Jew v Holloway [2013] VSCA 260

Jew v Holloway [2013] VSCA 260 - VSCA 2013 case summary — Zoe

[28]

Nevertheless, the 19th century cases did support a related distinction bearing upon the sufficiency of proof in these cases. The effect of the decisions was summed up as follows in the treatment under the title 'Fraudulent and Voidable Conveyances' in the first edition of Halsbury's Laws of England.

"In an action to set aside an alienation under the statute the onus of proof of actual fraud on the part of the grantor, and that the grantee was privy to the intent, rests upon the plaintiff where the alienation is for valuable consideration (a). Where, however, the alienation is voluntary, then on proof that the grantor was at the time of its execution contemplating his entry upon a hazardous business (b), or that the natural consequence of the alienation was to delay, hinder, or defraud creditors (c) or that the circumstances under which the alienation was effected bore one of the indications or badges of fraud hereafter mentioned (d), the onus of upholding the alienation is imposed on the defendants." (emphasis added)

The two leading authorities given in footnote (c) to this passage are Freeman v Pope and Ex parte Mercer; In re Wise. However, neither case concerned a transaction cast in the form of a contract for sale of property. Rather, each transaction was a voluntary settlement of property, which was set aside in the first case but not in the second.

The point sought to be made in the text of Halsbury attached to footnote (c) may be expressed by saying that it would be the duty of the judge to direct a jury that they might infer an intention by the settlor to defeat or delay creditors, even in the absence of direct evidence of that intention, where this outcome was the necessary consequence of a voluntary settlement. In this way, it was easier to infer a dishonest intention if the conveyance were voluntary than if it were made for consideration. Evidence that the conveyance was voluntary does not replace the requirement of proof of intent by a distinct category where constructive fraud, with notions of constructive knowledge or notice as understood in equity, would suffice for the application of s 37A. Rather, the evidence is that species which has sufficient weight to entitle the fact finder to decide an issue (here the necessary intent) in favour of the moving party, although the fact finder is not obliged to do so and other evidence given may be decisive to the contrary.[22]

[41]

COUNSEL: When you say 'the thought crossed our mind'.

MRS HOLLOWAY: M'mm.

COUNSEL: I'd suggest you had a talk about it?

MRS HOLLOWAY: It went through my mind.

COUNSEL: Yes?

MRS HOLLOWAY: But we signed that paperwork over to fund this court case.

COUNSEL: So if I can just understand it. The thought went through your mind before you signed that document in front of you , Exhibit 9?

MRS HOLLOWAY: At the same time I - I'm not sure whether it was before I signed it or at the same time.

COUNSEL: Yes?

MRS HOLLOWAY: We were in turmoil at that stage because of what Peter had been accused of, our life was changing.

COUNSEL: How would you know understand the significance of what civil proceedings meant?

MRS HOLLOWAY: I've seen civil proceedings in the papers and that sort of thing, I knew what happened.

...

COUNSEL: But nonetheless you had an idea of civil proceedings for damages?

MRS HOLLOWAY: I knew what that branch of the Holloways were like, so...

...

COUNSEL: [B]ut it was still your belief, I suggest, that if the outcome of the trial was bad for Peter the victims should get no money out of it?

MRS HOLLOWAY: That was their plan.

COUNSEL: Yes?

MRS HOLLOWAY: But at that time we were more worried about fighting to keep him out of gaol for something.

COUNSEL: Are you saying it was your belief that that was their plan?

MRS HOLLOWAY: That was their plan?

COUNSEL: To get money out of it?

MRS HOLLOWAY: Well I don't know what their plan was, but they just, it was ludicrous what they accused him of.

COUNSEL: But a moment ago you said 'that was their plan'?

MRS HOLLOWAY: More than likely, yes.

COUNSEL: And that was your belief, though?

MRS HOLLOWAY: Yeah, I would believe that's what they'd do.

COUNSEL: And that was your belief when you signed that document?

MRS HOLLOWAY: This was to fund the case.

...

COUNSEL: So I'm asking you when did you believe they had that plan?

MRS HOLLOWAY: S[o]me (sic) time that they made up this story.

COUNSEL: Before you signed that document?

MRS HOLLOWAY: Well that was their plan, it wasn't our plan.

COUNSEL: But all I'm asking is that you believed it was their plan sometime between when you heard about the allegations?

MRS HOLLOWAY: Yes, I do believe it was their plan, long-term plan.

COUNSEL: And you formed that belief when you heard about the allegations, is that right?

MRS HOLLOWAY: Yes.

COUNSEL: You insist that the signing of that document was to fund the action?

MRS HOLLOWAY: It was, yes.

COUNSEL: But you know very well it wasn't necessary to do that before the funds could be used?

MRS HOLLOWAY: We agreed to do that, that we changed I - to fund - as I said before Peter felt really bad that we were going to use my superannuation money to fight something that happened before we even met.

...

COUNSEL: No I was going to suggest that you had an unshakeable belief that no matter what the outcome of the trial of your husband, the victims should get no money out of it?

MRS HOLLOWAY: There was nothing for them to get money out of, because nothing happened.

COUNSEL: But that was your belief wasn't it?

MRS HOLLOWAY: Well it was what they - their reputation was like, yes.

[45]

I have summarised the evidence of the first defendant and second defendant on this issue. I have also set out the circumstances existing as at 9 March 1999. In particular at 9 March 1999 there was no debt owing to the plaintiff although there was the possibility of a future debt. There was no civil proceeding on foot. There had been no notice of a potential application for a compensation order or demand for damages. Criminal charges had been laid but they were being defended. The first defendant at all times maintained his innocence. Money was needed to fund the first defendant's defence.

The second defendant wanted to ensure the first defendant was well represented. He was facing very serious criminal charges and in the minds of the defendants there was a real risk of a sentence of imprisonment if he was found guilty. The defence of these charges was likely to be an expensive exercise.

I accept the evidence of both defendants as to their state of mind at the time of the transfer of land on 9 March 1999. I find that they wanted to use the second defendant's money to fund the first defendant's defence. I find that it was their belief that the transfer of the first defendant's interest in the property to the second defendant was he right thing for them to do in the circumstances. This was their state of mind at 9 March 1999. They felt that in using the second defendant's redundancy money to fund the first defendant's defence it was appropriate to transfer the first defendant's interest in the property into the second defendant's name. I accept this evidence.

Both defendants agreed and I find that it was not legally necessary to effect the transfer to enable the second defendant's money to be used, however I find that this was their agreement amongst themselves. Both denied any intent to defeat a possible claim for compensation by the plaintiff by virtue of the transfer. I accept this evidence. I am therefore not prepared to infer that at the time of the execution of the transfer of land the defendants had an intention to defraud creditors.[34]

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Judgment (129 paragraphs)

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Legislation Cited (3)

Cases Cited (22)