A “private arrangement” between a liquidator and the Tax Commissioner

The Commissioner of Taxation has purchased a litigation claim from a liquidator, on what terms we are not permitted to know.

One of the reforms introduced in Australian in 2017 was to allow liquidators and trustees to assign causes of action to a third party, including a creditor, for value: s 100-5 Schedules.  The idea was that it may be more expedient for the insolvency practitioner to sell a cause of action, and allow the purchaser to pursue it, than for the practitioner to do so.

In ‘A good idea’ – assignment of a liquidator’s recovery rights’, the assignment of a liquidator’s claim in the liquidation of a tax agent – Atatax – to the Commissioner of Taxation was discussed. There are useful articles[1] about the principles and process under s 100-5, and some queries, and case law in particular in bankruptcy and from the UK, where there is a similar provision. As in the UK, the limited wording of our section 100-5 leaves a few questions open.[2]

In that case, Atatax had been wound up in May 2015 with only the Commissioner as creditor, owed $5.4m; the company had $333.08 remaining; and the sole director was not co-operative in producing company books.  Orders were made by Perram J under s 477(2B) of the Corporations Act allowing the liquidator to sign the deed of assignment simply because its obligations extended beyond 3 months: Nicols, in the matter of Anatax Pty Ltd (in liquidation) [2019] FCA 1528.

On the liquidator’s application (the Commissioner did not appear) Justice Markovic has now ordered that the deed of assignment be kept confidential, for two main reasons:

  • one, that there was “no discernible interest in the documents beyond the parties thereto and no public interest (or interest of non-parties)”, and
  • two, that the administration of justice would benefit from the protection of such arrangements, especially given the Commissioner’s role in general tax law administration.

The first reason may have been based on the fact that the Commissioner was the only creditor; even then a liquidator has duties in relation to the sale of assets and more so the assignment of claims, where the terms of the assignment can raise concerns, and public interest issues do exist.[3]

As to the second, this was said to be because it was the first time that the Commissioner has taken such an assignment, and he had concern that the commercial terms of the agreement with the liquidator should not become public, lest it influence further such arrangements. There are issues for negotiation as to the valuation of such claims, the calculation and method of payment, and the extent of assistance and involvement of the liquidator in any litigation.

See Nicols, in the matter of Anatax Pty Ltd (in liq)[2020] FCA 1320.

Commercial in confidence is one thing, but the Commissioner as a public entity might have conceded some information about the purchase from the liquidator as a means of recouping public funds. As the UK Cork Report said, insolvency proceedings “have never been treated in English law as an exclusively private matter between the debtor and his creditors; the community itself has always been recognized as having an important interest in them”.

In any event, the confidentiality arrangement expires in June 2021.


[1]  An Asset Shared Can Be a Problem Doubled: Assignment of Causes of Action by a Liquidator (2019) 93 ALJ 36, Justice Robert Harper, FCCA; Assigning Claims, Siba Diqer & Justin Ward, [2020] 32[1] ARITA J 22; Voidable transactions under the Corporations Act: something old and something new, CPD Seminar, 16 August 2017, Scott Aspinall.


[2] Section 246ZD Insolvency Act 1986. See Assignment of Claims: A Comparative Analysis of the United Kingdom and Australia, INSOL International, Q2, 2020, Saba Diger, Hugo Marshall, Justin Ward.


[3] As to other issues raised in the UK, see Allen & Anor, Re Longmeade Ltd (In Liq) (Rev 1) [2016] EWHC 356 (Ch) (25 February 2016). Section 176ZB provides that the proceeds of sale from such an assignment cannot be claimed by the floating charge holder; in Australian terms, by FEG.

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