The High Court has declared void a transfer of grain from farmer Jim Smith to a company he co-owned with his wife, finding that the transfer was made with the intention of defrauding Quinns of Baltinglass Limited, a creditor.
In a judgment delivered on 11 July 2017, Mr Justice David Keane said the transfer prejudiced Quinns, which had a money judgment against Mr Smith. The court granted the declaration sought under section 74(3) of the Land and Conveyancing Law Reform Act 2009.
The dispute concerned grain sold to Glanbia Foods Ireland Limited under an agreement made in the name of Nujmij Limited. The agreement was dated 2 July 2012, before Nujmij was incorporated on 19 July. A total of 397 tonnes were delivered. Glanbia owed €65,369.26 under the agreement and had undertaken to hold the sum pending the proceedings.
Quinns had obtained judgment against Mr Smith in 2010 for €292,632.69 plus interest. Its managing director told the court that Mr Smith later delivered grain worth €54,677.09, but made no further payment. Quinns’ book-keeper said the account balance was then about €352,000. An execution order was returned marked “nulla bona” in April 2012.
Mrs June Smith, a director of Nujmij, denied that the company was established to put assets beyond creditors’ reach. She said it was formed on the accountant’s advice to create an entity with a good credit rating and to establish a business for the couple’s children. Mr Smith did not give evidence.
The judge rejected that explanation, concluding that the existing farming business was being moved into a new company that would continue to benefit the family at creditors’ expense. He found the grain had been transferred without consideration in circumstances where the necessary or probable result was to defeat or delay creditors. The judgment also rejected the argument that Quinns had to exhaust other enforcement procedures before seeking relief under section 74(3).
The court’s declaration concerned the transfer of a quantity of grain in or about August 2012. The judgment does not state that the court awarded Quinns the money held by Glanbia or determine the final distribution of those proceeds.