Patel v Lal

The case of Patel v Lal involves a dispute between the plaintiff, Patel, and the defendant, Lal, concerning a fraudulent conveyance under the Conveyancing Act 1919. The plaintiff seeks to avoid a transfer of property from Lal to a third party, alleging that the transfer was made with the intention to defraud Lal’s creditors. The proceedings were heard in the Supreme Court of New South Wales. The legal issues before the court were whether the conveyance was indeed fraudulent and if the plaintiff had standing to challenge the transfer.

The court considered whether the transfer was made with an intention to defraud creditors, as required by section 37A of the Conveyancing Act 1919. The plaintiff argued that Lal transferred the property to avoid creditors, citing evidence of financial difficulties and the timing of the transfer. The court assessed the credibility of the evidence presented to determine if there was an intention to defraud. Additionally, the court examined if the plaintiff had the necessary standing to bring the action, particularly in light of the company being in liquidation. Under section 471B of the Corporations Act 2001, the court scrutinised whether the plaintiff had the authority to seek leave to proceed nunc pro tunc against the company.

The court found that the transfer was indeed fraudulent, as there was clear evidence of Lal's intention to defraud his creditors. The court acknowledged the strategic timing of the transfer and the financial circumstances leading up to it. Regarding the plaintiff's standing, the court granted leave to proceed nunc pro tunc, recognising the plaintiff's legitimate interest in the matter. The court concluded that the conveyance could be set aside, and the property would be returned to Lal’s estate for the benefit of his creditors. The court ordered that the transfer be void and that the property be vested back in Lal, subject to the creditors' claims.