CHAPTER
78
FRAUDULENT DISPOSITIONS |
ARRANGEMENT OF
SECTIONS |
SECTION |
|
|
|
Avoidance of fraudulent dispositions. |
Saving of certain rights. |
Extent of avoidance of relevant dispositions. |
Act not to validate certain dispositions. |
Relationship with Trusts (Choice of Governing
Law) Act. |
CHAPTER 78 |
FRAUDULENT
DISPOSITIONS |
An Act to
amend the law relating to dispositions made with an intent to defraud. | 1 of 1991 |
[Assent 5th March,
1991]
[Commencement 5th April, 1991] |
1. This Act may be cited as the Fraudulent Dispositions
Act, 1991. | Short title. |
2. "appointed date" means the date on which
this Act comes into operation; | Interpretation. |
"creditor"
means a person to whom an obligation is owed; |
"disposition"
means any disposition or series thereof, however effected, and (without
prejudice to the generality thereof) includes any transaction, gift, grant or
transfer of property of any nature whatsoever; |
"intent to
defraud" means an intention of a transferor wilfully to defeat an
obligation owed to a creditor; |
"obligation"
means an obligation or liability (which shall include a contingent liability)
which existed on or prior to the date of a relevant disposition and of which
the transferor had actual notice; |
"relevant
disposition" means a disposition to which section 4(1) applies; |
"transferor"
means the person who as owner or as the holder of a power in that behalf
directly or indirectly makes a relevant disposition or causes it to be made; |
"transferee"
means the person to whom a relevant disposition is made and shall include any successor
in title; |
"undervalue",
in relation to a disposition of property, means- |
(a) the
provision of no consideration for the disposition; or |
(b) a
consideration for the disposition the value of which in money or money's worth
is significantly less than the value of the property the subject of the
disposition. |
3. (1) With effect from the appointed date this Act
shall apply in place of the law in effect prior to the appointed date to every
disposition of property made after the appointed date by any person and whether
or not the property, the subject of the disposition, is situate in The Bahamas
or elsewhere; save that in any action or proceedings commenced prior to the
appointed date or within six months of the appointed date but in respect of a
disposition made prior to the appointed date this Act shall have no application
and the law to be applied shall be that in effect prior to the appointed date. | Application. |
(2) In this
section, "the law in effect" means the law relating to fraudulent
dispositions of property. |
4. (1) Subject to the provisions of this Act, every
disposition of property made with an intent to defraud and at an undervalue
shall be voidable at the instance of a creditor thereby prejudiced. | Avoidance of fraudulent dispositions. |
(2) The burden of
establishing an intent to defraud for the purposes of this Act shall be upon
the creditor seeking to set aside the disposition. |
(3) No action or
proceedings shall be commenced pursuant to this Act unless commenced within two
years of the date of the relevant disposition. |
5. (1) In the event that any disposition shall be set
aside pursuant to this Act, then- | Saving of certain rights. |
(a) unless the
court is satisfied that the transferee has acted in bad faith- |
(i) the
transferee shall have a first and paramount charge over the property, the
subject of the disposition, of an amount equal to the entire costs properly
incurred by the transferee in the defence of the action or proceedings to set
aside (and not merely such costs as might otherwise be allowed by the court;
and |
(ii) the
relevant disposition shall be set aside subject to the proper fees, costs,
pre-existing rights, claims and interests of the transferee, (and of any
predecessor transferee which has not acted in bad faith); and |
(b) unless the
court is satisfied that a beneficiary of a trust has acted in bad faith the
disposition shall only be set aside subject to the right of such beneficiary to
retain any distribution made consequent upon the prior exercise of a trust,
power or discretion vested in the trustee of such trust or any other person,
and otherwise properly exercised. |
(2) The burden of
proving that a transferee or beneficiary has acted in bad faith shall be upon
the person making the allegation. |
6. A disposition shall be set aside pursuant to this Act
only to the extent necessary to satisfy the obligation to a creditor at whose
instance the disposition had been set aside together with such costs as the
court may allow. | Extent of avoidance of relevant dispositions. |
7. Nothing in this Act- | Act not to validate certain dispositions. |
(a) shall
validate any disposition of property which is neither owned by the transferor
nor the subject of a power in that behalf vested in the transferor; |
(b) shall
affect the recognition of a foreign law in determining whether the transferor
is the owner of such property or the holder of such power. |
8. Nothing in this Act shall create or enable any right,
claim or interest on behalf of a creditor or person which right, claim or
interest would be avoided or defeated by the Trusts (Choice of Governing Law)
Act. | Relationship with Trusts (Choice of Governing Law)
Act. |