George v Deputy Commissioner of Taxation

In this appeal, the appellant, a former acting Judge of the District Court of New South Wales, sought to challenge the decision of a Federal Magistrate to declare void a deed of assignment executed on 25 July 2003 and to order the sequestration of the appellant’s estate. The appellant’s primary contention was that the Federal Magistrate erred in declaring the deed of assignment void and ordering sequestration as he had been unable to discharge the onus of proving that the appellant did not owe a provable debt to First Netcom at the time of the meeting. The appellant also argued that the Federal Magistrate had failed to take into account the wishes of the majority of creditors, who had voted in favour of the deed of assignment. The Deputy Commissioner of Taxation, as the respondent, submitted that the appellant’s appeal should be dismissed as the Federal Magistrate’s decision was correct. The respondent argued that the appellant had not discharged the onus of proving that he did not owe a provable debt to First Netcom and that the Federal Magistrate’s decision to declare the deed of assignment void and order sequestration was in the best interests of the creditors.

The primary issue before the Court was whether the Federal Magistrate was correct in declaring the deed of assignment void and ordering sequestration. This issue hinged on whether the appellant had discharged the onus of proving that he did not owe a provable debt to First Netcom. The Court found that the Commissioner had discharged the onus of proof by establishing that the appellant had not breached his duty under s 588G of the Corporations Act to prevent the company trading while insolvent and therefore he was not liable under s 588M(2). The Court held that the appellant had not adduced any evidence capable of rebutting the Commissioner’s prima facie case. Furthermore, the Court held that the Federal Magistrate was correct in declaring the deed of assignment void and ordering sequestration as it was in the best interests of the creditors. The Court noted that the Commissioner’s debt accounted for almost two-thirds of the total debts represented at the creditors’ meeting and that the Commissioner had opposed the deed of assignment.

The Court dismissed the appeal and upheld the decision of the Federal Magistrate. The Court held that the Federal Magistrate’s declaration that the deed of assignment was void and the sequestration order were properly made. The Court held that the appellant had not discharged the onus of proving that he did not owe a provable debt to First Netcom and that the Federal Magistrate’s decision was in the best interests of the creditors. The Court found that the Commissioner had discharged the onus of proof by establishing that the appellant had not breached his duty under s 588G of the Corporations Act to prevent the company trading while insolvent and therefore he was not liable under s 588M(2). The Court held that the appellant had not adduced any evidence capable of rebutting the Commissioner’s prima facie case.

The Court made no orders as the appeal was dismissed.