COURT FILE NO.: CV-13-3413-00SR

DATE: 2021-08-25

CORRECTED: 2021-09-01

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BANK OF MONTREAL, Plaintiff

AND:

ROUFAT ISKENDEROV and ELENA LAZAREVA, Defendant

BEFORE: Kurz J.

COUNSEL: Joshua Siegel and Allyson Fox, for the Plaintiff

Patrick Bakos, for the Defendants

HEARD: July 29, 2021

CORRECTED ENDORSEMENT

The text of the original endorsement was corrected on September 1, 2021 as follows:

In the style of cause, counsel’s name is changed to “Joshua”. Paragraph 1 – In the last sentence, the word “action” was changed to “motion”. Paragraph 24 – In the first sentence, the words “BMO is” are deleted. Paragraph 70 – In the first sentence, the word “Plaintiff” is replaced with “Defendants’”. Paragraph 72 – In the second sentence the word “delay” is inserted.

Introduction

[1] The Defendants, Roufat Iskenderov (“Roufat”) and Elena Lazareva (“Elena”), move for summary judgment, seeking to dismiss this action as limitation barred. In the alternative, they seek to have the certificate of pending litigation issued against the property described below dismissed for delay. The Plaintiff (“BMO”) brings its own motion, seeking an order extending the time for it to place this action down for trial. For the reasons that follow, I dismiss the defendants’ motion and grant BMO’s motion.

Background

[2] Roufat and Elena are former spouses. They jointly held title to their former matrimonial home, located at 220 King High Drive, Thornhill, Ontario (“the home”). On March 7, 2008, Roufat transferred his interest in the home to Elena. The consideration for the transaction was listed in the land transfer tax affidavit as $2.00. The transaction and its consideration were further described in that document as a “[t]ransfer from husband and wife to wife for natural love and affection".

[3] The Defendants claim that Roufat’s interest in the home was transferred to Elena under the terms of the separation agreement that they say they signed on January 10, 2008 (“the separation agreement”), drafted by Roufat’s lawyer, Susan Ambrose.

[4] The separation agreement called for Roufat to transfer his interest in each of the home, a condominium unit and a business to Elena. Despite the fact that the separation agreement stated that Roufat had nil income, it described the transfer of his property to Elena as “lump sum child support” and a “special provision that benefits the children.” But it also says that “Elena can support the children without contribution from ROUFAT [sic].”

[5] On April 28, 2008, Roufat defaulted on payment of a $400,000 BMO line of credit (“the line of credit”). BMO takes the position that the line of credit was obtained through fraud. It asserts that Roufat intentionally lied about his true income while applying for the line of credit. BMO says that it would not have granted him the line of credit had he not lied about his income. On January 14, 2009, BMO obtained a judgment against Roufat for $483,449.89. Just over two months later, on March 24, 2009, Roufat assigned himself into bankruptcy. He was discharged from that bankruptcy on November 21, 2012.

[6] Roufat’s Notice of Bankruptcy disclosed that he had transferred his interest in the home to Elena on March 7, 2008, pursuant to the terms of the separation agreement. BMO did not accept the propriety of the home’s transfer. BMO’s counsel examined Roufat on July 17, 2009 under s.163(2) of the Bankruptcy and Insolvency Act (“BIA”). At his examination, Roufat undertook to provide copies of his 2004-2008 income tax returns to BMO. He would not fulfil that undertaking for over three years.

[7] On November 22, 2012, Campbell J. ordered that Roufat be discharged from bankruptcy on the condition that he pay the highly discounted sum of $15,000 to his bankruptcy trustee. He was ordered to do so within five years, at the minimum rate of $250 per month. Campbell J. also lifted the stay of proceedings to allow BMO to proceed with its claim against Roufat under s. 178 of the BIA.

[8] BMO states without contradiction that Roufat only answered his July 17, 2009 undertakings the night before the discharge hearing.

[9] BMO commenced this action when it issued its statement of claim on June 18, 2013. However, BMO failed to obtain an order under s.38 of the BIA, assigning the Trustee’s claim and interest to it before it commenced this proceeding. On February 17, 2015 Master Weibe granted BMO a s. 38 order. On February 1, 2017 Miller, J. clarified that Master Wiebe’s s.38 order was retrospective.

[10] On March 11, 2015, O’Connor J. granted BMO a certificate of pending litigation (“CPL”) against the home following a contested motion.

[11] This action moved sluggishly along, with what appears to be delay by both parties until this motion was originally scheduled to be heard in 2019. In its factum for this motion, BMO provided a chronology of its dealings with the Defendants since the time that it granted the line of credit to Roufat. That chronology includes the conduct of this action from the time of the issuance of the statement of claim until the examinations for discovery in this action on August 1-2, 2019. The Defendants take no issue with the facts of that chronology and present no alternative.

[12] In light of that factual concession, I attach a copy of the portion of the chronology that commences with the issuance of the statement of claim in this action as Schedule “A” to this endorsement. It sets out 52 events in the 74 months between the commencement of this action and the examinations for discovery. Over that period, there were 11 adjournments; one was requested or the responsibility of BMO, two were requested or the responsibility of the Defendants and the rest were on consent.

Summary of Arguments

[13] In arguing for the dismissal of this action as statute barred, the Defendants say that BMO commenced this action more than two years after the limitation period set out in s. 4 of the Limitations Act, 2002, SO 2002, c 24 (“the LA”). It adds that BMO’s claim against them became discoverable under s. 5(2) of the LA during its July 17, 2009 s.163(2) examination of Roufat. By that point, BMO was not only aware of the transfer of the home for nominal consideration but that it was purportedly carried out pursuant to the terms of the separation agreement. While BMO did not know for certain that it would succeed in its claim against the Defendants, it did not require that level of knowledge for the limitation clock to begin to run.

[14] The Defendants rely on the Supreme Court of Canada’s recent decision in Grant Thornton LLP v New Brunswick, 2021 SCC 31 (“Grant Thornton”) regarding discoverability. There, Moldaver J. writing for the court, stated that the test for discoverability is met when “the plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn… a plaintiff does not need knowledge of all the constituent elements of a claim to discover that claim” [Emphasis added].

[15] The Defendants stated that BMO had such a plausible inference of liability when it discovered the transfer during the s.163(2) examination of Roufat. Thus, it should have commenced this proceeding within two years of that examination. Instead it commenced this action on June 18, 2013, almost four years after it says that BMO’s claim against them became discoverable.

[16] BMO offers two responses to these arguments. First, it asserts that the LA’s two-year limitation period does not apply to its cause of action against the Defendants. It points out that its claims in this action are solely declaratory and consequential to that declaration. It seeks declarations that its judgment against Roufat of January 14, 2009, for non-payment of the line of credit, will survive his bankruptcy and that Roufat’s transfer of his interest in the home to Elena is a fraudulent conveyance. It thus seeks to have the transaction set aside under the under the Fraudulent Conveyances Act (“FCA”) and for a CPL against the home. BMO does not sue for any consequent financial relief. As set out above, it already has a judgment against Roufat that it can execute upon, if and when the court sets aside the transfer. For that reason, BMO asserts that the applicable limitation period is the ten years as set out in s. 5 of the Real Property Limitations Act RSO 1990, c L.15 (“RPLA”).

[17] Second, BMO argues that its claim against the Defendants did not become discoverable until Roufat had finally honoured his undertakings on November 21, 2012. Whether the applicable limitation period is two or ten years, BMO says that it issued its statement of claim on June 18, 2013, less than seven months after it discovered its claim. Before Roufat honoured his undertakings, BMO argues that its claim was not discoverable. That is because it had to conduct its due diligence regarding the claim that the home was properly transferred in accord with the separation agreement. Also citing Grant Thornton, BMO says that it was not required to rely on mere speculation and that it was entitled to conduct its due diligence regarding Roufat and Elena’s allegations regarding the transfer being a proper one under the separation agreement before its claim became discoverable.

[18] The issues regarding both the lifting of the CPL and dismissal for delay are also centred in the issue of delay: i.e. why it has taken so long to get to this point in the litigation. The Defendants place most of the delay in this action on the shoulders of BMO, arguing that they presumptively suffered non-compensable prejudice due to BMO’s alleged delay. With regard to the CPL, they point out that in the approximately two years between the issuance of the statement of claim and the granting of O’Connor J.’s CPL order, BMO registered cautions against the home about every 60 days. They argue that taken collectively, these pre-CPL cautions effectively acted as the equivalent of a CPL, tying up the home without a court order. Thus, the home has been tied up, without resolution for over six years.

[19] BMO responds that it consistently attempted to move this action forward but was met by the Defendants’ pattern of delay and obstruction. That pattern is a prominent cause of the delay in this action. It also points out that O’Connor J.’s order allowed Elena to refinance the home at the time that the CPL was granted.

[20] At the commencement of this motion, the parties agreed that the key period of time for the court’s consideration of delay is the time between the commencement of this action and 2018. By June 2018, the parties had brought their motions, including those presently before me. The resolution of those motions was delayed by both institutional factors (i.e. obtaining sufficient court time to argue all of the issues raised in their motions) and the delays that were endemic to the court’s COVID-19 shut-down. Further, each party acknowledges that I had to sort out the issue of solicitor and client privilege regarding Ms. Ambrose’s records and evidence before I could complete this summary judgment portion of the parties’ motions. That required its own long motion date and decision.

[21] While the privilege issue was resolved with my decision of June 7, 2019, 2019 ONSC 3567, because of the factors described above, the balance of this motion could not be heard until July 29, 2021. While BMO attempted to rely on an affidavit, sworn after the cross examinations of the parties, it had not requested leave to do so and offered no compelling reason to admit it. For those reasons, I declined to consider that affidavit.

Issues

[22] These motions raise the following issues:

1. What is the applicable limitation period for BMO’s claim against the Defendants?

2. Is there a genuine issue for trial regarding whether BMO commenced this action after the expiry of the applicable limitation period?

3. Should the CPL be discharged for delay?

4. Should this action be dismissed for delay?

[23] For the reasons that follow, I find that:

• the applicable limitation period is the ten-year period under the RPLA,

• this action was commenced within that limitation period, and that

• there was delay by both parties, with the Defendants’ delay being at least equal to that of BMO.

[24] Accordingly, the Defendants’ claim to summary judgment based upon their limitation defence on is dismissed. Further, the CPL should not be discharged and this action should not be dismissed for delay. Rather, this action shall be set down for trial within 30 days of the release of this decision.

Law Regarding Summary Judgment

[25] A portion of this motion is brought under r. 20.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The terms of r. 20.04 are mandatory: the court shall grant summary judgment if it is satisfied that there is no genuine issue for trial with respect to a claim or defence (see also Hryniak v. Mauldin, 2014 SCC 7 (“Hryniak”), at para. 68, and Mega International Commercial Bank (Canada) v. Yung, 2018 ONCA 429 (“Mega International”), at para. 83).

[26] The principles under which the court makes the determination of a genuine issue for trial are set out by the Supreme Court of Canada in Hryniak, at paras. 44-45, 49-50 and 66.

[27] There will be no genuine issue requiring a trial if the summary judgment process allows the court to reach a fair and just determination on the merits on a motion for summary judgment. That will be the case when the process (1) provides the court with the evidence required to fairly and justly adjudicate the dispute by making the necessary findings of fact, (2) allows the judge to apply the law to those facts, and (3) is a proportionate, more expeditious, and less expensive means to achieve a just result: Hryniak, at paras. 49, 66.

[28] The Hryniak approach requires a “broad assessment of the entire record to determine whether summary judgment [is] appropriate or whether a trial would be required”: Pichelli v. Kegalj, 2021 ONCA 445, at para. 12. Despite this “robust approach to summary judgment, the overarching goal remains to have ‘a fair process that results in a just adjudication of disputes’”: Pichelli at para. 23, citing Hryniak at para. 28..

[29] Each party to a motion for summary judgment has an obligation to “...‘put its best foot forward’ with respect to the existence or non-existence of material facts that have to be tried” (Ramdial v. Davis (Litigation Guardian of), 2015 ONCA 726, 341 O.A.C. 78, at para. 27, citing Papaschase Indian Band No. 136 v. Canada (Attorney General), 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 11).

[30] The onus for proving that there is no genuine issue for trial rests with the moving party. However, in response to the evidence of the moving party, the responding party may not rest on mere allegations or denials in the party’s pleadings. That party must set out in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial. A self-serving affidavit is not sufficient itself to create a genuine issue for trial in the absence of detailed facts and supporting evidence: Rules of Civil Procedure, r. 20.01(2); Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, at para. 31.

[31] In the oft-repeated maxim of Osborne J.A., the responding party to a motion for summary judgment must “lead trump or risk losing”: 1061590 Ontario Ltd. v. Ontario Jockey Club, 1995 1686 (ON CA), [1995] O.J. No. 132 (Ont. C.A.), at para. 35. The principle was reaffirmed in Ramdial, at para. 28.

[32] The court is entitled to assume that the record before it is complete, that it contains all of the evidence that a party would present if there were a trial: Broadgrain Commodities Inc. v. Continental Casualty Company (CNA Canada), 2018 ONCA 438, at para. 7, citing Dawson v. Rexcraft Storage & Warehouse Inc., 1998 4831 (Ont. C.A.), at para. 17; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 27, 33-34, aff'd 2014 ONCA 878, leave to appeal to S.C.C. refused, [2015] S.C.C.A. No. 97; and Tim Ludwig Professional Corporation v. BDO Canada LLP, 2017 ONCA 292, at para. 54.

[33] Once the moving party discharges the burden of showing that there is no genuine issue for trial, the onus shifts to the responding party. That party must then provide evidence of specific facts showing that there is a genuine issue requiring a trial: Ramdial, at para. 30. An adverse inference may be drawn from a failure to support the allegations or denials in a party’s pleadings: Pearson v. Poulin, 2016 ONSC 3707, at para. 40.

[34] Under r. 20.04(2.1) the court may exercise enhanced powers on the motion unless it is in the interest of justice to exercise them at trial instead. Those enhanced powers allow the court to weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence. As Paciocco J.A. wrote for the Court of Appeal for Ontario in Mega International, above, those powers “...are presumptively available to a summary judgment motion judge to use to fairly and justly adjudicate a claim at a motion for summary judgment”: at para. 83; see also Hryniak, at para. 45. However, the court is not required to resort to those powers to make up for a party's evidentiary shortcomings: Broadgrain Commodities Inc., at para. 7.

Issue No. 1: What is the applicable limitation period for BMO’s claim against the Defendants?

[35] The key issue for determination regarding the Defendants’ limitation defence is which statute and thus which limitation period applies. The Defendants argue that the applicable statute is the LA, with its two-year limitation period. According to s. 4 of the LA,

Basic limitation period

4 Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

[36] Under the s. 1 definition section of the LA, the term, “claim”, is defined as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”.

[37] Section 2(1) of the LA sets out some exceptions to the applicability of the LA, including “proceedings to which the Real Property Limitations Act applies”.

[38] BMO argues that the applicable limitation provision is found in s. 4 of the RPLA, whose ten-year limitation period is set out below:

Limitation where the subject interested

4 No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[Emphasis added.]

[39] The Defendants concede that if the RPLA applies, this action is not limitation barred. It was commenced well within the ten-year period of any potential date of discoverability of BMO’s claim. The transfer itself occurred on March 7, 2008 and the statement of claim was issued just over five years later, on June 18, 2013.

[40] Thus, the key question to be asked when determining which limitation statute applies to the facts of this case is whether BMO’s claim is for, in the words of RPLA s. 4, “an action to recover any land”. The Defendants’ answer in the negative. They argue that this action does not concern the land on which the home is found. BMO does not request to have title to the home transferred to it. Rather, BMO seeks a transfer of Roufat’s interest in the home back to him so that it can enforce its judgment against him and his interest in the home.

[41] The Defendants reply that BMO’s pursuit of that relief takes this case out of the realm of the RPLA. It says that its claim is, in essence, a claim for monetary damages and a way of enforcing those damages. BMO replies that any action to transfer land, including the reversal of a fraudulent conveyance of land, meets the criterion of the RPLA. That is what it seeks to do here.

[42] As counsel have ably demonstrated, there are contrasting authorities on the issue of the applicable limitation statute. In Toronto Standard Condominium Corp. No. 1703 v. 1 King West Inc., 2009 55330 (ON SC), [2009] O.J. No. 4216 (S.C.J.), Master Glustein, as he then was, considered a motion to amend a statement of claim. The proposed amendment included a claim for a declaration that a certain mortgage was fraudulent. The amendment was opposed for a variety of reasons, including the assertion that it was limitation barred under s. 4 of the LA. One of the arguments that the plaintiffs raised against the limitation defence was the application of the RPLA. Master Glustein found that he had been presented with no authority for the application of the RPLA. He ultimately applied the two-year basic limitation period of s.4 of the LA to find that the action was statute barred. While the decision was unsuccessfully appealed to a single judge of the Divisional Court, the decision of Sachs J. makes no reference to the RPLA (2010 ONSC 2129). The issue does not appear to have been argued before her.

[43] In Conde v. Ripley, 2015 ONSC 3342, Dunphy J. at para. 48, rejected the precedent of the Toronto Standard case. In Conde, the plaintiff sued her ex-spouse for a declaration that he had fraudulently conveyed his interest in real property to his sister to defeat her family law claim. He sought a reversal of that transaction under the FCA. Dunphy J. found that the action before him was not subject to the LA’s two-year limitation period. Rather, he found that such an action was one "to recover any land". Thus, the RPLA is the applicable limitation statute for claims seeking a declaration under the FCA that would reverse a fraudulent transfer of land.

[44] As Dunphy J. wrote:

[48] It is not necessary for me to consider whether an action to set aside a mortgage under the FCA is an action "to recovery any land". This case clearly involves an actual transfer of land. With all due respect to Master -- now Justice -- Glustein, I think that the nature of the underlying claim by which a creditor or other has standing to pursue an action under the FCA is not be confused with the nature of the FCA action itself. The end result may be to enhance the ability of a plaintiff to collect on a judgment, but the actual impact is not a money judgment in favour of the plaintiff. Rather, it is an order that the transaction is void as against the creditor or others similarly situate (including, potentially, a trustee in bankruptcy). This makes the property available for collection proceedings as a matter of practical reality, but in form and substance, it results in the recovery of property from one estate (the transferee) for the benefit of another (creditors and others with claims against the transferor). It is thus in every sense an action to recover property -- that is both its object and the end result of any judgment that might be obtained. As such, it is an FCA action is one to which the RPLA applies on its face in any instance where, as here, the conveyance impugned is a conveyance of real property.

[Emphasis added]

[45] The Defendants respond that in Stravino v. Buttinelli, 2015 ONSC 1768. (“Stravino”), Horkins J., like Master Glustein, found that the LA’s two-year limitation period was applicable. Stravino was a motion by a husband in matrimonial proceedings to amend pleadings to add claims against his wife and two adult children. He alleged that his wife had surreptitiously used the settlement funds from his motor vehicle accident claim as well as family property to purchase three real properties, whose title she placed in her sole name. The wife then transferred her interest in one of those properties (described as the “Wendell property” in Horkins J.’s decision) to herself and the parties’ adult son. She later transferred the remainder of her interest in the Wendel property to that son, while continuing to own the other two properties. The husband’s claim regarding the Wendell property was based on the FCA while his claims regarding the other two properties was based on the principles of constructive trust.

[46] Horkins J. found that the RPLA applies to the constructive trust claim while the LA applies to the husband’s FCA claim to the Wendell property. She distinguished between claims that seek an interest in land in itself and those in which the transfer of title is requested in order to underpin a monetary claim, such as an equalization payment. The former are clearly claims in “an action to recover any land” per s. 4 of the RPLA, which attract the ten-year limitation period. However, the latter are simply claims that attract the LA’s two-year limitation period. As Horkins J. explained her reasoning:

63 The proposed claim dealing with the Wendell property is not "an action to recover any land". The applicant is not seeking an entitlement to an ownership in land as was the case in McConnell v Huxtable [2014 ONCA 86, where the applicant was making a claim to a constructive trust to land owned by her spouse]. The applicant's purpose in seeking to have the January 28, 2011 conveyance set aside is focused solely on his aim to have the value of this property available for equalization. If the conveyance was fraudulent, then ownership of the Wendell property reverts back solely to the respondent.

64 The fact that land is incidentally involved in the proposed fraudulent conveyance claim does not mean that the action is governed by the RPLA (see Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872, aff'd. 2014 ONSC 2219 and Metropolitan Toronto Condominium Corp. No. 1067 v. L. Chung Development Co., 2012 ONCA 845; Toronto Standard Condominium Corp. No. 1487 v. Market Lofts Inc., 2015 ONSC 1067).

[47] While Horkins J. relied on two Ontario Court of Appeal decisions in addition to Toronto Standard, those two appellate decisions are not germane to the limitation issue before this court. In Zabanah v. Capital Direct Lending Corp., the plaintiff’s claim was for damages based on negligence and breach of contract in the sale of a mortgage. It did not seek an interest in any land. Similarly, in Metropolitan Toronto Condominium Corp. No. 1067 v. L. Chung Development Co., the court described the plaintiff’s claim “as one for damages flowing from the respondents' negligence, breach of contract, conflict of interest, and breach of duty of care, fiduciary duty and statutory duty”. The plaintiff asserted that the defendant’s conduct had caused it to pay $1 million over market value for surface rights to a parking garage. Thus, the LA’s two-year limitation period applied.

[48] The Defendants also rely on the decision of Faieta J. in Wilfert v. McCallum 2017 ONSC 3853 (“Wilfert”). They point to a number of similarities between the facts in Wilfert and those in this case. In Wilfert, the plaintiff sued to set aside a real estate transaction under s. 2. of the FCA following the defendant’s bankruptcy. However, the motion before Faieta J. was a r. 21 motion for the determination of an issue before trial, in which evidence is generally not admissible, rather than a summary judgment motion. Faieta J. found that the plaintiffs before him lacked the jurisdiction to bring the proceeding because they had failed to obtain a s. 38 order in the defendant’s bankruptcy.

[49] Nonetheless, in what appears in the circumstances to be obiter, Faieta J. explicitly rejected the precedent of Conde v. Ripley. He wrote:

26 With the greatest of respect for the views expressed by my colleague in Conde v. Ripley, 2015 ONSC 3342 at para. 48, the prospect that a financial benefit may accrue to a plaintiff/judgment creditor resulting from a declaration to set aside the transfer of land under the FCA does not result in the plaintiff "obtaining land by judgment of the Court". Accordingly, an action to set aside a fraudulent conveyance of land is not an action to recover land.

[50] The precedential dispute between judges of this court appears to have been resolved by the Court of Appeal for Ontario. In Anisman v. Drabinsky, 2021 ONCA 120, the appellate court upheld a decision by Morgan J. of this court (2020 ONSC 1197) which adopted Dunphy J.’s analysis in Conde. The facts of Anisman are relatively straightforward. A husband, Drabinsky, transferred his joint interest in a home valued at $2,625,000 to his wife for a nominal consideration. He did so at a time that he had substantial debts, including one to the plaintiff, who was demanding that Drabinsky bring his monthly debt payments up to date. The plaintiff sued to reverse the transaction so that he could collect the amounts owing to him.

[51] In finding that the RPLA’s ten-year limitation period applies, Morgan J wrote:

55 Furthermore, it is the Plaintiff's position that the Limitations Act, 2002, with its 2-year limitation from the date of discovery, is not the applicable statute. Rather, the Plaintiff submits that it is the 10-year limitation period in the Real Property Limitations Act ("RPLA") that applies in this case.

56 As Dunphy J. said in Conde v Ripley, 2015 ONSC 3342, at para 2, "if a claim is brought under the FCA to set aside a conveyance of real property, such a claim is on its face a claim to 'recover any land' to which the RPLA applies a 10-year limitation period." Given the time frame in the case at bar, a 10-year period makes the doctrine of discoverability irrelevant; the action was commenced well within a decade of the transaction in issue.

[52] The Court of Appeal could not have been more succinct in dismissing the defendant’s appeal, writing: “[f]or the reasons of Morgan J., with which we substantially agree, the appeal is dismissed.” As Morgan J. later commented in Midland Resources Holdings Ltd. v. Bokserman, 2021 ONSC 3077, his approach in Anisman (and that of Dunphy J. in Conde) “has been confirmed without comment or qualification by the Court of Appeal”.

[53] The same approach was also adopted by Charney J. in Khan v Taji, 2020 ONSC 6704 at para. 60, a decision released before the Court of Appeal’s decision in Anisman.

[54] I add that in Beniak v Leamington, 2020 ONCA 238 at para. 51, van Rensburg J.A., writing for the Court of Appeal for Ontario, commented that both Conde and Stravino:

… considered whether an action under s. 2 of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29 counted as an "action to recover land" under s. 4 of the RPLA and reiterated that actions to recover land generally seek a property interest and involve property rights.

[55] Counsel for the Defendants urges me to ignore the decisions in Anisman and Beniak, as well as Khan v Taji. He argues that the Court of Appeal only “substantially” agreed with Morgan J.’s analysis in Anisman and that those decisions failed to cite Faieta J.’s decision in Wilfert. With respect, I must disagree. The principle of stare decisis requires me to be bound by the Court of Appeal’s decision in Anisman. Accordingly, I find that the applicable limitation period in this action is the ten-year period set out in the RPLA.

Issue No 2: Is there a genuine issue for trial regarding whether BMO commenced this action after the expiry of the applicable limitation period?

[56] In any motion for summary judgment, the overarching issue is whether there is a genuine issue for trial. Here, I have found that the applicable limitation period is ten years. The parties have agreed that if I make that finding, there will be no genuine issue for trial. I agree for reasons set out above.

[57] Thus, I conclude that there is no genuine issue for trial regarding the Defendants’ limitation defence in that BMO’s statement of claim was issued well within the RPLA’s ten-year limitation period. Accordingly, I need not deal with the issue of discoverability. Accordingly, I dismiss the Defendants’ motion for summary judgment.

[58] If I am incorrect in that regard, and the LA is found to be the relevant statute in this case, I add the following comments.

[59] The notion of discoverability of a claim is defined in s. 5 of the LA as follows:

Discovery

5 (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

[60] Section 5(2) of the LA offers a presumption that “[a] person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.”

[61] In its recent decision in Grant Thornton LLP v. New Brunswick, 2021 SCC 31, Moldaver J. writing for the court described the “common law rule” regarding discovery that applies under the LA. Although the court’s decision was made under New Brunswick’s limitations legislation, the Limitation of Actions Act, S.N.B. 2009, c. L-8.5 ("LAA"), Moldaver J. found that its discoverability provisions were modeled on those in the LA and other provincial limitations legislation: para. 35. He described the common law discoverability principles as follows "a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence" (citing Central Trust Co. v. Rafuse, 1986 29 (SCC), [1986] 2 S.C.R. 147, at p. 224, which in turn cites Kamloops (City of) v. Nielsen, 1984 21 (SCC), [1984] 2 S.C.R. 2,)

[62] At para 3. of Grant Thornton LLP, Moldaver J. described the degree of knowledge required to discover a claim as follows:

In my view, a claim is discovered when the plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant's part can be drawn. It follows from this standard that a plaintiff does not need knowledge of all the constituent elements of a claim to discover that claim.

[63] Moldaver J. went on to find at para. 46 that “the degree of knowledge needed to discover a claim is more than mere suspicion or speculation”. But it “does not rise so high as to require certainty of liability or perfect knowledge.”

[64] If the LA were to apply here, the question would be when BMO had a “plausible inference” of the Defendants’ liability under the FCA. In that event, I would find that there is a triable issue as to whether BMO had that plausible inference of Roufat’s liability when it cross-examined him in 2009 or whether waiting for him to fulfill his undertakings constituted due diligence.

Issue No. 3: Should the CPL be discharged for delay?

[65] The jurisdiction to discharge a CPL is found in s. 103 (6) of the Courts of Justice Act. That provision states:

Order discharging certificate

(6) The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,

(ii) does not have a reasonable claim to the interest in the land claimed, or

(iii) does not prosecute the proceeding with reasonable diligence;

(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

(c) on any other ground that is considered just, and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

[66] In 572883 Ontario Inc. v. Dhunna (1987), 24 C.P.C. (2d) 287, Master Donkin set out seven factors to be considered on a motion to discharge a CPL. They are:

1. whether the plaintiff is, or is not a shell corporation;

2. whether the land is or is not unique, bearing in mind that in a sense any parcel of land has some special value to the owner;

3. the intent of the parties in acquiring the land;

4. whether there is an alternative claim for damages;

5. the ease or difficulty of calculating damages

6. whether damages would be a satisfactory remedy;

7. the presence or absence of another willing purchaser,

8. harm done to the defendant if the certificate remained, and

9. harm to the plaintiff if the certificate is removed with or without security.

See also: Chiu v. Pacific Mall Developments Inc. (c.o.b. Torgan Group), [1998] O.J. No. 3075, at para. 40, Access Self Storage Inc. v. 1321645 Ontario Ltd.2017 ONSC 6037 (Ont. Div. Ct.) at para.41.

[67] In considering those factors, the court must recall that “the governing test is that the Judge must exercise his discretion in equity and look at all of the relative matters between the parties in determining whether or not the certificate should be vacated”: Clock Investments Ltd. v. Hardwood Estates Ltd. et al., 1977 1414 (ON SC), 16 O.R. (2d) 671 at p. 4 (QL), JDM Developments Inc. v. J. Stollar Construction Ltd.2004 CarswellOnt 4502 at para 32.

[68] Here:

1. BMO is not a shell corporation;

2. The land is not unique;

3. The intent of the Defendants in transferring the land raises a triable issue as to whether the transfer was a fraudulent conveyance;

4. There is no alternate claim in damages as the prayer for relief sounds in non-monetary relief. This point resolves all of the factors related to damages;

5. There is no evidence of a willing purchaser here;

6. There is no question that Elena has been prejudiced by having her interest in the home tied up for over six years. I also consider the factor raised by Defendants’ counsel that the home has been further encumbered by two years of serial registration of cautions against title prior to the issuance of the CPL; and

7. On the other hand, in light of the credible fraudulent conveyance claims, there is a risk that BMO will be prejudiced if the CPL were lifted as the house could be sold or refinanced, lowering its equity.

[69] The Defendants’ main argument is that Elena has and continues to suffer prejudice as a result of the delay in moving this action to trial. This has left her effectively unable to deal with the home for over eight years (including the time that the cautions were registered against the home). In their factum, the Defendants make the following assertions:

It is respectfully submitted the Plaintiff has not prosecuted this action with reasonable dispatch following the registration of the Certificate of Pending Litigation and it ought to be discharged on that basis alone.

It is respectfully submitted the Plaintiff improperly and without justification permitted this action to languish with its thumb on title to the Property and has not demonstrated the dispatch that is necessary in order for this Honourable court to continue the registration.

[70] While I have considered the Defendants’ arguments, I do not accept them for the following reasons:

1. Elena provides no evidence of her intent to deal with the property other than to live in it. She offers no evidence of the desire to sell or refinance the home or of BMO’s refusal to cooperate with that plan. Rather, she simply refers to the loss of her freedom to deal with the home as she wishes. In many circumstances that may be sufficient, but in light of the Defendants’ own dilatory conduct and the nature of the claims in this matter, that argument is not sufficient here.

2. The evidence summarized below demonstrates that the delays in this matter while at times mutual, seem to generally lay closer to the feet of the Defendants than to BMO. In that regard, I refer to the following:

i. The Defendants’ delays in answering all of their undertakings in the 2014 cross examinations regarding BMO’s CPL motion. I note that BMO first brought its CPL motion returnable November 21, 2013, yet it was not heard until March 11, 2015;

ii. The Defendants’ persistent failure to respond to BMO’s attempts to arrange examinations for discovery;

iii. The Defendants’ delays in serving their affidavits of documents;

iv. Their insistence on a discovery plan but later abandonment of the request, leading to further delay;

v. BMO was required to move to compel the Defendants’ attendance at discoveries. That motion resulted in Gray J.’s order of January 18, 2018, compelling the Defendants’ attendance.

vi. Much of the responsibility for the delays in this action lands at the feet of both parties or has been institutional (i.e. the difficulty in finding court time to deal with all of the legal issues) or pandemic related.

3. The risk of prejudice to BMO is real. As I found in an earlier decision regarding the admissibility of Ms. Ambrose’s records, they “raise a prima facie case of civil fraud”. They “allow an evidentiary basis for BMO to argue that there has been a fraudulent conveyance. They may prove that the transfer of Roufat’s interest was intended to defraud BMO of its rights to collect on his debt.” If it is at least triable that the home was already fraudulently transferred once, the equities do not support offering Elena the opportunity to transfer or mortgage the home in a way that practically diminishes or extinguishes the value of BMO’s claim against the Defendants.

4. The Defendants do not offer BMO any form of security for its claim (and judgment against Roufat) should the CPL be discharged;

5. BMO claims that it is ready to list this matter for trial. As set out below, I require it to do so within 30 days.

[71] For those reasons, I exercise my discretion to dismiss the request to discharge the CPL.

Issue No. 4: Should this action be dismissed for delay?

[72] BMO seeks a status hearing and an order extending the time for it to set this matter down for trial. The Defendants seek to dismiss this action for delay under r. 48.14, which allows a registrar of the court to dismiss an action for delay as follows:

Dismissal of Action for Delay

48.14 (1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):

1. The action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.

2. The action was struck off a trial list and has not been restored to a trial list or otherwise terminated by any means by the second anniversary of being struck off.

[73] If the parties do not agree to a timetable to bring an action to trial before the passage of five years since its commencement and the action has not been dismissed by the registrar, either party may move for a status hearing under r. 48.14(5) and (6). Rule 48.14(7) sets out the manner in which such a status hearing will proceed, as follows:

(7) At a status hearing, the plaintiff shall show cause why the action should not be dismissed for delay, and the court may,

(a) dismiss the action for delay; or

(b) if the court is satisfied that the action should proceed,

(i) set deadlines for the completion of the remaining steps necessary to have the action set down for trial or restored to a trial list, as the case may be, and order that it be set down for trial or restored to a trial list within a specified time,

(ii) adjourn the status hearing on such terms as are just,

(iii) if Rule 77 may apply to the action, assign the action for case management under that Rule, subject to the direction of the regional senior judge, or

(iv) make such other order as is just.

[74] A judge conducting a status hearing must balance two fundamental principles: “[t]he first is that civil actions should, if possible, be decided on their merits and procedural rules should be interpreted accordingly. The second is that the procedural rules that aim to resolve disputes in a timely and efficient manner can only achieve their goal if they are respected and enforced”: 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 (“1196158”), at para. 17.

[75] Sharpe J.A. added at paras. 19-20 and 42 of 1196158 that the challenge posed in a motion such as this is to find the right balance between two important principles: that disputes be resolved on their merits and obedience to rules designed to ensure timely and efficient justice. He noted at para. 19 that: “[w]e should strive to avoid a purely formalistic and mechanical application of timelines that would penalize parties for technical non-compliance and frustrate the fundamental goal of resolving disputes on their merits”.

[76] Yet on the other hand, as Sharpe J.A. wrote at para. 42:

If flexibility is permitted to descend into toleration of laxness, fairness itself will be frustrated. As the status hearing judge recognized, even if there is no actual prejudice, allowing stale claims to proceed will often be unfair to the litigants. Disputes are more likely to be resolved fairly if they are resolved in a timely fashion and, accordingly, the enforcement of timelines helps achieve the ultimate goal of fair resolution of disputes.

[77] The onus in a motion dealing with dismissal lies with the plaintiff to demonstrate that there was both an acceptable explanation for the litigation delay and that, if the action was allowed to proceed, the other party would suffer no non-compensable prejudice: 1196158, at para. 32, citing Khan v. Sun Life Assurance Co. of Canada, 2011 ONCA 650. The test is “conjunctive, not disjunctive”. In other words, even if the plaintiff offers a satisfactory explanation for the delay, the action will be dismissed if there would be prejudice to the defendant. Absent satisfactory explanation for the delay, the court may dismiss an action even absent proof of actual prejudice to the defendant: ibid para.32.

[78] Here, this was a first status hearing. BMO requested it in 2018 but was not able to proceed with it at that time because of the scheduling issues cited above and the pandemic. Had BMO’s motion been heard when it was first brought there would still have been a significant delay since the issuance of the statement of claim, but far less than today.

[79] When looking to prejudice, as cited above, I set out above that the Defendants point to the prejudice to Elena in being unable to deal with the home during the term of this action. However, there is no evidence of actual prejudice to the Defendants in the form of Elena’s desire to sell or refinance the property or in the inability to muster the evidence required to defend this action. On the other hand, I have spoken to the prejudice that BMO would suffer if this action were dismissed without a hearing on the merits.

[80] Further I cannot ignore three further factors in exercising my discretion in resolving this status hearing. First, there is some justice to BMO’s argument that it was not in a position to set this matter down for trial until completion of discoveries on August 2, 2018. Discoveries were delayed to that date in large measure due to the Defendants’ various delays. BMO asserts that “[b]ut for the delays, [it] would have completed discoveries and been in a position to set the action down for trial well before June 13, 2018 [the fifth anniversary of the issuance of the statement of claim]”.

[81] As stated above, the Defendants had a large hand in contributing to the delay in getting this matter to trial. BMO often tried to advance this litigation, with little or grudging cooperation from the Defendants.

[82] Second, this matter is ready to be set down for trial I direct that BMO do so within 30 days.

[83] Third, while not generally a consideration in a status hearing, I cannot ignore the comments made above about the potential merits of this case when considering whether to dismiss it for delay.

Conclusion

[84] For the reasons set out above, I dismiss the Defendants’ motion for summary judgment and to discharge the certificate of pending litigation. I grant BMO’s motion to extend the time to set this action down for trial. It shall be set down for trial within 30 days of the release of this endorsement. If possible, this action shall thereafter be placed in the Halton fall trial blitz list. The parties shall arrange a pretrial conference through the court’s trial office.

Costs

[85] The parties should attempt to resolve the issue of costs on their own. If they are unable to do so, BMO may submit its costs submissions of up to three pages, double-spaced, one-inch margins, plus a bill of costs/costs outline and offers to settle within 14 days of release of this endorsement. It need not include the authorities upon which it relies so long as they are found in the commonly referenced reporting services (i.e. LexisNexis Quicklaw, or WestlawNext) and the relevant paragraph references are included. The Defendants may respond in kind within a further 14 days. No reply submission will be accepted unless I request it. If I have not received any submissions within the time frames set out above, I will assume that the parties have resolved the issue and make no costs order.

“Marvin Kurz J.”

Electronic signature of Justice Marvin Kurz

Date: August 25, 2021

Corrected: September 1, 2021

SCHEDULE “A” TO ENDORSEMENT OF KURZ J. OF AUGUST 25, 2021

CHRONOLOGY OF EVENTS AFTER THE STATEMENT OF CLAIM IS ISSUED

a. June 18, 2013 – Statement of Claim

b. November 21, 2013 – Return date for the Certificate of Pending Litigation motion – adjourned to December 19, 2013 at the request of the Defendants

c. December 5, 2013 – The Defendants serve their Statement of Defence and reply materials to the CPL motion – CPL motion adjourned on consent to February 20, 2014 to allow for cross-examinations

d. January 20, 2014 – Roufat Iskenderov and Elena Lazareva are examined with respect to the CPL motion – undertakings are given by the Defendants

e. March 25, 2014 – Defendants provide partial answers to undertakings, with many outstanding

f. July-August, 2014 – further answers to undertakings provided by the Defendants, although outstanding undertakings remain – CPL motion adjourned to December 17, 2014 due to outstanding undertakings

g. December 17, 2014 – CPL motion adjourned to March 11, 2015 so the Plaintiff could obtain a s.38 order under the BIA

h. February 17, 2015 – Order of Master Wiebe under s.38 of the BIA

i. March 11, 2015 – Order of O’Connor, J. granting leave to issue a CPL

j. December 21, 2015 – BMO serves an unsworn Affidavit of Documents

k. January 5, 2016 – BMO requests the Defendants’ Affidavit of Documents and dates for their examination for discovery

l. On the following dates BMO requests the Defendants’ Affidavit of Documents and dates for their examination for discovery: a. February 29, 2016 b. March 14, 2016

m. March 29, 2016 - BMO requests the Defendants’ Affidavit of Documents and dates for their examination for discovery. Defendants’ lawyer advises that the Defendants retrieved their file from him a month earlier

n. June 22, 2016 – Defendants serve Notice of Change of Lawyer

o. September 27, 2016 BMO brings a motion returnable October 20, 2016 to compel their Affidavit of Documents

p. October 8, 2016 the Defendants serve their Affidavit of Documents

q. October 20, 2016 – Plaintiff’s motion is adjourned on consent to November 9, 2016

r. November 9, 2016 – Plaintiff’s motion adjourned on consent to December 15, 2016

s. November 21, 2016 the Defendants serve the Plaintiff with a cross-motion for further productions, a better Affidavit of Documents and other relief

t. December 9, 2016 – cross-motions adjourned to February 1, 2016 for Plaintiff to file response to Defendants’ cross-motion

u. February 1, 2017 – Cross motions are heard and Miller, J. orders that the s.38 order be nunc pro tunc and criticizes both parties for poor communication leading to misuse of resources.

v. March 23, 2017- Parties agree that BMO’s witness, Jocelyne Sauve will be examined on May 16, 2017 which was cancelled due to a personal matter arising from Plaintiff’s counsel.

w. April 3, 2017 – Discovery of BMO scheduled for May 16, 2018 and subsequently rescheduled to May 18, 2017

x. June 30, 2017 – Plaintiff’s counsel writes to Defendants’ counsel and the Defendants’ counsel responds to his e-mail seeking dates for discoveries.

y. July 6, 2017 – the Plaintiff requests the Defendants available dates in September

z. July 21, 2017 – Defendants’ counsel suggests dates in October for discoveries

aa. August 2, 2017 – Defendants’ counsel suggests a discovery plan be agreed to

bb. August 15, 2017 – Plaintiff serves the Defendants with a draft Discovery Plan and confirms availability for discoveries

cc. August 16, 2017 –Defendants provide response to draft Discovery Plan, but question why the Plaintiff wants to examine the Defendants again. The Plaintiff responds that the previous examinations were not discoveries, but cross-examinations and Rule 39.03 examinations. Plaintiff confirms its client is available November 13, 2017 for examinations for discovery

dd. August 23, 2017 – Plaintiff’s counsel writes to Defendants reiterating intention to conduct discoveries of the Defendants on contiguous dates with the examination of Plaintiff’s affiant and seeking confirmation of availability

ee. September 18, 2017 – the Defendants write to the Plaintiff and take the position that they will not permit Ms. Lazareva to be examined as she had already been discovered, and they would place limitations on BMO’s examination of Mr. Iskenderov

ff. October 16, 2017 – The Plaintiff reiterates its right to conduct examinations for discovery of the Defendants.

gg. October 27, 2017 – the Defendants advise that they would not produce the Defendants for examinations for discovery in the absence of a court order.

hh. November 8, 2017 – The Plaintiff writes to the Defendants confirming that BMO would not proceed with the examination of Jocelyne Sauve unless they withdraw their restrictions on BMO’s right to discover the Defendants

ii. November 10, 2017 – On consent, Plaintiff seeks a case conference from the Regional Senior Justice

jj. November 14, 2017 – RSJ Daley denies request for a case conference

kk. November 30, 2017 – Plaintiff’s counsel writes to the Defendants regarding the proposed Discovery Plan

ll. November 30, 2017 – the Defendants serve Notice of Motion for summary judgment returnable May 8, 2018

mm. December 6, 2017 – Plaintiff’s Counsel writes again to Defendants again regarding the Discovery Plan as there have been no response.

nn. December 29, 2017 – BMO serves motion returnable January 18, 2018 to compel the Defendants to attend discoveries

oo. January 18, 2018 – Justice Gray grants the Plaintiff’s motion to compel the Defendants to attend discoveries and orders costs in favour of Bank of Montreal of $3,500.00

pp. February 9, 2018 – March 28, 2018 - The Plaintiff writes seven e-mails to the Defendants regarding the Discovery Plan, dates for examinations for discovery and the payments of the costs awarded by Grey J. The only response was an email on March 9, 2018 that the Defendants would respond “in due course”.

qq. February 13, 2018 – the Defendants served a revised motion for summary judgment returnable July 17, 2018 (without an affidavit or motion record)

rr. March 28, 2018 – The Defendants write seeking dates for discoveries without proposing dates

ss. April 11, 2018 – BMO wrote to Mr. Bakos proposing discovery dates in May, 2018, and further requested a copy of their motion record and their agreement to the proposed discovery plan. BMO followed up with Mr. Bakos on the following dates: a. April 18, 2018 b. April 23, 2018 c. April 26, 2018 d. May 4, 2018

tt. May 18, 2018 – The Plaintiff counsel writes to the Defendants again seeking a response with respect to the proposed discovery dates and advised that a motion for a status hearing had been couriered to him, returnable June 6, 2018 as a status hearing would be necessary to set a timetable for the action as the action had to be set down for trial by June 13, 2018

uu. May 23, 2018 – Mr. Bakos wrote to BMO advising that he is unavailable June 6, 2018 and the motion must be adjourned.

vv. May 23, 2018 – Plaintiff’s counsel writes to the Defendants seeking examination dates and consent to a timetable in lieu of a status hearing motion

ww. May 25, 2018 – The Defendants write that a Discovery Plan was “unnecessary” and that the motion record for the summary judgment motion would be served the week of May 28, 2018. The Defendants proposed dates for discoveries in June, 2018 and propose conducting discoveries and cross-examinations simultaneously

xx. May 31, 2018 – The Plaintiff agreed to conduct examinations for discovery on June 27 and 28, 2018 and advise that the Plaintiff is open to considering simultaneous discoveries and cross examinations but will need to see the motion record before agreeing to this.

yy. June 6, 2018 – the Parties consented to adjourn the status hearing and have it heard together with the within motion. The Defendants advised Master Jolley that their motion record for the within motion would be served by June 15, 2018 2018.

zz. June 21, 2018 – Defendants serve Motion Record for summary judgment

aaa. June 26, 2018 – Defendants counsel writes to the Plaintiff at 7:42 PM demanding Plaintiff’s responding affidavit to summary judgment by end of day, otherwise he will not permit the Plaintiff to examine Mr. Iskenderov on June 28, 2018.

bbb. June 27, 2018 – Plaintiff agrees to serve responding affidavit for summary judgment by July 13, 2018 and the parties agree to proceed with discoveries on August 1 and 2, 2018. Parties agree to adjourn motion for summary judgment

ccc. July 17, 2018 – Motion for summary judgment and status hearing adjourned on consent to October 30, 2018

ddd. August 1-2, 2018 – Examinations for discovery of all parties are conducted