



COURT OF APPEAL FOR ONTARIO

CITATION: Wilfert v. McCallum, 2017 ONCA 895

DATE: 20171122

DOCKET: M48387 (C64088)

Feldman J.A. (In Chambers)

BETWEEN

Bryon Wilfert and Elizabeth Wilfert

(Appellants/Moving Parties)

and

Ian McCallum and Jacqueline Boughner

(Respondents/Responding Parties)

Paul Starkman, for the moving parties

Shaun A. Hashim, for the responding parties

Heard: October 18, 2017

REASONS FOR DECISION

A.

Introduction

[1]

The appellants move for a stay pending their appeal of the judgment of
    Faieta J., dated June 23, 2017, which dismissed their action on a motion
    brought by the respondents under Rule 21 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. See
Wilfert v. McCallum
, 2017 ONSC 3853, 49
    C.B.R. (6th) 272.

B.

Background

[2]

The action was brought under s. 38 of the
Bankruptcy and Insolvency
    Act
, R.S.C. 1985, c. B-3 (the 
BIA
), for an order setting aside
    as a fraudulent conveyance, the 1993 conveyance by McCallum of his one half interest
    in the matrimonial home to his wife, Boughner. The appellants have appealed the
    dismissal of the action to this court and seek a stay to prevent Boughner from
    disposing of the property pending the appeal.

[3]

The appellants are judgment creditors of the respondent McCallum, as a
    result of an action for defamation they brought against him in respect of statements
    made in 2014. They obtained default judgment on May 12, 2015, following which,
    McCallum filed an assignment in bankruptcy in September 2015. The appellants
    obtained an assignment of rights under s. 38 of the
BIA

to
    bring the fraudulent conveyance action.

[4]

The relevant portions of the statement of claim are in paras. 8-12,
    which plead:

8.       In order to judgment proof himself, McCallum, with the
    cooperation and assistance of Boughner, has taken steps to defeat, hinder,
    delay or defraud his creditors and future creditors including the Plaintiffs,
    by among other things:

(a)      Arranging for the Property, which was jointly owned
    by McCallum and Boughner to be transferred for no or nominal consideration so
    that it became registered solely in the name of Boughner;

(b)      Effecting the transfer in subparagraph (a) above,
    in spite of the fact that McCallum paid all or substantially all of the down
    payment for the Property as well as paid and continued to pay the expenses
    associated with it and continued to live in the Property.

9.       At the time of the Transfer of the Property to Boughner solely, namely
    November 1, 1993, there was a Charge/Mortgage of Land in favour of the Royal
    Trust Corporation of Canada registered as Instrument No. R432228 on May 11,
    1987 (the RT Charge) naming both McCallum and Boughner as Chargors. The RT
    Charge was not discharged until the registration of a Discharge of Charge on
    January 31, 2007.

10.     At the time of the transfer, McCallum had creditors
    including, but not limited to Royal Trust Corporation.

11.     The transfer referred to above was completed for the
    purpose of defeating, delaying, hindering or defrauding McCallums creditors and
    further creditors and should be declared void as against the Plaintiffs and
    other creditors.

12.     The registered owner, Boughner, did not take title in
    good faith. Boughner knew or ought to have known that the Property was being
    registered solely in her name as part of a scheme to delay, hinder, defeat or
    defraud creditors and future creditors of McCallum.

[5]

On the motion brought under Rule 21 to dismiss the claim, the motion judge
    addressed three issues and found: (i) the Wilferts were not creditors or others
    within the meaning of s. 2 of the
Fraudulent Conveyances Act
, R.S.O.
    1990, c. F.29 (the 
FCA
), and therefore had no standing to bring the
    action; (ii) the court could not address the limitation issue as to whether the
    claim was statute barred on the Rule 21 motion; and (iii) there was an
    irregularity in the procedure used by the Wilferts but it could be cured
nunc
    pro tunc
.

C.

The motion for a stay

[6]

The test on a motion for a stay pending appeal under Rule 63.02(1) is
    the same as the test for an interlocutory injunction: (i) whether there is a serious
    issue to be tried; (ii) whether the moving party will suffer irreparable harm
    if the stay is not granted; and (iii) whether the balance of convenience
    favours the granting of the stay. See
Circuit World Corp. v. Lesperance
(1997), 33 O.R. (3d) 674 (C.A., in Chambers), at para. 8;
Pathan v. Qureshi
,
    2009 ONCA 575 (in Chambers), at para. 11; and
Starkman v. Home Trust
    Company
, 2015 ONCA 436 (in Chambers), at para. 7.

[7]

In my view, none of the grounds favour a stay on this record.

(1)

Serious issue to be tried

[8]

The primary legal issue on the appeal is whether the 1993 conveyance was
    a fraudulent conveyance within the meaning of s. 2 of the
FCA

and
    whether the appellants are creditors or others within the meaning of the
    section. Section 2 provides:

Every conveyance of real property or personal property and
    every bond, suit, judgment and execution heretofore or hereafter made with
    intent to defeat, hinder, delay or defraud
creditors
    or others
of their just and lawful actions, suits, debts, accounts,
    damages, penalties or forfeitures are void as against such persons and their
    assigns. [Emphasis added.]

[9]

The appellants became creditors of the respondents many years after the
    impugned conveyance. The leading case on the test for when a subsequent
    creditor can set aside a conveyance as fraudulent is
Gauthier v. Woollatt
,
    [1940] 1 D.L.R. 275 (Ont. Sup. Ct.) which identified two circumstances: (i) if
    there remains unpaid a creditor from the time of the conveyance who would have
    been entitled to impeach the conveyance; or (ii) if the debtors purpose in
    making the conveyance was to defraud present and future creditors generally.
    See also
IAMGOLD Ltd. v. Rosenfeld
(1998), 81 O.T.C. 215 (Gen. Div.),
    at para. 11.

[10]

On the record before the court, there was a mortgage on the property to the
    Royal Trust Corporation of Canada at the time of the conveyance which was
    discharged in 2007.

[11]

There is a bare pleading that there were other creditors, beyond Royal
    Trust, in 1993 and that the respondents intent was to defraud. However, there
    are no particulars whatsoever to support that bare allegation, for example the
    names of any such creditors and whether their debts remain unpaid, any precarious
    financial position of McCallum at the time of the conveyance, or an impending
    risky financial venture at that time.

[12]

The appellants rely on the principle that on a Rule 21 motion the facts
    pleaded are taken to be true. However, that principle must be tempered by the
    principle that fraud must be pleaded with particularity: see Rule 25.06(8);
Balanyk
    v. University of Toronto
(1999), 1 C.P.R. (4th) 300 (Ont. S.C.), at para.
    28; and
South Holly Holdings Limited v. The Toronto-Dominion Bank
,
    2007 ONCA 456, at para. 2.

[13]

In my view, on the basis of the record and the law, the issue to be
    tried cannot be said to be a serious one.

(2)

Irreparable harm and balance of convenience

[14]

The appellants filed no evidence to support a claim of irreparable harm,
    or to demonstrate that the balance of convenience favours the granting of a
    stay pending appeal. They rely on the discharge of the CPL as establishing
    irreparable harm. However, there is no evidence that the respondent Boughner
    intends to sell the property imminently, or that if she did, the proceeds would
    not be available to satisfy a judgment if the appeal were to be successful.

D.

Disposition

[15]

I would therefore dismiss the motion for a stay with costs of $1,500,
    inclusive of disbursements and HST.

K.
    Feldman J.A.


