Executive Summary: Key Legal and Evidentiary Issues

• Transfer of $687,291.69 in condominium sale proceeds to the debtor’s spouse, without paying out the registered mortgage, was scrutinized as a fraudulent conveyance under s. 2 of the Fraudulent Conveyances Act.
• Multiple separation-related agreements, back-dated separation dates, and lack of proper Family Law Act financial disclosure undermined the claim that the transfer represented a bona fide equalization payment.
• The court relied heavily on “badges of fraud” (non-arm’s-length transfer, no consideration, timing, continued mortgage payments post-sale, and concealment from the lender) to infer Mr. Carmichael’s intent to defeat creditors.
• Evidence showed that the net sale proceeds were quickly dissipated through payments and transfers between Ms. Tesolin, Mr. Carmichael, and his family, supporting a finding that she helped shelter his funds from FirstOntario.
• The court rejected the defendant’s reliance on matrimonial settlement case law, distinguishing those authorities because no genuine value was given in exchange for the transfer of the proceeds.
• A tracing remedy under s. 12 of the Assignments and Preferences Act was granted, treating the spouse as holding the traced funds in trust and leading to a substantial monetary judgment plus Courts of Justice Act interest in favour of the creditor.

Background and mortgage lending relationship
FirstOntario Credit Union Limited advanced $470,960 to Kevin Carmichael in November 2016, secured by a mortgage registered against his Hamilton condominium at 200 Stinson Street (the Stinson Property). Unbeknownst to the lender, the Land Registry Office mistakenly deleted the mortgage from title without a discharge, creating the appearance of a clear title when no discharge had in fact been given. Mr. Carmichael later sold the Stinson Property in August 2020 for $730,000. On closing, the net sale proceeds of $687,291.69 were not used to repay FirstOntario’s mortgage but were instead directed, by Mr. Carmichael’s written instructions to his real estate lawyer, into the TD Bank account of his then-spouse, Aria Sage Tesolin. The closing documents showed no payout of the mortgage, and the amount due to Mr. Carmichael was recorded as $687,291.69, corresponding to the sum deposited into Ms. Tesolin’s account. No funds from the sale went to FirstOntario.
Despite the sale, Mr. Carmichael continued making monthly mortgage payments of $1,843.21 from his FirstOntario bank account for about 18 months, defaulting only in February 2022. FirstOntario’s later collection efforts and investigation revealed the mistaken deletion of the mortgage from title and the fact that its security had not been discharged in the ordinary way. In June 2025, FirstOntario obtained a judgment against Mr. Carmichael for $666,174.15 plus contractual interest under the mortgage terms. Mr. Carmichael did not testify at trial in this subsequent fraudulent conveyance action against Ms. Tesolin.

Marital relationship, financial context, and OSC investigation
Ms. Tesolin began working with Mr. Carmichael at Strike Holdings Inc., a private equity trading enterprise that reportedly used leveraged algorithmic strategies. She eventually entered into a personal relationship with him and later married him in May 2019. Before their marriage, she had acquired a home for her mother at 138 Burlington Street East and a pre-construction condominium, which she sold around the time of the wedding, using the proceeds to pay wedding and personal expenses.
Soon after the wedding, a crisis emerged at Strike Holdings: Mr. Carmichael and his business partner presented that approximately $97 million that should have been in the firm’s TD Bank accounts was missing. Banks, including TD Bank and later RBC, shut down Mr. Carmichael’s personal and business accounts on suspicion of fraudulent activity. By late 2019, his only operating account was a chequing account with FirstOntario, which Ms. Tesolin did not access. She was told the situation was a banking error and initially believed it was a temporary problem. Strike Holdings began raising investor capital to fund litigation against TD Bank. In the meantime, the couple’s finances were strained; both lost their employment at Strike Holdings and Ms. Tesolin took work in hospitality to generate income.
By 2020, Mr. Carmichael was under Ontario Securities Commission (OSC) scrutiny relating to the Strike Holdings activities. Eventually, he was charged with fraud and other offences under the Ontario Securities Act. Throughout much of this period, however, Ms. Tesolin stated that she believed he was a victim of a banking error, not a perpetrator, and that the missing funds would ultimately be recovered.

Sale of the Stinson Property and use of the proceeds
In February 2020, Mr. Carmichael and Ms. Tesolin decided to list the Stinson Property for sale to generate funds. An agreement of purchase and sale was signed in April 2020 with an August 2020 closing. Although she was not on title, Ms. Tesolin signed the sale agreement as the spouse. On August 12, 2020, the sale closed, and $687,291.69 (the Stinson Proceeds) was deposited into her TD Bank Allinclusive account at Mr. Carmichael’s direction. She said she understood this routing was chosen because the real estate lawyer used TD Bank and it was supposedly faster than sending the money to Mr. Carmichael’s FirstOntario account.
Immediately after the deposit, large payments were made from the account: a TD Visa bill of about $30,330, an RBC Visa bill of about $18,000 for Mr. Carmichael, $30,500 to Mr. Carmichael’s parents to repay rent they had covered, and other transfers, including $130,000 and $10,000 to her RBC account. She soon gave Mr. Carmichael the password to her TD account, and he began using the account and funds alongside her. By 4 November 2020, the balance had fallen to around $9,400, meaning the Stinson Proceeds had effectively been spent or dispersed.
At the same time, Mr. Carmichael continued to make regular mortgage payments to FirstOntario, keeping the lender unaware that the property securing its loan had been sold and the proceeds diverted. The court ultimately found that as of 12 August 2020, Mr. Carmichael had no other assets or funds capable of satisfying the mortgage debt and deliberately chose to protect the Stinson Proceeds from FirstOntario and other creditors.

Separation agreements and alleged equalization payment
Following increasing marital tension, including alleged alcoholism, substance abuse, and dishonesty by Mr. Carmichael, Ms. Tesolin contemplated separation. She said that by September 2020 she had told him she wanted to leave, and she consulted a family lawyer in October 2020. A Separation Agreement was drafted and signed on 7 January 2021. It recited that the parties had separated on 1 September 2020, although they continued to live together until about May 2021. The agreement provided that: (1) Mr. Carmichael would pay Ms. Tesolin a $150,000 lump sum in full satisfaction of spousal support; (2) she had received the entire net Stinson Proceeds of $687,291.69 on 12 August 2020; (3) that receipt of the entire proceeds was an equalization payment in full satisfaction of all Family Law Act equalization claims; (4) 138 Burlington Street East was her pre-marriage property and he had no claims to it; and (5) both parties waived further financial disclosure. Only Ms. Tesolin provided a financial statement; Mr. Carmichael provided neither disclosure nor a sworn financial statement as normally required for equalization under the Family Law Act, so no actual calculation was ever done.
In January 2021, using some of the Stinson Proceeds, Ms. Tesolin purchased a property at 1166 King Street East. In August 2021, she and Mr. Carmichael signed an “Amending Agreement” altering the separation date and purporting to split the net sale proceeds of 1166 King Street East equally, and to gift a half-interest in 138 Burlington Street East to Mr. Carmichael’s daughter, with sale proceeds split equally between the daughter and Ms. Tesolin. The document recited that both parties received independent legal advice, though she testified she did not, believed the amendment would not stand in court, and intended to revoke it. She later did so via a Revocation Agreement signed in May 2022, which restored the original Separation Agreement and expressly noted that both parties declined legal advice for the revocation.
The court viewed the timing and content of these agreements with suspicion. At the time of the August 2020 conveyance of the Stinson Proceeds, the parties were not yet separated, and the court held that no equalization obligation could have existed on that date. By the time the Separation Agreement was signed in January 2021, the Stinson Proceeds had largely been dissipated and Mr. Carmichael purportedly had no property or income, making a genuine equalization calculation “anywhere close” to $687,291.69 impossible. The court concluded that labeling the prior transfer of the Stinson Proceeds as an equalization payment was not credible and was instead part of a scheme to justify or retroactively clothe a fraudulent transfer as a matrimonial settlement.

Continuing financial entanglement and asset movements
Although the Separation Agreement was signed in January 2021, Ms. Tesolin remained living with Mr. Carmichael until around May 2021, in part due to pandemic conditions and the renovation needs of 1166 King Street East. She testified that she definitively ended the relationship by email on 15 April 2021 and moved out shortly thereafter. Yet, their finances remained closely intertwined for a lengthy period. She gave Mr. Carmichael a $50,000 bank draft in April 2021 to appease his demands after learning she was seeing someone else. She also allowed him to use her TD banking and later opened an Interactive Brokers investment account in her name at his request, linking it to her RBC account, and gave him her RBC debit card. She said she believed he was using her “equalization” capital to trade and create income but that she did not closely monitor transactions. The court found this story implausible given her knowledge that his bank accounts had been frozen on suspicion of fraud and her own description of him as a “pathological liar.”
In early September 2021, she sold 1166 King Street East and handed over approximately half the net sale proceeds—about $140,000—to Mr. Carmichael: $91,424 was transferred into the Interactive Brokers account he controlled, and $50,000 (US$35,000) to his Las Vegas account. She maintained she expected to be repaid when he recovered wealth from Strike Holdings, but the court interpreted these movements as further evidence that she was helping redistribute and shelter his funds. In March 2022, as the OSC’s investigation culminated in charges, she sold 138 Burlington Street East and paid about $171,000 to Mr. Carmichael’s father and a further US$1,243.50 to Mr. Carmichael. Shortly after gaining back control of the Interactive Brokers account at the end of March 2022, she reviewed the trading history and concluded that the pattern mirrored Strike Holdings; this was the point when she finally believed he was likely guilty of the alleged frauds. She then severed remaining ties, proceeded to divorce (granted in December 2022), and did not pursue spousal support, believing most of the money was gone.

Legal framework: fraudulent conveyance, tracing and matrimonial settlements
FirstOntario sued Ms. Tesolin under s. 2 of the Fraudulent Conveyances Act, arguing that the transfer of the Stinson Proceeds to her was a fraudulent conveyance, and sought to trace the proceeds under s. 12(1) of the Assignments and Preferences Act. Section 2 voids any conveyance of property made with intent to “defeat, hinder, delay or defraud” creditors. Section 3 protects only those who receive property on “good consideration” and in good faith without notice of the debtor’s fraudulent intent. Section 12 of the Assignments and Preferences Act allows creditors to follow proceeds of property subject to an invalid transfer and recover the money or proceeds from the transferee if they could have seized the original property had it remained with the debtor.
The court applied well-established principles from Purcaru v. Seliverstova and related cases on “badges of fraud”: circumstances such as a non-arm’s-length transfer, lack of consideration, secrecy, the timing relative to creditor pressure or litigation, and continued use or benefit by the transferor. Where sufficient badges of fraud exist, an inference of fraudulent intent can be drawn, shifting an evidentiary burden to the transferee to rebut the inference, though the ultimate onus remains with the creditor on a balance of probabilities.
Ms. Tesolin argued that the deposit of the Stinson Proceeds was a legitimate equalization payment under the Family Law Act, discharging Mr. Carmichael’s matrimonial property obligations, and that bona fide matrimonial settlements are generally protected from attack. She relied on authorities such as Royal Bank v. Morrison and Austin Marshall Ltd. v. Bennie, where transfers pursuant to arms-length, good faith family law settlements supported by real consideration (such as release of support rights) were upheld as not fraudulent. She also contended that there was no proof she knew of the FirstOntario mortgage, and that any “windfall” to Mr. Carmichael was caused by a Land Titles Office error of which he was not initially aware.
The court rejected these arguments. It distinguished the matrimonial cases on the basis that in those authorities, the wife gave up valuable support or other rights and negotiations were genuinely adversarial, whereas here no legitimate equalization calculation was performed, no proper disclosure was provided, and the parties were still cohabiting when the supposed “equalization” transfer occurred. The court found that there was no “good consideration” for the August 2020 transfer, and thus s. 3 of the Fraudulent Conveyances Act could not shield Ms. Tesolin. Because the transfer was gratuitous, FirstOntario did not need to prove that she herself had fraudulent intent or notice; it was enough that Mr. Carmichael’s intent to defeat or delay creditors was established and that she was a voluntary recipient.
Relying on Westinghouse v. Buchar, Allen v. Hennessey and Pilot Insurance Co. v. Foulidis, the court held that where a conveyance is void under s. 2 of the Fraudulent Conveyances Act, s. 12 of the Assignments and Preferences Act allows proceeds of that property—even after further dispositions—to be recovered from the transferee. The fraudulent transferee is effectively treated as a trustee of the proceeds for the benefit of the defrauded creditors, and payment to anyone other than creditors is a breach of that trust. The court also endorsed the principle from Tsui-Wong v. Xiao that a divorce or separation settlement cannot be used as a shield for fraudulent conveyances when the real effect is to keep assets out of the reach of creditors while preserving them within the family or its close circle.

Court’s findings on intent, credibility and outcome
On the evidence, the court identified multiple badges of fraud surrounding the 12 August 2020 transfer: Mr. Carmichael knew of his mortgage obligations and that the Stinson Proceeds were the natural fund to repay FirstOntario; he was already facing the collapse of Strike Holdings and an OSC investigation; his TD and RBC accounts had been frozen for suspected fraud; he still had a functioning FirstOntario account into which the proceeds could have been paid; the mortgage was plainly not discharged from the sale proceeds; the transfer was to a non-arm’s-length spouse who had no legal interest in the property; she provided no consideration on the date of transfer; and the proceeds were rapidly spent while he continued to make mortgage payments to conceal the sale. These facts, taken together, supported a clear inference that Mr. Carmichael intended to defeat, delay or hinder FirstOntario and other creditors.
The judge found much of Ms. Tesolin’s testimony not credible, particularly her explanations for allowing Mr. Carmichael extensive control over her accounts despite knowing his accounts had been frozen for suspected fraud and that he was untruthful. The court did not accept that she was simply an innocent, trusting spouse or that she had truly loaned her money to him to invest on her behalf. Instead, the judge concluded that her conduct—sharing accounts, opening an investment account he controlled, transferring large portions of the proceeds of 1166 King Street East and 138 Burlington Street East to him and his father, and failing to pursue any repayment—was more consistent with helping him keep assets shielded from FirstOntario and other creditors. The narrative that the Stinson Proceeds constituted a bona fide equalization payment was rejected as contrived and unsupported.
Accordingly, the court held that the August 12, 2020 transfer of $687,291.69 from Mr. Carmichael to Ms. Tesolin was a fraudulent conveyance within s. 2 of the Fraudulent Conveyances Act and declared it void as against FirstOntario. Because the transfer was made for no good consideration, the lender did not need to establish fraudulent intent on Ms. Tesolin’s part; Mr. Carmichael’s intent and the gratuitous nature of the transfer were sufficient. The court further ruled that s. 12 of the Assignments and Preferences Act applied, enabling FirstOntario to trace the proceeds and recover them from Ms. Tesolin as if she held them in trust for the creditor.

Final judgment, tracing order and monetary relief
In the result, FirstOntario Credit Union Limited was the successful party. The court granted judgment against Ms. Tesolin in the amount of $467,945.69, representing the traced value of the mortgage funds misdirected through the fraudulent conveyance, together with prejudgment interest (from October 1, 2023 to judgment) and postjudgment interest, both calculated at the applicable rates under ss. 128 and 129 of the Courts of Justice Act. The court expressly declined to apply the higher contractual mortgage interest rate because Ms. Tesolin was not a party to the mortgage and had not enjoyed the benefit of the entire Stinson Proceeds over time. A tracing order was also made to identify the ultimate recipients of the funds originating from FirstOntario, so that appropriate enforcement steps could be taken against those proceeds. Costs were not fixed in the reasons; instead, the parties were invited to agree or to file short written submissions, so the total amount including any costs award could not yet be determined from this decision.