Judgment Won, Money Gone: Tracing Funds to Collect a Debt

The situation

Dimitri taught grade five during the school year and spent evenings and summers running a small renovation partnership with his friend Raymond, a paramedic. The two had built the side business over several years, taking on kitchen and basement projects around Sault Ste. Marie that paid better, hour for hour, than either of their day jobs. In the spring, they took on their largest job yet: a full main-floor renovation and rear addition for a homeowner named Herman, quoted at roughly $310,000.

The work took four months. Dimitri and Raymond supplied materials, subcontracted the electrical and plumbing, and invoiced in stages as the contract required. Herman paid the first two draws without complaint. When the third draw came due, with the project substantially finished, he stopped responding to calls and texts. A final walkthrough showed a handful of minor deficiencies — a cabinet door that stuck, some touch-up paint — nothing close to justifying withholding the balance owed, which by then stood at about $145,000.

Renovation work like this is still lienable under the Construction Act, but Dimitri and Raymond had never registered a construction lien on any job before and did not think to do it here either, treating it as a step reserved for larger new-build contracts. By the time Herman stopped paying, the strict window for registering one had already closed. That left a straightforward debt claim as the only route to recovery — a route that would prove to be far longer than either of them expected.

Dimitri and Raymond had run smaller jobs the same informal way for years without a problem — a written quote, staged draws, and enough trust in a client's word that neither of them had ever thought hard about what would happen if a client simply stopped paying near the end. Herman's job was the first one large enough, and far enough along, that the gap between a friendly handshake business and a properly protected one actually mattered. By the time they realized the lien window had closed, there was no way back to it; the only path left ran through the courts, and neither of them had any real sense of how long or complicated that path would turn out to be.

When judgment wasn't enough

Dimitri and Raymond came to Treadstone Law after months of getting nowhere on their own. Because the amount owed was well above the limit for Small Claims Court, their claim proceeded in the Superior Court, which carries no cap on the amount that can be claimed but moves more slowly, with pleadings, document exchange, motions, and a pretrial before a matter is resolved. Herman filed a brief defence alleging deficiencies but never seriously engaged with the process, missing document deadlines and failing to fully participate in the pretrial. After roughly ten months, the partnership obtained a judgment for the outstanding balance plus interest and costs — a total of roughly $165,000.

Winning a judgment, though, only establishes that money is owed. It does not produce the money. When our team wrote to Herman demanding payment, the letters went unanswered. A search of the public land registry showed his house had been transferred to a family member for a nominal amount two months after the lawsuit was served — around the same time his bank accounts, according to a bank garnishment notice that came back empty, had been drained to almost nothing. Herman had not disappeared; he had simply rearranged his affairs so that a judgment against him would have nothing to attach to.

This is a familiar pattern in enforcement work. A defendant who sees a judgment coming sometimes moves assets out of their own name before it lands, hoping a creditor will give up once the obvious targets — a house, a bank account, wages — turn out to be empty. Ontario's Fraudulent Conveyances Act exists for exactly this situation: it allows a court to set aside a transfer of property made with intent to defeat or delay a creditor, even where the transfer was on paper valid. But to use it, a creditor first has to prove where the money actually went.

Proving that is harder than it sounds. A creditor does not get automatic access to a debtor's private banking information simply by holding a judgment, and a debtor who is determined to obscure a transfer will rarely volunteer the details. Dimitri and Raymond's own efforts — the demand letters, the land registry search, the garnishment attempt — had confirmed something was wrong without confirming what. Closing that gap meant using the formal enforcement tools available under Ontario's rules of civil procedure to compel answers, rather than relying on Herman to explain himself voluntarily.

What we did

1. Conducted an examination in aid of execution. This is a formal questioning of a judgment debtor under oath about their income, assets, and debts, held outside of court and recorded. Herman was required to attend and answer. He was evasive about the timing of the property transfer and could not account for where roughly $138,000 that had moved through his account in the weeks before service of the claim had gone.
2. Brought a motion for a court order requiring Herman's bank to produce his account records. Examinations alone often are not enough — a debtor can simply refuse to remember or claim not to know. Our team applied to the Superior Court for an order compelling the bank to disclose statements and transfer records for the relevant period, on the basis that Dimitri and Raymond had an unsatisfied judgment and reasonable grounds to believe the bank held evidence of where the funds had gone. The court granted the order.
3. Traced the funds through the records rather than accepting the transfer at face value. The bank's disclosure showed several transfers in the two months before the lawsuit was served, all moving money from Herman's account into an account held by the same family member who later received the house. That timing mattered: a single unexplained transfer might be innocent, but a pattern tied to one recipient right before being served is much harder to explain away.
4. Started a proceeding under the Fraudulent Conveyances Act. With the bank records in hand, we commenced a further action to set aside both the property transfer and the fund transfers as fraudulent conveyances, naming the family member as a party. This mattered because such a claim does not require proving the family member was complicit — only that Herman transferred the assets meaning to defeat a creditor, a bar the pattern of transfers went a long way toward meeting. Facing that evidence, the family member's own lawyer opened settlement talks within weeks.
5. Negotiated a structured repayment secured against the recovered funds rather than pushing the fraudulent conveyance claim to trial. A full trial on the fraudulent conveyance claim could have taken another year or more, with its own costs and uncertainty, even though the evidence was strong. Instead, the parties agreed to unwind enough of the transfers to satisfy the judgment, with the balance paid from funds the family member agreed to release — a faster, more certain path to the same result the trial was aiming for.

The outcome

Dimitri and Raymond recovered the full amount of their judgment, roughly $165,000, along with a portion of the additional costs incurred in the enforcement and fraudulent conveyance proceedings. The recovery came just under a year after the original judgment was obtained — slower than either of them wanted, but faster than a full trial on the fraudulent conveyance claim would have allowed, and without the additional risk and expense of an uncertain trial outcome.

The case turned entirely on the bank records order. Without it, the partnership would have had a judgment on paper and no realistic path to collecting it — Herman's remaining visible assets were worth almost nothing, and a creditor cannot force a debtor to reveal transfers they would rather keep quiet. Once the bank disclosed the transfer history, the timing spoke for itself, and the other side's incentive to settle changed overnight.

Looking back, Dimitri said the hardest part was not the renovation itself but the year that followed it, waiting through each procedural step while continuing to run the business and teach full time. Raymond, still working paramedic shifts throughout, described the eventual recovery less as a windfall and more as simply getting paid for work already done — a reminder that enforcement, when it works, restores what was owed rather than adding anything extra.

The two of them have since changed how they run the business side of their partnership. Every job over a certain size now gets a written contract that spells out draw amounts and deadlines up front, and Dimitri has started keeping a simple checklist for any job of meaningful size: confirm the lien registration deadline before it is too late to act, and if a client stops responding, get a demand letter out immediately rather than waiting to see if the silence resolves itself. Neither change would have prevented Herman's decision to hide his assets, but both would have shortened the year it took to find out where the money had gone.

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