EXPLANATORY STATEMENT

Select Legislative Instrument 2010 No. 195

Subject-           Bankruptcy Act 1966

Same-Sex Relationships (Equal Treatment in Commonwealth Laws—General Law Reform) Act 2008

Bankruptcy Amendment Regulations 2010 (No. 1)

Section 315 of the Bankruptcy Act 1966 (the Act) provides that the Governor‑General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

Clause 86 of Schedule 1 to the Same-Sex Relationships (Equal Treatment in Commonwealth Laws—General Law Reform) Act 2008 (the Same-Sex Act) provides that the Governor‑General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions) relating to amendments and repeals made by the Schedule or any other Schedule to the Same-Sex Act.

The purpose of the Regulations is to correct certain technical defects and anomalies in the Bankruptcy Regulations 1996, and to update these to reflect new technologies and drafting practices.

Specifically, the Regulations:

·        enable online lodgement of applications and electronic issuing of the Bankruptcy Notice, which is a Notice issued by the Insolvency and Trustee Service Australia requiring a debtor to pay their debt (noncompliance is an act of bankruptcy which is a ground for the creditor to petition for the debtor’s bankruptcy);

·        make it easier for people with a disability to present a petition for bankruptcy, sign a debt agreement proposal or sign an authority to appoint a controlling trustee under section 188(1) of the Act,

·        set in place transitional arrangements which essentially confirm the prospective application to bankruptcies of amendments to the Act introduced by the Same-Sex Act; and

·        remove inconsistencies in terminology with the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

Details on the Regulations are included in the Attachment.

The Act and the Same-Sex Act do not specify any conditions that need to be satisfied before the power to make the Regulations may be exercised.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations commence on 1 August 2010.

Consultation

Consultation was not undertaken on the Regulations as a whole, given the minor nature of the changes to the existing law.  However, consultation was undertaken in relation to the facilitation of online applications and electronic issuing of the Bankruptcy Notice. 

A draft of the proposed new Bankruptcy Notice form was provided to members of the Bankruptcy Reform Consultative Forum.  Forum members include representatives of insolvency practitioners; major creditors; financial counselors and the Law Council.  The draft was also provided to the Federal Court of Australia and the Federal Magistrates Court of Australia, given that they have jurisdiction in bankruptcy matters.

Evidentiary certificates

Regulation 11.01B allows the Inspector-General to issue evidentiary certificates.  Evidentiary certificates are appropriate to facilitate proof of purely technical, procedural or formal matters of fact, or matters that are peculiarly within the knowledge of the person attesting to the matter.  The certificate is prima facie evidence only and does not prevent evidence to the contrary being adduced.  Proposed Regulations 11.01B is expected to facilitate efficiency in court proceedings.

ATTACHMENT

DETAILS OF THE BANKRUPTCY AMENDMENT REGULATIONS 2010 (No. 1)

Regulation 1 – Name of Regulations

This regulation provides that the title of the Regulations is the Bankruptcy Amendment Regulations 2010 (No. 1).

Regulation 2 – Commencement

This regulation provides for the Regulations to commence on 1 August 2010.

Regulation 3 – Amendment of Bankruptcy Regulations 1996

This regulation provides that the Bankruptcy Regulations 1996 (the Principal Regulations) are amended as set out in Schedule 1.

SCHEDULE 1 – Amendments commencing on the day after registration

Item [1] – Subregulation 1.03(1), definition of 2006 Fees Determination

Item 1 omits the definition of the 2006 Fees Determination in subregulation 1.03 of the Principal Regulations.  The 2006 Fees Determination is out of date as it was updated in 2007 and 2008.

Item [2] – Subregulation 1.03(1), after definition of FC (Bankruptcy) Rules

Item 2 inserts a definition of Fees and Remuneration Determination to replace the old definition of the 2006 Fees Determination.  The new terminology and definition reflects the fact that legislative instruments determining fees made under subsection 316(1) of the Bankruptcy Act 1966 are likely to be updated from time to time.

Item [3] – Regulation 4.01

Item 3 amends the requirements for an application to the Official Receiver for a Bankruptcy Notice in order to facilitate online lodgement of applications and electronic issuing of such notices.  At present, applicants must fill out and lodge a draft Bankruptcy Notice as part of the application.  While this requirement will remain for paper-based applications, Item 3 allows applicants to simply provide information that will be uploaded by the Insolvency and Trustee Service Australia into an electronic Bankruptcy Notice form.  Currently, paragraph 4.01(1)(a), subparagraph 4.01(1)(b)(i) and subregulation 4.01(2) are impediments to the electronic issuing of bankruptcy notices. 

Item [4] – Regulation 4.02A, note

Item 4 updates terminology in the note to reflect the new definition of Fees and Remuneration Determination inserted by item 2 above.

Item [5] – Subregulation 4.04(3)

Item 5 removes reference in subregulation 4.04(3) to any particular bank in converting into Australian currency where a judgment or order lodged in relation to a bankruptcy notice is expressed in an amount of foreign currency.

Item [6] – Subregulation 4.05(1)

Item 6 replaces existing subregulation 4.05(1) to clarify the period of time within which a petitioner creditor must give a copy of the endorsed petition to the Official Receiver.  The time runs from the date the petition is endorsed by the Court, rather than from the date of its presentation to the court.   It provides the creditor with a reasonable period of two working days after the court has endorsed the petition in which to give the endorsed petition to the Official Receiver.  This is designed to ensure that the Official Receiver is informed as soon as practicable after the court has endorsed the petition, and that the National Personal Insolvency Index is kept up to date.

Item [7] – Subregulation 4.05(2)

Item 7 inserts a new subregulation 4.05(3) to introduce a requirement that the Official Receiver be given a copy of a court order dismissing, staying or extending a creditor petition, or adjourning the hearing of the petition.

A creditor may present a petition to the Court under Division 2 of Part IV of the Act.  Regulation 4.05 currently requires that the Official Receiver be given a copy of the petition if it is endorsed by the Court, but does not make any provision for situations where the petition is dismissed, stayed or extended or where the hearing of the petition is adjourned.  This will ensure that the Official Receiver is kept informed of the progress of the proceedings.

Item [8] – Subregulation 4.11(3)

Subsection 54D(1) of the Act requires the Official Receiver to give prescribed information to a debtor lodging a declaration of intent.  Item 8 amends subregulation 4.11(3) to require the Official Receiver to obtain a signed acknowledgement that the debtor has received and read the prescribed information when accepting a debtor’s petition.

Item [9] – Subregulation 4.11(5)

Item 9 replaces existing subregulation 4.11(5) with new subregulations 4.11(5) to (7) to allow a person to sign the prescribed information acknowledgement in item 8 on the debtor’s behalf if the debtor is unable to sign due to physical incapacity.  The Act currently allows for signing on behalf of an intending practitioner who is blind, partially sighted, illiterate or partially literate, or insufficiently familiar with the English language, but does not allow for signing on behalf of an intending practitioner who is unable to sign due to physical incapacity.

Item [10] – Regulation 4.17, note

Item 10 updates terminology in the note to reflect the new definition of Fees and Remuneration Determination inserted by item 2 above.

Item [11] – Subregulation 6.12B(2)

Item 11 replaces existing subregulation 6.12B(2) with a new subregulation to remove the current reference to an “industrial agreement made solely between the employer and the person” and replace it with reference to an “individual industrial agreement”.  This brings the Principal Regulations in line with the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

Item [12] – Subregulation 6.12B(3), definition of industrial agreement made solely between the employer and the person

Item 12 provides a definition of “individual industrial agreement” to include an AWA, or an ITEA, within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.

Item [13] – Subregulation 8.04A(1)

Subregulation 8.04A(1) requires a registered trustee to notify changes in particulars such as their name and address.  Item 13 requires that this notification be made to the
Inspector–General rather than the Official Receiver, as the former is the more appropriate recipient.

Item [14] - Paragraph 8.35(1)(f)

Item 14 replaces existing paragraph 8.35(1)(f) to clarify the time at which a solicitor must have obtained relevant qualifications to act as the controlling trustee of a personal insolvency agreement.  The current wording suggests that qualifications had to be obtained by 1 December 2006, thereby precluding solicitors who obtain the qualifications after that date from being a controlling trustee.  This was not intended.  Rather, the requirement to have the relevant qualifications began on 1 December 2006, but solicitors may obtain the qualifications after that time to be eligible to be a controlling trustee.

Item [15] - Subregulations 9.01(5) and (6)

Item 15 replaces existing subregulations 9.01(5) and (6) to allow a person to sign a debt agreement proposal on behalf of a debtor who intends to present a debt agreement proposal, where the debtor is unable to sign due to physical incapacity.  The Act currently allows for signing on behalf of a debtor is blind, partially sighted, illiterate or partially literate, or insufficiently familiar with the English language, but does not allow for signing on behalf of a debtor who is unable to sign due to physical incapacity.

Item [16] - Paragraph 9.02(b)

Item 16 replace existing paragraph 9.02(b) to clarify that a person seeking registration as a Debt Agreement Administrator must hold a Certificate IV in Financial Services (Accounting) or a degree, diploma or similar qualification in the same field as the certificate.  The current wording of this provision may be interpreted such that an alternative degree or diploma can be in any discipline.

Item [17] – Subregulations 10.02(4) and (5)

Item 17 replaces existing subregulations 10.02(4) and (5) to allow a person to sign an authority to appoint a controlling trustee, on behalf of a debtor, where the debtor is unable to sign due to physical incapacity.  The Act currently allows for signing on behalf of a debtor is blind, partially sighted, illiterate or partially literate, or insufficiently familiar with the English language, but does not allow for signing on behalf of a debtor who is unable to sign due to physical incapacity.

Item [18] – Subregulation 10.03(2)

Item 18 replaces existing subregulation 10.03(2) to require a controlling trustee to lodge with the Official Receiver a Personal Insolvency Agreement (PIA) proposal at the same time as the controlling trustee lodges his/her consent to act.  Currently a debtor’s PIA proposal is not required to be lodged until 10 days before the creditors meet to decide whether to accept the PIA.  It is important for the Official Receiver to see the PIA proposal in sufficient time to identify any significant problems and inform the controlling trustee and/or debtor.  Earlier lodgement by the controlling trustee will facilitate this.

Item [19] – Paragraph 10.04(aa)

Item 19 removes paragraph 10.01(aa), which sets out the requirement that a debtor’s PIA proposal be lodged 10 days before the meeting of creditors, in line with item 18.

Item [20] – After regulation 11.01

Item 20 inserts new regulations 11.01A and 11.01B to specify requirements relating to the filing of petitions with the Official Receiver under Part XI of the Act.  Part XI of the Act relates to estates of deceased bankrupts.  The Principal Regulations currently contain requirements for the filing of petitions with the Official Receiver in relation to living bankrupts, but not in relation to the estates of deceased bankrupts.

Item 20 also provides for the Inspector-General to issue evidentiary certificates in relation to the form of a statement of affairs.  The certificate is intended to create efficiencies in court proceedings, and does not prevent evidence to the contrary being adduced.

Items [21] to [25]

Items 21 to 25 update terminology to reflect the new definition of Fees and Remuneration Determination inserted by item 2 above.

Item [26] – Paragraphs 16.11(5)(b), (c) and (d)

Item 26 substitutes new paragraphs 16.11(5)(b) and (c) to update the references to specific items and clauses of the Fees and Remuneration Determination to reflect the numbering in the current Fees and Remuneration Determination.  Item 26 also updates terminology to reflect the new definition of Fees and Remuneration Determination inserted by item 2 above.

Item [27] – Schedule 3, Paragraph 1A(a)

Item 27 updates terminology to reflect the new definition of Fees and Remuneration Determination inserted by item 2 above.

Item [28] – After regulation 16.12

Item 28 inserts a new Division 3 to provide transitional arrangements for the amendments to the Bankruptcy Act 1966 made by the Same-Sex Relationships (Equal Treatment in Commonwealth Laws—General Law Reform) Act 2008.  Transitional provisions were not drafted as part of the same-sex legislation due to a lack of time.

Item [29] – Schedule 1, Form 1

Schedule 1 substitutes a new Form 1 to amend the Bankruptcy Notice form to remove the signature requirement and to provide for other technical format changes.  This is linked to the amendments referred to in item 3 and will facilitate the electronic issuing of bankruptcy notices.