What is the evidentiary burden of proving badges of fraud?

Notwithstanding the existence of badges of fraud, the burden of proof remains on the plaintiff: see Conte Estate v. Alessandro, [2002], O.J. No. 5080 (S.C.J.), at para. 22. However, the existence of badges of fraud places an evidentiary burden on the defendant to explain the transaction.

Whether the burden on the defendant is described is an evidentiary burden, or a burden of persuasion, or whether the various burdens are referred to as “shifting” burdens, it seems clear that as a practical matter, once suspicious circumstances are raised the defendant must explain the transaction or transactions in order to persuade the court that it or they are not caught by the Fraudulent Conveyances Act. In part, the placing of an onus on the defendant is consistent with the fact that it is the defendant who has knowledge of the circumstances of the transaction. Once suspicious circumstances are raised, it is the defendant who can dispel the suspicions. As stated by Sopinka J. in Snell v. Farrell, 1990 CanLII 70 (SCC), [1990] S.C.J. No. 73, in discussing the burden of proof in a medical malpractice action, at para. 16: The legal or ultimate burden of proof is determined by the substantive law “upon broad reasons of experience and fairness”: 9 Wigmore on evidence para. 2486, at p.292. In a civil case, the two broad principles are: 1. that the onus is on the party who asserts a proposition, usually the plaintiff; 2. that where the subject matter of the allegation lies particularly within the knowledge of one party, that party may be required to prove it.