Legal Blog

Fraudulent Conveyance Claim Not Time Barred by Limitations Act

Prima Technology Inc. Yang 2018 BCSC

The debtor transferred property to relatives, including her 14-year-old daughter, without consideration, knowing that a prospective creditor was investigating her for possible fraudulent losses suffered. The creditor ultimately was awarded judgment and moved to set aside the conveyance. The judge held that there was no limitation problem because it was unreasonable for the creditor to investigate a possible fraudulent conveyance until its action was successful against the debtor. The judge held that, on the merits, the creditor was protected by the British Columbia Fraudulent Conveyances Act, which is almost identical to the Ontario statute. Even though not a creditor at the time, the creditor was protected by the term “and others” who had “just claims” not yet brought to fruition in terms of legal process. Further, the court approved the reasoning in the Ontario Indcondo decision, noting that if there were an intention to defeat creditors it mattered not whether it was to defeat present or future creditors. Further, if the intent to defraud existed at the time of the conveyance, it mattered not that person attacking it was not a creditor at that time.

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