The law of fraudulent preference and conveyances is outdated and still relies on the English Fraudulent Conveyances Act, 1571.
The law in this area also lacks a clear policy foundation and needs to be clarified and modernised. In 2012, the Uniform Law Conference of Canada recommended new legislation to update this area of the law.
The Alberta Law Reform Institute has reviewed the work of the Uniform Law Conference of Canada and recommends that Alberta adopt the Uniform Reviewable Transactions Act.
Key changes that would flow from adopting the Reviewable Transactions Act in Alberta include:
- Balancing creditors’ rights to recover what they are owed against a transferee’s right to be free from unsuspected claims to property or value received from a person who has creditors;
- Focusing on the effect of a transaction (did it impede or defeat creditors’ rights of recovery?) rather than the intention of its participants;
- Considering whether the transferee was in a position to recognise that the transaction was vulnerable because its terms were too good to be true or the transferee knew of and facilitated the debtor’s intention to obstruct creditors.
The Report also includes a sample draft Reviewable Transactions Act. Implementing the Uniform Act in Alberta would also complement the modern legislative framework established by the Civil Enforcement Act and the Personal Property Security Act.