Executive Summary: Key Legal and Evidentiary Issues

• Applicability of the Grefford v. Fielding test to a pre-judgment fraudulent conveyance claim where the main action does not itself claim an interest in land
• Whether the plaintiffs adduced sufficient evidence to show a “high probability” of obtaining judgment against Oleg Chekhter in the underlying Improve Actions
• Admissibility and evidentiary value of a prior 2019 affidavit sworn in a related proceeding as proof of likelihood of success in the main action
• Significance of the absence of pleadings or evidence to justify piercing the corporate veil to impose personal liability on Oleg for corporate conduct
• Proper allocation of the onus in the balance of convenience analysis for a Certificate of Pending Litigation over a matrimonial home
• Impact of timing and context of the property transfer, including alleged separation and nominal consideration, on the inference of intent to defeat or delay creditors

Background and parties

The plaintiffs, Judah Holdings Ltd., Aspect Creative Agency Inc., Rich Point Group Inc., and 2527041 Ontario Inc., operate businesses in home decoration or renovation. They purchased commercial condominium units from a developer, Improve Inc. Dissatisfied with the transactions, they commenced what are known as the “Improve Actions” in 2018, suing 15 defendants, including Improve Inc. and its minority shareholder, officer, and director, Oleg Chekhter. The claims in those actions include rescission of the condominium purchases and over $10 million in damages for conspiracy, fraudulent and negligent misrepresentation, and oppression. Oleg’s wife, Katherine Chekhter, is not a party to the Improve Actions.

The defendants on this appeal are Oleg and Katherine Chekhter. The proceeding under appeal is not about liability in the Improve Actions, but about whether the plaintiffs can secure a Certificate of Pending Litigation (CPL) on the Chekhters’ matrimonial home in a separate fraudulent conveyance action. The CPL motion, and this appeal, therefore sit at the intersection of debtor–creditor remedies and ongoing commercial litigation.

The property transfer and fraudulent conveyance allegations

After the plaintiffs’ concerns about the condominium dealings were raised in late 2017, their lawyer, Mr. Sherkin (now counsel on the appeal), sent a letter on November 2, 2017 setting out the plaintiffs’ position that Oleg and other defendants knowingly misrepresented material facts, inducing the plaintiffs to purchase the units, and that Oleg had concealed material changes to the condominium declaration contrary to the Condominium Act, 1998.

Oleg’s evidence was that in December 2017 he moved out of the matrimonial home because of family issues unrelated to the litigation, and agreed that title to the property would be put into his wife’s name alone. He instructed his accountant on December 11, 2017 to transfer his half interest in the property, but the transfer was not effected at that time because the accountant did not carry out the instructions.

On February 11, 2020, Oleg’s half interest in the property was ultimately transferred to Katherine for nominal consideration of $2. The plaintiffs later learned of this transaction on October 5, 2023. They alleged that this transfer was a fraudulent conveyance designed to defeat their interests as creditors or potential creditors, given their pending claims against Oleg in the Improve Actions.

The underlying actions and corporate context

The Improve Actions were commenced in two statements of claim, one in February 2018 and another in June 2019. The plaintiffs claim substantial damages and other relief arising from allegedly wrongful conduct by Improve Inc. and multiple individual defendants. In that litigation, Oleg is sued in his capacity as a minority shareholder, officer, and director of Improve Inc. There is no pleading that he acted for his own personal benefit, or outside his role as director or officer, in connection with the marketing and sale of the condominium units.

The associate judge, whose decision is under appeal, made an important factual finding: for the plaintiffs to obtain a personal judgment against Oleg, they would need to pierce the corporate veil. However, the pleadings in the Improve Actions do not allege the kind of personal benefit or conduct outside corporate capacity that is typically required for veil-piercing. There is also no evidence in the record showing that Oleg was acting beyond his corporate role. This finding bears directly on whether there is a “high probability” that the plaintiffs will obtain a personal judgment against him, a key element in the test for a CPL in a fraudulent conveyance context.

The motion for a Certificate of Pending Litigation

In 2023, the plaintiffs brought a motion to register a CPL against the Chekhters’ matrimonial home, relying on their fraudulent conveyance claim under the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29. The motion was heard on April 2, 2025. The plaintiffs filed two affidavits from Mr. Judah, sworn May 29, 2024, one of which had been filed previously on a summary judgment motion. They also sought to rely on an extensive 600-page affidavit sworn by Mr. Judah in 2019 (the “2019 Affidavit”), originally filed in the Improve Actions.

The associate judge applied the test from Grefford v. Fielding for granting a CPL in an action alleging a fraudulent conveyance where: (i) the plaintiffs have not yet obtained judgment in the underlying action; and (ii) the underlying claim does not itself seek an interest in the land alleged to have been fraudulently conveyed. Under that test, the plaintiffs had to show: a high probability of success in the main action; evidence that the impugned transfer was made with intent to defeat or delay creditors, with the burden lightened if the transfer was for less than fair market value; and that the balance of convenience favoured issuance of the CPL.

On the second branch—intent to defeat or delay creditors—the associate judge held that the plaintiffs met the threshold. He described it as a “low bar” and found there was a triable issue. Oleg’s ongoing use of the property, and his delayed identification of himself as separated on tax returns until 2019, supported an inference sufficient to warrant a trial on fraudulent intent.

However, the associate judge held that the plaintiffs did not satisfy the first and third branches. For the first branch, they failed to show a “high probability” of obtaining judgment against Oleg in the Improve Actions. The only material directed at that issue was the 2019 Affidavit, which did not actually state that the plaintiffs would obtain judgment nor provide substantive evidence directed to the likelihood of success against Oleg personally. As to the third branch, the associate judge held that the plaintiffs had not demonstrated that the balance of convenience favoured a CPL.

The evidentiary treatment of the 2019 affidavit

The appellants argued on appeal that the associate judge erred in refusing to treat the 2019 Affidavit as evidence on the CPL motion and in finding that Mr. Judah had not expressly adopted it as true in the current proceeding. Justice Pollak rejected this characterization. An affidavit filed in a different proceeding is generally not admissible in a new motion unless it is properly brought in as evidence—through authentication, adoption, or being re-sworn for the present case.

The associate judge concluded that an affidavit sworn six years earlier for a different purpose in another proceeding was not properly before him as evidence of contested facts on the CPL motion, nor could it be used as evidence of the likelihood of judgment in the Improve Actions. Justice Pollak noted that, in any event, nothing in that 2019 affidavit showed a likelihood of success in the main action. The appellate judge therefore upheld the associate judge’s approach to, and conclusions about, the 2019 Affidavit and its limited evidentiary value.

Case law relied upon and the applicable CPL test

On appeal, the plaintiffs argued that the associate judge applied the wrong test by following Grefford and thereby imposed an unduly onerous burden. They said other cases on fraudulent conveyance and CPLs supported a more favourable approach. Justice Pollak disagreed. The Superior Court has consistently applied the Grefford framework where a plaintiff has not yet obtained judgment and the main action does not concern an interest in the land itself. The judgment cites, for example, Jodi L. Feldman Professional Corporation v. Foulidis and Fewson v. Bansavatar, both confirming Grefford as the applicable standard in similar circumstances.

The plaintiffs relied on cases such as Gerger Mechanical v. Salvarinas, Fernandes v. Khalid, and Transmaris Farms Ltd. v. Sieber to argue that a CPL should be more readily available where there are allegations of fraud or nominal consideration between spouses. Justice Pollak found these authorities distinguishable. In Gerger Mechanical, the moving parties already had a judgment, giving them a recognized creditor’s interest in the property; in contrast, here the plaintiffs have no judgment against Oleg. Fernandes and Transmaris Farms involved strong or overwhelming evidence of fraud that justified the CPLs granted in those matters, a level of proof that was not replicated on the record in this case.

Balance of convenience and prejudice

The balance of convenience analysis also weighed against issuing a CPL. The plaintiffs did not present evidence that they would suffer specific prejudice if the CPL were refused. Their case largely rested on the allegation that the transfer was intended to prejudice them as creditors, but allegation alone is not proof of actual prejudice from the absence of a CPL.

By contrast, Katherine’s evidence showed that she would be prejudiced by a CPL. As the sole registered owner, a CPL registered against her matrimonial home would significantly constrain her ability to deal with the property and manage her assets in consultation with professional advisors. Justice Pollak accepted the associate judge’s conclusion that the plaintiffs had not discharged their onus to show that the balance of convenience favoured registration of a CPL in these circumstances.

Absence of relevant insurance or policy terms

The decision does not involve an insurance policy, coverage dispute, or interpretation of contractual policy terms. There are references to the Condominium Act, 1998 and the Fraudulent Conveyances Act, but no specific policy clauses or insurance conditions are discussed or interpreted. The legal analysis centres instead on procedural and remedial issues: the appropriate test for a CPL in a fraudulent conveyance setting, the evidentiary foundation required to show a high probability of success in the main action, and the balancing of convenience between parties.

The appellate reasoning and outcome

Justice Pollak reviewed the associate judge’s decision under the deferential standard applicable to discretionary orders on mixed questions of fact and law. An appellate court may only intervene if there is a palpable and overriding error or an error in principle. Applying that framework, Justice Pollak concluded that the associate judge applied the correct legal test from Grefford, assessed the evidence appropriately, and made no reviewable error in refusing the CPL.

The appeal was therefore dismissed. As the successful parties, Oleg and Katherine Chekhter were entitled to their costs of the appeal. The parties had agreed on costs in advance, and the court ordered that the plaintiffs/appellants pay the respondents a total of $6,000. This order represents the only quantified monetary outcome in this decision: no damages or other monetary awards were granted on the underlying claims, which remain to be resolved in the Improve Actions, and the only amount ordered in favour of the successful respondents was $6,000 in costs.