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Saturday, February 06, 2016
Saskatchewan Justice

Under The Fraudulent Preferences Act, a creditor may bring an action to set aside a transfer which has the effect of defrauding or giving preference to certain creditors, when the transfer is made by a debtor who:

  • is unable to pay his or her debts in full; or
  • knows that he or she is on the eve of insolvency.

A transaction is considered preferential if the effect is that a creditor receives or is placed in a position to  receive a greater payment than he or she would otherwise have received. The intention of the debtor, any pressure exerted by a creditor, or lack of notice to the creditor are all irrelevant in determining whether a transaction is preferential.

An application to set aside a preferential transaction must be made within 60 days of the disputed transaction.

The Act provides protection for purchasers in good faith who do not have knowledge of a person's intention to defeat creditors. For example, the Act protects a bona fide sale or payment made in the ordinary course of business or a bona fide sale or delivery of goods or property, provided that the money paid is a fair and reasonable amount.

Nothing affects the payment of money to a creditor where the creditor has given up a valid security to obtain the payment unless the value of the security is returned to the creditor.

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