Commissioner of Taxation v Lane [2020] FCAFC 184

Appeal from: Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953

Lane (Trustee), in the matter of Lee (Bankrupt) v Commissioner of Taxation (No 3) [2018] FCA 1572

BANKRUPTCY AND INSOLVENCY – exercise of bankrupt trustee’s right of exoneration from trust assets – discussion of the nature of the right of exoneration – whether right of exoneration “property divisible among the bankrupt’s creditors” or trust property ‑– whether the proceeds of the right of exoneration are to be distributed to all creditors or only to trust creditors – whether the priority regime in s 109 of the Bankruptcy Act 1966 (Cth) applies to the proceeds of the right of exoneration

BANKRUPTCY AND INSOLVENCY – where bankrupt held assets in his capacity as trustee of a trading trust – where proceeds from sale of trust assets distributed to trust creditors– where trust creditors claim on personal estate of bankrupt – whether in distribution of personal assets of bankrupt “hotchpot” principle applies

BANKRUPTCY AND INSOLVENCY – recovery of preference payment – where trustee exercised right of exoneration to discharge taxation liability – where payment void under s 122 of the Bankruptcy Act 1966 (Cth)‑– whether proceeds from preference recovery action are to be distributed to all creditors or only to trust creditors

Full decision here