![]() the debtor’s financial state at the time of the transaction was precarious.The Court of Appeal reviewed the “badges of fraud” which, when present, may raise a suspicion of fraud that needs to be rebutted. Rather, it is enough to plead facts that support an allegation that the transferor perceived risk from a general class of future creditors and made the conveyance with an intent to defeat such potential future persons. To plead fraudulent conveyance does not require naming a specific, knowable creditor exists. ![]() What matters is that at the time of the conveyance, there is an intention to defraud creditors. The Court makes clear that a creditor, as referred to in s 2 applies to both present and future creditors. ![]() The appellate court held that the motion judge erred in its interpretation of the Fraudulent Conveyances Act. The OSC appealed to the Ontario Court of Appeal. The motion judge found that Bluestream, and accordingly, the OSC, were not in the class of persons contemplated by the Fraudulent Conveyances Act -in other words, they were not ‘creditors or others’ at the time that Fred transferred his interest in the home to Mirella. The motion judge struck the OSC’s claim relating to fraudulent conveyance, finding that the pleadings of fraudulent conveyance were insufficiently particular to support a claim under s 2 of the Fraudulent Conveyances Act. A pleading will be struck only if it is ‘plain and obvious’ that the claim is certain to fail because it contains a radical defect. Accordingly, the OSC sought to set aside Fred’s 1996 conveyance of his interest in the family home to Mirella, claiming that the conveyance was fraudulent because it was made with the intent and purpose of defeating Fred’s existing and future creditors.įred and Mirella brought a motion to strike the OSC’s claims. OSC brought an action against the current respondents to recover the money loaned to them by Bluestream. In 2018 the OSC, issued a disgorgement order against Bluestream on behalf of the defrauded investors. The business associate turned out to be a fraudster, having defrauded many through a fraudulent investment scheme. Some 15 years later, Fred, facing financial difficulty, obtained a loan from a business associate via the company Bluestream International Investments Inc. ![]() The OSC alleges that at the time the transfer was made, Fred and Mirella were concerned about Fred’s potential exposure from the rapidly expanding electrical services business, in which the company took on high-risk projects. Four months after, both Fred and his business partner, using the same lawyer and on the same day, conveyed their interests in their family homes to their respective spouses for no consideration. The OSC’s statement of claim, alleges that in 1996, Fred and his business partner incorporated an electrical services business. Fred and Mirella purchased a family home in 1988, taking title in joint tenancy. Fred is the sole director and shareholder of the corporate respondent, Camerlengo Holdings Inc. The personal respondents are spouses, Fred and Mirella Camerlengo. This decision involved a claim of fraudulent conveyance by the Ontario Securities Commission’s (“OSC”) against the respondents. Camerlengo Holdings Inc., 2023 ONCA 93, the Ontario Court of Appeal reaffirmed that “creditors” refers to both present and future creditors. Section 2 of the Fraudulent Conveyances Act provides that conveyances of real or personal property made with the intent to defeat, hinder, delay or defraud creditors or others of their lawful action are void as against such persons. Can individuals take steps to make themselves ‘creditor proof’ against future creditors, even when there is no such creditor at the time? If there are sufficient “badges of fraud” present, the answer may be no.
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