heading “Payment Execution”, which appears to show a transfer of $116,655CAD to an account at Scotiabank. The “date of instruction” is said to be “110210”, which I take it is February 10, 2011. An internal Scotiabank document was produced that shows a transfer to Jonathan’s account, in the amount of $99,985US. However, that transfer was effected on April 5, 2011, and was transferred through First City Monument Bank, Nigeria.

51Abisola testified as to the source of funds for the balance due on closing, of approximately $617,000.

52She testified that 16,000,000 Naira were obtained from her funds at Spa One Enterprises. She identified a letter dated April 4, 2011, from her sister, Lola Ajayi to Parkway Microfinance Bank instructing the bank to credit Abisola’s current account with 16,000,000 Naira. I pause at this point to note that the original of that letter raises the same issue as the other letter signed by Lola Ajayi, namely, that while it has on it a date stamp from Parkway Microfinance Bank dated April 5, 2011, the letter itself appears to be a copy of an original.

53Abisola testified that an additional 100,000,000 Naira came from a relative, who she calls her “uncle”, but who is really her cousin. He is apparently the King of a local tribe in Nigeria.

54Abisola testified that during discussions with her uncle in December, 2010, he said he would lend her 100,000,000 Naira, and she could return the money whenever she could. She identified a document apparently signed by her uncle that states “This is to certify that his Royal Majesty, Oba Mufutau Gbadamosi, the Olofa of Offa gave financial support to Mrs. Abisola Awele Okoakih for the purchase of her house in Canada in April, 2011. The financial assistance is non-interest bearing and repayable when able.” The document is dated October 19, 2013. The document is clearly hearsay. The signatory was not called as a witness, even though Lola Ajayi, Abisola’s sister, came from Nigeria to testify. Another witness called by the defendants, Michael Oreglemhe, testified through Skype.

55Entries from Abisola’s current account at Parkway Microfinance Bank appear to show two deposits from Two R Global Ventures (a company apparently owned by Abisola’s uncle) in the amounts of 50,000,000 Naira each, on April 1 and 4, 2011, and a deposit of 16,000,000 Naira from Spa One on April 4, 2011. It also shows the issuance of a draft on April 4, 2011 in favour of Fairmont BDC Ltd in the amount of 116,000,000 Naira. Fairmont BDC is an organization that does currency transfers. I should note here that there are some issues respecting these transactions, which I will discuss more fully later.

56Six internal Scotiabank documents bearing dates between April 6, 2011 and April 14, 2011 show transfers of €69,990 each from First City Monument Bank, Nigeria, to Jonathan. Presumably, this was sufficient to provide the balance due on closing.

57Additional funds were sent to Jonathan after the closing of the transaction. On July 11, 2011, the sum of $50,015US was transferred. On July 25, 2011, the sum of $50,005US was transferred. On August 15, 2011, the sum of $50,000US was transferred. On September 22, 2011, the sum of $29,802US was transferred. Abisola testified that the funds were for the purpose of mortgage payments, upkeep of the property and living expenses. She said the money was furnished to Jonathan because he was in charge of the family’s finances.

58Commencing in November, 2011, additional funds were transferred but instead of to Jonathan, they were transferred to Abisola. On November 23, 2011, the sum of $15,080US was transferred. On December 12, 2011, the sum of $40,150US was transferred. On December 30, 2011, the sum of $30,195US was transferred. On January 31, 2012, the sum of $99,985US was transferred. Abisola testified that some of the funds came from Spa One.

59Abisola testified that the reason for the change in the recipient of the funds was because Jonathan had litigation against him. She did not want to be bound by her husband’s legal problems. Thus, she had to ensure that any funds transferred were in her name. She knew about the judgment against Jonathan.

60Abisola testified that she decided to purchase her husband’s one per cent interest in the property. They attended on a lawyer for that purpose. She said she did not want to be bound by her husband’s legal problems, and therefore she bought him out. She paid $7,412.50 for her husband’s one per cent interest. To arrive at the amount, she added $25,000 to the original purchase price, to take account of inflation, and paid one per cent of the equity.

61On cross-examination, she testified that the shares of Spa One are owned by herself and her sister. She testified that both she and her sister are signatories for matters involving the company, but she acknowledged that in the proceedings involving her husband’s bankruptcy she testified that she was not a signatory. She testified that her memory gets better as time goes on.

62She was questioned about the letters regarding the sum of $60,000 from her sister Lola to Adymar dated January 11, 2011, and the acknowledgement from Adymar dated January 12, 2011. She acknowledged that these documents were not provided to counsel for the plaintiffs until December, 2013. She had no explanation for the discrepancy in the dates of the two letters. She also acknowledged that the documents regarding her discussion with her uncle as to borrowing money were not produced until December, 2013.

63Abisola was questioned with respect to the account with Standard Chartered Bank in London. She insisted that she could not get statements for that account from the bank. She acknowledged that she did not check with the bank in London. Rather, she only made inquiries of the bank in Nigeria.

64She was asked about her tax returns. She said her new accountants, KPMG, are working on them. However, they have not been produced.

65Abisola stated that Parkway Microfinance Bank was incorporated in 2007. The head office of the bank was first listed as the address of her husband’s office. She said he was consulting for the bank at the time. It then moved to its current location in Lagos.

66Abisola confirmed a number of the original shareholders of the bank. She was then asked if she would identify the one remaining shareholder. She hesitated, paused for a long time, and then barely audibly said “I don’t know – you tell me.” She then acknowledged that the remaining original registered shareholder was her husband, who held 12,000,000 shares, or at that time, 4 per cent of the issued capital.

67Abisola also acknowledged that subsequently Dale & Parker Limited, the consulting company owned by her husband and herself, was issued 280,000,000 shares, or 93 per cent of the issued capital. Thus, shareholders other than Jonathan Okoakih and Dale & Parker Limited have only 2.7 per cent of the issued shares.

68Abisola acknowledged that Jonathan was one of the original directors in 2007, and remains a director.

69She became Managing Director in 2009, and as Managing Director she is on the Board of Directors.

70When asked why she did not advise the court in her direct testimony as to the shareholdings of Parkway Microfinance Bank, she said she was not asked.

71Abisola was asked about the account at the Standard Chartered Bank. She acknowledged that the account was a joint account. She said that if she died, her husband would have access to the account. She said the bank invested the funds in an account in London at her request. The funds were held in both names in the account in London. She testified that the transfer of $116,000 effectively wiped out the account.

72Abisola acknowledged that the transfer of $50,000US on August 15, 2011 was from Standard Chartered Bank in Nigeria, and was at the order of herself and Jonathan.

73On re-examination, Abisola testified that while the shares in Parkway Microfinance Bank that are registered in Jonathan’s name belong to him, the shares registered in the name of Dale & Parker are beneficially owned by others. She does not know who they are.

74Michael Oreglemhe testified. He was in Atlanta, Georgia, when he gave evidence and he did so through Skype.

75Mr. Oreglemhe has been a banker for 21 years. He is the Branch Manager of First City Monument Bank in Lagos, Nigeria. Mr. Oreglemhe testified that First City Monument Bank is involved in foreign exchange transfers. He knows Abisola, and he has done foreign exchange transfers for her. He has met Lola, Abisola’s sister. He has never met Jonathan.

76Mr. Oreglemhe identified a number of transfers that were effected in April, 2011.

77Mr. Oreglemhe testified that Parkway Microfinance Bank had an investment with First City Monument Bank of 250,000,000 Naira. On April 4, 2011, Parkway Microfinance Bank instructed First City Monument Bank, in writing, to liquidate 116,000,000 Naira from that investment, and transfer it to Fairmont BDC Ltd. The instruction was signed by two officers of Parkway, not Abisola. The transfer was effected on April 5, 2011.

78Mr. Oreglemhe confirmed that the transfers of funds, some in US dollars and some in Euros, were effected by First City Monument Bank on January 11, April 5, April 6, April 8, April 12, April 13, April 14, July 11, July 25, September 21, November 23, December 12, and December 21, 2011, and January 31, 2012.

79On cross-examination, Mr. Oreglemhe acknowledged that nothing on the documents suggested that he was personally involved in any of the transfers.

80He was asked what was involved in effecting a transfer of funds through the use of a draft. He said a draft would be used if a customer had funds in his or her account, and the draft would be purchased with those funds. When the draft is presented to the receiving bank, it would be shown as a deposit in the account at that bank.

81Olupola Ajayi testified. She goes by the name of Lola. She is Abisola’s sister. She is well educated with a Bachelor of Science degree.

82Ms. Ajayi testified that she assisted her mother with a business in Nigeria. That business has 45 employees. She has lived in both Nigeria and the United States, and has children living in the United States.

83Ms. Ajayi testified that Spa One was started in January, 2010. It consists of a guest house, a salon, a gym, and provides body massage and shoes. In 2010, she became the Managing Director. She collects the revenue and supervises the staff. Abisola owns 70 per cent of the shares, and Ms. Ajayi owns 30 per cent.

84Ms. Ajayi testified that after Abisola moved to Canada, she would call Abisola and update her every couple of days. She testified that Abisola had signing authority for the business before she moved and still has signing authority although she does not use it much.

85Ms. Ajayi testified that about 90 per cent of the business’ revenue is in cash. She said it is not unusual to keep large amounts of cash on hand.

86Ms. Ajayi testified that Abisola talked to her about her living arrangements in Oakville, and said she needed more space for the kids. She said she wanted to buy a house. She would need money to do so. Ms. Ajayi testified that one way or another, she could come up with $60,000US. She did so. It was in cash, which came out of Abisola’s share of the business. She testified that she prepared the letter dated January 11, 2011 addressed to Adymar, and gave the letter and the $60,000 in cash to a salesgirl and asked her to deliver both the letter and the cash to Adymar. She instructed the salesgirl to get a stamp acknowledging receipt. She was not surprised that the money was being transferred to Jonathan, as this was a cultural thing.

87Ms. Ajayi testified that the salesgirl told her that she was not too familiar with the person at Adymar to whom she delivered the letter and the cash. Accordingly, she got a letter acknowledging receipt.

88Ms. Ajayi testified that she prepared the letter dated April 4, 2011, addressed to Parkway Microfinance Bank, requesting the bank to withdraw cash amounting to 16,000,000 Naira and credit Abisola’s current account. She said the letter was delivered by a salesgirl, and was stamped as received on April 5, 2011.

89Ms. Ajayi testified that she provided the letters she had prepared to Abisola when she asked for them but could not recall when that was.

90Ms. Ajayi testified that there were other occasions in which she was involved in transferring money to Abisola. She dealt with Mike at First City Monument Bank. Sometimes a salesgirl delivered cash, and sometimes it was by cheque. She could not recall if the money was transferred to Jonathan’s or Abisola’s account. She said in the Nigerian culture, it is the male who pays the bills.

91On cross-examination Ms. Ajayi testified that the name of the salesgirl that she used to deliver letters and cash is Noye Peters.

92Ms. Ajayi testified that Adymar charges a fee for its services but she could not recall what that was.

93She acknowledged that the letter dated January 11, 2011 states “Kindly transfer to Dr. Jonathan Okoakih as per attached bank details”. She said the “attached bank details” were prepared and typed by the salesgirl, but she did not know what they were. She could not recall when other transactions involving Abisola were effected.

94Ms. Ajayi testified that she was the one who called the person at Adymar and asked for a letter confirming receipt of the funds.

95Counsel for the plaintiffs requested production of the originals of the letters dated January 11 and April 4, 2011, which were marked as Exhibits 10 and 11. Ms. Ajayi, when confronted with these documents, was asked to say whether they were originals or copies. After some equivocating she finally took the position that they were originals. To me, they appear to be copies.

96Jonathan testified.

97Jonathan was qualified as a medical practitioner in Nigeria in 1987. In 1990, he joined Arthur Anderson and was involved in consulting, including in the United States. In 1994, his consulting company, Dale & Parker Limited was incorporated. Since then, he has been involved in consulting through Dale & Parker.

98Jonathan testified that as of April, 2010, Abisola earned more money than he did. He estimated that she earned 45-50 per cent more. He testified that he handled the finances of the family until December, 2011.

99Jonathan testified as to the incorporation of Parkway Microfinance Bank. He was involved in setting up the bank. Dale & Parker were the consultants. He said they were involved on behalf of a number of investors.

100Jonathan testified that there are eight investors in the bank. Not all of them are shown as shareholders. In terms of the 12,000,000 original shares, he wanted to put them in the name of Dale & Parker. However, the Nigerian central bank said it needed the name of an individual. Jonathan testified that when he got the shares, he signed them back to the investors.

101When it came time to issue a second tranche of shares, Mr. Aduci, the third shareholder in Dale & Parker, brought in some additional investors. They wanted to put the shares in the name of Dale & Parker, and they were. Jonathan testified that the shares were signed over to the investors, and he has never held a beneficial interest in the shares of Parkway, nor has Dale & Parker.

102Jonathan testified that the investors wanted Abisola to join the bank as its managing director. She was hesitant at first, but ultimately agreed. Jonathan testified that the bank has not paid any dividends to shareholders. Jonathan testified that while he is a director of Parkway he has not been active, at least since he moved Canada.

103Jonathan testified that he immigrated to Canada in 2009, after applying in 2006 or 2007. After he arrived, he began renting a property for $6,000 or $7,000 per month. A real estate agent suggested that he buy a house. Ultimately, he signed the agreement of purchase and sale for the purchase of the property on Lakeshore Road. He testified that the deposit of $50,000 came from cash he had brought with him.

104Jonathan testified that he spoke to Marco, a private banker at Scotiabank. On November 12, 2009, he was approved for a first mortgage in the amount of $1,820,000.

105Jonathan testified that he and his counsel requested the entire file from Scotiabank. What he received is probably incomplete. For example, he believes he signed a mortgage application, which is not in the file that was supplied by Scotiabank.

106Jonathan testified that the bank wanted a downpayment of $1,000,000. He provided to the bank a letter dated November 4, 2009, showing that he had an investment in his name in the amount of 170,050,000 Naira, which is approximately $1,164,000CAD. Some of the investment consisted of funds from his wife, but he did not tell the bank that.

107A further $100,000 transfer to Jonathan came from Abisola, from her funds.

108Jonathan testified that he could not close the transaction, as he could not get the necessary balance due on closing. Parkway liquidated a number of investments to collect debts and accordingly he could not get access to the necessary funds. As a result, a lawsuit ensued, which ultimately led to the judgment against him.

109Jonathan testified that his family arrived in Canada in April, 2010. They rented a townhouse at 111 Forsythe Street in Oakville. He said his children did not like the property.

110Jonathan testified that his wife wanted to buy a house, but he had no money. He said that on a trip to Nigeria, his wife spoke to her uncle and to Lola about getting some money.

111Jonathan testified that he and Abisola signed the agreement of purchase and sale for the Dunwoody property. He said that he did not like the house. The purchase price was $2,475,000, and Abisola did not have immediate access to the funds.

112Jonathan testified that he signed the agreement of purchase and sale because Abisola wanted him to take the lead as the male of the family. He said that in Nigeria, Abisola would normally provide him with about 80 per cent of her income and he would pay the bills.

113Jonathan said that his name was on the account at the Standard Chartered Bank in case anything happened. An account with Standard Chartered Bank was opened in England because it was possible that their daughter might go to school there. He testified that none of his money was in the account, and he had no access to it.

114Jonathan testified that none of the money that went into the house came from him.

115Jonathan testified that while both he and Abisola signed the agreement of purchase and sale, Abisola decided that she wanted the house in her name only because she did not want to be involved with his legal affairs. He said he discussed it with Marco, who told him the bank would insist that he be on title but that the bank did not care what percentage he owned.

116Jonathan testified that when he moved to Canada he thought he would still do work through Dale & Parker, but he testified that he does not do very much now. He acknowledged that an internal Dale & Parker memo to him dated June 12, 2002 appears to show income to him up to and including March, 2012. He said the income is used to pay a loan.

117Jonathan testified that he transferred his one per cent interest in the Dunwoody property to Abisola because Abisola did not want to be involved in his legal issues. He said an appraisal was obtained, and they calculated that one per cent of the equity including an allowance for inflation came to $7,412.50, and Abisola wrote him a cheque for that amount.

118Jonathan reviewed the documents regarding the transfer of funds, and stated that none of the money came from him. He said he had never met Michael Oreglemhe.

119On cross-examination, Jonathan acknowledged that the shares of Parkway Microfinance Bank were not disclosed to his Trustee in Bankruptcy.

120Jonathan confirmed that he owns 300,000 shares of Dale & Parker, Abisola owns 150,000 shares, and a third person owns 50,000 shares.

121Jonathan stated that he has signed over the shares in Parkway Microfinance Bank, but that he does not have the documents to show that. He said there is a secrecy agreement. He is not sure how much profit Parkway earns.

122Jonathan testified that his relationship with the Bank of Nova Scotia started in 2009, when he arrived in Canada. He said he provided Bank of Nova Scotia with a statement disclosing how much he had. He said the letter from Parkway Microfinance Bank, which showed that he had over $1,000,000CAD actually reflects a combination of his money and his wife’s money.

123Jonathan acknowledged that his tax returns, at least as they were filed, show that he earned more money than Abisola.

124Jonathan acknowledged that in obtaining the approval for the mortgage on the Dunwoody property, he told Marco that he owned luxury cars, which the bank was satisfied gave him enough net worth in Canada to qualify for the mortgage. On the Rolls Royce alone, he appeared to have equity of $193,000. Shortly after the judgment was obtained against him, he traded the car in and got in exchange a leased vehicle with no equity.

125Jonathan acknowledged that between April and October, 2010, various amounts were withdrawn from his account at Scotiabank and transferred to another account. He also acknowledged that on November 9, 2010, he transferred $250,000 to Dale & Parker Canada, effectively depleting his account entirely. He said the money was transferred there with Abisola’s permission, but could not recall why. Dale & Parker Canada was set up in 2009, but had not done any significant consulting work. He then acknowledged that a draft was purchased from the Dale & Parker account on November 25, 2010 in the amount of $182,917.18, which undoubtedly was used to purchase the Rolls Royce. He acknowledged that on February 14, 2011 the sum of $10,378.83 was transferred from the Dale & Parker account to an unknown account, and on February 28, 2011, the sum of $15,764.58 was also transferred from the Dale & Parker account to an unknown account. Jonathan said he could not recall why this was done. He acknowledged that on December 13, 2010, $20,000 was transferred from the Dale & Parker account to his own account at Scotiabank, but he could not say why. He testified that he never thought the money in the Dale & Parker account was there so it would not be exposed to creditors. He acknowledged a number of other transfers from the Dale & Parker account, including one that was made five days after the judgment. On November 22, 2011, the account was closed.

126Jonathan acknowledged that over the course of their marriage, he would transfer money to Abisola and Abisola would transfer money to him, as needed.

Submissions

Submissions

127Mr. Cohen, counsel for the plaintiffs, submits that his clients are entitled to relief under both the Fraudulent Conveyances Act and the Bankruptcy and Insolvency Act.

128Mr. Cohen submits that there are a number of badges of fraud that should cause the court to view, with suspicion, the circumstances surrounding the purchase of the Dunwoody property, and the decision to place the property in the name of Abisola, first as to 99 per cent, and ultimately in her name alone.

129The transaction occurred at a time when litigation was underway respecting the aborted first transaction involving the property on Lakeshore Road in Oakville. An action was commenced on April 19, 2010, following the failure of Jonathan to close that transaction. The agreement of purchase and sale respecting the Dunwoody property was executed on January 18, 2011. That transaction closed on April 29, 2011.

130Summary judgment was granted in favour of the plaintiffs against Jonathan following the aborted Lakeshore transaction, in the amount of $317,731.17, and $20,000 for costs, on October 17, 2011. An appeal was dismissed on April 12, 2012, with costs of $5,000.

131In the face of the litigation against Jonathan, and ultimately the judgment against him, the defendants made efforts to place the Dunwoody property beyond the reach of the plaintiffs, by placing title to the property in Abisola’s name to the extent of 99 per cent, and ultimately 100 per cent. In the meantime, Jonathan had effectively placed the equity in his Rolls Royce beyond the reach of his creditors by trading it in for a leased vehicle that had no equity. To secure a mortgage on the Lakeshore property, he represented to Scotiabank that he had assets worth at least $1,000,000, and to secure the mortgage on the Dunwoody property he persuaded the same bank that he had net worth in Canada of at least $345,000.

132While the defendants seek to persuade the court that Abisola provided all of the money for the purchase of the Dunwoody property, Mr. Cohen submits that, in fact, the evidence shows that that is not so. The lion’s share of the money came from Parkway Microfinance Bank, an entity owned and controlled by Jonathan and Abisola.

133The evidence shows that Parkway had money on deposit at First City Monument Bank, in the amount of 250,000,000 Naira. The signing officers of Parkway directed First City Monument Bank to cash in the certificate to the extent of 116,000,000 Naira, and forward the funds to Fairmont BDC, a transfer agent. This was confirmed by Mr. Oreglemhe, and the documentary evidence supports this.

134Contrary to the clear documentation, which explains exactly how the money was furnished to First City Monument Bank and then to Fairmont BDC, Abisola produced her bank records which purport to show that the money went directly from her account to Fairmont BDC through the issuance of a draft. Mr. Oreglemhe, in his evidence was clear that there is a distinct difference between a transfer of funds through an electronic transfer, and the transmission of funds through the issuance of a draft. Where a draft is issued, it will then be transmitted physically to the recipient’s bank and recorded as a deposit.

135In view of the clear documentary evidence as to the source of the funds, Abisola’s explanation that the funds came from her uncle and from her interest in Spa One must be rejected. No confirmation from her uncle/cousin was tendered, except for a hearsay document apparently signed more than two years after the fact. The author of the document was not called as a witness, although clearly he could have been. As for the money from Spa One, the documentary evidence allegedly prepared by Ms. Ajayi, and her evidence itself, is highly suspect.

136It can only be concluded that the alleged banking records that purport to show money coming from TwoR Global Ventures and Spa One, and being transmitted through a draft issued to Fairmont BDC, cannot be relied on.

137In the final analysis, at least the money used to provide the balance due on closing came from Parkway Microfinance Bank, an organization owned and controlled by Jonathan and Abisola, and primarily Jonathan.

138As far as the first deposit of $50,000 is concerned, Mr. Cohen points out that on discovery Abisola took the position that the funds were “her money”. At trial, she said the money came to her through Spa One. Ms. Ajayi’s evidence as to that transaction is highly suspect, and should not be relied on.

139As far as the second deposit of $100,000 is concerned, the funds allegedly came from an account at Standard Chartered Bank in London, England. Mr. Cohen points out that the account, in both Nigeria and England, was in the names of both Jonathan and Abisola. The parties had different explanations as to how and why the money ended up in England as opposed to Nigeria. Both parties testified that Jonathan looked after the finances, as a male in Nigeria is expected to do so. Jonathan testified that each gave each other money as needed. There is no evidence, apart from Abisola’s own evidence, that the sole source of funds in the Standard Chartered Bank accounts came from cash generated by Abisola as a foreign exchange broker. It is more likely, as was clearly the case with respect to all of their other financial dealings, that the funds came from both of them.

140In the final analysis, it stretches credulity to the breaking point to accept that all of the money for the purchase of the Dunwoody property came from Abisola. More likely, it mostly came from Parkway Microfinance Bank, an entity owned and controlled primarily by Jonathan, and the balance from a mixture of funds owned by both Abisola and Jonathan.

141Mr. Cohen points out that prior to Jonathan’s attempt to purchase the Lakeshore property, a large amount of cash was deposited to Jonathan’s account and there is no dispute, indeed Jonathan acknowledges, that Jonathan was the source of that money. On November 9, 2010, after the lawsuit arising out of the Lakeshore property had been commenced, $250,000 was diverted from Jonathan’s account to the Dale & Parker account. Scotiabank was satisfied with Jonathan’s net worth for the purpose of a mortgage of $1,800,000, and made its mortgage commitment knowing that Jonathan needed to come up with about $700,000 to buy the property.

142Until October, 2011, funds continued to be deposited into Jonathan’s account, and payments, including mortgage payments, were made from that account. It was only in October, 2011, that funds began to be deposited only into Abisola’s account.

143Mr. Cohen submits that even if it is not accepted that Jonathan contributed the entire amount for the purchase of the Dunwoody property, it must at least be concluded that he contributed a significant amount, and his interest should be considered to be at least a one half interest. He submits that the 99 per cent/one per cent split is entirely artificial, and does not reflect Jonathan’s contribution.

144Mr. Cohen submits that in addition to Jonathan’s financial contribution, his contribution as a mortgagor is also a significant contribution. The bank insisted that Jonathan be on title, and if he had not been on title the bank would not have granted the mortgage.

145Mr. Cohen submits that in view of Jonathan’s contribution, both financial and through his signing the mortgage as a mortgagor, Abisola holds her interest, or at least a substantial part of it, on a resulting trust for Jonathan. Alternatively, she holds it on a constructive trust. He submits that structuring the transaction so as to place the property in Abisola’s name to place it beyond the reach of Jonathan’s creditors is, pursuant to the Fraudulent Conveyances Act, void and of no effect as against his creditors.

146Mr. Cohen submits that the transfer of Jonathan’s interest in the property to Abisola for slightly more than $7,000 constitutes a transfer at undervalue, as contemplated in s.96 of the Bankruptcy and Insolvency Act. Jonathan’s interest in the property was worth considerably more than $7,000. The transaction was effected with the clear intent to defeat claims of Jonathan’s creditors, and particularly the claims of the plaintiffs, and thus a remedy under s.96 of the Act should be awarded.

147Mr. Cohen submits that there are serious issues respecting the credibility of the witnesses called on behalf of the defendants.

148Mr. Cohen points out that Jonathan removed $250,000 from his account and transferred it to his company, Dale & Parker. He had no satisfactory explanation. He had no satisfactory explanation for failing to disclose the shareholdings of Parkway Microfinance Bank, until the information was dragged out of Abisola on cross-examination. While he claims that the shares in his name and in the name of Dale & Parker are held in trust for others, no evidence was produced to support this.

149While Jonathan claimed not to have spoken to any lawyer in Russell Allegra’s office, the note made by Frank Torchia, which discloses that there had to have been discussion of how he could be “protected”, belies this evidence. Frank Torchia’s notation is supported by the note of the clerk in Russell Allegra’s office, which states “see Frank’s note” in terms of how title is to be taken.

150Mr. Cohen notes that Justice Newbould had difficulty with Jonathan’s credibility and his explanation for trading in his equity in the Rolls Royce for a leased vehicle. Newbould J. was prepared to draw an inference that the vehicle transaction “was at least a prima facia preference or fraudulent conveyance of his equity interest.” Newbould J. noted that Jonathan traded in his Rolls Royce, which then had an equity value of $78,548, for a leased vehicle. Transferring his equity to the leasing company resulted in a lower lease payment for the new Rolls Royce. Newbould J. called this “more than a suspicious circumstance.”

151Mr. Cohen also notes that when Jonathan and Abisola went to another lawyer to transfer Jonathan’s one per cent interest to Abisola, it was done just before the filing of a writ of execution against Jonathan. The filing of the writ of execution had been delayed only because Jonathan’s solicitor had delayed approving the judgment as to form.

152With respect to Abisola’s credibility, Mr. Cohen points out that her income tax returns are clearly wrong, and grossly understate her income. Her explanation is that she gave all the necessary information to her accountant. It is difficult to believe that a responsible accountant would not have advised her as to the basis upon which income tax returns are prepared in Canada. She knew about the lawsuit at the time they were prepared. No other documents have been produced, nor any evidence from her former or current accountants.

153Mr. Cohen notes that Abisola and Jonathan waited until after judgment had been issued on the aborted transaction before transferring Jonathan’s one per cent interest.

154Mr. Speigel, counsel for the defendants, submits that the action should be dismissed.

155Mr. Speigel submits that all of the money for the purchase of the Dunwoody property came from Abisola. He submits that credible evidence has been tendered to show that that is so.

156With respect to the initial deposit of $50,000, credible evidence has been tendered to show that the money came from Spa One. Abisola’s sister, Lola Ajayi, testified to support Abisola’s evidence. While the differences in the dates of some of the documents may not have been explained very well, nevertheless that does not detract from the credible and compelling evidence that was given by Abisola and her sister.

157With respect to the secondary deposit of $100,000, credible evidence has been tendered to show the source of that money. Abisola testified that it came from cash generated from her foreign exchange earnings, and nothing was produced to contradict that assertion. While the money was placed in a joint account, nevertheless the money belonged to Abisola. The account was joint only so that Jonathan would have access to it, should anything happen to Abisola, and the account was in London, England because it was possible that their daughter might go to school in England.

158The downpayment of $617,000 was transmitted in two tranches, first, of $100,000US, and second, of 420,000Euros.

159There were two sources for that money. First, 16,000,000 Naira came from Spa One. Second, 100,000,000 Naira came from Abisola’s relative, which may or may not have been repayable on generous terms. For this purpose, this was her money.

160The issue of whether the money was transferred to Fairmont BDC through a draft, or whether it was transferred electronically to Fairmont BDC through Parkway Microfinance Bank, is of no moment. Mr. Speigel notes that none of the witnesses were cross-examined as to the distinction or the difference, and it is unfair to now rely on the distinction when none of the witnesses had an opportunity to explain. Indeed, he submits that the failure to cross-examine on this issue contravenes the rule in Browne v. Dunn (1893), 1893 CanLII 65 (FOREP), 6 R. 67 (H.L.). Mr. Speigel submits that it can only be concluded that the money came from Abisola, and the underlying source of the funds was Spa One and Abisola’s relative.

161Mr. Speigel submits that the evidence of Mr. Oreglemhe was clear and compelling. Mr. Oreglemhe is entirely independent, and his evidence should be accepted. The instructions were given by Abisola to transfer the money to Jonathan, and he did so.

162Mr. Speigel submits that Abisola at all times wanted the title to the property placed in her name alone. It was only placed in the name of Jonathan to the extent of one per cent at the insistence of Scotiabank.

163Mr. Speigel submits that the plaintiffs have not established any entitlement to rely on the Fraudulent Conveyances Act. While it is clear that Abisola did not want the Dunwoody property to be available to Jonathan’s creditors, there is nothing unlawful about having that intention. There is nothing unlawful about the transaction, provided she provides all of the funds for the purchase of the property. She did so.

164As far as the issue under s.96 of the Bankruptcy and Insolvency Act is concerned, there was no sale at an under-value. Jonathan actually had no equitable interest in the property because he provided none of the money to purchase it. However, on the assumption that he had a one per cent interest, he was fairly compensated for the value of that interest by the payment to him of slightly more than $7,000.

165Various cases referred to by the parties include Juhasz (Trustee of) v. Codeiro, 2015 ONSC 1781, [2015] O.J. No. 1654 (S.C.J); Re Rehman, [2015] O.J. No. 1748 (S.C.J.); Montor Business Corp. (Trustee of) v. Goldfinger, [2013] O.J. No. 4871 (S.C.J.); Mitchell Jenner & Associates Inc. v. Saunders, 2011 ONSC 2930; aff’d. 2012 ONCA 290; Re Elez, 2011 ONSC 4687; Albert (Trustee of) v. Albert [1997] O.J. No. 6265 (S.C.J.); McNeilly Estate v. McNeilly, [2005] O.J. No. 2488 (S.C.J.); Lavie v. Lavie, [2015] O.J. No. 5121 (S.C.J.); Salisbury v. Dumond, [2002] O.J. No. 4899 (S.C.J.); CIT Financial Ltd. v. Zaidi, 2006 CanLII 8469 (ON SC), [2006] O.J. No. 1073 (S.C.J.); Ehrmantraut v. Ehrmantraut (Trustee of), 2008 MBQB 140, [2008] M.J. No. 196 (Q.B.); aff’d. [2008] M.J. No.370 (C.A.); Re Indarsingh, 2015 ABQB 158, [2015] A.J. No. 259 (Q.B. in Bankruptcy, Registrar); and FL Receivables Trust 2002-A (Administrator of) v. Cobrand Foods Ltd. (2007), 2007 ONCA 425, 85 O.R. (3d) 561 (C.A.).

Analysis

Analysis

166As noted at the outset of these reasons, the Fraudulent Conveyances Act is powerful legislation that is to be given a broad and liberal interpretation and construction. The relevant provisions of that Act are as follows:

1. In this Act,

“conveyance” includes gift, grant, alienation, bargain, charge, encumbrance, limitation of use or uses of, in, to or out of real property or personal property by writing or otherwise; (“cession”)

“personal property” includes goods, chattels, effects, bills, bonds, notes and securities, and shares, dividends, premiums and bonuses in a bank, company or corporation, and any interest therein; (“biens meubles”)

“real property” includes lands, tenements, hereditaments and any estate or interest therein. (“biens immeubles”)

2. Every conveyance of real property or personal property and every bond, suit, judgment and execution heretofore or hereafter made with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as against such persons and their assigns.

3. Section 2 does not apply to an estate or interest in real property or personal property conveyed upon 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.

4. Section 2 applies to every conveyance executed with the intent set forth in that section despite the fact that it was executed upon a valuable consideration and with the intention, as between the parties to it, of actually transferring to and for the benefit of the transferee the interest expressed to be thereby transferred, unless it is protected under section 3 by reason of good faith and want of notice or knowledge on the part of the purchaser. [emphasis added]

167Also of relevance is section 14 of the Family Law Act, which provides:

14. The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that,

(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and

(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).

168The plaintiffs also rely on s.96 of the Bankruptcy and Insolvency Act, which provides:

96. (1) On application by the trustee, a court may declare that a transfer at undervalue is void as against, or, in Quebec, may not be set up against, the trustee — or order that a party to the transfer or any other person who is privy to the transfer, or all of those persons, pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration given by the debtor — if

(a) the party was dealing at arm’s length with the debtor and

(i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy,

(ii) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, and

(iii) the debtor intended to defraud, defeat or delay a creditor; or

(b) the party was not dealing at arm’s length with the debtor and

(i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy, or

(ii) the transfer occurred during the period that begins on the day that is five years before the date of the initial bankruptcy event and ends on the day before the day on which the period referred to in subparagraph (i) begins and

(A) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, or

(B) the debtor intended to defraud, defeat or delay a creditor.

(2) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

(3) In this section, a “person who is privy” means a person who is not dealing at arm’s length with a party to a transfer and, by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.

[emphasis added]

169There is no doubt that the Fraudulent Conveyances Act is to be given a large and liberal interpretation and construction. In Royal Bank of Canada v. North American Assurance Co., 1996 CanLII 219 (SCC), [1996] S.C.J. No. 17, Gonthier J. stated for the Court, at para. 59:

All the provincial fraud provisions are clearly remedial in nature, and their purpose is to ensure that creditors may set aside a broad range of transactions involving a broad range of property interests, where such transactions were effected for the purpose of defeating the legitimate claims of creditors. Therefore, the statues should be given the fair, large and liberal construction and interpretation that best ensures the attainment of their objects, as required by provincial statutory interpretation legislation (see, for example, The Interpretation Act, 1993, S.S. 1993, c.I11.1, s. 10). I agree with the following observation by Professor Dunlop in Creditor-Debtor Law in Canada (2nd ed. 1995), at p.598, that the purpose of fraudulent conveyance legislation:

…is to strike down all conveyances of property made with the intention of delaying, hindering or defrauding creditors and others except for conveyances made for good consideration and bona fide to persons not having notice of such fraud. The legislation is couched in very general terms and should be interpreted liberally.

170Much of the provincial legislation, including the Ontario Act, was taken from the Statute of Elizabeth, (Acte agaynst fraudulent Deedes Gyftes Alienations &c.) first enacted in 1571, 13 Eliz. 1, c.5. Thus, English cases interpreting the Statute of Elizabeth are of assistance.

171No matter how broadly the legislation is to be interpreted, and no matter what fair, large and liberal construction and interpretation should be given to it, it cannot be construed so as to set aside a conveyance, to a person, of property purchased with that person’s own money, even if the intent is to ensure that a creditor of some other person cannot get at the property. All counsel agree that that is so.

172Where the money to purchase an asset is furnished by one person, but the asset is placed in the name of another, the doctrines of resulting trust and constructive trust come into play.

173Resulting trusts can arise in a number of ways, but of relevance here is where an asset is purchased by one person and placed in the name of another. In that situation, it is presumed that the recipient holds his or her interest in trust for the person who purchased the asset and provided the funds for it, unless it was intended that there be a gift. The onus is on the recipient to prove the intention was to make a gift. Where there is more than one contributor to the purchase price, it is presumed that the trust is in favour of all of them. See Waters’ Law of Trusts in Canada, (4th Ed., Carswell, 2012), chapter 10, pp. 394-475.

174A constructive trust can also arise in a number of ways, but fundamentally it has been applied to prevent unjust enrichment, which arises where there has been enrichment of one party; corresponding deprivation to another; and no juristic reason for the enrichment and corresponding deprivation: see Waters, at pp.534-540.

175In this case, apart from the statutory considerations, if Jonathan contributed all or part of the money to purchase the Dunwoody property, a resulting trust would arise in his favour to the extent of his contribution, unless he intended to make a gift of his contribution to Abisola. Alternatively, his contribution would represent an enrichment to Abisola and a corresponding deprivation to him. If he did not intend to make a gift, there would be no juristic reason for the enrichment.

176There is no dispute that the Dunwoody property was taken in Abisola’s name so that the plaintiffs and other creditors of Jonathan could not get at the property. At the end of the day, therefore, the real question is whether Jonathan supplied all or at least some of the money for the purchase of the property. If he did, then as between himself and Abisola, Abisola held his share of the property on a resulting trust for Jonathan or, perhaps, the law would impose a constructive trust on Abisola to hold Jonathan’s share in trust for him. If Jonathan intended to make a gift of his share of the property to Abisola, the Fraudulent Conveyances Act would operate so as to hold that that gift would be void as against Jonathan’s creditors if the intent was to defeat, hinder, delay or defraud creditors.

177Apart from the evidence of actual intent, expressed by both Jonathan and Abisola, to ensure that the Dunwoody property would not be available to Jonathan’s creditors, it has been established for over four centuries that the court can have regard for what are called “badges of fraud” in assessing whether a transaction was effected for a fraudulent purpose. As long ago as 1601 in Twyne’s Case (1601), 3 Co. Rep. 80; 76 E.R. 809, the Court made reference to the fact that a gift “had the signs and marks of fraud”, where a debtor had transferred sheep to another, and the creditor, upon attempting to seize the sheep to satisfy his debt, was resisted by the transferee of the sheep. The Court held, at p.812 E.R., that the gift had the signs and marks of fraud because the donor continued in possession of the sheep; used them as his own; the transaction was made in secret; the transaction was made pending the writ; and the transaction was subject to a trust between the parties, because the donor continued to possess and use the sheep as his proper goods. At p.815 E.R., the court stated:

And because fraud and deceit abound in these days more than in former times, it was resolved in this case by the whole Court, that all statutes made against fraud should be liberally and beneficially expounded to supress the fraud.

178The main statute under consideration by the Court in Twyne’s Case was the Statute of Elizabeth.

179Since Twyne’s Case, the courts have invariably looked for badges of fraud in order to assist in determining whether a transaction is one that is caught by the statute.

180The significance of badges of fraud, and their use, are explained by Penny J. in Indcondo Building Corp. v. Sloan (2014), 2014 ONSC 4018, 121 O.R. (3d) 160 (S.C.J.), at paras. 52 and 53 as follows:

The badges of fraud derive from Twyne’s Case (1601), 76 E.R. 809. As interpreted by modern courts, the badges of fraud include

a) the donor continued in possession and continued to use the property as his own;

b) the transaction was secret;

c) the transfer was made in the face of threatened legal proceedings;

d) the transfer documents contained false statement as to consideration;

e) the consideration is grossly inadequate;

f) there is unusual haste in making the transfer;

g) some benefit is retained under the settlement by the settlor;

h) embarking on a hazardous venture; and

i) a close relationship exists between parties to the conveyance.

The badges of fraud represent evidentiary rules developed over time which, when considered in all the circumstances, may enable the court to make a finding unless the proponents of the transaction can explain away the suspicious circumstances. It’s clear that the legal or persuasive burden to prove the case remains on the plaintiff throughout the trial. Nevertheless, the plaintiff may raise an inference of fraud sufficient to shift the evidentiary burden to the defendant if the plaintiff can establish that the transaction has characteristics which are typically associated with fraudulent intent. Proof of one or more badges of fraud will not compel a finding for the plaintiff but it may raise a prima facie evidentiary case which it would be prudent for the defendant to rebut.

181The existence of badges of fraud is not, of course, determinative. They simply constitute circumstantial evidence from which it may be inferred that a transaction was undertaken with fraudulent intent. This is made clear from the judgment of Laskin J.A. in the Court of Appeal in FL Receivables, supra. At paras. 39 and 40, Laskin J.A. stated as follows:

The crucial question in any fraudulent conveyance action is whether the plaintiff has proved the fraudulent intent of the debtor. While the legal burden to prove fraudulent intent remains on the plaintiff throughout the trial, the plaintiff can raise an inference of fraud sufficient to put a “burden of explanation” on the defendant debtor. The plaintiff typically raises an inference of fraud by putting forward “badges of fraud.” These “badges of fraud” vary from case to case. They are no more than typical and suspicious facts that may allow the court to make a finding of fraud absent an explanation from the debtor. See C.R.B. Dunlop, Creditor-Debtor Law in Canada, 2d ed. (Toronto: Thomson Canada, 1995) at 613-15.

The court, however, is not compelled to draw this inference of fraudulent intent from badges of fraud pleaded by the plaintiff. See Koop v. Smith (1915), 1915 CanLII 26 (SCC), 51 S.C.R. 554(S.C.C.) at 558-59. The court may dismiss a fraudulent conveyance action because it has decided that the surrounding circumstances taken as a whole explain away the plaintiff’s evidence. It seems to me that is what the trial judge did in this case.

182Notwithstanding the existence of badges of fraud, the burden of proof remains on the plaintiff: see Conte Estate v. Alessandro, [2002], O.J. No. 5080 (S.C.J.), at para. 22. However, the existence of badges of fraud places an evidentiary burden on the defendant to explain the transaction.

183Whether the burden on the defendant is described is an evidentiary burden, or a burden of persuasion, or whether the various burdens are referred to as “shifting” burdens, it seems clear that as a practical matter, once suspicious circumstances are raised the defendant must explain the transaction or transactions in order to persuade the court that it or they are not caught by the Fraudulent Conveyances Act. In part, the placing of an onus on the defendant is consistent with the fact that it is the defendant who has knowledge of the circumstances of the transaction. Once suspicious circumstances are raised, it is the defendant who can dispel the suspicions. As stated by Sopinka J. in Snell v. Farrell, 1990 CanLII 70 (SCC), [1990] S.C.J. No. 73, in discussing the burden of proof in a medical malpractice action, at para. 16:

The legal or ultimate burden of proof is determined by the substantive law “upon broad reasons of experience and fairness”: 9 Wigmore on evidence para. 2486, at p.292. In a civil case, the two broad principles are:

1. that the onus is on the party who asserts a proposition, usually the plaintiff;

2. that where the subject matter of the allegation lies particularly within the knowledge of one party, that party may be required to prove it.

184At para. 29, Sopinka J. referred with approval to the famous dictum of Lord Mansfield in Blatch v. Archer (1774), 1 Cowp. 63; 98 E.R. 969, at p. 970 E.R.:

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

185There are a number of badges of fraud in this case. They include:

a) the transaction involving the Dunwoody property occurred after Jonathan had defaulted on the Lakeshore property, and after action had been commenced against him.;

b) a decision was made to place title in the name of Abisola solely, or at 99 per cent, at a time when the action against Jonathan was underway;

c) Jonathan disposed of his apparent one per cent interest in the property after judgment against him had been delivered, but before a writ of execution could be filed;

d) Jonathan disposed of his equity in his Rolls Royce after judgment had been rendered against him;

e) Jonathan transferred $250,000 from his bank account to the account of Dale & Parker after proceedings were commenced against him;

f) Jonathan has resided in the Dunwoody property throughout, and has continued to enjoy the property.

186At the very least, there is an evidentiary burden on the defendants to persuade me that the transaction is not one that is caught by the statute.

187I am not persuaded, having heard and considered the evidence, that all the money for the purchase of the Dunwoody property came from Abisola. A considerable amount of it came from Jonathan or from an organization that he owns and controls.

188There were three payments made for the property:

a) the initial $50,000 deposit;

b) the supplementary $100,000 deposit;

c) the balance due on closing, of approximately $617,000.

189Not without hesitation, I am persuaded that it is more probable than not that the initial deposit came from funds generated from Spa One. The documents that appear to show that $60,000US was transmitted from Spa One to Adymar are certainly suspicious. The conflict in the dates of the relevant letters was not adequately explained. It is not clear that what was produced as originals are actually originals or are copies. The reason for getting a receipt stamp on the original letter, assuming it is original, and then requiring a follow-up acknowledgement letter, was also not adequately explained. To entrust $60,000US with a salesgirl, and require a follow-up letter simply because the salesgirl did not recognize the person at Adymar, seems odd. The fact that the letters were produced in this litigation very late in the day is also suspicious.

190Having made these observations, I need only be convinced on a balance of probabilities that the funds came from Spa One. Not without doubt, I am so persuaded.

191I am not so persuaded with respect to the supplementary deposit of $100,000. That money was said to have come from Abisola’s money, received in cash from her transactions involving currency transfers. The account into which the funds were placed was a joint account, at a bank that had operations in both Nigeria and England.

192I note that while Jonathan’s bank account records in Canada, and Abisola’s bank records in Nigeria and Canada, were produced, none of Jonathan’s bank records in Nigeria were produced. That he had at least one bank account in Nigeria is clear from para. 17 of his affidavit sworn October 6, 2011. According to both Jonathan and Abisola, while Abisola earned more than Jonathan did, nevertheless he earned a considerable amount. Abisola had bank accounts in her own name in Nigeria, and they had one joint account at the Standard Chartered Bank. Jonathan earned his own money, and it is inconceivable that he would not have had his own bank account or bank accounts. Indeed, he testified that each party would give the other money as needed.

193I am entitled to draw an adverse inference from the failure to produce Jonathan’s Nigerian bank accounts and I do so. As stated by Lord Mansfield in Blatch, the evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted. It would have been open to show that none of the money in the joint account at the Standard Chartered Bank came from any of Jonathan’s Nigerian bank accounts, but none of the records for those accounts were produced.

194I am similarly not persuaded that Abisola was the source of the funds required for the balance due on closing, from funds made available through her relative or from Spa One.

195It is clear, in my view, that the entire sum of 116,000,000 Naira that was ultimately transferred to Jonathan’s Scotiabank account in Euros came from an investment of Parkway Microfinance Bank of 250,000,000 Naira that it had on account with First City Monument Bank. That is clear from the letter of instruction dated April 4, 2011. That letter refers to an “existing investment”, and requires First City Monument Bank to liquidate that investment and transfer the sum of 116,000,000 Naira to Fairmont BDC, and rollover the balance. For what it is worth, that transaction was confirmed on October 30, 2015, by letter of that date from First City Monument Bank to Parkway, confirming that 116,000,000 Naira was transferred by debit transfer from Parkway Microfinance Bank to Fairmont BDC on April 5, 2011. That transaction was confirmed, once again, by an entry in the records produced by First City Monument Bank. It was also confirmed by Mr. Oreglemhe. In my view, there is no ambiguity in the transaction.

196The transaction cannot be explained, in my view, by a purported excerpt from a bank account record of Abisola at Parkway Microfinance Bank, purporting to show two transfers to her account, of 50,000,000 Naira each, from Two R Global Ventures, and a transfer from Spa One of 16,000,000 Naira, and the issuance of a draft to Fairmont BDC in the amount of 116,000,000 Naira. I am also unconvinced by a purported letter from Lola Ajayi for Spa One Enterprises addressed to Parkway Microfinance Bank dated April 4, 2011, purportedly instructing the bank to withdraw 16,000,000 Naira and credit Abisola’s account, or Abisola’s purported letter to Parkway dated April 3, 2011 instructing the bank to debit her account with the sum of 116,000,000 Naira and transfer that amount to Fairmont BDC in First City Monument Bank “as per attached”. It would seem odd that Abisola’s letter of instruction was dated the day before Spa One’s purported letter of instruction, at a time when Spa One’s funds would not have been in Abisola’s account. The document said to be “as per attached” to Abisola’s letter was not included in what was produced to the court.

197I also note, as I did earlier, that there is no confirmation of any contribution from Abisola’s relative, other than the purported bank record which I discount, and other than the clearly hearsay document produced two years after the fact, and which was not supported by any viva voce evidence.

198If it comes to a choice between accepting the clear documentary evidence that the funds came from Parkway Microfinance Bank, supported by the evidence of Mr. Oreglemhe, or the purported bank records of Abisola, supported only by suspicious evidence from her sister and only hearsay evidence from her relative, I have no hesitation in preferring the former.

199I am not persuaded that any Browne v. Dunn issue arises from the failure of Mr. Cohen to cross-examine the defendants’ witnesses, particularly Abisola, as to the conflict in the documentary evidence. Browne v. Dunn requires that a witness be confronted with contradictory evidence that will be called by the opposite party that is different from the evidence given by the witness. It does not require that a party confront the opposite party’s witness with contradictions that arise from other evidence also called by the opposite party. Mr. Cohen is perfectly entitled to rely on the glaring contradictions in the evidence called by the defendants. The contradiction could and should have been explained by the defendants themselves without any prompting by counsel for the plaintiffs. There is no violation of the rule in Browne v. Dunn.

200In the result, I conclude that the funds came from money owned by Parkway Microfinance Bank. That entity appears to be owned and controlled primarily by Jonathan, albeit with some control on the part of Abisola.

201No convincing evidence has been produced to show that Jonathan is not the beneficial owner of the shares of Parkway held in his name or in the name of Dale & Parker, his consulting company. If there is documentary evidence that would show that he and/or Dale & Parker are not the beneficial owners, it was not produced. I draw the appropriate inference.

202In the result, I hold that the balance due on closing did not come solely from Abisola. Rather, it came from an entity owned, for the most part, by Jonathan and/or his consulting company and controlled by Jonathan and, to some extent, from both Abisola and Jonathan.

203Does it matter that some of the money came not from Jonathan but from a corporation owned directly or indirectly by him? Generally speaking the corporate veil is not to be pierced. However, an exception exists where the corporation is inserted and being used as a shield for fraudulent or improper conduct: see Transamerica Life Insurance Co. of Canada v. Canada Life Insurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423, at pp.431 and 433, per Sharpe J., as he then was; aff’d. [1997] O.J. No. 3754 (C.A.). In this case, to maintain the fiction of a separation between the corporation and Jonathan would be to perpetrate a fraud. Indeed the whole purpose of the Fraudulent Conveyances Act is to protect against fraud. As noted earlier, the legislation is to be given a broad and liberal interpretation.

204At the end of the day, it seems clear that some of the money to purchase the property came from Abisola, and some came from Jonathan. It is not possible, on this record, to make an accurate, or indeed any, determination as to the proportions contributed by each.

205I also agree with Mr. Cohen’s submission that the fact that Jonathan was a co-owner and a co-mortgagor represented a significant contribution of value to the purchase. Without Jonathan’s covenant on the mortgage, the transaction would not have occurred. I agree in this respect with the reasoning of McKelvey J. of the Manitoba Court of Queen’s Bench in Ehrmantraut, supra, at para. 49, upheld by the Manitoba Court of Appeal.

206In the final analysis, both parties made contributions of value to the purchase, but it is not possible to calculate their respective contributions.

207There is a suggestion in an early Ontario case that where two people contribute to the purchase of a property, which is placed in the name of one of them, and it is impossible to determine the proportions in which each has contributed, there cannot be any resulting trust in favour of the person in whose name the property is not placed: see the judgment of Strong V.C. in Wilde v. Wilde (1873), 20 Gr. 521; [1873] O.J. No. 199 (Court of Chancery), at para. 58.

208This seems wrong to me in principle. It would be a fairer result, in my view, that in the absence of a precise calculation of respective contributions, it should be concluded that each party is entitled to an equal share. This is particularly so in the case of married contributors. Indeed, that was the conclusion in an English case, Jones v. Maynard, [1951] 1 Ch. 572, where Vaisey J. decided that where a husband and wife effectively operated by a pooling of their respective monies, and it was thus impossible to determine the respective investments made by each, it should be concluded that each is entitled to half. At p.575, Vaisey J. stated:

I think that the principle which applies here is Plato’s definition of equality as a “sort of justice”: if you cannot find any other, equality is the proper basis. When monies were taken out of the joint account for the purpose of making an investment, the intention which I attribute to the parties is equality, and not some proportional entitled to be arrived at an inquiry as to the amounts contributed respectively by the husband and wife to the common purse. Where one is searching for justice, as one must, and cannot find any other source and sound basis, I think that equality is the best rule.

209A similar approach has been adopted in the courts of Manitoba: see, for example, Atamanchuk v. Atamanchuk, (1955), 1955 CanLII 553 (MB QB), 15 W.W.R. 301 (Man. Q.B.); aff’d. except as to a minor variation, (1956), 21 W.W.R. 335 (Man. C.A.). See also S. v. S. (1952), 1952 CanLII 444 (MB QB), 5 W.W.R. (N.S.) 523; [1952] M.J. No. 13 (Q.B.). At para. 14, Campbell J. stated:

I take the view that when spouses have a common purse and a common bank account, and pool their resources, the husband’s earnings, even if they be more than those of the wife, are on behalf of both of them, and the idea that years afterwards one can dissect the contents of the fund by taking an elaborate account as to how much was paid in by each is inconsistent with the idea of a joint bank account or common pool insofar as husband and wife are concerned.

210I think the policy reflected in the Manitoba cases is persuasive. Where the parties have effectively pooled their resources and purchased an asset, it is difficult, if not impossible, to try, at some later date, to unwind the pooling and determine the proportions in which each party has contributed to the asset. In this case, it is clear that up until the judgment was granted against Jonathan, the parties operated by pooling their resources. It was agreed that while Abisola earned more than Jonathan, he looked after the finances. Each provided money to the other as needed. I expect if each was asked how much each of them owned individually, before the judgment was delivered, neither party would have been able to answer with any particularity. That is quite common among married couples.

211Jonathan contributed a substantial amount to the purchase price of the Dunwoody property. Abisola either holds his proportionate share on a resulting trust for him or he made a gift of his share to her. If the latter, it was made with the intent of both himself and Abisola to defeat, hinder, delay or defraud Jonathan’s creditors and, pursuant to s.2 of the Fraudulent Conveyances Act, the transaction under which the property was placed in Abisola’s name to the exclusion of Jonathan is void as against Jonathan’s creditors.

212Since, at the end of the day, it is not possible to determine the proportions in which Abisola and Jonathan contributed to the purchase of the Dunwoody property, I conclude that each of them should be held to be the owner of an undivided one half interest. I emphasise that this holding is only for the purpose of determining their rights as they relate to Jonathan’s creditors, and is not determinative as it relates to their interests as between themselves.

213Having regard to this holding, it is not certain that I need to make any determination under s.96 of the Bankruptcy and Insolvency Act. However, it seems clear that the purchase, by Abisola, of Jonathan’s undivided one-half interest in the property was at an under-value. She paid slightly more than $7,000 for his interest, and it was worth, at the time of purchase, at least $350,000. Having regard to the timing of the transaction, as well as the other badges of fraud I have identified, the intent was to defeat the interests of creditors, including those of the plaintiffs.

214I will await advice from counsel as to whether any other remedial orders are requested. Once I have heard from counsel, I will also invite submissions as to the matter of costs.

Gray J.