Hometown decision?

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.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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qm
qm
2022 years ago

Well this throws the cat amongst the pigeons, and explains some of the ATO’s insistence in the recent committee hearings on the proposed amendments to the bankruptcy act that the amendments were still needed, notwithstanding the fact that they had been successful in Prentice on the existing law.

Mark Platt
Mark Platt
2022 years ago

Barristers’ negligence has just recently been reargued before the High Court hasn’t it?

jen
jen
2022 years ago

I’m interested in law parish. I read all of that i might even take a look at the links … no its too soon …one step at a time

Ken Parish
Ken Parish
2022 years ago

Mark

The matter you have in mind is still reserved before the High Court. It’s called D’Orta-Ekenaike v Victorian Legal Aid. If you’re interested, the case is discussed in this edition of The Baxt Report at page 16 (or search for “D’Orta-Ekenaike” – it’s a PDF file).