Executive Summary: Key Legal and Evidentiary Issues

• Scope and effect of a prior fraudulent conveyance judgment and whether it created a proprietary trust interest in the replacement property (Cortleigh) or only a capped monetary claim tied to the earlier Rollscourt proceeds.
• Proper interpretation of a tracing order under the Fraudulent Conveyances Act and whether Midland, as judgment creditor, can capture post-fraud increases in the value of the traced property.
• Equitable balancing between enforcing a long-outstanding judgment and the defendant’s request for time to refinance rather than sell the home that was acquired using fraudulently conveyed value.
• Treatment of “carrying costs” on the trust property, including whether mortgage interest as well as principal, taxes, and other expenses must be shared by the judgment creditor as beneficial co-owner.
• Availability and scope of occupation rent as an equitable remedy where the judgment creditor never lived in the property but was deprived of the benefit of its 50% interest by the defendants’ continued occupation.
• Calculation and set-off of credits between the parties, including unpaid historical costs awards, occupation rent, and a small net carrying-cost credit in favour of the defendant wife.

Background and underlying commercial dispute

The litigation arises from a long-running commercial dispute in which Midland Resources Holding Limited (Midland, now proceeding as a British Virgin Islands company) obtained a substantial judgment against Eugene Bokserman. In a 2014 decision (the Sanderson Judgment), Midland was awarded US$1,500,000 in damages for multiple torts, including deceit and false representations, making Midland a significant judgment creditor of Bokserman. That judgment was upheld on appeal, and leave to appeal to the Supreme Court of Canada was refused. Midland then turned to enforcement measures, including issuing and filing a writ of seizure and sale against Bokserman in Toronto.

The Rollscourt transfer and fraudulent conveyance findings

Just days before the final Sanderson Judgment was formally released, and knowing that a decision finding liability had already been circulated in draft, Bokserman and his wife, Elena Krasnov, transferred title to their jointly held home on Rollscourt Drive into Krasnov’s name alone, for no consideration and “for natural love and affection.” The parties later conceded that, prior to this transfer, the Rollscourt home was Bokserman’s principal asset available to satisfy any judgment against him. Krasnov subsequently sold the Rollscourt property for approximately $3.29 million, with net proceeds of about $1.746 million. She then used those proceeds to purchase a new home on Cortleigh Boulevard, again taking title in her sole name, where the couple have lived since 2015.

Midland only discovered the Rollscourt sale when it resumed enforcement efforts after the appellate process in the original commercial case had run its course. In 2018, Midland commenced a new action targeting the Rollscourt transfer as a fraudulent conveyance under Ontario’s Fraudulent Conveyances Act.

The Morgan Judgment and appeal: tracing into the Cortleigh property

In May 2021, Justice Morgan granted summary judgment to Midland, declaring that the transfer of Bokserman’s 50% interest in Rollscourt to Krasnov was a fraudulent conveyance made without consideration and with intent to defeat Midland’s rights as a creditor. The court found that both defendants were “keenly aware” that the conveyance was designed to deprive Midland of recourse to the only significant asset that could satisfy the Sanderson Judgment and held that the transfer was void as against the plaintiff.

Justice Morgan ordered a tracing of the proceeds of the Rollscourt sale and declared that 50% of Krasnov’s ownership interest in the Cortleigh property was held in trust for Midland. The order also authorized the sheriff to take possession of and sell the Cortleigh property to realize and pay to Midland the value of the property that had been fraudulently conveyed, with any funds received from that sale to be credited toward satisfaction of Bokserman’s existing debt. On appeal, the Ontario Court of Appeal upheld the fraud findings and the remedial structure, and leave to the Supreme Court of Canada was denied, leaving the Morgan Judgment as a final order. A certificate of pending litigation was registered on title to Cortleigh to protect Midland’s interest.

Reference to determine enforcement, rights, and quantum

Despite the tracing order, Midland’s efforts to have the sheriff seize and sell Cortleigh were delayed, including by the sheriff’s concerns about how to interpret the Morgan Judgment. All appellate routes having been exhausted, the Superior Court was later asked, by order of Glustein J., to conduct a focused reference. The court was directed to clarify the amounts owing under the Morgan Judgment, determine Midland’s legal interest in Cortleigh, decide whether Krasnov should be given an opportunity to refinance instead of selling, and, if a sale was ordered, to settle the terms of sale, distribution of proceeds, allocation of costs, and any further directions. Both sides were required to serve expert valuation evidence on Cortleigh and evidence on rental values and carrying costs, with the hearing made peremptory on both parties.

Key legal issues: nature of Midland’s interest and fraudulent conveyances law

The central legal issue was the meaning of the Morgan Judgment. Krasnov argued that Midland’s rights were strictly monetary and capped: in her view, Midland could recover only half of the net Rollscourt sale proceeds—about $873,000—and nothing more. On this theory, Cortleigh was “her” property, and any incremental value above that cap belonged entirely to her as sole registered owner. Midland, by contrast, maintained that the Morgan order created a proprietary trust interest entitling it to 50% of Cortleigh’s net sale proceeds whenever the property was sold, including any increase in value since the fraud.

The court grounded its analysis in several principles under the Fraudulent Conveyances Act. A conveyance made with intent to defeat or hinder creditors is void as against those creditors, but such a declaration does not itself move legal title; instead, creditors may treat the property in the transferee’s name as exigible for the debt of the transferor. As a remedial statute, the Act must be given a liberal, creditor-protective reading. Where property has been fraudulently transferred and then traced into a new form, equity treats the defrauded party as the equitable owner of the traced interest from the date of the wrongdoing, and entitles that party to the benefit of any post-wrongdoing increase in value, with the fraudulent transferee effectively bearing the liabilities of a trustee of the property and its proceeds.

Applying those principles, the court rejected Krasnov’s narrow, dollar-capped interpretation. It emphasized that what was fraudulently conveyed was not a fixed sum of cash, but Bokserman’s 50% interest in the Rollscourt property, which was then substituted into the Cortleigh property through the use of the sale proceeds. Justice Morgan’s order did not specify a fixed sum (such as $873,000), but instead declared the fraudulent conveyance, imposed a 50% trust interest in Cortleigh for Midland, ordered tracing, and authorized a sale to realize the value of the fraudulently conveyed property. Read fairly and in light of the underlying fraud, Midland’s interest was proprietary in nature and extended to 50% of Cortleigh’s net sale proceeds whenever realized, subject to appropriate equitable adjustments.

The court also rejected an argument based on the Court of Appeal’s decision in Bank of Montreal v. Iskenderov. It held that Midland was not being treated as a registered owner or as recovering “land” in a way forbidden by that case. Instead, Midland was recognized as holding a proprietary interest in Cortleigh that flowed directly from the fraudulent conveyance and subsequent tracing, a remedy consistent with the Act and general principles of equity.

Equitable relief: sale versus refinancing and the balance of hardships

Another major issue was whether Krasnov should be allowed time to refinance rather than being compelled to sell Cortleigh. She argued that a court-ordered sale would be “draconian,” forcing her from the home she had occupied for 11 years, and that she should be given a chance to arrange financing to pay Midland what was owed. Midland opposed any further delay and urged an immediate sale.

Treating this as an equitable question, the court weighed the competing hardships. It found that several considerations strongly favoured Midland: Krasnov’s sole title to Cortleigh existed only because of the prior fraud; Midland had been pursuing enforcement since at least 2021 and was entitled to effectual relief without further postponement; and there was no persuasive evidence that Krasnov had made real efforts to obtain financing or that any lender had refused her solely because of the certificate of pending litigation. Moreover, without a sale, the court would have to fix an artificial dollar value for Cortleigh based on competing expert appraisals, which was inherently speculative. Midland, by contrast, was prepared to accept 50% of the actual net sale proceeds, whether that figure ultimately exceeded or fell short of the Rollscourt net proceeds, thereby allowing the market to determine Cortleigh’s value.

While the court acknowledged the hardship for Krasnov in potentially losing a long-term residence, it concluded that the equities in her favour did not “undoubtedly outweigh” those supporting immediate enforcement. Critically, it observed that, but for the fraudulent conveyance of Rollscourt, it was unlikely that Cortleigh could have been purchased at all, because Bokserman’s half interest in the earlier property would have been available to satisfy Midland’s original judgment. On that footing, giving Krasnov further time to refinance would effectively reward her for the fraud and perpetuate Midland’s inability to realize on its interest.

Carrying costs, mortgage interest, and occupation rent

A further set of issues concerned financial adjustments between the parties as co-beneficial stakeholders in Cortleigh. Both sides accepted that Midland, as beneficial owner of a 50% interest, should share in certain “carrying costs” of the property, such as taxes and maintenance, but they disputed whether mortgage interest payments had to be included. Krasnov sought compensation for half of all carrying costs, including interest; Midland argued that interest was qualitatively distinct and should be excluded.

The court held that, in principle, beneficial co-owners can be required to bear their share of carrying costs, and it treated mortgage interest as an integral part of those costs, not a separable or excludable category. Interest, it reasoned, is central to the cost of financing a mortgaged property, and there was no compelling authority to carve it out when allocating burdens among those who benefit from ownership. Midland’s attempt to differentiate principal from interest was therefore rejected, and the mortgage interest amounts formed part of the carrying costs to be shared.

At the same time, Krasnov resisted paying any occupation rent to Midland, contending that such relief was confined to estates or family property cases where one spouse buys out another. The court disagreed. It characterized occupation rent as a flexible equitable remedy available wherever someone has had the benefit of exclusive occupation of property in which another has an interest, and where fairness calls for compensation for that lost benefit. The fact that Midland, as a corporate creditor, would never have physically occupied Cortleigh was not determinative; what mattered was that Krasnov and Bokserman had enjoyed exclusive use while Midland’s 50% beneficial interest lay effectively dormant. Given that the only reason Krasnov ever acquired Cortleigh was the fraudulent conveyance of Rollscourt, and that she did not approach the court with clean hands, it would be inequitable to award her carrying costs without also requiring payment of occupation rent.

Midland’s expert evidence placed the fair rental value of Cortleigh at $7,500 per month, and Krasnov did not tender competing valuation evidence; she challenged only the notion that any rent was owing. Likewise, Midland did not dispute her total claimed carrying costs of $399,103.04, objecting only to the inclusion of mortgage interest. When the court accepted both the rental and carrying-cost figures, it found a modest net difference—$10,237.04—in Krasnov’s favour after set-off. Accordingly, Krasnov was granted that limited credit, while Midland was recognized as entitled to occupation rent and other credits within the overall distribution scheme.

Terms of sale and mechanics of enforcement

With the nature of Midland’s interest clarified and the equities assessed, the court turned to detailed directions for selling Cortleigh. Midland proposed a structured framework, and Krasnov did not object to its mechanics, only to the idea of immediate sale. The court adopted Midland’s proposed terms.

Under the order, Midland is to propose three real estate brokers, from whom Krasnov will choose one as listing agent. Krasnov must list Cortleigh on the Multiple Listing Service within 60 days, cooperate with the listing process, permit reasonable showings, and sign all necessary listing, sale, and closing documents. She and the listing agent must keep Midland informed of all offers and any resulting agreements of purchase and sale. The closing date of any sale must be no more than 90 days after an agreement is signed, and the solicitor acting for the sale must be given a copy of the order. Krasnov and Bokserman are required to vacate and provide vacant possession by the closing date.

The order also sets a hierarchy for distributing the net sale proceeds. First, the outstanding RBC mortgage on Cortleigh must be discharged in full. Second, the usual sale costs, including legal fees and a commercially reasonable commission, must be paid. The remaining net proceeds are then to be divided equally between Midland and Krasnov, reflecting Midland’s 50% beneficial interest. From Krasnov’s 50% share, however, several specified amounts must be deducted and paid to Midland: a quantified occupation rent amount of $11,000 (subject to the $10,237.04 credit in Krasnov’s favour), two historical costs awards of $175,000 and $1,777 respectively with 2% interest running from dates in 2021 and 2022 until the date of sale, and the costs awarded on this motion together with any applicable post-judgment interest. The net $10,237.04 credit is to be applied as a partial offset against these obligations. The parties are given liberty to return to court for further directions, including, if necessary, a writ of possession to facilitate vacant possession for the purchaser.

Outcome, successful party, and financial consequences

In the result, the court granted Midland’s motion in almost all respects. It held that the Morgan Judgment created a proprietary trust interest, not a capped monetary claim; declared that Midland is entitled to 50% of the net proceeds of the Cortleigh sale, including any increase in value since purchase, subject to the set-offs and credits described; refused to grant Krasnov additional time to refinance; required both principal and mortgage interest to be included in shared carrying costs; awarded Midland occupation rent; and adopted Midland’s proposed sale framework. Krasnov succeeded only to the narrow extent of receiving a $10,237.04 credit representing the net difference between accepted carrying costs and occupation rent.

On costs, Midland was recognized as the largely successful party. The court reviewed its bill of costs, which covered multiple attendances and the preparation of expert evidence, and fixed costs at $55,000, payable by both defendants, finding this amount proportionate and within their reasonable contemplation. Together with the two earlier costs awards of $175,000 and $1,777—both ordered to be paid with 2% interest from 2021 and 2022 respectively—and a net occupation-related entitlement of $762.96 after set-off, Midland’s fixed monetary recovery under this decision comes to at least $232,539.96 in principal, plus the specified interest and post-judgment interest on the $55,000, with the precise total depending on the eventual sale date and interest accrual. In addition, Midland will receive 50% of Cortleigh’s net sale proceeds after mortgage and sale costs, but because the property has not yet been sold and the sale price is unknown, the final aggregate dollar amount in Midland’s favour—including its share of the sale proceeds and all interest components—cannot presently be determined from the decision.