Fraudulent Conveyance in UK Law

So far as concerns defendants who are within the jurisdiction of the court and have assets here, it is well-established that the court should not, in advance of any order or judgment, allow the creditor to seize any of the money or goods of the debtor or to use any legal process to do so. His proper remedy is to get judgment - under Order XIV if he can - and issue bankruptcy proceedings against the debtor. There are statements of the highest authority to this effect.

Mrs. Gross could no doubt have relied on the misrepresentations if James or some agent of his had repeated them to her or some agent of hers. Again, if James had known that Colonel Sinclair was handing on his bargain to Mrs. Gross and was repeating to her the misrepresentations which he (James) had made to him and he stood by and allowed Mrs. Gross to complete the purchase from him without disillusioning her, then Mrs. Gross might well have been able to rescind.

As my brother Lord Justice Cross says, when the contract is made with A, the effect of the misrepresentation is spent; and therefore on this subject I find it necessary to come to the conclusion that the plaintiff cannot succeed even though the representation was false to the knowledge of the maker of it. Therefore the appeal cannot succeed, and I would agree that it ought to be dismissed.

The transfer to the company constituted an act of bankruptcy. The relation back of the trustee's title, however, did not strictly render the transaction either void or voidable; it operated automatically to divest the debtor at the date of the act of bankruptcy of any title to pass to the transferee, and this enabled the trustee to prevail against anyone who could not bring himself within the protective provisions of Section 45.

If the debtor was adjudicated bankrupt, then as from the date of the act of bankruptcy neither the debtor nor any such person claiming under him who could not bring himself within the protective provisions of the Bankruptcy Acts had any title at all; as from that date title was vested in the trustee. Outside the law of bankruptcy no similar ambulatory title was known to the law.

I am not sure what is meant by a perfectly innocent defeat, hindrance or delay. If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it (or its worth) beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor.

However, I have no doubt on which side of the line the present case falls. The plaintiffs have an unanswerable claim for damages for fraudulent misrepresentation. The possible illegality involved in the apportionment of the price in the contract is wholly unconnected with their cause of action. The plaintiffs' loss caused by the defendant's fraudulent misrepresentation would have been the same, even if the contract had not contained this illegal element.