WHAT HAPPENS IF A DEFENDANT TRIES TO TRANSFER ASSETS OUT OF THEIR NAME TO DEFEAT YOUR CLAIM
This very thing happened to our client who owned a block of flats. The developer next door undermined our clients building in the course of excavation for their development. Our client sued in the District Court for damage to her building and during that case the defendant transferred its last remaining development project to an associate thus putting the development project out of reach to satisfy any judgment obtained by our client in the District Court. Whilst the District Court proceedings were pending our client commenced a second action in the Supreme Court to set aside the transaction between the developer and its associate so that there would be an asset against which to recover any money if the District Court proceedings were successful. This action was based upon section 37A of the Conveyancing Act 1919 on the grounds that the transfer to the developer’s associate was intended to defeat, hinder or delay our client’s claim in the District Court. Our client was successful at first instance in the Supreme Court. The Developer’s associate then appealed to the NSW Court of Appeal which upheld the appeal. Our client then sought leave to appeal to the High Court, which leave was granted with the result that the High Court unanimously upheld our clients appeal 5 to nil. As a result the developers property was transferred back into the name of the developer and our client was able to recover the amount awarded to her in the District Court from the sales of properties in that development as well as her legal costs in the District Court, Supreme Court, NSW Court of Appeal and the High Court. This case is now a leading case on the law in relation to transactions intended to defeat hinder or delay creditors. If you wish to read the whole of the judgment of the High Court click on the following link.