Husband's transfer of matrimonial home to wife fraudulent: Ontario Court of Appeal

The home was transferred for $2.00 through an interim separation agreement

Husband's transfer of matrimonial home to wife fraudulent: Ontario Court of Appeal

In a recent family law case, the Ontario Court of Appeal voided the husband’s transfer of the matrimonial home to his wife as a fraudulent conveyance.

The trial judge found that Baljit Dhaliwal failed to return $600,000 obtained from the respondent company for a joint venture to build a gas station that was never constructed. Anticipating legal action for breach of trust, Baljit transferred the matrimonial home to his wife, Arvinder Dhaliwal, for $2.00 through an interim separation agreement. The judge ruled this transfer fraudulent.

Arvinder argued that the trial judge wrongly concluded she did not provide good consideration for the home transfer, claiming the decision was unfair as it would cause her to lose built-up equity and make her liable for a mortgage associated with the transfer. Baljit contended that only $50,000 was owed to the respondent and challenged the finding that he intended to fraudulently transfer the home, asserting his wife was unaware of any fraudulent intent.

The appellate court noted that the trial judge's findings of fact, including evidence of Baljit's breach of trust and fraudulent conveyance, were "overwhelming." The judge found Baljit's and the respondent's vice president's testimonies inconsistent and evasive, while the evidence from the respondent's 100 percent shareholder was deemed "straightforward and sensible."

Regarding the home conveyance, the trial judge identified multiple indications of fraud, and the appellants failed to counter the evidence of fraudulent intent. Arvinder's refusal to produce her family law file, bank statements, and accounting records further supported the fraudulent conveyance finding. The court also noted that the exception for good consideration transfers did not apply in this case.

The appellate court confirmed that the trial judge’s findings are subject to review only for palpable and overriding error and found no such error in the case. The court also dismissed Arvinder's claim of fundamental unfairness, referencing recent case law, which clarified that an order under the Fraudulent Conveyances Act does not change title but allows creditors to execute against the property for debts owed by the transferor.

Ultimately, the court dismissed the appeal and awarded the respondent $15,000 in total costs, with each appellant liable for $7,500.

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