Court allows Plaintiff's Fraudulent Conveyances Claim and Personal Injury Claim to proceed simultaneously against Defendant

On October 29, 2014, a pedestrian was seriously injured when he was struck by a vehicle driven by the defendant. The injured man, together with his wife, children and brother, subsequently filed a civil suit for damages in the combined amount of $20 million. " The plaintiffs alleged that the accident victim suffered catastrophic injuries that resulted in an inability to return to his job as an accountant and the need for 24-hour attendant care. While he did not deny responsibility for the accident, the defendant driver argued that the accident was inevitable due to his own health-related issues.

At the time of the accident, the defendant was insured for a $1 Million liability limit under his motor vehicle policy and also had $1 Million coverage for third party liability under his homeowner's policy, but the latter policy excluded coverage for injuries that resulted from the use of a motor vehicle.

On November 9, 2015, the defendant transferred ownership of his home into his wife's name, for the amount of $2. Upon discovering the transfer of ownership, the plaintiff amended his Statement of Claim to add that the conveyance of the home was fraudulent and void, in accordance with the" Fraudulent Conveyances Act. The plaintiff also claimed punitive damages pursuant to the" Fraudulent Conveyances Act.

In" Ahmed v. Rowe" (2017), the defendant responded by filing a motion to have the" Fraudulent Conveyances Act" claim dismissed or alternatively, ordering a stay in the claim pending the outcome of the personal injuries claim. " The key issue to be decided in this action was whether the two claims - the fraudulent conveyance claim and claim for punitive damages - should be stayed (placed on hold) until the personal injuries claim was decided.

Counsel for the defendant argued that the plaintiffs' claim under the" Fraudulent Conveyances Act" will not become relevant until the plaintiffs establish liability in the claim for personal injuries and only if the judgment is in excess of the limits of the defendant's insurance policies; therefore, it would be unjust to allow the claim under the" Act" to proceed before the personal injury claim has been resolved. " Defence counsel further argued that the fraudulent conveyance and punitive damages claims will extend the examination process and will require the defendant's wife to participate, all of which may prove to be unnecessary if the personal injuries claim is dismissed. Finally, defence counsel asserted that the personal injuries claim has no question of law or fact in common with the other claims and the convenient administration of justice will only be frustrated by allowing all claims to proceed simultaneously.

Counsel for the plaintiffs argued that a claim under the" Act" can be pursued when it is alleged that a conveyance was made with the intent to "defeat, hinder, delay or defraud creditors or others". Plaintiffs' counsel asserted that it was not necessary for the plaintiff to be a creditor in order to make the claim under the" Act, as 'others' suggests a broad context and may include claims that have not yet been resolved by the courts.

Plaintiffs' counsel further stated that the limitation period for commencing a fraudulent conveyances claim begins as soon as the plaintiff discovers a fraudulent conveyance has occurred. Therefore, there was an urgency on the part of the plaintiffs to make a claim as quickly as possible. Plaintiffs' counsel also noted that, in previous cases, other fraudulent conveyances claims had been joined with other claims and later decided by the trial judge after the other claims were held to be valid.

Finally, counsel for the plaintiffs argued, if the fraudulent conveyances claim is left to proceed only after the plaintiffs obtain a judgement on the personal injury claim, it would result in prejudice against the plaintiffs due to the fact that they would then be required to go through the entire litigation process twice, including examination for discovery, followed by another pre-trial proceeding and a possible second trial. " This process would result in a delay in judgement and full compensation for the plaintiffs. " On the other hand, there would be no prejudice to the defendant if the claims proceed at the same time.

Justice Gray sided with the plaintiffs, agreeing that the use of the word "others" in the" Fraudulent Conveyances Act" was sufficiently broad to include a person whose claim had not yet received a judgement. The judge rejected the defendant's submission of previous cases where claims against solicitors had been struck out or stayed, emphasizing that they were of no assistance in the current issue. The judge noted that the case boiled down to the question of how the court should exercise its discretion.

Justice Gray acknowledged the defendant's argument that the litigation of two sets of claims simultaneously could be more difficult and more costly, particularly for the defendant's wife, as the fraudulent conveyance claim will be moot if the plaintiff's are unsuccessful in their personal injury claim or if the settlement is within the policy limits. " This circumstance would be unfair to the defendant's wife, who would have been required to participate in the litigation unnecessarily, in this scenario. " On the other hand, the judge found that, in the event of an opposite outcome, the plaintiffs would be disadvantaged -- if the plaintiffs succeed and receive a judgement in excess of the defendant's policy, the plaintiffs would be delayed in collecting on the portion of the settlement in excess of the policy limits and would also have to undergo the added expense and delay of another set of examinations for discovery and another trial.

Upon consideration of both potential outcomes, Justice Gray ruled that the trial judge would have ample power to conduct the proceedings in a way that would minimize, if not eliminate any prejudice to the defendants. Justice Gray then laid out a number of scenarios that would help eliminate any prejudice for both parties. For example, the trial judge could conduct the trial of the claim for personal injury with a jury first and hold the fraudulent conveyance claim in abeyance or the trial judge could instruct counsel to make no reference to the fraudulent conveyance claim before the jury.

Justice Gray ruled that, in his view, there is greater benefit in allowing the claims to proceed at the same time and as much as possible, avoid multiplicity of proceedings. " The judge noted that any unnecessary involvement by the defendant's wife can be compensated in costs. " On these grounds, the defendant's motion was dismissed.

The process leading up to favourable settlement of a personal injury claim, following an accident, can be complicated and difficult. " However, at Rastin & Associates, our highly experienced and skilled team has the necessary knowledge and resources to address any complicated and/or unexpected legal issues that arise, to facilitate a strong legal argument for just compensation. " If you or a loved one were injured in an accident and would like to make a claim against the 'at fault' party, call our office today to schedule a no-obligation meeting to discuss the specifics of your case and learn about the most effective legal options for achieving owed compensation.