Section 172 of Property Law Act explained

The High Court recently considered s37A of the Conveyancing Act 1919 (NSW) which is the New South Wales equivalent of s172(1) of the Property Law Act 1958.

Section 172(1) provides that: "Save as provided in this section, every alienation of property made, whether before or after the commencement of this Act, with intent to defraud creditors, shall be voidable, at the instance of any person thereby prejudiced."

French CJ, Gummow, Crennan and Bell JJ approved of a decision in New Zealand where "Their Honours said that it was unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss: it was necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly". See: para [32]. It was not necessary for the wrongdoer to appreciate that the act in question was dishonest judged by the standards of ordinary, decent people. See: para [33].