EVIDENCE – judicial notice – Evidence Act 1995 (Cth), s 144 – whether Court can take judicial notice of Bills forming “trigger” for double dissolution of Commonwealth Parliament – whether unfair to permit party to rely on such material where it had not been identified prior to supplementary written submissions.
PRACTICE AND PROCEDURE – no case submissions – principles to be applied where evidence is said to be insufficient to support applicant’s case.
BANKRUPTCY – Bankruptcy Act 1966 (Cth) – s 121 – voluntary transfer by bankrupt of matrimonial home and shares – bankrupt a practising barrister who had not lodged a tax return for many years – whether evidence sufficient to establish for the purposes of a no-case submission that bankrupt’s “main purpose” was to defeat or delay creditors.
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Prentice v Cummins [2002] FCA 1503
Case
[2002] FCA 1503
Decision Date
CaseChat Overview and Summary
Prentice v Cummins is a case involving a bankrupt's transfers of his interest in a Hunters Hill property and shares, and payments made to his wife, Mrs Cummins. The dispute hinges on whether these transfers were made to hinder or delay creditors, and whether the payments were made at an undervalue or without consideration. The principal creditor in the bankrupt's estate is the Australian Taxation Office (ATO), which claims the bankrupt owes a significant sum. The court was tasked with deciding if the trustee's claims under sections 120 and 121 of the Bankruptcy Act were supported by the evidence presented.
The respondents argued that the evidence was insufficient to establish that the bankrupt's primary purpose in transferring his interest in the property and shares was to hinder creditors or that the payments to Mrs Cummins were made without consideration or at an undervalue. The court rejected these submissions, finding that the evidence did support the trustee's claims in certain respects. The respondents' failure to call the bankrupt as a witness was noted, and the court held that it was reasonable to expect the respondents to call him, given his close relationship with Mrs Cummins and Aymcopic. The court also considered the implications of the respondents' no case submissions and found them to be successful in relation to specific claims but not others.
The court concluded that the respondents' no case submissions were successful in relation to certain claims but not others. Specifically, the submissions were upheld regarding the voidability of the transfer of the bankrupt's interest in the Hunters Hill property and the money transfers claims, except for the claim that Mrs Cummins had failed to repay a loan. However, the submissions failed in relation to the voidability of the transfer of the Hunters Hill property and shares under section 121 of the Bankruptcy Act. The court ordered the dismissal of certain claims and scheduled a further hearing to address unresolved issues, including the extent of the bankrupt's interest in the Hunters Hill Property at the time of the 1987 transfer.
Orders
Orders of the court
1. The claims made in pars 10-15 and 28-37 of the further amended statement of claim be dismissed.
2. The proceedings be relisted for a further hearing to resolve outstanding issues.
Background
Background to the litigation
Although the respondents (or perhaps more accurately, each respondent in relation to the pleaded claim against her or it) do not dispute that certain inferences can and should be drawn from the evidence, they submit that the evidence is insufficient to warrant the inference that the Bankrupt’s main purpose in transferring his interest in the Hunters Hill property and the Shares was to prevent the transferred property from becoming divisible among his creditors; or to hinder or delay the process of making property available among his creditors.They also dispute that the evidence is capable of establishing that the payments of $55,960.60 by the Bankrupt to Mrs Cummins were made without consideration or at an undervalue. It is convenient to commence with an account of the facts that are not in dispute.BACKGROUND The Bankrupt and Mrs Cummins were married in 1964, from which date (according to admissions on the pleadings) they have lived together as husband and wife. As I have already indicated, the Bankrupt presented his own petition on 13 December 2000 and became bankrupt by virtue of the acceptance of that petition. The principal creditor in his estate is the ATO, which claims to be owed $955,672.92 The Bankrupt was admitted as a solicitor of the Supreme Court of New South Wales in 1957 and in 1961 he was admitted as a barrister of that Court. He was appointed a senior counsel in December 1980. In August 1999, the Bankrupt engaged Mr Morelli, a chartered accountant, to prepare and lodge income tax returns on the Bankrupt’s behalf. Mr Morelli gave evidence that the Bankrupt had advised him that the last time he (the Bankrupt) had had contact with the ATO was in 1955. I infer from this evidence (as Mr Brereton accepted was open to me) that the Bankrupt had not lodged any tax returns between about 1955 and 14 February 2000, when Mr Morelli lodged on his behalf returns for the 1992 to 1999 taxation years. The evidence did not explain why the Bankrupt did not lodge tax returns in respect of any year prior to the 1992 taxation year. Mr Morelli gave unchallenged evidence that he prepared the tax returns from documents, including cheque butts, bank statements, deposit books and receipt records, supplied to him by the Bankrupt. Mr Morelli described these records as “incomplete and unsatisfactory in many serious respects”, for example because cheque butts, deposit books, and bank statements were missing for various periods of time. He also said that when he sought further instructions to fill in the gaps, “on by far the majority of these occasions no satisfactory information was available”. There was no documentary evidence as to the Bankrupt’s income from professional or other activities in respect of any period prior to the 1992 taxation year. For that matter, there was no detailed evidence as to the nature of the Bankrupt’s professional activities between the date of his admission as a barrister (1961) and the date of the transactions that are the subject of the present proceedings (1987). However, successive transfers or mortgages to which the Bankrupt was a party described him as a “Barrister at Law” or “Barrister”. These documents were executed in 1965, 1967, 1970, 1971, 1982 and 1987. As will be seen, the Bankrupt’s tax returns show that he derived substantial professional income from his practice as a barrister in each of the taxation years 1992 to 1999, although the precise amounts vary considerably.
Evidence
Evidence Before The Court
It follows that I reject the respondents’ submission that the Trustee failed to adduce sufficient evidence to support their pleaded case in relation to the Bankrupt’s transfer of his interests in the Hunters Hill Property and the Shares.The Respondents’ Failure to Call Evidence I have reached the conclusion that the respondents’ no case submissions, insofar as they are based on the Bankrupt’s main purpose in making the transfers, must fail on the basis that it is not open to me to draw inferences against them for their failure to adduce evidence. As I have explained, I think that the better view is that, once the respondents elect to call no evidence, the usual principles apply, including the principles stated in Jones v Dunkel, at 320-321, per Windeyer J. These principles allow (not compel) the Court to take into account the unexplained failure by a party to call evidence from a witness, if that party could reasonably have been expected to call the witness in his or her case: O’Donnell v Reichard [1975] VR 916, at 929, per Newton and Norris JJ. It will usually be regarded as reasonable for one party to call a witness if the witness is in that party’s camp so as to make it unrealistic for the other party to call him or her: Payne v Parker [1976] 1 NSWLR 191, at 200-201, per Glass JA. The reasoning that is permissible“involves the treatment of a failure to adduce evidence as a reason for increasing the weight of the proofs of the opposite party or reducing the weight of the proofs of the party in default. The principle may be invoked for a deficiency in the evidence either of a party bearing the legal onus of proving an issue, or of a party bearing the evidentiary burden only. If the failure is of the latter kind, the direct evidence of the party with the onus of proof can be more readily accepted, and inferences in his favour may be more competently drawn”: Payne v Parker, at 200-201.The significance of the inference depends on the closeness of the relationship of the absent witness with the party who did not call the witness: Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157, at 176, per Hill and Finkelstein JJ (quoting Cross on Evidence (6th Aust ed, 2000), at par 1215). Mrs Cummins admits on the pleadings that she has lived together with the Bankrupt as his wife since 1964. The evidence is consistent with that admission. The Bankrupt and Mrs Cummins were the shareholders of, and the Bankrupt was a director of Aymcopic. Aymcopic, in turn, was the trustee of the Cummins Family Trust. In these circumstances, the Bankrupt can fairly be regarded as within the respondent’s camp. He has a close relationship, in the relevant sense, both with Mrs Cummins and Aymcopic and it seems to me that it would have been reasonable to have expected the respondents to call the Bankrupt. I do not think that the fact that the Trustees could cause the Bankrupt to be examined pursuant to s 81 of the Bankruptcy Act detracts from this conclusion, since the Trustees cannot use the transcript of any examination as evidence in this case (the Bankrupt having been removed as a party). Certainly the Bankrupt’s evidence would have shed light on the critical issues in the case. For example, he would have been able to give evidence of his income from his practice as a barrister in the years prior to August 1987 and of the assets that he retained after the 1987 transfers. Most importantly, he would have been able to give evidence as to his purpose or purposes in entering into the transactions.
Decision
Reasons for decision
SACKVILLE J
The evidence is consistent with the moneys paid by the Bankrupt being by way of loan to Mrs Cummins or perhaps for household purposes rather than for Mrs Cummins’ benefit. Indeed, on the evidence before me the probabilities are that the payments were not of the kind caught by s 120(1) of the Bankruptcy Act. Accordingly, the respondents’ no case submission in relation to pars 34-37 of the statement of claim must be upheld.CONCLUSION The respondents’ no case submissions succeed in relation to the claims made in pars 10-15 and 28-37 of the statement of claim. That is, the submissions succeed in relation to the Trustees’ claim that the transfer of the Bankrupt’s interest in the Hunters Hill property is void against them by reason of s 120 of the Bankruptcy Act; and the money transfers claims (except for the claim that Mrs Cummins had failed to repay the loan of $138,546.80). The respondents’ no case submissions fail in relation to the claims made in pars 4-9 (including par 16, so far as it is dependent on pars 4-9) and pars 17-23 of the statement of claim. That is, the submissions fail in relation to the Trustees’ claim that the transfer of the Bankrupt’s interest in the Hunters Hill Property is void against them by reason of s 121 of the Bankruptcy Act; and the Trustees’ claim that the transfer of the Shares is void against them by reason of s 121 of the Bankruptcy Act. The appropriate course is to set a date for a further hearing to resolve any outstanding issues. These include the extent of the Bankrupt’s interest in the Hunters Hill Property at the time of the 1987 transfer. It will of course also be necessary to address the issues in respect of which no case submissions were not made, in accordance with the evidentiary regime agreed between the parties. I shall list the matter for further directions to set a further hearing date.