Ahmed v Rowe is a recent motion decision dismissing the defendants’ attempt to strike paragraphs of an amended Statement of Claim to assert a claim under the Fraudulent Conveyances Act (FCA).
Mr. Ahmed was hit by a car operated by Mr. Rowe. Mr. Ahmed’s counsel brought a claim for $20M in damages against Mr. Rowe. Mr. Ahmed was an accountant and unable to work after the accident. Mr. Rowe potentially has available $2M in third party liability limits.
Since the commencement of the action, Mr. Rowe transferred his interest in the matrimonial home to his wife for a nominal sum.
Upon learning of this transfer of property, the plaintiffs amended the Statement of Claim to add the wife as a defendant and to assert a claim under the FCA. Plaintiffs’ counsel also obtained a Certificate of Pending Litigation and registered it against title of the matrimonial home. Plaintiffs’ counsel argued that the transfer should be void under the FCA since it was fraudulent. The plaintiffs also sought to amend the pleading to assert a claim for punitive damages.
Mr. Arnold’s counsel brought a motion to dismiss the FCA claim or an order staying the claim pending the outcome of the claim for damages for personal injury. The defendants argued that the FCA issue is not triggered unless and until liability is established and there is an award in excess of limits.
In arguing the motion, Mr. Arnold’s counsel attempted to have the paragraphs relating to FCA struck or to have the matter stayed. Counsel argued that there are no common questions of law or fact between the personal injury claim and the FCA claim. Additionally, it was argued that keeping the FCA claim live would lengthen the discovery process and necessarily include the wife’s participation. Ultimately, counsel argued that it would frustrate the administration of justice (and convenience) to allow the claims to proceed together.
Plaintiffs’ counsel argued that the language of the FCA triggers the commencement of the limitation clock once the conveyance has been discovered, and as such, did not believe that the Plaintiff could afford to wait until after an excess limits judgment was entered before commencing a claim under the FCA. The Plaintiff asserted that the conveyance was made to defraud, defeat, or delay “creditors or others”. Counsel argued that the term “or others” is broad, and is meant to include a plaintiff whose claims have not yet crystallized by way of judgment.
In dismissing defence counsel’s arguments, the Court held that it would be redundant to have the parties proceed through two sets of discovery where a trial would only deal with the FCA issue if judgment awarded was in excess of the $2M available. The process could be controlled with jury instruction.
Ultimately, the Court ruled there was no undue prejudice to the defendants if the claims proceed together. This decision makes it clear that streamlining processes while maintaining the administration of justice is of paramount importance in a time were Courts are overburdened and trial wait times are lengthy.
From an evidentiary standpoint, it appears that the plaintiffs submitted affidavit evidence regarding the possible breach of the $2M policy limits potentially available. The addition of a punitive damages claim under the FCA should concern an insured since insurance policies usually do not cover indemnification for such damages.
With larger claims coming through the door in light of the 2016 insurance changes including reductions of accident benefit collateral deductions, personal exposure to over limits claims may become a more frequent issue. .
If you have a question about this blog or a similar file, please contact Eric Grossman at 416-777-5222
