Court File and Parties

COURT FILE NO.: CV-1800605661 DATE: 20200309 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N :

STUDIO PYRAMID INC. AND MILOSH PAVLOVICZ Plaintiffs – and – CHRISTINE RAFFAN AND WILLIAM MOLSON Defendants

Counsel: Arnie Herschorn, for the Plaintiffs (Responding Parties) Jessica DiFederico, for the Defendants (Moving Parties)

HEARD: January 17, 2020

FAVREAU J. :

Overview

[1] The plaintiffs sue the defendants Christine Raffan and William Molson for fraudulent conveyance, alleging that Ms. Raffan transferred her interest in a property to Mr. Molson for the purpose of avoiding judgment in another action.

[2] The defendants seek summary judgment, arguing that a trial is not required to decide the issues in this action. The defendants claim that they were in a common law relationship and that Ms. Raffan transferred the property to Mr. Molson as part of a settlement of their family law issues.

[3] For the reasons set out below, the motion for summary judgment is dismissed. There are discrepancies between some of the documents and the defendants' evidence. This action depends predominantly on issues of credibility. This is not an appropriate case for summary judgment.

Background

[4] The plaintiff Studio Pyramid Inc. ("Studio") is an architectural and interior design firm. The plaintiff Milosh Pavlovicz is an architect and Studio's principal.

[5] Ms. Raffan and Mr. Molson are both accountants.

[6] In 2012, Studio, Mr. Pavlovicz and a third plaintiff commenced an action against Ms. Raffan for fraud, negligence, fraudulent misrepresentation and intentional interference with economic relations (the "fraud action"). In the fraud action, the plaintiffs allege that Ms. Raffan altered, forged and manipulated the records of a company closely affiliated with Studio, causing economic damages to Studio and Mr. Pavlovicz. The fraud action is ongoing. Discoveries have been completed, and, at the hearing of this motion, counsel advised that the trial is scheduled for 2021.

[7] The plaintiffs commenced this action for fraudulent conveyance in 2018. In their claim, the plaintiffs state that Ms. Raffan and Mr. Wilson are common law spouses and that, in 2011, they bought a property at 2333 Queen Street East, Toronto (the "Property"), for $686,000 as joint tenants. The claim alleges that on September 28, 2016, which is the date on which Ms. Raffan was examined for discovery in the fraud action, Ms. Raffan transferred her interest in the Property to Mr. Molson for $2 as an "inter-spousal transfer for natural love and affection". The plaintiffs allege that this was a fraudulent conveyance made to avoid payment of a judgment in the fraud action, and they seek a declaration that the transfer is void.

[8] In their statement of defence, the defendants state that they were common law spouses until 2016, when they separated. They claim that, at that time, Ms. Raffan paid Mr. Molson a sum of money in exchange for which he received her interest in the Property. They claim that the transfer was made after the defendants received a valuation of the Property. The defendants deny that Ms. Raffan made the transfer for the purpose of avoiding payment of a judgment in the fraud action.

Evidence on the motion for summary judgment

[9] The evidence on the motion consists of affidavits sworn by Mr. Pavlovicz and Ms. Raffan, the cross-examinations of Mr. Pavlovicz and Ms. Raffan on their affidavits, and the examination of Mr. Molson as a witness on a motion pursuant to Rule 39.03 of the Rules of Civil Procedure.

[10] After the cross-examinations took place, the plaintiffs also sought to adduce a supplementary affidavit sworn by Mr. Pavlovicz and an affidavit sworn by an expert providing a valuation of the Property for 2016. However, as addressed below, I did not allow the additional evidence.

[11] In her affidavit, Ms. Raffan provides the following explanation for the 2016 transfer of the Property:

a. Ms. Raffan and Mr. Molson were in a romantic relationship starting in 1999. b. While they were together, they purchased the Property as joint tenants in May 2011. At the time, they had a mortgage on the Property of $445,250. c. In February 2012, they increased the mortgage to $516,750. Ms. Raffan took $66,087.75 of that amount. d. The defendants' romantic relationship broke down in April 2012. e. In 2016, they decided to seek legal advice in order to finalize their separation. f. In 2016, they decided to sever their joint tenancy because Ms. Raffan understood that her interest in the Property would automatically go to Mr. Molson if she died. g. On August 16, 2016, they entered into a separation agreement, that is attached as an exhibit to Ms. Raffan's affidavit. h. The affidavit provides the following explanation for the transfer of the Property as reflected in the separation agreement:

Under the Separation Agreement, Mr. Molson and I agreed that the value of the property was approximately $850,000. There was an existing mortgage on the Property in the amount of $469,515. I agreed to transfer my interest in the Property to Mr. Molson in exchange for payment in the amount of $138,000. Mr. Molson took over all obligations under the mortgage for the Property and also assumed responsibility under the Income Tax Act for any income tax which would have been payable by me for capital gains in respect of the Property from the date of acquisition to the date of transfer…

[12] Ms. Raffan goes on to say that the Property was transferred to Mr. Molson to settle their affairs and not to avoid a judgment in the fraud action. She also says that an insurance policy would satisfy most of the claims in the fraud action and that, in any event, she has other assets to satisfy the judgment.

[13] In his affidavit, Mr. Pavlovicz states that, following a failed mediation in the fraud action in 2018, he conducted a search of Ms. Raffan's assets. It was in the context of that search that he found the following information from transfer documents related to the Property:

a. A transfer registered on the Property showed that Ms. Raffan and Mr. Molson bought the Property as joint tenants on August 31, 2011 for $685,000; b. An instrument dated January 13, 2016 showed that Ms. Raffan and Mr. Molson changed the ownership of the Property from a joint tenancy to a tenancy in common; and c. A transfer dated September 28, 2016, showed that Ms. Raffan transferred her interest in the Property to Mr. Molson for $2. The transfer instrument describes the consideration as being an "inter-spousal transfer for natural love and affection".

[14] In his affidavit, Mr. Pavlovicz also says that September 28, 2016 was the date on which Ms. Raffan was examined for discovery in the fraud action.

[15] In addition, he says that he found three other properties owned by Ms. Raffan, but suggests that based on the mortgages for each property, they likely have little equity.

[16] When they were examined, Ms. Raffan and Mr. Pavlovicz were both asked about the discrepancies between the September 28, 2016 transfer instrument and the separation agreement. Ms. Raffan's evidence was that the transfer instrument was prepared by her lawyer, and that she was not aware of the contents of the document but that she believes Mr. Molson was aware of its contents. She testified that, while the transfer says that she and Mr. Molson were in a common law relationship, they had in fact separated four years earlier. She also testified that it was her lawyer's decision to show the consideration as $2, when it was in fact $138,000.

[17] Mr. Molson testified that he did not recall seeing the transfer instrument until this litigation, and that he did not remember any discussions about the $2.00 amount in the document. He said that he believed that the discrepancy between the $2.00 in the deed and the $138,000 provided for in the separation agreement is consistent with special rules related to the land transfer tax in the context of separation agreements, but he did not know what those rules are. He also claimed that the transfer for "natural love and affection" was consistent with his relationship with Ms. Raffan, because "[s]pouse includes former spouse".

[18] During her cross-examination, Ms. Raffan stated that the parties arrived at $850,000 as the value of the Property in 2016 based on a 2012 valuation and their observations of sales of similar properties in the area. Ms. Raffan also explained that the amount she received for her share of the Property was based on her initial contribution to the purchase of the Property. She said that she did not seek any additional amount to reflect the increase in the value of the Property because Mr. Molson had paid for all household expenses while they lived together. She stated that this rationale was not reduced to writing, but was based on a conversation she had with Mr. Molson.

[19] Mr. Molson's explanation for the $850,000 was different from Ms. Raffan's. He stated that the parties had obtained an appraisal around 2012, after doing some renovation on the Property, at which time it was valued for an amount in excess of $700,000. They then added 15 to 20% to that amount to reflect the increase in value due to the passage of time.

Ruling on the plaintiffs' motion to adduce additional evidence

[20] The motion for summary judgment was originally scheduled before me on December 6, 2019. At that time, the plaintiffs requested an adjournment for the purpose of bringing a motion to file additional evidence. The motion was scheduled to be heard before a Master. I granted the adjournment, but directed that I would hear the motion to adduce fresh evidence and, if possible, the motion for summary judgment together on January 17, 2020.

[21] At the beginning of the hearing on January 17, 2020, I heard arguments from the parties on the motion for additional evidence. After hearing arguments, I dismissed the motion for reasons to follow, after which counsel for the parties proceeded to argue the motion for summary judgment.

[22] The balance of this section addresses my reasons for dismissing the plaintiffs' motion to adduce additional evidence.

[23] The additional evidence the plaintiffs sought to adduce consists of the following two affidavits:

a. A supplementary affidavit sworn by Mr. Pavlovicz, in which he comments on Ms. Raffan’s cross-examination and Mr. Molson’s examination, and attaches a number of exhibits that he claims discredit their evidence. b. An affidavit sworn by Alex Lazic, who provides an opinion on the value of the Property between June 2016 and October 2016.

[24] The plaintiffs served these affidavits on the defendants several months after the completion of cross-examinations and two weeks before the motion was originally scheduled to proceed.

[25] Rule 39.02(2) of the Rules of Civil Procedure provides that leave is required before a party can file additional evidence on a motion following cross-examinations:

A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03.

[26] The parties agree that the following test applies to Rule 39.02(2):

a. Is the evidence relevant? b. Does the evidence respond to a matter raised on the cross-examination, not necessarily for the first time? c. Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment? d. Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?

See: First Capital Realty Inc. v. Centrecorp Management Services Ltd., [2009] O.J. No. 4492 (Div. Ct.), at para. 13.

[27] In First Capital Realty, at para. 14, the Divisional Court also stated that a “flexible, contextual approach is to be taken in assessing the criteria relevant to Rule 39.02(2), having regard to the overriding principle outlined in Rule 1.04 of the Rules of Civil Procedure that the rules are to be interpreted liberally to ensure a just, timely resolution of the dispute”.

[28] Applying the principles above to the two affidavits put forward by the plaintiffs, I found that neither of the affidavits should be admitted for the following reasons.

Supplementary affidavit of Mr. Pavlovicz

[29] As indicated above, Mr. Pavlovicz’s supplementary affidavits consists primarily of argument in response to the defendants’ examinations. Large portions of the affidavit point out inconsistencies in their evidence. This is not admissible evidence. As held in Lockridge v. Ontario (Director, Ministry of the Environment), 2012 ONSC 2316 (Div. Ct.), at para. 123, “[i]t is inappropriate for a witness to provide evidence, whether opinion or otherwise, that constitutes argument in support of that party's position on the issues that are to be decided by the court.”

[30] The only evidence that does not consist of argument in Mr. Pavlovicz’s supplementary affidavit are various instrument registered on properties owned by Ms. Raffan and Mr. Molson at various times. Mr. Pavlovicz incudes these exhibits in his affidavit to show that the defendants have been inconsistent in describing themselves as spouses. Some of these documents pre-date 2012, and would therefore not be relevant to the issue of whether Ms. Raffan and Mr. Molson separated in 2012.

[31] In any event, I am not satisfied that Mr. Pavlovicz has provided a satisfactory explanation for seeking to adduce this evidence after cross-examinations. The issue of when the defendants stopped being spouses arose from the affidavit filed by Ms. Raffan. Mr. Pavlovicz attached at least one of these documents to his original affidavit. Finally, while Mr. Pavlovicz swore an affidavit in support of the motion to adduce further evidence, his affidavit does not address the delay in serving his own supplementary affidavit.

[32] Accordingly, I did not admit Mr. Pavlovicz’s supplementary affidavit because it consists almost entirely of inadmissible evidence and, in any event, the plaintiffs have not explained why the evidence was not included in Mr. Pavlovicz’s original affidavit.

Affidavit of Alex Lazic

[33] Mr. Lazic’s affidavit attaches a report that provides an opinion regarding the value of the Property in 2016.

[34] There is no dispute that the actual value of the Property in 2016 is relevant to the issues on the motion. However, I am not satisfied that the plaintiffs have provided an adequate explanation for delivering Mr. Lazic’s affidavit after the cross-examinations.

[35] In his affidavit in support of the motion to adduce further evidence, Mr. Pavlovicz states that he obtained the report from Mr. Lazic after Ms. Raffan’s cross-examination because he only became aware that the defendants took the position that the Property was transferred for more than $2 when Ms. Raffan was cross-examined. He describes what he claims to have discovered as follows:

On April 10, 2019, Christine Raffan was cross-examined on the affidavit that she delivered in support of her motion for summary judgment.
At that point, I became aware that Christine Raffan and William Molson were relying on an actual consideration for the conveyance that was not set out in the affidavit of the consideration.
The consideration they relied on is in the amount of $138,000 as set out in a separation agreement dated August 16, 2016.

[36] The problem with this explanation is that Ms. Raffan’s affidavit sets out all of these facts, and this information was therefore available to Mr. Pavlovicz prior to cross-examinations. The separation agreement was attached as an exhibit to Ms. Raffan’s affidavit. In addition, as reviewed above, the text of Ms. Raffan’s affidavit specifically referred to the $138,000 she claims Mr. Molson paid her for her share of the Property.

[37] During argument, the plaintiffs’ lawyer argued that Mr. Lazic’s affidavit should be admitted because it is relevant expert evidence. In making this argument, he relied on the decisions in Hunter v. Ellenberger, [1988] O.J. No. 49 (Sup. Ct.), at paras. 6-7; and Shaw-Vanderholst, 2016 ONSC 6895 (Sup. Ct.), at paras. 31-33, to suggest that courts routinely allow the late admission of expert evidence prior to trial. One problem with this argument is that Rule 53.03 of the Rules of Civil Procedure governs the timing for the service of expert reports in the context of a trial, and specifically gives the Court the power to extend the timelines in appropriate circumstances. This motion is governed by Rule 39.02(2), which, in accordance with the test developed under this rule, requires a reasonable or adequate explanation for the delivery of additional affidavit evidence after cross-examinations.

[38] Here, I am not satisfied that the plaintiffs have provided an adequate explanation for not including an expert report on the value of the Property in their original responding materials, and, on that basis, I did not admit the report for the purpose of the motion.

Test on a motion for summary judgment

[39] Under subrule 20.04(2) of the Rules of Civil Procedure, summary judgment is to be granted if the Court is satisfied that there is no genuine issue requiring a trial.

[40] As set out in Hryniak v. Mauldin, 2014 SCC 7, at para. 49, there will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits using the summary judgment process. This is the case when the process: "(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result."

[41] On a motion for summary judgment, the judge should first determine if there is a genuine issue requiring a trial based on the evidence before him or her without using the fact-finding powers in subrule 20.04(2.1). If there appears to be a genuine issue requiring a trial, Rule 20.04(2.1) permits the motion judge, at his or her discretion, to: (1) weigh the evidence, (2) evaluate the credibility of a deponent, or (3) draw any reasonable inference from the evidence unless it is in the "interest of justice" for these powers to be exercised only at trial: Hryniak, at para. 66. The motion judge is also permitted to use the expanded powers under Rule 20.04(2.2) to direct a procedure such as a mini-trial, rather than a full trial.

[42] The responding party cannot rely on the prospect that additional evidence may be tendered at trial; the respondent must put its best foot forward in response to a motion for summary judgment: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 (Ont. S.C.J.), at para. 26, aff'd 2014 ONCA 878 (Ont. C.A.), leave to appeal to SCC refused, [2015] S.C.C.A. No. 97 (S.C.C.).

[43] In Mason v. Peras Mongenais, 2018 ONCA 978, at para. 44, the Court of Appeal emphasized that "summary judgment is only appropriate where it leads to a fair process and just adjudication'", and that adjudication by trial, rather than summary judgment, is not to be viewed as exceptional.

Analysis

[44] The issue on this motion is whether the plaintiffs' claim for fraudulent conveyance can be decided on a motion for summary judgement.

[45] The relevant sections of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, provide as follows:

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.
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.

[46] In this case, the defendants argue that the plaintiffs have not established the fraudulent intent required by section 2 of the Act, and that, in any event, section 3 is a complete answer to the claim. The defendants argue that these determinations can be made without a trial based on the record before me.

[47] I disagree.

[48] There is incomplete evidence and conflicting evidence on a number of key issues. The determination of these issues is dependent on findings of credibility. Notably, most of the cases the defendants rely on were decided with a trial or a summary trial: Feher v. Healey, [2006] O.J. No. 3450 (Sup. Ct.), aff'd 2008 ONCA 191; Indcondo Building Corporation v. Sloan, 2014 ONSC 4018 (Sup. Ct.), aff'd 2015 ONCA 752; and Devry Smith Frank LLP v. Chopra, 2018 ONSC 1303 (Sup. Ct.).

[49] Here, the need for a trial is evident from a review of the evidence available relevant to the determination of both sections 2 and 3 of the Fraudulent Conveyance Act.

Fraudulent intent

[50] In Devry Smith Frank LLP, Perell J. described two types of fraudulent conveyance cases, and then went on to describe how the transferor's intent is to be determined:

44 There are two types of fraudulent conveyances cases. First, there are the cases where the conveyance is for no consideration or for only nominal consideration. Second, there are the cases where there is good consideration for the conveyance. The case at bar is of the first type of fraudulent conveyance case.

45 In a fraudulent conveyance case, if the conveyance had been made for no consideration or only for nominal consideration, only the intent of the debtor in making the conveyance is relevant to the outcome of the case. The common element of both types of classes of case is that, for success, the plaintiff must prove that the debtor had the mental state of conveying his or her property with the intent to defeat, hinder, delay, or defraud creditors of their lawful claims. Proving the fraudulent intent of the debtor is a question of fact for every case. The requisite fraudulent intent is to be assessed at the time of the impugned transactions.

46 In determining whether a conveyance was made with the intent to defeat, hinder, delay or defraud creditors, the plaintiff will rely upon and the court may consider indicia of fraudulent intention, the so-called "badges of fraud" that are circumstantial evidence that support an inference that the conveyance was fraudulent. Although the burden of proof remains on the plaintiff who alleges a fraudulent conveyance, where he or she proves the existence of one or more of the traditional badges of fraud to raise an inference of the intent to defeat, hinder, delay or defraud creditors or others, then there is an evidentiary burden on the defendants to adduce evidence showing an absence of fraudulent intent. One of the more significant badges of fraud is a conveyance by a debtor to a close friend or family member.

[51] In Indcondo Building Corporation, Penny J. reviewed the badges of fraud:

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

(d) the donor continued in possession and continued to use the property as his own; (e) the transaction was secret; (f) the transfer was made in the face of threatened legal proceedings; (g) the transfer documents contained false statements as to consideration; (h) the consideration is grossly inadequate; (i) there is unusual haste in making the transfer; (j) some benefit is retained under the settlement by the settlor; (k) embarking on a hazardous venture; and (l) a close relationship exists between parties to the conveyance.

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

[52] In this case, while the transfer of the Property from Ms. Raffan to Mr. Molson does not have all the badges of fraud, it certainly raises several of them:

a. The defendants were in a close relationship. b. Ms. Raffan faced a potential judgment in the fraud action. c. The transfer document contained false statements. The transfer document stated that Ms. Raffan and Mr. Molson were spouses when their evidence on the motion is that they had separated four years earlier. In addition, the transfer document says that the Property was transferred for $2 when the separation agreement states that it was transferred for $138,000. d. $2.00 is a nominal amount. Even if Ms. Raffan paid $138,000, as set out in the separation agreement, this amount is less than 50% of the agreed upon value of the Property after the mortgage is deducted.

[53] The defendants argue that, even if the plaintiffs have established a prima facie case of fraudulent intent, their evidence rebuts that presumption.

[54] I cannot agree. It is not possible for me to find that the defendants have rebutted the presumption of fraudulent intent on the record before me. There is conflicting evidence on key issues that cannot be resolved without the benefit of further evidence and the opportunity to hear the viva voce evidence of Ms. Raffan and Mr. Molson. Set out below are five non-exhaustive examples of deficiencies in the evidence.

[55] First, the explanations for the discrepancies between the transfer documents and the separation agreement are unsatisfactory. The transfer document states that the consideration was $2 and that it was an "inter-spousal transfer for natural love and affection". The separation agreement provides that Mr. Molson was to pay Ms. Raffan $138,000 for her share of the Property. As reviewed above, the defendants’ explanations for this discrepancy are different.

[56] Second, the defendants provided different explanations for how they arrived at $850,000 as the value of the Property in 2016. Ms. Raffan stated that it was based on a review of the sale of similar properties in the area. Mr. Molson said that it was based on a 2012 valuation, to which they added 15% to 20% to account for renovations and an increase in the value of properties.

[57] Third, there is insufficient evidence of how the defendants arrived at the $138,000 amount. Both defendants agree that this amount is less than half of the value of the Property after the outstanding mortgage is deducted. As reviewed above, Ms. Raffan claims that $138,000 represents the amount she originally contributed to purchase the property and that she and Mr. Molson agreed verbally when they separated that she would not be compensated for the increase in the value of the property because Mr. Molson paid for all the household expenses while they were together. There is no evidence from Mr. Molson on this point.

[58] Fourth, the timing of the transfer coincides with the date of Ms. Raffan’s examination for discovery. Ms. Raffan stated that this was a coincidence, but given her evidence that she and Mr. Molson separated in 2012, this is a significant coincidence that requires further explanation.

[59] Finally, Ms. Raffan's contention that she has insurance and other assets requires further examination. As pointed out by the plaintiffs, the insurance would not cover intentional torts such as fraud. Therefore, if Ms. Raffan is found liable for fraud in the fraud action, she would be personally liable for the whole amount of the claim. In addition, Ms. Raffan has put forward no evidence, other than a bald statement, that she has enough equity in her other properties to satisfy a judgment in the fraud action.

[60] I cannot find, based on the record on the motion, that the defendants have rebutted the presumption that the transfer of the Property was fraudulent.

Good consideration and good faith on the part of the recipient

[61] As indicated above, the defendants argue that, even if Ms. Raffan had a fraudulent intent when she transferred the Property to Mr. Molson, in accordance with section 3 of the Fraudulent Conveyances Act, there was good consideration and there is no evidence that Mr. Molson was aware of the intent or that he acted in bad faith. I am not satisfied that the record allows me to make this determination.

[62] On the issue of consideration, even if Mr. Molson paid Mr. Raffan $138,000 for her share of the Property, there is no dispute that this amount is less than half of the value of the property after the outstanding mortgage is deducted. While Ms. Raffan has provided an explanation for this discrepancy, as reviewed above, it is based on a verbal agreement for which there is no additional supporting evidence. In any event, both defendants provided different explanations for how they arrived at $850,000 as the value of the Property, neither of which was based on a current valuation. Therefore, the property may have been worth more than $850,000 at the time of the separation agreement. Under the circumstances, the record does not allow for a determination of whether there was “good consideration”.

[63] In addition, Mr. Molson’s evidence about his knowledge of the fraud action is equivocal. He was aware of the fraud action when it was initiated. His evidence on whether he continued to be aware of the fraud action at the time of transfer is that he “thought it had just died a natural death some years ago”. Given all of the other discrepancies in the defendants’ evidence, I have sufficient concerns about their credibility not to take Mr. Molson’s statements at face value.

Conclusion

[64] Accordingly, I am not confident that I can make the necessary factual determinations to grant summary judgment and dismiss the claim based on the record before me. Despite the powers conferred by sub-Rule 20.04(2.1) and (2.2), I cannot make the necessary findings of credibility on this record and I am not satisfied that a mini-trial would allow me to do so. Credibility is at the core of the defendants’ defence in this case. I do not expect that a trial would be lengthy, but a full trial is nevertheless required to resolve the issues between the parties.

[65] At the conclusion of the argument on the motion, there was a brief discussion about whether, if I dismissed the motion, this trial should proceed immediately after the trial of the fraud action. I will not make an order to this effect without giving the parties an opportunity to further consider the matter. However, if I can be of assistance through a case conference in dealing with this issue or in giving directions in accordance with Rule 25.05 of the Rules of Civil Procedure in relation to the conduct of the trial, the parties can contact my assistant to schedule a case conference. Otherwise, the parties can bring a motion in the ordinary course for both actions to proceed one after the other.

[66] For the reasons above, the defendants' motion for summary judgment is dismissed.

[67] Following the argument of the motion, the parties' counsel advised that they had resolved the issue of costs and that they did not require an opportunity to make submissions on the issue. Accordingly, I make no order in relation to the costs of the motion.

FAVREAU J.

RELEASED: March 9, 2020