SUPERIOR COURT OF JUSTICE

COURT FILE NO.: FS-10-150-01

DATE: 2017 08 23

ONTARIO

B E T W E E N:

DIPIKABEN MAKWANA

M. Leonard, for the Applicant

Applicant

and -

SEWSANKAR BISHNU

A. Chima, for the Respondent Sewsankar Bishnu

Respondent

and -

SURUJPAUL BISHNU

M. Tubie, for the Respondent Surujpaul Bishnu

Respondent

and -

HOWARD MELVIN WASSERMAN (Intervener and Trustee in Bankruptcy for Sewsankar Bishnu

Self-Represented

Intervener

HEARD: May 12, 13, 14, 2014, September 15, 2014, October 13, 2015, November 6, 2015, September 13, 14, 15, 16, 19, 20, 21, 23, 2016, February 21, 23, March 3, 2017

REASONS FOR JUDGMENT

Justice Thomas A. Bielby

INTRODUCTION

[1] These proceedings were initiated by the Respondent, Sewsankar Bishnu who, on October 25, 2011, brought a motion to vary the support provisions of the order of Brockenshire J., dated October 6, 1999.

[2] The Applicant and the Respondent had a romantic relationship in the 1990’s, and lived together for a brief period of time. They are the parents of one child, Varsah, born January 13, 1995. The relationship failed and the Applicant sought child and spousal support.

[3] In the judgment of Brockenshire J. (Exhibit 1, Tabs 2 and 3) it was declared that the Respondent was the father of the child and custody was granted to the Applicant. Spousal support was ordered in the amount of $1,750 per month, commencing October 1, 1999. Child support was ordered in the amount of $733 per month, all on an annual income imputed to the Respondent, of $100,000.

[4] On December 9, 1999, the Respondent was ordered to pay costs to the Applicant, in the amount of $6,667.56.

[5] The Respondent did not appeal the judgment.

[6] In his motion to vary, the Respondent submitted that he has never had the ability to pay such a level of support. He submits, that he has survived on minimal income. Recently the Respondent has been the recipient of Ontario Works.

[7] Historically, the Respondent was not allowed to proceed with a motion to vary until the outstanding costs were paid.

[8] The support arrears are substantial. At Tab DD of Exhibit 1, is a statement of the Family Responsibility Office showing that the arrears of support as of December 10, 2013, amounted to over $413,000. They now exceed $500,000.

[9] The other issue before this court is whether or not the Respondent has fraudulently disposed of property in order to defeat creditors. The Applicant and Mr. Wasserman (the Trustee) submit that such fraudulent dispositions occurred and seek the appropriate remedies.

[10] There is no doubt that on December 16 1999, the Respondent conveyed away, for no consideration, whatever interest he had, if any, in two properties located in Brampton.

[11] On August 18, 1999, the Respondent and Danwantie Jaginarine (DJ), who at the time was the Respondent’s common law spouse, purchased the property at 89 Main Street in Brampton, Ontario, (89 Main) for $540,000. There was a significant cash down payment of approximately $127,000 and the balance of the purchase price was raised through mortgages, the first being with the Royal Bank of Canada (RBC).

[12] On December 16, 1999, the Respondent conveyed his interest in 89 Main to DJ, without consideration, alleging that she was, at all times, the beneficial owner of the property. The Respondent testified that he was only on title so that DJ could qualify for a mortgage.

[13] The Applicant and the Trustee argue that the transfer was fraudulent and was meant to protect the property from creditors, which included the Applicant in regards to arrears of support and costs and the Canada Revenue Agency (CRA) in regards to taxes and GST owed.

[14] After December, 1999, the RBC mortgage against 89 Main went into default and the RBC commenced power of sale proceedings.

[15] On January 14, 2002, 89 Main was conveyed by DJ to the Respondent’s brother Surujpaul Bishnu (Paul) and his brother-in-law, Gopaulram Tularam (GT) (Exhibit 1, Tab G, Exhibit B). The purchase price was the amount necessary to pay out the RBC mortgage.

[16] On August 15, 2002, GT conveyed his interest in 89 Main to Paul and title has remained in his name since then. It is alleged that Paul was a party to the fraudulent conveyances of the property (Exhibit 1, Tab H).

[17] Further, on December 16, 1999, the Respondent conveyed to Paul his interest in a second property, known municipally as 5 Newlyn Crescent, Brampton (5 Newlyn). It is alleged by the Applicant and the Trustee that the conveyance of this property was also fraudulent. This property was originally acquired by the Respondent, Paul and Paul’s wife Nazlene Baksh (Exhibit 1, Tab I).

[18] However, the Applicant and the Trustee are not seeking any relief in regards to 5 Newlyn because, ultimately, it was sold, at arm’s length, to an unrelated third party. They rely on the transfer as further evidence of a fraudulent intent.

[19] In 2003 the Respondent filed for bankruptcy and remains undischarged. At Exhibit 1, Tab U, is the Respondent’s Statement of Affairs dated August 19, 2003, prepared for the purposes of the bankruptcy. The document is signed under oath. Therein the Respondent failed to disclose the Applicant as a creditor, failed to disclose his dispositions of property and declared assets having a total value of $5,000.

[20] In his Statement of Affairs the Respondent answered “no” to the question, “Within the 12 months prior to the date of the initial bankruptcy have you sold or disposed any of your property?” He also answered “no” to the question, “Within the last 5 years have you sold or disposed of any property?”

[21] The Applicant and the Trustee ask the Court to void the transfers of 89 Main and order the property be vacated and sold. The Applicant submits the monies realized from a sale should be used to satisfy arrears of support owing. The Trustee submits the monies ought to go to the general benefit of the Respondent’s creditors, which presumably would include the Applicant.

[22] After hearing the evidence and submissions in regards to this matter over a course of almost three years, I cannot help but think that the conveyances set out above would have never been challenged except for the following.

[23] In September, 2001, the Respondent retained counsel and commenced a court application against DJ and 1398954 Ontario Inc. o/a Forex Woodworking (Forex). He sought the following:

(a) an order declaring the Respondent to be the beneficial owner of a 95% interest in 89 Main;

(b) an order declaring that the Respondent is entitled to 100% of the shares of Forex;

(d) an order requiring DJ to transfer to him the ownership of a 1992 Mercedes Benz motor vehicle and ownership of a 1987 Jaguar motor vehicle.

[24] In support of the application the Respondent filed an affidavit, sworn, August 21, 2001 (Exhibit 1, Tab G). In that document the Respondent set out the evidentiary basis of his claim including the following:

He contributed $127,210 through HOSF Woodworking, to purchase 89 Main which he and DJ acquired for $540,000.
DJ contributed approximately 5% of the total amount paid.
The property was registered to the Respondent and DJ as tenants in common. They lived in the house in a common law relationship.
While the Respondent transferred his interest in the property to DJ, the understanding was that she was to hold a 95% share of the property in trust for him.
The Respondent no longer wanted to operate his cabinet-making business under the business name HOSF Woodworking (HOSF) and asked DJ to set up a company for him (Forex).
DJ arranged for the incorporation of Forex and while all the shares were issued in her name, she was to hold the shares in trust for the Respondent.
Forex operated out of 320 Clarence Street, Brampton as had HOSF.
The only source of income for Forex was the cabinet making work performed by the Respondent.
Originally DJ was the only person who could sign cheques but the Respondent noticed money missing in the bank account and the account was changed so that two signatures were required.
The Respondent alleged that DJ amended cheque amounts and forged signatures, as a way to take money out of the account for her personal use.
In regards to the Mercedes and Jaguar motor vehicles, the Respondent deposed that they were bought using Forex funds and although they were registered in the name of DJ, she was holding ownership in trust for the Respondent.

[25] What is not set out in the affidavit is why all this property was registered in the name of DJ and not in the Respondent’s name. Can it be inferred he did so to protect those assets from the claims of his creditors?

[26] Exhibit B to the affidavit of the Respondent includes a copy of a bank statement of HOSF, a company operated by the Respondent, filed as proof that a withdrawal of $127,216.50, was done on August 18, 1999.

[27] In the trial before me, the Respondent testified that the allegations and facts set out in the August 21st affidavit were not true. It was a false affidavit. He testified that he retained no interest in the real and personal properties set out therein. He testified that he instructed his lawyer to commence the claim because he was angry with DJ, who had had him charged criminally with assaulting her for which he was convicted and sentenced to 30 days in jail.

[28] The Merriam-Webster, on-line, dictionary define perjury as,

“The voluntary violation of an oath or vow either by swearing to what is untrue or by omission to do what has been promised under oath.”

[29] Accordingly, the problem faced by the Respondent is that he either perjured himself when swearing to the truth of the August 21st affidavit or when he testified at this trial, circumstances that goes to the core of the Respondent’s credibility.

[30] Brockenshire J., in his order, dated October 6, 1999, made the following finding of facts:

The Applicant and the Respondent lived together for some period of time.
The Respondent was the father of Varsha.
The Applicant signed cheques and made deposits for the business.
The business RS Contracting was not owned by Paul but rather was the Respondent’s business.
The Respondent declared the following income for the years indicated:

1995 $16,500

1996 $0.00

1997 $20,453

1998 $29,671 (net on a gross of $55,632)

January 1 - August 31, 1999, HOSF grossed $114,538 resulting in a net income of $29,671

[31] Brockenshire J. found that ISPA, another woodworking business, paid to the Respondent the following:

1997 $236,000

1998 $130,000

1999 (to Sept. 14th) $132,000 (of which $13,910 was paid to HOSF)

[32] The trial judge determined that the Respondent attempted to conceal his true income. The trial judge referenced the Respondent’s connection with ISPA and referred to two letters which said that the Respondent was employed by ISPA and earned $55,000 per annum. The trial judge found these letters to be an attempt to defraud a lending institution.

[33] He concluded that the Respondent was attempting to mislead the Court and the CRA in regards to his true income. He concluded that there was ample evidence to justify a conclusion that the Respondent had an income of at least $100,000 and ordered support accordingly.

[34] Brokenshire J. stated, on page 13 of his reasons, “The man, in my conclusion, was simply an unmitigated liar and probably has mislead his counsel as much as he tried to mislead the Court.”

[35] I of course have to draw my own conclusions as to credibility but take note of the fact that despite the adverse credibility findings of Brokenshire J. the Respondent, in 2001, commenced an application against DJ, relying on his own affidavit, that he now says was untrue.

[36] I will have more to say about the Respondent’s credibility.

[37] In regards to spousal support, Brockenshire J. found that the Applicant had returned to school with the expectation that she would be finished in a couple of years and would then be better qualified to join the workforce. He seemed to infer that spousal support would be a short term financial obligation of the Respondent pending the Applicant’s effort to retrain.

[38] The trial judge, in his reasons, stated that spousal support could be reviewed in three years without the necessity of proof of a material change of circumstances.

[39] It is now appropriate to review and summarize the evidence presented at trial.

THE EVIDENCE

Witness - Applicant, Dipikaben Makwana

[40] The Applicant, who has a university degree in fine arts, met the Respondent in 1992. The Applicant attended at the Respondent’s place of business on Clarence Street in Brampton. The Respondent was involved in a cabinet making business and the Applicant testified that she was seeking a job.

[41] The Applicant started working the next day and shortly thereafter developed a relationship with the Respondent and moved in with him at 5 Newlyn.

[42] She testified that RS was a sub-contractor for IPSA, and was contracted to make custom designed cabinets. She was hired and paid by RS.

[43] The Applicant testified that she had full knowledge of RS Contracting. She wasn’t sure if it was formed by the Respondent or Paul, although she believed that the business belonged to the Respondent who paid Paul for the time he worked.

[44] A number of exhibits were entered through this witness and are referenced throughout this judgment, including, a number of pieces of correspondence sent or received by legal counsel in relation to the conveyance of 89 Main to Paul and GT and the need for refinancing. Notwithstanding the Respondent’s evidence that he never had a real interest in 89 Main, and that he conveyed away paper title to the property in December, 1999, much of this correspondence is either directed to the Respondent or copied to him.

[45] At Tab 11 of Exhibit 2, in the Respondent’s exhibit book, is the business registration of RS Contracting, dated June 27, 2991. The address is shown as 5 Newlyn. The form shows the business to be a sole proprietorship and Paul is the name noted on the form.

[46] The Applicant testified that she moved into 5 Newlyn with the Respondent in the summer of 1992 and that she left in January, 1993, to work for MetLife Insurance in Quebec. She returned to 5 Newlyn in December, 1993. Sometime thereafter Varsha was born and they remained at 5 Newlyn until the spring of 1996 and thereafter separated from the Respondent.

[47] In the cross-examination of the Applicant by Mr. Markin, who at the time was counsel for Paul, statements of fact, in form of questions, were put to the Applicant on the basis that DJ would be called as a witness and confirm these facts. DJ was never called as a witness.

[48] The Applicant and Varsha moved to the United States of America (USA) in October, 2000. The Applicant remarried in 2003, after meeting her husband in India. She does not work and is comfortably supported by her husband. She worked until 2009 as a freelance computer programmer.

[49] Varsha is now 22 years of age. She was a good student, graduating high school in 2013 and was accepted to the University of Mississippi where she hoped to be part of the swim team.

[50] However, for financial reasons Vasha never went to university and is currently working. It was decided that they would defer putting Vasha in university until these court proceedings were over. The Applicant did not want Vasha to take out a loan for school.

[51] The Applicant believes that the income imputed by Brockenshire J. of $100,000 was far less than was earned by the Respondent.

[52] The Applicant, on May 13, 2013, executed a financial statement (Trial Record, Tab 9). She served and filed a further financial statement, sworn February 21, 2017. She remains unemployed by choice, but for tax purposes I assume, claims half of her husband’s salary as income. She owns or has an interest in a number of assets with virtually no debt.

[53] Since 2008, the Applicant’s husband has been earning at least $100,000 per year.

[54] Nevertheless, the Applicant is of the opinion that she is still entitled to spousal support.

Witness - Trustee, Howard Wasserman

[55] Mr. Wasserman is the Respondent’s trustee in bankruptcy. The Respondent’s original trustee was Joseph Mathew.

[56] At some point thereafter Mr. Mathew left the business and the current Trustee has the responsibility of processing the file. He testified that the mandate of a trustee is to represent creditors.

[57] The Trustee’s interest in this matter is in relation to 89 Main and he testified that if there was a fraudulent conveyance then the property must revert to the estate of the bankrupt for the benefit of the creditors.

[58] Exhibit 5 is a three volume set of exhibits filed on behalf of the Trustee.

[59] Tab 9 therein is a letter from solicitors for the Respondent to DJ, seeking a return of his interest on 89 Main. While this letter cannot be used for the truth of its contents, it was the document that “Tweaked his interest on what happened.” In his words, “Something was not right in the bankruptcy”.

[60] The Trustee testified in regards to his, Trustee’s Report to the Court, filed pursuant to section 205 of the Bankruptcy and Insolvency Act (Exhibit 5, Vol. 3, Tab 52). The document is dated November 10, 2004. The witness explained that section 205 deals with offences by a bankrupt.

[61] In this document the Trustee advised the court that there was reason to believe that the Respondent had disposed of assets with the 12 months prior and/or within five years prior to the date of bankruptcy (contrary to his Statement of Affairs).

[62] The Trustee advised the bankruptcy court of the questionable transfers with respect to 89 Main and the other facts sworn to by the Respondent in his affidavit filed in support of the 2001 application he commenced against DJ.

[63] The Trustee also noted the fact that the Respondent did not disclose his court ordered support obligation to the Applicant and their daughter.

[64] As noted previously, the Trustee also investigated 5 Newlyn and discovered that it had been sold to an arm’s length purchaser in good faith. As a result, interest in that property was not pursued. Nevertheless, the Trustee expressed his opinion as to the likely fraudulent transfer of that property.

[65] On November 24, 2004, the Respondent signed an affidavit in response to the Trustee’s report (Exhibit 5, Vol. 3, Tab 53). In this affidavit, the Respondent deposes that he had no right to any interest in the property and states, at paragraphs 23 and 46, in regard to his Statement of Affairs,

“I did not disclose the transfer of any interest in the Main Street Property as I did not and I do not believe that I ever had any financially realizable interest therein.

I understood Mr. Matthew who was the representative of the trustee who met with me when I executed my Statement of Affairs, to indicate that I only had to disclose those transaction within the previous 12 months and within the previous 5 years which were not bonafide transactions or were made for the transfer of property which I was legally entitled to for an amount less than fair market value.

As there were no transfers in accord with my understanding of what Mr. Matthews stated, I did not include reference to these transfers in my Statement of Affairs.”

[66] In his November, 2004 affidavit, the Respondent deposes that he had no real interest in 5 Newlyn, a property purchased by him together with Paul and Paul’s wife. He goes on to say he was incarcerated for approximately one year in 1992/1993 and Paul paid all the expenses on the home. As a result of Paul doing so it was agreed that the Respondent would convey his interest in the property to Paul. The Respondent stated that he did not receive any consideration for his interest in 5 Newlyn.

[67] The Respondent, in the affidavit, denied any beneficial interest in the shares of Forex and the Jaguar. In regards to a 1989 BMW, the Respondent admits that 11 months prior to bankruptcy he conveyed the vehicle to a creditor for $1,500.

[68] The Trustee testified that when the Respondent conveyed his interest in 89 Main to DJ there were two mortgages on the property, the first with RBC for $400,000 and the second for $33,000 to Mr. Singh.

[69] The Trustee takes issue with the arm’s length bona fides of the multiple conveyances of 89 Main. He disbelieves the evidence of the Respondent.

[70] In regards to Exhibit 1, Tab W, the Trustee testified that the documents are the Proofs of Claim filed by the CRA. The first claim is for GST in the amount of $32,000 owed by the Respondent in regards to his cabinetry business for the years, 1996 to 1999 inclusive.

[71] The second claim is for $104,072 as of December, 1999. These debts, in the Trustee’s opinion, were a factor in the Respondent conveying away his property interests. He testified that the fact that the Respondent conveyed away assets at a time he was insolvent is inherently suspicious.

[72] The Respondent’s Statement of Affairs (Exhibit 5, Vol.1, Tab 44) was signed by the Respondent and Mr. Mathew, the Trustee at the time. Therein the Respondent stated that the reason for his financial difficulty was that he has been unemployed since 2002.

[73] The Respondent disclosed on the Statement that he operated the business known as HOSF Woodworking from 1998 to 1999.

[74] The Trustee identified the document at Exhibit 6, Tab 18, as an affidavit, sworn by the Respondent on October 25, 2011.

[75] The Respondent therein said Forex was his business but Forex was not listed as an asset of the Respondent’s Statement of Affairs. This is a second affidavit dated ten years after his first affidavit in which the Respondent claimed ownership of Forex, contrary to the Respondent’s testimony that Forex was never his business.

[76] DJ filed a creditor’s claim in the bankruptcy, stating that the Respondent owed her $152,000. This claim was disallowed by the Trustee (Exhibit 5, Vol. 1, Tab 8, Exhibit 7).

[77] As of December 16, 1999, the Trustee believes that the Respondent’s debts were just over $104,000 and that at the time the Respondent may have had equity in 89 Main, in the amount of $127,000, given the Respondent’s August 21, 2001, affidavit.

[78] From the documents disclosed by the Trustee we know that pursuant to it’s power of sale proceedings, the RBC had a buyer for 89 Main, who agreed to pay $490,000, with the deal set to close January 14, 2002 (Exhibit 5, Tab 18).

[79] In the draft Statement of Affairs sent to Mr. Mathew by the Respondent very little is filled out but in response to question 10a, “Within five years prior to the date of the initial bankruptcy event, have you, sold or disposed of any real estate”, the answer, “yes” is checked. However box 18, which calls for details if such a question is answered yes, is blank (Exhibit 8, Tab 4).

[80] As noted previously, in the final version of the Statement of Affairs, the answer to question 10a is, no (Exhibit 1, Tab U).

[81] Exhibit 16 is a further exhibit book file by the Trustee. At pages 4 and 5 are the front and back view of two cheques from a CIBC account payable to S. Bishnu and signed on behalf of R.S. Contracting by S. Bishnu. The first cheque is for $10,000 and dated November 20, 1995. The second is for $1,000 dated November 22, 1995.

[82] On the back of the cheque for $10,000 is a handwritten account number, 447285, and a Scotia Bank stamp.

[83] It would appear that Scotia Bank account #447285 was an account in the name of the Respondent (Exhibit 16, Tab 1).

[84] Found in Exhibit 16, is a National Bank statement for HOSE Woodworking, having an address of 5 Newlyn (Tab 2, page 8). The account number is 0582228. I find that this account is that of HOSF Woodworking and the name HOSE is nothing more than an error in spelling.

[85] Found in Exhibit 16 are three R.S. Contracting cheques drawn on its CIBC account 7902913 (Tab 1, page 16). They are all drawn in June, 1996, and payable to S. Bishnu and signed by S. Bishnu. One of the cheques was for $8,000 and appears to have been deposited into the Respondent’s Scotiabank account #447285.

[86] Commencing at page 20 of Tab 1 are a number of IPSA Woodworking Ltd. contracts or work orders with R.S. Contracting, in 1997-98, for varying amounts, the most being $21,000. The Respondent on some is shown as the signing authority for R.S. Contracting.

[87] The significance in regards to these banking documents is the amounts of money involved which contradicts the evidence of the Respondent.

[88] The Trustee in cross-examination agreed that he had no evidence that puts the character or credibility of Paul in issue.

Witness - Surujpaul Bishnu

[89] This witness, whom I refer to as Paul, is the Respondent’s brother. He testified that he works from home, 89 Main, doing woodworking. He has operated his business from this address since he bought it in 2002.

[90] In regards to his purchase of 89 Main, Paul testified that he received a call from DJ whom he knew as his brother’s common law wife. She initially wanted to borrow money to pay up the arrears on the RBC mortgage.

[91] Paul testified that DJ told him that someone by the name of Dhaliwal had entered into an agreement to buy 89 Main. The proposed purchaser was someone DJ approached to assist her in arranging refinancing for the property. Paul testified that DJ felt betrayed by Mr. Dhaliwal and did not want him to get the property.

[92] Apparently she still believed there was time to redeem the RBC mortgage and nullify this agreement to purchase. DJ asked Paul if he wanted to buy 89 Main.

[93] Paul testified that he called the Respondent and asked him to get a lawyer for him.

[94] Paul testified that the Respondent assisted him in redeeming the RBC mortgage. In January, 2012, Paul, along with GT who assisted in the financing, took title to 89 Main from DJ.

[95] Later that year Paul was able to repay GT and he became the sole owner of 89 Main.

[96] Exhibit 4 is the document book filed on behalf of Paul. There are a number of documents relating to Paul and his mortgage on 89 Main. Therein are bank statements showing mortgage payments for 89 Main coming out of Paul’s account (Tab 1).

[97] At subsequent tabs there are bank documents confirming the payment from Paul’s account of utility bills as well as property tax information, all relating to 89 Main, all in Paul’s name.

[98] Paul’s 2011 Income Tax Summary reflects at line 150 income of $14,500 (Tab 22). His 2012 return declares an income of $54,000. Both documents show 89 Main as Paul’s address.

[99] Paul’s declared income for 2009 was $15,700 (Exhibit 12).

[100] Exhibit 10 is another package of documents relating to 89 Main and were tendered as proof that Paul makes the mortgage payments on 89 Main as well as all the other expenses relating to the property.

[101] To acquire 89 Main, Paul testified that he contributed $15,000 from his savings. He also borrowed $40,000 from GT, which loan was secured by GT initially becoming an owner of the property.

[102] Paul testified that his brother, the Respondent, was a guarantor on his 89 Main mortgage but apart from that, the Respondent did not help him financially in any way with its acquisition. He denied holding title to 89 Main, or any part of it, in trust for the Respondent.

[103] In regards to 5 Newlyn, Paul testified that when his brother went to jail in the early 1990’s it was agreed orally that if he (Paul) took care of the property financially, and continued to do so, he (Paul) would become its sole owner.

[104] Paul testified that the Respondent’s transfer of title in 1999 was the result of this 1990 agreement. It was not asked or volunteered why Paul and the Respondent waited nine years to register the transfer.

[105] Paul testified that 5 Newlyn was initially purchased for $235,000. The property was the subject of a City Property Standards Order and Paul was required to bring the property up to standard. He did so without the financial assistance of the Respondent, at a significant cost to himself which he said was close to $100,000.

[106] 5 Newly was sold in 2004 for $275,000. Given what he had put into the property, Paul testified that the sale did not generate any profit.

[107] Paul testified that since 2002, he has put, maybe, $10,000 into renovations at 89 Main.

[108] On cross-examination Paul was questioned on why he and his brother-in-law purchased 89 Main for $414,000 when DJ and the Respondent bought it for $540,000. Paul explained that the price he paid was the amount necessary to redeem the RBC mortgage and DJ was agreeable to sell it for that amount.

[109] Exhibit 14 was introduced through Paul and was identified as a Direction Re Funds, signed Paul and GT. The Direction confirms that the two of them provided $55,000 ($15,000 of which came from Paul) to McCabe Filkin, to be used to satisfy debts, including mortgages on 89 Main.

Witness - Respondent Sewsankar Bishnu

[110] In his motion to vary he seeks to reduce child support to $104 per month on an income of $14,000. He asks that the arrears be reduced to zero or alternatively, reduced to an amount that the court sees fit.

[111] In the Respondent’s Change Information Form executed on October 21, 2011, he alleges his income for that year would be $9,500 and his income for 2010 was $2,800.

[112] In regards to his Notice of Application and his affidavit, sworn August 21, 2001 (Exhibit 1, Tabs F and G) the Respondent testified, during his examination in chief, that the claims and sworn evidence in support of the claims were false and made out of spite. The Respondent, on May 14, 2000, was charged with two counts of assault arising out of his relationship with DJ and, as a result, he was very angry.

[113] The Respondent denied that he bought 89 Main together with DJ, although they both moved into the house in August, 1999. He testified that the property was purchased by DJ who could not qualify for a mortgage on her own so he went on title and became a mortgagor. He was holding his interest in the property in trust for DJ, the beneficial owner.

[114] The Respondent testified that he made no cash contribution to the purchase of 89 Main, contrary to his own sworn August 21st affidavit.

[115] The Respondent testified that any claim in the affidavit that HOSF contributed to the purchase of 89 Main is untrue, although initially he admitted that HOSF was his business.

[116] In regards to the correspondence from McCabe Filkin, the Respondent testified that they were his lawyers and when 89 Main was subject to a Power of Sale, DJ spoke to his brother who then called the Respondent. He arranged for the law firm to assist DJ and his brother, although they could not legally represent them. Therefore correspondence was sent to the Respondent at 89 Main.

[117] The Respondent testified that he had no interest in Forex, which he says was incorporated by DJ.

[118] In regards to the Notice of Application, the Respondent testified that he ultimately instructed his lawyers to discontinue the action, realizing that what he had done was wrong, however I note that the action was only discontinued after 89 Main was conveyed by DJ to Paul and GT.

[119] The Respondent described himself as a cabinet installer, a helper, despite the fact other evidence, including his own affidavits, referred to him as a skilled cabinet maker.

[120] The Respondent testified that in the mid-1990s the most he earned per year was $42,000 and that when he operated HOSF he earned about $50,000 per annum. HOSF opened in 1998 or 1999 and operated for a year.

[121] He testified that at no time did the business have enough money to contribute $127,000 to the purchase of 89 Main.

[122] In regards to 5 Newlyn, the Respondent testified that he went on title in 1990 and that he did contribute some money to its acquisition.

[123] At some point thereafter, as referenced previously, the Respondent was incarcerated for a period of time during which his brother and his parents continued to reside at 5 Newlyn. His brother had trouble carrying the costs of the property and the Respondent told him he could sell it or continue to carry it. It was decided that whoever carried the expenses on the property should be the owner and that person was Paul.

[124] When the Respondent was released from prison he returned to live at 5 Newlyn. He started working for his brother at R.S. Contracting, a woodworking shop.

[125] When questioned about the timing of the conveyance of 5 Newlyn, the Respondent testified that because he was moving in with DJ it seemed fair to release his interest in 5 Newlyn (although they had lived together since the summer). He resided at 5 Newlyn from his release from jail until August, 1999, when he moved into 89 Main.

[126] The Respondent testified that after he ceased operating HOSF he worked for DJ at Forex until sometime in 2000. It is noted that he did so despite the fact that DJ had made a complaint to the police which resulted in charges, convictions, and time in jail, and despite the fact she was not paying him for his work.

[127] There was no explanation provided as to why he closed HOSF in the same year of his trial presided over by Brockenshire J. and the release of the judgment.

[128] The Respondent testified that he has health problems which started after 1999. He began to feel depressed and sick. He testified that since then he has suffered from high blood pressure, diabetes, depression, anxiety, pain in his left shoulder and right knee, and has a cholesterol problem.

[129] At Exhibit 8, Tab 11, are medical and health records of the Respondent.

[130] The Respondent testified that at some point he was advised by his doctors not to work. At Exhibit 1, Tab X is a medical note dated, I believe, March 3, 2004, stating that the Respondent suffers from depression and hypertension and was, at the time of the note, not able to work.

[131] There is little medical evidence about the Respondent’s long term ability to work.

[132] The Respondent stated that he is very weak and becomes confused very easily. He cannot focus and is on medication most of the time.

[133] The Respondent testified that since 2004 he saw three psychologists and one psychiatrist.

[134] A Mental Health Progress Report, dated June, 2015, from the William Osler Health System noted a diagnostic impression of “Major depression, currently moderate” (Exhibit 8, Tab 11). In the report it is recorded that the Respondent told the doctor that he could not work because he lost his license for not paying support.

[135] The records confirm the Respondent had heart by-pass surgery.

[136] The Respondent testified that he worked a little in 2000, by helping DJ a bit. He could not recall if he worked in 2001. Between 2000 and 2010 he testified that he may have worked in 2008 or 2009, but did not work for a long period of time.

[137] At Exhibit 1, Tab J, is the Respondent’s income tax returns. The following incomes were reported for the years indicated:

2000 $7,010

2001 $0

2002 $12,240

2003 $1

2004 $0

2005 $0

2006 $0

2007 $0

2008 $0

2009 $0

2010 $2,800

[138] Since 2004 the Respondent has had a couple of part time jobs including working for a landscape company. He would earn $8-9,000 per year. In 2014 he worked for maybe five or six months.

[139] Currently his driver’s license is suspended as a result of his support arrears.

[140] The respondent testified that his failure to pay child support was not intentional and he paid what he could. The FRO history of payment suggests otherwise.

[141] He has not paid any spousal support believing the Applicant was not entitled to any, contrary the order of Brockenshire J.

[142] In 2015, the Respondent, after his heart surgery, went on Ontario Works (social assistance) and continues thereon, receiving $762 per month.

[143] The Respondent said that he is unable to work because of his health. He cannot concentrate and cannot stand for any long period of time.

[144] In or around the year 2000, the Respondent moved into 4 Cochrane Street, Brampton, a property owned by Nina Persaud.

[145] The Respondent testified that when he commenced his bankruptcy proceedings he told Mr. Mathew of the support he owed to the Applicant but was told by him he did not have to list the Applicant as a creditor because the obligation to pay support survives the bankruptcy.

[146] The Respondent testified that the $127,000 cash to buy 89 Main came from DJ.

[147] When asked questions in cross-examination concerning his execution of the August 21st affidavit (Exhibit 1, Tab G), the Respondent was, contrary to his examination in chief evidence, quite evasive.

[148] In regards to this affidavit, the Respondent testified when asked if he swore a false affidavit,

“I admit I made a wrong judgment and the affidavit was prepared by my lawyer.”

[149] When asked again if it was a false affidavit, the Respondent answered,

“The affidavit information was not correct, whether the answer should have been false or not have sworn to it, I don’t know the answer.”

[150] The Respondent seemed unwilling to say that he intentionally swore a false affidavit. He seemed to imply that the words were those of his lawyer, although I presume that the facts set out in the affidavit must have been provided by the Respondent.

[151] He did concede that he had signed the affidavit in issue.

[152] He was asked to read the affidavit and point out what was not true.

[153] He testified that his description as a cabinet maker was not true, he was not fully a cabinet maker.

[154] His statement that in the years leading up to 1999, he was operating the business of HOSF Woodworking was false (contrary to earlier testimony).

[155] His statement that he gave $127,000 from HOSF to buy 89 Main was false.

[156] The Respondent was then asked if he said that Exhibits B and C are the HOSF bank statements and transaction statement showing the $127,000 came from the HOSF account. When asked if this was true or false, the Respondent answered, “I can’t remember if I said the money came from HOSF”, despite the fact that the affidavit said that specifically.

[157] The property was transferred to DJ and the Respondent testified that his statement in the affidavit that she held 95% interest in trust for him was false.

[158] The Respondent testified that his statement that he asked DJ to set up a company for him (Forex) was false.

[159] In short he denied most of the contents of the affidavit.

[160] When discussing the wording of the affidavit, the Respondent, stated,

“I told you the lawyer prepared the document, and I don’t understand your wording.”

“He told me to sign it and I signed it. It is not my words. If I tell him lie or something like that…”

“The person who made this affidavit put it in his or her own word. He took my information and he put his word. He put his whole wording. If I tell him, if I tell you, or tell this Court that I tell you whoever signed this affidavit that I said this I’ll by lying.”

[161] The Respondent went on to say, “Nobody never really explained that to me.”

[162] He could not recall if he was asked to swear to the truth of the affidavit.

[163] The Respondent was questioned in regards to another affidavit signed and sworn by him on July 19, 2002, and filed in these proceedings (Exhibit 5, Tab 100).

[164] The Respondent testified that, while the signature looked like his, he did not recall signing it.

[165] At paragraph 9 of Schedule 1, the Respondent deposed,

“My brother Surijpaul Bishnu bought the property not as a part of a scheme to insulate it from the order of Judge Brockenshire but to attempt to keep the property and not let it be undersold by power of sale proceedings initiated by the holder of the first mortgage, the Royal Bank.”

[166] 89 Main was acquired in 1999 for $540,000. Pursuant to its power of sale, the RBC had a buyer for the property who would pay $490,000 (admitted by the Respondent). The RBC mortgage was redeemed for $414,000 and the property was transferred to Paul and GT. Given these circumstances it cannot be said the property was going to be undersold by virtue of the RBC’s power of sale.

[167] In regards to his Statement of Affairs, the Respondent testified that he took his friend Meena Persaud to Mr. Mathew’s office the day he signed the document. He testified that he was told by Mr. Mathew that he could answer no to the questions at paragraph 10 because 89 Main was not his to begin with.

[168] As noted earlier, another affidavit of the Respondent was sworn November 24, 2004 (Exhibit 5, Tab 52), in response to the Trustee’s Report to the court. Therein he denied any inaccuracies in his Statement of Affairs and did not depose that it was filled in the manner recommended by Mr. Mathew.

[169] He testified the words set out in his November 24th affidavit, were set out in his lawyer’s “own form of writing…I don’t know it is false or not false”.

[170] The Respondent testified that, to the best of his knowledge, DJ did not get back the $127,000 she put into the property. When asked who benefited from that equity, he said, “I can’t answer that.”

[171] In the 2001 affidavit, the Respondent deposed that a 1992 Mercedes Benz was purchased in 2000 for $35,000, the money coming from the Forex account. While the car was purchased in the name of DJ, it was to be held in trust for the Respondent. He went on to depose that DJ had possession of the car and would not return it.

[172] At trial the Respondent stated that the statement was not true as the car had not been driven and that it was DJ who bought the car.

[173] The Respondent confirmed that in May of 2000 he was charged with assault and ultimately sentenced to 30 days in jail. He conceded that even after his arrest he talked to DJ and continued to work for her, although he was not getting paid, facts alluded to earlier in this judgment. In fact, all the time that he worked for Forex, the Respondent testified that DJ did not pay him a “penny”. This all occurred after he had commenced the application against DJ, out of spite and anger. He continued to use the Forex address (320 Clarence Street, Brampton) for mail.

[174] Even though the Respondent’s affidavit of August 21, 2001, contained copies of documents which were made exhibits to the affidavit, he testified that he did not give his lawyer any documentation.

[175] The Respondent testified that he has not had a bank account since 2000-2001, without providing a reason for not maintaining such an account.

[176] When questioned about certain cheques included in the exhibits, the Respondent conceded that his signature and that of his brothers are very similar. He wouldn’t concede however that each could deposit cheques made out to the other.

[177] The Respondent agreed that given the amounts made payable to his brother, S. Bishnu, by Forex that his brother did very well because he was a very skilled cabinet maker. He testified that $4,500 per month is not too much for such a skilled cabinet maker.

[178] The Respondent was questioned in regards to DJ and how counsel and the court were originally told by Mr. Margin that she would testify. He denied knowing about that and denied knowing where DJ lived or how she could be contacted.

[179] The Respondent was questioned about another affidavit of his, sworn July 6, 2001 (Exhibit 3, Tab 10). At paragraph 6 therein, the Respondent deposed that he was working in Brampton under the name of R.S. Contracting and that he leased the facilities and equipment so that he could continue his business as a cabinet maker. He deposed he netted only about $35-40,000 from the business.

[180] At paragraph 9 he states that he started HOSF Woodworking in 1999 and it subsequently became Forex through a company he set up with DJ. He worked as a cabinet maker.

[181] At paragraph 10 it is deposed that Forex is no longer operating and that DJ had misappropriated most of the funds from Forex and he had retained counsel to commence an action against her.

[182] He then deposes that at the time of the affidavit he was working for ISPA Woodworking and earning $35,000 per year.

[183] As with the August 21st affidavit, most of the facts set out in this affidavit were denied by the Respondent.

[184] The Respondent, swore another affidavit on June 18, 1998, which was filed in response to the Applicant’s claim for custody and support (Exhibit 9, Tab 1). At paragraph 4(J) therein, the Respondent deposes the he never worked for IPSA and that the two letters were obtained from IPSA as a friendly gesture so that he and his brother could qualify for mortgage financing on 5 Newlyn ( as noted in the judgment of Brockenshire J.).

[185] The Respondent could not recall this affidavit and would not concede that he signed it.

[186] When he lived with Meena Persaud, she was giving him food and shelter. In June 2011, the Respondent was jailed for the non-payment of support, requiring him to pay $10,000 (costs) to get out of jail. The money was paid by Ms. Persaud.

[187] By order of Mossip J. dated January 14, 2011, the Respondent could only bring a motion to vary when the cost order of Brockenshire J. was paid. The cost order was paid Ms. Persaud.

[188] At Exhibit 6, Tab 11 information in regards to the CRA”s audit for the years 1996-1999. The Respondent’s income for those years was noted as follows:

1996 $110,346

1997 $220,706

1998 $211,040

1999 $59,541

[189] At the date of his bankruptcy the Respondent owed to the CRA, $104,072.59 (Exhibit 5, Tab 122).

[190] In his affidavit sworn May 5, 1999 (Exhibit 6, Tab 1) the Respondent swore to a more modest income. In 1997 he declared $20,453.82 in income. In 1998, $15,959, showing gross revenues of approximately $60,000. For 1999, as of the date of the affidavit, the Respondent expected to earn $30,000.

[191] For the years 2002-2009 the Respondent disclosed essentially, zero income and when asked why he should be believed, answered, “I don’t know”.

[192] The Respondent could not recall, given his health issues, ever applying for a disability pension under the Ontario Disability Support Program or the Canada Pension Plan.

[193] The Respondent would not concede a bank account registered in the name of HOSE was in fact that of HOSF.

[194] The Respondent is the deponent of another contradictory affidavit sworn October 25, 2011 (Exhibit 6, Tab 18). At paragraph 15 he deposes that he worked for his brother’s company R.S. Contracting which ceased “trading” in 1999. He then started HOSF, which became Forex, which ceased “trading” in 2001. His brother worked as a sub-contractor to HOSF.

[195] The Respondent never explains why these businesses ceased operation and the relevancy of the time at which they shut down.

[196] As noted previously in his affidavit sworn November 24, 2004 (Exhibit 5, Tab 53) in response to the Report of his Trustee in Bankruptcy, the Respondent deposes that he transferred the BMW to Warren Barrington 11 months prior to bankruptcy, for the value of $1,500 as part payment of what he owed to Barrington who worked with the Respondent at R.S. Contracting and Forex (para 40 & 41). If the Respondent had no interest in R.S. Contracting or Forex, then why did he feel an obligated to compensate Mr. Barrington?

[197] At paragraph 42 the Respondent states that a 1987 Jaguar was purchased in the name of DJ to hold in trust for him. He goes on to say the car was transferred to him in April, 2002. It was then transferred to Meena Persaud, in October, 2002, ten months prior to bankruptcy.

[198] When cross-examined the Respondent testified that the car was DJ’s but she gave it to him and he then transferred it to Meena. Another contradiction in evidence.

[199] When questioned about these inconsistencies relating to the November 24, 2004 affidavit, the Respondent again suggested the errors were somehow the fault of the person who drafted the document.

[200] When asked why he would get involved in redeeming the mortgage on 89 Main instead of letting Mr. Dhaliwal buy it for $490,000, the Respondent answered because his brother had wanted to buy it.

[201] In the November 24th affidavit, the Respondent deposed that the transfer of 89 Main for $414,000 was fair and reasonable in the circumstances as it was akin to a distress sale.

Witness - Neena Persaud

[202] This witness was called on behalf of the Respondent. She signed a statutory declaration in regards to what she heard and observed when she accompanied the Respondent to the trustee in bankruptcy, Mr. Mathew (Exhibit 8, Tab 2). She set out therein that given the circumstances they did not have to answer yes to the section 10 questions and did not have to show the Applicant as a creditor because support survived bankruptcy.

[203] In 1999 this witness was working in the office for Re/Max Realty and testified that she remembers DJ calling her in 1999 wishing to purchase 89 Main. She testified that DJ provided a cheque for $20,000 as a down payment.

[204] Through a mortgage broker at the Re/Max offices DJ applied for a mortgage from RBC but did not qualify. The Respondent, who was described as DJ’s boyfriend, agreed to co-sign the mortgage which allowed her to qualify for the mortgage. As a result the Respondent became a joint owner, at least on title.

[205] On cross-examination Ms. Persaud agreed that the Respondent must have had sufficient credit to qualify for RBC financing, however she did not process the mortgage application so was unaware of what income or assets he declared.

[206] A few years later the Respondent and Ms. Persaud became friends and he disclosed his debt issues (legal costs and income taxes). Ms. Persaud took the Respondent to Mr. Mathew, a trustee in bankruptcy.

[207] At this time the Respondent was living at 4 Cochrane Avenue, Ms. Persaud’s home.

[208] The Respondent, signed his Statement of Affairs before Mr. Mathew, a document prepared by Mr. Mathew.

[209] Ms. Persaud describes her relationship with the Respondent as good friends and not a common law relationship. He lived in her basement apartment without paying rent but moved out in 2013 or 2014.

[210] He returned to live in the basement apartment after his surgery but he was required to pay $500 per month rent.

[211] To compensate her for rent not paid, the Respondent gave her one of his cars.

[212] The witness denied ever talking to the Respondent about business.

[213] In 2011 she loaned $11,000 to the Respondent in order to get him out of jail for the non-payment of support.

[214] She also loaned him money to pay off the cost orders.

[215] Ms. Persaud does not anticipate being repaid.

ARGUMENT

The Applicant

[216] The Applicant seeks the following orders:

An order voiding the December 16, 1999, transfer of 89 Main from the Respondent to DJ and any subsequent transfers.
An order finding that the Respondent had a 95% interest in the property.
An order finding that DJ’s 5% share has been paid through the funds provided to her from Forex.
Alternatively, an order that 5% of the proceeds of sale shall be held in trust for DJ by the bankruptcy trustee.
An order that 89 Main be vacated within 60 days and thereafter sold.
An order that the proceeds of sale be paid to the FRO to the credit of the support arrears.
In the alternative an order that the arrears of child support ought to be paid and that the remaining funds vest with the Trustee and the arrears of spousal support be treated as a debt of the bankruptcy.
An order that spousal support shall be terminated as of the date of my order.
An order that child support be terminated as of the date of my order subject to variation if the child returns to full time post-secondary school.
Costs and pre-judgment interest at 2% in accordance with the Courts of Justice Act.

[217] Counsel relies on the facts surrounding the various dealings with 5 Newlyn and 89 Main and submits that the law firm of McCabe Filkin were at all times acting on the instructions of the Respondent.

[218] She relies on the inconsistencies and contradictions included in the testimony of the Respondent and his multiple affidavits. She submits that the court can only conclude that the Respondent had a significant interest in both 89 Main and 5 Newlyn as well as HOSF and Forex.

[219] Counsel for the Applicant asks the court to note that multiple cheques were put into evidence sometimes signed by S. Bishnu and/or payable to S. Bishnu, a name equally applicable to the Respondent and Paul.

[220] Cheques were deposited to a Scotia Bank account numbered 447285, an account owned by the Respondent.

[221] It is submitted that in the first six months of 1998, over $111,000 was deposited into the Respondent’s account #447285, reflecting an ability for the Respondent to provide the cash needed to buy 89 Main and to pay the support he was ordered to pay.

[222] On the evidence of Ms. Persaud, to finance the purchase of 89 Main the Respondent had to become a co-mortgagor, suggesting he must have had good credit. Yet in 1998 the Respondent reported an income of $15,959.

[223] It is submitted that the sale of 89 Main to Paul resulted in instant equity of over $125,000 (it had been purchased for $540,000). This is partially corroborated by the fact that the RBC, had the mortgage not been redeemed, had a purchaser willing to pay $490,000 for 89 Main.

[224] Counsel noted an affidavit sworn by the Respondent on April 19, 2013, filed in response to proceedings commenced against him by Wasserman and Associates, at paragraph 9, the Respondent deposed that,

“With respect to the merits of this action, there were mortgages on the property located at 89 Main St. in Brampton, Ontario and I, as owner, had to make those mortgage payments. I also had to maintain the property during the period that I owned it.”

[225] Counsel for the Applicant submits that the evidence of Paul was inconsistent and contradictory. For example, he testified that in August, 1999 he was not involved in the purchase of 89 Main and had no knowledge about it but later said he knew that DJ had put up the cash needed to buy the property.

[226] Paul testified that in regards to his marriage to Nazlene that she just “went away” after a six year marriage without making any claim against him and in regards to 5 Newlyn. Clearly, before she went away she signed over her interest in 5 Newlyn to Paul.

[227] Paul testified that his income was $11-15,000 per year but later he testified that his gross income was $50-115,000 per year. Any discrepancies he blamed on the person who prepared his tax returns.

[228] It is submitted that Paul’s answer too many questions was, “I don’t know.”

[229] It is submitted by counsel for the Applicant that while there is evidence of the Respondent having significant health issues, both physical and mental, there is no evidence he cannot work. He admitted that in 2012, he worked as a labourer for 20-30 hours per week for a company named, SDR Removal.

[230] The Respondent has not applied for a disability pension.

[231] Counsel for the Applicant asks me to take into account that DJ was not called as a witness and asked me to draw adverse inferences as a result of her non-appearance. It would appear that during the first week of trial, which took place in Milton, DJ was in attendance at the court house, presumably waiting to be called as a witness.

[232] When the trial re-convened in Brampton some months later, DJ was not in attendance and neither the Respondent nor Paul could provide contact information for DJ.

[233] Counsel for the Applicant submits that the Respondent’s transfers of title to 5 Newlyn and 89 Main were fraudulent and represent a fraudulent conveyance under the Fraudulent Conveyances Act R.S.O. 1990, Chapter f. 29 (FCA), section 2. It is submitted that the conveyances were void pursuant to the Bankruptcy and Insolvency Act (1985) (BIA).

[234] The Applicant seeks to void title to 89 Main only.

[235] It is submitted that at the time of the transfers of both properties in December, 1999, the Respondent was indebted to the CRA and to the Applicant. The transfers were to protect his properties from these creditors. Further, the Respondent sought bankruptcy protection and in his Statement of Affairs therein failed to disclose the disposition of assets.

[236] It is submitted that the Respondent used DJ’s name to operate Forex after closing HOSF to protect the business from his creditors.

[237] Counsel for the Applicant relies on the authority Business Development Bank of Canada v. Samarsky 2012 ONSC, a decision of Chapnik J. of the Ontario Superior Court of Justice.

[238] At page 3 of the judgment the court states,

“An abundance of jurisprudence in this area of law establishes the following general principles:

Where the result of an impugned transfer is to defeat, hinder, delay or defraud creditors, there is a presumption at law that the transfer was done with that intent.
Certain “badges of fraud” indicate the debtor’s intent, namely secrecy, the transfer of all or substantially all of the debtor’s assets, continuance in possession of the debtor and some benefit retained under the settlement to the transferor. A non-arm’s length relationship between the parties to the conveyance and inadequate consideration are additional badges.
As to the applicability and functions of ss. 2 and 3 of the FCA, a helpful summary is enunciated in the case of CIT Financial Ltd. v. Zaidi 2006 CanLII 8469 (ON SC), [2006] O.J. No. 1073, at para. 21:

Pursuant to section 3, if the conveyance is made upon good consideration, it is not subject to section 2, if the transferee was acting in good faith and without notice or knowledge of the fraudulent intent of the transferor. But if the conveyance was not made for good consideration it is not protected under section 3 and is subject of being set aside under section 2 regardless of the intent of the transferee. Accordingly, where a plaintiff establishes prima facie that a conveyance was made with fraudulent intent for purposes of section 2 and without good consideration for purposes of section 3, the conveyance is subject to be set aside unless the defendant establishes either that the transferor lacked the fraudulent intent or else (as required by section 3) that the conveyance was made for good consideration and that the transferee acted in good faith and without notice or knowledge of the fraudulent intent of the transferor.”

[239] In Rose v. Pica 2011 ONSC, the trial judge, McIssac J., relies on Koop v. Smith 1915 CanLII 26 (SCC), [1915] 51 S.C.R. 554 for the proposition that claims of good faith in the face of suspicious circumstances should be supported by evidence independent of interested parties (para. 7).

[240] At paragraph 11, the judge states,

“Most importantly, there is absolutely no independent evidence from outside the circle of these interested parties to support her position that she was being used as a mere cipher of her husband: see Koop v. Smith, supra, at p. 557. Although such confirmation is not mandatory, I am satisfied that in the extremely suspicious circumstances that prevail in this case, it is prudent to look for such evidence before accepting Kimberley Pica’s somewhat fantastic claims.”

[241] Counsel for the applicant submits that the Respondent, Paul, is not sufficiently outside of the situation to provide such confirmatory evidence. He is inextricably tied to the fraudulent transfers.

[242] The Applicant submits that the transfer of 89 Main runs afoul of the BIA as it existed in December, 1999. The property was conveyed away within five years of the date of the Respondent’s initial bankruptcy, at a time when the Respondent was insolvent and is therefore void pursuant to section 91.

[243] The Respondent did not reveal to his Trustee the transfers of 89 Main, 5 Newlyn, the Jaguar and the BMW vehicles.

[244] It is submitted by counsel for the Applicant that the Respondent’s actions represent multiple “badges of fraud”. The transfer of 89 Main was a fraudulent transfer and must be voided.

[245] In regards to support the Applicant submits that the Respondent’s request that retroactive relief is estopped due to his failure to appeal the order of Brokenshire J. or to take steps earlier to bring a prior motion to vary.

[246] It is submitted that the Respondent is intentionally under-employed and an income ought to be imputed to him on a retroactive basis and moving forward.

[247] The Applicant relies on Silizewicz v. McKinnon 2011 ONCJ 85 where at para. 32, the court notes,

“A general principle is that the payors must not arrange their financial affairs so as to prefer their own interests over those of their children. Indeed, a payor will engage in blameworthy conduct even when he does nothing to active to necessarily avoid his obligations if he consciously chooses to ignore them. The case law provides that it is not necessary to prove bad faith in order to find blameworthy conduct.”

[248] Counsel submits that the Respondent, given the judgment of Brockenshire J., could have had his support obligations reviewed after three years had he paid the costs.

[249] The Respondent testified that he did not work in the field of cabinet making after Forex closed in 2001. He did not provide a reason for the closing of the business nor why he could not find work in his field.

[250] Counsel for the Applicant submits that it is appropriate to impute an income of at least $100,000, as did Brockenshire J.

The Trustee

[251] The Trustee in Bankruptcy, Mr. Howard Wasserman, for the most part, supports the submissions of the Applicant in regards to the transfer of property.

[252] The Trustee has no interest in the support issues other than the fact that the Applicant, based on arrears of support, is a creditor of the bankrupt.

[253] The Trustee submits that the transfer of 89 Main to DJ in 1999 and all subsequent transfers are void and that the 95% interest owned by the Respondent in 89 Main ought to vest in the Trustee, for the benefit of the creditors.

[254] The Trustee seeks vacant possession within 60 days from the date of the order.

[255] The Trustee seeks an accounting of the proceeds obtained from the final disposition of 5 Newlyn.

[256] The Trustee also seeks costs.

[257] The Trustee seeks the relief for the benefit of all creditors.

[258] It is submitted that the transfers of both properties by the Respondent were not at arm’s length, a submission that is supported by the evidence.

[259] The Trustee submits that there is evidence that in the mid 1990’s the Respondent made mortgage payments on 5 Newlyn to an extent representing 100% ownership.

[260] It is submitted by the Trustee that various transfers of property were not disclosed on the Respondent’s Statement of Affairs, as signed by the Respondent.

[261] The unpaid debts of the Respondent in December, 1999, amounted to $144,409 and remain unpaid.

[262] The Trustee submits that in his review of the documents and exhibits between 1995 and 1999, inclusive, amounts totally $304,345 were paid to or for the benefit of the Respondent. This submission is backed up by a review of various bank transactions and the issuance of cheques.

[263] The Trustee also relies on certain findings of fact set out in the judgment of Brockenshire J.

Respondent - Sewsankar Bishnu

[264] It is submitted by counsel for the Respondent that since the year 2002 the Respondent has attempted to vary the order of Brokenshire J.

[265] He sought to vary the order as a result of a material change of circumstances but was unable to do so because he had not satisfied orders for costs (notwithstanding the order allowed a review of spousal support after three years and without requiring a material change in circumstances).

[266] Section 37(2) of the Family Law Act, stipulates that there must be a material change of circumstances to vary an order for support. The Respondent relies on the following changes:

Change in income and loss of employment;
A change in health conditions;
Compliance with paragraph 3 of the order of Brockenshire J; and
The order of support is prejudicial.

[267] It is submitted that the child Varsha finished school in 2013 with no intention to pursue post-secondary education. Varsha is said to be working.

[268] The Respondent submits that in 2000 he suffered a down turn in income resulting in his petition into bankruptcy. He continues as an undischarged bankrupt. Counsel submits that the malicious, wrongful and untruthful reports of the Applicant to the CRA and FRO resulted in the bankruptcy and the suspension of his driver’s licence.

[269] It is submitted that the Respondent’s health has been deteriorating since 1998 and has been getting worse.

[270] He relies on the unrebutted medical evidence found in Exhibit 1 and Exhibit 8.

[271] It is alleged that in the 2000’s the Respondent has earned an average of $7,000 per year and the individual years of actual income are:

2001 $0

2002 $12,240

2003 $1

2004-09 $0

2010 $2,800

2011 $8,540

2012 $9,890

2013 $4,500

2014 $2,800

2015 $8,979 (social assistance)

2016 $10,636.00 (social assistance)

[272] The Respondent is currently on social assistance (Ontario Works) and it is submitted it is likely he will continue on social assistance and that it would be absurd to continue the order of Brockenshire J., which has resulted in the Respondent suffering and continuing to suffer an undue hardship.

[273] It is submitted that over the years the Respondent has paid $40,000 towards support, both child and spousal.

[274] It is submitted that R.S. Contracting was his brother’s business (contrary to the finding of Brokenshire J.) and that from 2000 to present the Respondent has not owned or operated any business.

[275] It is submitted by counsel for the Respondent that Varsha, since 2010 has been working (initially part-time) and her support ought to terminate in that year. Alternatively, in 2014 when she withdrew from parental control.

[276] With respect to that submission, I note that since the Applicant and the Respondent were never married, that the test for the termination of child support is that of the Family Law Act. Child support is to terminate when the child reaches 18 years of age and is no longer in full-time attendance at school.

[277] With respect to spousal support, counsel for the Respondent submitted that the Applicant moved to the USA in 2000 and remarried in 2003.

[278] It is submitted that the Applicant, since 2003, has been fully supported by her husband and has not suffered any undue hardship from the non-payment of spousal support. The Applicant is well educated and, if necessary, does have the ability to earn an income.

[279] In regards to 89 Main and 5 Newlyn, counsel for the Respondent submits that evidence falls short of establishing any fraudulent conveyance or any ownership in property other than acknowledged by the Respondent.

[280] He submits that the evidence of the Respondent was corroborated by his brother, Paul.

[281] Counsel for the Respondent relies on the evidence of Ms. Persaud to corroborate the Respondent’s testimony that he did not intend to mislead anyone when he completed his Statement of Affairs and that his failure to disclose earlier dispositions of property was done on the advice of his Trustee, Mr. Mathew.

[282] While recognizing the Respondent’s August 21, 2001 affidavit as spurious and vengeful, it is submitted that there is no other evidence to support the Respondent’s ownership of 89 Main after December 16, 1999 (although it is noted that in his affidavit, sworn April 19, 2013, the Respondent claims ownership of 89 Main).

[283] It is submitted that the Respondent’s explanation of the affidavit is logical and reasonable.

[284] It is submitted by counsel for the Respondent that, neither the Applicant nor the Trustee sought to call DJ as a witness (although on this point the court was initially advised that DJ would be a witness for either the Respondent or Paul).

[285] It is submitted by the Respondent that there is no credible evidence to show that the cash provided to buy 89 Main came from the Respondent or that he paid any expenses on the property.

[286] Counsel for the Respondent submits that 89 Main was not fraudulently conveyed to Paul.

Surujpaul Bishnu (Paul)

[287] Counsel for Paul submits that 89 Main met his needs and the needs of his family and that he purchased the property at a somewhat cheaper price because it was acquired at a time when the RBC had commenced power of sale proceedings.

[288] It is submitted that Paul required the financial assistance of GT in order to purchase 89 Main and for that reason only, GT was on title.

[289] It is submitted that the circumstances of the acquisition of 5 Newlyn and 89 Main are completely different.

[290] Paul submits that the exhibits provided by him show conclusively that he pays the cost of carrying 89 Main, including the mortgage and utilities.

[291] Paul relies on the submissions of counsel for his brother, the Respondent.

[292] Counsel for Paul relies on Exhibit 4, Tab 18, to prove that the $127,000 cash needed to buy 89 Main came from the bank account of DJ.

[293] It is submitted on behalf of Paul that DJ approached him to buy 89 Main because her real estate broker, who promised to find her money to re-mortgage the property, double crossed her and made his own offer to purchase. She also approached Paul and asked him to get the Respondent to redeem the mortgage.

[294] Paul continues to reside in 89 Main and operates his business out of the property.

[295] It is submitted by counsel for Paul that the case is unique and fact-oriented however, there is a legal issue as to whether or not valuable consideration was paid to acquire 89 Main.

[296] Indcondo v. Slaon 2014 ONSC 4018 is relied upon when stating that often the intent must be determined by drawing inferences. The legal burden remains with the applicant/plaintiff throughout unless he or she can raise an inference of fraud sufficient to shift the burden.

“Proof of one or more of the badges of fraud will not compel a finding for the plaintiff, but it may raise a prima facie case which would be prudent for the defendant to rebut (Indcondo, para. 53).”

[297] It is submitted that to find a fraudulent conveyance, it has to be proven that Paul failed to give good consideration, did not act in good faith and had the requisite knowledge of any wrongful intention on the part of the Respondent (Spadina Ltd v. Walton 2014 ONSC 3052).

[298] It is submitted by counsel for Paul that his client paid valuable consideration for 89 Main and that he acted in good faith. He bought the property when it was under power of sale, at a time when the Respondent was not on title. He took advantage of a good price and DJ’s willingness to sell.

ANALYSIS

[299] I want to say at the outset of this analysis that I am not going behind the judgement of Brockenshire J. and his findings of fact. I say that because it is clear from the submissions that the Respondent and his counsel believe that the trial judge erred in imputing an income to the Respondent of at least $100,000.

[300] The ruling was not appealed and the trial judge’s finding of facts will not be challenged.

[301] To a great extent, on the issues before me, the credibility of the Respondent takes on special significance. He seeks a variation of support, in part, on his financial ability to pay and is accused of fraudulently disposing of property.

[302] On the issue of credibility, on the evidence and testimony presented, I share Brockenshire’s findings of credibility with respect to the Respondent.

[303] As noted, the Respondent was cross-examined on at least seven of his affidavits. These affidavits contradict themselves and the Respondent’s trial testimony before me.

[304] From these affidavits and the Respondent’s testimony, he repeatedly contradicted himself as to his ownership of the following assets:

(a) R.S. Contracting;

(b) HOSF Woodworking;

(d) a number of automobiles;

(e) 5 Newlyn; and

(f) 89 Main.

[305] One way or another, the Respondent has perjured himself.

[306] In my review of the evidence the various affidavits were discussed. However, I wish to add the following.

[307] In regards to 89 Main, at paragraph 7 of his November 24, 2004, affidavit the Respondent deposed, “Notwithstanding the contents of the August affidavit, I was unable to succeed in my claim for an unequal division of our property.”

[308] He did not say the facts set out in the affidavit were untrue as he claims now or that he voluntarily withdrew the application he commenced against DJ.

[309] At paragraph 10 he deposed,

“While it is true that in my August Affidavit I did claim that Danwantie held the Main Street Property in trust for me, that position was never agreed to or accepted by Danwantie at all material times, she claimed a one half interest therein.”

[310] He does not deny he had an interest in 89 Main.

[311] To some extent this sworn document supports the allegations contained in the Respondent’s August 21, 2001, affidavit as does his affidavit sworn April 19, 2013.

[312] For the purposes of re-financing, the Respondent guaranteed the mortgages taken by Paul and GT to finance the purchase of 89 Main. It was also his testimony that his name was added to the deed with DJ to assist her to obtain the mortgage. Clearly at a time when the Respondent disclosed minimal income he had sufficient credit to assist in acquiring two mortgages.

[313] In regards to his conveyance of his interest in 89 Main to DJ, he deposed that he did so because he did not believe there was any equity in the property. He makes this statement notwithstanding the property had been purchased six months earlier for $540,000.

[314] The Respondent swore a further affidavit on October 25, 2011 (Exhibit 6, Tab 18). The affidavit was filed in support of a motion seeking a variation of the Brockenshire order.

[315] The Respondent deposed that during the original trial he was self-employed. He testified that he had been working for his brother’s business, R.S. Contracting, which ceased business in 1999. He deposed he then started a business known as HOSF Woodworking and his brother worked as a sub-contractor for HOSF. HOSF subsequently became Forex, which ceased business in 2001.

[316] The Respondent thereby acknowledged that HOSF and Forex were his businesses, but testified at the trial that Forex was owned by DJ and in other affidavits and in his testimony he swore that he had no interest in HOSF and Forex.

[317] The Respondent, in an affidavit sworn June 18, 1998 (Exhibit 9, Tab 1), deposed that he had a one-third interest in 5 Newlyn, which was a gift from his brother Paul.

[318] Therein he specifically contradicts his trial testimony by deposing, “I am a cabinet maker by trade.”

[319] Another of his affidavits was sworn July 6, 2001 (Exhibit 3, Tab 10) and therein he deposed that in regards to R.S. Contracting, he leased the facilities and equipment. The business of R.S. Contracting ended in 1999 and that he then started HOSF Woodworking which became Forex, a company he started up with DJ. In regards to all of these businesses the Respondent swore to the fact that he worked as a cabinet maker.

[320] He goes on to say that in March, 2001, he went to work at IPSA Woodworking earning $35,000 per annum.

[321] All of the contradictions and inconsistencies between the various affidavits and the Respondent’s trial testimony result in a complete loss of credibility. He has an interest in 89 Main when it is of benefit to him. The contradictions portray a man who consistently failed to tell the truth. He would swear to any set of facts that would assist him at the time he signed a particular affidavit or when he testified before me. The affidavits disclose a pattern of deceit. When caught in an inconsistency the Respondent would attempt to deflect the blame to the lawyer who prepared the affidavit, saying the affidavits were “their words” or he would testify that he never read the document before signing.

[322] For many reasons this trial took three years to complete. While some of that time was lost because of the health problems of one counsel, much of the time can be attributed to the exploration of the Respondent’s multiple contradictions.

[323] In most respects the Respondent is, “the author of his own misfortune”.

[324] His counsel’s suggestion that the Respondent explained away the inconsistency of his August 21, 2002, affidavit in a logical or reasonable way, cannot be accepted. Nor can it be defended.

[325] The Respondent never provided a reason why the various woodworking companies would cease operations and then reopen under another name. The only logical inference to be drawn is that it was meant to avoid creditors.

[326] I find that it was not a coincidence that the Respondent conveyed away his interests in 5 Newlyn and 89 Main, for no consideration, on December 16, 1999, a week after significant costs were awarded against him and just over two months after Brockenshire J. released his ruling obliging the Respondent to pay child and spousal support.

[327] I find that the Respondent’s transfer of 89 Main to DJ in December, 1999, was an effort to protect it from creditors. He thereafter had a falling out with DJ, moved out of the premises and likely no longer assisted with the costs of carrying the property, resulting in mortgage going into arrears.

[328] I find that he had an ownership interest in Forex. Some of the automobiles were conveyed away to creditors, including Ms. Persaud.

[329] In regards to 5 Newlyn, the evidence is less certain but it is likely that it was conveyed to Paul to protect it as well, although I accept that before December, 1999, Paul was financially responsible for the property.

[330] In regards to the testimony of Paul, while he likely earned much more income than he disclosed to the CRA, he is more credible. Paul was involved in the arrangement of the necessary financing to acquire 89 Main in January, 2002, along with GT. They both put up funds to acquire the property and arranged for two mortgages. The purchase price was $414,000 and this fell well short of the earlier purchase price ($540,000) or the value of the offer held by the RBC ($490,000). Nevertheless, the purchase price, while likely a bargain, was a transfer for valuable consideration.

[331] I further accept that Paul has resided in the property since then and operates his business out of those premises. There is no evidence to the contrary.

[332] I accept that since he bought out GT’s interest in 89 Main later in 2002, he has been financially responsible for the carrying costs on the property including the mortgage payments and utilities.

[333] I find that for whatever reason Ms. Persaud was very protective of the Respondent and while she denies any romantic involvement with him, I think otherwise. Further the complete lack of credibility on the part of the Respondent taints the credibility of her evidence.

[334] Certainly her involvement is not at arm’s length and even if I accept her explanation as to the errors on the Respondent’s Statement of Affairs, it does not change my view.

SUPPORT

[335] As noted previously I will not look behind the order of Brockenshire J. and accept that as of the date of the order (October, 1999) the Respondent was earning at least $100,000 per annum.

[336] There is reliable evidence of this level of earnings. On the reassessed income by the CRA, the Respondent averaged income over the years in excess of $100,000 per annum.

[337] In regards to support, I accept the evidence of the Applicant in regard to her knowledge of the facts. I found her to be credible even if a bit obsessive in relation to what she believes she is owed. I do accept and understand her level of frustration and the burden of the legal costs she carries in regards to the Respondent, a man who never voluntarily paid support.

[338] Counsel for the Applicant encouraged the court to continue spousal support at least to the date of the application to vary, if not to the date of judgment. She makes this argument on the basis that the Respondent, for so many years, failed to bring his application to vary.

[339] On that point I disagree with the Applicant’s counsel. My order will reflect what I feel ought to have occurred at the appropriate times.

[340] The Respondent, in regards to his motion to vary child support, must prove that there has been a material change in circumstances that warrant a historic reduction of the support order.

[341] I accept as an obvious change in circumstances that in the spring of 2013, the child Varsha finished grade 12 and was 18 years if age. Thereafter she was not in full time attendance at school. Accordingly, and pursuant to the Family Law Act, child support ought to have terminated on June 30, 2013.

[342] There is evidence that Varsha wished to pursue a college education but could not for financial reasons. I will leave it to another judge to determine if she returns to school on a full time basis, can her status as a dependent child be re-established?

[343] Quite apart from the issue of the correct quantum, the ongoing payment of child support can only continue as long as the child remains eligible, regardless of the conduct of the payor.

[344] In regards to spousal support, Brockenshire J. was of the opinion that spousal support was appropriate, notwithstanding the duration of the parties’ relationship, but implied that it was to be time limited. It appears he accepted that, on the short term, the Applicant wanted to attend school and upgrade her skills for employment purposes. For that reason the Applicant had a need for, and an entitlement, to spousal support.

[345] Accordingly, the trial judge stated in his reasons that the spousal support order, after three years, that is after October 6, 2002, could be reviewed without the necessity of a material change in circumstances.

[346] Had a material change of circumstances occurred prior to the passage of three years, presumably a variation could have been sought.

[347] The Applicant remarried in 2003 and has been unemployed for a number of years. She has been and is financially dependent on her husband. As a result of their marriage her husband has an obligation to support the Applicant. It would appear they live a very comfortable lifestyle.

[348] The Applicant’s marriage in 2003, I find was a material change in circumstances.

[349] Up until her marriage however, the Applicant was financially responsible for caring for herself and Varsha.

[350] In my opinion, spousal support should terminate on December 31, 2002, the year preceding the Applicant’s marriage. The reason is two-fold; the expiry of the 3 year period as noted in the judgement of Brockenshire J. and the Applicant’s remarriage in 2003.

[351] The fact that the Applicant moved to the USA in 2000, is not in and of itself a material change in circumstances that would suggest a reduction of support.

[352] Filed in the Respondent’s material is the medical evidence alluded to earlier. This evidence was admitted without objection and without any viva voce medical testimony. While I am suspicious that the Respondent may have manipulated some of this evidence, there is no evidence to the contrary and I can only conclude that, as time passed, the Respondent developed medical conditions, including mental health issues, which affected his ability to seek and maintain employment. There certainly is no doubt he has had heart surgery.

[353] I find however that in 1999 his medical condition was not a factor in the Respondent’s ability to work. In my opinion that, for some period of time after 1999, he was likely underemployed or failed to accurately report his income to avoid his financial obligations.

[354] The issue now to consider is what income is to be imputed to the Respondent, from 1999 to 2013, taking into account the Respondent’s health. Has he established a material change in circumstances to justify a variation in the quantum of support he was ordered to pay?

[355] At Exhibit 2, Tab 10, is a medical noted dated January 14, 2014, authored by Dr. Aggarwal, who has been the Respondent’s primary physician since 1990. He stated therein that the Respondent suffers from hypertension, hyperlipidemia and diet-controlled type 2 diabetes. His health problems are compounded by the stress related to his personal life.

[356] The doctor lists the medication taken by the Respondent and states,

“At this time he has been unable to work due to severity of his medical conditions.”

[357] His inability to work, by its wording, is time specific, that is to say, at the time the note was written, the Respondent was unable to work.

[358] At Exhibit 8, Tab 11, are further medical records. In April, 2016, in a Heath Status Report completed by Dr. Aggarwal, the Respondent’s conditions were noted as coronary heart disease, chronic pain in the neck and shoulder and depression. His symptoms are noted to be shortness of breath, an inability to use his hands due to his neck and shoulder issues and reduced motivation and concentration.

[359] It was noted that the symptoms are expected to last and his physical issues are likely to deteriorate.

[360] On November 13, 2014 the Respondent underwent coronary by-pass surgery.

[361] The Respondent’s physical strength is said to have medium or moderate limitations but that his ability to participate physically in sustained activity is severely affected and as a result the limitations may be complete.

[362] In a report dated December 8, 2015, from Dr. Heslop of the Brampton Cardio Pulmonary Services, the Respondent’s heart disease is noted as stable.

[363] It would appear that the Respondent was referred for psychiatric care in 2004. As late as 2015 the Respondent was still under mental health care as set out in the Mental Health Progress Reports. The Respondent was said to suffer from depression and anxiety. Reference is made to his ongoing court case which is causing him stress.

[364] In June, 2015, the Respondent was said to be doing relatively better. In a report earlier that year it is noted that the Respondent has not been working for the past 14 years, except possibly part-time. It is also noted that the loss of his driving license is the cause for the Respondent not being able to work (as opposed to his health being the reason he is not able to work).

[365] Given the Respondent’s credibility issues, it is difficult to assess the impact his health issues had historically on his ability to work. I cannot help but think there was a continued intent on the part of the Respondent to avoid his support obligations.

[366] There is nothing to say that up to 2003 that the Respondent was suffering to the extent that it would affect his ability to work and pay spousal support.

[367] I do not accept the evidence of the Respondent as to what he earned in the years 1999-2003. Just prior to that period the CRA did not believe the Respondent in relation to his income in the mid 1990’s.

[368] In regards to the level or quantum of his income the Respondent has not, over that period of time, proven any material change in circumstances. Accordingly, spousal support will continue as ordered by Brockenshire J. up to and including December 31, 2002.

[369] In regards to child support, it shall continue at the rate set by Brockenshire J. until December 31, 2003. There is medical evidence that the Respondent, in 2004 may have had some mental health issues which might have begun to affect his ability to work.

[370] While somewhat arbitrary, I will fix his income commencing January 1, 2004 at $35,000 per annum, an income which in one of his affidavits the Respondent deposed he was being paid by IPSA. For the period commencing January 1, 2004 and ending December 31, 2009, the Respondent shall pay child support of $303 per month, pursuant to the child support guidelines.

[371] From January 1, 2010 and forward until June 30, 2013, the Respondent is to pay child support of $176 per month, pursuant to the Guidelines on an income of $22,000, a somewhat arbitrary figure but recognizing the Respondent’s health over time likely deteriorated which would result in a lower income and/or inability to work full time.

[372] There is nothing to substantiate a complete inability to earn any income over that period of time. The only medical evidence I have is that in 2014, after the termination of his obligation to pay support, the Respondent did not have an ability to work.

[373] Child support will terminate on June 30, 2013.

[374] I will leave it to the FRO to recalculate the arrears of both child and spousal support.

FRAUDULENT CONVEYANCES

[375] Turning now to the issue regarding the alleged fraudulent conveyances, Section 2 of the FCA states,

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.

[376] Section 3 states,

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.

[377] As noted previously, the BDBC v. Samarsky decision sets out the generable principles to be applied. They are:

Where the result of an impugned transfer is to defeat, hinder, delay or defraud creditors, there is a presumption at law that the transfer was done with that intent.
Certain badges of fraud indicate the debtor’s intent, namely secrecy, the transfer of all or substantially all of the debtor’s assets, continuance in possession of the debtor and some benefit retained under the settlement to the transferor. A non-arm’s length relationship between the parties to the conveyance and inadequate consideration are additional badges.
As to the applicability and functions of ss. 2 and 3 of the FCA, a helpful summary is enunciated in the case of CIT Financial Ltd. v. Zaidi 2006 CanLII 8469 (ON SC), [2006] O.J. No. 1073, at para. 21:

“Pursuant to section 3, if the conveyance is made upon good consideration, it is not subject to section 2, if the transferee was acting in good faith and without notice or knowledge of the fraudulent intent of the transferor. But if the conveyance was not made for good consideration it is not protected under section 3 and is subject to being set aside under section 2 regardless of the intent of the transferee. Accordingly, where a plaintiff establishes prima facie that a conveyance was made with fraudulent intent for the purposes of section 2, and without good consideration for the purposes of section 3, the conveyance is subject to be set aside unless the defendant establishes either that the transferor lacked the fraudulent intent or else (as required by section3) that the conveyance was made for good consideration and that the transferee acted in good faith and without notice of knowledge of the fraudulent intent of the transferor.”

[378] As noted previously, I have rejected the Respondent’s evidence as to his intention with respect to his conveyance of interests relating to 89 Main and concluded that the transfer of the property to DJ was done to protect his interest from his creditors.

[379] This conclusion is based on multiple badges of fraud some of which have been noted previously.

[380] Further, the timing of the transfer of 89 Main and 5 Newlyn are badges of fraud. The transfers were concluded seven days after Brockenshire J. completed his judgment by ordering the Respondent to pay costs to the Applicant in the amount of $6,667.56. The learned judge in October, 1999, imposed upon the Respondent a significant support obligation, both spousal and child.

[381] At the same time the Respondent owed significant monies to the CRA, who recently reassessed the Respondent’s income declarations relating to his earnings in the mid 1990’s. The CRA had determined that the Respondent earned significantly more income than reported.

[382] The lack of valuable consideration for the December, 1999, transfers is a badge of fraud.

[383] The Respondent testified that he went on title to allow DJ to qualify for mortgage financing. He had to have declared an income sufficient enough to provide he had some wherewithal to help contribute to the carrying costs of the mortgage. The Respondents’ evidence is that he had very little income in 1999.

[384] The various businesses under which the Respondent worked or ran are badges of fraud for the following reason. Businesses would open and operate for a short period to time, only to reopen at the same location, under a different name. HOSF, a wood working business admittedly owned and operated by the Respondent, closed after approximately a year of operation, then ceased operations without any explanation as to its reason for doing so, only to reopen under a new name, Forex and I have already determined that the Respondent was an owner of Forex.

[385] This behaviour suggests an attempt to avoid creditors and represents a badge of fraud.

[386] The Respondent’s contradictory testimony and affidavits, especially his affidavit sworn August 21, 2001, in relation to the real properties and Forex are badges of fraud.

[387] From all of this I conclude that the conveyance of 89 Main to DJ in December, 1999, violated section 2 of the FCA.

[388] However, in 2002 DJ conveyed away her interest in 89 Main to Paul and GT. I must now consider whether or not this further conveyance was done with a fraudulent intent. I must also consider the impact of section 3 of the FCA and determine if the transfer was for good consideration, made in good faith and if there was fraudulent intent, was Paul aware of it.

[389] These questions are more difficult. In the BDBC v. Samarsky case and the discussion of badges of fraud reference was made to considerations of whether, after a transfer of property, was there a continuance of possession of the debtor and was there some benefit retained.

[390] While it is true that the Respondent was a guarantor of the mortgage taken out by Paul and GT, there is no evidence of any possession by the Respondent in regard to 89 Main or of a benefit being retained by the Respondent in 89 Main after January, 2002, when title was conveyed from DJ to Paul and GT.

[391] I accept the evidence of Paul, as corroborated by the documentation included Exhibit 4 that he has continually lived at 89 Main since January, 2002, operates his business out of the premises and has been financially responsible for the property. This evidence rebuts any suggestion that the Respondent retained any benefit or possession of the property.

[392] It has been 15 years since the transfer to Paul was completed, and if the Respondent did have a continued interest in the property there would be evidence of such an interest.

[393] It is difficult to find badges of fraud which would lead to an inference of an intent to defraud in the circumstances of the 2002 conveyance, even accepting that the Respondent had a role in orchestrating this transfer of title and the financing of the purchase by Paul and GT.

[394] Inadequate consideration is potentially a badge of fraud. Paul and GT acquired title to 89 Main by acquiring it from DJ for just over $414,000, being the cost of paying out the first mortgage.

[395] While the total cost does not amount to the amount paid in the summer of 1999, or the offer of purchase accepted by the RBC, it is a significant amount of money and cannot be said to be grossly inadequate. There is no fair market value appraisal for 89 Main.

[396] As part of the consideration to purchase the property both Paul and GT had to put up monies from their personal savings.

[397] Paragraph 20 of the Spadina Ltd. v. Walton decision states that good consideration means valuable consideration. A bona fide exchange is required.

[398] I find that the amount paid for the property is not a badge of fraud.

[399] It can be said that is was the intent of the transferor, DJ, to be relieved of her mortgage debt to the RBC and not an attempt to defraud creditors.

[400] However, assuming for the moment that the transferor’s intent was fraudulent, section 3 of the FCA must be considered.

[401] The monies paid to acquire the property by Paul and GT was good consideration for the reasons I have already reviewed.

[402] In regards to good faith, I accept that both Paul and GT were required to invest cash into the purchase and were mortgagors in the two mortgages required to acquire 89 Main. Paul was able to refinance and pay out the interest of GT and thereby became the sole owner of 89 Main in the summer or 2002.

[403] As noted above, Paul has resided in the property, has made the mortgage payments and has been responsible for all of the monthly carrying costs, including utilities.

[404] While the Respondent may have participated in having the RBC mortgage paid out, once the conveyance was completed there is no evidence of any continued connection he had with 89 Main, other than his continued guarantee of the mortgage.

[405] I find that Paul and GT acted in good faith.

[406] In regards to whether or not Paul and GT had knowledge of a fraudulent intent, as noted in DBDC Spadina Ltd. v. Walton, supra, at paragraph 18,

“The presence or absence of “good consideration” in a conveyance, such as the granting or a mortgage, determines whether the court examines only the intention of the transferor, or that of both the transferor and transferee.”

[407] If the conveyance is made for little consideration, the court need only consider if there was fraudulent intent on the part of the transferor. The December, 1999, conveyance of the Respondent’s interest in 89 Main was such a conveyance. If there is consideration for the transaction there needs to be fraudulent intent on the part of both the transferor and the transferee.

[408] I find on the evidence I have heard and read that Paul and GT did not have knowledge of a fraudulent intent. The RBC mortgage was in default. DJ agreed to sell the property for the cost of paying out the mortgage. Such an act does not equate to a fraudulent intent.

[409] Paul’s acceptance of these financial burdens goes to the issue of whether he knew of any intent to defraud. Paul ultimately became the owner of 89 Main after he was able to re-finance and payout GT, thereby increasing his financial burden. If the Respondent continued to have some interest in 89 Main and intended to further transfer the property to avoid creditors, why would Paul take on and continue to manage the financial burden?

[410] I find that Paul (and GT) did not have the knowledge of the intent necessary to deny him the protection of section 3 of the FCA.

[411] Accordingly, I find that pursuant to sections 2 and 3 of the FCA a fraudulent conveyance, on a balance of probabilities, has not been established to the extent necessary to invalidate the transfer of the property to Paul and to allow for the sale of the property.

FINAL ORDER

[412] The order of Brockenshire J., dated October 6, 1999, is varied as follows:

The Respondent’s obligation to pay spousal support shall terminate on December 31, 2002. Until that date the Respondent shall continue to pay spousal support of $1,750 per month.
In regards to child support for the child Varsha, born January 13, 1995, the Respondent shall continue to pay support to the Applicant, at the rate of $773 per month on an imputed income of $100,000 per year until December 31, 2003.
Commencing January I, 2004, the Respondent shall pay to the Applicant monthly child support of $303, until December 31, 2009, on an imputed annual income of $35,000.
Commencing January 1, 2010, until June 30, 2013, the Respondent shall pay monthly child support to the Applicant in the amount of $176 on an imputed income of $22,000.
The Respondent’s obligation to pay child support shall terminate on June 30, 2013.
The Applicant’s and Trustee’s claims for a declaration of a fraudulent conveyance is dismissed.
If costs cannot be agreed upon, the parties can arrange with my office a one-half day appearance before me to argue costs.

Bielby J.

Released: August 23, 2017

CITATION: Makwana v. Bishnu, 2017 ONSC 4916

COURT FILE NO.: FS-10-150-01

DATE: 2017 08 23

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

DIPIKABEN MAKWANA

Applicant

and –

SEWSANKAR BISHNU

Respondent

and -

SURUJPAUL BISHNU

Respondent

and -

HOWARD MELVIN WASSERMAN (Intervener and Trustee in Bankruptcy for Sewsankar Bishnu

Intervener

REASONS FOR JUDGMENT

Bielby J.

Released: August 23, 2017

Makwana v. Bishnu, 2017 ONSC 4916

Case Summary

SUPERIOR COURT OF JUSTICE

ONTARIO

REASONS FOR JUDGMENT

INTRODUCTION

THE EVIDENCE

Witness - Applicant, Dipikaben Makwana

Witness - Trustee, Howard Wasserman

Witness - Surujpaul Bishnu

Witness - Respondent Sewsankar Bishnu

Witness - Neena Persaud

ARGUMENT

The Applicant

The Trustee

Respondent - Sewsankar Bishnu

Surujpaul Bishnu (Paul)

ANALYSIS

SUPPORT

FRAUDULENT CONVEYANCES

FINAL ORDER

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 4

Legal Tests 2

Legislation 5