New Zealand Law on Property Dispositions to Avoid Creditors and Mortgage Fraud Comparison Essay by Metro

New Zealand Law on Property Dispositions to Avoid Creditors and Mortgage Fraud
A comparison of New Zealand's legal position on property dispositions made to avoid creditors and mortgage fraud with the legal position of Australia and Canada respectively.
# 153660 | 4,927 words | 11 sources | MLA | 2013 | NZ
Published on Aug 21, 2013 in Business (Law) , Law (Business) , Law (Property)

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This paper explores two areas of land law disputes in New Zealand, specifically, dispositions to avoid creditors and mortgage fraud. The paper compares the position of New Zealand's courts on dispositions with the position of Australia's courts, and finds that the New Zealand position appears stronger on the basis that we have an objective test to determine if there is an intention to frustrate a creditor or not, whereas the Australian position appears to be more of a subjective and arbitrary test. With regards to mortgage fraud, however, the paper finds that New Zealand's law's could be strengthened by following the Canadian reasoning of due diligence.

Property Dispositions to Avoid Creditors
Mortgage Fraud

From the Paper:

"One leading cause of disputes within New Zealand in relation to land law involves situations where a debtor disposes of their property in order to defeat the interests that a creditor may have to such, as in this instance the creditor is left in the position of having to try and recover their interest. Under our current legislation there are provisions in the Property Law Act which have the effect of rendering a disposition of property voidable in the instance where it prejudices a creditor. The purpose of this is to allow the court to revert property back to creditor when a debtor has attempted to escape their liability and claim insolvency. Commonly these cases involve situations where it is clear that a debtor is in financial trouble due to debts etc, and as a result they decide to transfer their property either to a trust or company, or potentially to another family member. If the property is sold to a bone fide purchaser for value then proceeds of that sale can be held by the court as an alternative to the property itself . This situation was previously dealt with under the Land Transfer Act 1952 , and under the 2007 Act, all dispositions made before 31 December 2007 will be dealt with under that older Act.
"For a creditor to recover they must meet several criteria under the Act. A creditor would have to show that a debtor met the requirements under s 346(2), that there was a disposition under s 345(2) and that they themselves are able to apply for an order of the court under s 348."

Sample of Sources Used:

  • CIR v Ly [2012] NZHC 443
  • Nathan v Dollars & Sense Finance Ltd [2008] 2 NZLR 557 (SC)
  • Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 (SC)
  • Bahr v Nicolay (No 2) (1988) 164 CLR 604
  • Rabi v Rosu [2006] Can LII 36623

Cite this Comparison Essay:

APA Format

New Zealand Law on Property Dispositions to Avoid Creditors and Mortgage Fraud (2013, August 21) Retrieved February 21, 2024, from

MLA Format

"New Zealand Law on Property Dispositions to Avoid Creditors and Mortgage Fraud" 21 August 2013. Web. 21 February. 2024. <>