When I read in the Oz over the weekend that the Full Federal Court had allowed an appeal by the wife of disgraced bankrupt former Sydney QC John Cummins, I thought it must surely be a badly flawed, hometown decision.
The case concerned whether assets Cummins had transferred to his wife 17 years ago (his share in the family home and barristers’ chambers) had been transferred with the intent of defrauding his creditors. Cummins hasn’t filed a tax return (or paid tax) for 45 years, and even back when he transferred those assets he hadn’t done so for 28 years!! Surely it wouldn’t be difficult in those circumstances, I thought, to prove enough to allow any court to infer that the assets were transferred with a fraudulent intent. Especially with the assistance of section 121(2) of the Bankruptcy Act, which effectively deems a fraudulent intent to exist where the bankrupt was insolvent at the time of the transfer. It would be pounds to peanuts that a barrister who hadn’t paid tax for 28 years would be unable to pay the accumulated tax debt from funds readily to hand (and thus would be insolvent).
But when I read the Full Court judgment itself, all was explained. Counsel for the bankrupt’s estate (which is trying to recover the assets from Mrs Cummins) had failed to adduce any evidence showing that Cummins even owed any tax back in 1987 when the transfers took place, failed to plead section 121(2), and attempted unsuccessfully to argue it as an afterthought (both at first instance and on appeal)! You’d certainly suspect rather strongly that a prominent and apparently wealthy barrister was likely to have earned big mobs of money over the years, but a court can’t infer such a conclusion without any evidence.
Counsel for the Cummins estate must be thanking their lucky stars that barristers can’t (in many circumstances, anyway) be sued for negligence. Most of the rest of us will be reckoning it’s about time they were subject to exactly the same rules as everyone else. The continued existence of this rule really is an outrageous hometown decision.