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Michael Nowina

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Michael Nowina’s litigation practice focuses on a broad range of commercial disputes including advising on the recovery from fraudulent investment schemes, mortgage fraud and credit fraud. Michael’s fraud-related and investigations experience includes representing victims of a Canada-wide investment fraud and ultimately securing recovery of a majority of the proceeds from the fraud, advising numerous creditors in proceedings commenced to recover fraudulent conveyances and preferential payments in multi-jurisdictional litigation, and representing financial institutions in identity fraud cases and in proceedings to recover funds from fraudulent borrowers. Michael also frequently advises clients on insolvency matters involving fraud.

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In McGoey (Re), 2019 ONSC 80, Justice Penny of the Ontario Superior Court of Justice found trusts over two properties held by a bankrupt were void as shams. In his decision, Justice Penny noted that had he not found the trusts to be sham trusts, he would still have set them aside as fraudulent conveyances, making us ask: “what is the difference between a sham trust and a fraudulent conveyance?”

A sham trust occurs where documents or acts give the appearance of creating legal rights that the parties have no intention of actually creating. In contrast, the documents and acts for a fraudulent conveyance accurately reflect the intentions of the parties and the legal rights that they want to create. The issue with a fraudulent conveyance is not that the transfer of rights is a sham, but that the transfer is being done for fraudulent purpose. With the evidence in front of him, Justice Penny was satisfied that, even if the McGoeys intended to transfer the properties, it was for a fraudulent purpose.
Continue Reading Same Facts, Different Badges – Sham Trusts and Fraudulent Conveyances

Square Rect - red and greyThe decision in SFC Litigation Trust (Trustee of) v. Chan, 2017 ONSC 1815 represents a step toward a more flexible approach when our courts are asked to consider whether a Mareva injunction should be granted. In this case, the appellant, Mr. Chan, the former Chief Executive Officer of Sino-Forest Corporation (“SFC”), appealed an order confirming a Worldwide Mareva injunction that had been granted against him, ex parte.

SFC was a Canadian corporation and had an office in Ontario, a head office in Hong Kong, and assets predominately located in China. It carried out a sale process through the Companies’ Creditors Arrangement Act, R.S.C. 1985 c. C-36 (the “CCAA”), which ultimately failed.  SFC then applied under the CCAA for an order approving a plan of compromise and reorganization, which was subsequently sanctioned.  A Litigation Trust was assigned the litigation rights of SFC.
Continue Reading Mareva Injunctions – Ontario Court of Appeal Signals a More Flexible Test for Granting Worldwide Mareva Injunctions

According to Statistics Canada, 84% of Canadians aged 15 and over, or just under 24 million people, reported making at least one financial donation to a charitable or non-profit organization when the last survey on gift giving was conducted in 2010. With over $10 billion in yearly donations, it is unsurprising that there are those that seek to take advantage of Canadians’ spirit of giving. In a recent sentencing decision, R v Raza, 2016 BCSC 1030, the British Columbia Supreme Court sentenced two brothers, Fareed Raza and Saheem Raza, to over four (4) years for their roles in orchestrating a charitable donation scheme.
Continue Reading Court rules “culpability is not a finite” in charitable donation scheme

Both of Canada’s primary insolvency statutes, the Bankruptcy and Insolvency Act (“BIA”) and the Companies’ Creditors Arrangement Act (“CCAA”) provide for an automatic stay of all legal proceedings when an insolvent debtor files for or seeks insolvency protection. The purpose of the stay is to provide breathing space to a debtor attempting to restructure its business so as to avoid “death by a thousand cuts” and also to ensure similarly situated creditors are treated equally. While it is an integral part of Canada’s insolvency regime, the stay of proceedings is not inviolable and there have been a number of noteworthy cases where Canadian courts have considered whether to lift the statutory stay and permit proposed class actions to proceed where the plaintiff has alleged fraud.
Continue Reading Courts give the green light for fraud-based class actions in Canadian insolvency proceedings

On May 26, 2016, the British Columbia Provincial Court dismissed Rashida Samji’s request for a stay of criminal fraud charges in R v. Samji.  The British Columbia Securities Commission had previously levied an Administrative Monetary Penalty (“AMP”) of $33 million against Samji, in relation to what the British Columbia Securities Commission found was a $100 million Ponzi scheme perpetrated by Samji between 2003 and January 2012. Samji had earned the nickname the “Magic Lady” for the large profits she claimed to generate for clients. Samji argued that the AMP was essentially a criminal penalty and the stigma that she has suffered as a result of media coverage amounted to criminal punishment. In light of the AMP, she argued that the Charter prevented double prosecution under both the Securities Act and Criminal Code.
Continue Reading “Magic Lady” fails in Constitutional Challenge