BRACEBRIDGE COURT FILE NO.: CV-19-170
DATE: 20211102
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CORPORATION OF THE TOWN OF BRACEBRIDGE
Plaintiff
– and –
MARK GRAND and IRMA KUCERA
Defendants
Jordan Page, for the Plaintiff
Mark Grand and Irma Kucera, Self-Represented, for the Defendants
HEARD: October 26, 2021
REASONS FOR JUDGMENT
DE SA J.:
Overview
[1] The plaintiff was granted judgment and awarded costs against the defendant Mark Grand totaling $259,258.37 in a related action.
[2] Shortly before the trial of the related action, Mr. Grand transferred property municipally known as 1790 Cedar Lane, Bracebridge, Ontario (the “Property”), to his mother, the defendant Irma Kucera.
[3] In my view, there clearly exists sufficient evidence for this Court to conclude that the impugned transfer was made with the intent to defeat, hinder, delay, and defraud creditors (including future creditors such as the plaintiff) and, therefore, entitle the plaintiff to judgment.
[4] Although properly served with the statement of claim, the defendants failed to deliver statements of defence within the prescribed time and, consequently, were noted in default.
[5] The defendants were given the opportunity to file materials/evidence in response. They did not.
[6] Judgment is granted in favor of the plaintiff.
[7] The transfer of the Property from Mr. Grand to Ms. Kucera is set aside.
[8] The reasons for my decision are outlined below.
Summary of Facts
The Tort Action
[9] The plaintiff and Mr. Grand were co-defendants in a tort action in which the plaintiff crossclaimed against Mr. Grand for contribution and indemnity.
[10] The tort action was pre-tried by Justice Healey and, at its conclusion, traversed to trial scheduling court on September 27, 2018.
[11] Mr. Grand listed the Property for sale on September 26, 2018, the day before the trial scheduling court appearance, for $649,900. The Property did not sell and the listing was terminated on December 10, 2018.
[12] Mr. Grand was initially represented by counsel in the tort action; however, he delivered a notice of intention to act in person on or about April 30, 2019.
The Transfer
[13] On May 3, 2019, three days after signing the notice on intention to act in person, Mr. Grand transferred the Property to his mother Ms. Kucera for $232,225.80.
[14] On the same day, Ms. Kucera registered a signed agreement on title to the Property which provided, among other things, that:
(a) the consideration paid for the Property does not reflect fair market value; and
(b) in the event that Ms. Kucera sells the Property, she will pay twenty-five (25%) of the net sale proceeds to Mr. Grand, less the cost of any improvements made to the Property by Ms. Kucera.
[15] Immediately after the transfer, Ms. Kucera registered a $300,000 mortgage on the Property in favour of Helmut Kucera and Janice Kucera, relatives of Mr. Grand.
The Tort Action Judgment
[16] Despite serving a notice of intention to act in person, Mr. Grand did not attend nor participate in the tort action trial.
[17] At the conclusion of the tort action trial, Justice DiTomaso (as he then was), granted the plaintiff judgment against Mr. Grand on its crossclaim in the amount of $82,523.99, plus $70,512.41 for costs. Justice DiTomaso also granted the plaintiff further costs against Mr. Grand totaling $105,706.61, which represented the costs it was required to pay the plaintiff in the tort action on behalf of Mr. Grand.
[18] Mr. Grand has failed to honour Justice DiTomaso’s judgment and the plaintiff is unable to locate any assets belonging to Mr. Grand that could potentially satisfy the debt.
Attempt to Sell the Property
[19] On August 19, 2019, approximately three months after the Property was sold to Ms. Kucera for $232,235.80, the Property was listed for $595,000. The Property did not sell and the listing was terminated on October 7, 2019.
Defendants Noted in Default
[20] The defendants were properly served with the statement of claim in this matter and Mr. Grand acknowledged receipt of the pleading via email on September 29, 2020.
[21] The defendants failed to deliver statements of defence within the prescribed time and were noted in default on November 2, 2020.
Analysis
[22] Where a defendant fails to deliver a statement of defence within the timelines prescribed by the Rules of Civil Procedure, the plaintiff may, on filing proof of service of the statement of claim, require the registrar to note the defendant in default.: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.01(1).
[23] A defendant who is noted in default is deemed to admit the truth of all allegations of fact made in the statement of claim.: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.02(1)(a).
[24] Where a defendant has been noted in default, the plaintiff may move before a judge for judgment against the defendant on the statement of claim in respect of any claim for which default judgment has not been assigned. The motion shall be supported by affidavit evidence if the claim is for unliquidated damages.: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 19.05.
[25] On a motion for judgment pursuant to rule 19.05, the inquiry undertaken by the court is the following:
(a) What deemed admissions of fact flow from the facts pleaded in the statement of claim?
(b) Do those deemed admissions of fact entitle the plaintiff, as a matter of law, to judgment on the claim?
(c) If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitle it to judgment on the pleaded claim?
Elekta Ltd. v. Rodkin, 2012 ONSC 2062, at para. 14.
Fraudulent Conveyance
[26] Section 2 of the Fraudulent Conveyances Act provides that “every conveyance of real property…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.”: Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, section 2.
[27] The intent requirement to void a conveyance is satisfied when the debtor intends for the conveyance to defeat creditors and, where there is such an intent, when the recipient was privy to the fraud by acting as a party to carrying out the fraudulent intent and purpose.: Bank of Montreal v. Bibi, 2020 ONSC 2948, at para. 20.
[28] It is typically uncommon to find direct proof of an intent to defeat, hinder or delay creditors. Rather, it is more common to find evidence of suspicious facts or circumstances (“badges of fraud”) from which the court may infer fraudulent intent. Bank of Montreal v. Bibi, 2020 ONSC 2948, at para. 21.
[29] The jurisprudence has identified the following “badges of fraud” for the purpose of determining the intention of a debtor:
(a) The transferor has few remaining assets after the transfer;
(b) The transfer was made to a non-arm’s length person;
(c) There were actual or potential liabilities facing the transferor, he was insolvent, or he was about to enter upon a risky undertaking;
(d) The consideration for the transaction was grossly inadequate;
(e) The transferor remained in possession or occupation of the property for his own use after the transfer;
(f) The deed of transfer contained a self-serving or unusual provision;
(g) The transfer was effected with unusual haste; or
(h) The transaction was made in the face of an outstanding judgment against the debtor.
Bank of Montreal v. Bibi, 2020 ONSC 2948, at para. 23.
[30] A conveyance without adequate consideration that serves to defeat, hinder or delay creditors may justify an inference that the transfer was made with this intention. The inference may be rebutted by cogent evidence that the transfer was made for an honest purpose: DBDC Spadina Ltd. v. Walton, 2014 ONSC 3052, at para. 67.
[31] Where a debtor transfers his only remaining asset with which he may pay his debts, there is a presumption of an intention to defeat creditors: Conte Estate v. Alessandro, [2002] OJ No. 5080 (SCJ), at para. 20, aff’d [2004] OJ No. 3275(CA), at para. 24.
[32] A significant badge of fraud is a conveyance by a debtor to a close friend or family member: Devry Smith Frank LLP v. Chopra, 2018 ONSC 1303, at para. 46, aff’d 2019 ONCA 78; Caligiuri v. Bonner, [2000] OJ No. 4478 (SCJ), at para. 52, aff’d [2002] OJ No. 1533 (CA).
Application to the Facts of the Case
[33] The defendants have failed to respond to the statement of claim, which was properly served on them. Accordingly, the defendants were noted in default and the plaintiff is entitled to move for judgment.
[34] I agree with the plaintiff that there are sufficient facts and evidence presented on the motion to permit the court to conclude that the impugned transfer was made with the intent to defeat, hinder, delay, and defraud creditors, and entitle the plaintiff to judgment as against the defendants; namely:
(a) Mr. Grand is Ms. Kucera’s son and, as such, the transaction was not completed at arm’s length;
(b) The Property was sold to Ms. Kucera at a significantly reduced price ($232,235.80), approximately 64% less than the price from the listing that was terminated five months prior to the sale ($649,000);
(c) Ms. Kucera registered a signed agreement on title to the Property which acknowledged that the consideration does not reflect fair market value;
(d) The agreement provided Mr. Grand with a twenty five (25%) percent interest in any future net sale proceeds;
(e) The transfer occurred three days after Mr. Grand became self-represented in the tort action and several months before its trial (in which Mr. Grand was exposed to an adverse judgment and costs); and
(f) The transfer effectively dispossessed Mr. Grand of a significant asset that could be used to satisfy Justice DiTomaso’s judgment in the tort action.
[35] On September 28, 2021, this matter was before Justice McKelvey. The Defendant requested the opportunity to bring a motion to set aside the default. The matter was adjourned to permit Mr. Grand the opportunity to bring that motion, and file it in time for hearing for the scheduled hearing date.
[36] No materials have been filed by the defendants.
[37] I see no basis to delay the matter further. In my view, it is clear that judgment is warranted in the circumstances. The case itself is overwhelming. On the evidentiary record before me, I cannot see how further delaying the matter would be in the interests of justice.
Disposition
[38] Accordingly, on the basis of the evidence filed by the plaintiff, I declare that the Property described as PIN 48118-9769 (LT), PT LT 6 CON 6 MACAULAY PT 1 35R10699; BRACEBRIDGE; THE DISTRICT OF MUNICIPALITY OF MUSKOKA, municipally known as 1790 Cedar Lane, Bracebridge, Ontario, was fraudulently conveyed by Mr. Grand to Ms. Kucera.
[39] I grant judgment setting aside the transfer of the Property from Mr. Grand to Ms. Kucera, instrument MT212489 dated May 3, 2019.
[40] I will receive costs submissions from the plaintiff within 3 weeks of the release of this judgment. The defendants will have 2 weeks thereafter to respond.
Justice C.F. de Sa
Released: November 2, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CORPORATION OF THE TOWN OF BRACEBRIDGE
Plaintiff
– and –
MARK GRAND and IRMA KUCERA
Defendants
REASONS FOR JUDGMENT
Justice C.F. de Sa
Released: November 2, 2021