Introduction

This commentary examines the High Court of Ireland’s decision in AIB Mortgage Bank UC & Anor v Burke & Ors [2024] IEHC 755, delivered by Mr Justice Cregan on 3 December 2024. The plaintiffs, AIB Mortgage Bank UC and AIB plc, sought to set aside three property transfers from Gerard (Michael Gerard) Burke and Teresa Burke to their daughter, Caroline Burke, on the ground that they were made at gross undervalue with the intention of defrauding the plaintiffs as creditors. A mysterious fourth defendant, “John Shiels,” was joined but never identified or served. Key issues included whether the transfers fell within Section 74(3) of the Land and Conveyancing Law Reform Act 2009 (fraudulent conveyance), and if so, whether they were voidable.

Summary of the Judgment

After striking out the parents’ defence for failure to comply with discovery orders and noting repeated last-minute medical adjournment applications by Mr Burke, the Court heard evidence from AIB’s case manager and a property valuation expert. It found that each of the three transfers was:

• Executed after the plaintiffs had obtained judgments of approximately €9.5 million against Mr Burke and €8.9 million against Mrs Burke;
• Made at a gross undervalue (10% or less of market value);
• Procured to evade enforcement of those judgments.

The Court applied Section 74(3) of the 2009 Act and relevant authorities, concluded that the transfers were fraudulent conveyances, and ordered them set aside.

Analysis

Precedents Cited

• Re Moroney (1887) 21 LR Ir 27: Palles CB held that a conveyance is “fraudulent” if its necessary or probable effect is to delay or defraud creditors. Fraud may be proved by direct evidence or inferred from circumstances.
• McQuillan v Maguire [1996] 1 ILRM 394: Costello P affirmed that intent to defraud may be inferred when the necessary result of a transaction is creditor prejudice.
• MIBI v Stanbridge [2008] IEHC 389: Laffoy J applied Re Moroney to disclaimers, inferring fraudulent intent from the inevitable consequences of defendants’ acts.
• Keegan Quarries v McGuinness [2011] IEHC 453: Finlay Geoghegan J recognized that Section 74(3) of the 2009 Act replaced the 1634 Conveyancing Act test, applying the same badges of fraud principle.
• Tracey v McDowell [2021] IESC 50: Clarke J. on balancing court process and litigant health, relevant to adjournment applications.
• Geary & Ors v PRA [2018] IEHC 727: Ní Raifeartaigh J on the limits of leeway for litigants and the duty to comply with court orders.

Legal Reasoning

The Court’s reasoning proceeded in stages:

1. Establishment of statutory framework: Section 74(3) LCLA 2009 renders “any conveyance of property made with the intention of defrauding a creditor” voidable by the prejudiced party.
2. Identification of necessary proofs:
• A conveyance or disposition took place;
• It was executed with intent to defraud creditors;
• The creditor was prejudiced.
3. Inference of intent: In the absence of direct admission, the Court relied on “badges of fraud” derived from Re Moroney—namely:
• Gross undervalue (transfers at 10% or less of market value);
• Timing after entry of judgment;
• Family relationship between grantors and grantee;
• Retention of beneficial rights (life-residence in the family home);
• Use of a potential straw party (“John Shiels”) and non-disclosure of his identity;
• Absence of bona fide marketing or explanation.
4. Application of case law: The Court followed Palles CB’s twofold test for actual and legal inference of fraud, as endorsed in McQuillan and Stanbridge.
5. Relief granted: Each conveyance was set aside as voidable.

Impact

This decision clarifies and reinforces the application of Section 74(3) LCLA 2009 in Irish law. Its key impacts include:

• Reiteration that transfers at gross undervalue to close relatives shortly after judgment attract a presumption of fraudulent intent;
• A reminder that courts will draw inferences from a combination of badges of fraud without direct evidence of subjective intent;
• A deterrent effect on debtors seeking to shield assets by interposing opaque intermediaries or family members;
• Confirmation that non-compliance with discovery and court orders can lead to striking out defences and expedite creditor remedies.

Complex Concepts Simplified

• Voidable vs Void: A voidable conveyance is valid until a court sets it aside; a void conveyance is invalid from the start. Section 74(3) makes fraudulent transfers voidable.
• “Intent to defraud”: Not limited to actual deception—courts infer it when a transfer’s necessary or probable effect is to prejudice creditors.
• “Badges of fraud”: Circumstances such as gross undervalue, timing, family ties, retention of benefit, and lack of transparency—used to infer intent.
• Section 74(3) LCLA 2009: Modern statutory restatement of the 1634 Act rule against fraudulent conveyances, streamlining the test to “defraud.”

Conclusion

The High Court’s decision in AIB Mortgage Bank UC & Anor v Burke & Ors solidifies the jurisprudence on fraudulent conveyances under Section 74(3) of the Land and Conveyancing Law Reform Act 2009. By applying established badges of fraud and inferring intent from objective circumstances, the Court delivered clear guidance to creditors and debtors alike. Transfers at gross undervalue to close relatives after judgment will be vigorously scrutinized and, if necessary, set aside to preserve the integrity of creditor remedies and the orderly administration of justice.