Kuwait Court of Cassation principle number 179

Summary: - A creditor’s request that his debtor’s disposition be declared ineffective against him. Its condition: the creditor’s right must be due for payment and must have arisen before the disposition, and the disposition must prejudice the creditor by causing or increasing the debtor’s insolvency. For a gratuitous disposition to be ineffective against the creditor, neither fraud by the debtor nor good faith on the part of the transferee is required. Assessment thereof is a matter of fact. - The challenged judgment ruled that the disposition made by the appellant to his son of the property subject to the official deed of gift was ineffective, because it diminished the creditor’s security, increased the appellant’s insolvency, and occurred after the debt was established against him. The appellant maintained that the true nature of the documented gift was a sale predating the establishment of his indebtedness. His defence contained no evidence that he had received the price and that this price had entered his estate, reinforcing the creditor’s security. The judgment’s conclusion to that effect, and its subsequent refusal of the request for referral for evidentiary investigation, do not vitiate it. Rule: It is established in the jurisprudence of this Court that the provision in Article 310 of the Civil Code that “Every creditor whose right is due for payment and whose debtor has made a disposition prejudicial to him may request that this disposition be declared ineffective against him if the disposition diminished the debtor’s rights or increased his obligations and resulted in the debtor’s insolvency or increased his insolvency,” and in Article 311/2, “If the debtor’s disposition is gratuitous, neither fraud by the debtor nor good faith on the part of the transferee is required for it to be ineffective against the creditor,” means—as disclosed by the explanatory memorandum to this Law—that, for a creditor to be able to request that his debtor’s disposition be declared ineffective against him, the creditor’s right must be due for payment and must have arisen before the challenged disposition, and the debtor’s disposition must prejudice the creditor, that is, result in the debtor’s insolvency or increase his insolvency. If, however, the disposition is gratuitous, neither fraud by the debtor nor good faith on the part of the transferee is required for it to be ineffective against the creditor. It is also established that the existence of evidence that the disposition would render the debtor insolvent or increase his insolvency is a factual matter within the authority of the court of merits, without review, provided that it bases its ruling on sound reasons having an established basis in the papers and leading to the conclusion it reached. That being so, the challenged judgment based its ruling that the disposition made by the appellant to his son of the property subject to the official deed of gift dated 8-5-2011 was ineffective on its inference from the case papers and documents that the appellant’s gratuitous disposition of that property to his son diminished the first respondent’s security and increased the appellant’s insolvency. It was made after his debt had been established against him by the judgment issued on 25/4/2011 in Commercial Appeal No. 4041/2009, and he had previously disposed of all his assets by sale except the property constituting his residence, which was not amenable to execution. This is not altered by the appellant’s contention that the true nature of the documented gift made by him to his son was a sale predating the establishment of his indebtedness to the first respondent, since his defence contained no evidence that he had received the price of that sale and that this price had entered his financial estate, reinforcing its security in respect of the debt owed to the first respondent. This is a sound inference by the judgment, sufficient to support its ruling and leading to the conclusion it reached. The court therefore cannot be faulted for not granting his request for referral for evidentiary investigation when it found in the case papers sufficient material to form its conviction. Accordingly, the challenge in its entirety is without foundation.