EXPLANATORY STATEMENT
BANKRUPTCY ACT 1966
BANKRUPTCY RULES (AMENDMENT)
1987 NO. 54
Sub-section 315(1) of the Bankruptcy Act 1966 (the Act) provides that the Governor-General may make rules prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Act and particularly for or in relation to the practice and procedure of courts having jurisdiction under the Act, including costs and the taxation of costs.
Sub-rule 162(1) of the Bankruptcy Rules provides that, subject to rule 162 and except where otherwise ordered, in all proceedings, solicitors are entitled to charge and be allowed costs as set forth in Schedule 3 to the Rules.
Sub-rule 162(2) of the Bankruptcy Rules specifies the costs to be allowed to the solicitor for the petitioning creditor (if the solicitor so desires) where a sequestration order is made in a proceeding instituted by a petition based on non-compliance with a bankruptcy notice.
The purpose of the amendments to sub-rule 162(2) and Schedule 3 of the Bankruptcy Rules is to adopt the recommendation by the Federal Costs Advisory Committee that the scale of solicitors’ costs in the Bankruptcy jurisdiction be increased by 2.8 per centum. That recommendation was the third made by the Committee to the Attorney-General.
The scale was last increased on 31 October 1986 by Statutory Rules 1986 No. 323 after consideration of an earlier report by the Committee.
The Committee advises the Attorney-General at regular intervals on variations in the quantum of costs for solicitors under the Bankruptcy Rules, having regard, among other factors, to government policy in relation to prices and incomes and in particular to paragraph 28 of the National Economic Summit Communique.
That paragraph states -
“If restraint is to be exercised then such restraint should be exercised universally. As such, it is important that non-wage incomes are not increased faster than movements in wages.”
The increases are consistent with paragraph 28 of the Communique. They are based on movements in the Consumer Price Index in the first six months, and in the Award Rates of Pay-Index in the first seven months, of 1986. The extra month was included in the case of the Award Rates of Pay Index so that the effects of the National Wage Case decision in May 1986 could be taken into account.
Authorised by the Attorney-General
Overview
The Bankruptcy Act 1966 was enacted to provide a legal framework for the administration of bankruptcy in Australia. The Act outlines the process by which individuals and businesses can be declared bankrupt, the rights and obligations of creditors and debtors, and the procedures for the management of the bankrupt's assets. In 1987, the Bankruptcy Rules were amended to address the need for periodic adjustments to the scale of solicitors' costs in bankruptcy proceedings. The amendments were made in response to recommendations from the Federal Costs Advisory Committee, which advises the Attorney-General on variations in the quantum of costs for solicitors under the Bankruptcy Rules. The policy objective behind these amendments was to ensure that the costs for solicitors remained consistent with broader government policy on prices and incomes, as outlined in the National Economic Summit Communique. Specifically, the amendments aimed to align the increases in solicitors' costs with movements in the Consumer Price Index and the Award Rates of Pay Index, reflecting the government's commitment to exercising restraint on non-wage incomes.
Scope and Application
The Bankruptcy Rules (Amendment) 1987 No. 54 amends sub-rule 162(2) and Schedule 3 of the Bankruptcy Rules 1966, which are subordinate legislation made under the Bankruptcy Act 1966. The amendment applies to the costs that solicitors can charge in bankruptcy proceedings in Australia, specifically increasing these costs by 2.8 per cent. This adjustment follows a recommendation from the Federal Costs Advisory Committee, which advises the Attorney-General on variations in solicitors' costs. The amendment is intended to reflect economic factors, including the Consumer Price Index and Award Rates of Pay Index for 1986, and aligns with the principle of exercising restraint on non-wage incomes as outlined in paragraph 28 of the National Economic Summit Communique. The amendment does not alter the substantive scope of who or what the Bankruptcy Act applies to, nor does it change the geographic or jurisdictional reach of the Act, which remains Commonwealth-wide. Any exclusions, exemptions, or thresholds are governed by the existing provisions of the Bankruptcy Act and Rules, and the amendment itself does not introduce new ones.
Key Provisions
The primary sections of the Bankruptcy Rules (Amendment) 1987 No. 54 focus on adjusting the costs that solicitors can charge in bankruptcy proceedings. Specifically, sub-rule 162(2) of the Bankruptcy Rules addresses the allowable costs for solicitors representing petitioning creditors in cases where a sequestration order is made due to non-compliance with a bankruptcy notice. This amendment, as detailed in the Explanatory Statement, seeks to increase these costs by 2.8 percent. This change aligns with the third recommendation made by the Federal Costs Advisory Committee to the Attorney-General. The adjustment aims to reflect the economic conditions and government policies regarding price and income adjustments, particularly as outlined in paragraph 28 of the National Economic Summit Communique, which emphasizes restraint in non-wage incomes to match wage movements.
The Bankruptcy Rules (Amendment) 1987 No. 54 impose specific obligations on solicitors representing petitioning creditors in bankruptcy proceedings. These obligations include ensuring that the costs charged are in line with the updated scale set forth in Schedule 3 to the Rules. This updated scale reflects the 2.8 percent increase recommended by the Federal Costs Advisory Committee, considering economic factors such as the Consumer Price Index and the Award Rates of Pay Index for 1986. The increased scale aims to provide fair compensation to solicitors for their services in bankruptcy cases, ensuring that the adjustments are consistent with broader economic policies.
Under the Bankruptcy Rules (Amendment) 1987 No. 54, there are no specific offences or penalties outlined for breaching the updated costs scale. However, any deviation from the prescribed costs could potentially lead to disputes regarding the reasonableness of costs charged. Such disputes might be subject to judicial review or other legal remedies available under the Bankruptcy Act 1966. While the Amendment itself does not introduce new penalties, adherence to the updated costs scale is essential to avoid potential legal challenges and maintain compliance with the legislative framework governing bankruptcy proceedings.