Kuwait Court of Cassation principle number 274

Summary: - A creditor’s request that his debtor’s disposition be declared ineffective against him. Its conditions: that the creditor’s right be due for payment and have arisen before the disposition, and that the disposition prejudice the creditor, resulting in the debtor’s insolvency or increasing his insolvency. A gratuitous disposition does not require the debtor’s fraud or the transferee’s good faith for it to be ineffective against the creditor. Assessment thereof is a matter of fact. - The challenged judgment’s ruling that the disposition made by the appellant to his son of the property covered by the official deed of gift is ineffective because it diminishes the creditor’s security, increases the appellant’s insolvency, and was completed after the debt was established as owing by him. The appellant’s contention that the true nature of the notarized gift disposition was a sale preceding the establishment of his indebtedness. His defense lacked evidence that he received the price and that this price entered his estate, reinforcing the creditor’s security. The judgment’s conclusion to that effect and its subsequent rejection of the request for referral to 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 having a right due for payment, 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 the debtor’s fraud nor the transferee’s good faith is required for it to be ineffective against the creditor,” means—as the Explanatory Memorandum to this Law made clear—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 the debtor’s fraud nor the transferee’s good faith is required for it to be ineffective against the creditor. It is also established that proof that the disposition would render the debtor insolvent or increase his insolvency is a factual matter falling within the trial court’s authority without review, provided it bases its ruling on sound reasons having an established basis in the papers and leading to the conclusion it reached. That being so, and whereas the challenged judgment based its ruling that the disposition made by the appellant to his son of the property covered by the official deed of gift dated 8-5-2011 was ineffective on what it inferred from the case papers and documents, namely that the appellant’s gratuitous disposition of that property to his son diminished the first respondent’s security and increased the appellant’s insolvency, and was made after his debt had been established as owing by him pursuant to the judgment rendered on 25/4/2011 in Commercial Appeal No. 4041/2009, and he had previously disposed of all his property by sale except for the property serving as his residence, which is not amenable to execution. This is not altered by the appellant’s contention that the true nature of the notarized gift disposition made by him to his son was a sale preceding the establishment of his indebtedness to the first respondent, since his defense lacked any evidence that he received the price of that sale and that this price entered his financial estate, reinforcing its security in relation to the indebtedness of the first respondent. This is a sound inference by the judgment, sufficient to sustain its ruling and leading to the conclusion it reached. The court therefore cannot be faulted for not granting his request for referral to investigation when it found in the case papers sufficient material to form its conviction. Accordingly, the complaint in its entirety is without foundation.