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FraudulentConveyanceDefinition

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Duhaime'sLawDictionary
FraudulentConveyanceDefinition:
Atransferofaninterestinpropertydonewithintenttodefeatcreditorsorothersoftheirjustandlawful
entitlements.

RelatedTerms:Fraud
Atransferofaninterestinpropertydonewithintenttodefeatcreditorsorothersoftheirjustandlawfulentitlements.
Primarilyacreatureofstatute,theprocessofclawingbackconveyancesofpropertymadetodefraudacreditorhadashumblebeginningstheStatuteof
Elizabeth(theFraudulentConveyancesAct).
Nowmostjurisdictionshavethesetypesoflawsintheirstatutebooks.Forexample,Ontario'sFraudulentConveyancesActcontainsthiscodificationat2
and3:

"2.Everyconveyanceofrealpropertyorpersonalpropertyandeverybond,suit,judgmentand
executionheretoforeorhereaftermadewithintenttodefeat,hinder,delayordefraudcreditors
orothersoftheirjustandlawfulactions,suits,debts,accounts,damages,penaltiesor
forfeituresarevoidasagainstsuchpersonsandtheirassigns.

"3.Section2doesnotapplytoanestateorinterestinrealpropertyorpersonalproperty
conveyedupongoodconsiderationandingoodfaithtoapersonnothavingatthetimeofthe
conveyancetothepersonnoticeorknowledgeoftheintentsetforthinthatsection."
BritishColumbia'sstatuteisamodelofsimplicitycomprisingofonlytwoparagraphsasfollows:

"Ifmadetodelay,hinderordefraudcreditorsandothersoftheirjustandlawfulremedies,a
dispositionofproperty,bywritingorotherwise,abond,aproceeding,oranorder,isvoidand
ofnoeffectagainstapersonortheperson'sassigneeorpersonalrepresentativewhoserights
andobligationsbycollusion,guile,maliceorfraudareormightbedisturbed,hindered,
delayedordefrauded,despiteapretenceorothermattertothecontrary.

"ThisActdoesnotapplytoadispositionofpropertyforgoodconsiderationandingoodfaith
lawfullytransferredtoapersonwho,atthetimeofthetransfer,hasnonoticeorknowledgeof
collusionorfraud."
However,BCalsohasaFraudulentPreferenceActwhichprovides,at2:

"Ifapersonininsolventcircumstances,unabletopaytheperson'sdebtsinfull,orknowing
thatthepersonisontheeveofinsolvency,voluntarilyorbycollusionwithacreditor,agrees
toajudgmentagainsttheperson,withorwithouttimetopay,orgivesapowerofattorneyto

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FraudulentConveyanceDefinition
doso,withintenttodefeatordelaytheperson'screditorswhollyorinpart,ortogiveone
ormoreoftheperson'screditorsapreferenceoverothercreditors,oroversomeofthem,the
judgmentorpowerisvoidagainstthecreditorsoftheperson."
InTorontoDominionBankvMilleritwasheldthatgiftsarejustasretractableasareconyenacesforconsideration,andthat:

"Howeverstrongthepresumptionmaybethatifthenecessaryeffectofavoluntarytransferis
todelayordefeatcreditorsanintentiontodososhouldbeinferred,itisnotconclusive.In
anappropriatecasethepresumptionmayhavetoyieldinfavourofcogentandaffirmative
evidenceestablishinganhonestpurposeinthemakingofthetransfer,apurposeinnoway
designedtoprejudicecreditors."
ReferencesandFurtherReading:

FraudulentConveyancesAct,RSO1990ChapterF29,publishedatcanlii.com/on/laws/sta/f29/index.html
FraudulentConveyanceActRSBC1996Chapter163andFraudulentPreferenceActatRSBC1996Chapter164
TorontoDominionBankvMiller(1990)3CBR3d285.

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