2013 ONSC 5716, 2013 ONSC 5716

CITATION : York University v.

Michael Markicevic, 2013 ONSC 5716 DIVISIONAL COURT FILE NO.: 320/13 DATE: 20131029 SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT RE: York University, Plaintiff AND: Michael Markicevic, Janet Fleming, Mima Veronica Markicevic, Aleeyah Apparel Inc. operating as A-Tech Construction and Design Inc., Aleeyah Inc., AFC Inc. operating as Arsenal Facility Consulting Inc., Toronto Engineering Company, Guga's International, Canadian & American Concrete Renovation & Drain-Layer Ltd., Roman Ritacca, Luigi Lato, Phil Brown, Riaz Jadavji, Helen Saoulli, Guram Sekhniashvili, Gia Sekhniashvili, John Doe #1, John Doe #2, John Doe #3, Jane Doe #1, Jane Doe #2 and Jane Doe #3, Defendants , BEFORE: Mr.

Justice H.J. Wilton-Siegel COUNSEL: William C. McDowell and Dena N. Varah, for the Moving Party/Plaintiff Lincoln Caylor and Michael J. Paris, for the Respondent/Defendant Mima Veronica Markicevic HEARD: September 11, 2013 ENDORSEMENT [ 1 ] York University (“York”) seeks leave to appeal an order dated June 25, 2013 of D. M. Brown J. (the “Order”) under rule 62.02(4) (

b) of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 . The Order discharged a certificate of pending litigation on a property referred to as the “Woodville Property” and authorized the sale or mortgage of the Woodville Property on certain terms described below. York says there is good reason to doubt the correctness of the Order and that the proposed appeal involves matters of such importance that leave should be granted.

The Principal Legal Issues on this Appeal [ 2 ] The facts pertaining to this action are set out in the motion judge’s reasons for decision dated June 25, 2013, and need not be repeated here. The issues raised on this motion for leave pertain to the principles of law applicable to a discharge of a certificate of pending litigation and a proprietary injunction. [ 3 ] Section 103(6) of the Courts of Justice Act , R.S.O. 1990, c. C.43, governs a discharge of a certificate pending litigation: The court may make an order discharging a certificate, (

a) where the party at whose instance it was issued, (

i) claims a sum of money in place of or as an alternative to the interest in the land claimed, (ii) does not have a reasonable claim to the interest in the land claimed, or (iii) does not prosecute the proceeding with reasonable diligence; (

b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or (

c) on any other ground that is considered just, and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just. [ 4 ] A proprietary injunction has been defined by Molloy J. in Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology , [2003] O.T.C. 7 (Ont. S.C.), at para. 15 : A proprietary injunction is granted to preserve an asset in the possession of a defendant, which the plaintiff says belongs to the plaintiff, or is subject to a trust in favour of the plaintiff.

It is typically sought in cases of alleged theft, conversion or fraud where the defendant, by some wrongdoing, comes into the possession of the plaintiff's property. The purpose of the injunction is to preserve the disputed property

until trial so that the property will be returned to the plaintiff if successful at trial, rather than used by the defendant for his own purposes. In that case, Molloy J. addressed the principles applicable to a payment out of funds subject to a proprietary injunction, rather than a discharge of a proprietary injunction.

The parties are agreed, however, that the same principles should govern the discharge of a proprietary injunction and a certificate pending litigation. [ 5 ] As noted by the motion judge, in the circumstances of the present case, s. 103(6) mandates a two-stage analysis for the discharge of a certificate of pending litigation: (1) an analysis of whether the claimant has “a reasonable claim to the interest in the land”; and (2) an assessment of the equities of the case. [ 6 ] This leaves two significant issues in the context of a discharge of a certificate of pending litigation or a proprietary injunction: (1) the test for proof of a “reasonable claim to the interest in the land”; and (2) the relationship between the two steps in the analysis. [ 7 ] The third issue raised on this motion is whether the personal circumstances of a third party intended to benefit from a discharge of a certificate of pending litigation or a proprietary injunction is an appropriate consideration in assessing the equities between the parties.

The Decision of the Motion Judge Respecting These Issues [ 8 ] At paras. 47-49 in his reasons for decision dated the same day as the Order, the motion judge made the following determination regarding York’s interest in the Woodville Property (referred to as the “Vaughan Property” in the motion judge’s reasons): [47] … In my January Reasons I concluded that York had demonstrated a reasonable claim to the Vaughan Property on the basis of its constructive trust/Residence Improvement Claim to the extent of $122,330. [48] York since has amended its Statement of Claim to assert fraudulent conveyance and resulting trust claims against the Vaughan Residence.

First, I would observe that the facts pleaded by York in support of those claims were available to it prior to the argument of the Mareva /summary judgment motions. The arguments advanced by York in paragraphs 72 through to 81 in its factum on this motion could just as easily have been advanced on the earlier Mareva /summary judgment motions. Second, unlike the constructive trust claim, the two amended claims are not proprietary in nature, in the sense that they do not contain assertions by York that it has an ownership claim to some or all of the Vaughan Property.

The two new claims simply seek to increase the pool of eligible Markicevic assets in the event York succeeds in obtaining a judgment against him. Third, in my view the evidence relied upon by York in support of its two new claims does not support a finding that "there is a strong indication that the conveyance [to Mima] may have been fraudulent".

In my view these two new claims add little additional weight to York's claim for a reasonable interest in the Vaughan Property. [49] Moreover, Mima has agreed that in the event the CPL on the Vaughan Property is discharged, then she will use the proceeds resulting from a financing or sale of the Property to pay into court the sum of $142,330 as security for the proprietary claims advanced by York against both the Vaughan and Duntroon Properties.

Accordingly, York's claimed proprietary interests in the lands can be adequately protected by another form of security. [ 9 ] After reviewing the financial circumstances of the defendants, the motion judge then concluded that, without access to the equity in the Woodville Property, the defendants will not be able to afford counsel to defend them through to the end of trial. [ 10 ] The motion judge then addressed the question of whether, if access to the equity in the Woodville Property is granted, Markicevic should have access to those funds.

He concluded on the following basis at paras. 57-60 that such access should be granted: Dealing with the first question, to date the orders of this Court have been predicated on only Mima and Fleming having access to the equity of the Residences to fund their own legal costs. In my view, fairness and reality require re-visiting that approach. First, unless Markicevic has access to some of the equity to fund his defence, he will be unrepresented.

The claims against Markicevic are the key claims to be decided; the claims against his wife and daughter are derivative, in the sense that if no liability is found against Markicevic, most probably no liability will be found against his wife and daughter. For a real defence to be made to York's key claims, Markicevic requires legal representation. Second, Mima, the registered owner of the Vaughan Property, has testified that she wants her equity in her property to be used to defend all family members.

Combined, those two factors lead me to conclude that the equities favour granting all three Markicevic defendants access to the equity in the Vaughan Property. In a complex case such as this, justice requires that both sides to the dispute have some semblance of equal access to legal representation to make it a "fair fight". I acknowledge that in so holding I am changing my mind from the views I expressed in my February Reasons (and departing from the terms of the consent order made by Newbould J.).

But, adhering to a past discretionary decision simply for the sake of consistency would work an injustice in this case; equity requires a different approach in light of current facts. That said, I am prepared to allow Markicevic access to that equity only to cover future legal costs of defending this action, not to pay legal costs incurred to date. I see no real prejudice to York in this approach. Its proprietary claims against both Residences will be fully secured by a payment into court.

I can only assume that as a public institution York would prefer seeing the determination of its claim result from a "fair fight" rather than a gross imbalance in the parties' financial resources. Further, if this trial cannot be done within 10 days, with the preparation by legal counsel attendant for only a 10-day trial, then I find it difficult to conceive how one could manage a case like this to trial with five self-represented defendants, which would be the resulting alternative.

[ 11 ] From the prior quoted passage, it is clear that, as he was required to do, the motion judge addressed the issue of whether York had a reasonable claim to an interest in the Woodville Property on the basis of the Amended Statement of Claim, which set out York’s fraudulent conveyance and resulting trust claims. The parties agree that the first comment of the motion judge in paragraph 48 is not relevant to the issues on this motion. The analysis of the motion judge regarding the test for proof of a reasonable claim to the interest in the land is found entirely in the second and third comments in paragraph 48.

In addition, the conclusions of the motion judge regarding the equity of the circumstances are set out in paragraphs 57-60. I will return to my conclusions regarding his analysis for purposes of this leave motion after first setting out the positions of the parties, including their respective submissions regarding the conclusions of the motion judge. Positions of the Parties [ 12 ] The issues between the parties can be summarized as follows.

Position of York [ 13 ] York contends that the standard for each of the two requirements necessary to show a reasonable claim to an interest in land for purposes of a fraudulent conveyance action or a resulting trust claim – (1) the existence of indebtedness; and (2) a “strong indication that the conveyance may have been fraudulent”, or have given rise to a resulting trust – is whether a triable issue exists. In addition, it submits that the respondents must disprove the existence of a reasonable claim to an interest in the land before a court can give consideration to the equities of the case.

As mentioned, York suggests, in effect, that demonstration of a triable issue regarding a claimant’s interest in land is sufficient to oust any consideration of the equities of a case. In addition, it says that, when a court considers the relevant equities, it must limit that consideration to the equities between the plaintiff and the defendant in the fraudulent conveyance or resulting trust action.

In particular, it says that the circumstances of a defendant who is not the owner of the property which is the subject of the fraudulent conveyance or resulting trust claim, and therefore is not a defendant in the action regarding the land, are not a proper consideration in the assessment of the equities in a discharge hearing. [ 14 ] Turning to the decision of the motion judge, York makes three submissions.

First, it submits that the motion judge erred insofar as he concluded, in his second comment, that the fraudulent conveyance and resulting trust claims cannot be, as a matter of law, reasonable claims to an interest in the Woodville Property. Second, York submits that, insofar as the motion judge reached this conclusion based on a consideration of the relevant facts, he either erred in applying a standard other than the triable issue standard in reaching his conclusion on the two elements of the test for a reasonable claim or, alternatively, he misapprehended the evidence.

Third, York argues that the motion judge erred as a matter of law in taking the personal circumstances of Markicevic into consideration in assessing the equities of the case on one of two alternative grounds. As a matter of law, the equities of the case could not “trump” the finding of the motion judge that York had established at least a triable issue regarding a reasonable claim to an interest in the Woodville Property.

In the alternative, even if the motion judge was entitled to consider the equities in the face of a triable issue regarding York’s fraudulent conveyance and resulting trust claims, York says that the motion judge was not entitled, as a matter of law, to take the personal circumstances of Markicevic into consideration in assessing the equities of the case.

Position of the Respondent [ 15 ] The respondent contends that, for the purposes of a fraudulent conveyance or resulting trust action, the standard of proof in respect of both elements of a reasonable claim to an interest in land is either a prima facie case, which I understand to be a reasonable or arguable case, or a strong prima facie case.

In addition, it says that even if the claimant can demonstrate a triable case or stronger, a court can discharge a certificate of pending litigation, or a proprietary injunction, if the court considers that the equities of the case require such relief, i.e., the equities of a particular situation may trump a finding that a claimant has established a triable issue regarding a reasonable claim to an interest in the relevant land.

The respondent further argues that nothing precludes a court from considering the circumstances of a third party relative to the property claimed in assessing the equities of the case. [ 16 ] The respondent therefore argues that the motion judge proceeded properly in accordance with the foregoing standard and made determinations that are supportable.

Specifically, the respondent says that the motion judge, who had an extensive familiarity with the evidence as the case management judge, properly concluded that the evidence did not support a prima facie case or a strong prima facie case on either element of the test for a reasonable claim to an interest in the Woodville Property, grounded in York’s fraudulent conveyance or resulting trust claims.

The respondent says further that, whether or not the evidence establishes the two requirements of a reasonable claim to an interest in the Woodville Property on a triable issue standard, the motion judge was entitled to consider the equities of the case. Lastly, the respondent argues that the motion judge was entitled to consider Markicevic’s circumstances in his assessment of the equities.

Analysis and Conclusions [ 17 ] I propose to address York’s motion for leave to appeal by first considering the state of the law regarding the principles applicable to a discharge of a certificate of pending litigation and/or a proprietary injunction, and then addressing the questions of whether there is good reason to doubt the correctness of the decision of the motion judge and the importance of the issue. Analysis of the Principles of Law Applicable to a Discharge of a Certificate of Pending Litigation or a Proprietary Injunction

The Test for Proof of a Reasonable Claim to an Interest in the Land [18] In Transmaris Farms Ltd. v. Sieber (1999), 86 O.T.C. 190 [“Sieber”], Blair J. (as he then was) proceeded on the basis thatfraudulent conveyance claims could give rise to a reasonable claim to an interest in land. It is clear that a court can find such an interesteven if there is no claim for tracing funds into the relevant property that gives to a constructive trust claim.

On this basis, I suggest thatresulting trust claims could also give rise to a reasonable claim to an interest in land, there being no distinction in principle between thesetwo categories of claim for present purposes. [19] The case law is, however, less clear regarding the requirements for demonstration of such a claim. [20] For this purpose, both parties point to the following excerpt from Sharpe, Robert A., Injunctions and Specific Performance,looseleaf (Toronto: Canada Law Book, 1998) at 2740 [“Sharpe”], which addresses the requirement for a proprietary injunction in afraudulent conveyance action: In order to secure such an injunction, the plaintiff must establish status as a creditor, although, as noted, it is unnecessary that judgmenthas actually been obtained.

Presumably, the plaintiffs must establish a prima facie case of indebtedness. Secondly, the plaintiffs willhave to show that a fraud has been committed and, again, as the matter arises at the interlocutory state, it will be sufficient if the court issatisfied that there is a strong indication that the conveyance may have been fraudulent.

The acceptance of a general jurisdiction toaward Mareva injunctions to protect claims from being defeated by devious means does, of course, render this well-established, butrelatively narrow, jurisdiction less significant[emphasis added]. [21] The discussion in Sharpe on this issue refers to the decision of Steele J. in Robert Reiser & Co., Inc. v.

Nadore FoodProcessing Equipment Ltd. et al. (1977), (ON SC), 17 O.R. (2d) 717 [“Reiser”], which does not answer the issue ofthe applicable standard: I am satisfied that there need not be a conviction or prior finding of fraud in order to come within the principles of Campbell v. Campbell,supra. On an application for an interlocutory injunction I am satisfied that the Court need only be satisfied that there is a strongindication that the conveyance may have been fraudulent. I do not believe that the general denial of innuendo and inferences that are setout in the affidavit of Mr.

Nadon is sufficient to counteract the lengthy affidavit of Mr. Vedie which raises very strong presumptions andissues indicating that the conveyance may have been fraudulent. I am therefore satisfied that there is jurisdiction in this Court in thepresent case to deal with the matter. Having come to that conclusion, I must direct my attention to the question of whether interiminjunction should continue as requested.

I would also note that, later in Reiser, Steele J. found that there was a strong prima facie case of indebtedness, but it is not clear that heconsidered that anything more than an “arguable case” of the existence of a fraudulent conveyance, by which I think he meant reasonablecase, needed to be established. [22] The two-stage analysis described by Sharpe in fraudulent conveyance actions is not disputed by the parties.

However, it isdifficult to reconcile the principles articulated in Sieber and the principles articulated in the extract from Sharpe in respect of the standardof proof applicable to each stage of the analysis. Sharpe refers to a requirement of a prima facie case in respect of the first stage – thedemonstration of indebtedness – and a “strong indication that the conveyance may have been fraudulent” in respect of the second stage.

This may suggest a reasonableness standard for the first stage and either the same standard or a strong prima facie case standard for thesecond stage in the context of fraudulent conveyance actions. However, Sieber, at para. 69, appears to suggest that the appropriatestandard is a triable issue in respect of both requirements for demonstration of an interest in the land.

The Relationship Between the Two Steps in the Analysis [23] In Sieber, at para. 68, Blair J. addressed the issue of the relationship between the two steps in the analysis involvedrespectively on a motion to obtain, and to discharge, a certificate of pending litigation: It is not necessary for the court to be satisfied that there is no triable issue as to an interest in land or that the claim is frivolous andvexatious, before a certificate of pending litigation may be set aside.

Conversely, where the plaintiff's claim is not frivolous andvexatious, and the evidence gives rise to a triable issue or a reasonable claim as to whether the plaintiff has an interest in the land, acertificate of pending litigation may be issued. The distinction is significant. [24] This statement supports the respondent’s contention, with which I agree, that satisfaction of the first requirement of the testfor a discharge of a certificate of pending litigation, or a proprietary injunction, is not a pre-condition to a consideration of the equities ofthe case.

The equities may justify a discharge of a certificate of pending litigation, or a proprietary injunction, even if the applicant forthe discharge is unable to persuade the court of the absence of any triable issue regarding the respondent’s claim to an interest in theland, i.e., the respondent continues to demonstrate a reasonable claim to an interest in the land. [25] York’s position on this motion that the first requirement is a pre-condition to consideration of the second is contrary to thestatement of law of Blair J. in Sieber.

It is also contradicted by the practical reality that a consideration of the equities of the case wouldbe unnecessary if York were correct in its reading of the law. This

interpretation is also consistent with the structure of section 103(6) ofthe Court of Justice Act. Clause 103(6)(

c) gives a court the authority to discharge a certificate of pending litigation, among other things,on “any other ground that is considered just”, even if it is not possible to demonstrate the requirements of 103(6)(

a) or (b), including inparticular the requirement under 103(6)(a)(ii) that the claimant lacks a reasonable claim to the interest in the land claimed. Consideration of the Personal Circumstances of a Third Party in Assessing the Equities [26] Lastly, I note that there is no case law that specifically addresses the third issue raised on this motion of whether the personalcircumstances of a third party intended to benefit from a discharge of a certificate of pending litigation or a proprietary injunction is anappropriate consideration in assessing the equities between the parties.

Conclusions Regarding the Correctness of the Decision of the Motion Judge [ 27 ] The conclusions of the motion judge in respect of the issues on this motion are effectively contained entirely in the third comment of the motion judge in paragraph 48 in his reasons for discussion (with respect to whether York has a reasonable claim to an interest in the Woodville Property) and in paragraphs 56-59 of the reasons for decision of the motion judge (with respect to his assessment of the equities between the parties). I will address each issue in turn.

Preliminary Observations [ 28 ] Before doing so, I would make three preliminary observations. [ 29 ] First, the standard of a “good reason to doubt the correctness of the order in question” for purposes of rule 62.02(4) means that the decision is open to serious debate. In reaching the conclusions below, I wish to state that I am not making any determination that the decision of the motion judge was incorrect. [ 30 ] Secondly, the motion judge correctly addressed the protection of York’s constructive trust claims in respect of the Woodville Property.

The issues on this motion are limited to his treatment of York’s fraudulent conveyance and resulting trust claims. [ 31 ] Third, the comments below address only York’s fraudulent conveyance claim. However, as mentioned above, I see no distinction in principle for present purposes between such claim and York’s resulting trust claim. Accordingly, the comments below are in my opinion equally applicable to York’s resulting trust claim, except to the extent that such claim is expressly referred to in the discussion.

Conclusions [ 32 ] The second comment of the motion judge, which is reproduced again below, can be regarded either as a statement of fact or a legal conclusion regarding whether York has a reasonable claim to an interest in the Woodville Property: Second, unlike the constructive trust claim, the two amended claims are not proprietary in nature, in the sense that they do not contain assertions by York that it has an ownership claim to some or all of the Vaughan Property.

The two new claims simply seek to increase the pool of eligible Markicevic assets in the event York succeeds in obtaining a judgment against him. [ 33 ] On balance, I think this is a factual statement that is not intended to do more than identify a distinction between York’s constructive trust claims, on the one hand, and its fraudulent conveyance and resulting trust claims, on the other hand.

Based on the conclusion of Blair J. in Sieber (in particular, his comments regarding the 88 Forest Hill Road property in that case) and the cases cited therein at paragraphs 61 and 62, there would be good reason to doubt any conclusion that, as a matter of law, York cannot have a reasonable claim to an interest in the Woodville Property based on its fraudulent conveyance claim merely because it is directed toward “[increasing] the pool of eligible Markicevic assets in the event York succeeds in obtaining a judgment against him.” [ 34 ] Accordingly, I have proceeded on the basis that the following statement of the motion judge constitutes the grounds upon which the motion judge concluded that York does not have a reasonable claim to an interest in the Woodville Property: Third, in my view the evidence relied upon by York in support of its two new claims does not support a finding that "there is a strong indication that the conveyance [to Mima] may have been fraudulent".

In my view these two new claims add little additional weight to York's claim for a reasonable interest in the Vaughan Property. This is a conclusion that York has failed to establish a reasonable interest in the Woodville Property beyond its constructive trust claim. [ 35 ] I note, first, that the motion judge makes no reference to the first requirement for demonstration of a reasonable claim to an interest in the Woodville Property – a prima facie case of indebtedness.

The motion judge appears to have proceeded on the present motion on the basis that this requirement was satisfied by York without expressly stating the standard of proof that he considered applicable.

In this regard, I note that, in his earlier decision on York’s application for a Mareva injunction, the motion judge had found that there was at least a genuine issue requiring a trial regarding York’s claim respecting the alleged fraudulent invoicing scheme. [ 36 ] This third determination therefore appears to be limited to a conclusion that York has not established the second requirement for demonstration of a reasonable claim to an interest in the Woodville Property – a strong indication that the conveyance of the Woodville Property may have been fraudulent .

However, it is unclear whether this conclusion of the motion judge is a determination of law or of mixed fact and law. [ 37 ] To the extent that this statement constitutes a conclusion of law that a fraudulent conveyance claim cannot give rise to a reasonable claim to an interest in the subject property, there is reason to doubt the correctness of such conclusion for the reasons set out above.

To the extent that the statement represents a conclusion of mixed fact and law as I think it was intended to be, there is also reason to doubt the correctness for a different reason. [ 38 ] Based on the analysis of the cases set out above, the standard of proof that must be met to establish a “strong indication that the conveyance to [Mima] may have been fraudulent” is the standard of either a triable issue per Sieber or a prima facie case, being a reasonable or arguable case.

It does not appear, however, that the motion judge made a determination on this issue. [ 39 ] On York’s earlier motion for a Mareva injunction, the motion judge had previously addressed whether a strong prima facie

case of fraud in respect of the alleged fraudulent invoicing scheme could be established and concluded that it could not on the record before him. The motion judge made no determination regarding the state of the record respecting York’s residence improvement claim pertaining to another property owned by Markicevic’s former wife (the Duntroon Property), finding that in any event there was no evidence of a real risk of dissipation of assets.

The motion judge also found there was a triable issue regarding York’s fraudulent conveyance and constructive trust claims in respect of the Duntroon Property and regarding York’s constructive trust claim in respect of the Woodville Property for purposes of a certificate of pending litigation. [ 40 ] However, the motion judge did not previously address whether the evidence in the record satisfied the standard of either a triable issue or a prima facie case regarding York’s fraudulent conveyance and resulting trust claims in respect of the Woodville Property.

These claims were not asserted by York until after the decision of the motion judge on York’s motion for a Mareva injunction. [ 41 ] Moreover, the determinations of the motion judge regarding York’s failure to establish a strong prima facie case regarding the merits of its claims asserting the alleged fraudulent invoicing scheme and the alleged residence improvement scheme are relevant for a determination of the first requirement for demonstrating a reasonable claim of an interest in the Woodville Property – a prima facie case of indebtedness.

As mentioned, from his silence on this issue, the motion judge appears to have assumed that this requirement was satisfied on the present motion.

These determinations are not, however, relevant to the second requirement for demonstration of a reasonable claim to an interest in the Woodville Property – a strong indication that the conveyance of the Woodville Property to the respondent may have been fraudulent . [ 42 ] Further, on the facts, as the Court understands them, it is possible that York could satisfy either or both of such lesser standards of proof in respect of its assertions of a fraudulent conveyance and a resulting trust.

In particular, the Woodville Property was transferred for no consideration at a time when the fraudulent invoicing scheme was on-going and Markicevic resided in the Property and directed the renovations of the Property. [ 43 ] The motion judge went on to assess the equities between the parties. This may implicitly reflect a determination that York had, in fact, satisfied the test for demonstration of a strong indication that the conveyance of the Woodville Property to the respondent was fraudulent despite the absence of a formal finding to this effect.

However, there is also reason to doubt the correctness of the motion judge’s assessment of the equities in the present circumstances in two respects. [ 44 ] First, the strength of York’s case was a relevant consideration in the assessment of the equities of the case.

The absence of an express finding of a strong indication that the conveyance of the Woodville Property to the respondent may have been fraudulent, including the standard of proof applied in reaching any such conclusion, prevented the motion judge from taking this matter into consideration. [ 45 ] Second, there is reason to doubt the correctness of the motion judge’s decision to take Markicevic’s personal circumstances into consideration in weighing the equities, as he did in paragraphs 56-59 of his reasons. [ 46 ] I have considerable sympathy for the concerns expressed in the reasons of the motion judge regarding access to justice.

Nevertheless, there is no case law supporting the taking into consideration of the personal circumstances of a non-owner of property subject to a fraudulent conveyance claim. There is also at least a reasonable argument on policy grounds that a party who chooses to alienate property should not be able to effectively reverse that action to the extent of accessing the equity in the property in the event the conveyance is challenged as a fraudulent conveyance.

On this basis, there is a good reason to doubt the correctness of the motion judge’s decision to take Markicevic’s personal circumstances into consideration in assessing the equities of the case. [ 47 ] For the foregoing reasons, therefore, I conclude that there is good reason to doubt the correctness of the Order.

Conclusion Regarding the Importance of the Issue [ 48 ] The review of the applicable principles of law set out above in respect of a discharge of a certificate of pending litigation, or a proprietary injunction, establishes that there are a number of issues of law that are uncertain respecting both the standard of proof and the matters that may be taken into consideration by a court in assessing the equities between the parties to litigation.

In view of the regularity in which fraudulent conveyance actions are prosecuted in our courts, and in which protective relief is sought prior to trial in order to preserve assets subject to such a claim for realization purposes if the claim is successful, it is important that an appellate court address these issues to provide greater clarity to both plaintiffs and defendants in such actions. [ 49 ] I therefore conclude that the appeal also involves matters of sufficient importance to warrant the granting of leave. Conclusion [ 50 ] Accordingly, leave to appeal the Order is hereby granted.

Costs are fixed in the agreed amount of $7,500 to be payable by the respondent forthwith. ________________________________ Wilton-Siegel J.

Date: October 29, 2013