EXPLANATORY STATEMENT
Bankruptcy Rules (Amendment)
Statutory Rules No. 376 of 1989
These Statutory Rules amend the Bankruptcy Rules to correct technical defects, to implement the recommendations of the 6th and 7th reports of the Federal Costs Advisory Committee for an increase in the prescribed scale of fees for solicitors in bankruptcy matters, to introduce rules relating to the filing of notices of appearance by parties in proceedings before the courts, and to prescribe countries whose bankruptcy laws will be accorded recognition in Australia.
The details of the rules are set out below.
Rule 1
This rule corrects a typographical error in paragraph 17B(e) of the Bankruptcy Rules where the words ‘by paid’ instead of ‘be paid’ appear.
Rule 2
Rule 20 of the Bankruptcy Rules requires debtors who intend to deny or dispute statements in a creditor’s petition, or to oppose the petition to file a notice setting out the grounds of dispute or of opposition. However, not all debtors do file a notice opposing or disputing the petition, but nevertheless appear at the hearing with a view to proposing some arrangement with the creditor. Accordingly, some debtors do not file any documents which allow the Registry to keep a record of the person’s name, address and address for service. Rule 2 repealed rule 20 and inserted a new rule which requires a debtor who wishes to appear on a petition, whether he or she intends to dispute it or not, to file a notice of appearance, and to serve a copy of the notice on the petitioner.
Rule 3
Rule 27 of the Bankruptcy Rules provides a procedure for trustees to notify the fact of bankruptcy by posting a copy of the sequestration order or a notice stating the fact of bankruptcy by virtue of the acceptance of a debtor’s petition to the bankrupt. The order or notice was required to be posted by prepaid certified mail. In most cases, the debtor is already aware of the fact that he or she has become a bankrupt, and the requirement to send the order or notice by certified mail adds unnecessarily to the cost of administration of the estate. Accordingly, rule 3 repealed the requirement to use certified mail, enabling trustees to use the ordinary post. This will produce significant savings in administrative expenses for the Bankruptcy Division of the
Attorney-General’s Department, which through the Official Trustee administers the vast majority of bankrupt estates.
Rule 4
Section 189B of the Act requires a registered trustee or solicitor who consents to exercise the powers conferred by section 188 of the Act to distribute to creditors a statement in writing setting out prescribed information about the powers of the meeting to pass resolutions with respect to the debtor’s affairs. Where a registered trustee consents to exercise the powers, the debtor’s property comes under the control of that registered trustee, whereas a solicitor’s functions are confined to calling a meeting of the debtor’s creditors. Rule 75 of the Bankruptcy Rules prescribes the information required to be included in the statement under section 189B, and subparagraph 75(c)(i) specifies that the statement should refer to the fact that the creditors may pass a special resolution releasing the debtor’s property from control. This information is required to be included in a statement prepared by a solicitor, even though in such a case, the debtor’s property is not subject to control.
Rule 4 amended subparagraph 75(c)(i) of the Bankruptcy Rules to make clear that the creditors have the option to pass a resolution releasing a debtor’s property from control where it is a registered trustee who is acting pursuant to the section 188 authority. In the case of solicitors, it will not be necessary for a statement under section 189B to make reference to a resolution releasing the debtor’s property from control, since the control regime does not, in any event, come into being where a solicitor performs functions under a section 188 authority.
Rule 5
Rule 78 of the Bankruptcy Rules sets out the material that a debtor is required to include in his or her statement of affairs for the purposes of Part X of the Act. Paragraph (h) provides that the debtor should include such other matters as the Registrar considers ought to be included. Under new administrative arrangements, the statement of affairs forms are approved by the Inspector-General in Bankruptcy rather than the Registrar, and accordingly rule 5 provided for the repeal of paragraph 78(2)(h).
Rule 6
Subrule 101(5) requires a person to specify his or her telephone number at the address given by the person as his or her address for service. The use of facsimile machines, and document exchange facilities has become quite commonplace, and rule 6 amended rule 101 of the Bankruptcy Rules to recognise the use of such facilities. Subrule 101(5) will enable a person to specify his or her document exchange and facsimile numbers in documents filed in the Registry. Subrule 101(6) provides that a document exchange facility is an address for
service only if it is stated to be an address for service in the document which is filed. Subrule 101(7) enables proceedings to be continued or documents to be corrected in a case where a person files a document showing an address for service which is not genuine.
Rule 7
Rule 106 provides a procedure for a person to oppose an application by filing a notice setting out the grounds upon which he or she intends to oppose it. This rule corresponds with rule 20, which was amended by rule 3 of these statutory rules. Rule 7 amended rule 106 of the Bankruptcy Rules in the same manner as rule 2 amended rule 20 of the Bankruptcy Rules so that a person who intends to appear at the hearing of an application or petition, whether or not he or she intends opposing the application will be required to file a notice of appearance before the hearing, or by leave at the hearing, so that the Registry has a record of the person’s address for service.
Rule 7 also introduced into the Bankruptcy Rules provision corresponding to that found in the Federal Court Rules whereby a corporation which wishes to file a document must do so by a solicitor, unless it is excused from the requirement to do so.
Rule 8
Rule 162 of the Bankruptcy Rules sets out the scale of solicitors costs in bankruptcy matters. The scale of costs is reviewed regularly by the Federal Costs Advisory Committee, and the Sixth and Seventh reports of that Committee have recommended increases in the scale amounting in the aggregate to 3.8%. Rule 8 implemented the recommendations of the
Committee’s two reports by applying a 3.8% increase to the scale costs. Bills of costs will continue to be calculated in accordance with the scale, but solicitors will be allowed to charge an additional amount equal to 3.8% of the total according to the scale.
Rule 9
Rule 183 of the Bankruptcy Rules empowers the Registrar in Bankruptcy to waive or remit a fee payable where payment would impose unreasonable hardship on the payee. Under the Federal Court Regulations, the power to remit and waive fees arises where the person otherwise required to pay the fee would suffer hardship in consequence. Rule 9 amended rule 18 3 by removing the word ‘unreasonable’, thus making the provision identical to that contained in the Federal Court Regulations.
Rule 10
Section 29 of the Act provides that the Courts of prescribed foreign countries may act in aid of Australian courts having jurisdiction in bankruptcy, and requires the Australian courts
to act in aid of the courts of prescribed countries in bankruptcy matters. Paragraph 29(5)(b) of the Act enables countries to be prescribed in rules. Rule 10 specifies that the countries mentioned in Schedule 5 of the Bankruptcy Rules, inserted by these rules are prescribed countries for the purposes of paragraph 29(5)(b) of the Act.
Rule 11
Rule 11 amended Schedule 1 to the Bankruptcy Rules by repealing Forms 8 and 46 and inserting substitute forms. The previous Forms 8 and 46 were forms of notice of opposition to applications and petitions, provided for under rules 20 and 106 of the Bankruptcy Rules. Those rules were amended by rules 2 and 7 of these Statutory Rules to provide for notices of appearance by parties.
Rule 12
Item 4 in Schedule 4 of the Bankruptcy Rules provided that a fee of $1.00 was payable to the Registrar in Bankruptcy in respect of each request for a copy or copies of a document or documents. A similar fee was provided for under the Federal Court Regulations, and was raised in those regulations from $0.60 to $2.00 so as to recover more fully the costs of providing the service. To maintain uniformity between the Federal Court fee scale and the Bankruptcy fee scale, item 4 was correspondingly increased from $1.00 to $2.00 by rule 12.
Rule 13
Rule 13 inserted Schedule 5 into the Bankruptcy Rules. Schedule 5 contains the list of prescribed countries whose courts having jurisdiction in bankruptcy will be aided by Australian courts. The countries whose courts will be provided with aid are Malaysia, Papua New Guinea, Singapore, Switzerland and the United States of America.
Rule 14
Rule 14 provides that the Bankruptcy Rules are to be further amended as provided in Schedule 2 to these Statutory Rules.
Rule 15
Rule 15 is a declaratory provision designed to overcome doubt about the application of certain provisions of the Bankruptcy Rules as amended by the Bankruptcy Rules (Amendment), Statutory Rules No. 182 of 1989. Rule 19 of Statutory Rules No. 182 of 1989 repealed rule 129 as it stood before 31 July 1989 and inserted new rules 129, 129A, 129B and 129C. Rule 129 as it was before 31 July 1989 provided a procedure for the application for and issue of summonses to persons to attend for examination about the property and affairs of a debtor or bankrupt under section 81 of the Act. Section 81 was amended
by the Bankruptcy Amendment Act 1987 with effect from 31 July 1989, and rules 129, 129A, 129B and 129C which commenced on that day provide appropriate procedures for section 81 as amended. However, section 81 in its amended form applies to and in relation to a bankruptcy if and only if the date of bankruptcy took place on or after 31 July 1989. The new rules of procedure are not appropriate in relation to section 81 as it stood before 31 July 1989 and as it continues to apply in relation to bankruptcies which occurred before that date. The application provisions of Statutory Rules No. 182 of 1989 did not specify that the amendments made by rule 19 of those rules applied in the same manner as the amendments to section 81 made by the Bankruptcy Amendment Act 1987, that is, to bankruptcies where the date of bankruptcy was on or after 31 July 1989. Rule 15 makes clear that the amendments made by rule 19 of Statutory Rules No. 182 of 1989 apply only in relation to bankruptcies that occurred after 31 July 1989.
Schedule 1
Schedule 1 contains new Forms 8 and 46, which were inserted into Schedule 1 of the Bankruptcy Rules. Form 8 is the form of notice of intention of a debtor to appear at the hearing of a creditor’s petition, provided for under rule 20 as amended by these Statutory Rules. Form 46 is the notice of intention by a person to appear at the hearing of an application or a petition, or at an examination under the Act.
Schedule 2
Rule 14 of these Statutory Rules provides for minor amendments to be made to the Bankruptcy Rules as specified in Schedule 2. Rule 30A and subrules 30B(1), 78(1) and 87(1) all make provision relating to statements of affairs required to be filed in the office of the Registrar by bankrupts, debtors and the administrators of the estates of deceased persons where the estate is to be administered in bankruptcy. Each of these provisions require that the statement of affairs be in a form provided by the Registrar. Under new administrative arrangements, the forms are developed and approved by the office of the Inspector-General in Bankruptcy. Accordingly, the words ‘provided by the Registrar’ which appeared in each of the quoted provisions were repealed and replaced by the words ‘approved by the Inspector-General’.
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