Trevor Todd and Jackson Todd have over sixty years combined experience in handling estate disputes including fraudulent conveyances.

 

In Weng v Fan 2026 BCSC 244 the court set aside a transfer of a mother’s only significant asset in a parcel of property to her son as a “gift” for $1 consideration as a fraudulent conveyance done to hinder, delay or avoid a claim by a creditor for about one million dollars.

The property was transferred after a claim was made against the defendant mother and prior to a judgment being made against her for one $million.

 

The Law

 

Section 1 of the FCA provides that a disposition of property “made to delay, hinder or defraud creditors and others of their just and lawful remedies … is void and of no effect against a person … whose rights and obligations are or might be disturbed, hindered, delayed or defrauded [by the conveyance], despite a pretence or other matter to the contrary”.

           The leading British Columbia authority on fraudulent conveyances is Abakhan & Associates Inc. v. Braydon Investments Ltd., 2009 BCCA 521 [Abakhan]. In Jasmur Holdings Ltd. v. Callaghan, 2019 BCSC 1966 [Jasmur] at para. 17, Justice Giaschi set out the following principles that may be derived from Abakhan:

[17]      …

1. a)The FCAis to be construed liberally (para. 62);
2. b)An intent to put one’s assets beyond the reach of creditors is all that is required to void a transaction (para. 73);
3. c)A dishonest intent or mala fidesis not a necessary element to avoid a transaction under s. 1 of the FCA (para. 65);
4. d)Intent is a state of mind and a question of fact (para. 74);
5. e)Intent can be proven by direct evidence of the transferor’s intent as well as by inferences from the transferor’s conduct, the effect of the transfer and other circumstances (para. 80);
6. f)Where a transfer of property has the effect of delaying, hindering or defeating creditors, the necessary intent is presumed (paras. 58–59 and 75);
7. g)Inadequate consideration paid for the transferred property may be indicative of fraudulent intent (para. 76);
8. h)It is not necessary to show the transferor was insolvent at the time of the transfer (para. 60);
9. i)It is not necessary for the applicant to show that he or she was a creditor at the time of the transfer. Future creditors are also protected (paras. 78 and 87); and
10. j)It is no defence that the transfer was also in furtherance of a legitimate business objective (paras. 84–85).

Further, the law imposes on a defendant an evidentiary duty to rebut prima facie suspicious circumstances, referred to in the jurisprudence as “badges of fraud.” Where one or more such badges of fraud exist, the requisite fraudulent intent is presumed: Kootenay Savings Credit Union v. Brar, 2021 BCSC 2027 at para. 39.

In Prima Technology Inc. v. Yang, 2018 BCSC 94 [Prima Technology] at para. 23, the Court, citing the decision in Banton v. Westcoast Landfill Diversion Corp., 2004 BCCA 293, listed the following indicia of fraudulent intent:

[23]      …

1. a)the state of the debtor’s financial affairs at the time of the transaction, including his income, assets and debts;
2. b)the relationship between the parties to the transfer;
3. c)the effect of the disposition on the assets of the debtor, i.e. whether the transfer effectively divests the debtor of a substantial portion or all of his assets;
4. d)evidence of haste in making the disposition;
5. e)the timing of the transfer relative to notice of debts or claims against the debtor; and

f)      whether the transferee gave valuable consideration of the transfer.

 

Section 2 of the FCA provides:

Application of Act

2 This Act does not apply to a disposition of property for good consideration and in good faith lawfully transferred to a person who, at the time of the transfer, has no notice or knowledge of collusion or fraud.

[Emphasis added.]

In Chan v. Stanwood, 2002 BCCA 474, the Court held:

[20]      … Where the consideration is inadequate or nominal, a creditor need only show that the transferor intended to delay, hinder or defraud the creditor of his remedies. Where on the other hand valuable consideration has passed, the creditor must also show that the transferee actively participated in the fraud.

With respect to the defendant’s assertion that the plaintiff’s claim was barred by the statute of limitation the court stated :

Under s. 8 of the present Act, a claimant should not be deemed to have discovered that they have suffered a loss due to a fraudulent conveyance of property until their claim to that property is established as a result of a judgment.

In the case at bar, judgment in the underlying action was pronounced on February 12, 2024, and this action was commenced on February 26, 2024. The claim was therefore filed well within the two-year limitation period and the defendants’ limitation defence is dismissed