



COURT OF APPEAL FOR ONTARIO

CITATION: Shoukralla v. Shoukralla, 2016 ONCA 128

DATE: 20160211

DOCKET: C59196

Weiler, LaForme and Huscroft JJ.A.

BETWEEN

Carmen Shoukralla

Respondent

and

Michael Shoukralla

Respondent

and

Margelyn Delfin Dumolong, Luzviminda
    Jardenil Bautista and

Gina Tumulak Aung

Appellants

Victor Opara, for the appellants, Margelyn Delfin
    Dumolong, Luzviminda Jardenil Bautista and Gina Tumulak Aung

Michael Shoukralla, in person

G. William McKechnie Q.C., for the respondent, Carmen
    Shoukralla

Heard: January 14, 2016

On appeal from the judgment of Justice Bonnie L. Croll of
    the Superior Court of Justice, dated July 14, 2014, 2014 ONSC 4205.

By the Court:

BACKGROUND

[1]

Carmen Shoukralla (the Wife), commenced an application against her
    husband, Michael Shoukralla (the Husband), seeking, among other things, an
    order that a property in Toronto (the Property) be sold and that the proceeds
    be available to satisfy her equalization entitlement and child support arrears,
    and to secure future child support. In January 2011, a court order was granted
    prohibiting the Husband from selling, encumbering or registering mortgages on
    any properties without further court order.

[2]

A trial dealing with all of the family law issues, including issues
    relating to the Property, commenced in September 2013. Evidence came out at
    trial that the Husband sold the Property for $350,000 to the appellants, who
    were tenants at the Property, without seeking a court order.

[3]

After hearing this evidence, the Wife sought and was granted an
    adjournment of the trial to bring a motion to add the appellants  the
    purchasers of the Property  as parties. The court ordered that substituted
    service was appropriate and ordered the Wife to serve the appellants with the
    notice of motion and supporting materials by regular and registered mail at the
    Property.

[4]

The Wifes motion was heard on October 29, 2013. The appellants were not
    in attendance nor did they file any material. Nonetheless, the motion judge was
    satisfied that the service requirements were met and that each of the
    appellants had actual or deemed notice of the motion. She granted the motion
    and added the appellants as parties. Further, the Wife was granted leave to
    amend her pleadings to request that the transfer be set aside and an injunction
    be granted restraining the appellants from dealing with the Property.

[5]

At the conclusion of the trial, the Wife brought a motion for summary
    judgment, returnable April 8, 2013, seeking an order setting aside the Husbands
    transfer of the Property to the appellants.

[6]

The Wife did not serve the appellants with the notice of motion and
    supporting material for the summary judgment motion. Nevertheless, on the
    return date of April 8, 2014, counsel for the appellants attended the motion
    hearing and submitted  without evidence  that the appellants were never
    served with any prior documents and were unaware of the action between the Wife
    and Husband. Counsel said that his clients only became aware of the summary
    judgment proceeding after instructing him to search the court files to see if
    there was anything  relating to [the appellants]. Thus, he argued, the lack
    of valid service nullified the proceedings as against the appellants.

[7]

The motion judge rejected counsels submissions and found that the
    appellants had been served with previous documents and orders  including the
    first motion to add them as parties  and arranged for all previous orders to
    be copied and provided to counsel. She accepted that the appellants had not
    been served with the summary judgment motion materials and adjourned the motion
    to June 6, 2014 to allow them to receive the Wifes materials and file their
    own.

[8]

The summary judgment motion was heard on
    June 6, 2014. The appellants were represented by counsel and one of the
    appellants filed affidavit evidence in response to the motion.

[9]

On July 14, 2014, the trial judge released separate reasons for the
    trial judgment,
Shoukralla v. Shoukralla
,
2014 ONSC 4209
and the summary judgment motion,
Shoukralla v.
    Shoukralla
,
2014 ONSC 4205
. The Wife
    was successful in obtaining relief at trial. Regarding the summary judgment
    motion, the Wife was granted the relief she sought. The motion judge held that:

1.  The transfer of the Property from
    the Husband to the purchasers was a fraudulent conveyance, as it was done with
    the intent to defeat the Wife's claims. There is no genuine issue requiring a
    trial. Accordingly, summary judgment should issue setting aside the transfer
    dated August 30, 2013.

2.  There shall be an order vesting the
    registered interest of the Husband in the Property in the name of the Wife. The
    Wife may sign all documents required to give effect to the vesting order on
    behalf of both herself and the purchasers, without their consent.

[10]

The
    appellants appeal the order adding them as parties on the application and the
    order granting summary judgment. The Husband appeared on the appeal but did not
    file any material and made no submissions.

[11]

At
    the conclusion of oral argument, we dismissed the appeal and advised the
    parties that reasons would be forthcoming. What follows are those reasons.

ANALYSIS

Fresh evidence

[12]

The
    appellants first sought to introduce fresh evidence in the form of an affidavit
    by a legal assistant to counsel for the appellants with attachments containing
    correspondence and documents from the file of the solicitor who acted on the
    property transfer.

[13]

The
    appellants have failed to explain why this fresh evidence was not tendered on
    the summary judgment motion when it was available through due diligence:
Palmer
    v. The Queen
(1979), [1980] 1 S.C.R. 759. While we would therefore deny
    the admission of the proposed evidence on this appeal, we note that it is of no
    assistance to the appellants in any case.

Merits of the appeal

(i)

Adding the appellants as parties on an
ex parte
basis

[14]

The
    appellants first argument is that their rights to procedural fairness were
    violated when the trial judge added them as parties on an
ex parte
basis
    after the trial proceedings were already under way. They say that, because the
    order was made
ex parte
it was subject to
de novo
review.
    They further argue that they were never properly served with the notice of
    motion to add them as parties and therefore the motion judge should have held a
de novo
hearing to determine whether service was effective.

[15]

The
    trial judges order, made on October 29, 2013, adding the appellants as parties
    in the matrimonial proceedings between the Husband and Wife, is interlocutory.
    Consequently, any appeal from it is to the Divisional Court with leave,
    pursuant to s. 19(1)(b) of the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43:
Clarke (Litigation Guardian of) v. Richardson
, 2013 ONCA 731.

[16]

Having
    never properly appealed the order adding them as parties, the appellants
    complaints about procedural fairness, including proper service of the hearing
    of the motion on October 29, 2013, are not properly before this court. This
    portion of the appeal is quashed.

[17]

We
    note that this court raised the issue of jurisdiction with respect to the order
    adding the appellants as parties during the hearing of the appeal. The
    appellants did not dispute that the order is interlocutory and chose to proceed
    with the remaining grounds of appeal, which are properly before this court.

(ii)

Procedural fairness in failing to inquire into proper service

[18]

The
    appellants second argument is that the motion judge violated their rights to
    procedural fairness in relation to the summary judgment motion by failing to
    provide them with an opportunity to adequately prepare and respond to the
    motion. We reject this assertion.

[19]

The
    motion judge adjourned the summary judgment motion on the first return date  April
    8, 2014  because the Wife acknowledged that she did not serve the appellants
    with her motion materials. A review of the record reveals to us that, after
    some discussion about the availability of appellants counsel, the motion judge
    fixed June 6, 2014 as the return date. The only comment appellants' counsel
    made was that he had an examination for discovery already scheduled the same
    week. He then advised the court that he was satisfied with the timeline fixed
    for the exchange of materials.

[20]

The
    appellants counsel refused to accept service on behalf of his clients on the
    April 8 return date. The appellants were therefore given three weeks from the
    date set for substituted service by mail to respond to the motion. There is no
    evidence that they ever requested more time or an adjournment of the June 6 hearing
    date. There is no evidence of any attempt made by the appellants to examine the
    Wife. The appellants have not demonstrated any error and this ground of appeal
    is accordingly dismissed.

(iii)

Reliance on evidence at trial for the summary judgment motion

[21]

The
    appellants submit that the motion judge improperly relied on evidence from the
    trial between the Husband and the Wife in adjudicating on, and granting, the
    summary judgment motion. We reject this submission.

[22]

The
    motion judge's findings were well-supported by the motion record. She relied on
    information in the record as well as the lack of affidavit evidence tendered by
    the appellants on the motion. While the motion judge appears to have made some
    reference to evidence adduced at trial that did not form part of the motion
    record, this referenced evidence is not essential to her decision and does not
    amount to a palpable and overriding error. This ground of appeal therefore
    fails.

(iv)

Transfer of Property was a fraudulent conveyance

[23]

Finally,
    we do not accept the appellants submission that the motion judge erred in
    finding that there was a fraudulent conveyance, pursuant to ss. 2 and 3 of the
Fraudulent
    Conveyances Act
, R.S.O. 1990, c. F.29.

[24]

The
    motion judge considered the evidence and reached the following conclusions: (i)
    the appellants were not arms-length parties in relation to the Husband; (ii)
    the appellants had knowledge of the January 2011 court order prohibiting any sale
    of the Property; and (iii) the Husband transferred the Property with the intent
    to defeat the Wifes claims and the appellants did not rebut the evidentiary
    presumption that they were privy to such intent.

[25]

In
    the circumstances of this case, the motion judge relied on principles described
    in
Conte Estate v. Alessandro
, [2002] O.J. No. 5080 (S.C.), at paras.
    20-24, affirmed by this court, [2004] O.J. No. 3275 (C.A.), to analyze intent
    to defraud for purposes of ss. 2 and 3 of the
Fraudulent Conveyances Act
.
    In doing so, the motion judge noted that an inference of fraudulent intent can
    be made by suspicious circumstances  or badges of fraud  surrounding the
    conveyance. The presence of such suspicious circumstances raises a presumption
    of fraud that must be rebutted by the parties to the conveyance.

[26]

Applying
    that analysis to this case, the motion judge found that there were ten badges
    of fraud surrounding the transfer of the Property, all of which were supported
    by the Wifes evidence. She further found that the appellants had not rebutted
    the presumption of fraud. We see no error in the motion judges analysis and
    conclusions on this issue.

[27]

The
    appellants have failed to demonstrate any basis upon which this court may
    interfere with the motion judges findings or analysis. We therefore reject
    this ground of appeal.

DISPOSITION

[28]

It
    is for these reasons that the appeal was dismissed. The respondent (the Wife)
    is entitled to costs of the appeal in the amount of $28,000, inclusive of
    disbursements and HST.

Released: KMW FEB 11 2016

K.M. Weiler J.A.

H.S. LaForme J.A.

"Grant Huscroft J.A."


