Court File and Parties

COURT FILE NO.: CV-23-00000021 DATE: 20230223 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Naymark Law Professional Corporation, Plaintiff AND: Darlene Edwardes-Evans, aka Darlene Evans, aka Darlene Eva Robb, Robert Harold Bestard, Ronald Bestard and Robb & Bestard Family Holdings Ltd. Defendants

BEFORE: J. Di Luca J.

COUNSEL: James Gibson, Counsel for the Plaintiff Darlene Evans in person No one appearing for remaining Defendants

HEARD: February 13, 2023

Endorsement

[1] This is a motion by the plaintiff for leave to obtain a Certificate of Pending Litigation (“CPL”) on a property located at 763 Alexander Street, Peterborough, Ontario. The plaintiff also seeks an order for substituted service by email for the defendants, Darlene Evans and Robert Bestard.

Background Facts

[2] By way of brief background, in 2016 Ms. Evans and Mr. Bestard were sued by the Big Brothers and Big Sisters Association of Peterborough. The claim was for, inter alia, fraud and breach of fiduciary duty against Ms. Evans and knowing assistance against Mr. Bestard.

[3] Ms. Evans was formerly the Executive Director of Big Brothers and Big Sisters Association. She was terminated following an internal investigation. She eventually pleaded guilty to Fraud Over $5000 in relation to her conduct as Executive Director.

[4] In December 2019, the civil action was set down for trial. On December 26, 2019, Ms. Evans and Mr. Bestard signed a retainer agreement retaining Naymark Law to act as counsel on the civil action. The retainer agreement provides that Ms. Evans and Mr. Bestard are jointly and severally liable for legal fees and disbursements.

[5] The trial in the civil action was scheduled to commence on May 10, 2021, lasting approximately two weeks. Following a pre-trial conference on April 16, 2021, the parties reached a settlement on confidential terms. The settlement was performed and on May 12, 2021, the action was dismissed on consent. As part of the settlement, restraining orders barring the sale of properties owned by Ms. Evans and Mr. Bestard were set aside.

[6] On April 22, 2021, Naymark Law rendered a final invoice for services and disbursements in the amount of $58,690.90. Trust funds totalling $20,000 were applied to the account, leaving a balance owing of $38,690.90.

[7] On May 19, 2021, Ms. Evans filed a requisition for an assessment of Naymark Law’s final account. While Naymark Law initially sought to invoke an arbitration clause contained in the retainer agreement, it eventually pursued the assessment hearing instead.

[8] The assessment hearing occurred on July 13, 2022. Mr. Bestard did not seek an assessment of the account. While he was served with Naymark Law’s materials on the assessment hearing, he did not attend or otherwise participate.

[9] On August 16, 2022, the assessment officer issued an assessment report and certificate of assessment confirming that the $38,690.90 was owed to Naymark Law. The assessment officer also awarded costs of $15,235.57 all-inclusive.

[10] On August 17, 2022, Ms. Evans filed a motion in the Superior Court of Justice opposing confirmation of the assessment. Lack J. eventually dismissed the motion and confirmed the report. She also awarded costs of $5,786 all-inclusive.

[11] All together, Ms. Evans owes Naymark Law $59,712.47. She has since paid $500, leaving $59,212.47 as the current outstanding balance.

The Subject Property

[12] The property located at 763 Alexander Street in Peterborough is a residential property. It was initially purchased by Ms. Evans. She lived there with Mr. Bestard after they married. At the time of the assessment hearing, the property was jointly owned by Ms. Evans and Mr. Bestard.

[13] On August 18, 2022, which is two days after the assessment report was issued and one day after Ms. Evans launched a motion opposing confirmation of the assessment report, Ms. Evans and Mr. Bestard registered a transfer of the property.

[14] According to the transfer instrument, the transfer of the property was made to Ronald Bestard and Robb & Bestard Family Holdings Ltd. (“R&B Holdings”) as trustees. The transfer was made for no consideration.

[15] On January 17, 2023, Naymark Law commenced an action against the defendants. The action seeks $38,690.90 against Mr. Bestard for breach of the retainer agreement. The action also seeks a declaration that the conveyance of the subject property from Ms. Evans and Mr. Bestard to Ronald Bestard and R&B Holdings as trustees on August 18, 2022, is void and unenforceable as it constitutes a fraudulent conveyance within the meaning of s. 2 of the Fraudulent Conveyances Act.

The Certificate of Pending Litigation

[16] In order to obtain a CPL, the plaintiff must demonstrate that there exists a “triable interest” in the subject property. The plaintiff must also establish that the balance of convenience favours issuing a CPL, see Perruzza v. Spatone, 2010 ONSC 841 at para. 20.

[17] The threshold test in respect of an “interest in land” does not require the plaintiff to prove a likelihood of success at trial. It merely requires that the plaintiff prove that there is a triable issue as to whether the plaintiff has an interest in the subject property, see 1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J. (as she then was), citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. – Comm. List) at para. 62.

[18] Assuming the threshold of a triable interest in land is met, the court must examine all relevant matters in order to assess whether it should exercise its discretion to grant leave to obtain a CPL.

[19] Where a CPL is sought in relation to a fraudulent conveyance claim, the usual test discussed in Perruzza is modified and the case law establishes that the following test must be satisfied: (i) the claimant must satisfy the court that there is a high probability that judgment will be successfully recovered in the main action; (ii) the claimant must introduce evidence to show that the transfer was made with the intent to defeat or delay creditors, with this burden being lightened by evidence that the transfer was for less than fair market value; and (iii) the claimant must demonstrate that the balance of convenience favours issuing a CPL in the circumstances of the particular case, see Fernandes v. Khalid, 2021 ONSC 190 at para. 35; Grefford v. Fielding at para. 26; Botiuk v. Campbell, 2015 ONSC 694 (Div Ct) at para.18; Jodi L. Feldman Professional Corporation v. Foulidis, 2018 ONSC 7766 at para. 11.

[20] I will now address each branch of this modified test.

[21] I am readily satisfied that there is a high probability that judgment will be obtained on the debt owed in this action. First, Naymark Law already has an enforceable judgment against Ms. Evans as a result of the assessment proceedings. Had the impugned transfer of the property not occurred, Naymark Law would have been in a position to obtain a writ of seizure and sale to realize against the property.

[22] Second, it is highly probable that Naymark Law will succeed on its debt claim against Mr. Bestard. He is jointly liable for the debt along with Ms. Evans. The debt has already been found to be reasonable by Order of Lack J. Mr. Bestard had notice of the assessment proceedings but chose not to participate. As such, to date he has raised no objection to the account.

[23] I turn to the second branch of the test which examines whether the plaintiff has established a prima facie case that the impugned transfer was a fraudulent transfer. Section 2 of the Fraudulent Conveyances Act provides that where a conveyance of real property is made with intent to defeat, hinder, delay or defraud creditors, the conveyance is void. One purpose of this provision is to prevent a defendant from intentionally dissipating assets, especially to a related recipient, in order to avoid a judgment, see Ernst & Young Inc. v. Aquino, 2022 ONCA 202 at para. 24.

[24] In order to succeed on its claim under the Fraudulent Conveyances Act, Naymark Law must first establish that it has standing as a “creditor or other.” In this regard, an asserted claim of debt is sufficient to grant standing. The plaintiff does not need to already hold a judgment so long as they may become a creditor, see Indcondo v. Sloan, 2014 ONSC 4018 at paras. 47-49, aff’d 2015 ONCA 752.

[25] Naymark Law has clearly asserted claims against Ms. Evan and Mr. Bestard for the accounts. The debt is joint and several in accordance with the terms of the retainer agreement. The account has already been finally assessed. I find that Naymark Law is a “creditor or other” as that term is interpreted in the Fraudulent Conveyances Act.

[26] Naymark Law must also establish that there has been a conveyance of property within the meaning of the Act. There is no dispute on this issue as the subject property was clearly conveyed from Ms. Evan and Mr. Bestard to Ronald Bestard and R&B Holdings in trust.

[27] Lastly, Naymark Law must establish that the conveyance was undertaken with the requisite intent. In other words, the evidence must establish that the purpose for the conveyance was to defeat, hinder, delay or defraud the creditor.

[28] At this stage in the proceedings, the plaintiff does not have to prove intent to the level required at trial. It merely needs to demonstrate a prima facie case. As well, while intent can be proven based on direct evidence, an inference of intent can also arise based on circumstantial evidence.

[29] Based on the evidence before me, I am satisfied that the plaintiff has established a prima facie case that the conveyance of the subject property was undertaken with the intent of defeating, delaying, hindering or defrauding Naymark Law as a creditor. I reach this conclusion for the following reasons:

a. The transfer of the property occurred two days after Naymark Law was successful in an assessment of the account that is the subject of the debt. The transfer occurred one day after Ms. Evans commenced an ultimately unsuccessful proceeding to oppose confirmation of the assessment; b. The transfer was for no consideration; c. The transfer appears to be between related parties. Ronald Bestard is likely related to Robert Bestard. The holding company also appears related as it bears the names Robb (which is a former surname of Evans) and Bestard; d. Ronald Bestard and R&B Holdings received the property in their capacity as trustees; e. Ms. Evans has refused to provide information regarding the transfer. In her affidavit filed on this motion, she provides no explanation as to why this transfer occurred, though in her submissions before the court she makes a vague reference to it being related to estate planning. The absence of any evidence-based explanation is telling; f. Ms. Evans claims that she and Mr. Bestard separated in 2018 and that she relinquished any interest in the property. Ms. Evans has provided no documentation supporting this assertion. Moreover, despite this sworn assertion, Ms. Evans remained on title until the property was the subject of the impugned transfer; g. Service of materials on Mr. Bestard was undertaken at the subject property. Ms. Evans accepted service. An inference arises that despite her assertions, she and Mr. Bestard continue to reside at the residence; and, h. A minimal amount has been paid towards the debt, suggesting that neither Ms. Evans nor Mr. Bestard have the means or intent to pay the debt. According to the plaintiff, Ms. Evans has advised that she is insolvent, though she now denies being insolvent in her affidavit filed on this motion.

[30] When all of these factors are taken together, I am satisfied that Naymark Law has established a prima facie case that the transfer of the subject property was done with the intent of defeating, hindering, or delaying Naymark Law’s ability to collect on the debt that is owing as a result of the assessment and/or owing as a result of the anticipated outcome of this action.

[31] I turn lastly to assessing whether the balance of convenience favours granting leave to obtain a CPL. On this issue, I note that in her written submissions, Ms. Evans asserts that a CPL would inhibit the refinancing of the subject property, which apparently is subject to two mortgages that are soon up for renewal. Ms. Evans has provided no evidence as to the state of the property’s encumbrances, nor has she provided any evidence as to why a CPL will inhibit the refinancing of the property.

[32] Ms. Evans also asserts that she is prepared to pay her debt in monthly installments of $500. That may be case. However, that does not impact whether a CPL is appropriate in relation to the litigation involving Mr. Bestard.

[33] Ultimately, when I consider the balance of convenience, I am satisfied that I should grant the motion seeking leave to obtain a CPL.

Service of Motion Material

[34] While this motion was initially filed as an ex parte motion, the materials were inadvertently disclosed to Ms. Evans who learned of the motion through Caselines on February 6, 2023.

[35] Ms. Evans appeared on the Zoom hearing of the motion. She provided written submissions in advance and made oral submissions during the hearing. In terms of service, Ms. Evans initially advised that she accepted service on behalf of Robert Bestard. Following the hearing of the motion, Ms. Evans filed a document on Caselines entitled “Notice of Service Delivery for Robert Bestard and Ronald Bestard.” In this document, Ms. Evans asserts that while she accepted the “service delivery” for Robert Bestard on February 10, 2023, she advised the process server that Robert was on vacation. She further asserts that as of February 14, 2023, Robert had not received the package and therefore was neither aware of nor able to participate in the Zoom hearing that occurred on February 13, 2023.

[36] In terms of service on Ronald Bestard, Ms. Evans provided a copy of a complaint she filed against the process server who attended at the home of her aged mother in an attempt to serve Ronald. In her complaint, she indicates that the police have been contacted and that the package that was dropped off has been turned over to police.

[37] In order to avoid any concerns about the sufficiency of service on either Ms. Evans or Mr. Bestard, I will treat this matter as essentially an ex parte motion for leave to obtain a CPL.

[38] The effect of treating this matter as an ex parte motion is that the defendants are free to bring a motion, supported by evidence, seeking an order vacating the CPL. This will alleviate any residual concern of unfairness given the manner in which the motion came to the attention of the parties.

[39] I turn lastly to the plaintiff’s request for an order permitting substituted service on Ms. Evans and Mr. Bestard by way of email. Under Rule 16.04, a court may make an order for substituted service where it is impractical to effect proper service. Impracticality can be established by demonstrating that despite reasonable efforts, personal service has not been accomplished. An order for substituted service will be granted where the moving party establishes that there is a “reasonable possibility” or “some likelihood” that the proposed method of service will bring the matter to the attention of the other party, see Ramnarine v. Marino, 2021 ONSC 5935.

[40] Based on the evidence before me, I am satisfied that in the past, Mr. Bestard has attempted to evade service in relation to the Notice of Arbitration. I also note that while Ms. Evans appeared to accept service on behalf of Mr. Bestard, she later advised the court that she did not accept service for him as he was in Panama at his winter residence. She maintains that she did not convey to him the nature or contents of this motion.

[41] In terms of Ms. Evans, I note that she has provided the court with a copy of the complaint she filed against the process server who attended at her mother’s residence to serve Ronald Bestard. As set out in that complaint, she contacted the police in response and explained that Ronald Bestard never received the material served and therefore had no notice.

[42] Based on the material before me, an inference arises that Ms. Evans is engaged in a game of “catch me if you can” on behalf of the parties involved in this litigation.

[43] I see no need to put the plaintiff through the further, possibly futile, expense of personal service. I am also satisfied that there is a reasonable likelihood that service by email will bring matters to Ms. Evans’ and Mr. Bestard’s attention. They communicated regularly with Naymark Law using their email addresses.

[44] In these circumstances, I am prepared to make an order for substituted service in relation to the statement of claim and any and all subsequent materials on Ms. Evans and Mr. Bestard.

[45] Order to go accordingly. No costs.

J. Di Luca J. Date: February 23, 2023