



COURT OF APPEAL FOR ONTARIO

CITATION: Indcondo
    Building Corporation v. Sloan, 2015 ONCA 752

DATE: 20151105

DOCKET: C59303

Strathy C.J.O., Gillese and Blair JJ.A.

BETWEEN

Indcondo Building Corporation

Plaintiff/Appellant/

Respondent in Cross-Appeal

and

Valerie Francis Sloan, David Robin Sloan and Cave
    Hill Properties Ltd.

Defendants/Respondents/

Appellant in Cross-Appeal

Trung Nguyen, for the appellant

Philip Healey, for the respondents

Heard: October 19, 2015

On appeal from the judgment of Justice Michael A. Penny
    of the Superior Court of Justice, dated July 31, 2014.

ENDORSEMENT

[1]

Following oral argument, we dismissed the appeal and cross-appeal with
    reasons to follow. These are those reasons.

[2]

The appellant sought to set aside four transfers of property pursuant to
    the
Fraudulent Conveyances Act
, R.S.O. 1990, c. F-29, in order to
    satisfy a judgment it obtained against the respondents in 2001. The action was twice
    dismissed prior to trial, first on a limitations issue and second as an abuse
    of process. Both orders were reversed by this court and the matter went to
    trial.

[3]

Success was divided. The trial judge found that the respondent Sloans
    conveyances in 1987 and 1988 to his wife and her company were not made with
    intent to defraud his creditors. He found, however, that transfers of the
    matrimonial home and a Florida property between 1992 and 1994 were made for
    that purpose, and set them aside.

[4]

The trial judges analysis hinged primarily on his determination of when
    Sloan knew he was in financial trouble. He found the conveyances in 1987 and 1988
    occurred at a time when Sloan could not reasonably have known that they would
    impair his ability to discharge his financial obligations. By 1992, however, his
    circumstances had changed. He knew that he was in significant financial
    jeopardy. The circumstances surrounding those transactions pointed to a
    fraudulent intent.

[5]

The trial judge also dismissed the appellants claim to pierce the
    corporate veil of the wifes company and dismissed the respondents defence
    that the action should be dismissed on the basis of the doctrine of laches.

[6]

The appeal and cross-appeal impugn the trial judges findings of fact. This
    was a case in which the documentary and testimonial evidence suffered from some
    infirmities due to the passage of time. The trial judge was in the best position
    to consider and weigh all that evidence, recognizing the challenges faced by
    both parties. His findings were based on inferences he drew from the evidence,
    and from the lack of evidence, and on his assessment of the credibility of the
    witnesses. They are supported by that evidence. We are not persuaded that the
    trial judge made a palpable and overriding error in any of his factual findings.

[7]

In attacking the 1987 and 1988 conveyances, the appellant says the trial
    judge should have found the trust arrangements were a sham, relying on
Duca
    Financial Services Credit Union Ltd. v. Bozzo
, 2011 ONCA 455, 68 E.T.R.
    (3d) 1. It says that on the trial judges findings, Sloan maintained control of
    his wifes company, and this is inconsistent with having parted with the
    beneficial interest in the properties.

[8]

We do not accept this submission. Although the
Duca
case was
    not brought to the attention of the trial judge, he addressed the argument that
    the transactions were shams and found otherwise. Indeed, in both cases, based
    on Sloans evidence and that of his lawyer, the trial judge found that the
    appellant had failed to establish that the conveyances were made with
    fraudulent intent. The trial judge recognized that the documentation was not as
    complete as it might have been, but observed this did not mean the transaction
    was lacking in good faith
.

[9]

Applying the principles from
Transamerica Life Insurance Co. of
    Canada v. Canada Life Assurance Co
. (1996), 28 O.R. (3d) 423 (Gen. Div.),
    at pp. 433-34, affirmed by [1997] O.J. No. 3754 (C.A.), the trial judge
    concluded that the corporate veil argument could not succeed separate and apart
    from the issue of the fraudulent conveyances. He was willing to accept that Sloan
    dominated the affairs of his wifes company to bring it under his complete
    control. He noted, however, that the second part of the test  conduct akin to
    fraud that would otherwise unjustly deprive claimants of their rights  had
    not been met. The conduct upon which the appellant relied was the same conduct
    it relied upon to set aside the transactions as fraudulent conveyances. Thus,
    the corporate veil argument did not add anything to its attacks of the specific
    transactions, which he had already dismissed on their merits.

[10]

Turning
    to the cross-appeal, the trial judge found that Sloans circumstances were markedly
    different by 1992. The appellant had started an action against Sloan and three
    banks were putting pressure on him. It was in these circumstances that Sloan
    transferred his interest in the matrimonial home to his wife in 1992 and his
    half interest in their Florida condo to her in 1993. On the matrimonial home,
    the trial judge found that Sloan knew the transfer would materially impact his
    ability to pay his creditors. That was the very reason he made the transfer,
    and his wife knew that was the reason it was done.

[11]

As
    for the Florida condo, the trial judge found that the badges of fraud pointed
    overwhelmingly to a fraudulent intent and the respondents had not overcome
    their evidentiary burden of establishing the validity of the transfer.

[12]

The
    trial judge was then entitled to determine that the entire proceeds of sale
    were available to Sloans creditors, as the respondents produced no evidence to
    show the property was encumbered.

[13]

On
    the cross-appeal, the respondents also say the trial judge erred in not giving
    effect to the defence of laches.

[14]

We
    see no merit to this submission. As the trial judge noted, laches is an
    equitable doctrine. The party relying on the defence must establish both delay
    and prejudice resulting from the delay. The trial judge indicated that he would
    be prepared to find the appellant had been guilty of inordinate delay in the
    prosecution of the claims. He found, however, that the defendants had not
    established actual prejudice as a result of the delay.

[15]

Having
    presided at the trial, the trial judge was in the best position to determine
    whether the respondents defence was prejudiced by the 23-year delay in
    bringing the matter to trial. The respondents essentially ask us to re-assess
    the circumstances and to make our own findings as to prejudice. We are not
    prepared to do so. Nor are we prepared to interfere with the trial judges
    exercise of his discretion.

[16]

The
    respondents also submit on the cross-appeal that the trial judge erred in
    failing to give effect to s. 5(1) of the
Assignments and Preferences Act
,
    R.S.O. 1990, c. A.33, which, the respondents claim, exempts any payment of
    money to a creditor provided it was made in satisfaction of a pre-existing
    debt, whether the payment was intended to prefer the creditor or not. This submission
    does not reflect the actual words of the section, which contains no reference
    to a pre-existing debt. Nor does it take into account the concluding words of
    the sub-section:

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.

[17]

The
    wording of the provision suggests that it does
not
refer to payments for
pre-existing
debts but rather to
present
payments, advances,
    sales or deliveries.

[18]

We
    do not, however, find it necessary to resolve the issue. This provision was not
    pleaded and the submission was not made to the trial judge. We are not
    satisfied that we have all the facts necessary to address the issue and that it
    can be addressed without causing unfairness to the appellant:
767269
    Ontario Ltd. v. Ontario Energy Savings L.P.
,
2008 ONCA 350
, at
    para. 3;
Kaiman v. Graham
, 2009 ONCA 77, 245 O.A.C. 130, at para. 18.

[19]

Both
    parties sought to introduce fresh evidence on the appeal. In a case of this
    vintage, a partys claim to have discovered new evidence is viewed with some
    scepticism. We are not satisfied that the evidence could not have been obtained
    by due diligence before trial. Whether we apply the
Palmer
test (
R.
    v. Palmer,
[1980] 1 S.C.R. 759), or the
Sengmueller
test (
Sengmueller
    v. Sengmueller
(1994), 17 O.R. (3d) 208 (C.A.)), the fresh evidence is not
    admissible. See
Chiang (Trustee of) v. Chiang
, 2009 ONCA 3 at paras.
    72-78.

[20]

For
    these reasons, the motions to admit fresh evidence are dismissed. The appeal
    and cross-appeal are dismissed. As success is divided, there will be no order
    as to costs.

G.R. Strathy C.J.O.

E.E. Gillese
    J.A. 

R.A.
    Blair J.A. 


