Consideration
74 The question to be resolved, namely whether the Trustees established the facts necessary for the rebuttable presumption to arise for the purposes of s 128B(5) of the Bankruptcy Act, requires a consideration of the proper construction of that section. The dispute that arises concerns: first, the meaning of the phrase "business carried on by the transferor" as used in subs 128B(5)(a) of the Bankruptcy Act; and secondly, who bears the onus of showing what books, accounts and records are usually kept in relation to the "business".
75 As to the first issue, as is evident from the parties' respective submissions, Mr Do and Do Construction contend for a narrow construction of s 128B(5)(a), while the Trustees contend for a broad construction. Mr Do and Do Constructions say the subsection is concerned with the commercial activity of the bankrupt at the relevant time while the Trustees say the subsection can be construed more broadly and can include activities such as those described at [66] above at the relevant time, even if the transferor was not carrying on a business.
76 The starting point for ascertaining the meaning of a statutory provision is the text, while at the same time regard should be had to context and purpose: see SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at [14]. Focus on the text requires consideration of the natural and ordinary meaning of the words in the provision. But the text must also be considered in context which includes the statute as a whole. In our opinion when that is done, s 128B(5) of the Bankruptcy Act is to be construed in the narrow way contended for by Mr Do and Do Construction. That is apparent both from the ordinary meaning of the text and a consideration of the provision in context.
77 The text of s 128B(5) of the Bankruptcy Act is set out at [59] above. While there may be some ambiguity about the meaning of the phrase "the business carried on by the transferor", in our view, the natural meaning of the words supports the narrow construction. The subsection focuses on the business of the transferor. That is to be construed as the business, if any, carried on by the transferor at the time of the impugned transactions. The use of the definite article in s 128B(5) cannot carry with it any implication that the transferor must be carrying on a business. There is no indication in the text of s 128B(1), or the extrinsic materials, that superannuation contributions to defeat creditors by persons who later become bankrupt are only void if the transferor was carrying on a business at the time of the impugned transfer.
78 The books, accounts and records that are required to be kept are the books, accounts and records as are usual and proper for the business, if any, carried on by the transferor. The plain meaning of those words does not support a construction where "the business carried on by the transferor" could extend to activities carried on by a retiree, a person engaged in unpaid domestic duties or a person who may be engaged in full time employment but does not carry on the business, in terms of having ownership and/or control over its activities, in which he or she is employed. Those undertakings could not be classified as a "business".
79 That construction is supported by a consideration of the context and purpose of the provision. To that end, it is informative first to have regard to the history of s 128B of the Bankruptcy Act. It was introduced into the Bankruptcy Act by the Bankruptcy Legislation Amendment (Superannuation Contributions) Act 2007 (Cth). The explanatory memorandum which accompanied the Bankruptcy Legislation Amendment (Superannuation Contributions) Bill 2006 (Cth) explained at [27] that "the new section 128B describes when a superannuation contribution made by the person who later becomes bankrupt is void against the bankruptcy trustee". It was said to be based on existing s 121 of the Bankruptcy Act. At [30] the explanatory memorandum noted in relation to s 128B(5) that:
Subsection 128B(5) provides a rebuttable presumption of insolvency for the purposes of subsection 128B(2) where the transferor had not kept proper books and records relating to the time of the transfer. This is line with existing subsection 121(4A).
80 Amendments to s 120 and s 121 of the Bankruptcy Act had been made the previous year by the Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 (Cth) (2006 Bankruptcy Amendment Act). Those sections concern respectively undervalued transactions and transfers of property made to defeat creditors. The amendments made by the 2006 Bankruptcy Amendment Act to s 120 and s 121 introduced respectively s 120(3A) and s 121(4A). Section 121(4A) is identical to s 128B(5) and s 120(3A) is in largely identical terms to s 128B(5). The explanatory memorandum which accompanied the Bankruptcy Legislation Amendment (Anti-avoidance) Bill 2005 (Cth) provided in relation to the introduction of those subsections:
Rebuttable presumption of insolvency
8. A further proposed amendment will create a rebuttable presumption of insolvency for the purposes of sections 120 and 121 of the Act. A presumption will arise that the transferor was insolvent at the time of the transfer if it is established that the transferor had not, in respect of that time, kept proper 'books, accounts and records'; or where, having kept the appropriate books, accounts and records in relation to that time, the transferor had failed to preserve them. A similar presumption will be introduced in relation to Division 4A of Part VI of the Act.
9. These amendments are proposed on the basis that it is usual commercial practice to keep these books and records. This removes the incentive to avoid making, hiding or destroying, records that would demonstrate insolvency. This amendment will overcome some of the difficulties faced by trustees when, for example, endeavouring to establish an intention on the bankrupt's behalf to defeat the interests of creditors under section 121. The bankrupt will of course have the opportunity to rebut the presumption.
(Emphasis added.)
81 The explanatory memorandum, referring as it does to existing s 121(4A) of the Bankruptcy Act, supports the narrow construction. That is, the legislature expressly noted that s 121(4A) is concerned with usual commercial practice and it must follow, in the case of s 128B(5), that it is similarly concerned with usual commercial practice on the part of the transferor. That it does suggests that the purpose of s 128B(5) was to permit a finding that would lead to a rebuttable presumption of insolvency where the transferor had not followed usual commercial practice in maintaining books and records in relation to his or her business.
82 There are, as the primary judge observed, no authorities which have considered s 128B(5) of the Bankruptcy Act nor it seems the construction of its analogues in s 120(3A) or s 121(4A).
83 The primary judge had regard to s 286 of the Corporations Act in construing the section. It relevantly provides:
(1) A company, registered scheme or disclosing entity must keep written financial records that:
(a) correctly record and explain its transactions and financial position and performance; and
(b) would enable true and fair financial statements to be prepared and audited.
The obligation to keep financial records of transactions extends to transactions undertaken as trustee.
The term "financial records" is defined in s 9 of the Corporations Act and includes, among other things, invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers.
84 As can be seen, s 286 of the Corporations Act imposes on a company, or other specified entity, a positive obligation to maintain financial records to a particular standard. It is not an analogue of s 128B(5) of the Bankruptcy Act and decisions in relation to s 286 of the Corporations Act do not assist in the construction or application of s 128B(5) of the Bankruptcy Act.
85 In the course of argument we were taken to s 270 of the Bankruptcy Act. That section relevantly provides:
(1) A person who has become a bankrupt after the commencement of this Act and:
(a) has not kept such books, accounts and records as are usual and proper in any business carried on by him or her and as sufficiently disclose his or her business transactions and financial position during any period while the business was being carried on within the period of 5 years immediately preceding the date on which he or she became a bankrupt; or
(b) having kept such books, accounts or records, has not preserved them;
commits an offence and is punishable, upon conviction:
(c) in the case of a person who has previously been either a bankrupt whose bankruptcy has not been annulled or a person whose affairs have been administered under a personal insolvency agreement, a deed of assignment or a deed of arrangement under this Act or the repealed Act or who has made a composition or arrangement with creditors under this Act or the repealed Act-by imprisonment for a period not exceeding 3 years; and
(d) in the case of any other person-by imprisonment for a period not exceeding 1 year.
…
(Emphasis added.)
86 As is evident, s 270 does not use the identical phrase to that found in s 128B(5) of "such books, accounts and records as are usual and proper in relation to the business carried on by the transferor". But it bears some relationship to s 128B(5) of the Bankruptcy Act in the requirement for the bankrupt to have kept "such books, accounts and records as are usual and proper in any business carried on by him or her" and which "sufficiently disclose his or her business transactions and financial position". That is, like s 128B(5), s 270 focusses on financial records relating to any business carried on by the bankrupt.
87 Analogous provisions to s 270 of the Bankruptcy Act (found in UK bankruptcy legislation and the predecessor legislation to the Bankruptcy Act), which required a bankrupt to have kept such books and records as sufficiently disclose his or her business transactions and/or financial position, have been the subject of consideration, both as to their construction and what is required to prove a breach.
88 As to the question of the construction of those analogous provisions, the starting point is Ex parte Board of Trade; in Re Mutton (1887) 19 QBD 102. In that case, the question before the court was whether the bankrupt had omitted to keep books of account required by s 28 of the Bankruptcy Act 1883 (UK) (UK Bankruptcy Act 1883). That section relevantly provided
28. Discharge of bankrupt.
…
(2.) On the hearing of the application the Court shall take into consideration a report of the official receiver as to the bankrupt's conduct and affairs, and may either grant or refuse an absolute order of discharge, or suspend the operation of the order for a specified time, or grant an order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the bankrupt, or with respect to his after-acquired property:
Provided that the Court shall refuse the discharge in all cases where the bankrupt has committed any misdemeanor under this Act, or Part II. of the Debtors Act, 1869, or any amendment thereof, and shall, on proof of any of the facts herein-after mentioned, either refuse the order, or suspend the operation of the order for a specified time, or grant an order of discharge, subject to such conditions as aforesaid.
(3.) The facts herein-before referred to are -
(a.) That the bankrupt has omitted to keep such books of account as are usual and proper in the business carried on by him and as sufficiently disclose his business transactions and financial position within the three years immediately preceding his bankruptcy:
…
(Emphasis added.)
89 In Re Mutton the bankrupt was a hatter but had also acquired a parcel of land, adjacent to land he already owned, with the intention of selling the two parcels together. The appellant argued that the bankrupt ought to have entered the land transactions in his books. The contrary argument was that a person was only bound to keep books if he or she is carrying on a business in which it is usual to do so, in which case he or she is bound to keep the books which are usual in that particular business.
90 At 106-107, Lord Esher, M.R. (with whom Lopes L.J. agreed) said:
The first thing mentioned is the kind of books which he is to keep, - such books as are "usual and proper in the business carried on by him," - and the following words shew the manner in which he is to keep those books. It would be of no use to insist that he should keep books if he might keep them in any way he liked, and therefore the section goes on to say, "and as sufficiently disclose his business transactions and financial position." I cannot help thinking that all those words are joined together to describe the kind of books which he is to keep, and the manner in which he is to keep them under certain circumstances. If he is engaged in a business in which books are usually kept of a certain kind, he is to keep those usual books, but he is to keep them so as "sufficiently to disclose his business transactions and financial position." It seems to me that the only reasonable way of reading those words is, as meaning his financial position as a man of business. If you dislocate the words "financial position" from the others, you would, as I have already said, be causing a revolution in the social life of England. It would come to this, that everybody in the kingdom must keep books which will "sufficiently disclose his financial position." Before this statute no one ever heard of such a thing, nor was it even suggested until now that a person who is engaged in no business at all, that every man and woman over twenty-one years of age is to keep books which will shew his or her financial position. It seems to me that this would be a revolution, and I cannot agree that that is the meaning of the words. The statute, as I have often said, deals with business matters, and we must give a business meaning to it. In my opinion the meaning is, that a man in business must keep his books properly, but if his business is one in which it is not usual to keep any books, or if the man is not engaged in business, then he need not keep any books at all. If it means that a business man is to keep business books, it cannot mean that a man of business is to put down all his private concerns in his business books, where they would be out of place, and, if he is not to enter them in his business books, he is not bound to keep any other books.
91 A majority of the court in Re Mutton clearly favoured the narrow construction of s 28(3)(a) of the UK Bankruptcy Act 1883 which, like s 270 of the Bankruptcy Act, required that a person had kept books and accounts which disclosed his or her business transactions relating to the business which the person carried on.
92 In Re Lane (1909) 26 WN (NSW) 60 in determining whether the bankrupt in that case, Mr Lane, should be discharged from bankruptcy the court considered, among other things, whether he had "failed to keep such books and accounts as are usual or proper in the business carried on by him". In relation to that issue the court applied Re Mutton and concluded that the bankrupt was not under an obligation to keep books. The court noted that Mr Lane was the salaried director of a limited liability company who held a large number of shares in the company and otherwise had some small private means. At 61 Salusbury R. observed:
The only transactions of a business nature that I am aware of are two in the course of three years: a speculation in jute goods and the barter of a motor car for some coal, by way of part payment. These two isolated transactions do not in my mind establish that he carried on business as a jute merchant or a dealer in motor cars, or of coal merchant.
93 Most recently, in Re Aarons; Ex parte the Bankrupt (1978) 33 FLR 2; 19 ALR 633 the bankrupt applied for discharge from bankruptcy. The official receiver opposed the grant of an order of discharge because, among other things, he contended that the bankrupt failed to keep proper books as required by s 150(6) of the Bankruptcy Act.
94 Section 150 of the Bankruptcy Act (now repealed) relevantly provided:
(5) The Court shall, if any of the matters specified in the next succeeding sub-section is established-
(a) refuse to make an order of discharge; or
(b) make an order of discharge but suspend the operation of the order as the Court thinks proper, either unconditionally or subject to conditions.
(6) The matters upon the establishment of which the Court may exercise the powers specified in the last preceding sub-section are as follows:
(a) that the bankrupt has omitted to keep and preserve such books, accounts or records as sufficiently disclose his business transactions and financial position within the period of five years immediately preceding the date on which he became a bankrupt;
…
95 At 5 of Re Aarons Riley J observed that:
Predecessors of s 150(6)(a) of the Bankruptcy Act 1966 had, like s. 270(1) and its predecessors. 209(g) of the Bankruptcy Act 1924, referred (with minor variations of verbiage) to the omission to keep such books "as are usual and proper in the business carried on by him and as sufficiently disclose his business transactions and financial position": see Bankruptcy Act 1883 (Eng.), s. 28(3)(a); Bankruptcy Act, 1887 (N.S.W.), s. 38(a); Bankruptcy Act 1914 (Eng.), s. 26(3)(b); Bankruptcy Act 1924 (Cth), s. 119(7)(b). The words "as are usual and proper in the business carried on by him and" do not occur in s. 150(6)(a).
96 After referring to Re Mutton, at 5-6 his Honour continued:
The words "as are usual and proper in the business carried on by him and" were said by Matthew J. in the court below to be "the governing description" and they were so treated by Lord Esher M.R. in the passage I have just quoted from his judgment on appeal. Though they are absent from s. 150(6)(a), I think Lord Esher's interpretation of the remaining words of the phrase is still valid. It is those words which "describe the kind of books" (etc.) which the bankrupt is to keep, and there has been no change in them such as to bring about the revolution of which Lord Esher spoke. In my opinion it is significant that the words are "his business transactions and financial position" and not "his business transactions and his financial position", and they should be read as meaning "the transactions and financial position of his business".
(Emphasis in original.)
97 It is apparent from these decisions that the phrase "books, accounts and records as are usual and proper in any business carried on by [a person who becomes a bankrupt] and as sufficiently disclose his or her business transactions and financial position" was given a narrow construction, similar to that propounded by Mr Do and Do Constructions. That is, the books and records that are to be kept are those in relation to any business maintained by the bankrupt, which was considered to be a commercial enterprise, and which sufficiently disclose the transactions and financial position of that business.
98 While s 128B(5) of the Bankruptcy Act is not in the same terms as the provisions considered by the courts in those decisions, it is sufficiently similar to give us comfort that the narrow construction which we favour is appropriate. The Trustees have not provided any compelling reason why we would depart from the narrow construction which has been favoured by courts for over 100 years in relation to similar provisions and we do not intend to do so, particularly having regard to the ordinary meaning of the provision, its context and purpose.
99 The related and second issue that arises for consideration is the question of who bears the onus of showing what books, accounts and records are usually kept in relation to the business conducted by the transferor and, relatedly, what is required to discharge that onus.
100 In Re Nancarrow, an Insolvent [1916] SALR 198, among other things, the Full Court of the Supreme Court of South Australia considered the elements required to be proved in order to make out a breach of s 175 of the Insolvent Act 1886 (SA) which, among other things, provided that:
… if any insolvent shall have committed any of the offences in this section mentioned, the Court may, at the time of awarding a certificate to the insolvent, . . . by order, adjudge such insolvent to be imprisoned with or without hard labour, at the suit of the trustee as such judgment creditor as hereinafter mentioned, for any period not exceeding three years from the date of such order; and the messenger of the Court shall, upon receiving the warrant of the Court thereon, lodge the insolvent in gaol.
101 One of the offences included in the section was the failure within three years to keep such books of account as are usual and proper in the business carried on by the insolvent, and as sufficiently set forth his business transactions, and disclosed his financial position. The bankrupt or insolvent (as he was referred to by the court) appealed against two orders, one of which was that within three years prior to the filing of the petition upon which he was made a bankrupt, he failed to keep the books of account required by s 175 of the Insolvent Act in the business of a draper and hawker carried on by him. The bankrupt raised a number of grounds of appeal including, in relation to that determination, that there was no evidence about what books of account are usual in the business of a draper and hawker.
102 In relation to that contention at 213 Murray CJ said:
The effect of the word "usual", as here used, I take to be as follows. Unless the business carried on by the insolvent is one in which it is usual to keep books, there can be no books which are "usual" in that business, and no offence can be committed either by keeping no books or by keeping books which do not contain the particulars mentioned in the Act. But if the business be one in which it is usual to keep books an offence is committed if no books are kept at all, or if books are kept which, even though they are the "usual" ones, do not sufficiently set forth the insolvent's business transactions and disclose his financial position.
In this case the insolvent did keep books. He kept two, but as they merely shewed his sales on credit, and contained no record of his purchases on credit, or of his stock in hand, he was clearly guilty of the offence charged, provided his business were one in which it is usual to keep books.
103 His Honour noted that his view of the relevant legislation was in accordance with Re Mutton. He went on to observe that, although no witness was called to prove that it is usual to keep books in the business of a draper and hawker, it was a matter of common knowledge on which no evidence was required, at least in relation to a draper's business and that, "speaking for [himself]", his Honour "[could not] believe it possible for anyone to doubt that books are usually kept by a draper": at 214-215.
104 At 219 Gordon J said that the onus was on the prosecution to prove three things in relation to the charge namely:
(1) that the insolvent carried on a business; (2) that the business carried on by the insolvent was of a kind in connection with which books are usually kept; (3) that insolvent failed to keep such books of account as are usual and proper in the particular business, and as sufficiently set forth his business transactions and disclose his financial position.
105 As to the second requirement Gordon J noted that no evidence was tendered. Accordingly his Honour considered whether it was appropriate for the primary judge to find against the bankrupt based on his own knowledge of what is usual in the business of a draper and hawker. At 221 his Honour concluded that, given the nature of the business in question, namely trading by buying goods to sell again on credit, it was a fact of which judicial notice may be taken.
106 As to the third requirement Gordon J said at 222:
As to the third of the requirements I have mentioned, the objection is taken that there was no evidence that the books kept by the insolvent, such as they were, were not of the kind usually kept in such a business as his. In my opinion no such evidence was necessary if the books themselves made it manifest that they were not kept so as to set forth his business transactions and to disclose his financial position. … Having thus before him an authoritative standard, it was competent for the learned Judge to look at the books kept by the insolvent, and without further evidence than that supplied by their contents, or their want of contents, to say that they fell so far short of that authoritative standard that the insolvent had brought himself within the penal provisions of the Act.
107 At 232 Buchanan J reached the same conclusion.
108 Having regard to the construction of s 128B(5) set out above, it is necessary to return to the resolution of Issue 1. That is, whether, as the primary judge found to be the case, the rebuttable presumption in s 128B(5) of the Bankruptcy Act was established by the Trustee. In doing so, it is instructive to commence with the pleadings.
109 Before the primary judge, the Trustees relied on the ASOC. Commencing at [5] of the ASOC the Trustees pleaded the material facts in relation to Mr Do's financial position. These included: his appointment as the sole director of Trustful Builder and Do Construction; that Trustful Builder went into liquidation; the examination of Mr Do by the liquidator of Trustful Builder; the issues that arose with Goongarline culminating in the commencement of a proceeding by Goongarline against Mr Do and the obtaining of judgment by Goongarline against Mr Do; and finally the service of a bankruptcy notice on Mr Do and the appointment of the Trustees to his bankrupt estate in September 2016.
110 At [24]-[26] of the ASOC, the Trustees contended that:
24. By virtue of [7] to [23] above, in or about 2010 onwards and at all relevant times Mr Do was insolvent or in the alternative was about to become insolvent.
25. On or about 9 May 2018, Mr Do was examined by the Applicants pursuant to section 77C of the Bankruptcy Act 1996 (Cth) (Act) (Applicants' Examination).
26. By virtue of the Applicants' findings at the Applicants' Examination, at all relevant times Mr Do has failed to keep such books, accounts and records as are usual and proper in relation to his examinable affairs.
111 At [24] of the ASOC, the Trustees sought to engage s 128B(2) of the Bankruptcy Act which deems the transferor's main purpose to be that in s 128B(1)(c) if at the time of the transfer the transferor was, or was about to become, insolvent. However, in the course of oral submissions before the primary judge reliance on [24] of the ASOC, and thus reliance on s 128B(2) of the Bankruptcy Act, was taken to be abandoned. Relevantly on the second day of the hearing in the course of closing submissions the following exchange took place between the primary judge and Mr Dooley, counsel for the Trustees:
Mr Dooley: … Subsection 128B subsection (2) provides that:
The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1) subparagraph (c) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent.
And the words "is taken to be the purpose" has authorities that I've referred to in my written submissions create a conclusive presumption, irreputable (sic). I refer to that in paragraph 92 of my written submissions.
His Honour: So what's the evidence you say that's before the court that Mr Do was imminently to become insolvent.
Mr Dooley: Your Honour, can I address that question by saying I don't have any such evidence. One could, of course, prove the case that why (sic). But what I then do is rely on subsection (5).
His Honour: Right.
112 At [26] of the ASOC the Trustees sought to invoke the rebuttable presumption of insolvency in s 128B(5) of the Bankruptcy Act. They did so by pleading a failure to keep books and accounts that are usual and proper in relation to Mr Do's "examinable affairs" as opposed to "the business carried on by" Mr Do. That is, it seems that the Trustees contended that s 128B(5) of the Bankruptcy Act requires that the transferor maintain books and records in relation to his or her examinable affairs. As is evident from the terms of s 128B(5) and its construction, that is not what the section requires. Putting that to one side, the adoption by the Trustees of this terminology in the ASOC may explain the primary judge's approach to the application of s 128B(5) of the Bankruptcy Act.
113 In his defence Mr Do:
(1) did not admit [24] of the ASOC and pleaded that he "did have incomes (sic) and paid taxes since 2010 onwards"; and
(2) did not admit [26] of the ASOC and said that:
what books and records [Mr Do] had, had forwarded to the [Trustees] plus contact details of relevant lawyers, accountant and the real estate agent.
114 In its defence Do Construction did not admit [24] or [26] of the ASOC.
115 Thus the question of whether the rebuttable presumption in s 128B(5) arose was squarely in issue between the parties.
116 Next we turn to the reasons of the primary judge. His Honour commenced his consideration of the operation of s 128B(5) of the Bankruptcy Act at J [112]. As set out at [50] above, at J [119] the primary judge referred to the phrase "the business carried on by the transferor" as used in s 128B(5) of the Bankruptcy Act and made a finding that :
… for current purposes, the range of companies, trusts and other interests in which Mr Do had a relevant interest, one need look no further than the list of such entities set out in Mr Combis' letter to Mr Do, dated 8th December 2018, noted above, which is Annexed at Tab 15 to Ms Sijabat's trial Affidavit.
117 It was not in dispute that the letter referred to at J [119] is a letter dated 8 December 2016 (December Letter), rather than 8 December 2018 as referred to by the primary judge, from Mr Combis to Mr Do. We infer that the primary judge's reference is to the information included at page 4 of that letter which relevantly includes:
118 Neither the primary judge's reasons at J [119] nor the December Letter to which his Honour refers identifies the nature of Mr Do's "relevant interest" in the entities listed or the time at which Mr Do is said to have held the "relevant interest" and, in particular whether it was held when the FY13 Transfers were made. That is not surprising given that the purpose of the December Letter was to enable the Trustees to gather information from Mr Do about his role as a director and/or shareholder of various companies and his interest in the nominated trusts. The primary judge did not make any findings in relation to the nature of Mr Do's "relevant interest" in those entities. In that regard, merely acting as a director or holding shares in a company that, in turn, carries on a business, is not sufficient to establish that the business of the company was carried on by the director or shareholder: see Quickfund (Australia) Pty Ltd v Airmark Consolidators (2014) 222 FCR 13 at [134]-[135].
119 A review of the primary judge's reasons shows that his Honour did not make any findings of fact about whether Mr Do's role as an officer or his shareholdings or other interests in the entities listed in the December Letter could amount to an ownership interest in, and/or demonstrate that he was in fact carrying on any business in connection with, any of those entities; if so, the nature of the business in which the relevant entity was engaged; and whether the relevant business was being carried on at the time of the FY13 Transfers. As to the latter at least the following was clear from evidence before the primary judge: by the time of the FY13 Transfers, Trustful Builder was in liquidation; and Steele Properties Pty Ltd was registered on 6 March 2013, which was after the last of the FY13 Transfers was made.
120 The Trustees submitted that there was evidence that Mr Do was carrying on a business. That evidence was that:
(1) Mr Do was a director of various companies; and
(2) when examined by the liquidator of Trustful Builder on 19 July 2012 and 24 August 2012, Mr Do gave evidence that he was a "manager" and a "businessman" respectively.
121 However, these facts on their own, or in combination, are not sufficient to establish that Mr Do was carrying on a business at the time of the FY13 Transfers. Properly construed s 128B(5) requires a finding that the transferor was carrying on an identified business, a fact which necessarily had to be established as a first step to engage the section. As we have already observed, that Mr Do was a director of various companies at unspecified times does not support a finding that he was carrying on any particular business at the time of the FY13 Transfers. Similarly his self-described role as a manager or businessman in 2012 does not assist the Trustees. Once again there was no identification of the nature of his activities in those roles and whether they might amount to his operating a business at the relevant time.
122 At J [125]-[127] (see [52] above) the primary judge focussed on Mr Do's financial records. His Honour found that there was "a complete absence of relevant documents" about Mr Do's "significant transfer of funds" and that the deficits in his oral and documentary evidence "made the clarification and determination of his 'true financial position' almost impossible". The primary judge found that it was the "lacunae" in Mr Do's evidence that satisfied the deeming provisions in s 128B(5) of the Bankruptcy Act such that the rebuttable presumption applied.
123 However, in approaching the analysis in this way, his Honour erred in the application of s 128B(5) of the Bankruptcy Act. This was because:
(1) no finding was made about the business carried on by Mr Do at the time of the FY13 Transfers;
(2) no evidence was led by the Trustees and, it follows, no finding was or could be made about the types of records that are usual and proper in relation to such a business;
(3) in the absence of those findings it was not possible to make any finding about whether Mr Do had failed to keep the books and accounts that are required by s128B(5)(a) or, having kept them, had failed to preserve them; and
(4) in the absence of a factual inquiry as to Mr Do's usual business, his lack of recollection and the absence of information were not relevant to the question of whether the presumption in s 128B(5) arose.
124 In those circumstances there was no proper basis on which a finding could be made that the rebuttable presumption in s 128B(5) of the Bankruptcy Act arose in relation to Mr Do.
125 It follows that grounds 1 and 2 of both notices of appeal and ground 3 of Do Construction's notice of appeal have been made out.