13B
Fraud
(1)
Where it is proven beyond reasonable doubt by a creditor that an international trust settled or established or property disposed to an international trust—
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(a)
was so settled established or disposed by or on behalf of the settlor with principal intent to defraud that creditor of the settlor; and
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(b)
did at the time such settlement establishment or disposition took place render the settlor, insolvent or without property by which that creditor’s claim (if successful) could have been satisfied,
then such settlement establishment or disposition is not void or voidable and the international trust liable to satisfy the creditor’s claim out of the property which but for the settlement establishment or disposition would have been available to satisfy the creditor’s claim and such liability shall only be to the extent of the interest that the settlor had in the property prior to settlement establishment or disposition and any accumulation to the property (if any) subsequent thereto.
(2)
In determining whether an international trust, settled or established or a disposition, has rendered the settlor insolvent or without property by which a creditor’s claim (if successful) may be satisfied, regard must be had to the fair market value of the settlor’s property, (not being property of or relating to the trust) at the time immediately after the settlement establishment or the disposition referred to in subsection (1)(b) and in the event that the fair market value of such property exceeded the value of the creditor’s claim, at that time, after the settlement establishment or disposition, then the trust so settled or established or the disposition is for all purposes deemed not to have been so settled established or the property disposed of with intent to defraud the creditor.
(3)
An international trust settled or established and a disposition to such trust is for all purposes deemed not to have been so settled or established, or the property disposed of with intent to defraud a creditor—
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(a)
if settled established or the disposition takes place after the expiration of 2 years from the date that creditor’s cause of action accrued; or
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(b)
where settled, established or the disposition takes place before the expiration of 2 years from the date that the creditor’s cause of action accrued, that creditor fails to commence in a court of competent jurisdiction proceedings in respect of that creditor’s cause of action before the expiration of 1 year from the date such settlement established or disposition took place;
provided that this subsection does not have effect if, and subject to subsection (5), at the time of settlement, establishment, or disposition, as the case may be, proceedings in respect of that creditor’s cause of action against that settlor have already been commenced in a court of competent jurisdiction.
(4)
An international trust settled or established and a disposition of property to such trust is for all purposes deemed not to have been so settled or established, or the property disposed of with intent to defraud a creditor if the settlement establishment or disposition of property took place before that creditor’s cause of action accrued.
(5)
A settlor must not have imputed to him or her an intent to defraud a creditor, solely by reason that the settlor—
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(a)
has settled or established a trust or has disposed of property to such trust within 2 years from the date of that creditor’s cause of action accruing:
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(b)
has retained, possesses or acquires any of the powers or benefits referred to in section 13C(a) to (f):
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(c)
is a beneficiary, trustee, or protector:
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(d)
has settled or established a trust, or has disposed of property to such trust, at a time when proceedings in respect of that creditor’s cause of action against that settlor have already been commenced in a court of competent jurisdiction.
(6)
Where an international trust is liable to satisfy a creditor’s claim in the manner provided for in subsection (1)—
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(a)
the creditor’s rights to recovery is limited to that property referred to in subsection (1), or to the proceeds of that property, to the exclusion of any rights against the trustees of the international trust or any of them, against any other property of the international trust, or against any other of the property or assets of the trustees of the international trust, or any of them:
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(b)
where the international trust is unable to satisfy the creditor’s claim by reason of the fact that the property referred to in subsection (1) has been disposed of, other than to a bona fide purchaser for value, then any such disposition is void.
(7)
For the purpose of this section the onus of proof of the settlor’s intent to defraud the creditor lies on the creditor.
(8)
For the purposes of this section, and section 13K—
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(a)
the date of the cause of action accruing is, the date of that act or omission which is relied upon to either partly or wholly establish the cause of action, and, if there is more than one act or the omission is a continuing one, the date of the first act or the date that the omission has first occurred, as the case may be, is the date that the cause of action has accrued:
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(b)
cause of actionmeans the earliest cause of action capable of assertion by a creditor against the settlor of an international trust or, as the case may be, against the settlor of property upon an international trust, by which that creditor has established (or may establish) an enforceable claim against that settlor:
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(c)
where a creditor has, or asserts, or could have asserted, multiple or successive causes of action against a settlor (whether by virtue of the nature of the relevant circumstances of the case, or by reason of having attained the status of a judgement creditor in respect of one or more of such causes of action, or by reason of asserting or being able to assert an allegedly fraudulent settlement of or disposition to an international trust, or otherwise) the entitlement of such a creditor to relief under this section must be determined, and the periods referred to in this section must be calculated with reference to one only of the creditor’s causes of action, being that cause of action which accrued first in time in accordance with paragraph (b):
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(d)
nothing in paragraphs (b) or (c) applies so as to affect the right or requirement of a creditor to commence separate proceedings under this section in relation to a cause of action which is separate from and independent of another cause of action where the Court is satisfied, having regard to paragraph (c), that both the circumstances out of which the cause of action arose and the subject matter of that cause of action are wholly unrelated to those of the other cause of action.
(9)
The provisions of this section apply to all civil actions and proceedings brought in the Court in which fraud, deceit, unconscionable conduct or any other inequitable conduct however described or any species of unjust enrichment is alleged, against any person (whether a party to the proceedings or not) with regard to the settlement or establishment of an international trust or the disposition of property to such a trust, or receipt of property by or for such a trust (or subsequent disposition of property from such a trust with the intention of prejudicing creditors of the settlor of such property or such trust), and the remedy conferred by subsection (1) is the sole remedy available in such an action or proceedings, to the exclusion of any other relief or remedy against any party to the relevant action or proceeding.
(10)
The provisions of this section operate to the exclusion of any other remedy, principle or rule of law, whether provided for by statute, or founded in equity or in common law including, for the avoidance of doubt, the imposition of a constructive trust upon any interested party or the recognition and enforcement of any constructive trust imposed or recognised by the laws of any other jurisdiction.
(11)
Subject to section 16(6), the provisions of this section apply to every international trust, and to every trust which having been registered as an international trust, is no longer so registered, and in respect of all dispositions to such a trust.
(12)
For the purposes of this section creditor means a creditor of the settlor and includes any person who alleges a cause of action against a settlor.
(13)
A creditor seeking to enforce a claim under this section in reliance on a foreign judgement may not enforce such claim until such time as it can demonstrate to the reasonable satisfaction of the Court that,
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(a)
it has exhausted all remedies available to it against the settlor’s remaining property, and
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(b)
all rights of appeal against that foreign judgement have been exhausted.
(14)
For the purposes of assessing the liability of an international trust to a creditor under this section, where the amount of that creditor’s claim against the settlor is, wholly or partly, in any way related to or evidenced by a foreign judgement, the Court in making any award in favour of that creditor must disregard and exclude any amount awarded in that foreign judgement to that creditor which comprise any form of exemplary, vindictive, retributory or punitive damages (by whatever name), or is an amount of damages arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damage (which types of damage are in this section together called punitive damages).
(15)
The burden of proof is on a creditor to establish that an amount awarded in a foreign judgement does not wholly or partly comprise punitive damages.
(16)
Subsection (14) does not apply if, at the time of settlement, establishment, or disposition, as the case may be, an award of punitive damages has already been made in a foreign judgement against a settlor.
[Section 13B: inserted, on 8 September 1989, by section 6 of the International Trusts Amendment Act 1989 (1989 No 23) .]
[Section 13B(2): amended, on 21 November 1996, by section 11(a) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(3): amended, on 22 December 1989, by section 3(a) of the International Trusts Amendment (No 2) Act 1989 (1989 No 31) ; on 21 November 1996, by section 11(b) and (d) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) ; on 12 December 1996, by section 2(a) of the International Trusts Amendment (No 2) Act 1995-96 (1995-96 No 30) .]
[Section 13B(3)(a): amended, on 22 December 1989, by section 3(b) and (c) of the International Trusts Amendment (No 2) Act 1989 (1989 No 31) .]
[Section 13B(3)(b): replaced, on 22 December 1989, by section 3(d) of the International Trusts Amendment (No 2) Act 1989 (1989 No 31) ; amended, on 21 November 1996, by section 11(c) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) ; amended, 12 December 1996, by section 2(a) of the International Trusts Amendment (No 2) Act 1995-96 (1995-96 No 30) .]
[Section 13B(4): amended, on 21 November 1996, by section 11(b) and (e) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(5): amended, on 21 November 1996, by section 11(g) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(5)(a): amended, on 21 November 1996, by section 11(f) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(5)(c): amended, on 21 November 1996, by section 11(g) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(5)(d): inserted, on 21 November 1996, by section 11(h) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) ; amended, on 12 December 1996, by section 2(b) of the International Trusts Amendment (No 2) Act 1995-96 (1995-96 No 30) .]
[Section 13B(6): replaced, on 21 November 1996, by section 11(i) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(8): inserted, on 19 December 1991, by section 2 of the International Trusts Amendment Act 1991 (1991 No 32) ; amended, on 21 November 1996, by section 11(j) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(8)(b): replaced, on 21 November 1996, by section 11(k) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(8)(c): inserted, on 21 November 1996, by section 11(k) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(8)(d): inserted, on 21 November 1996, by section 11(k) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(9): replaced, on 21 November 1996, by section 11(l) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(10): replaced, on 21 November 1996, by section 11(l) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(11): inserted, on 21 November 1996, by section 11(l) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(12): inserted, on 21 November 1996, by section 11(l) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(13): inserted, on 21 November 1996, by section 11(l) of the International Trusts Amendment Act 1995-96 (1995-96 No 25) .]
[Section 13B(14): inserted, on 3 March 1999, by section 5 of the International Trusts Amendment Act 1999 (1999 No 3) .]
[Section 13B(15): inserted, on 3 March 1999, by section 5 of the International Trusts Amendment Act 1999 (1999 No 3) .]
[Section 13B(16): inserted, on 3 March 1999, by section 5 of the International Trusts Amendment Act 1999 (1999 No 3) .]