Ontario Securities Commission v. Tsatskin, 2024 ONSC 4720

Court File No.: CV-23-710703 Date: 2024-06-21 Superior Court of Justice - Ontario

Re: Ontario Securities Commission v. Tsatskin et al.

Before: Associate Justice G. Eckler

Heard: Friday March 22nd, 2024 by videoconference

Counsel: K. Ferreira and D. Konomi for the plaintiff/moving party J. Squire and G. Cherniak appearing for the defendants/ responding party Irene Bromberg

REASONS FOR DECISION

A. NATURE OF THIS MOTION

1This is a motion by the plaintiff for leave to issue a certificate of pending litigation (“CPL”) against certain lands municipally known as 8 Colby Lane, in Richmond Hill, Ontario. (“the Colby Property).

2This motion was scheduled as an urgent motion due the expiry of a caution on the Colby Property on March 24th, 2024. After hearing the submissions of counsel, I granted the plaintiff’s motion on March 22nd, 2024, with reasons to follow.

3My reasons are set out below.

B. FACTS

4The plaintiff, the Ontario Securities Commission (“OSC”) is a self-funded, independent Crown corporation responsible for regulating capital markets in Ontario.

5The defendant Vadim Tsatskin (“Tsatskin”) is a debtor to the OSC by way of an order (the "Global Energy Order") dated December 13, 2013.

TSATSKIN’S DEBT TO THE OSC

6The defendant, Irina Tsatskin (also known as Irene Tsatskin, Irene Bromberg and Irina Bromberg) is Tsatskin's spouse (“Bromberg”) and the sole registered owner of the Colby Property. Tsatskin and Bromberg reside at the Colby Property with two of their four children. The Colby Property is the matrimonial home.

7In 2006, Tsatskin, and others, incorporated Global Energy Group, Ltd. ("Global Energy") in the Bahamas. Tsatskin controlled Global Energy. Tsatskin was also involved with New Gold Limited Partnership ("New Gold").

8Global Energy and New Gold purported to sell partnership units in New Gold’s business to the public in furtherance of a fraudulent scheme. Tsatskin directed the unauthorized sale of the units (the "Securities") in New Gold and Global Energy in contravention of the Securities Act.

9Consequently, the OSC initiated quasi-criminal and administrative proceedings against Tsatskin for orchestrating the fraudulent investment schemes.

10During the OSC's investigation and in the subsequent court and tribunal hearings brought by the OSC, the OSC established that:

a) Tsatskin knew the sales of Securities were deceitful, fraudulent, and misleading. b) Tsatskin and his sales team misled investors. c) USD$16,197,125.02 of investor funds (the "Investor Funds") were obtained from the investment schemes. d) Tsatskin knew that, by his actions, he was perpetrating a fraud and contravening securities law. e) Tsatskin gifted his mother, Faina Tsatskin USD $439,000.00 from the Investor Funds. f) Tsatskin or his other family members also received $145,384.49.15 g) USD $2,891,000.00 of Investor Funds were transferred to accounts effectively controlled by Tsatskin.

11On November 24, 2011, the Ontario Court of Justice sentenced Tsatskin to a jail term of three years. During the quasi-criminal proceeding, the following statements were made:

By Crown's counsel:

"[19] Now, Mr. Tsatskin received about -- or Mr. Tsatskin and his family had received--received about 2 million dollars, which is a -- an enormous amount of money by anybody's standards. He's a directing mind of Global Energy…"

From the Court:

"[122] I also have to take into [sic]that there were others involved in this. The fraud was a large one. The – the amount that Mr. Tsatskin and his family received was certainly a substantial – very substantial on the allegations … but it is only alleged that Mr. Tsatskin and his family, or people connected to him, received something in the range of two million dollars..."

12Tsatskin used his family members to disburse money from the various schemes. The OSC determined that:

"[136] Based on his review of the banking records, as well as documents seized by Staff at the offices of Global Energy …with respect to their activities with Global Energy…. $145,384.49 to Tsatskin or members of his family"

"[156] Tsatskin stated that Alexandre Tsatskin ("Alexandre"), who is listed as the President of GVC Marketing Inc. on the Corporation Profile Report for that corporation, is Tsatskin's father. Tsatskin stated that Alexandre was President in name only, while he, [and others] were actually responsible for the operation of GVC Marketing Inc.;"

"[171] Based on his compelled testimony, we find that Tsatskin effectively controlled GVC, although his father was the nominal director and officer of the corporation. We therefore find that [Investor Funds] transferred to GVC (US$2,891,000.00) were effectively controlled by Tsatskin..."

13On December 13, 2013, the OSC issued the Global Energy Order against Tsatskin, which sets out various monetary and non-monetary sanctions. Pursuant to the Global Energy Order, Tsatskin was ordered to pay $5,304,750.00 to the OSC.

14In furtherance of the Global Energy Order, the OSC placed Tsatskin on the Canada Revenue Agency Refund Set-Off Program (the "Program"). The Program intercepted payments due to Tsatskin and another and provided the payments to the OSC in partial satisfaction of the Global Energy Order.

15The OSC recovered only $4,287.05 under the Global Energy Order pursuant to the Program with the last payment having been received in July 2021.

16Despite the issuance of the Global Energy Order, Tsatskin has paid virtually nothing to the OSC in satisfaction of the debt owed under the Global Energy Order. The amount owing under the Global Tsatskin Debt currently remains at $5,300,462.95 ($5,304,750.00 – $4,287.05) plus interest and enforcement costs.

OSC’s POSITION ON THIS MOTION

17The plaintiff, the OSC obtained a judgment against the defendant Tsatskin on December 13th, 2013, in the amount of $5,304,750.00. The current amount owing by Tsatskin on the judgment is $5,300,462.95.

18The OSC is therefore a judgment creditor of the defendant Tsatskin. The judgment remains unpaid.

19The OSC seeks to collect on its debt and, in this regard, launched an action as against various defendants including Tsatskin and Tsatskin’s spouse Ms. Bromberg. In the action, the OSC asserts that Tsatskin, to avoid payment of his debt to the OSC, orchestrated an extensive scheme to hide his true ownership interest in, among others, the unencumbered matrimonial home (the “Colby Property”), municipally known as 8 Colby Lane, Richmond Hill, Ontario.

20The OSC takes the position that, between 2006 and April of 2022, Tsatskin and his spouse, the defendant Ms. Bromberg moved properties and money through a sequence of real estate transactions that ultimately had the effect of defeating the OSC’s ability to collect on the debt owed by Tsatskin. The OSC alleges that Tsatskin directly or indirectly contributed the balance of funds needed, including Investor funds, to purchase the Mapledown Property and the Colby Property and that Investor Funds can be traced into the Colby Property.

21The OSC now asserts in the action that Ms. Bromberg (“Bromberg”), while the legal owner of the Colby Property, actually holds a 50% beneficial ownership interest in the Colby Property in trust for Tsatskin by virtue of an express, resulting, or constructive trust and in connection with a tracing remedy.

22In furtherance of the action, the OSC now seeks a certificate of pending litigation (the "CPL") on title of the Colby Property to ensure that the defendants, given Tsatskin's history of fraudulent conduct, do not dispose of the Colby Property or dissipate its equity before the action is decided.

23The OSC argues that without the granting of the CPL, there is a strong likelihood that any future judgment granted in the action will be rendered moot.

BROMBERG’S POSITION ON THIS MOTION

24Bromberg argues that this motion should be dismissed for inter alia the following reasons:

25Bromberg’s position is that the OSC, having registered the caution on the Colby Property in January 2024 without notice to either this court or the respondent, has not come to court with clean hands such that a CPL, which is an equitable remedy should not be granted in this case.

26Bromberg argues that the lengthy delay between the time that the plaintiff obtained its judgment against Tsatskin and the launching of this motion should preclude the granting of a CPL in this case.

27Bromberg argues that the OSC has not brought evidence of a supposed fraudulent conveyance that would permit this court to grant a CPL. Bromberg’s position is that the OSC is really seeking a Mareva injunction to prevent her from dissipating her assets pending the court’s determination of whether she holds the properties in trust for Mr. Tsatskin. She argues that a Mareva injunction is unavailable on this motion and is unwarranted.

28Finally, Bromberg argues that the balance of convenience and equities do not favour granting a CPL to the OSC. Ms. Bromberg’s evidence is that she will be prejudiced by the placing of a CPL on her home. Ms. Bromberg has agreed with her lender not to permit a registration on the Colby Property such that encumbering the Colby Property risks causing her loan to go into default. In addition, Bromberg raises concerns that the placing of a CPL on the Colby Property will be prejudicial to her business and her business reputation.

FILING OF WRITS

29On August 21, 2023, the OSC filed writs (the "Writs") of seizure and sale in regard to the Global Energy Order. The OSC filed the Writs with the Sheriffs of the Regional Municipality of York and the City of Toronto. The Writs are identified as execution numbers 23-0001662 and 23-00003964, respectively.

30The writs attach to any interest Tsatskin has or may have in real property, including potentially the Colby Property.

THE ACTION – STATEMENT OF CLAIM

31On December 4, 2023, the OSC commenced the underlying action (the "Action") against Tsatskin, his spouse, Ms. Bromberg, and others. In the Action, the OSC:

• advances trust claims against Tsatskin and his spouse, Ms. Bromberg, which call into question their beneficial and legal interests in the Colby Property;
• requests that a certificate of pending litigation be registered against the Colby Property (i.e., their matrimonial home); and
• asserts that Tsatskin is the beneficial owner of at least a 50% interest in the Colby Property by virtue of a resulting or constructive trust and in connection with a tracing remedy.

32In support of its position on this motion and the action itself, the OSC alleges that:

• Tsatskin, directly or indirectly, contributed the balance of the funds needed, including using Investor Funds, to purchase the Mapledown Property and the Colby Property;
• Tsatskin, directly or indirectly, continued to provide monies for the upkeep and maintenance of the Mapledown Property and the Colby Property;
• Tsatskin’s spouse, Ms. Bromberg, at Tsatskin’s direction, registered the Mapledown Property and the Colby Property solely in her name to conceal Tsatskin's beneficial ownership interest in the couple’s matrimonial homes;
• the taking of the title in his spouse’s name was done to shield Tsatskin from the OSC and other creditors;
• Investor Funds can be traced into the Colby Property; and
• Mr. Tsatskin’s spouse, Ms. Bromberg continues to hold at least a 50% beneficial interest in the Colby Property

CAUTIONS

33On December 18, 2023, in furtherance of its claims in the Action, the OSC registered a caution (the "Caution") against title to the Colby Property.

34On January 24, 2024, pursuant to the request of the Land Registry Office, the OSC corrected the Caution to (i) refer to section 71 of the Land Titles Act, and (ii) state that the Caution relates to a claim by a creditor, that the Property was conveyed to Bromberg to defeat the interests of creditors and (iii) that the Land Registrar is authorized to delete the Caution 60 days from the date of registration.

35The Caution was set to expire two days after this motion was heard, on March 24, 2024 (i.e., 60 days after the corrected filing).

OSCS’S EVIDENCE IN SUPPORT OF THIS MOTION

36In support of this motion, the OSC has filed two affidavits of Tiziana Moretti, sworn on December 14th, 2023 and January 26th, 2024. (“Moretti Affidavits”) Ms. Moretti is the chief law clerk at Speigel Nichols Fox LLP, the lawyers for the OSC. She deposes that her affidavit is based upon a review of inter alia, various documents provided by the OSC, a review of the credit bureau report of Vadim Tstaskin, a review of various corporate searches and database of government records and searches obtained from Teraview.

37These affidavits outline the following evidence in support of the OSC’s position that Ms. Bromberg holds a 50% beneficial interest in the Colby Property in trust for Tstaskin by virtue of an express, resulting or constructive trust and in connection with a tracing remedy.

38The OSC argues that from April 2006 (i.e., when Tsatskin became involved with Global Energy and the schemes) to April 2022, Tsatskin and his spouse Bromberg orchestrated various real estate transactions involving their matrimonial homes. The OSC argues that these events/transactions include:

a) 2006 – Tsatskin begins his involvement with Global Energy and New Gold (ie: Fraudulent scheme) b) On April 6, 2006, Tsatskin and Bromberg (joint tenants) sold their matrimonial home, identified as 70 Foxfield Crescent, Concord, Ontario (the "Foxfield Property"). Tsatskin and Bromberg sold the Foxfield Property for $496,900.00 and they both received the net sale proceeds (the "Foxfield Proceeds"). The sale proceeds discharged the RBC First Mortgage and paid a writ of seizure and sale (the "Writ") filed with the Sheriff of the Regional Municipality of York. The OSC argues that assuming that the entire principal amount of the RBC First Mortgage had been advanced and the entire balance of the Writ was paid, Tsatskin and Bromberg jointly received sale proceeds in the amount of $120,633.95 [$496,900.00 - ($320,015.25 + $56,250.80)] before closing costs from the sale of the Foxfield Property. c) May 25th 2006 – Court orders Tstatskin to pay $50,020 in damages (Foldes v. Tsatskin) d) On May 26, 2006 (i.e., a day after a court ordered Tsatskin to pay $50,020 in damages) Mr. Tsatskin’s spouse, Ms. Bromberg, paid $808,411.21 to purchase the property municipally known as 63 Mapledown Way, Vaughan, Ontario (the "Mapledown Property"). The OSC alleges that Bromberg, at the direction of Tsatskin, purchased the Mapledown Property using the Foxfield proceeds and then put the Property in her name only. Tsatskin did not take legal title to the Mapledown Property, but resided at the property with Bromberg and their children. The purchase price for the Mapledown Property was comprised of a mortgage to The Toronto Dominion Bank ("TD") that secured the original principal amount of $562,250.00 (the "Old TD First Mortgage") and a down payment of $246,161.21 ($808,411.21 -$562,250.00) plus closing costs. Consequently, the OSC maintains that Bromberg would need all of the net sale proceeds (i.e. $120,633.95) from the Foxfield Property, plus additional funds to complete the purchase of the Mapledown Property. On July 24, 2009, Bromberg granted two new mortgages against the Mapledown Property: * a second mortgage to TD securing the original principal amount of $550,000.00 (the "New TD First Mortgage"); and * a demand mortgage to TD securing the original principal amount of $350,000.00 (the "TD Demand Mortgage"). The OSC maintains that it appears that the New TD First Mortgage was used to discharge the Old TD First Mortgage. e) June 8th, 2010 – Tribunal issued its notice of hearing to Tstaskin f) September 10th, 2010 – Faina Mortgage – Bromberg granted, against the Mapledown Property, a demand mortgage to Faina (Tstaskin’s mother) securing the original principal amount of $500,000.00. The granting of the Faina Mortgage occurred shortly after the Tribunal issued its notice of hearing to Tsatskin on June 8, 2010 in the Global Energy proceeding. In the Global Energy proceeding, the Tribunal ultimately found that, before the registration of the Faina Mortgage, Tsatskin gave Faina Tsatskina approximately USD$439,000.00 from Investor Funds. g) December 13th, 2012 – Order – Global Energy Order against Tsatskin in the amount of $5,304,750.00. h) On March 10, 2021, Bromberg sold the Mapledown Property for $2,275,000.00 and received the net sale proceeds (the "Mapledown Proceeds"). The Faina Mortgage was discharged but Faina received no monies. The OSC alleges that Tsatskin is entitled to a 50% beneficial interest in the Mapledown Proceeds. The OSC argues that assuming that the entire original principal amounts of the New TD Mortgage, the TD Demand Mortgage, and the Faina Mortgage were advanced, Bromberg received $875,000.00 [$2,275,000.00 – $1,400,000.00 ($550,000.00 + $350,000.00 + $500,000.00)] before closing costs from the sale of the Mapledown Property i) On April 29, 2022, Bromberg (who took title to the property as Irina Bromberg) purchased the Colby Property, which is the couple's current matrimonial home. Bromberg paid $5,330,000.00 for the Colby Property and the Colby Property remains completely unencumbered. The OSC alleges that Tsatskin directed Bromberg to use the Mapledown Proceeds to purchase the Colby Property. The OSC further alleges that Tstaskin directly or indirectly contributed the balance of the funds necessary to complete its purchase. Tsatskin resides at the Colby Property with Bromberg and their children. The transfer for the purchase stated that Bromberg paid $5,330,000.00 in cash for the Colby Property.

Tsatskin’s/Bromberg’s Evidence in Response to the OSC’s Motion

39In response to this motion, Bromberg has placed two affidavits in her name before the Court. No supporting documentation in the form of exhibits was appended to either affidavit. The evidence outlined in the Bromberg Affidavits includes the following:

Affidavit of Irene Bromberg Sworn on January 30th, 2024

40Bromberg’s evidence in this affidavit relates to the prejudice that she alleges will result if a CPL is granted. Her evidence with respect to this issue is as follows:

• Ms. Bromberg and her family reside at the Colby Property. She and Vadim Tsatskin have four children – two are at University and two live with Ms. Bromberg and Mr. Tsatskin at the Colby Property. One is in elementary school and one is in high school.
• Bromberg and Tsatskin have no intention of selling the Colby Property.
• Ms. Bromberg’s evidence is that she purchased the Mapledown Property in 2005, and did not move in until May of 2006) which was before Tsatskin commenced the business that was at issue in the OSC proceedings.
• Bromberg’s evidence is that the registration of a CPL in respect of the Colby Property will be prejudicial to her as she has substantial loans secured with the Colby Property and other properties that she owns through her corporations.
• Bromberg’s evidence is that the Colby Property is presently intentionally clear of any registered encumbrances in order to be able to secure a first mortgage to a bank when market conditions are more favourable. Ms. Bromberg indicates that her agreement with her lender includes that there are to be no encumbrances registered on the Colby Property until she is in a position to pay his loan. She cannot have an intervening registration on the Colby Property before she gets a first mortgage. She argues that if the OSC is permitted to register now, her loan will be in default and could be called immediately.
• Ms. Bromberg’s evidence is that she operates A-Protect Warranty, a warranty business for used cars. Her evidence is that a registered caution or no dealings order related to her name and her home will be prejudicial to her business and her business’ reputation

Affidavit of Irene Bromberg Sworn on February 11th, 2024

41Bromberg’s evidence in this affidavit relates to the sales and mortgages and titles relating to the Foxfield and Mapledown properties. Her evidence is as follows:

• The sale of the Foxfield Property closed in 2006. The home was jointly owned by Ms. Bromberg and Mr. Tsatskin. Tsatskin’s share of the proceeds was used to pay his legal fees as well as to satisfy the judgment relating to separate proceedings brought against him by a Mr. Foldes.
• Ms. Bromberg’s evidence is that she then purchased the Mapledown Property using only her proceeds from the sale of the Foxfield Property. Her evidence is that her husband did not contribute to the purchase of the Mapledown Property and none of its equity was his and nor does he have equity in the Colby Property. Ms. Bromberg’s affidavit states that title to the Mapledown and Colby properties were and are in her name only.
• She and her husband were going through marital problems at the time that they moved into the Mapledown Property and she therefore thought it was best that title to the Mapledown property be only in her name for her own sake and that of her children.
• In September 2010, she permitted a mortgage to be registered for Faina Tsatskin, Vadim Tsatskin’s mother. Faina had loaned substantial funds to Vadim Tsatskin for his legal fees during his ordeal with the OSC. She agreed to give a mortgage to Faina in support of that loan to her husband. Her evidence is that no funds were given or loaned to her or used to purchase or pay for the Mapledown Property. She deposes that her Mapledown Property was used effectively to guarantee that loan by Faina Tsatskin but she received no benefit.
• When the Mapledown property was sold, the mortgage was taken off title. Faina Tsatskin was not paid any proceeds from the Mapledown Property when she agreed to remove her mortgage.

C) ANALYSIS - THE TEST FOR LEAVE TO ISSUE A CERTIFICATE OF PENDING LITIGATION

42The purpose of a CPL is to give non-parties notice of a claimant's proprietary claim to real property. A CPL protects the claimant from a situation in which a defendant disposes of land before the claimant can successfully establish an interest in that land at trial. Avan v. Benarroch, 2017 ONSC 4729 ("Avan") at paras 15 and 39.

BASIC REQUIREMENTS

43The Rules of Civil Procedure (the “Rules”) and the Courts of Justice Act, (the “CJA”), provide that a claimant must satisfy two basic requirements to obtain a CPL:

a) That the action calls into question an interest in land: Courts of Justice Act, s. 103(1); and b) In the originating process, the claimant includes a claim for a CPL and provides a description of land that is sufficient to allow for registration: Rule 42.01(1),(2) of the Rules of Civil Procedure.

44With respect to the first requirement, in this case, the moving party, the OSC, is a judgment creditor. A claim that a debtor is the beneficial owner of a property as a result of an express, resulting or constructive trust, is a claim that calls into question an interest in land: West v. West, 1997 CarswellOnt 1670 (Ont. Gen. Div.) at para. 18. (1061307 v. Zang, 2023 ONSC 217, Chalmers J. para.7) In the statement of claim, the OSC advances such trust claims which call into question Tsatskin’s interest in land.

45With respect to the second requirement, at paragraph 1(d) of the statement of claim, the OSC seeks an Order for the registration of the CPL against title to the Colby Property. The Property is described sufficiently in paragraph 1 of the statement of claim to allow for registration.

46I am satisfied that the two basic requirements are met in this case.

GOVERNING TEST

47It has been stated that a practical approach on a motion for leave to issue a certificate of pending litigation, is for the court to:

a) First, determine if there is a triable issue as a threshold question ("Part 1"); and b) Second, consider the equities on all matters between the parties to determine and whether the court should exercise its discretion to allow the certificate of pending litigation ("Part 2"). 2526716 Ontario Inc. v. 2014036 Ontario Ltd., 2017 ONSC 1762 Emery J. at para 48

48The factors the court is to consider when deciding a motion brought on notice seeking leave to issue a CPL are found in Perruzza v. Spatone, (2010) ONSC 841. At paragraph 20 of Perruzza, Master Glustein, as he then was, identifies those considerations which I have considered and which are applicable to this motion as follows:

(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) ("Homebuilder") at para 1); (ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C. 43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commercial List] at para 62); (iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CarswellOnt 219 (Ont. C.A.) at para 20); (iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras 10-18); and (v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Ont. Gen. Div.), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para 9).

The Issue of the Alleged Fraudulent Conveyance

49Bromberg argues that the OSC has not brought evidence of a supposed fraudulent conveyance that would permit this court to grant a CPL. Bromberg argues that what the OSC really seeks is a Mareva injunction to prevent Ms. Bromberg from dissipating her assets pending the court’s determination of whether she holds the properties in trust for Mr. Tsatskin. Bromberg argues that a Mareva injunction is unavailable on this motion and is unwarranted.

50Many of the arguments raised by Bromberg during the motion and in her factum are premised on the assumption that the OSC is alleging that Bromberg and Tsatskin engaged in various fraudulent conveyances with respect to the Properties in issue. However, I agree with the position of the OSC’s that Bromberg has mischaracterized the nature of the relief being sought by the OSC.

51In its factum and during oral submissions, the OSC, with reference to the statement of claim, confirmed that that the core relief sought by the OSC in the Action is the recognition of trust claims and a declaration that Bromberg holds at least 50% of the Colby Property in trust for Tsatskin. In this regard, the statement of claim clearly confirms that the OSC is advancing trust claims against Tsatskin and his spouse which call into question their beneficial and legal interests in the Colby Property.

52If the OSC succeeds in the Action, then Tsatskin's beneficial interest in the Colby Property will be recognized, the Writs will attach to the Colby Property, and the OSC will collect on its debt. I therefore find that the core relief being sought by the OSC is the recognition of trust claims and the relief being sought is not based on an alleged fraudulent conveyance as has been suggested by Bromberg.

ANALYSIS

53Under Part 1, the OSC has to prove it has a reasonable chance of proving a claim that brings title to or an interest in land into question. The OSC does not need to establish that it will likely succeed at trial. (Perruzza, supra). The threshold is "low". (1061307 v. Zang, 2023 ONSC 217, Chalmers J. para.11).

54The OSC takes the position that it has a reasonable chance of proving a claim that brings title to or an interest in land in question. (Perruzza, supra) The OSC advances a claim that there is an express, resulting or constructive trust and that between 2006 and April of 2022, Tsatskin and his spouse moved properties and money through a sequence of real estate transactions that ultimately had the effect of defeating the OSC’s ability to collect on the debt owed by Tstaskin. Evidence of the various real estate transactions is in the record before me.

55The plaintiff also relies on section 9 of the Execution Act. Under section 9 of the Execution Act, R.S.O. 1990, c.E.24, a judgment creditor may realize on any lands held in trust for the judgment debtor. If the court ultimately determines that Tsatskin has a beneficial interest in the Colby Property, the OSC is entitled to look to that Property to satisfy the Judgment. Avan v. Benarroch, 2017 ONSC 4729 At paras 20 to 22.

56Bromberg relies on Casaplata Inc. v. Ali 2023 ONSC 3359 at paras. 42-43 (“Casaplata”) and Mr. Greek Meats Inc. v. Mr. Zagros Management Inc., 2023 ONSC 791 (“Mr. Greek Meats Inc.”) for the proposition that securing property for enforcement purposes is not the type of interest in land that a CPL is intended to protect. Both of these decisions are distinguishable from the case at bar.

57In particular, in Casaplata, the moving party was not alleging an interest in land by way of a constructive trust or resulting trust claim. Moreover, the Court specifically determined that the statement of claim and supporting affidavit for the motion failed to assert any claim to any interest in the property in question.

58In Mr. Greek Meats Inc., the Court found that there were other remedies available to the plaintiff and notably, the Court was not satisfied that the moving party’s unpaid debt could be transformed into an interest in land by way of a claim for constructive trust or resulting trust claim. This is not the case here. In this regard, there is authority consistent with the OSC’s position on this motion that a trust claim raises a triable issue with respect to Tsatskin’s beneficial interest in the Colby Property. (1061307 v. Zang, 2023 ONSC 217, and Ishver Lad et al. v. Manny Marcos et al., Endorsement of Justice Stribopoulos dated August 26th, 2019, Court File No. CV-19-111(SCJ))

59In 1061307 v. Zang, (“Zang”) the Honourable Justice Chalmers in granting certificates of pending litigation noted that he was satisfied that the judgment creditor had met the low threshold of establishing that it raised a triable issue with respect to the debtor’s beneficial interest in various properties by virtue of a resulting trust. In Zang the plaintiff had claimed that the debtor had either transferred properties to her family members or provided monies to her sons to purchase properties. The current case before the court is akin to Zang where Justice Chalmers, in granting the CPL, noted that "the moving party is a judgment creditor" and "[a] claim that a debtor is the beneficial owner of a property as a result of an express, resulting or constructive trust, is a claim that calls into question an interest in land".

60In Lad et al v. Marcos et al., the plaintiffs were judgment creditors of two of the defendants. They brought an action claiming, among other things, that the debtors held a beneficial interest in property legally owned by another defendant/spouse by virtue of an express, resulting, or constructive trust. The plaintiffs brought a motion for a CPL on a without notice basis. The Court held that:

[i]n essence, the current action will turn exclusively on whether or not the Plaintiffs can establish that the conveyances to [spouse] were fraudulent or that [the debtor] … enjoys a beneficial interest in the properties. In these circumstances, … [a CPL] should issue... (Ishver Lad et al. v. Manny Marcos et al., Endorsement of Justice Stribopoulos dated August 26th, 2019, Court File No. CV-19-111(SCJ))

61In HarbourEdge Mortgage Investment Corporation v. Community Trust Company, 2016 ONSC 448 at paras 45 and 46, the Court in granting a CPL held that the threshold in respect of the "interest in land" issue on a motion respecting a CPL is whether there is triable issue to such interest (whether a reasonable claim to such interest has been raised); not whether the plaintiff will likely succeed ultimately at trial. The Court in Harbour noted that it is enough to establish that a constructive trust is a possible remedy at trial based upon the evidentiary record on the motion for a CPL.

62The Court in HarbourEdge also properly pointed out that a court does not assess the credibility of deponents or decide disputed issues of fact at the juncture of an interlocutory motion for a CPL. HarbourEdge Mortgage Investment Corp. v. Community Trust Co., 2016 ONSC 448 at para 45.

Has the OSC demonstrated that there is a triable issue with respect to its trust claims?

The Requirements of a Trust Claim

63In Pecore v. Pecore, 2007 SCC 17 ("Pecore") at para 4 the Surpreme Court of Canada confirmed that equity recognizes a distinction between legal and beneficial ownership. In particular, the Court confirmed that “the beneficial owner of property has been described as the real owner of property even though it is in someone else’s name”.

64Section 9 (1) of the Execution Act R.S.O. 1990. C. E.24, provides that "[t]he sheriff to whom a writ … is delivered … may seize and sell … the lands of the execution debtor, including any lands whereof any other person is seized or possessed in trust for the execution debtor …"

65Pursuant to section 9 of the Execution Act, a judgment creditor may realize on lands held in trust for the judgment debtor: Avan, supra, at para 22. Although a creditor's writ automatically attaches to property that a debtor beneficially owns, in practice, the sheriff will not seize and sell such property without a Court order. To obtain such an order, a plaintiff creditor can advance a trust claim asserting that its debtor is the beneficial owner (i.e., the real owner) of property by virtue of an express, resulting, or constructive trust.

66In Cambone v. Okoakih, 2016 ONSC 792 at para 173, the Court described a resulting trust as follows:

Resulting trusts can arise in a number of ways, but of relevance here is where an asset is purchased by one person and placed in the name of another. In that situation, it is presumed that the recipient holds his or her interest in trust for the person who purchased the asset and provided the funds for it, unless it was intended that there be a gift. The onus is on the recipient to prove the intention was to make a gift. Where there is more than one contributor to the purchase price, it is presumed that the trust is in favour of all of them. See Waters’ Law of Trusts in Canada, (4th Ed., Carswell, 2012), chapter 10, pp. 394-475.

67When determining whether a party intended to make a gift, the Court will consider various factors including whether the transferor’s treatment of the property after the transfer was consistent with ownership and, thus, inconsistent with the intention to gift. (Syrnyk v. Syrnyk, 2019 ONSC 225 at paras 22 and 23)

Triable Issue - There is Sufficient Evidence to Support A Trust Claim

68The OSC alleges that Tsatskin is the beneficial owner of at least 50% of the Colby Property. The OSC further argues that Bromberg is deemed to be holding at least 50% of the Colby Property in trust for Tsatskin unless she can establish that she received no funds from Tsatskin or that the funds she received were gifted to her. The OSC maintains that there is ample evidence to support the conclusion that it will be difficult for Bromberg to rebut the presumption. In this regard, having considered the evidence in the record before me, I am satisfied that the OSC has met the low threshold of establishing that it has raised a triable issue as to whether Tsatskin holds a beneficial interest in the Colby Property by way of a resulting trust.

69On April 29th, 2022, Bromberg (who took title as Irina Bromberg) bought the current family house, being the property municipally described as 8 Colby Lane, Richmond Hill, Ontario (the “Colby Property”) for $5,300,000.00. The transfer for the purchase price stated that Bromberg paid $5,330,000.00 in cash for the Colby Property which remains unencumbered as of the date of the hearing of this motion.

70Bromberg’s evidence is that she alone contributed to the purchase of the Foxfield, Mapledown and Colby Properties with no contributions having been made by Tsatskin. However, Bromberg’s affidavits did not contain any exhibits referencing supporting evidence in the form of trust ledger statements, utility bills, real estate files, bank statements or any form of documentary evidence which would support the assertion that she and she alone contributed to the purchase of the properties as well as the maintenance and upkeep of the properties. In this regard, there is no supporting evidence concerning the source of the significant funds of over five million dollars to purchase the Colby Property.

71The series of real estate transactions relating to the various matrimonial homes also occurred during the time that Tsatskin was involved in the Global Energy and New Gold fraudulent schemes and in particular during the time where it has been determined that over 2.8 million dollars of Investor Funds were transferred to accounts effectively controlled by Tsatskin. The timing of these events, raises a triable issue with respect to the source of funds used to purchase the Mapledown and Colby Properties.

72During the time period of the various transfers between 2006 to 2022, Mr. Tsatskin’s treatment of the Properties also raises the issue as to whether he had an ownership interest in the Properties. Syrnuk, surpa, at paras 22 and 23.

73Between 2006 to 2022, Tsatskin continued to reside at the Properties which were all matrimonial homes.

74Bromberg’s evidence is that she and Tsatskin were experiencing marital issues which is why the Mapledown Property was place in her name only. However, during this same time period when Bromberg’s evidence is that the couple was experiencing marital issues, Bromberg granted, against part of the Mapledown Property, a demand mortgage (the “Faina Mortgage”) to her mother-in-law, Faina Tsatskin. This Faina Mortgage secured the original principal amount of $500,000.00 The granting of the Faina Mortgage occurred shortly after the Tribunal issued its notice of hearing to Tsatskin on June 8th, 2010 in the Global Energy proceeding.

75Bromberg’s evidence is that Faina had loaned substantial funds to her son, Vadim Tsatskin for his legal fees relating to the OSC investigation. Despite the fact that Bromberg maintains that she was the sole owner of the Mapledown Property, and experiencing marital issues, Bromberg agreed to grant the demand mortgage to Tsatskin’s mother, on the Mapledown Property in support of her mother-in-law’s loan to her husband Tsatskin, whom Bromberg maintains has no ownership interest in the Property.

76The evidence in the record before me also confirms that OSC has determined that from the Investor Funds which were fraudulently obtained, Tsatskin gave $439,000 U.S. to his mother which is almost the same amount as the Faina mortgage.

77The granting of this mortgage to her mother in law relating to loans by her mother in law to Tsatskin relating to legal fees, in the face of the indicated marital issues, also raises the question as to whether Tsatskin had an interest in the Property.

78Moreover, in light of the OSC’s findings about Tsatskin’s conduct, including his use of Investor Funds for his own benefit, the corresponding timeline surrounding the movement of real property by Tsatskin and Bromberg from 2006 onward, appears suspicious. Specifically of note is the sale of the Foxfield Property in 2006 in the face of a cost order granted against Tsatskin, the subsequent purchase of the Mapledown Property and Colby Property in Bromberg’s name alone and to the complete exclusion of Tsatskin, which left him judgment proof.

79Having regard to the record before me there is sufficient evidence before me to allow me to conclude that there is a triable issue with respect to an interest in the Colby property on the basis of a resulting and/or constructive trust. I am satisfied that a declaration of a constructive and/or resulting trust and a tracing of funds are possible remedies at trial.

Equities

80Part two of the governing test is to review all matters as between the parties to determine whether the CPL should be granted.

81Even if a moving party meets the basic threshold requirements, the court may still refuse the CPL if it would be unjust to order it. The court must consider the equities in granting this form of interim relief. This is not a mechanical application of a test, but an exercise of discretion to achieve a just result. Factors the court may consider include the strength of the case, the uniqueness of the land, the adequacy of damages as remedy, whether the CPL appears to be for an improper purpose and the balance of convenience. Avan v. Benarroch, 2017 ONSC 4729 at para 18.

82The list of factors which Master Glustein (as he then was) refers to in Perruzza, surpa, which I referred to are often referred to as the “Dhunna factors” (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551), and are applied regularly to determine the equities between the parties on a motion for leave or a motion to discharge, with respect to a certificate of pending litigation. (2526716 Ontario Inc. v. 2014036 Ontario Ltd., 2017 ONSC 1762 Emery J. at para 48.

83The court is mindful that in the context of this case, many of the Dhunna factors are more relevant to an action for specific performance than to this case where a tracing claim and a constructive trust claim are being advanced here. (Avan v. Benarroch, 2017 ONSC 4729 at para 36, Roseglen Village For Seniors Inc. v. Doble 2010 ONSC 4680)

84The moving party has a judgment in the amount of $5,300,462.95. This judgment has been outstanding since December 2013 and to date no attempts have been made by Tsatskin to pay the judgment. I find therefore that there is no improper purpose in terms of the OSC seeking the CPL.

85During the OSC’s investigation and in the subsequent court and tribunal hearings brought by the OSC, the OSC established inter alia that Tsatskin knew the sales of securities were deceitful, fraudulent, and misleading, Tsatskin and his sales team misled investors, USD $16,197,125.02 of Investor Funds were obtained from the investment schemes, Tsatskin knew that, by his actions, he was perpetrating a fraud and contravening securities law, Tsatskin gifted his mother, Faina Tsatskin USD$439,000.00 from the Investor Funds, Tsatskin or his other family members also received $145,384.49.15 and US$2,891,000 of Investor Funds were transferred to accounts effectively controlled by Tsatskin.

86The OSC argues that without the granting of the CPL, there is a strong likelihood that any future judgment granted in the action will be rendered moot.

87Ms. Bromberg, in her affidavit has given evidence the family has no intention of selling the home and that she and her business will be prejudiced by the placing of a CPL on her home. It is significant that Ms. Bromberg has made allegations of prejudice but has not appended any exhibits to her affidavit to substantiate her assertions of potential prejudice.

88As an example, Bromberg’s evidence is that the registration of a CPL in respect of the Colby Property will be prejudicial to her as she has substantial loans secured with the Colby Property and other properties that she owns through her corporations. Her evidence is that her agreement with her lender includes that there are to be no encumbrances registered on the Colby Property until she is in a position to pay his loan. She argues that she cannot have an intervening registration on the Colby Property before she gets a first mortgage. She further maintains that if the OSC is permitted to register now, her loan will be in default and could be called immediately.

89Further, Ms. Bromberg’s evidence is that a registered caution or no dealings order related to her name and her home will be prejudicial to her business and her business’ reputation.

90It is significant that other than Ms. Bromberg’s assertions with respect to this alleged prejudice, there is no documentary evidence in the record before me to support her assertions of prejudice. In this regard, the Bromberg affidavits are all made without attaching any foundational documents, including the purported credit agreements or corresponding security documents that she alleges would be jeopardized by the granting of the CPL.

91With respect to the alleged reputational prejudice, this represents an abstract argument. Indeed, there is no evidence before the court of any real prejudice relating to the alleged harm to Bromberg’s reputation which may flow from the registering of a CPL.

92The OSC argues that it will be prejudiced if the Colby Property is transferred or encumbered before a final determination of the action. The OSC argues that unless the CPL is registered against title to the Colby Property, then the defendants will either transfer the Colby Property or deplete its equities. The OSC maintains that if the CPL is not granted, Bromberg and Tsatskin may sell the Colby Property and the OSC will be left without any practical remedy to collect if successful at trial. The OSC argues that its concerns are grounded on the previous conduct of the parties which includes the following:

i) Tsatskin has a criminal past, has been found guilty of fraud, and has given Investor Funds to his family. ii) Bromberg previously granted a mortgage to Tsatskin's mother that was registered against a former home and that suspiciously matched one of the amounts taken by Tsatskin from Investor Funds and given to his mother. iii) The OSC maintains that Bromberg and Tsatskin have orchestrated an elaborate scheme to avoid paying the Global Energy Order.

93The OSC argues that the CPL is the only appropriate relief available to the OSC. Absent the CPL, the OSC will likely have no other remedy to collect on the substantial judgment owing by Tstaskin which is in excess of five million dollars.

The Registering of the Cautions

94Bromberg argues that having registered the caution on the Colby Property in January 2024 without notice to either this court or the respondent, the OSC has not come to court with clean hands and that this factor should militate against granting the CPL.

95In Claireville Holdings v. Botiuk, 2014 ONSC 6505 the plaintiff improperly registered cautions on title to 13 properties. An application was launched to expunge the cautions and the plaintiff then sought certificates of pending litigation. The Court expunged the impugned notices from title but then ordered that they would be replaced either with security or a certificate of pending litigation. While the court accepted that the registering of the cautions represented a factor for the court to consider when balancing the equities, the court did not find that the improper registration of the cautions on the part of the plaintiff precluded the granting of a certificate of pending litigation.

96In this case, I agree that given the ongoing case conferences that were being held with respect to the interim CPL issue, it would have been preferable for the OSC to notify the defendants and the Court of its intention to register the second caution. While the registering of the cautions is a factor to consider and may represent “a strike” against the OSC in respect of its request for a CPL, it does not represent a bar to granting a CPL. Claireville Holdings v. Botiuk, 2014 ONSC 6505 at para 25

Delay

97Bromberg has also raised the issue of delay and argues that the OSC has offered no explanation as to why it waited more than a decade to pursue Ms. Bromberg for Mr. Tsatskin’s debt. There is no question that there has been delay on the part of the OSC in terms of advancing its claim as against the defendants, including Bromberg.

98Bromberg argues that the CPL should not be issued where the claimant does not prosecute the claim with reasonable diligence and Bromberg relies on Nanton v. Julien, 2019 ONSC 68 in support of her position.

99The OSC argues that the Nanton decision has no application to this motion as Nanton involved a family dispute about financial dealings and the plaintiff (mother) in Nanton did not have a judgment against the defendants (children). The Court in Nanton noted that that there were "debatable aspects" of the plaintiff’s claims and she could not establish an interest in land.

100In contrast, in this case the OSC is a judgment creditor of Tsatskin and has particularized its claims in the action. The OSC also relies on section 9 of the Execution Act that provides a judgment creditor may realize on any lands held in trust for the judgment debtor.

101There is no question that there has been delay on the part of the OSC in terms of advancing its claim as against the defendants, including Bromberg. However, the OSC argues that it brought this motion as soon as it became aware of the various real estate transactions that Bromberg and Tsatskin had orchestrated.

102In Claireville Holdings v. Botiuk, 2014 ONSC 6505 at para 25, a case referenced in the defendants’ factum, D.L. Corbett J. commented that “delay after obtaining a certificate of pending litigation is more telling than delay in obtaining one in the first place, since the absence of the certificate will usually cause no prejudice, while the presence of one impairs the owner’s ability to deal with the property”.

103The issue of delay, was also considered in LPIC v. Fiore et al, 2021 ONSC 7860 (“Fiore”). In Fiore, a judgment creditor, commenced an action against the debtor/father and his children more than eight years after the father had transferred the relevant property to one of his children. In Fiore, similarly to this case, LPIC claimed that the children were holding the property in trust for their father in an effort to defeat their father’s creditors. LPIC obtained a certificate of pending litigation against the relevant property and was successful at trial in proving that the father/debtor was the beneficial owner of the property. Notably, the Court pointed to the absence of evidence raised by the defendants to defend the allegations and stated the only inference to be drawn is that the father (i.e. beneficial owner) provided monies for the upkeep of the property and not the children (i.e. legal owners).

104While delay may very well be a strike against the OSC in respect of its request for a CPL, under the circumstances of this case, I do not find that the OSC’s delay in seeking equitable relief is a basis to refuse the certificate of pending litigation. Delay can be a factor against granting a CPL but delay in and of itself is not a bar to granting a CPL. Claireville Holdings v. Botiuk, 2014 ONSC 6505, LPIC v. Fiore et al, 2021 ONSC 7860

D. CONCLUSION

105I am required to and have exercised my discretion in equity and I have looked at all of the relevant matters between the parties. In particular, on a balancing of interests, I find that Bromberg’s raised concerns relating to prejudice including inter alia, the possible default on her loan and reputational harm to her business do not outweigh the prejudice to the OSC if this motion is not granted. In this regard, if the CPL is not granted, there may be no remedy available to the OSC to satisfy the sizeable judgment which was obtained against Tsatskin based on illegal and fraudulent activity whereby millions of dollars were improperly taken from unwitting investors. Given that Tsatskin has a quasi-criminal past and has been found guilty of fraud and has given Investor Funds to his family, the dissipation risk is a factor that warrants serious consideration in this case.

106Accordingly, having regard to the context of this case and the entire record before the court, I am satisfied that the equities favour granting leave to issue a CPL with respect to the Colby Property municipally known as 8 Colby Lane in Richmond Hill.

107The relief requested is granted. I order that the registrar shall issue a certificate of pending litigation on title to 8 Colby Lane in Richmond Hill, Ontario and more particularly described as: LT 79 PL 5644 VAUGHAN; S/T VA42752 RICHMOND HILL [Property Identifier Number: 03106-0099 (LT)]

E. COSTS

108The issue of costs was decided on the hearing date of this motion. My endorsement of March 22nd, 2024, provides that the general principle is that a successful party is entitled to costs. There is no reason to depart from this general principle in this case. The defendants sought costs of $68,918.90 if successful.

109The plaintiff in contrast sought a much lower amount for costs on a partial indemnity basis, and in particular the plaintiff sought costs on a partial indemnity basis of $13,266.77 if successful.

110The costs being sought by the plaintiff are reasonable and within the expectation of the parties and in this regard, costs of $13,266.77 inclusive of HST and disbursements shall be payable by the defendants to the plaintiff forthwith.