



COURT OF APPEAL FOR ONTARIO

CITATION: Montor Business Corporation v. Goldfinger, 2016
    ONCA 406

DATE: 20160530

DOCKET: C57879

Cronk, Pepall and Lauwers JJ.A.

In the Matter of the Bankruptcy
    of Summit Glen Waterloo/2000 Developments Inc., of the City of Toronto, in the
    Province of Ontario

BETWEEN

A.

Farber & Partners
    Inc., the Trustee of the Bankruptcy Estate of

Montor Business
    Corporation, Annopol Holdings Limited and

Summit Glen Brantford
    Holdings Inc.

Applicant (Appellant/

Respondent by way of
    cross-appeal)

and

Morris
    Goldfinger, Goldfinger Jazrawy Diagnostic Services Ltd.,

Summit
    Glen Bridge Street Inc., Mahvash Lechcier-Kimel,

Annopol
    Holdings Limited and Summit Glen Brantford Inc.

Respondents (
Respondents/Appellants
    by way of cross-appeal
)

Patrick Shea and Brent Arnold, for the appellant/respondent
    by way of cross-appeal

Maurice J. Neirinck and Michael McQuade, for the
    respondents/appellants by way of cross-appeal

Heard: October 14 and 15, 2015

On appeal from the judgment of Justice David M. Brown of
    the Superior Court of Justice, dated October 28, 2013, with reasons reported at
    2013 ONSC 6635, 8 C.B.R. (6th) 200.

Pepall J.A.:

Introduction

[1]

A failed relationship between an investor, Dr. Morris Goldfinger, and a real
    estate developer, Jack Lechcier-Kimel (Kimel), and the subsequent bankruptcy
    of several of Kimels companies has generated three appeals.  The appeals
    involve claims to funds asserted by A. Farber & Partners Inc. (Farber), the
    Trustee in bankruptcy of five companies: Annopol Holdings Limited (Annopol),
    Summit Glen Brantford Holdings Inc. (SG Brantford), Summit Glen Waterloo/2000
    Developments Inc. (SG Waterloo), Summit Glen Group of Companies Inc. (SG
    Group) and Montor Business Corporation (Montor).  All but Montor were
    companies owned and controlled by Kimel or his then-spouse, Mahvash
    Lechcier-Kimel (Mahvash).

[2]

In the primary appeal, which is the subject matter of these reasons,
    Farber, in its capacity as Trustee of Annopol, challenges the trial judges
    refusal to set aside transactions arising from a settlement between Goldfinger,
    Kimel and some of Kimels companies. In particular, Farber seeks to set aside certain
    transactions arising from the settlement: (1) payments totalling $2.5 million
    to Goldfinger from Annopol (the Payments); and (2) mortgages granted to
    Goldfinger by SG Brantford and Summit Glen Bridge Street Inc. (SG Bridge)
    over their respective properties, and Annopols subordination of mortgage
    security in favour of Goldfinger (the Brantford/Bridge 2008 Transactions).

[3]

The trial judge rejected Farbers assertions that the transactions were:

·

transfers at undervalue under s. 96 of the
Bankruptcy and
    Insolvency Act
,
R.S.C. 1985, c. B-3
    (the 
BIA
)
;

·

unjust preferences under s. 4 of the
Assignments and
    Preferences Act
, R.S.O. 1990, c. A.33 (the 
APA
);

·

fraudulent conveyances under s. 2 of the
Fraudulent
    Conveyances Act
, R.S.O. 1990, c. F.29 (the 
FCA
);

·

oppressive under s. 248 of the Ontario
Business Corporations
    Act
, R.S.O. 1990, c. B.16 (the 
OBCA
); and

·

an unjust enrichment.

[4]

Goldfinger cross-appeals on the basis that the trial judge erred in
    setting aside a $471,000 payment in his favour from SG Brantford. The trial
    judge found that the payment was contrary to s. 2 of the
FCA
and
    oppressive under s. 248 of the
OBCA
.

[5]

In the remaining two appeals, both Farber and Goldfinger or his company,
    1830994 Ontario Ltd., take issue with the treatment of certain claims asserted
    in the various bankruptcy proceedings. These appeals are addressed in separate
    sets of reasons released contemporaneously with these reasons, bearing court
    file numbers C57898 and C58356.

[6]

For the reasons that follow, I would dismiss this appeal and
    Goldfingers cross-appeal.

Background Facts

A.

The Parties Relationship

[7]

Kimel was a real estate developer. He incorporated numerous companies
    for that purpose. He attracted investors to lend to and invest in his
    companies. Those companies would then lend money to other Kimel companies that
    would in turn acquire real estate. The investor loans were to be repaid from
    the proceeds generated from selling the real estate. The investors would also
    receive a portion of the profit generated from the sales.

[8]

Goldfinger was not a real estate developer; he was a radiologist. He was
    also a good friend of Kimel. He decided to lend and invest money into some of
    Kimels companies. From February 1999 to December 2005, Goldfinger lent
    approximately $6.5 million to Kimels companies, $2,956,000 of which he claimed
    was advanced to Annopol.  Annopols affairs were directed by Kimel.  Annopol
    then lent these funds to other Kimel companies for the purpose of acquiring
    properties in the Kitchener/Waterloo and Brantford areas.

[9]

The terms of the arrangements with Goldfinger were not reduced to
    writing. Goldfinger described the funds advanced as interest-free loans and
    claimed that he was engaged in a joint venture with Kimel.

[10]

In 2007, the relationship between Goldfinger and Kimel broke down.  Goldfinger
    discovered that Kimel had misled him and that many of the properties that had
    been acquired were encumbered by mortgages of which he was unaware. He sought
    explanations and the return of his money, but Kimel stalled.  Goldfinger retained
    counsel who, in letters dated November 12 and 13, 2007, threatened litigation.  Goldfinger
    prepared a draft affidavit in support of a request for a court-appointed
    receiver over some of Kimels companies, including Annopol. In that affidavit,
    he asserted that he had repeatedly requested an accounting from Kimel without
    success and had concluded that Kimel had not been dealing in good faith. Kimel
    also retained counsel.

B.

The First Settlement

[11]

The parties commenced settlement negotiations and negotiated the
    dissolution of their business relationship (the First Settlement).  Goldfinger
    and Kimel reached a resolution independently and arrived at an amount to be
    paid to Goldfinger, but the overall structure and details of the settlement
    were negotiated with the assistance of counsel.  The parties agreed that Goldfinger
    would withdraw from the various projects and would be repaid his shareholder
    loans of $6.5 million, plus an additional $5 million in return for his shares
    in the various companies.  At the time, this latter sum was thought to
    represent his equity in the properties.

[12]

As agreed, between December 2007 and January 2008, Annopol paid $2.5
    million to Goldfinger. The Payments were broken down as follows. On December 5,
    2007, Annopol transferred $1.5 million to Goldfinger. Annopol also issued four
    cheques in his favour dated December 12 and 28, 2007 in the amount of $300,000
    each and December 21, 2007 and January 10, 2008 in the amount of $200,000 each,
    for a total of $1 million.  Each cheque bore the notation re-purchase
    shares.  Annopol relied on transfers of funds from other Summit Glen entities to
    cover the amounts paid to Goldfinger.

[13]

The settlement was memorialized in a Memorandum of Agreement (the Memorandum)
    dated December 11, 2007 but signed on May 20, 2008 and amended on June 6,
    2008.  The terms of the Memorandum originated around the time that the
    aforesaid payments were made. Goldfinger testified that the Payments of $2.5
    million were consideration in contemplation of the settlement.  Kimel also stated
    that the Payments were made in anticipation of the settlement.

[14]

The parties to the Memorandum were: Goldfinger, Kimel, Mahvash, Annopol,
    and enumerated Summit Glen companies including SG Brantford and SG Bridge
    (collectively, the Summit Glen Companies).

[15]

The Memorandum provided that:

·

Notwithstanding
    that shares of the Summit Glen Companies had not been formally issued,
    Goldfinger was, and for all purposes deemed to be, the legal and beneficial owner
    of 50% of the share capital of each of the Summit Glen Companies.

·

The
    Summit Glen Companies acknowledged the $6.5 million debt to Goldfinger which,
    in aggregate, was allocated to each of them in separate amounts. The advances
    were described as shareholder loans.

·

The
    Memorandum accurately recorded the parties understanding of the discussions
    that had taken place.

·

Each
    of the Summit Glen Companies was to deliver an interest-free promissory note
    for its share of the $6.5 million to Goldfinger, one-half payable on December
    11, 2008 and the other half payable on December 11, 2009.

·

Kimel
    and each of the Summit Glen Companies were to guarantee the payment of $6.5
    million.

·

The
    Summit Glen Companies were to provide $6.5 million in collateral mortgages to
    Goldfinger. These included mortgages on 176 Henry St., Brantford, which was
    owned by SG Brantford, and on 70 Bridge St. W., Kitchener, which was owned by
    SG Bridge.

·

Kimel
    would purchase Goldfingers shares for $5 million. The parties agreed that the
    $2.5 million already paid represented a partial payment of the purchase price. The
    remainder was to be paid by a $1.5 million secured promissory note and a $1
    million unsecured promissory note.

·

Each
    of the Summit Glen Companies, including SG Brantford and SG Bridge, was to
    guarantee payment to Goldfinger of these secured and unsecured promissory notes
    and was to give collateral third mortgages as security for the guarantees. SG
    Brantford granted a third mortgage over 176 Henry St. in Brantford and SG
    Bridge granted a third mortgage over 70 Bridge St. W. in Kitchener to secure the
    sum of $1.5 million.

·

Annopol,
    Kimel and Mahvash postponed all of their claims against the Summit Glen Companies,
    including SG Brantford and SG Bridge, in favour of Goldfinger.

·

Annopol
    also postponed its mortgages, including those over 176 Henry St. and 70 Bridge
    St. W., in favour

of

Goldfinger (the Annopol Subordinations).

·

Kimel
    and the Summit Glen Companies provided Goldfinger with an indemnity and they,
    together with Mahvash and Annopol, also provided him with a release.

[16]

Lawyers acted for the parties on the settlement, but Goldfingers
    lawyers testified that Kimel and Goldfinger had agreed on the $2.5 million
    figure prior to approaching them.

[17]

The settlement was designed in such a way as to repay to Goldfinger the
    amounts already lent to the SG Companies and to enable Goldfinger to extract an
    amount representing his notional equity or profit in the various real estate
    developments: reasons, at para. 213.

[18]

The Memorandum transactions closed in June 2008 and Goldfinger received
    the promissory notes, guarantees, postponements and mortgages due to him
    pursuant to the terms of the Memorandum.

C.

The Brantford/Bridge 2008 Transactions

[19]

Prior to the closing, the 176 Henry St. property owned by SG Brantford was
    subject to: a first mortgage of $2.85 million in favour of First National
    Financial Corporation (First National); a second mortgage of $450,000 in
    favour of Montor; and a third mortgage of $750,000 in favour of Annopol. 
    Montor was owned by Jack Perelmuter, an accountant who had provided accounting
    services to Kimels companies.

[20]

As a result of the settlement, SG Brantford provided Goldfinger with two
    mortgages over 176 Henry St. and Annopol agreed to postpone its third mortgage
    in favour of Goldfingers two mortgages. As such, Goldfingers mortgages were in
    third and fourth position on the property and Annopols mortgage was in fifth place.

[21]

The 70 Bridge Street property owned by SG Bridge was subject to a mortgage
    in favour of Annopol. As a result of the settlement, SG Bridge provided
    Goldfinger with two mortgages over 70 Bridge Street and Annopol postponed its
    mortgage in favour of Goldfingers two mortgages.

D.

Events Surrounding the Bankruptcies

[22]

By July 2008, Goldfinger alleged that Kimel had breached the terms of
    the Memorandum and he proceeded to serve demand notices on some of Kimels
    companies.

[23]

Meanwhile, the global credit market crisis was brewing, with matters
    coming to a head with Lehman Brothers Chapter 11 filing in mid-September 2008.

[24]

In November 2008, the 176 Henry St. property had to be refinanced, as the
    first mortgage in favour of First National was due. It was renegotiated and the
    principal sum secured was increased. As part of the transaction, Kimel signed an
    agreement on behalf of Montor to subordinate its second mortgage so that the principal
    amount of the first mortgage could be increased. SG Brantford then paid
    $471,000 to Goldfinger, and his third and fourth mortgages were discharged. This
    payment to Goldfinger was made in the absence of any payment to Montor.

[25]

On December 1, 2008, Goldfinger obtained an order appointing Zeifman
    & Partners Inc. as receiver of a number of Kimels companies to which
    Goldfinger had made loans, including SG Waterloo, but not including Annopol. Following
    this, some other Kimel companies defaulted on loans.

[26]

Perelmuter assigned his company, Montor, into bankruptcy on February 6,
    2009. Farber was subsequently appointed Montors Trustee in bankruptcy.

[27]

Annopol and SG Brantford were each adjudged bankrupt on May 27, 2010,
    the initial bankruptcy event having occurred on May 26, 2009, in the case of
    Annopol, and on April 30, 2009 in the case of SG Brantford. Farber was
    appointed Trustee in bankruptcy of both companies, as well as of SG Group and
    SG Waterloo. SG Waterloo was adjudged bankrupt on June 28, 2010, the date of its
    initial bankruptcy event being April 3, 2009.

E.

The Litigation

[28]

As mentioned, Farber, in its capacity as Trustee in bankruptcy of
    Annopol, challenged the $2.5 million Payments from Annopol to Goldfinger. It
    argued that the Payments were: (1) transfers at undervalue contrary to s. 96 of
    the
BIA
;
(2) unjust
    preferences under s. 4 of the
APA
; (3) fraudulent conveyances under s.
    2 of the
FCA
; (4) oppressive under s. 248 of the
OBCA
; and
    (5) an unjust enrichment.

[29]

The trial judge heard the proceedings in a hybrid trial conducted over
    the course of eight days. He heard
viva voce
evidence and also
    reviewed extensive documentary records, including several transcripts of
    out-of-court cross-examinations.

[30]

The trial judge dismissed all of Farbers challenges to the Payments. Farber
    now appeals from that judgment, arguing that the trial judge erred in upholding
    the Payments on each of the grounds set out above.

[31]

Also relying on the same statutory provisions, before the trial judge Farber
    challenged the Brantford/Bridge 2008 Transactions (the mortgages granted by SG
    Brantford and SG Bridge to Goldfinger and the Annopol Subordinations) and the
    $471,000 paid to Goldfinger.  The trial judge dismissed Farbers claims with
    the exception of the $471,000 payment to Goldfinger, which he found to be
    contrary to s. 2 of the
FCA
and s. 248 of the
OBCA
.  On
    appeal, Farber submits that the trial judge erred in failing to set aside the
    Brantford/Bridge 2008 Transactions under the
OBCA.


[32]

Goldfinger cross-appeals from the trial judges decision ordering him to
    repay Farber the $471,000.

Appeal Relating to the Payments

A.

Are the Payments Transfers at Undervalue under the
BIA
?

(i)

Introduction

[33]

Dealing first with the
BIA
claim, Farber challenged the Payments
    as transfers at undervalue contrary to s. 96 of the
BIA
.  In order to
    succeed on this ground, Farber was required to establish that:

(a)   the
    Payments were transfers at undervalue;

(b)   the
    transfer occurred:

(i)     within
    one year before the initial bankruptcy event (May 26, 2009), if Goldfinger was
    at arms length with the debtor, Annopol; or

(ii)    within
    five years before the initial bankruptcy event (May 26, 2009), if Goldfinger
    was not at arms length with the debtor, Annopol; and

(c)   the
    debtor, Annopol, was insolvent at the time of the Payments or was rendered
    insolvent by the Payments; and

(d)   the
    debtor, Annopol, intended to defraud, defeat or delay a creditor.

[34]

As I will discuss, undervalue means either that no consideration has
    been received by the debtor or that the consideration received is conspicuously
    less than the fair market value of the consideration given by the debtor:
BIA
s. 2.  Section 96 is reproduced in Schedule A attached to these reasons.

(ii)


Trial
    Judges Decision on s. 96 of the
BIA

[35]

Before the trial judge, Farber argued that it had established all of the
    s. 96 requirements and therefore was entitled to an order that the Payments
    were transfers at undervalue.

[36]

The trial judge rejected this argument. He found that the transfers were
    not at undervalue because consideration was given to Annopol by Goldfinger.

[37]

The trial judge explained that forbearance from suit, either actual or
    promised, can constitute good consideration.  He found that Goldfinger had lent
    $6.5 million to Kimels companies and could bring proceedings for that amount. 
    Moreover, formal demand had been made on Kimel and in November 2007, Goldfinger
    had his counsel prepare an affidavit for him to swear in an action he was contemplating
    against Kimel, Annopol and the Summit Glen Companies, for the appointment of a
    receiver over a number of their properties. Instead, Goldfinger settled and did
    not proceed with his threatened litigation.

[38]

The trial judge held that the terms of the settlement reflected a
    compromise of Goldfingers claims to recover his investment of $6.5 million. Goldfinger
    deposed that: (1) but for the prior payment of $2.5 million, he would not have
    entered into the settlement and would have proceeded with the litigation
    against Kimel and his various companies; and (2) over the course of his
    dealings, $2.956 million of his money had been deposited into Annopol. Goldfingers
    forbearance from suit was not consideration that was conspicuously less than
    the fair market value of the Payments and there were no transfers at
    undervalue. This was the ratio of the trial judges decision on s. 96 of the
BIA
.

[39]

Nonetheless, he proceeded to consider the other elements Farber was required
    to establish under s. 96 of the
BIA
.

[40]

The trial judge concluded that at the time of the Payments (December
    2007 and January 2008), Annopol was insolvent using a balance sheet test.

[41]

The trial judge also addressed the nature of the relationship between
    Goldfinger and Annopol and considered whether they were at arms length. 
    Although the Memorandum deemed Goldfinger to be a shareholder, the trial judge
    found that Goldfinger was not a registered shareholder of Annopol. He found
    that this deal structure was simply a technical device that was probably
    tax-driven. Goldfinger never exercised any control over the affairs of Annopol,
    or any of Kimels other companies. As a result, Goldfinger and Annopol were not
    related persons within the meaning of ss. 4(2) and (3) of the
BIA
.

[42]

In addition, he addressed s. 4(4) of the
BIA
, which provides
    that [i]t is a question of fact whether persons not related to one another
    were at a particular time dealing with each other at arms length. He
    concluded that they were acting at arms length.

[43]

Although the trial judge accepted that Goldfinger and Kimel had been
    close friends, he acknowledged that one had to examine the nature of their relationship
    at the time the Payments were made. Goldfinger had not been involved in the
    operation of Kimels companies and had quite limited information about their
    affairs. In 2007, Goldfinger discovered that he had been misled. He sought
    explanations, but Kimel stalled. Although Goldfinger and Kimel arrived at the amount
    of $2.5 million together, the overall structure and details of the settlement
    were negotiated with the assistance of counsel. The trial judge determined that
    the facts did not disclose bonds of dependence, control or influence, which are
    generally necessary in order to find that two parties are not acting at arms
    length.

[44]

Given that the parties were found to be at arms length, to succeed
    under s. 96 of the
BIA
,

Farber had to show that the Payments
    were made within one year prior to the initial bankruptcy event. Annopols initial
    bankruptcy event was May 26, 2009 and therefore, the one-year statutory review
    period commenced on May 26, 2008. The Payments, having occurred between December
    5, 2007 to January 10, 2008, were outside the one-year statutory review period
    reflected in s. 96(1)(a) of the
BIA
.  Accordingly, the trial judge
    concluded that the Payments were not reviewable under s. 96.

[45]

Lastly, the trial judge considered whether, by making the Payments,
    Annopol intended to defraud, defeat or delay a creditor. He accepted Farbers
    submission that Annopols intention should be determined by reference to the
    intention of Kimel, who directed Annopols affairs.

[46]

The trial judge recognized that an inference of intent may arise from suspicious
    facts or circumstances, sometimes referred to as badges of fraud. He found
    that when making the Payments, Kimel and Goldfinger did not intend to defraud, defeat
    or delay any of Annopols creditors. In making that finding, he relied on the
    following facts:

·

the
    terms of the Memorandum, which originated around the time the Payments were made,
    indicated that the parties thought the Summit Glen Companies would continue as
    going concerns and that the properties would generate sufficient value to repay
    the remaining amount owing to Goldfinger by December 11, 2009;

·

the
    parties to the Memorandum also believed that the properties owned by the Summit
    Glen Companies had significant future value;

·

the
    Memorandum was not put together in a rush, but was negotiated over six months and
    both parties were represented by counsel;

·

the
    parties were at arms length;

·

the
    two lawyers evidence on the parties thought processes at the time suggested a
    genuine belief in the sufficient value of the subject properties;

·

consideration
    was given;

·

the
    Payments and the Memorandum were not put in place in the face of claims by
    Annopols judgment creditors; and

·

this
    was all done prior to the collapse of the credit markets, which occurred months
    after the execution of the Memorandum.

(iii)

Farbers
    s. 96 Submissions on Appeal

[47]

On appeal, Farber advances three arguments with respect to the trial
    judges treatment of the s. 96
BIA
claim.

[48]

First, in concluding that the Payments were not transfers at undervalue,
    Farber submits that the trial judge erred in deciding that Goldfinger provided
    valuable consideration. Compromising his potential legal claim did not amount
    to sufficient consideration, as s. 96 requires that the consideration be given
    at the same time as the transfer and the compromise only occurred at the time
    of the Memorandum. Furthermore, Annopol did not receive anything in exchange
    for the Payments; the Memorandum lists the $2.5 million as payment for a debt
    owing by Kimel. Farber also submits that the trial judge erred in failing to
    examine the sufficiency of the consideration provided



there was no
    documentary evidence of any forbearance or settlement with Annopol at the time
    of the Payments.

[49]

Second, Farber submits that the trial judge erred in finding that the
    parties were acting at arms length. Although he identified the correct test,
    he failed to apply it.  Specifically, he failed to consider the parties
    relationship at the time of the Payments and that the Payments were the
    opposite of what one would expect from arms-length parties. The trial judge also
    failed to consider that Goldfinger refused to produce his e-mail exchanges with
    Kimel from the time of the Payments and failed to consider Goldfingers
    evidence that he used his relationship with Kimel to obtain the Payments.

[50]

Third, Farber argues that the trial judge erred in his analysis of
    Annopols intention to defraud, defeat or delay a creditor. Again, Farber states
    that the trial judge focused on the evidence relating to the Memorandum rather
    than the Payments themselves and also failed to identify and consider the
    badges of fraud that were present. In addition, Annopol had a subjective intent
    to defraud its creditors, HSBC and a third-party investor, Srubiski, and its
    actions were deliberate. It had borrowed money from those creditors on the
    basis that the funds would be invested in real estate; instead, Annopol gave
    the money to Goldfinger. The effect of the Payments was to defraud and defeat
    its creditors.

(iv)

Analysis

(1)
Transfers
    at Undervalue

[51]

Section 2 of the
BIA
defines a transfer at undervalue as
    follows:

[A] disposition of property or provision of services for which
    no consideration is received by the debtor or for which the consideration
    received by the debtor is conspicuously less than the fair market value of the
    consideration given by the debtor.

[52]

In the absence of evidence to the contrary, Farbers opinion on both the
    fair market value of the property or services and the value of the actual
    consideration given or received by the debtor are to be accepted by the court: see
    s. 96(2) of the
BIA
.

[53]

Weighing the adequacy of consideration is not an exercise in precision
    but one of judgment. Nominal or grossly inadequate consideration is
    insufficient and may be an indication or badge of fraud: see
Feher v.
    Healey
, [2006] O.J. No. 3450 (Sup.
    Ct.)
, at para. 45, affd 2008 ONCA 191.

[54]

Forbearance from suit and a settlement agreement may constitute adequate
    consideration: see
Ronald Elwyn Lister Ltd. v. Dunlop Canada Ltd.
,
    [1982] 1 S.C.R. 726, at p. 743;
Stott v. Merit Investment Corp.
(1988), 63 O.R. (2d) 545 (C.A.), at pp. 558-60, leave to appeal dismissed,
    [1988] S.C.C.A. No. 185.

[55]

Here, formal demand had been made on Kimel and in November 2007 Goldfinger
    had his counsel prepare an affidavit for him to swear in an action he was
    contemplating against Kimel, several of the Summit Glen Companies and Annopol. Rather
    than proceeding with the litigation, Goldfinger negotiated a resolution to the
    parties dispute. He abandoned his pursuit of the legal action against Kimel
    and his companies, including Annopol. But for the $2.5 million payment, he
    would have commenced and continued with his litigation.

[56]

The evidence supports the finding that Goldfinger was genuinely threatening
    legal action. In particular, the record contains Goldfingers draft affidavit
    and, as well, his lawyer prepared a memorandum referring to the proposed
    settlement and that as a result, Jack [Kimel] staves off receivership. In
    addition, Annopol was to be a beneficiary of a release under the settlement. The
    trial judge did not err in concluding that Goldfingers forbearance constituted
    consideration.

[57]

One must then consider whether the consideration given by Goldfinger was
    adequate, or, to use the language of s. 2 of the
BIA
, was conspicuously
    less than the fair market value of the consideration given by Annopol.

[58]

Of the $6.5 million invested by Goldfinger, $2.956 million had been paid
    to Annopol. Based on the record before him, it was open to the trial judge to
    conclude that a payment of $2.5 million in return for a compromise of
    Goldfingers remaining rights was adequate consideration. At a minimum,
    Goldfinger paid Annopol and Kimel $2.9 million.

Given the potentially ruinous consequences of a lawsuit, the
    trial judge did not err in concluding that the Payments did not constitute a
    transfer at undervalue.

[59]

Farber also asserts that s. 96 requires that consideration be given at
    the same time as the transfer and, in this case, the compromise only occurred
    at the time of the Memorandum.

[60]

Section 96 does not address timing and Farber provided no authority for
    this proposition. However, assuming without deciding that Farbers proposition
    is correct, the trial judge found at para. 274 of his reasons that the terms of
    the settlement originated around the time the $2.5 million was paid. This
    finding of fact is also relevant to the trial judges determination that the Payments
    were not motivated by a desire to defraud, defeat or delay a creditor.

[61]

This finding was also available on the record. Goldfinger testified that
    he and Kimel came up with the terms of the settlement themselves and only then
    approached the lawyers to structure and paper the agreement. In one of his
    affidavits, he stated that the parties had reached an agreement in November
    2007, before the first payment was made. The evidence of Goldfingers two
    lawyers lends credence to Goldfingers version of events.

[62]

In addition, one of the lawyers, Carl Schwebel, prepared a memo dated
    November 28, 2007 that recorded discussions with Goldfinger, Kimel and members
    of Schwebels firm at a meeting that same day. Although not identical to the
    terms of the Memorandum, the memo recorded the terms of the settlement negotiated
    by Goldfinger and Kimel, including the payment of $2.5 million.

[63]

In light of this evidence, I would not give effect to Farbers submission
    that the trial judge erred in his transfer at undervalue analysis.

(2)
Acting
    at Arms Length

[64]

Given my conclusion on the transfer at undervalue issue, it is not
    strictly necessary to address Farbers other arguments about s. 96 of the
BIA.
I will do so because my conclusions on the balance of the s. 96 factors
    inform my conclusions on Farbers other grounds of appeal attacking the
    validity of the Payments.

[65]

On the issue of whether the parties were at arms length, Farber does
    not challenge the trial judges description of the applicable test or his
    finding that Goldfinger and Annopol were unrelated. Rather, it challenges his
    application of the test and his conclusion that Goldfinger and Annopol were
    acting at arms length.

[66]

Section 4(4) of the
BIA
states: It is a question of fact
    whether persons not related to one another were at a particular time dealing
    with each other at arms length. As a result, absent a palpable and overriding
    error, the trial judges finding on this issue is entitled to deference.

[67]

The trial judge considered the
dicta
in
Abou-Rached (Re)
,
    2002 BCSC 1022, 35 C.B.R. (4th) 165, at para. 46:

[A] transaction at arms length could be considered to be a
    transaction between persons between whom there are no bonds of dependence,
    control or influence, in the sense that neither of the two co-contracting
    parties has available any moral or psychological leverage sufficient to
    diminish or possibly influence the free decision-making of the other. Inversely,
    the transaction is not at arms length where one of the co-contracting parties
    is in a situation where he may exercise a control, influence or moral pressure
    on the free will of the other. Where one of the co-contracting parties is, by
    reasons of his influence or superiority, in a position to pervert the ordinary
    rule of supply and demand and force the other to transact for a consideration
    which is substantially different than adequate, normal or fair market value,
    the transaction in question is not at arms length.

[68]

He also considered
Piikani Energy Corporation (Trustee of) v. 607385
    Alberta Ltd.
, 2013 ABCA 293, 556 A.R. 200, which identified factors that
    provide guidance on non-arms length analysis in the context of
Income Tax
    Act
, R.S.C. 1985, c. 1 (5th Supp.) jurisprudence. These factors,
    enumerated at para. 29 of
Piikani
, are: was there a common mind which
    directed the bargaining for both parties to a transaction; were the parties to
    the transaction acting in concert without separate interests; and was there
de
    facto
control?

[69]

There was no common mind directing Goldfinger and Annopol or indeed,
    Kimel. They were adverse in interest and on the verge of litigation. The
    evidence also fails to suggest that they were acting in concert. As discussed,
    the trial judge did not fail to consider the parties relationship at the time
    of the Payments. Nor did Goldfinger or Annopol exercise
de facto
control
    over the other.

[70]

Goldfinger was never involved in the operation of the companies, had
    little information about their operation or finances, discovered Kimel had
    misled him and then threatened to sue.  As mentioned, although Goldfinger and
    Kimel decided on the amount Goldfinger would be paid, the overall structure and
    details of the settlement were negotiated with the assistance of counsel.

[71]

Farber argues that the Payments were the opposite of what one would
    expect from arms length parties and that the trial judge erred in declining to
    draw certain inferences from the evidence. However, the trial judge is the fact
    finder, not this court, and he was not required to recite every piece of
    evidence in his 372 paragraphs of reasons. Moreover, there was a dearth of
    evidence suggesting that the parties were not at arms length and the trial
    judge did not err in finding to the contrary. I would reject this argument.

(3)
Intention
    to Defraud, Defeat or Delay a Creditor

[72]

The burden was on Farber to establish the requisite intent under s. 96
    of the
BIA
. An inference of intent may arise from the existence of one
    or more badges of fraud. However, the presence of such indicia does not mandate
    a finding of intent. Whether the intent exists is a question of fact to be
    determined from all of the circumstances as they existed at the time of the
    conveyance: see
Re Fancy
(1984), 46 O.R. (2d) 153 (H. Ct. J.), at p. 159.

[73]

Case law has identified the following, non-exhaustive list of badges
    of fraud (see
DBDC Spadina v. Walton
,

2014 ONSC 3052
, at para.
    67;
Indcondo Building Corp. v. Sloan
, 2014 ONSC 4018, 121 O.R. (3d)
    160, affd 2015 ONCA 752, 31 C.B.R. (6th) 110, at para. 52):

·

the
    transferor has few remaining assets after the transfer;

·

the
    transfer was made to a non-arms length person;

·

the
    transferor was facing actual or potential liabilities, was insolvent, or about
    to enter a risky undertaking;

·

the
    consideration for the transaction was grossly inadequate;

·

the
    transferor remained in possession of the property for his own use after the
    transfer;

·

the
    deed of transfer contained a self-serving and unusual provision;

·

the
    transfer was secret;

·

the
    transfer was effected with unusual haste; or

·

the
    transaction was made in the face of an outstanding judgment against the debtor.

[74]

As stated, Farber complains that the trial judge failed to consider the presence
    of badges of fraud, focused on the evidence relating to the Memorandum rather
    than the Payments themselves, and ignored Annopols intent to defraud its
    creditors.

[75]

The trial judge found that the terms of the settlement originated around
    the time that the $2.5 million was paid.  Furthermore, the evidence suggested
    that the parties expected the Summit Glen Companies and Annopol to continue as
    going concerns.  As is evident from paras. 260 and following of his reasons,
    the trial judge did consider the issue of badges of fraud, but ultimately
    concluded that there was no intent. Indeed, his findings undermine Farbers
    assertions that badges of fraud were present. He assessed the evidence and made
    findings of fact that supported his reasons for finding an absence of intent. Those
    findings were available on the record. I see no basis to interfere with them.

[76]

As for Farbers submissions relating to Annopols alleged subjective intent
    to defraud its creditors, HSBC and Srubiski, the evidence did not support such
    a finding of intent.  Neither the Payments nor the settlement were effected in
    the face of claims by Annopols judgment creditors.  No evidence was tendered
    from any creditor and there was no evidence that established that Annopol paid creditor
    funds to Goldfinger.

[77]

In conclusion, I would reject Farbers submissions on s. 96 of the
BIA
.

B.

Are the Payments Unjust Preferences under the
APA
?

(i)

Introduction

[78]

At the trial, Farber also argued that the Payments were void as unjust preferences
    pursuant to s. 4 of the
APA
. To be successful, Farber needed to
    establish that:

(a)   Annopol
    was insolvent at the time of the Payments;

(b) Annopol
    intended to defeat, hinder, delay or prejudice a creditor; and

(c)   Goldfinger
    was not a creditor of Annopol within the meaning of s. 5(1) of the
APA
.

[79]

Sections 4 and 5 of the
APA
are reproduced in Schedule A
    attached to these reasons.

(ii)

Trial Judges Decision on the
APA

[80]

The trial judge did not accept Farbers
APA
argument. He found
    that the first and third requirements under the
APA
were satisfied 
    Annopol was insolvent, and Goldfinger was not a creditor of Annopol within the
    meaning of s. 5(1) of the
APA
. However, the trial judge relied on his
    earlier analysis under s. 96 of the
BIA
to conclude that the second
    requirement was not met: Annopol did not have the requisite intent to defeat,
    hinder, delay or prejudice a creditor.

(iii)

Parties
APA
Submissions on Appeal

[81]

On appeal, Farber reiterates its position on intent. In response, Goldfinger
    takes issue with the trial judges finding that he was not a creditor within
    the meaning of s. 5(1).

(iv)

Analysis

[82]

I have already addressed the issue of intent under s. 96 of the
BIA
and that analysis is equally applicable to the requirement of intent under the
APA
.
    For these reasons, I would dismiss Farbers
APA
ground of appeal. 
    Given that conclusion, there is no need to address Goldfingers submission on
    his status.

C.

Are the Payments void under the
FCA
?

(i)

Introduction

[83]

Before the trial judge, Farber submitted that the Payments were also
    contrary to s. 2 of the
FCA
. To succeed, Farber had to demonstrate
    that:

(a)   Annopol
    made the Payments with an intent to defeat, hinder, delay or defraud creditors
    or others; and

(b)   Goldfinger
    did not provide good consideration in exchange for the Payments; or

(c)   if
    Goldfinger did provide good consideration, he had notice or knowledge of
    Annopols intent to defeat, hinder, delay or defraud creditors or others.

[84]

Sections 2 and 3 of the
FCA
are reproduced in
    Schedule A.

(ii)

Trial
    Judges Decision on the
FCA

[85]

The trial judge confined his
FCA
analysis to an examination of intent.
    He concluded that the evidence concerning intent under the other statutes
    applied equally to Farbers claim under the
FCA
. Consequently, he
    dismissed the
FCA
claim.

(iii)

Farbers
    Submissions on Appeal

[86]

On appeal, Farber submits that the trial judge erred in failing to
    consider the factual matrix surrounding the Payments; the evidence relating to
    Annopols actual or imputed intent; and that Goldfinger was wilfully blind.

(iv)

Analysis

[87]

I have already addressed the issue of intent, which is equally fatal to
    this ground of appeal. There is therefore no need to address the issue of
    Goldfingers knowledge. The trial judge was correct in dismissing Farbers
    claim under the
FCA
.

D.

Oppression Claim

(i)

Introduction

[88]

Before the trial judge, Farber submitted that the Payments were
    oppressive within the meaning of s. 248 of the
OBCA
. To succeed, Farber
    had to establish that:

(a)   it was a
    complainant within the meaning of s. 245 of the
OBCA
; and

(b)   the
    Payments were oppressive, unfairly prejudicial or unfairly disregarded the
    interests of Annopols creditors.

Section 248 of the
OBCA
is reproduced in
    Schedule A.

(ii)

Trial
    Judges Decision on Oppression

[89]

The trial judge proceeded with his analysis of the oppression claim on
    the basis that Farber, as Trustee in bankruptcy of Annopol, had status as a
    complainant under s. 245 of the
OBCA
. In that regard, he noted that in
Olympia
    & York Developments Ltd. (Trustee of) v. Olympia & York Realty Corp.
(2003), 68 O.R. (3d) 544, at para. 46
,
    this court held that where it was likely the creditors of a bankrupt would have
    been recognized as complainants for the purpose of challenging a transaction under
    s. 248 of the
OBCA
, it was proper to recognize the Trustee of the
    bankrupt as a complainant in effect on behalf of the creditors of the
    bankrupt.

[90]

The trial judge accepted that creditors of a corporation have a
    reasonable expectation that the corporation will not engage in conduct that
    runs afoul of provincial preference legislation or the preference/transfer for
    undervalue provisions of the
BIA
. However, the trial judge had already
    found that the Payments by Annopol to Goldfinger did not run afoul of the
BIA
,
    the
APA
or the
FCA
,
and he therefore relied on the same findings to conclude that the Payments did
    not violate the reasonable expectations of Annopols creditors.

[91]

Farber also argued that Goldfinger was a shareholder of Annopol at the
    time of the Payments and the $2.5 million represented the repurchase of shares
    or the payment of a dividend. However, the trial judge rejected this
    contention. Rather, in substance, Goldfinger received the re-payment of $2.5
    million of the funds he had loaned to Kimel and his companies, together with
    some additional security. He wrote, at para. 300 of his reasons: The business substance
    of the December, 2007 and January, 2008 payments was that Goldfinger received
    back some of the principal he had invested; there was no profit or equity yet
    available for distribution. For these reasons, he rejected Farbers oppression
    claim.

(iii)

Parties
    Oppression Submissions on Appeal

[92]

Goldfinger submits that while the court has discretion to recognize a
    Trustee in bankruptcy as a complainant under the
OBCA
, the exercise of
    that discretion was unjustified in this case.  Furthermore, Farber put forward
    no evidence on the reasonable expectations of the creditors on whose behalf it
    purported to act.  Goldfinger submits that the trial judge erred in recognizing
    Farber as a complainant.

[93]

For its part, Farber asserts that Goldfinger is raising the issue of Farbers
    status as a complainant for the first time on this appeal. The decision was
    within the trial judges discretion and there is no basis on which this court
    should interfere.

[94]

On the issue of oppression, Farber reiterates that the Payments were unlawful
    preferences. In addition, Farber submits that Annopols creditors expected that
    its funds would be used for real estate development. The Payments to Goldfinger
    resulted in unfair prejudice, as Annopols creditors will likely recover
    nothing from its bankrupt estate. Annopol and Kimel acted with unfair disregard
    for Annopols creditors interests. As a result, Farber submits that Goldfinger
    should be ordered to repay the $2.5 million to Annopols bankrupt estate.

(iv)

Analysis

[95]

Dealing first with the issue of Farbers status as a complainant, s. 245
    of the
OBCA
defines complainant for the purposes of the oppression
    remedy as follows:

(a) a registered holder or beneficial owner, and a former
    registered holder or beneficial owner, of a security of a corporation or any of
    its affiliates,

(b) a director or an officer or a former director or officer of
    a corporation or of any of its affiliates,

(c) any other person who, in the discretion of the court, is a
    proper person to make an application under this Part.

[96]

Farber relied on subsection (c) in support of its position that it
    should be given standing as a complainant. In
Olympia & York
    Developments Ltd.
,
at para. 45, this court held that Trustees in
    bankruptcy are neither automatically barred nor automatically entitled to
    standing, but it is a matter of discretion in each case whether to grant
    standing.

[97]

I do not read the trial judges reasons as having conclusively held that
    Farber was a proper person to be a complainant under s. 245. Rather, given his
    other findings, the trial judge simply proceeded on the assumption that Farber,
    in its capacity as Trustee in bankruptcy of Annopol, was a complainant. In
    light of his conclusion on the merits of the oppression claim, and my
    concurrence with it, I see no need to interfere with his approach.  I would also
    observe that Goldfinger objected to Farbers status to assert a claim for
    oppression for the first time on this appeal.

[98]

Turning to the merits of the oppression ground of appeal, this court
    has recognized that the oppression remedy contained in s. 248 of the
OBCA
is a flexible, equitable remedy that affords the court broad powers to rectify
    corporate malfeasance: see
Unique Broadband Systems, Inc. (Re)
, 2014
    ONCA 538, 121 O.R. (3d) 81, at para. 107. The granting of an oppression remedy
    is a discretionary decision.

[99]

In
BCE Inc. v. 1976 Debentureholders
, 2008 SCC 69, [2008] 3
    S.C.R. 560, the Supreme Court addressed the oppression provision found in the
Canada
    Business Corporations Act
, R.S.C. 1985, c. C-44, which is similar to the
    provision found in the
OBCA
. At para. 68, the Court outlined the
    following two-step test: (1) Does the evidence support the reasonable
    expectations asserted by the claimant? and (2) Does the evidence establish that
    the reasonable expectation was violated by conduct falling within the terms
    oppression, unfair prejudice or unfair disregard of a relevant interest?

[100]

The Court
    addressed the concept of reasonable expectations under the first part of the
    test, at paras. 62 and 63:

[T]he concept of reasonable expectations is objective and
    contextual. The actual expectation of a particular stakeholder is not
    conclusive. In the context of whether it would be just and equitable to grant
    a remedy, the question is whether the expectation is reasonable having regard
    to the facts of the specific case, the relationships at issue, and the entire
    context, including the fact that there may be conflicting claims and
    expectations.

Particular circumstances give rise to particular expectations. Stakeholders
    enter into relationships, with and within corporations, on the basis of
    understandings and expectations, upon which they are entitled to rely, provided
    they are reasonable in the context. These expectations are what the remedy of
    oppression seeks to uphold. [Citations omitted.]

[101]

The court
    addressed the second stage of the test, at para. 67:

Even if reasonable, not every unmet
    expectation gives rise to a claim under [s. 248]. The section requires that the
    conduct complained of amount to oppression, unfair prejudice or unfair
    disregard of relevant interests. Oppression carries the sense of conduct
    that is coercive and abusive, and suggests bad faith. Unfair prejudice may
    admit of a less culpable state of mind, that nevertheless has unfair
    consequences. Finally, 
unfair
disregard of interests
    extends the remedy to ignoring an interest as being of no importance, contrary
    to the stakeholders reasonable expectations. The phrases describe, in
    adjectival terms, ways in which corporate actors may fail to meet the
    reasonable expectations of stakeholders. [Citations omitted.]

[102]

The trial judges
    analysis under the
BIA
, the
APA
and the
FCA
effectively disposed of that part of Farbers submissions relating to unjust
    preferences.  As for Farbers argument that there was unfair disregard for the
    interests of Annopols creditors, this submission must be placed in context. While
    Kimel stated that he was not thinking of his creditors when he made the
    Payments, Kimel and his companies were facing the prospect of potentially
    ruinous litigation.  He believed that the Payments would permit the companies
    to continue as going concerns and that they would generate profit. The evidence
    did not suggest that this was a misguided proposition at that time. The cataclysmic,
    and unforeseen, economic meltdown that enveloped the global economy months
    after the Payments were made cannot be ignored. In this context, the trial
    judge did not err in exercising his discretion and dismissing Farbers claim of
    unfair disregard for the interests of Annopols creditors.

[103]

As for the
    expectations of HSBC and Srubiski as creditors, Farber claims that Annopol paid
    Goldfinger with funds it had received from Srubiski.  The trial judge found
    that it was not possible to trace the vast majority of funds to any particular
    source or creditor.  As the trial judge noted, Kimels evidence was that money
may
have come from Srubiski or Mahvash. 
    There was also no conclusive evidence that the funds paid by Annopol to Goldfinger
    came from Srubiski.  Moreover, the line of credit from HSBC was provided to SG
    Group and not to Annopol. Consequently, HSBC was not a creditor of Annopol. HSBC,
    a sophisticated party, would have known that it was not a creditor of Annopol. There
    could be no reasonable expectation to the contrary.

[104]

The trial
    judges decision reflected an exercise in discretion and is entitled to
    deference.  I would not accede to Farbers submissions on oppression.

E.

Did the Payments Unjustly Enrich Goldfinger?

(i)

Introduction

[105]

Before
    the trial judge, Farber submitted that the Payments unjustly enriched
    Goldfinger. To succeed, Farber had to establish that:

(a)  the
    Payments enriched Goldfinger;

(b)  there
    was a corresponding deprivation suffered by Annopol; and

(c)  there
    was no juristic reason for that enrichment.

(ii)

Trial Judges Decision on Unjust Enrichment

[106]

The trial judge
    gave brief reasons for his dismissal of Farbers unjust enrichment claim. In
    essence, he relied on his reasons for dismissal of the oppression claim, stating
    at para. 304 of his reasons: Farber also advanced a claim sounding in unjust
    enrichment on the basis that the $2.5 million payments were a re-purchase of
    shares or equity distribution. For similar reasons [
i.e.

similar
    to those for dismissing the oppression claim], I dismiss that claim.

(iii)

Parties Submissions on Appeal

[107]

Farber submits
    that the trial judge failed to consider the test for unjust enrichment, which
    it says was met based on the evidence. Farber says that the first two parts of
    the test were easily satisfied on the basis of the Payments from Annopol to
    Goldfinger. With respect to lack of a juristic reason, the Payments were
    contrary to the reasonable expectations of Annopols creditors and it was
    contrary to public policy for Goldfinger to have received the Payments from an
    insolvent company.

[108]

Goldfinger
    responds that he merely received his money back and Annopol got what it
    bargained for. The Payments were a repayment of an obligation and in line with
    the parties expectation of a settlement of their dispute.  Settlement of
    disputes is supported by public policy and may constitute the rationale for a
    payment.

(iv)

Analysis

[109]

As Iacobucci J. noted
    in
Garland v. Consumers Gas Co.
, 2004 SCC 25, [2004] 1 S.C.R. 629, at
    para. 30, the test for unjust enrichment requires that a claimant establish the
    following three elements:

a)

an enrichment of the defendant;

b)

a corresponding deprivation of the plaintiff; and

c)

an absence of juristic reason for the enrichment.

[110]

As noted in
Garland
,
    at para. 31, the first two elements are determined by applying a
    straightforward economic approach. Iacobucci J. explained, at para. 36: Where
    money is transferred from plaintiff to defendant, there is an enrichment.

[111]

The analysis in
    respect of the third element proceeds in two steps.

[112]

At the first
    stage, the claimant has the burden of demonstrating that no juristic reason
    from an established category exists to deny recovery. The established
    categories include a contract, a disposition of law, a donative intent, and
    other valid common law, equitable or statutory obligations: see
Garland
,
    at para. 44.

[113]

If the claimant can
    show that there is no established juristic reason, then, at the second stage,
    the defendant bears the burden of demonstrating that there is another reason to
    deny recovery. When determining if there is a reason to deny recovery at this
    stage, courts are required to consider the reasonable expectations of the
    parties and public policy considerations: see
Garland
, at paras.
    45-46.

[114]

As this court noted
    in
Campbell v. Campbell
(1999), 43 O.R. (3d) 783, at pp. 794-95, and
Simonin
    Estate v. Simonin
, 2010 ONCA 900, 329 D.L.R. (4th) 513, at para. 24:

[W]hat is at the heart of the third requirement is the
    reasonable expectation of the parties, and whether it would be just and fair to
    the parties considering all of the relevant circumstances, to permit the
    recipient of the benefit to retain it without compensation to those who
    provided it.

[115]

Applying these
    principles to the issues on appeal, the first two requirements for unjust
    enrichment were clearly met.  Goldfinger was enriched and there was a
    corresponding deprivation to Annopol.  The real issue turns on the third
    element: was there a juristic reason for the enrichment?

[116]

Farber was
    unsuccessful in attacking the Memorandum and, in any event, it did not ask that
    the Memorandum be set aside. A contract is a recognized category on which to reject
    a claim for unjust enrichment. The settlement provided an established rationale
    for the Payments and hence amounted to a juristic reason. In addition,
    Goldfingers advance of $2.9 million to Annopol amounted to a juristic reason.

[117]

Finally, a
    juristic reason may be made out based on an examination of the reasonable
    expectations of the parties. On the facts of this case, Goldfinger advanced
    funds to whichever company Kimel requested. He advanced a total of about $2.9
    million to Annopol itself.  Kimel treated all the companies as, effectively, a
    common pool.  Therefore, it was in line with past practice and the reasonable
    expectations of the parties that Goldfinger received payment in respect of
    funds from Annopol.

[118]

This ground of
    appeal therefore fails.

Appeal Relating to the Brantford/bridge 2008
    transactions

A.

Are the Brantford/Bridge 2008 Transactions Oppressive under the
OBCA
?

(i)

Introduction

[119]

As
    mentioned, Farber had originally advanced an oppression claim with respect to
    the Brantford/Bridge 2008 Transactions. Ultimately, the dispute devolved into a
    claim to approximately $280,000 in proceeds from the sale of the Bridge Street
    property that is held in trust pending resolution of the action. The payment of
    this sum turns on whether the Brantford/Bridge 2008 Transactions were
    oppressive within the meaning of s. 248 of the
OBCA
and therefore ought
    to have been set aside by the trial judge.

(ii)

Trial Judges Decision on the Brantford/Bridge 2008 Transactions and
    Oppression

[120]

The trial judge
    relied on his findings under the
BIA
, the
APA
and the
FCA
claims to conclude that Goldfingers charges over the SG Brantford and SG
    Bridge properties, as well as the Annopol Subordinations, did not violate the
    reasonable expectations of creditors. There was no intent to defeat, hinder,
    delay or defraud creditors. He concluded that no s. 248
OBCA
remedy
    was justified.

(iii)

Farbers Submissions on Appeal

[121]

Farber submits
    that the trial judge did not consider whether the transactions should be set
    aside pursuant to s. 248 of the
OBCA
.  Its primary submission is that
    the trial judge dismissed its claim on the basis of lack of intent; however,
    this is an irrelevant consideration in an oppression analysis. Goldfinger was
    at best an unsecured creditor, and Annopol held prior security over the Henry
    Street and Bridge Street properties. As a result of the Memorandum, Goldfinger
    became secured. But for the transactions, Annopols creditors would be entitled
    to the $280,000 in sale proceeds.

[122]

Farber argues
    that the trial judge erred in failing to make a finding of oppression and in
    refusing to set aside the Brantford/Bridge 2008 Transactions.

(iv)

Analysis

[123]

The
    trial judge clearly turned his mind to the oppression claim as is evident from
    paras. 317, 327, 328, 348, 349 and 351 of his reasons. It is a fair inference
    from his reasons and his conclusion on the Brantford/Bridge 2008 Transactions
    that he was of the view that his prior findings supported his conclusion that they
    did not violate the reasonable expectations of creditors.

[124]

The trial judge relied
    on his same reasons, found at paras. 274-280, for concluding that Annopol did
    not intend to defeat, hinder, delay or defraud its creditors by making the
    Payments to Goldfinger.  In addition, the trial judges reasons were that the
    Payments were part of a global settlement meant to avoid potentially ruinous
    litigation; the settlement in question was concluded at arms length after
    fairly lengthy negotiations; and the parties compromise was reasonable at the
    time they reached it.

[125]

The trial
    judges decision that the Payments and the Brantford/Bridge 2008 Transactions
    were defensible for the same reasons was justified on the record.  Both sets of
    transactions resulted from the same settlement.  Therefore, the validity of the
    Brantford/Bridge 2008 Transactions falls to be decided on the same basis as
    that applicable to the Payments.  For the reasons given, I would reject Farbers
    submissions with respect to the Brantford/Bridge 2008 Transactions.

Cross-Appeal

A.

Is the $471,000 Payment to Goldfinger a Fraudulent Conveyance?

(i)

Introduction

[126]

Farber, in its
    capacity as Trustee in bankruptcy of SG Brantford, asked the trial judge to order
    Goldfinger to return the sum of $471,000 to SG Brantford. Goldfinger objected.

(ii)

Trial
    Judges Decision

[127]

To recap, about
    five months after the Memorandum, the mortgage from the first mortgagee, First
    National, on 176 Henry St., a property owned by SG Brantford, came due. As part
    of the refinancing, the First National mortgage was to be increased. To complete
    the refinancing with First National, SG Brantford had to arrange for the
    postponement of the second mortgage in favour of Montor.

[128]

The trial judge
    was not prepared to find that Kimel forged Montors signature on the postponement. 
    He instead found that the Montor postponement was signed by Kimel purporting to
    act as the secretary-treasurer of Montor.

[129]

However, he did
    find that the postponement arose as a result of Kimels and SG Brantfords
    deliberate misrepresentation of the true state of affairs to Montor. Moreover,
    Perelmuter, the sole shareholder of Montor, was unaware that part of the
    refinancing proceeds would be paid to a junior secured creditor, namely
    Goldfinger. The trial judge concluded that Kimel and SG Brantford made the
    misrepresentation in order to defeat, hinder, delay or defraud Montor.

[130]

He held that the
    evidence on intent as of November 26, 2008 was materially different from the evidence
    at the time of the Memorandum. By November 2008, Goldfinger knew that Kimel and
    his companies, including SG Brantford, had defaulted on their obligations. He
    and Kimel also knew that there were insufficient funds to pay Goldfingers charges
    over the SG Brantford and SG Bridge properties if Montor were to be paid from
    the refinancing.

[131]

On the trial
    judges findings, when Kimel and SG Brantford misrepresented the true state of
    affairs to Montor, they did so intending to defeat, hinder, delay or defraud
    Montor. Goldfinger had notice or knowledge of that intent within the meaning of
    s. 3 of the
FCA
.

[132]

The trial judge
    concluded that Goldfinger knew that the payment of $471,000 to him would prefer
    his interests over those of Montor. He based his conclusion on the
FCA
,
    but held that he would have reached a similar result under s. 248 of the
OBCA
.
    Therefore, the payment by SG Brantford to Goldfinger of $471,000 in preference
    to the payment of that amount to Montor violated s. 2 of the
FCA
and was
    not saved by s. 3 of the
FCA
.

[133]

Accordingly,
    Goldfinger was ordered to repay the sum of $471,000 to Farber, as Trustee in bankruptcy
    of SG Brantford.

(iii)

Goldfingers Submissions on Appeal

[134]

Goldfinger
    argues that he was not involved with, and did not know, the terms of the postponement.
    He asserts that the trial judge erred in finding that he had the intent to defeat
    Montors interest. He had nothing to do with the postponement of the Montor
    mortgage. Goldfinger was unconditionally entitled to payment of the $471,000.

[135]

He
    asks that if his cross-appeal is denied, he should, in the alternative, be
    given judgment for the restoration of his position, including judgment for
    $183,000 representing the net proceeds from the sale of the Henry Street
    property on August 31, 2010 being held by the Trustee pending the outcome of
    the appeals.

(iv)

Analysis

[136]

I would reject Goldfingers
    cross-appeal. As Goldfinger notes in his factum, at para. 53, where the issue
    on appeal involves the trial judges interpretation of the evidence as a whole,
    his findings should not be overturned absent palpable and overriding error:
Housen
    v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 23-24.

[137]

The trial
    judges conclusion on this issue rested on factual findings. In particular, he
    found that Goldfinger had notice or knowledge of Kimels and SG Brantfords intent
    to defeat, hinder, delay or defraud Montor and that he knew the $471,000
    payment would prefer his interests over those of Montor. Goldfinger has not
    identified any palpable and overriding error that would serve to displace these
    findings.

[138]

For these
    reasons, I would dismiss the cross-appeal.

[139]

Further, I see
    no basis on which to grant the alternative relief Goldfinger requests.  Based
    on the evidence, even with the repayment of the $471,000, there will be a
    significant shortfall in recovery on account of Montors mortgage.  Moreover,
    no such request was made of the trial judge.

Disposition

[140]

For
    these reasons, I would dismiss both the appeal and the cross-appeal.  As agreed
    by the parties, I would order Farber to pay Goldfinger $40,000 in costs of the
    appeal and Goldfinger to pay Farber $20,000 in costs of the cross-appeal, both
    sums inclusive of disbursements and applicable taxes.

Released:

MAY 30 2016                                    S.E.
    Pepall J.A.

EAC                                                            I
    agree E.A. Cronk J.A.

I
    agree P. Lauwers J.A.


SCHEDULE A

Bankruptcy and
    Insolvency Act
, R.S.C. 1985, c. B-3

96

(1)
On
    application by the trustee, a court may declare that a transfer at undervalue
    is void as against, or, in Quebec, may not be set up against, the trustee  or
    order that a party to the transfer or any other person who is privy to the
    transfer, or all of those persons, pay to the estate the difference between the
    value of the consideration received by the debtor and the value of the
    consideration given by the debtor  if

(a)
the
    party was dealing at arms length with the debtor and

(i)
the
    transfer occurred during the period that begins on the day that is one year
    before the date of the initial bankruptcy event and that ends on the date of
    the bankruptcy,

(ii)
the
    debtor was insolvent at the time of the transfer or was rendered insolvent by
    it, and

(iii)
the debtor intended to defraud, defeat or delay a
    creditor; or

(b)
the
    party was not dealing at arms length with the debtor and

(i)
the
    transfer occurred during the period that begins on the day that is one year
    before the date of the initial bankruptcy event and ends on the date of the
    bankruptcy, or

(ii)
the
    transfer occurred during the period that begins on the day that is five years
    before the date of the initial bankruptcy event and ends on the day before the
    day on which the period referred to in subparagraph (i) begins and

(A)
the
    debtor was insolvent at the time of the transfer or was rendered insolvent by
    it, or

(B)
the debtor intended to defraud, defeat or delay a
    creditor.

(2)
In making the
    application referred to in this section, the trustee shall state what, in the
    trustees opinion, was the fair market value of the property or services and
    what, in the trustees opinion, was the value of the actual consideration given
    or received by the debtor, and the values on which the court makes any finding
    under this section are, in the absence of evidence to the contrary, the values
    stated by the trustee.

(3)
In this
    section, a person who is privy means a person who is not dealing at
    arms length with a party to a transfer and, by reason of the transfer,
    directly or indirectly, receives a benefit or causes a benefit to be received
    by another person.

Assignments and
    Preferences Act
, R.S.O. 1990, c. A.33

4. (1)
Subject
    to section 5, every gift, conveyance, assignment or transfer, delivery
    over or payment of goods, chattels or effects, or of bills, bonds, notes or
    securities, or of shares, dividends, premiums or bonus in any bank, company or
    corporation, or of any other property, real or personal, made by a person when
    insolvent or unable to pay the persons debts in full or when the person knows
    that he, she or it is on the eve of insolvency, with intent to defeat, hinder,
    delay or prejudice creditors, or any one or more of them, is void as against
    the creditor or creditors injured, delayed or prejudiced.

(2)
Subject
    to section 5, every such gift, conveyance, assignment or transfer,
    delivery over or payment made by a person being at the time in insolvent
    circumstances, or unable to pay his, her or its debts in full, or knowing
    himself, herself or itself to be on the eve of insolvency, to or for a creditor
    with the intent to give such creditor an unjust preference over other creditors
    or over any one or more of them is void as against the creditor or creditors
    injured, delayed, prejudiced or postponed.

(3)
Subject
    to section 5, if such a transaction with or for a creditor has the effect of
    giving that creditor a preference over the other creditors of the debtor or
    over any one or more of them, it shall, in and with respect to any action or
    proceeding that, within sixty days thereafter, is brought, had or taken to
    impeach or set aside such transaction, be presumed, in the absence of evidence
    to the contrary, to have been made with the intent mentioned in subsection (2),
    and to be an unjust preference within the meaning of this Act whether it be
    made voluntarily or under pressure.

(4)

Subject
    to section 5, if such a transaction with or for a creditor has the effect
    of giving that creditor a preference over the other creditors of the debtor or
    over any one or more of them, it shall, if the debtor within sixty days after
    the transaction makes an assignment for the benefit of the creditors, be
    presumed, in the absence of evidence to the contrary, to have been made with
    the intent mentioned in subsection (2), and to be an unjust preference
    within the meaning of this Act whether it be made voluntarily or under pressure.

(5)

The
    word creditor when used in the singular in subsections (2), (3) and (4)
    includes any surety and the endorser of any promissory note or bill of exchange
    who would upon paying the debt, promissory note or bill of exchange, in respect
    of which the suretyship was entered into or the endorsement was given, become a
    creditor of the person giving the preference within the meaning of those
    subsections.

5. (1)
Nothing
    in section 4 applies to an assignment made to the sheriff for the area in which
    the debtor resides or carries on business or, with the consent of a majority of
    the creditors having claims of $100 and upwards computed according to
    section 24, to another assignee resident in Ontario, for the purpose of
    paying rateably and proportionately and without preference or priority all the
    creditors of the debtor their just debts, nor to any sale or payment made in
    good faith in the ordinary course of trade or calling to an innocent purchaser
    or person, nor to any payment of money to a creditor, nor to any conveyance,
    assignment, transfer or delivery over of any goods or property of any kind,
    that is made in good faith in consideration of a present actual payment in
    money, or by way of security for a present actual advance of money, or that is
    made in consideration of a present actual sale or delivery of goods or other
    property where the money paid or the goods or other property sold or delivered
    bear a fair and reasonable relative value to the consideration therefor.

(2)

In
    case of a valid sale of goods or other property and payment or transfer of the
    consideration or part thereof by the purchaser to a creditor of the vendor
    under circumstances that would render void such a payment or transfer by the
    debtor personally and directly, the payment or transfer, even though valid as
    respects the purchaser, is void as respects the creditor to whom it is made.

(3)

Every
    assignment for the general benefit of creditors that is not void under
    section 4, but is not made to the sheriff nor to any other person with the
    prescribed consent of creditors, is void as against a subsequent assignment
    that is in conformity with this Act, and is subject in other respects to the
    provisions thereof until and unless a subsequent assignment is executed in
    accordance therewith.

(4)

Where
    a payment has been made that is void under this Act and any valuable security
    was given up in consideration of the payment, the creditor is entitled to have
    the security restored or its value made good to him before, or as a condition
    of, the return of the payment.

(5)

Nothing
    in this Act,

(a)
affects
    the
Wages Act
or prevents a debtor providing for payment of
    wages due by him or her in accordance with that Act;

(b)
affects any payment of money to a creditor where the creditor, by reason or on
    account of the payment, has lost or been deprived of, or has in good faith
    given up, any valid security held for the payment of the debt so paid unless
    the security is restored or its value made good to the creditor;

(c)
applies to the substitution in good faith of one security for another security
    for the same debt so far as the debtors estate is not thereby lessened in
    value to the other creditors; or

(d)
invalidates a security given to a creditor for a pre-existing debt where, by
    reason or on account of the giving of the security, an advance in money is made
    to the debtor by the creditor in the belief that the advance will enable the
    debtor to continue the debtors trade or business and to pay the debts in full.

Fraudulent Conveyances
    Act
, R.S.O. 1990, c. F.29

2.

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.

3.
Section
    2 does not apply to an estate or interest in real property or personal property
    conveyed upon good consideration and in good faith to a person not having at
    the time of the conveyance to the person notice or knowledge of the intent set
    forth in that section.

Business Corporations
    Act
, R.S.O. 1990, c. B.16

248
. (1)
A
    complainant and, in the case of an offering corporation, the Commission may
    apply to the court for an order under this section.

(2)

Where,
    upon an application under subsection (1), the court is satisfied that in
    respect of a corporation or any of its affiliates,

(a)
any act or omission of
    the corporation or any of its affiliates effects or threatens to effect a
    result;

(b)
the business or affairs
    of the corporation or any of its affiliates are, have been or are threatened to
    be carried on or conducted in a manner; or

(c)
the powers of the
    directors of the corporation or any of its affiliates are, have been or are
    threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to or that
    unfairly disregards the interests of any security holder, creditor, director or
    officer of the corporation, the court may make an order to rectify the matters
    complained of.

(3)
In
    connection with an application under this section, the court may make any
    interim or final order it thinks fit including, without limiting the generality
    of the foregoing,

(a)
an order restraining the
    conduct complained of;

(b)
an order appointing a
    receiver or receiver-manager;

(c)
an order to regulate a
    corporations affairs by amending the articles or by-laws or creating or
    amending a unanimous shareholder agreement;

(d)
an order directing an
    issue or exchange of securities;

(e)
an order appointing
    directors in place of or in addition to all or any of the directors then in
    office;

(f)
an order directing a
    corporation, subject to subsection (6), or any other person, to purchase
    securities of a security holder;

(g)
an order directing a
    corporation, subject to subsection (6), or any other person, to pay to a
    security holder any part of the money paid by the security holder for
    securities;

(h)
an order varying or
    setting aside a transaction or contract to which a corporation is a party and
    compensating the corporation or any other party to the transaction or contract;

(i)
an order requiring a
    corporation, within a time specified by the court, to produce to the court or
    an interested person financial statements in the form required by section 154
    or an accounting in such other form as the court may determine;

(j)
an order compensating an
    aggrieved person;

(k)
an order directing
    rectification of the registers or other records of a corporation under section
    250;

(l)
an order winding up the
    corporation under section 207;

(m)
an order directing an
    investigation under Part XIII be made; and

(n)
an order requiring the
    trial of any issue.

(4)
Where
    an order made under this section directs amendment of the articles or by-laws
    of a corporation,

(a)
the directors shall
    forthwith comply with subsection 186 (4); and

(b)
no other amendment to
    the articles or by-laws shall be made without the consent of the court, until
    the court otherwise orders.

(5)
A
    shareholder is not entitled to dissent under section 185 if an amendment
    to the articles is effected under this section.

(6)
A
    corporation shall not make a payment to a shareholder under clause (3) (f)
    or (g) if there are reasonable grounds for believing that,

(a)
the corporation is or,
    after the payment, would be unable to pay its liabilities as they become due;
    or

(b)
the realizable value of
    the corporations assets would thereby be less than the aggregate of its
    liabilities.


