Do you have a claim that you did not pursue because the other party appeared to be sheltering their assets behind their spouse? Do you have a judgment that you haven’t been able to collect because the other party’s house and/or other assets were in the name of their spouse? As a result of OSC v Camerlengo Holdings Inc., 2023 ONCA 93, a recent decision of the Ontario Court of Appeal, the litigation lawyers at Daniel & Partners LLP may be able to assist.
The Ontario Court of Appeal ruled that a claimant (person making a claim) can attack a transfer of property that was made with the intent to defraud creditors, whether present or future. Before this decision, the claimant had to demonstrate that the the transfer was made to thwart the efforts of current creditors.
In Camerlango, the husband started an electrical contracting company. Title to the family home was put into the wife’s name in 1996. The husband had financial difficulties in 2011. A creditor pursued collection against the family home, alleging the transfer in 1996 was a fraudulent conveyance.
The Court held,
“An intent to defraud creditors generally can be made manifest by taking steps to judgment proof oneself in anticipation of starting a new business venture. To plead a fraudulent conveyance on this basis, it is not necessary that a claimant be able to identify a particular, ascertainable creditor that the debtor sought to defeat at the time of the conveyance. It is enough, on the case law, to plead facts that support the allegation that at the time of the conveyance the settlor perceived a risk of claims from a general class of future creditors and conveyed the property with the intention of defeating such creditors should they arise.”
When one spouse in a marriage starts a business, it is a very common strategy to transfer ownership of the family home to the other spouse. This strategy is often implemented in the hopes that if the business fails with unpaid debts, the family home will be protected. The Court of Appeal in Camerlango has called the usefulness of this strategy into question.
It is of note, however, that the statute of limitations was not argued in the lower court, and therefore not considered by the Court of Appeal.
If you would like to pursue a fraudulent conveyance claim, or if you would like your asset protection strategy reviewed, please contact the lawyers at Daniel & Partners today.