Legal Blog

Sham Trust Discovered Based on Typeface (or “When Not to Use Cambria”)

Re McGoey 2019 Ont SCJ

One defence for a fraudulent conveyance action centres on the contention that the transfer was merely a transfer from trustee to beneficiary. In this case, when faced with the equivalent of a fraudulent conveyance claim, the bankrupt contended that he did not own 50% of two properties as shown on title; rather, he and his wife were trustees of the 2 properties for their 5 children. To bolster that defence, he produced two documents dated January 4, 1995 and March 4, 2004 in which he and his wife agreed that the first property, and then the 2^nd property, would be held in trust for their children. Why did the judge decide that these trusts were shams? He received expert evidence from a graphic arts expert, specialising in design and typography, who noted that the typeface used in the 1995 document had not yet been created as of the date of that document, had only been designed beginning in 2002, and did not reach the general public until 2007. Both documents, purportedly created in 1995 and 2004, used a typeface that did not then exist.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.