Court File and Parties

COURT FILE NO.: CV-18-609302

MOTION HEARD: 20191128

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joan Thomsen, by her litigation guardian Sigrid Louisa Thomsen, Plaintiff

AND:

Patricia O’Callaghan, Defendant

BEFORE: Master Abrams

COUNSEL: S.A. Rosen, for the Plaintiff

P. Morrissey, for the Defendant

HEARD: November 28, 2019

REASONS FOR DECISION

[1] The plaintiff’s motion for leave to amend her statement of claim is granted, as being unopposed. The proposed amendments are not scandalous, frivolous or vexatious; they are tenable; they are not statute-barred (as arising from a 2018 transfer of property); and they do not give rise to non-compensable prejudice.

[2] As for the plaintiff’s motion for leave to issue a certificate of pending litigation against title to 113 Cree Avenue, Scarborough, a motion opposed by the defendant Patricia O’Callaghan only, that motion too is granted.

[3] My reasons are as follows:

[4] The plaintiff (by her litigation guardian) claims that she made loans totalling more than $75,000.00 to her neighbour (Patricia O’Callaghan), which loans have not been and, she submits, ought to be repaid. Patricia O’Callaghan admits that monies were advanced to her but says that they were gifts made by the plaintiff.

[5] On November 17/17, a demand letter for the repayment of some of the monies received by Ms. O’Callaghan was sent by lawyer Henry Preisman to Ms. O’Callaghan at her home address. A demand was made for the repayment of some $40,000.00 advanced by the plaintiff to Ms. O’Callaghan in July of 2017. At the time of the advance, the plaintiff was in her late 80’s and in failing health.

[6] While Ms. O’Callaghan denies having received the demand letter, Mr. Preisman advises that the letter was sent. He referred the plaintiff and her litigation guardian to litigation counsel, the plaintiff’s current lawyer of record (Mr. Rosen), in early 2018.

[7] A title search conducted by Mr. Rosen revealed ownership of the 113 Cree Avenue property by Ms. O’Callaghan since 2006, with one mortgage in the amount of $390,000.00 registered in favour of Toronto- Dominion Bank in 2011.

[8] On November 21/18, this action was commenced. The statement of claim was served on Ms. O’Callaghan and defended by her, by way of a statement of defence delivered in December of 2018. Ms. O’Callaghan retained counsel in May/19, before the examinations for discovery herein and, on May 14/19, delivered an amended statement of defence.

[9] In September of 2019, the plaintiff’s litigation guardian learned that Ms. O’Callaghan’s home had been listed for sale. A fresh title search was then conducted by Mr. Rosen. Two changes from the early 2018 title search were noted by him. The changes were: 1. Ms. O’Callaghan conveyed 113 Cree Avenue to her son, ostensibly for no consideration (see p. 38 of the plaintiff’s motion record), and 2. a new $300,000.00 mortgage in favour of Toronto-Dominion Bank was granted by Ms. O’Callaghan and her son. This was done in early-July 2018, with Ms. O’Callaghan’s litigation lawyer herein acting on the transfer.

[10] The plaintiff posits that this 2018 transfer was done in the face of a demand letter from Mr. Preisman and amounts to a fraudulent conveyance, with some of the money received from the plaintiff being used to pay down the Toronto-Dominion Bank mortgage.

[11] For this reason, the plaintiff seeks leave to issue a certificate of pending litigation on the property that she alleges was conveyed, fraudulently, by Ms. O’Callaghan to her son.

[12] A certificate of pending litigation may be issued in an action if the title to or interest in land is brought in question. “A certificate of pending litigation may issue in an action to set aside a fraudulent conveyance even if the plaintiff has no interest in the land and is not yet a judgment creditor. The standard to be met by the plaintiff in order to obtain a certificate of pending litigation in an action to set aside a fraudulent conveyance is a prima facie case of fraud” (Financialinx Corporation v. K & D Auto Ventures Inc. et al., 2009 CanLII 55320 (ON SC), at para. 28).

[13] “…[P]roof of one or several badges of fraud…raise[s] a prima facie case…” (see: Xerox Canada v. Sterling, 2006 CanLII 60993 (ON SC), at para.17). The badges of fraud here include: the impugned transaction was non-arm’s length (Ms. O’Callaghan’s transfer was a transfer to her son); the consideration for the transfer was nominal (none was noted on the transfer documents and the evidence of Ms. O’Callaghan as to her financial circumstances, as set out in paragraph 6 of her November 12/19 affidavit, is bald and unsubstantiated[^1]); Ms. O’Callaghan continues to own and live at 113 Cree Avenue; the transfer to Ms. O’Callaghan’s son was made after Mr. Preisman’s letter was sent (which letter, I acknowledge, Ms. O’Callaghan denies having received) and with no explanation as to the coincident timing of the refinancing and transfer of the property; and the transfer is capable of defeating the plaintiff’s claim.

[14] That said, even if I were to apply the more stringent test set out in Grefford v. Sterling, 2004 CanLII 8709 (ON SC), I would say that a certificate of pending litigation could here issue. In addition to the badges of fraud referenced above, there is also a “high probability” (though, certainly, not a certainty) that the plaintiff will recover judgment on some or all of her claim; and, in my view, the balance of convenience favours the plaintiff.

[15] The damages claimed herein are in respect of alleged demand loans made by an elderly and ailing plaintiff to her younger neighbour. The law presumes a transfer of money between adults to be a loan, not a gift. The resulting trust doctrine puts the burden of proof on Ms. O’Callaghan to establish that the plaintiff’s monetary advances were gifts and not loans.

[16] There are no written agreements documenting the parties’ dealings. Though I acknowledge that Ms. O’Callaghan has produced a letter in which the plaintiff wrote that “anything [she has] given…are gifts with [her] thanks”, the letter is dated 2015 (long before the $40,000.00 that was the subject matter of Mr. Preisman’s demand letter was advanced). Indeed, the plaintiff herself does not dispute having given Ms. O’Callaghan gifts in the nature of a small oven and jewellery. She does dispute that Ms. O’Callaghan assisted her with tasks of daily living--to the extent that she says she did and in a manner that merited large cash gifts.

[17] As for the balance of convenience, I do not know that “[t]he estimated net proceeds of sale far exceed the amount of the plaintiff’s claim”, as Ms. O’Callaghan deposes. Ms. O’Callaghan has proffered no independently verifiable evidence as to what proceeds could be available to the plaintiff in the event of a judgment.

[18] With the transfer and refinancing of 113 Cree Avenue bearing several badges of fraud and with a certificate of pending litigation not being a bar to a sale (i.e. security can be posted, and the certificate discharged), the balance of convenience favours the plaintiff.

[19] Ms. O’Callaghan and the plaintiff filed costs outlines with me. If they wish to have me decide the issue of costs, I am to be so advised--by December 31/19. At the same time, I am to be told whether counsel wish to supplement their costs outlines with brief written or oral submissions.

December 1/19 __________________________

[^1]: Then too, and in any event, there are no particulars as to her son’s financial circumstances.