Executive Summary: Key Legal and Evidentiary Issues

• Central threshold issue was whether Darren Vrbanek had any exigible interest in the Arizona home or its sale proceeds that could support a fraudulent conveyance claim.

• Both decisions found that Nancy Vrbanek provided all funds for the Arizona home, paid all associated expenses, and that the property and its proceeds were effectively treated as hers.

• The evidence accepted by the Courts was that Darren was placed on title to the Arizona home as a joint tenant solely for estate planning purposes, namely to avoid probate issues in a foreign jurisdiction if Nancy died.

• Relying on authorities such as Drebert v Coates and Mitchell v Misener, both decisions applied the principle that where one person contributes the funds and title is joint, a resulting trust arises in favour of the contributor unless an intention to gift is established.

• Because there was no evidence that Nancy intended to gift any beneficial interest in the Arizona home to Darren, both Courts concluded that Darren had no exigible property interest in the Arizona home or its proceeds, so the fraudulent conveyance claim could not succeed.

• The summary judgment application and the subsequent appeal were both dismissed, leaving Cubbon Building Centre Ltd and Miramar Holdings Ltd without the remedies they sought over the Edmonton condominium, despite their existing judgment for $120,946.12 against Darren.

Background facts and the judgment debt

Cubbon Building Centre Ltd obtained a judgment against Darren Vrbanek in Court of King’s Bench of Alberta action number 1503 06257. The judgment, granted on February 14, 2020, was in the amount of $120,946.12. Miramar Holdings Ltd is the assignee of that judgment from Cubbon. Darren and Nancy Vrbanek are husband and wife. At the time of the transactions considered on the appeal, Darren had significant outstanding judgments against him, including the judgment at issue. Darren is described as financially dependent on Nancy, although he uses some of his pension money to assist with paying insurance and utilities.

Transfers of property and flow of funds

In November 2008, Darren gifted a commercial property (the Parsons Road Property) to Nancy. Nancy sold the Parsons Road Property in April 2009, and the sale proceeds were deposited into an account solely in her name. In 2010, Nancy used some of those Parsons Road proceeds to purchase a home in Arizona (the Arizona home). Title to the Arizona home was registered in the names of Nancy and Darren as joint tenants. Nancy and Darren gave evidence that this was done to avoid probate issues in a foreign jurisdiction should Nancy die. Nancy’s evidence was that she purchased the Arizona home because of her age and physical condition. Nancy was the primary resident of the Arizona home; Darren was still working at the construction company that he operated. Nancy paid for renovations to the property as required from time to time and she paid utilities and property tax bills. The Arizona home was sold in 2021. The proceeds of sale (the Arizona home proceeds) were initially deposited into a joint account in the names of both Nancy and Darren. Nancy gave evidence that she believed this was required since the Arizona home was in both names. The Arizona home proceeds were then immediately transferred into an account solely in Nancy’s name.

Use of proceeds and acquisition of the Edmonton condominium

The Vrbaneks needed to downsize their home in Edmonton. In late 2022 or early 2023, a condominium in Edmonton (the Edmonton condo) was purchased. For this purchase, Nancy used $136,986.19 from the Arizona home proceeds and $25,000 from other savings she had. The balance of the purchase price, $282,000, was financed by Nancy. The Edmonton condo was registered in Nancy’s name alone. Both Nancy and Darren resided, and continue to reside, in the Edmonton condo. Nancy also used approximately $425,000 of the Arizona home proceeds to purchase a small condominium in Arizona. The balance of the Arizona home proceeds was used for the Vrbaneks’ living expenses, with Darren contributing some pension income to assist with paying insurance and utilities. There was no allegation of impropriety with respect to the 2008–2010 transfer of the Parsons Road Property from Darren to Nancy; the first decision notes that challenging that transfer would now be beyond any limitation provision.

The plaintiffs’ application and fraudulent conveyance theory

In the first decision, the Plaintiffs (Cubbon Building Centre Ltd and Miramar Holdings Ltd) brought a Special Chambers application for summary judgment. They sought to impeach a transaction between Darren and Nancy as a fraudulent conveyance. They alleged that the conduct of the Vrbaneks, viewed cumulatively as a scheme, amounted to a fraudulent conveyance contrary to the Statute of Elizabeth, 1571 or the Fraudulent Preferences Act of Alberta. As a remedy, they asked that Darren be added to the title of the Edmonton condo as a joint owner. In the alternative, they sought a determination that there was a constructive trust or a resulting trust over the Edmonton condo in favour of Darren. The Defendants (Darren and Nancy) asserted that there was a threshold issue: whether Darren had any exigible interest in the Arizona home or the Arizona home proceeds. They argued that Darren had no such exigible interest and therefore there was no basis for a fraudulent conveyance claim.

Threshold issue and ruling at first instance

Applications Judge Summers agreed that the issue of whether Darren had an exigible interest in the Arizona home or its proceeds was a threshold issue and that if Darren did not have such an interest, the fraudulent conveyance claim could not succeed. The Plaintiffs did not allege any impropriety with respect to Darren’s transfer of the Parsons Road Property to Nancy. The Applications Judge noted that Nancy had provided all funds for the purchase of the Arizona home and that she had paid for all renovations. The critical question identified was the legal effect of registering the Arizona home in the joint names of Nancy and Darren as joint tenants: whether Nancy was the sole beneficial owner, as the Defendants contended, or whether Darren and Nancy were equal owners, as the Plaintiffs contended. During oral argument, the Applications Judge asked counsel for the Plaintiffs whether there was any credibility issue regarding Nancy’s and Darren’s testimony about their intentions. Counsel stated that he did not think there was a credibility issue and characterized their intention as legally irrelevant. He maintained that the legal effect of joint registration was to give Darren an exigible interest. The Defendants relied on Drebert v Coates, 2008 ABQB 684, where a son’s joint title to land was held to be subject to a prior equitable interest under a trust agreement with his mother, so that he had no exigible interest to which a writ could attach. Plaintiffs’ counsel sought to distinguish Drebert on the basis that in that case there was a written trust agreement and acknowledged that the Plaintiffs could not succeed here if the Vrbaneks’ stated intention had been set out in a written instrument. The Defendants argued that, despite joint legal title, the use of Nancy’s funds to purchase the Arizona home resulted in a resulting trust in her favour. They referred to Mitchell v Misener, 2011 ONSC 6600, which states that when one person contributes the funds but title is joint or in the other person’s name, title is held in trust unless it can be established to the contrary. In Mitchell, the court, relying on Kerr v Baranow, 2011 SCC 10, considered only the donor’s intention and found no evidence of an intention to gift. Applications Judge Summers held that in this case there was no evidence that Nancy intended to gift one half of the Arizona home to Darren. Nancy’s evidence was that the only reason for putting the Arizona home into joint names was estate planning—to avoid probate in a foreign jurisdiction. There was no challenge to Nancy’s credibility as to her stated intention. The Applications Judge rejected the Plaintiffs’ contention that intent was irrelevant and concluded that Darren had no exigible property in the Arizona home or the Arizona home proceeds. On that basis, the Court held that there was no fraudulent conveyance by Darren and dismissed the Plaintiffs’ application.

The appeal, standard of review, and issues

Cubbon Building Centre Ltd and Miramar Holdings Ltd appealed the Decision of Applications Judge Summers. On appeal, the parties are described as Appellants (Cubbon and Miramar) and Respondents (Darren and Nancy). The appeal was heard by a judge of the Court of King’s Bench. The appeal judge stated that the standard of review was correctness on issues of both fact and law, citing Bahcheli v Yorkton Securities Inc, 2012 ABCA 166, and that a de novo analysis of the issues was required under r 6.14(3) of the Alberta Rules of Court. There was no deference owed to the Applications Judge’s decision, and no new evidence was filed. The appeal grounds framed the following questions: whether the Vrbaneks’ misconduct, viewed cumulatively as a scheme, amounted to a fraudulent conveyance; if so, whether Darren should be added to the Certificate of Title as a registered owner and joint tenant of the Edmonton condo; and, in the alternative, whether the Court should impress a resulting trust, with Nancy as trustee and Darren as beneficiary, over the Edmonton condo. The appeal judge, like the Applications Judge, identified a threshold issue: whether Darren had any exigible interest in the Arizona home or its proceeds such that the impugned transfers could be subject to a fraudulent conveyance claim.

Findings on evidence, resulting trust, and presumption of advancement

The appeal judge agreed that the threshold issue of exigible interest was determinative. The judge accepted that the evidence showed Nancy provided all funds for the purchase of the Arizona home, that there was no credible challenge to her testimony that joint tenancy was chosen solely for estate planning purposes, and that Nancy paid all bills and renovation costs. The Appellants argued that Applications Judge Summers improperly relied on counsel’s submissions as corroborative evidence of the Vrbaneks’ credibility and that he improperly relied on the Vrbaneks’ after-the-fact, self-serving evidence about the transfers. The appeal judge found that Applications Judge Summers had committed neither alleged error. The Applications Judge had merely asked Appellants’ counsel if credibility was an issue and received an answer that there was consistency in the Vrbaneks’ account. On appeal, counsel clarified his position but the appeal judge addressed his arguments based on the record itself. The appeal decision reiterates that there was no allegation of impropriety regarding the 2010 transfer of the Parsons Road Property. It notes that Nancy sold that property, bought the Arizona home with some of the proceeds, was the primary resident there, and paid all bills including renovation costs, utilities, and property taxes. The appeal judge states that the Respondents’ authorities, including Drebert v Coates and Mitchell v Misener, support the proposition that where one party contributes all funds but title is held jointly, a resulting trust arises in favour of the contributor unless there is evidence of an intention to gift, and that an express trust document is not required. In this case, the appeal judge found that there was no evidence that Nancy intended to gift any beneficial interest in the Arizona home to Darren. The evidence was described as consistent and unchallenged: joint tenancy was for estate planning, not to confer a present interest. The source of the funds, and Nancy’s responsibility for all costs, supported her claimed intention. The appeal judge rejected the Appellants’ reliance on the presumption of advancement, stating that it was not persuasive in this context and that the presumption applies only in the absence of evidence of actual intention. Here, the appeal judge found that the evidence of Nancy’s intention was clear.

Rulings, outcome, and overall result

The appeal judge concluded that the Respondents’ evidence, supported by affidavits and transcripts, showed that the transfers were motivated by estate planning and financial necessity, not an intent to defeat creditors, and that minor inconsistencies in recollection did not undermine their credibility. The evidence did not support a finding that Darren retained any beneficial interest in the Arizona home or its proceeds. The transfer of funds to Nancy’s account and the purchase of the Edmonton condo were found to be consistent with Nancy’s ownership and financial independence. The appeal judge also noted that the Respondents’ explanations for placing the Edmonton condo in Nancy’s name—to avoid unnecessary interference by Darren’s creditors—reflected a desire to protect Nancy’s assets, not to conceal Darren’s. The appeal court held that Darren did not have an exigible interest in the Arizona home or its proceeds and that this threshold issue was dispositive. The findings of the Applications Judge on that point were held to be supported by the evidence and the law. Accordingly, the appeal was dismissed. As a result, the Plaintiffs’/Appellants’ attempt to impeach the transactions as a fraudulent conveyance and to obtain a proprietary remedy over the Edmonton condo did not succeed, and the Defendants/Respondents remained successful in both the summary judgment application and the appeal.