Conveyances Act of 1571 is still voiding fraudulent property
transfers 450 years later
In the 1500s, debtors in
England would avoid paying their
debts by transferring property
to friends or family as a gift
or for undervalue, move to a
sanctuary such as church land,
wait for their creditors to
exhaust their efforts or come to
a favourable settlement of the
debt, and then return and take a
re-transfer of the property.
This was a fraud on the
To prevent this mischief, in 1571, Parliament enacted the
Fraudulent Conveyances Act (13 Eliz I, c 5), known as the
Statute of 13 Elizabeth, and in Australia, as the
Elizabethan Statute. It provided:
“feoffments, gifts, grants etc [that] have been and
are devised and contrived of malice, fraud, covin,
collusion or guile to the end, purpose and intent to
delay, hinder or defraud creditors and others … [are] to
be clearly and utterly void”
The Act changed the law but not human nature. The latest
in a long line of cases which have applied the Statute of 13
Elizabeth to void fraudulent property transfers is the
decision of Commissioner of Taxation v Parr 
FCA 156 (28 February 2022) (Banks-Smith J).
The Federal Court of Australia applied the modern
manifestation of the statute, s 89 of the Property Law
Act 1969 (WA), to enable the Commissioner of Taxation to
recover a taxation debt against two properties the tax
debtor (Ronald Parr) had transferred as gifts, the first to
his wife, the second to his two sons, to avoid paying a
The factual background
On 21 July 2016, the Australian Taxation Office (ATO)
sent the tax debtor a letter advising him of its intention
to conduct a tax audit of undisclosed income, sources of
funds used to purchase properties, capital gains, and
unsubstantiated expense claims for the income years ending
30 June 2009 to 30 June 2014.
The tax debtor provided certain documents and
explanations including that the cash funds in question were
financial gifts or loans received from friends and
businesses, not taxable income. The tax debtor relied mainly
on oral promises and explanations.
On 15 February 2017, two ATO officers recorded an
informal interview with the tax debtor. As a result, they
identified significant income in the 2010 income year for
which no income tax return had been lodged, rental property
deductions for a property sold before the years the expenses
were claimed, a capital gain from the sale of a property not
declared and large amounts of cash deposited in bank
accounts which were not declared as income.
On 17 February 2017, the tax debtor transferred a
property at 58A Broun Avenue, Embleton, to the tax debtor’s
wife, and at 58 Broun Avenue to the tax debtor’s two sons,
as a ‘gift of love’ with no money paid.
On 6 April 2017, the ATO issued tax assessments giving
effect to the outcome of the audit.
On 18 September 2018 the tax assessments were entered as
a judgment in the amount of $2,149,411.03 (the tax debt).
Section 89 of Property Law Act 1969 (WA) provides
Voluntary conveyances to defraud creditors
(1) … every alienation of property made … with intent to
defraud creditors is voidable, at the instance of any
person thereby prejudiced.”
The leading Australian decision is Marcolongo v Chen
 HCA 3 in which the Hgh Curt of Australia considered
section 37A of the Conveyancing Act 1919 (NSW), which
is substantially identical to s 89. There are equivalent
provisions to ss 37A and 89 in all Australian States and
Territories, New Zealand and the United Kingdom.
The principles considered in Marcolongo were
summarised by the Full Federal Court in Zreika v Royal
 FCAFC 82 (as quoted in Parr):
“Section 37A refers to an intent to defraud creditors
and means delay, hinder or [otherwise] defraud creditors
as the Elizabethan Statute had provided (at ).
Whether there is an intent to defraud creditors involves
a question of fact concerning actual knowledge … it is
not necessary to prove a desire to cheat or swindle
those prejudiced; … it is not necessary to show that the
debtor wanted creditors to suffer a loss or that the
debtor had a purpose of causing loss (at ). Finally,
it is not necessary that the intent to defraud creditors
be the sole or predominant intention (at ).”
In Parr, the Court found:
- An actual intent to defraud creditors can be
inferred from the time the tax audit letter was received
in 2016, the correspondence between the tax debtor’s
accountants and the ATO and was obvious by at least 15
February 2017 at the interview with the ATO.
- The proximity of the audit and the interview to the
transfers (which were made 2 days after the interview)
were additional factors in demonstrating intent.
- The lack of evidence to support the tax debtor’s
explanation that he had promised to transfer the
properties for some time for other reasons, the lack of
expenditure upon the properties by the transferees to
establish a beneficial interest in the properties, were
relevant. The Court said that even if other reasons were
demonstrated for the transfers, so long as there was an
intent to defraud, the Statute would be satisfied.
“The alienation of Ronald’s property was made
voluntarily, for no more than nominal consideration of the
'gift of love', to family members, and proximate in time to
the ATO communications and interview that highlighted
Ronald's taxation liabilities, even though the exact amount
of the liability was not then known.” [judgment, paragraph
Note: the good faith defence i.e. that the
transfer was made for valuable consideration and in good
faith, was not raised by the transferees in this case.
The Court made declarations to the effect that the
transfers were void under s 89 because the alienation of the
properties was made with intent to defraud. The ATO will be
able to sell the properties and apply the proceeds of sale
against the tax debt.