Commissioner of Taxation v Parr

Counsel for the First-named Third Respondent: The First-named Third Respondent did not appear

Counsel for the Second-named Third Respondent: The Second-named Third Respondent appeared in person

BETWEEN: COMMISSIONER OF TAXATION Applicant

AND: RONALD ERNEST PARR First Respondent

JORDAN ZIN MI PARR AND BRANDON ZIN TAE PARR Third Respondent

order made by: BANKS-SMITH J DATE OF ORDER: 28 February 2022

1. The transfer registered in favour of the second respondent over the property known as 58A Broun Avenue, Embleton, being Lot 889 on Deposited Plan 73338, Certificate of Title Volume 2820 Folio 298 is void pursuant to s 89 of the Property Law Act 1969 (WA).
2. The transfer registered in favour of the third respondents over the property known as 58 Broun Avenue, Embleton, being Lot 888 on Deposited Plan 73338, Certificate of Title Volume 2820 Folio 297 is void pursuant to s 89 of the Property Law Act 1969 (WA).

3. The applicant provide to the Court and the parties within seven days a minute of any consequential orders it seeks in order to facilitate cancellation or removal of the transfers by the Registrar of Titles and as to costs.
4. Unless submissions are received from any respondent within 14 days as to why such consequential and costs orders proposed by the applicant should not be made, and subject to further order, further orders will be made on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BANKS-SMITH J: 1 The Commissioner of Taxation seeks declarations that the transfers by the first respondent of two adjoining properties in Broun Avenue, Embleton in Western Australia to his wife and two sons respectively are void pursuant to s 89 of the Property Law Act 1969 (WA). 2 The transfers were signed two days after the first respondent was interviewed by the Australian Taxation Office (ATO) in the course of an audit into his taxation affairs. The transfers were for nil monetary consideration. The consideration was said to be 'the gift of love'. The transfers were registered on 24 March 2017.

Parties 3 As they share the same surname, and to avoid confusion, I will refer to the parties by their first names, and in doing so no disrespect is intended. The first respondent, Ronald Parr, was until registration of the transfers dated 17 February 2017 the registered proprietor of 58A and 58 Broun Avenue. His wife, Francesca Parr is now the registered proprietor of 58A Broun Avenue. Two of Mr Parr's sons, Jordan Parr and Brandon Parr are the owners of 58 Broun Avenue as tenants in common.

Some procedural matters 4 This proceeding was commenced by originating application filed by the Commissioner in January 2018. 5 Throughout the proceedings Ronald was serving a sentence of imprisonment. For at least some of that time, Brandon was also incarcerated. It is necessary to recount some (but not all) of the procedural history in this matter in order to reveal the extent of the steps undertaken to afford the respondents procedural fairness in those circumstances. 6 Initially Ronald was self-represented and appeared at all case management hearings via video link. Once served, Francesca informed the Court that she did not oppose the relief sought and did not intend to appear. There was considerable difficulty in effecting service on Jordan and Brandon. The Commissioner brought an application for substituted service, but on 2 May 2018 solicitors (Lawton Gillon) filed a notice of acting on behalf of Ronald, Jordan and Brandon. 7 After some delay, a defence was filed on 22 June 2018. 8 Initially the timetable provided that discovery be made by 14 September 2018. The process of discovery took many months and many extensions of time by way of consent orders. A number of extensions of time were granted by consent. At a case management hearing in December 2018 programming orders were made for the provision of witness statements, lists of documents and an accompanying bundle of documents, submissions and an agreed list of issues. The participating respondents were also granted until 15 January 2019 to provide particulars of their defence. The claim was also referred to mediation. 9 Particulars of the defence were filed on 7 February 2019. 10 At a further case management hearing on 5 March 2019, counsel for the participating respondents disclosed that Lawton Gillon sought to remain on the record only for the purpose of mediation and otherwise did not have instructions, including as to discovery, which remained outstanding, or the other breaches of the programming orders. The other trial programming orders were vacated in the circumstances. 11 The participating respondents provided their list of documents by way of discovery on 16 April 2019. Lawton Gillon filed a notice of ceasing to act on 19 May 2019. 12 At a further case management hearing on 12 June 2019 the matter was programmed to trial, which was then anticipated to proceed in November 2019 or December 2019. 13 In the meantime an issue arose with respect to an objection to a taxation assessment that had been lodged by Ronald. The mediation, planned for August 2019, was adjourned by consent as a result. Chambers was informed that the ATO finalised the objection in late 2019. 14 Further attempts to agree revised programming orders were unsuccessful. 15 On 23 April 2020 Ronald filed another list of documents. There was a further case management hearing on 24 June 2020. Ronald participated in the hearing. He had still not filed any witness statements or affidavit evidence. In acknowledgment of the logistical difficulties which he faced, he was granted another two months to provide witness statements. 16 The Commissioner complied with all trial programming orders by 31 August 2020. 17 Another case management hearing was convened on 1 October 2020. Ronald participated but informed the Court that he had new solicitors, Cooper Webb Lawyers. Accordingly new programming orders were made, including that the time for provision of witness statements was extended to the end of November 2020. 18 Cooper Webb Lawyers filed notices of acting on behalf of all respondents on 14 October 2020. Despite that, the respondents did not comply with the programming orders. 19 At a further case management hearing on 21 December 2020 listed to address the default, and following submissions from counsel for the respondents, the date for compliance was extended to 2 March 2021. However, it was noted that the matter would be listed for hearing and would proceed, whether or not the respondent had representation. 20 The matter was listed for hearing on 21 April 2021. On 1 April 2021 Cooper Webb Lawyers filed a notice of ceasing to act. 21 The respondents were all informed of the hearing date. Arrangements were made for Ronald to appear in person. He was offered the opportunity to go into the witness box and give oral evidence formally at the hearing but he did not so do. A lawyer for Francesca appeared with leave but only in order to indicate on her behalf that she did not oppose the orders sought by the Commissioner. Arrangements were also made for Brandon to participate remotely. He participated by telephone link. He had not complied with any of the directions as to provision of documents or affidavit evidence. He told me he did not wish to make any submissions during the hearing, although as the hearing unfolded it became apparent that he did wish to comment on some matters, and I invited him to do so. Jordan did not seek to participate in the hearing. 22 This history of the proceeding and Ronald's involvement is of particular importance because during the hearing Ronald sought to rely on 'new' evidence which he did not provide at the hearing but said that he would locate and provide. The Commissioner opposed any adjournment to facilitate that course, pointing to Ronald's failure on numerous occasions to comply with programming orders, the many opportunities afforded to Ronald to provide the documents prior to the hearing and the likely prejudice to the Commissioner from the lack of notice about the additional documents, which would inevitably necessitate an adjournment of the hearing and so further delay. I declined to adjourn the hearing. It was unclear when or whether further documents would be produced; it was said by Ronald to be 'possible' that he might provide them. Ronald said at one point that the documents were in the hands of the 'Curtin Tax Clinic'. He also said the documents were in a folder and he knew where the folder was located. He did not explain why no attempt had been made to ask for their production, or why he had not asked his lawyers or other family members to retrieve such documents, other than to point to his incarceration. Whilst I acknowledged the practical difficulties from his incarceration, he had legal representation available to him during certain periods and he also had ample opportunity over the period between the first discovery order (September 2018) and the hearing (April 2021) to make contact with persons who might retrieve and provide the relevant documents on his behalf. 23 I did indicate to Ronald during the hearing that it was open to him to seek to apply after the hearing to re-open the hearing in order to seek to rely on new evidence and to bring a formal application in that regard. In this regard I had in mind authorities such as F.Y.D Investments Pty Ltd v Promptair Pty Ltd [2017] FCA 1097 (White J) and Frigger v Trenfield (No 7) [2020] FCA 1740 (Jackson J). That position was also confirmed in an email (by way of response to an email from Ronald's mother on his behalf) from the court registry confirming that if Ronald sought to adduce additional evidence, he was required to file an interlocutory application applying to reopen the case to permit the admission of further evidence. No such application was accepted for filing. 24 During the hearing Brandon also asked if he could provide further documents. I considered Brandon was in a different position to Ronald, albeit that he also had legal representation during some of the pre-trial proceedings. Ronald had actively participated in the many case management hearings and was familiar with the orders that had been made. He had requested extensions of time on many occasions. He had failed to comply with directions as to identifying documents that he might rely on at trial to be included by the Commissioner in the document bundle. Brandon had not so participated. Further, Brandon said that he had the relevant documents with him in prison and explained what they were: documentation showing the amounts he had paid relating to the property, bills and the like. He said there were about 15 pages and they could be faxed through to the Court. 25 Had Brandon been present in the physical courtroom with the documents in hand, it is likely that such documents would have been shown to counsel for the Commissioner at the hearing and the issue of their tender would have been resolved. Having regard to the difficulties of a COVID19 lockdown in place at the prison where Brandon was located and the fact of his incarceration, it was not possible for the documents to be faxed during the course of the hearing. 26 Although formally opposing any reliance on fresh evidence, counsel for the Commissioner was content to proceed on the basis that Brandon would arrange to have the pages faxed to the Court after the hearing; the documents would be provided to the Commissioner's solicitors; and the Commissioner could file and serve written submissions as to the evidentiary value if they wished to do so. As matters proceeded, documents were received from Brandon and the Commissioner filed short submissions. I will return to those documents in due course.

The factual background 27 The Commissioner relied on a bundle of documents that were tendered without opposition and on certain exhibits to an affidavit of George Khouri of the ATO (his affidavit was not otherwise relied upon). I record that Ronald did not accept that the taxation assessments in the bundle or exhibits were accurate, but he did not oppose the tender of the bundle or exhibits. 28 The following matters are extracted from the documentary record. 29 On 21 July 2016, the ATO sent Ronald a letter (care of Bedford Accounting Services) advising him of the intention to conduct an audit of his affairs. The letter noted that the ATO was looking into the following issues for the income years ending 30 June 2009 to 30 June 2014 (inclusive): (a) unidentified income sources for Ronald and a company known as Tekwise Pty Ltd as trustee for the Parr Family Trust; (b) rental income and deductions claimed by Ronald and Tekwise as trustee for the Parr Family Trust; (c) rental expenses claimed by Tekwise as trustee for the Parr Family Trust; (d) sources of funds to purchase properties by Ronald and Tekwise; (e) capital gain events from the sale of real properties for Ronald and Tekwise; and (f) income derived from the sale of shares for Ronald and Tekwise as trustee for the Parr Family Trust. 30 Bedford Accounting Services replied to the letter, providing certain documents, and also enclosed a statutory declaration made by Ronald on 11 August 2016. In the statutory declaration Ronald explained his incarceration and said that he was unable to access his financial records and that his former accountant, who set up the Parr Family Trust and Tekwise and was in control of their financial affairs, had passed away. Ronald said that he has had friends and business interests in different countries in the past and he would need to contact them to get information. He said he had received financial gifts from friends and businesses and that cash was the preferred method used. He stated that he had financial loans in place with friends, and that some of the loans were by way of verbal agreements from friends in Australia and overseas. He said that some of the lenders have passed away between 2009 and 2014 and that some were uncontactable, but that most of the loans were cash. Some of the loan agreements were for funds to be repaid in cash after agreed deadlines, and this would include interest. 31 He also stated that his financial records were destroyed sometime in 2015 in a break-in to a 40 foot container on-site at a rural address, and that the caretaker of the property informed him of the damage to the container. 32 Ronald also said in the statutory declaration that he would like to review the ATO's records 'to identify any errors or omissions', after which he said 'a voluntary disclosure "could" be made early'. 33 On 23 September 2016 the ATO issued a request for information. Ronald's tax agent responded on 16 and 28 November 2016. The 28 November 2016 response indicated that the difference between money declared and the amounts in bank statements mostly reflected repayment of loans given by Ronald, and also stated that $100,000 of the funds for a purchase of property in Morley came from a person who had since died. 34 On 15 February 2017 two ATO officers conducted a recorded informal interview with Ronald at the prison. They questioned him about a number of matters. Based on the transcript, the interview went for some 90 minutes. Relevantly the Commissioner refers to the following topics of discussion recorded in the transcript of the interview: (a) the Parr Family Trust's accounts recorded significant income in the 2010 income year, but no income tax return had been lodged; (b) Ronald had claimed as deductions from his taxable income certain expenses claimed to be in relation to a rental property, but that property had been sold before the income years in which the expenses were claimed; (c) Ronald had made a capital gain on the sale of a property in the 2010 income year which he had not declared in his return for that year; (d) large amounts of money described only as 'cash' had been deposited into his bank accounts and which were not declared as income; and (e) it was the ATO's intention to assess those cash deposits as income unless the source of the payments was established. 35 On 17 February 2017 Ronald signed the transfers for the two properties he owned at 58 Broun Avenue and 58A Broun Avenue, the consideration identified in both being the 'gift of love'. 36 On 24 March 2017 the transfers were registered. The property at 58A Broun Avenue was transferred to Francesca and the property at 58 Broun Avenue was transferred to Jordan and Brandon as tenants in common. 37 On 27 March 2017 the ATO finalised the audit and issued 'Reasons for Decision' to Ronald. The reasons identified $2,070,403.71 in unreported assessable income. The ATO determined that the first respondent owed $1,939,952.62 in income tax, penalties and interest for the income years 2009 to 2014. 38 On 6 April 2017 the Commissioner issued amended assessments and penalty assessments to Ronald giving effect to the outcome of the audit. 39 On 23 May 2018 the Commissioner commenced recovery proceedings in the Supreme Court of Western Australia with respect to Ronald's tax related liabilities for the income years 2009 to 2014. 40 On 5 September 2018, judgment was entered for the Commissioner against Ronald by Master Sanderson in the amount of $2,149,411.03 for the first respondent's 2009 to 2014 taxation liabilities. 41 The first respondent did not appeal the judgment debt nor seek to have it set aside. 42 However, the exhibits that were tendered from Mr Khouri's affidavit indicate that on 29 November 2019 notices of amended assessments were issued to Ronald for the financial years ending 30 June 2009, 30 June 2010, 30 June 2012 and 30 June 2014. 43 Further, on 22 April 2021 the Deputy Commissioner of Taxation signed a certificate under s 350-10(3) in Schedule 1 (Collection and recovery of income tax and other liabilities) of the Taxation Administration Act 1953 (Cth) relevantly certifying that: (a) notices of amended assessment for income tax for the years 2011 and 2013 were issued on 6 April 2017; (b) notices of amended assessment for income tax for the years 2009, 2010, 2012 and 2014 were issued on 29 November 2019; (c) Ronald has a tax-related liability for each liability referred to in the certificate and for general interest charge on the unpaid amount of each liability; and (d) from 22 April 2021, an amount of $1,960,665.61 was payable by Ronald under a taxation law to the Commissioner in respect of the tax-related liabilities referred to in the certificate, inclusive of general interest charge.

Summary of the pleaded cases 44 The Commissioner contends that the Court can be satisfied that the intent of the transfers of the properties to Francesca, Jordan and Brandon was to hinder or delay Ronald's creditors, and that the Commissioner has standing, as a person prejudiced by that conduct, to seek orders that the transfers were void. 45 The Commissioner pleads that such intent is to be inferred from: the familial relationship with the transferees; the voluntary nature of the transfers for no real consideration in circumstances where the properties had real value; the fact that Ronald knew about the ATO's tax examination prior to signing the transfers, knew it was likely that assessments would issue as a result and that therefore he would be liable for amounts in the future; and the fact that the properties were assets from which the Commissioner could otherwise recover payments. 46 At the time of filing their amended defence and providing particulars, Ronald, Jordan and Brandon were represented by solicitors Lawton Gillon. By their pleaded defence, the respondents contend that: (a) the taxation assessments are incorrect, contain errors and (it was submitted) are the subject of proceedings in the Administrative Appeals Tribunal (AAT); (b) sometime in 2000 Ronald subdivided a property situated at 58 Broun Avenue and created lots 58 and 58A, and had built a house on each lot; (c) those properties were the main matrimonial assets with his former wife Rachel Kim, the mother of Jordan and Brandon; (d) Ms Kim agreed to make no claim on those assets if Ronald lived with Jordan and Brandon in 58A and transferred 58 to Jordan and Brandon 'at an appropriate time and when they were an appropriate age'; (e) the agreement with Ms Kim was an oral agreement; (f) in June 2016 Ronald and Ms Kim determined that it was an appropriate time to transfer the property to Jordan and Brandon because Brandon had turned 19 years old, was maintaining the property and was providing financial support to Ronald; (g) in June 2016 Ronald also determined to transfer 58A Broun Avenue to Francesca as she was living in the house with the two young children of their marriage, was maintaining the property and was providing financial support to Ronald; (h) Ronald was incarcerated from mid-November 2015 and was unable to manage the properties; (i) he was told by NAB (through which he presumably had arranged insurance) that because of his incarceration any claim made by him under the home and contents policies for the properties would not be paid; (j) Francesca had been unable to obtain home and contents insurance in her name as the properties were in Ronald's name; (k) despite deciding in June 2016 to transfer the properties, there were delays in bringing it into effect and the transfers were not lodged until 24 March 2017; (l) in 2014 Tekwise paid off a loan due to Citibank, which held the certificate of title as security for the loans; (m) in June 2016 Francesca contacted Citibank to seek release of the certificates of title and appointed Vincent Settlements to act on behalf of Ronald in transferring the properties; (n) Francesca was told by Citibank that she needed to attend a Citibank branch to obtain a release form for the purpose of obtaining the certificates of title, that Tekwise needed to close the account and that the request to close the account needed to come from Ronald; (o) Francesca was a director of Tekwise; (p) it was not until November 2016 that Francesca was able to visit the Perth Citibank branch and collect the release form; (q) Francesca sent the release form to Ronald and he signed it and returned it to her, and she then provided it to Citibank in December 2016; (r) in January 2017 Ronald took steps to obtain permission from the prison administration to call Citibank to authorise closure of the Citibank account, and he called Citibank on 23 January 2017; (s) on 24 January 2017 Francesca, Jordan and Brandon attended Vincent Settlements and signed the transfers; (t) Mr Ly of Vincent Settlements received the certificates of title from Citibank on 20 February 2017; (u) Mr Ly tried to arrange a prison visit in December 2016 but due to travel commitments, the Christmas period and the need for Mr Ly to obtain security clearance he did not visit Ronald until 22 February 2017; and (v) from that time Mr Ly made the necessary arrangements for the transfer of the properties. 47 The participating respondents plead that the first respondent had no knowledge as at June 2016 that the ATO was carrying out any audit and he did not believe there was a risk that he owed any money to the ATO or that the properties could be used to meet any such debts. It is asserted that in the circumstances Ronald did not transfer the properties with the intent to defraud creditors but for the reasons pleaded. 48 The participating respondents also provided particulars of their defence. Relevantly those particulars state that the determination by Ronald and Ms Kim in June 2016 that it was an appropriate time to transfer the property was 'a determination made independently without conversation between 2 parties'. The particulars identify that Francesca spoke to an 'unknown representative' at Citibank. The particulars relevantly attach the 25 July 2016 letter from the ATO to Ronald and also attach two prison records. The first indicates that Ronald asked on 11 January 2017 to call Citibank to close 'my account' and said that he had sent letters to Citibank. The second is a letter from Ronald to the prison superintendent date 22 January 2017 seeking permission to call Citibank to close 'my account' and bearing an endorsement that a phone call was facilitated on 23 January 2011. The Commissioner did not oppose the Court referring to those prison records. 49 It should be noted that the respondents did not plead any reliance on s 89(3) (see further below). 50 It should also be noted that subsequent to the hearing, the AAT proceedings referred to by Ronald were dismissed. During the hearing I asked counsel about the status of the AAT proceedings and the position was confirmed by supplementary submissions filed by the Commissioner, which attached a copy of the AAT's order dismissing the application dated 27 April 2021.

Statutory context 51 Section 89 of the Property Law Act provides as follows: Voluntary conveyances to defraud creditors voidable (1) Except as provided in this section, every alienation of property made, whether before or after the coming into operation of this Act, with intent to defraud creditors is voidable, at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated for valuable consideration and in good faith or upon good consideration and in good faith to any person not having, at the time of the alienation, notice of the intent to defraud creditors. 52 It is not in issue in this case that the transfers constituted the alienation of property. The real issues in this matter are whether the transfers were undertaken with intent to defraud creditors and whether the Commissioner is a person prejudiced by the transfers.

Principles 53 Section 89 of the Property Law Act is the modern manifestation of the statute 13 Eliz I c5, entitled 'An Act against fraudulent Deeds, Gifts, Alienations, etc' 1571, and commonly referred to as the Elizabethan Statute. Section 37A of the Conveyancing Act 1919 (NSW) is the New South Wales modern manifestation of that statute, and is substantially identical to s 89 of the Property Law Act. There are equivalent provisions in all Australian States and Territories, New Zealand and the United Kingdom: Commissioner of Taxation v Oswal (No 6) [2016] FCA 762 at [38]. 54 The principles governing the operation of s 37A of the Conveyancing Act were set out by the High Court in Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546. The reasoning in Marcolongo is of equal application to s 89 of the Property Law Act: Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1 at [529]; and Commissioner of Taxation v Oswal [2012] FCA 1507 at [22]. 55 The Full Court in Zreika v Royal [2019] FCAFC 82; (2019) 271 FCR 65 summarised the principles considered in Marcolongo as follows: [88] The relevant principles in relation to the elements of s 37A of the Conveyancing Act and, in particular, the intent to defraud creditors, may be briefly stated. The High Court considered s 37A of the Conveyancing Act in Marcolongo v Chen. French CJ, Gummow, Crennan and Bell JJ referred to the history of s 37A and its predecessor, the Statute 13 Eliz. 1 c. 5. (the Elizabethan Statute). Their Honours made the point on two occasions in the course of their reasons that s 37A, like the Elizabethan Statute before it, should receive a liberal construction in effecting the purpose of suppressing fraud (at [20] and [58]). Section 37A refers to an intent to defraud creditors and means delay, hinder or [otherwise] defraud creditors as the Elizabethan Statute had provided (at [19]). Whether there is an intent to defraud creditors involves a question of fact concerning actual knowledge and is to be distinguished from the purely equitable doctrine of constructive notice or constructive knowledge (at [26]-[28]). However, it is not necessary to prove a desire to cheat or swindle those prejudiced. Furthermore, whilst it is necessary to show the existence of an intention to hinder, delay or defeat creditors, it is not necessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss (at [32]). Finally, it is not necessary that the intent to defraud creditors be the sole or predominant intention (at [57]). 56 The intention to hinder, delay or defeat creditors may be inferred. In Marcolongo at [25]-[26] the majority stated that an actual intention to delay or defeat creditors, even in the absence of direct evidence of intention, may be inferred if the disposition is voluntary, or for nominal rather than for valuable consideration, where the necessary consequence of the alienation is to put the property beyond the reach of the debtor's creditors. 57 In Oswal (No 6) Gilmour J usefully collected the authorities as to when the Court might infer intent as follows: [66] There are various circumstances in which it is recognised that the Court will move readily to infer the existence of the requisite intention. These include where: (1) the 'natural and probable consequences' of the disposition is the defeat or delay of creditors: Freeman v Pope (1870) 5 Ch App 538 at 541; Marcolongo at [24]; Bell Group Ltd (in liq) at [9146]; (2) the alienation is made voluntarily: Lloyds Bank Ltd v Marcan [1973] 1 WLR 1387 at 1390-1 per Russell LJ, referred to with approval by the plurality in Marcolongo at [32]; Marcolongo at [25]; (3) the alienation is made, relevantly, for no consideration by a person in financial difficulties: Cannane at [13]; (4) the alienation is made in favour of a family member: Noakes v J Harvy Holmes & Son (1979) 37 FLR 5 at 10; Cannane at [92(4)] per Kirby J; and (5) the alienation is made in haste or proximately to one or more events indicating financial stress on the part of the disponor: PT Garuda 35 FCR 515 at 525 and 527; Marcolongo at [46], [80], [83], [84]; and Green v Schneller at [86]. 58 The reference to 'creditors' includes present or future creditors: Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557. Impending indebtedness is sufficient: Barton v Deputy Commissioner of Taxation (Cth) (1974) 131 CLR 370 at 374. 59 In Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6; (2006) 227 CLR 278 at [32], the High Court accepted that the Commissioner was a 'creditor' for the purposes of s 121 of the Bankruptcy Act 1966 (Cth) in respect of impugned transactions occurring in August 1987. This conclusion was reached notwithstanding that notices of assessment were not issued by the Commissioner to the defendant until 2000 and those assessments related to years postdating August 1987, being the 1992 to 1999 income years (s 121 of the Bankruptcy Act employs similar language to s 89 in the context of transfers to defeat creditors). 60 There are conflicting first instance decisions as to whether the onus for the purpose of s 89(3) of the Property Law Act and its analogues is on the person bringing the claim or on the person asserting that s 89(3) applies. The Full Court referred to this conflict in Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) [2019] FCAFC 90 at [81]-[82] (Yates, Beach and Moshinsky JJ). It was not necessary for the Full Court to resolve the issue in that case. First instance decisions of this Court have favoured the latter approach: Royal v El Ali [2016] FCA 782 at [217] (Davies J); Oswal (No 6) at [115]-[118]; and ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) v Binetter, in the matter of ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) [2018] FCA 952 at [61]-[64] (Lee J).

Consideration - Ronald's intention 61 This is a case where an actual intention to delay or defeat creditors, even in the absence of direct evidence of Ronald's intention, may be inferred, having regard to the following matters. 62 Ronald knew about the ATO examination into his taxation affairs from July 2016 when he received the letter from the ATO, and he knew from that letter that topics of examination included his unidentified personal income sources, sources of funds for acquisitions, rental income and expenses. 63 Ronald's tax agent was communicating with the ATO on Ronald's behalf about his tax affairs during the period August 2016 to late 2016. Those communications highlighted items of interest such as the treatment of rental income, expenses and the difference between money declared and the amounts recorded in bank statements. One of the letters included a statement that the accountant was unable to produce any documents to support some of the deductions. 64 Ronald knew from the ATO's 25 January 2017 letter that the ATO wished to interview him to discuss the audit and ask questions pertaining to his business and the preparation of his income tax returns. He then participated in the interview on 15 February 2017. 65 Ronald was therefore on notice by at least 15 February 2017 of the ATO's interest in the particular matters referred to at [29] and [34] above. 66 I infer that at that time it would have been obvious to Ronald that the investigations by the ATO were likely to lead to the ATO determining that he had understated his income and overstated his expenses because, at minimum, the ATO officers had informed him of its intention to assess unexplained cash deposits as income unless the source of the payments was established. Ronald had been unable to provide such supporting evidence despite the assistance of his accountant. It was readily apparent that the circumstances would likely give rise to a significant tax liability (as they did). Ronald was in a position to know first-hand the extent of the cash payments he had received and their purpose. 67 Two days after the interview (17 February 2017) he signed the transfers in favour of the family members and for no consideration (the assertion in the defence to the effect that the transfers were signed by Ronald on 22 February 2017 is not supported by the documentary evidence). The attestation date of 17 February 2017 has been endorsed on both transfers by Mr Ly. The transfer documents in evidence do not disclose any different date for attestation by any of Francesca, Jordan or Brandon. 68 During the course of the hearing Ronald accepted that an amount was due by him to the ATO, but said that it was 'not the amount of the two properties … it could be one property'. He said: And my understanding was that I didn't have to pay the amount the ATO was saying, I believe[d] it was much less. And if I had to sell the properties, then the properties were safe in other people's hands. 69 Ronald also said that if he needed to sell the properties 'or give one property to the ATO' to pay the Commissioner he would do so 'or someone else' would do so, a submission that suggests he well understood that the proceeds of those properties would otherwise have been available to pay his liabilities to the Commissioner. There is no evidence, and no credible inference in Ronald's favour that can be drawn, as to why Ronald gave up his capacity to sell the properties himself and instead implemented a regime by which if he wanted to raise funds from their sale he was dependent upon Francesca or Jordan and Brandon, or all of them, selling properties that they would ostensibly own in their own right and making proceeds available to Ronald. 70 Ronald sought to explain by his oral submission that he transferred the properties while he was incarcerated because it was easier for other people to manage them. That explanation was not convincing. There was no evidence that Francesca, Jordan or a third party such as an agent or tenant were unable to attend to property management requirements. 71 I also have regard more generally to the proximity of the audit and interview to the transfers. 72 I have also considered the ostensible explanation for the transfer of the properties that was pleaded in the filed defence. That explanation was unsupported by any evidence, apart from the two prison records referred to at [48]. 73 There was an unexplained failure to evince any evidence: (a) from Ms Kim, as to the oral agreement allegedly made in 2001 to the effect that 58 Broun Avenue would be held on trust by Ronald or as to the determination allegedly made by her and Ronald in June 2016 that it was an appropriate time to effect the transfer of 58 Broun Avenue; (b) from Vincent Settlements or Mr Ly as to the timing of instructions to attend to the transfer of the properties or the steps taken to visit Ronald in prison; (c) of the insurance policies that allegedly would deny cover to Ronald because of his incarceration; (d) from Citibank as to its communications with Francesca and Ronald relating to the production of the certificates of title or the closure of an account in the name of Ronald or Tekwise (noting Ronald claimed in the prison records to have written to Citibank in this regard); (e) of bank account records from or held by Citibank that may have corroborated the information as to closure of the relevant account and production of the certificates of title; (f) from Francesca, as to the circumstances of the transfer of number 58A Broun Avenue to her or as to any relevant information she might have about the transfer of number 58 to Jordan and Brandon; (g) from Francesca about her alleged communications with Citibank and Vincent Settlements; and (h) from Brandon or Francesca about their alleged financial support of Ronald. 74 Such evidence, particularly any documentary evidence, may have provided cogent, contemporaneous and comprehensive evidence as to some of the matters pleaded in the defence. Documentary evidence could have been sought by subpoena, and it must be recalled that there have been lawyers on the record in this proceeding for the respondents. 75 The notes obtained from the prison ([48] above) do not establish anything beyond contact having been made by Ronald with Citibank about his account on or about the given dates. There is no reference to the reason for closure, or to any transfer, certificates of title or release of security. The notes of themselves do not establish the matters pleaded in the defence. 76 I have also had regard to the documents provided by Brandon after the hearing. Those documents were as follows: (1) Commonwealth Bank statement dated 31 March 2015 for Zin Tae Pty Ltd for the period 19 January 2015 to 31 March 2015 (page 1 of three only); (2) bank statement for Zin Tae Pty Ltd for the period 14 October to 1 November 2015 (page 2 of four only); (3) ANZ form in which Jordan and Brandon are stated to be 'beneficiaries in existence' and the trustee is stated to be Tekwise dated 13 January 2010 (page 3 of three only); (4) Esanda guarantee provided by Ronald in the amount of $62,536.80 for a loan to Tekwise atf The Parr Family Trust dated 13 January 2010 and relating to a Holden Captiva; (5) tax invoice (two pages) from Seamus Rafferty (solicitor) to Ronald for attending an appeal; (6) trust account ledger of Seamus Rafferty for Ronald for the period 19 October 2015 to 23 September 2016 (two pages); (7) quote from ECOfusion to Brandon at Unit 1/58 Broun [Avenue] for flooring supply dated 17 December 2015; (8) Synergy bill to Zin Tae Pty Ltd dated 22 January 2016 for $103.20 at Unit 1/58 Broun Avenue; (9) Synergy bill to Zin Tae Pty Ltd dated 4 April 2016 for $46.60 at Unit 1/58 Broun Avenue; (10) Water Use and Service Charge dated 30 March 2017 (recipient not apparent); and (11) Water Use and Service Charge dated 31 January 2018 (recipient not apparent). 77 The following can be said about the documents. Documents 1 to 6 might perhaps be related to expenses that were claimed by Ronald and so relate to the level of his indebtedness to the Commissioner, but so much is entirely unclear. The entries in the bank statements are in the main debits for small food and fuel expenses, with three cash deposits that have no useful label. Having regard to the quantum of the liability to the Commissioner, the relatively small amounts referred to in the documents are of little consequence, even if they were shown to be relevant. Document 3 refers to Jordan and Brandon as beneficiaries and Tekwise as the company trustee, and states that Jordan and Brandon reside at 2/58 Broun Avenue, but it does not evidence that they have any interest in the real properties owned by Ronald. Document 7 suggests that Brandon arranged for a quote for flooring prior to the transfer date, but it does not disclose whether the work was undertaken, whether Brandon sought the quote for himself or on behalf of anyone else or who paid for it. Documents 8 to 11 are utility bills that are consistent with either occupation or ownership of a property and therefore do not assist in circumstances where there was no issue that Brandon was living in number 58 Broun Avenue in a period prior to the transfers. The water bills post-date the date on which the transfers were executed. 78 In summary the documents are not probative evidence of any of the matters in the pleaded defence. They do not establish an absence of liability to the Commissioner. They do not establish that the respondents had any interest in the properties as beneficiaries prior to the transfers, whether by way of the alleged agreement between Ronald and Ms Kim or otherwise. They do not establish that Brandon incurred expenditure with respect to number 58 Broun Avenue prior to the July 2015 letter from the ATO or prior to the transfers that is consistent with ownership by him and Jordan rather than occupation, or that otherwise establishes a beneficial interest in the property prior to that time. 79 Therefore, although I have admitted the documents into evidence as requested by Brandon, they do not assist the respondents. 80 Having regard to all of those circumstances, and the matters collected in Oswal (No 6) (at [57] above), an inference can readily be drawn that Ronald executed the transfers to hinder, delay or defeat creditors. It is apparent that the natural consequence of the transfers was that creditors would be defeated or delayed. The alienation of Ronald's property was made voluntarily, for no more than nominal consideration of the 'gift of love', to family members, and proximate in time to the ATO communications and interview that highlighted Ronald's taxation liabilities, even though the exact amount of the liability was not then known. 81 The Commissioner submitted that the Court should draw a Jones v Dunkel inference with respect to the absence of evidence from Mr Ly of Vincent Settlements and Francesca. As elucidated by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-202, whether Jones v Dunkel should be applied depends on establishing three conditions: (a) the missing witness would be expected to be called by one party rather than the other; (b) their evidence would elucidate a particular matter; and (c) their absence is unexplained. 82 I accept that those conditions are met with respect to Mr Ly and Francesca and that it can be inferred that their evidence would not have assisted Ronald. However, even without relying on Jones v Dunkel, I would have inferred the requisite intent for the purpose of s 89(1). 83 Further as to the timing of the transfers, Ronald claims in the defence to have decided in June 2016 to transfer the properties. Even if Ronald gave evidence to that effect (which he did not) it would have been open to some scrutiny absent any corroborative evidence, noting that the timing of that decision is curiously said to have been one month before the letter from the ATO. 84 Finally, even if it were established that Ronald had a genuine belief that it would be easier to transfer the titles because of his incarceration so that the properties could be maintained and insured, and even if Brandon expended money on the property, such matters would not lead to a different result. It is not necessary that the intent to defraud creditors be the sole or predominant intention: Marcolongo at [57].

Consideration - the Commissioner as a future creditor 85 I am satisfied that the Commissioner is a person prejudiced within the meaning of s 89(1) of the Property Law Act. The Commissioner has been denied the opportunity to access the properties formerly owned by Ronald to meet debts due to the Commonwealth and payable to the Commissioner. 86 A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a taxation law, including a liability the amount of which is not yet determined: s 255-1(1) of Schedule 1 of the Taxation Administration Act. An amount of a tax-related liability that is due and payable is a debt due to the Commonwealth and payable to the Commissioner: s 255-5(1) of Schedule 1 of the Taxation Administration Act. 87 It was open to the Commissioner to pursue enforcement regardless of the pendency of any proceedings brought by Ronald in the AAT: s 14ZZM and s 14ZZR of the Taxation Administration Act. See generally Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473 at [28]-[29], [40], [44]. 88 Under s 350-10(1) and 350-10(3) of the Tax Administration Act, the certificate issued in this case is prima facie evidence that the assessment of income tax liability was properly made and that the amounts and particulars of the notices of assessment are correct. There is no evidence before the Court that impugns that liability. 89 However, the Commissioner acknowledges that at the time the properties were transferred, the amended assessments of Ronald's taxation liabilities had not been issued and so the tax liabilities were not due. Section 5-5 of the Income Tax Assessment Act 1997 (Cth) prescribes when income tax is payable. Under s 5-5(7) of that Act, where amended assessments have been issued the liability is due and payable within 21 days after the Commissioner gives notice. 90 Despite this, the authorities are clear that it is sufficient if the intention is to put property out of the reach of future creditors: see [58]-[59] above. I am satisfied in this case that the Commissioner was an identified and identifiable future creditor at the time of the transfers.

Section 89(3) 91 Finally, I note s 89(3). No respondent asserted that it applied. I would however, follow the approach of the first instance judges of this Court in the authorities referred to at [60] above, and maintain that the onus is on any person asserting that s 89(3) applies. A judge of this Court should follow an earlier decision of another judge unless of the view that it is plainly wrong: Hicks v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 757 at [75]. I do not consider those decisions are plainly wrong having regard to the reasoning, particularly that set out in Oswal (No 6). None of the respondents sought to satisfy or satisfied such onus. The limited documentary evidence provided by Brandon is insufficient and of such little probative force that it does not persuade me that Brandon held any beneficial interest in the relevant property. Nor does it otherwise establish any good faith defence. Section 89(3) does not assist the respondents in this case. 92 And, as noted, Francesca did not oppose the declarations sought by the Commissioner. Although Jordan was at some point represented, he assumed no role once solicitors were no longer on the record and he did not participate in the hearing.

Conclusion 93 There will be declarations to the effect that the transfers are void. 94 In addition to declaratory relief, the Commissioner sought a general order that would bind the Registrar of Titles. The Commissioner should provide a minute of the precise consequential orders sought in that regard (conferring with the Registrar of Titles as appropriate) and should also address the question of costs. The Commissioner is entitled to an order for costs. Having regard to the position taken by each of Francesca and Jordan, my preliminary view is that no costs order should be made against them. Proposed orders should be provided by the Commissioner within seven days. 95 There will be declarations and orders accordingly. I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.