Johnson v Leader Computers [2014] SASCFC 14

A husband transferred his half interest in a house to his wife. His company was placed into administration the next day. Two creditors of the company had personal guarantees from the husband and sought to void the transfer to the wife under section 86 of the Law of Property Act 1936 (SA) [equivalent to section 37A of the Conveyancing Act 1919 (NSW)] as a transfer to defraud creditors. The wife claimed that the transfer was in repayment of loans to the husband personally or alternatively in restitution for monies paid at her husband’s request. The lower court found no loan to the husband (only the company) and declared the transfer void. The lower court also rejected the wife’s restitution case. The wife appealed.

The Court of Appeal found no error in the lower court’s findings. The Court of Appeal said that the husband may well have requested the advances but he did so on behalf of the company, as director, not in his own right. In any case, the Court of Appeal found no rule that the mere fact that a conveyance is made to a creditor means that there can never be an intent to defraud creditors. Even if the wife had been found to be a creditor of the husband at that time, that would not have precluded a finding that the husband acted with intent to defraud his creditors. The ultimate issue was the intention of the husband at the time of the transfer. A finding of intent to defraud would be open in circumstances where the husband could reasonably expect, on the basis of their 44-year marriage, that he would be permitted to live in the house with the wife after the transfer, and that the property would ultimately be left to their children.

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