Bankruptcy Rules (Amendment) 1994 No. 307
EXPLANATORY STATEMENT
Statutory Rules 1994 No. 307
Issued by the authority of the Minister for Justice
Bankruptcy Act 1966
Bankruptcy Rules (Amendment)
The Bankruptcy Rules (Amendment) made amendments to the Bankruptcy Rules consequential upon the making of Bankruptcy Rules No. 214 of 1994.
Authority
Subsection 315(1) of the Act provides that the Governor-General may make rules prescribing matters that are required or permitted to be prescribed or that are necessary or convenient to be prescribed for the carrying out or giving effect to the Act.
Details of rules Commencement
These Rules commenced on gazettal.
Rule 1 - Amendment
Rule 1 provided that the Bankruptcy Rules were amended as set out in these rules.
Rule 2 - Rule 182 (Fees and percentages payable to the Official Trustee)
Statutory Rules No. 214 of 1994, which came into operation on 1 July 1994, amended rule 182 of the Bankruptcy Rules by increasing fees payable to the Official Trustee and so giving effect to those recommendations of the Report of the joint Attorney - General's Department and Department of Finance Phase 1 Review of the Insolvency and Trustee Service, Australia (the Report) which were accepted by the Government,
Rule 182 fixes the fees and percentages payable to the Official Trustee as remuneration for the administration of a bankrupt estate. Subrule 182(2) provides that, where the Official Trustee acts as trustee of the estate of a bankrupt, or of a deceased person, in accordance with Part XI of the Act, or takes control of the property of a debtor by virtue of a Court direction, it is entitled to a fee calculated in accordance with the subrule. The subrule prescribes the fees payable to the Official Trustee on a scale based on the "prescribed amount" in respect of an estate or a debtor. Fees payable to the Official Trustee are fixed where the "prescribed amount" of the estate or debtor does not exceed $2000, exceeds $2,000 but not $50,000, or is in excess of
$50,000, as is prescribed respectively in paragraphs 182(2)(d), (c) and (f). Subrule 182(4) defines "prescribed amount" for the purposes of subrule 182(2).
The Report had noted that the minimum fee of $1,000, prescribed in subrule 182(2), was set in 1981. If the amount had been indexed in line with the CPI, the minimum fee would currently be approximately $2,210. Accordingly, rule 9 of Statutory Rules No. 214 of 1994 introduced a minimum fee of $2,000 by amending paragraphs 182(2)(d) and (e) to omit the sum of $1,000, wherever occurring, and to substituting the sum of $2,000.
No consequential amendment of paragraph 182(2)(f), however, was made. Paragraph 182(2)(f) provides that where the "prescribed amount" in respect of the estate or debtor exceeds $50 000, the Official Trustee is entitled to receive a fee equal to the sum of $8,350 and an amount equal to 10% of the amount by which the prescribed amount exceeds $50,000.
The sum of $8,350 in paragraph 182(2)(f) was derived from levying the former minimum fee of $1,000 on the first $1,000 and 15% on $49,000. Without the sum of
$9,200 (ie $2,000 + 15% of $48,000) being substituted for $8,350, anomalies occurred. For example, the fee on a prescribed amount of $49,000 was greater than the fee on a prescribed amount of $51,000. This anomaly was cured by amending paragraph 182(2)f) to substitute the sum of $8,350 for $9,200. The change was effected by rule 2 of the Statutory Rules.
Overview
The Bankruptcy Rules (Amendment) 1994 No. 307 was enacted to amend the Bankruptcy Rules following the changes made by Statutory Rules No. 214 of 1994. This amendment was necessary to address anomalies that arose due to the changes in fee structures for the Official Trustee as recommended in the joint Attorney-General's Department and Department of Finance Phase 1 Review of the Insolvency and Trustee Service, Australia. The Bankruptcy Act 1966, under subsection 315(1), empowers the Governor-General to make rules to effectively implement the Act. The policy objective behind these amendments was to ensure that the fees paid to the Official Trustee for the administration of bankrupt estates were fair, up-to-date, and consistent with the economic conditions, as reflected by the Consumer Price Index (CPI). The Bankruptcy Rules (Amendment) 1994 No. 307 were issued by the authority of the Minister for Justice, reflecting the government's commitment to the effective administration of the insolvency system.
Scope and Application
The Bankruptcy Rules (Amendment) 1994 No. 307 applies to individuals and entities involved in bankruptcy proceedings in Australia, particularly focusing on the remuneration of the Official Trustee who administers the estates of bankrupts. This amendment is made under the authority granted by subsection 315(1) of the Bankruptcy Act 1966, which empowers the Governor-General to create rules necessary for the effective execution of the Act. The amendment adjusts the fees payable to the Official Trustee in line with recommendations from a joint review conducted by the Attorney-General's Department and the Department of Finance. Specifically, it increases the minimum fee payable to the Official Trustee from $1,000 to $2,000, reflecting the Consumer Price Index (CPI) adjustment since the original fee was set in 1981. Additionally, it corrects an anomaly where the fee for a prescribed amount exceeding $50,000 was incorrectly calculated, ensuring consistency in fee structures. These rules commenced upon gazettal and apply nationally, covering all states and territories within Australia.
Key Provisions
The Bankruptcy Rules (Amendment) 1994 No. 307 (the Amendment) primarily focuses on the adjustment of fees payable to the Official Trustee, as detailed in Rule 2. This amendment is a response to recommendations from the joint Attorney-General's Department and Department of Finance Phase 1 Review of the Insolvency and Trustee Service, Australia, which were accepted by the government. Rule 182, as amended, sets out the fees and percentages payable to the Official Trustee for the administration of a bankrupt estate. This rule specifies the fees according to the "prescribed amount" of the estate or debtor, which is categorised into three brackets: not exceeding $2,000, exceeding $2,000 but not $50,000, and exceeding $50,000. The amendment increased the minimum fee from $1,000 to $2,000, aligning it more closely with inflation rates since the fee was last indexed in 1981.
The Amendment imposes specific obligations on the parties involved, primarily the Official Trustee, who is responsible for the administration of a bankrupt's estate. The Official Trustee is entitled to the fees prescribed under Rule 182, based on the "prescribed amount" of the estate or debtor. This includes acting as trustee of the estate of a bankrupt or a deceased person in accordance with Part XI of the Bankruptcy Act 1966, or taking control of the property of a debtor by virtue of a Court direction. The Official Trustee must adhere to the fee structure outlined in Rule 182 to ensure they are compensated appropriately for their services. Additionally, the amendment ensures that the fees are fair and do not create anomalies, such as the situation where the fee on a prescribed amount of $49,000 was greater than the fee on a prescribed amount of $51,000, which was corrected by adjusting the fee structure in Rule 2.
The Bankruptcy Rules (Amendment) 1994 No. 307 does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach within the text. However, adherence to the prescribed fee structure is critical to avoid any legal complications. Failure to comply with the amended fees could potentially lead to disputes regarding the remuneration of the Official Trustee, which might necessitate judicial intervention. While the Amendment itself does not detail penalties, any resultant disputes or breaches of the prescribed fee structure could be subject to the general provisions of the Bankruptcy Act 1966, which might include financial penalties or other legal repercussions depending on the nature and severity of the breach.