Drabinsky transferred house title to dodge creditors, court finds

By James Langton | February 27, 2020 | Last updated on February 27, 2020
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An Ontario court has ruled that former theatre impresario Garth Drabinsky transferred the title on his $2.6 million house in Toronto to his wife to avoid creditors, including a lawyer who represented him before the Ontario Securities Commission (OSC).

The Ontario Superior Court of Justice ruled this week that when Drabinsky transferred the title for the house to his wife for $2 in 2015, the transaction was intended to hide the house from Drabinsky’s creditors.

The decision came in response to a legal action from securities lawyer Phil Anisman, who was seeking to reverse the title transfer.

Drabinsky was convicted in 2009 of fraud and forgery in connection with misrepresentations made in the financial statements of his company, Livent Inc. In 2017, he was permanently banned by the OSC.

According to the decision released this week, Drabinsky owed Anisman about $50,000 for representing him in an OSC enforcement proceeding between April 2013 and June 2014. The legal bill was to be paid in monthly instalments. However, only two payments were made in 2015.

Ultimately, Drabinsky was sued over the debt, and in 2018, a court awarded $47,727 plus $14,000 in costs against him.

“That judgment has not been paid, and the plaintiff remains a judgment creditor of Mr. Drabinsky’s,” the court said.

In 2019, Anisman brought legal action to reverse the title transfer that took place in 2015.

According to the decision, Drabinsky claimed that he transferred title to his wife at the request of a bank when he refinanced the property in 2015.

However, the court didn’t buy that explanation, saying, “It makes no sense that CIBC would ask for the transfer, as Mr. Drabinsky insists, since Ms. Winford-Drabinsky did not have the financial wherewithal to carry the mortgage. At the risk of stating the obvious, banks typically want financially capable mortgagors, not financially incapable ones.”

Ultimately, the court concluded that the transfer was designed to avoid creditors.

“To all appearances, the transfer can only be explained as an effort to put the property beyond the reach of Mr. Drabinsky’s creditors. The transaction is replete with the badges of this kind of surreptitious creditor-proofing,” the court said.

“Mr. Drabinsky offers no other explanation that makes sense. While he insists under oath that he had not turned his mind to the effect of the transfer on his creditors, the objective indicia are such that he could hardly have been thinking of anything else,” the court found.

The court granted judgement in favour of Anisman, and ruled that the transfer “is void as against the plaintiff and other creditors of Mr. Drabinsky.”

The court also ordered costs of $13,000.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.