Bankruptcy Rules (Amendment)

Legislation au C2004L03989 Rules Not in force Legislative Instrument

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Explanatory Statement

Bankruptcy Rules Amendment

Statutory Rules 1988 No. 261

The Bankruptcy Rules Amendment Statutory Rules No. 261 of 1988 implement the 5th Report of the Federal Costs Advisory Committee on the solicitors scale of costs under the Bankruptcy Act and change the scale so that items are rounded to the nearest dollar to bring the bankruptcy scale into line with the Federal Court’s scale of costs. The rules also correct minor anomalies in the Bankruptcy Rules. Details of the rules are as follows.

Rule 1

This rule provides for commencement of the Statutory Rules from 1 November 1988.

Rule 2

Rule 2 repeals rule 31A of the Bankruptcy Rules and substitutes a new rule 31A which is the same as the former rule 31A. When rule 31A was inserted into the rules by Statutory Rules No. 19 of 1988 a heading to the rule was inadvertently omitted. It was considered necessary to repeal and remake rule 31A with a heading to the rule since the heading could not be inserted by itself.

Rule 3

Rule 3 amends rule 162 to give effect to the 3.1% increase in the scale of solicitors costs recommended in the 5th report of the Federal Costs Advisory Committee. Subrule 162(2) enables a solicitor to deliver a short form bill of costs in relation


to appearing on a creditor’s petition. Where a sequestration order is made in a proceeding, on a creditor’s petition in which non-compliance with a bankruptcy notice is specified as the act of bankruptcy or one of the acts of bankruptcy, the solicitor may bring in a short form bill of costs. Previously a solicitor was allowed $772-00 on a short form bill. Paragraph 3(a) of these rules raises that amount to $899-00. In a case where proceedings on a creditor’s petition have been adjourned and the petitioning creditor is allowed his or her costs, a solicitor is allowed $77-00 in respect of the adjourned hearing where counsel attended and in any other case is allowed $87-00. Paragraphs 3(b) and 3(c) raise the amounts of $77-00 and $87-00 to $80-00 and $90-00 respectively. In a case where a creditor’s petition based on non-compliance with a bankruptcy notice is dismissed, a solicitor is allowed to bring in a short form bill of costs also. Paragraph 3(d) raises the previous amount of $750-00 to $774-00. Paragraph 3(d) also corrects an anomaly whereby a solicitor was not able to bring in a short form bill of costs in relation to creditor’s petitions which were dismissed where the proceedings had been adjourned earlier. Paragraph 3(d) corrects this anomaly by making the same provision in such a case as is provided for in subrule 162(2) where a sequestration order is made on a creditors petition. In the case where the proceedings are adjourned and counsel attends on the hearing which is adjourned, the solicitor will be allowed $80-00 costs and in any other case $90-00.

Rule 4

Rule 179 of the Bankruptcy Rules provides for the payment of fees to Registrars in Bankruptcy by trustees. Subrule 179(5) was amended by Statutory Rules No. 19 of 1988 to provide that fees were not payable to the Registrar in circumstances where


there was a surplus in the estate of the bankrupt which would be paid back to the bankrupt. However it was considered that the words used in subrule 179(5) as amended were ambiguous in that they referred to fees being payable on the amount realised by the trustee for distribution to creditors or the sum of the total amounts received. Although theoretically amounts are received by a trustee for distribution to creditors, the first charge on an estate is the trustee’s out-of-pocket expenses and remuneration and in some cases the trustee’s expenses and remuneration use all the realisations and no dividend is paid to creditors.

Accordingly paragraph 4(a) amends subrule 179(5) by removing the reference to amounts received by the trustee for distribution to creditors and paragraph 4(b) inserts into subrule 179(5) a clear statement that the amount of any surplus to which the bankrupt is entitled by virtue of section 148 of the Act is not subject to fees under rule 179.

Rule 5

Rule 5 repeals Schedule 3 of the Bankruptcy Rules which sets out the scale of solicitors costs in respect of 35 items mentioned in the Schedule. Rule 5 inserts a new Schedule 3 which applies increases in respect of each item in accordance with the recommendations of the Federal Costs Advisory Committee. In addition, each item in the scale is rounded to the nearest dollar. Previously the practice was to round each item in the scale to the nearest 10 cents. The Federal Court of Australia, which exercises bankruptcy jurisdiction throughout Australia in the vast majority of cases, rounds its scale of costs to the nearest dollar. Apart from the desirability of bringing the bankruptcy scale into line with the Federal Courts scale, rounding of the scale to the nearest


dollar has advantages for practitioners and for registry staff in the Court because the preparation and taxing of bills of costs is made simpler and less time consuming.

Rule 6

Rule 6 is the transitional provision under which the scale of costs which applied immediately before the commencement of these rules, will continue to apply in respect of work done after 12 October 1987 (the date on which the scale was last amended) and before the commencement of these rules.

Authorised by the Minister for Consumer Affairs.

Overview

The Bankruptcy Rules Amendment Statutory Rules No. 261 of 1988 were enacted to address the need for updating the scale of solicitors' costs under the Bankruptcy Act 1966, aligning it with the Federal Court’s scale of costs, and correcting minor anomalies within the existing Bankruptcy Rules. Authorised by the Minister for Consumer Affairs, these rules implement the recommendations of the 5th Report of the Federal Costs Advisory Committee, specifically by rounding each item in the scale of costs to the nearest dollar to simplify and streamline the preparation and taxing of bills of costs. The rules also correct specific anomalies identified within the Bankruptcy Rules, such as the omission of a heading in a previously inserted rule, and ensure that fees to Registrars in Bankruptcy are appropriately calculated based on the surplus in the estate of the bankrupt, rather than on the amounts received by the trustee for distribution to creditors. These amendments aim to enhance the efficiency and fairness of the bankruptcy process, ensuring that practitioners and registry staff are not burdened by unnecessary complexities in billing and fee calculations.

Scope and Application

The Bankruptcy Rules Amendment Statutory Rules 1988 No. 261 applies to practitioners, trustees, and parties involved in bankruptcy proceedings in Australia. Specifically, these rules amend the scale of solicitors’ costs under the Bankruptcy Act 1966 and align the rounding of costs to the nearest dollar with the Federal Court’s scale of costs. This adjustment is implemented to simplify the preparation and taxing of bills of costs and to ensure consistency with the Federal Court's practices. Additionally, the rules correct minor anomalies in the existing Bankruptcy Rules, ensuring clarity and proper application of the rules governing costs in bankruptcy proceedings. The rules are applicable nationally, as they are part of the Commonwealth legislation. There are no specific exclusions mentioned in the rules, but they apply to all entities and individuals involved in bankruptcy proceedings within the Australian jurisdiction. The rules are effective from 1 November 1988, with transitional provisions ensuring that the previous scale of costs continues to apply for work done before this date.

Key Provisions

The main operative sections of the Bankruptcy Rules Amendment Statutory Rules No. 261 of 1988 primarily concern changes to the scale of solicitors' costs under the Bankruptcy Act, as recommended by the Federal Costs Advisory Committee. Rule 3 (subrule 162) adjusts the scale of solicitors' costs by 3.1%, with specific increases applied to various scenarios such as when a short form bill of costs is delivered, a sequestration order is made, or proceedings are adjourned or dismissed. Rule 4 addresses the payment of fees to Registrars in Bankruptcy, clarifying that fees are not payable if there is a surplus in the estate that would be paid back to the bankrupt. Rule 5 repeals the existing scale of solicitors' costs and inserts a new schedule that aligns with the Federal Court’s scale by rounding each item to the nearest dollar. Rule 6 serves as a transitional provision, ensuring that the old scale continues to apply to work done before the new rules commence. The Act imposes several obligations on the parties and entities it governs. It mandates that the scale of solicitors' costs be updated in accordance with the Federal Costs Advisory Committee's recommendations, ensuring that the costs reflect current economic conditions and practices. Trustees must adhere to the new fee structures and conditions, particularly in relation to when fees are payable to Registrars. Furthermore, practitioners must ensure that all billings and claims for costs comply with the newly rounded scale, which simplifies the preparation and taxing of bills of costs. Breach of the provisions outlined in these rules can lead to civil and administrative consequences. For instance, if a solicitor submits a bill of costs that does not comply with the new scale, this may result in the bill being disallowed or taxed at an incorrect rate, potentially leading to financial discrepancies or disputes. Additionally, if trustees incorrectly calculate fees payable to Registrars due to misunderstandings about the surplus in the estate, this could lead to administrative penalties or financial liabilities. While the rules do not explicitly state maximum penalties for breaches, non-compliance could result in financial penalties or the need for corrective action to rectify any errors in billing or fee calculation.

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Bankruptcy Law
Instrument
Statutory Instrument
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Commencement Provisions
Repeal & Amendment
Transitional Provisions
Definitions & Interpretation
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.