Fraudulent Conveyance: Defeat of Future Creditor’s Claim

Fraudulent Conveyance: Defeat of Future Creditor's Claim

Mitchell Jenner v Saunders  2012 Carswell Ont 5299 is an Ontario Court of Appeal case that upholds a finding that the sale of a husband and wife’s property was a fraudulent conveyance intended to defeat creditors.

The married couple had purchased a house together but it was registered only in the wife’s name.

The property was subsequently put into joint names as a condition of obtaining a mortgage. After the mortgage proceeds were received the property was transferred back into only the wife’s name.

No consideration was paid by the wife to the husband for the transfer, and when the house was sold, the sale proceeds were put into a joint account.

Prior to the sale of the property, a plaintiff creditor brought action against the husband for unpaid commissions owed and obtained judgement after the sale.

The creditor successfully sued the wife at trial on the basis that the transaction was fraudulent and intended to defeat creditors.

The evidence of the couple was that the impugned transaction was to prevent the husbands’ creditors from having access against the matrimonial home.

The court found that the fact that couple intended to prejudice future creditors was contrary to the Fraudulent Conveyance act of Ontario, which is very similar in its wording to that of British Columbia’s

The appeal was dismissed but for also providing for pre judgement and post judgement interest.

The Court had little difficulty in holding that it was open for the trail judge to find that the intention of the debtor husband and his wife was to defeat existing and future creditors. opines that the same legal result would likely also occur in British Columbia.

Recommended Posts