EXPLANATORY STATEMENT
BANKRUPTCY ACT 1966
BANKRUPTCY RULES (AMENDMENT)
The Bankruptcy Rules (Amendment) made pursuant to section 315 of the Bankruptcy Act 1966 make changes to the Bankruptcy Rules resulting from the Government’s continuing review of insolvency legislation.
Broadly, the amendments made to the Bankruptcy Rules (“the Rules”) may be divided into three groups as follows:
• a group of amendments that increase various monetary amounts specified in the Bankruptcy Act 1966 (“the Act”) which are capable of variation by regulation in order to take account of changing money values;
• a group making improvements to the Rules following suggestions from people and organizations affected by the administrative requirements of the Rules; and
• a group removing anomalies and inconsistencies that have been detected in the Rules.
Details of the proposed rules are as follows:
Rule 1 repeals rule 39A. Rule 39A prescribes $1000 as the value of tools of trade which are not regarded as divisible property for the purposes of paragraph 116(2)(c) of the Act. The subject matter of former rule 39A is now dealt with in rule 40B inserted by rule 2 of these rules.
Rule 2 inserts a new rule 40A and a new Division 2A (rules 40B, 40C and 40D) into Part III of the Rules. Rule 40A prescribes $2000 as the higher amount for the purposes of paragraph 109(1)(e) of the Act. Paragraph 109(1)(e) provides that claims for wages and the like by employees of a bankrupt, to an upper limit which was $1500, are to be paid in priority to the claims of the unsecured creditors of the bankrupt. The amount for the purposes of paragraph 109(1)(e) of the Act was $1500 since the Act was amended by Act No. 12 of 1980, which commenced operation on 1 February 1981.
Rule 2 also inserts Division 2A into Part III of the Rules. Each of the rules in this Division prescribes a higher amount for the purposes of a paragraph of sub-section 116(2) of the Act. Sub-section 116(2) lists certain items of property which, if owned by a bankrupt, do not vest in the trustee in bankruptcy to be realized for the benefit of the creditors. In the case of some of the items of property an upper monetary limit is placed upon the exempted property. Those monetary limits are variable by regulation.
Rule 40B prescribes $2000 as the higher value to be allowed for any tools of trade and the like of the bankrupt. This figure replaces the limit of $1000 provided by rule 39A which is repealed by rule 1. The limit of $1000 has not been reviewed since 31 January 1981.
Rule 40C and rule 40D increase from $1200 to $2000 the protection accorded to certain annuities payable to a bankrupt, for the purposes of paragraphs 116(2)(f) and (fa) of the Act. In each case the monetary amount refers to the aggregate amount payable per annum under the policy for the annuity.
Rule 3 inserts a new Division 4AA into Part III of the Rules. The new Division comprises rule 45AA which prescribes a higher amount for the purposes of section 134 of the Act. Section 134 specifies those powers which the trustee in bankruptcy may exercise at discretion. Some of these discretionary powers are exercisable only if the property to which the exercise of power relates is valued at less than a certain monetary limit, presently $20,000. If the property is valued at more than the monetary limit then the power is exercisable by the trustee only with the permission of the Court or the creditors. Rule 45AA increases this monetary limit (which has not been reviewed since 8 April 1980) from $20,000 to $50,000.
Rule 4 amends rule 50, which details a procedure relating to the withdrawal of an objection to automatic discharge from bankruptcy. Section 149 of the Act provides for an entitlement to automatic discharge from bankruptcy after a period of three years. The entitlement to automatic discharge may be deferred if an objection to discharge is lodged. Rule 49 outlines the procedure for the lodgment of an objection and provides that a copy of the objection shall be posted to the Inspector-General in Bankruptcy, the trustee and the bankrupt. Rule 50, relating to the withdrawal of an objection, requires that a copy of the withdrawal shall be posted to the bankrupt. Rule 4 inserts a new sub-rule 50(2) in order that a copy of the withdrawal of objection shall be posted to the Inspector-General in Bankruptcy, the trustee, and the bankrupt. Accordingly, with regard to service, the requirements of rule 50 will reflect the requirements of rule 49.
Rule 5 amends rule 51A which prescribes certain matters for the purposes of sub-sections 149(10) and (13) of the Act. Those sub-sections of the Act are in aid of the Court’s powers
to order that an objection to discharge shall be effective for a reduced or extended period (under sub-sections 149(8) and (9)) or that a bankrupt shall not be entitled to automatic discharge (under sub-section 149(12)). Rule 51A prescribes matters which shall be taken into account by the Court in exercising its jurisdiction to make such orders. Rule 5 amends rule 51A by inserting a reference to the Official Receiver in paragraph 51A(g) and thus enabling the Official Receiver, as well as the bankrupt, the Inspector-General in Bankruptcy, the trustee and a creditor, to lead evidence before the Court.
Rule 6 amends rule 57 which provides a procedural framework for an application for annulment of a bankruptcy under section 154, or annulment of an order for the administration in bankruptcy of a deceased estate under section 252A of the Act. The amendments will result in the various time periods (for the giving of notice of the application, and for filing by the trustee of the trustee’s report to the Court) being similar to the corresponding time periods which, under rule 52, apply in the event of an application to the Court for an order of discharge from bankruptcy under section 150 of the Act.
Rule 7 amends rule 59 which provides that, where a person applies to the Court for an order that he or she be registered as a trustee in bankruptcy, the Official Receiver shall inquire into and file a report in connexion with “the qualifications and experience of the applicant”. Rule 7 amends rule 59 in order to extend the scope of the Official Receiver’s inquiry and report.
Rule 8 amends rule 73 which prescribes the times at which a registered trustee must file with the Registrar in Bankruptcy
the periodic accounts in relation to each administration under the Bankruptcy Act, At present the times for the filing of accounts are determined by reference to the date of commencement of the administration. Accordingly the date for the filing of accounts will vary from administration to administration. The effect of the amendment to rule 73 will be that accounts will be due on one of two common days, 31 March or 30 September, each year.
Rule 9 repeals rule 75 which is redundant. The subject matter covered by rule 75 is also covered by sub-section 188(4) of the Act.
Rule 10 amends rule 125 which concerns the issue, by the Registrar in Bankruptcy, of a summons to a witness to attend the Court. Rule 125 is presently limited to proceedings commenced by petition or by application. This limitation ignores those proceedings which may be commenced in some other way, such as by notice. The amendment to rule 125 removes this limitation.
Rule 11 corrects a defect in rule 131 which relates to the certification of the transcript of any evidence which has been transcribed pursuant to section 255 of the Act. Sub-rules 131(2) and (4) presently refer to sub-rule 131(3), a sub-rule which was repealed on 1 February 1981. Rule 11 will correct this defect in rule 131. Rule 11 will also omit sub-rule 131(2) which provides that the Registrar in Bankruptcy has custody of any record of proceedings which is recorded by means of a sound recording system. The concept contained in sub-rule 131(2) does not reflect the fact that such records are now prepared and retained by the Court Reporting Service and that the Registrar no longer exercises any control over those records.
Rule 12 amends rule 134 which confers a power upon the Court to order that scandalous matter included in an affidavit filed in the Court be struck out. Rule 134 contains two limitations, both of which are removed by rule 12. Firstly the rule refers to scandalous matter contained in “an affidavit”. This reference is replaced by a reference to “a document” by rule 12. Secondly the power to delete scandalous matter is exercisable by the Court after the affidavit has been filed. Rule 12 will confer upon the Registrar in Bankruptcy a power to refuse to file such a document or to seek the direction of a Judge.
Rule 13 inserts a new rule 161A into the Rules. Pursuant to section 167 of the Act certain bills of costs submitted to the trustee in bankruptcy for services rendered in respect of the estate of a bankrupt are to be taxed by the Registrar in Bankruptcy before being paid by the trustee. Paragraph 167(2)(a) provides that a bill for an amount less than $300, or such greater amount as is prescribed, need not be submitted for taxation. Rule 13 prescribes $1000 as the greater amount for the purposes of paragraph 167(2)(a).
Rule 14 corrects a defect in rule 182 which relates to the fees and percentages payable to the Official Trustee. At present such fees and percentages are not recoverable in relation to work performed by the Official Trustee in administering a post-bankruptcy composition or scheme of arrangement under Division 6 of Part IV of the Act. Rule 14 corrects this anomaly.
Rule 15 amends rule 200 which relates to the search of the file maintained by the Registrar in Bankruptcy in relation to the issue of a bankruptcy notice. Rule 200 provides for restricted access to this file. Rule 15 amends the rule in
order to extend the range of persons who may inspect the file by including references to the Official Receiver and the trustee.
Rule 16 amends Form 27 of Schedule 1, entitled “Notice of Application for Discharge”, by including a requirement that the notice include an address for service upon the applicant. The rule also inserts in the form a note referring the person served to the procedural requirements of rule 55 which relates to opposition to an application for discharge.
Rule 17 and rule 18 amend Form 29 and Form 30 respectively. These two forms are the forms of bond required of a registered trustee and the surety of the registered trustee. The bonds are intended to secure the due performance by the trustee of his or her duties as trustee. Both forms are presently deficient as they are not expressed to refer to a trustee’s duties as a controlling trustee under Part X of the Act. Rules 17 and 18 correct this deficiency.
Rule 19 is a transitional provision relating to the amendment to rule 73 which is made by rule 8.
Authorised by the Attorney-General