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Monday, 1 December 2003
Page: 23412

Mr Murphy asked the previous Attorney-General, the Hon. Daryl Williams AM QC MP, upon notice, on 11 September 2003:

(1) Is he aware of an article by Monica Videnieks in The Australian on 9 September 2003 titled “Creditors after wife of ex-QC tax cheat”.

(2) Can he confirm whether the bankrupt former barrister, John Cummins, who has not paid tax for more than forty years, transferred ownership of his Hunters Hill home and 6,000 shares in his Bar Chamber practice to his estranged wife, Mary Elizabeth Cummins.

(3) Can he confirm that the trustee of Mr Cummins' Estate, Mr Bernard Cole QC, told the Federal Court that these assets were transferred “in an effort to avoid detection” by creditors to the bankrupt estate.

(4) Is he able to say whether (a) a discretionary family trust, (b) a shelf company, (c) a creditor's petition in bankruptcy, (d) provisions of the Family Law Act 1975, in particular, the ancillary relief of property orders, (e) provisions of the Income Tax Assessment Acts, and (f) the corporate structure of Ms Cummins' business “Hospitality Hire”, were used in an effort to place Mr Cummins' assets out of the reach of his creditors.

(5) Is he acting to ensure that legal structures and instruments that exist for a legitimate purpose are not used to defraud the Commonwealth, evade tax or place assets beyond the reach of creditors; if so, what is he doing; if not, why not.

Mr Ruddock (Attorney-General) —The answer to the honourable member's question is as follows:

(1) Yes.

(2) Based on the decision by Justice Sackville in the matter of Prentice v Cummins (No 5) [2002] FCA 1503, I can confirm that:

Mr Cummins sold his interest as joint tenant of the Hunters Hill property to Mrs Cummins and executed a transfer of the property in her favour as transferee.

However, the 6,000 shares in Mr Cummins Bar Chamber Practice were transferred to Aymcopic Pty Ltd, the trustee of the Cummins Family Trust and not to Mrs Cummins.

(3) I note that Mr Bernard Cole QC is the counsel for the trustee of Mr Cummins' Estate and not the trustee of the estate. I further note that the abovementioned article mentions that Mr Bernard Cole QC made that statement. I cannot comment on the veracity of the article.

(4) The efforts by Mr Cummins to place assets outside the reach of creditors were unsuccessful. Justice Sackville's decision declared transactions by Mr Cummins, whose main purpose was to prevent assets from being divided among creditors, void against the trustee, under section 121 of the Bankruptcy Act 1966 (the Act).

(5) The above case is a good example of the current legislation operating effectively to enable the recovery of assets from people who attempt to utilise legal structures to place assets beyond the reach of the creditors. In this case the trustee was able to recover assets from transactions that took place almost 16 years ago.

The government has introduced changes to the bankruptcy law aimed at preventing people using bankruptcy in an improper way. Recent amendments to the Act have strengthened the powers of the trustee further.

The Insolvency and Trustee Service Australia (ITSA) works closely with the Attorney-General's Department, the Australian Taxation Office and the Australian Securities and Investments Commission to ensure compliance by debtors with the requirements of the personal insolvency system.

Education of trustees about offences under the Act has led to an increase in referrals of offences. The number of defendants being prosecuted has increased from previous years and there has also been an increase in the number of cases where action is taken to ensure transfers by debtor prior to bankruptcy were not made to defeat creditors.