B.C. couple transferred property to son to avoid paying $400K in court-ordered damages, judge rules

A B.C. Supreme Court judge ruled the transfer of this home on Dover Road in Nanaimo a 'fraudulent conveyance.' (BC Assessment)

A Vancouver Island couple's transfer of their home to their son has been ruled a "fraudulent conveyance."

Hai Huang and his wife Ying Gao transferred the title to their home on Dover Road in Nanaimo to their son Tian Long Huang in fall 2016, according to a B.C. Supreme Court decision issued earlier this week.

The consideration paid for the transfer was "$1 and natural love and affection." At the time, the decision indicates, the home's assessed value was $485,000. It has since risen to $993,000, according to BC Assessment.

The transfer occurred while Hai Huang was the defendant in a civil lawsuit brought by Jian He over an assault Huang committed against He in 2013. In early 2018, a jury awarded He $447,450 in damages in that case.

He was also the plaintiff in the latest case, arguing that Huang and Gao had transferred the property to their son in order to prevent him from targeting the home as a means of collecting the damages he was owed.

This week's decision indicates that Huang has not made any payments toward the damages since they were awarded.

Huang, Gao and their son told the court the transfer was legitimate and had been made for estate planning reasons and to honour Chinese customs, but Justice Robin A. M. Baird disagreed, finding that the transaction was a fraudulent conveyance.

'Presumption' of fraud

The plaintiff brought the case under the provincial Fraudulent Conveyance Act, which stipulates that transfers of property done to "delay, hinder or defraud creditors" are "void and of no effect." There are exceptions, however, for transfers made "for good consideration and in good faith" to legitimate buyers.

Because it was undisputed that the transfer in this case had been made without valuable consideration, the law assumes the transfer was not legitimate, according to Baird's decision.

"The defendants bear the burden of rebutting the presumption that it was fraudulent," the decision reads. "It falls to them, in other words, to prove that the transfer was not intended, in part at least, to put the property out of the plaintiff’s reach."

The judge concluded that they had not done so.

Huang and Gao told the court they transferred the property to their son because he was engaged, and Chinese custom required his parents to transfer all of their property to him in advance of the wedding.

While Baird concluded that the engagement was "probably sincere," he noted that the younger Huang and his fiancée broke up and have never reconciled.

The defendants also claimed that it is a Chinese custom for children to continue living with their parents even after they are married and to take over responsibility for household finances, according to the decision.

"Neither Mr. Huang nor Ms. Gao had any income to pay for the ongoing expense of maintaining the property, and because Tian Long Huang had agreed to pay all of these costs, to permit them to go on living on the property, and to take care of them until they died, they felt it was only fair that title should be transferred to him," the decision reads, summarizing the couple's stated reasons for completing the transfer.

The judge noted that he found the couple's claim to have no income of their own strange, given that Huang was only in his mid-50s when the transfer occurred.

Moreover, the defendants provided no documentation to corroborate the claim that the son was responsible for paying all of the family's expenses.

'Extremely suspicious'

Baird agreed with the plaintiff that the transfer bore multiple "badges of fraud," including its timing – occurring in the midst of litigation that had the potential to cost the defendant a significant amount in damages – and the fact that its end result was to allow Huang to continue enjoying all the benefits of the property that he enjoyed before the transfer.

All three defendants told the court they had lived in the home for 20 years and intended to continue doing so indefinitely, according to the decision.

"The timing of it, in the very midst of civil litigation in which it had been clearly established by medical evidence that Mr. Huang stood exposed to significant financial liability to the plaintiff, is extremely suspicious," the decision reads.

Baird further noted that the couple's desire to transfer the home to their son could've been achieved by adding him to the title as a joint tenant with the right of survivorship, rather than ending their own ownership of the property.

"The fact that, instead, they divested themselves of the property altogether speaks clearly to an alternative intention," the decision reads. "Even in the absence of a presumption, I would have no hesitation in concluding, in all of the circumstances, that this intention was to deprive the plaintiff of a lawful debt-collection remedy."

Having reached this conclusion, Baird ruled that the transfer was a fraudulent conveyance and that the plaintiff could register his judgment against the title as if the transfer had not happened. The judge also awarded special court costs to He.