The Owners Strata Plan 97121 v RCBS Devco Pty Ltd

The Owners Strata Plan 97121, acting through its managing agent, sought to recover compensation for building defects from RCBS Devco Pty Ltd. The case came before the Supreme Court of New South Wales, which was tasked with determining whether certain transactions constituted a fraudulent conveyance under the Conveyancing Act 1919 (NSW). The dispute centred on whether the second defendant, RCBS Devco Pty Ltd, transferred real property to the third defendant at an undervalue with the intent to defraud the plaintiff, who had a claim for damages arising from building defects. The court had to ascertain if the second defendant's actions were made with the intent to defraud the plaintiff, who had a legitimate claim as a creditor.

The court examined whether the alienations of property by the second defendant were made with the intent to defraud the plaintiff. It was established that the second defendant was aware of the plaintiff's potential litigation concerning the building defects when the property was transferred. The court needed to decide if the timing of these transactions, occurring shortly after the second defendant became aware of the litigation, was sufficient to infer fraudulent intent. The court had to consider whether the distribution of the proceeds from the sale immediately following the transaction indicated an intent to hinder, delay, or defraud the plaintiff.

In reaching its decision, the Supreme Court found that the second defendant's actions were indeed made with the intent to defraud the plaintiff. The court highlighted the immediacy of the distribution of proceeds and the second defendant's knowledge of the impending litigation as critical factors in establishing fraudulent intent. The court concluded that the alienations were made with the intent to defraud the plaintiff as a creditor, thereby allowing the plaintiff to recover compensation for the building defects. Consequently, the court determined that the plaintiff was entitled to recover against the second defendant for the damages caused by the building defects.

The Supreme Court ordered that the second defendant, RCBS Devco Pty Ltd, compensate the plaintiff for the damages arising from the building defects. The court's decision reinforced the principle that transactions made with the intent to defraud creditors are void under the Conveyancing Act 1919 (NSW). The court's ruling ensured that the plaintiff could pursue its claim against the second defendant, notwithstanding the fraudulent conveyance of the property.