Lean v Inspector-General in Bankruptcy

In *Lean v Inspector-General in Bankruptcy*, the Federal Court of Australia considered an application by Mr Lean for an order that he was not a bankrupt. The Inspector-General in Bankruptcy had determined that Mr Lean was a bankrupt based on a debt owed to the Australian Taxation Office (ATO). Mr Lean contended that the debt to the ATO had been discharged by a previous bankruptcy.

The primary legal issue before the Court was whether the debt owed to the ATO had been discharged by Mr Lean's prior bankruptcy, which had concluded in 2014. This required the Court to determine the nature of the debt and the effect of the discharge provisions under the *Bankruptcy Act 1966* (Cth) on debts that may have been incurred or assessed after the commencement of the bankruptcy but before its discharge.

Judge Lucev reasoned that the debt to the ATO, being a tax liability, was a provable debt in the bankruptcy. Crucially, the Court found that the discharge of a bankrupt under section 149 of the *Bankruptcy Act* operates to release the bankrupt from all provable debts, including those that may have arisen during the bankruptcy but were not yet assessed or payable at the time of discharge. The Court noted that the ATO had not sought to exclude this debt from the discharge. Consequently, the Court held that Mr Lean was not a bankrupt as the debt to the ATO had been discharged.