Mary Cummins, estranged wife of bankrupt former barrister John (“Gus”) Cummins made a bold showing in the witness box before Ronnie Sackville in the Federal Court yesterday (Sept 8).
Sporting big gold earrings and red suede platform shoes, Mrs Cummins was clearly not going to let Max Prentice, John Cummins’ trustee in bankruptcy, get within cooee of “her” assets, i.e. those assets John expeditiously transferred to the Cummins’ Family Trust back in 1987.
When Cummins finally declared himself bankrupt in 2000 it emerged he had not lodged a tax return for 40 years. He currently owes the Australian Taxation Office close to $2 million and that’s just for the tax returns he did file in 2000, for the period 1992 to 1999.
Last year Mary rolled the dice with Max Prentice, and lost. She made a “no case” submission to the court, saying that that trustee could not make out a case that John Cummins’ main purpose in the transfer was to defeat his creditors. Mary elected to call no evidence and is bound by that stricture.
In his judgment of December 5, 2002 Justice Sackville found that when Cummins transferred almost all of his assets to the trust, he was “well aware that he had incurred very substantial liabilities to the [Australian Taxation] Commissioner”.
In fact, at that point he had 27 years worth of contingent liabilities to the commissioner.
This was just what Prentice needed to pursue wife Mary and the companies.
He is going after Cummins’ half of the former matrimonial home at Hunters Hill (sold last year for over $2.2 million) and his shares in Counsel’s Chambers Ltd (sold for over $400,000). They were transferred to the family trust for zero payment.
He also has his eyes on Cummins’ 50 percent beneficial interest in Mary’s lucrative catering and events company Hospitality Hire Pty and in the family trust company Aymcopic Pty Ltd.
But not if Mary can help it.
Describing herself as “retired”, a tanned and feisty Mrs Cummins told the court she had been separated from her husband since early 2002. She said she knew her husband lived in Sutherland Street, Paddington, but not exactly where because she only saw him “several times a year on family occasions”.
When counsel for the trustee, Bernard Coles QC, inquired when Mrs Cummins had last seen her husband she replied, “Yesterday, at my daughter’s flat… I said ‘hullo’, that’s all I said.”
She told Coles that while no divorce proceedings had been initiated she had “no intention of going back” to poor old Gus.
Nor did she ever ask her husband for assistance in the case against her, she told Coles. This was not, as Coles put, because “He [Cummins] would be unlikely to be helpful to you,” but as she so eloquently declared, “I don’t feel as if my husband has anything to do with anything I’m doing… he just doesn’t come into my mind.”
This emerged as a central motif in Mrs Cummins’ evidence. Apparently she did everything off her own bat – this was to benefit herself and her children exclusively.
She, not her husband, instructed her accountant at the time, John Moore, to buy a shelf company (Lomova Pty Ltd – later Aymcopic Pty Ltd) in order to establish a family trust in 1980. She, not her husband, paid for it.
She told Sackville that despite her husband being listed as one of the company’s two shareholders and named as the first beneficiary, she never intended the family trust to benefit him. It was only ever intended “for the benefit of myself, mainly, and my children,” she reiterated.
She, and only she, established Hospitality Hire Pty Ltd in 1992. She, and only she, paid for and signed the tax returns for Lomova Pty Ltd.
“John was never ever to be involved…” she told Sackville.
“I find trusts and things difficult to understand.”
In his closing submission Coles asked why Mr Cummins hadn’t divested himself of his original “beneficial interest” when Hospitality Hire became the company running the family trust in 1995.
“It does seem strange…” Justice Sackville agreed.
Coles argued Cummins’ beneficial interest in the former matrimonial home in Hunters Hill was commensurate with his legal title and his joint tenancy since 1970.
He stressed that neither Cummins nor his wife had given evidence on the “true nature” of the arrangement between them on this matter.
Paul Brereton SC for “Bloody” Mary argued that the “beneficial interests” were held proportionately and that she had paid the bulk of the cost of the Hunters Hill home ($31,000).
To which Justice Sackville responded, “This would be a much easier case for me to decide if I had some evidence.”
This is an important tussle. The trustee is attempting to show that transactions that took place 16 years ago can be clawed back, because they amounted to fraudulent transfers.
In the meantime Ronnie has reserved his decision.