In what circumstances will a court set aside a transaction where the borrower is insolvent?

Ontario, Canada


The following excerpt is from McCrae v. White, 1882 CanLII 9 (ON CA):

In the case of Davidson v. Ross, 24 Gr. 22, in which the remarks attributed to the late Chief Justice were said to have been used, the insolvency occurred within thirty days, so that the onus of proving clearly that the insolvents did not act in contemplation of insolvency was cast upon the defendant; but the same learned Judge in the same judgment uses these expressions: “It is matter of every-day experience that Courts declare an impeached transaction to be surrounded with circumstances of grave suspicion; but that the evidence not having carried the case beyond the region of suspicion, and fraud being a thing to be distinctly proved, and not to be presumed, the transaction cannot be set aside. Facts must be proved which lead the judicial mind to no other conclusion than that of fraud. If the evidence in such a case leaves the matter in doubt the complainant must fail. If the case proved is consistent with honesty the defendant must succeed.”

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