CUBBON BUILDING CENTRE LTD v VRBANEK

Cubbon Building Centre Ltd. (“Cubbon”) appealed the dismissal of its Application for Summary Judgment, in which it had alleged that a series of transactions between the Respondent spouses constituted a fraudulent conveyance (the “Dismissal”). The Respondent husband was a Judgment debtor of Cubbon (the “Debtor”).

The Debtor had transferred a commercial property to his spouse, which was sold, and the proceeds were used to purchase an Arizona property, registered in both Respondents’ names as joint tenants (the “Property”). After the Property was sold, the sale proceeds were directed to the spouse, who combined the funds with her own savings to purchase an Edmonton condominium, solely in her name.

On Appeal, Cubbon argued that the Applications Judge had improperly relied on counsel’s submissions as evidence and failed to draw adverse inferences from inconsistencies in the Respondents’ evidence. Cubbon sought an Order adding the Debtor to title of the Edmonton condominium or, alternatively, to have it declared subject to a resulting trust in favour of the Debtor. The Respondents maintained that the Debtor had no exigible interest in the Property or its proceeds, and that the transactions were undertaken for estate planning and financial reasons, not to defeat creditors.

Justice Hayes-Richards confirmed that, under Rule 6.14, the Appeal required a de novo review of the issues based on the material before the Applications Judge. While acknowledging that Rule 6.14 permits new evidence on Appeal, Hayes-Richards J. noted that no new evidence was tendered. The Court agreed with the Applications Judge that a threshold issue arose with respect to whether the Debtor had any exigible interest in the Property or its proceeds, and that such a determination was dispositive of whether the Summary Judgment Application could succeed.

Justice Hayes-Richards found no reviewable error in the Dismissal, noting that the evidence supported the findings that the spouse had provided all funds for the purchase of the Property, paid all related expenses, and did not intend to gift any beneficial interest to the Debtor. The Court further held that the Applications Judge properly assessed the evidence, including any alleged inconsistencies, and that the transactions were motivated by legitimate estate planning objectives and financial necessity, rather than an intention to defeat the claims of creditors. The Appeal was dismissed.