Present : Ennis and Garvin JJ.

POULIER et al v. ALLES et al.

 81-D. C. Colombo; 8,346.

    Insolvency-Fraudulent preference-Transfer by father to daughter Agreement to provide settlement at marriage-Ordinance No. 7 of 1853, s. 58.

Where a person, in insolvent circumstances transferred property to his daughter ten years after her marriage to fulfil a promise made to settle property on her before her marriage.

Held, that the transfer amounted to a fraudulent preference within the meaning of section 58 of the Insolvency Ordinance.

ACTION to set aside a deed on the ground either that it was executed in fraud of creditors or that it was void as a fraudulent preference under the Insolvency Ordinance. One Massillamany, being in insolvent circumstances, by his deed No. 146 of March 2, 1922, conveyed a coconut estate, his only real asset, to his daughter the first defendant. The transfer, it was alleged, was made in pursuance of an undertaking given by him at the time of her marriage some ten years previously that he would convey thirty acres of coconut land to her before her marriage. The learned District Judge found that there was no fraudulent preference as the defendants were not creditors of the insolvent, but set aside the deed on the ground that it was executed in fraud of creditors.

Samarawickreme (with him Ferdinands), for defendants, appellants.

Drieberg, K.C. (with him Bartholomeusz and Navaratnam), for plaintiffs, respondents.

November 4, 1924, ENNIS J.-

This was an action to set aside a deed either on the ground that it was executed in fraud of creditors, or on the ground that it was void as a fraudulent preference under the Bankruptcy Ordinance. The learned Judge found that there was no fraudulent preference as the defendants were not the creditors of the insolvent;. He however, found that the conveyance by the insolvent was executed in fraud of creditors and he accordingly set aside the deed. The defendants appeal.

I am not prepared to hold, as found by the learned Judge, that the conveyance in this case was executed in fraud of creditors. It seems to me that the plaintiffs have not proved the matters, which

they have to prove beyond any question, to succeed in the Paulian action. This point was discussed in a recent case, Muttiah Chetty ' v. Mohamoodo Hadjiar.1[]1 25N.L. R. 185. There can be no doubt that the defendants of the land in question in pursuance of an earlier agreement which had been entered into by the insolvent when the insolvent's daughter contracted a marriage with the second defendant. That marriage agreement must be considered in deciding whether there was fraud, and it seems to me that it negatives any question of fraud, which would have to be established to succeed in a Paulian action. On the other question, also, as to whether or not there was a fraudulent preference within the Bankruptcy Ordinance, I am not in agreement with the learned Judge. It seems to me that the defendants were the creditors of the insolvent by virtue of the earner agreement. It was strenuously urged that this was not so, and that they had no claim which they could prove in the bankruptcy. Section 94 of the Insolvency Ordinance is, however, wide enough to cover a demand for the conveyance of land. If then the defendants were the creditors of the insolvent is there any reason why they should be put in a better position than the other creditors ? The evidence does not disclose that they took any steps to compel the insolvent to carry out his agreement. It merely shows that they were complaining that he had not carried out the agreement. In the absence of any compulsion by the creditors forcing the debtor to act, the conveyance by the debtor to one of the creditors would be a fraudulent pretence under the Bankruptcy Ordinance, and the conveyance in question is a voluntary conveyance.

Without therefore adopting the reasons of the learned Judge the conc