EXPLANATORY STATEMENT
BANKRUPTCY ACT 1966
BANKRUPTCY RULES (AMENDMENT)
1984 No. 23
Sub-rule 127(2) of the Bankruptcy Rules provides for allowances payable to witnesses when summoned or requested to appear before the Court or the Registrar to give evidence in proceedings under the Act. Immediately prior to these amending rules the allowances payable were in accordance with Schedule 2 to the Bankruptcy Rules.
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 Bankruptcy 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 is twofold. First, to increase, by 25 per cent, the scale of costs which may be charged by solicitors in respect of work done in bankruptcy proceedings. The increase is to cover rises in costs and expenses since
August 1979. Second, to tie witnesses’ allowances for travelling and other expenses when attending as witnesses in bankruptcy proceedings to those applying in the Federal Court of Australia from time to time.
The rules are as follows -
Rule 1
This rule amends sub-rule 127(2) of the Bankruptcy Rules by deleting the reference to Schedule 2 and making the fees and allowances payable for expenses of witnesses accord with those in the Second Schedule to the Federal Court Rules as in force from time to time.
Rule 2
This rule amends sub-rule 162(2) of the Bankruptcy Rules to increase, by 25 per cent, the costs allowed to a solicitor acting for a petitioning creditor in the circumstances set out in that sub-rule.
Rule 3
This rule repeals Schedule 2 to the Bankruptcy Rules.
Rule 4
This rule repeals Schedule 3 to the Bankruptcy Rules and substitutes a new Schedule which increases, by 25 per cent, the costs that solicitors are entitled to charge and be allowed for work done in respect of bankruptcy proceedings in circumstances other than those referred to in sub-rule 162(2).
Rule 5
This rule is a transitional provision. Sub-rule (1) of the rule continues to apply the provisions of sub-rule 127(2) of the Bankruptcy Rules and Schedule 2 to the Bankruptcy Rules as in force immediately before the commencement of the amending rules in relation to attendances before the commencement of those rules. Sub-rule (2) of the rule continues to apply the provisions of sub-rule 162(2) of the Bankruptcy Rules as in force immediately before the commencement of the amending rules in relation to proceedings instituted before the commencement of those rules. Sub-rule (3) of the rule continues to apply the provisions of Schedule 3 to the Bankruptcy Rules as in force immediately before the commencement of the amending rules in relation to work done before the commencement of those rules.
Authorised by the Attorney-General
Overview
The Bankruptcy Act 1966 was amended in 1984 to address issues relating to the costs and allowances for solicitors and witnesses involved in bankruptcy proceedings. The Bankruptcy Rules (Amendment) 1984 No. 23, enacted by the Commonwealth Parliament, introduced these changes to ensure that the fees and allowances kept pace with inflation and other rising costs since August 1979. The primary objective of the amendments was to increase by 25 per cent the scale of costs that solicitors could charge for their work in bankruptcy proceedings, as well as to align the allowances for witnesses with those applicable in the Federal Court of Australia. This was to ensure consistency in the treatment of witnesses across different courts and to reflect the actual expenses incurred in attending as witnesses in bankruptcy proceedings.
Scope and Application
The Bankruptcy Rules (Amendment) 1984 No. 23 amends the Bankruptcy Rules 1966 under the Bankruptcy Act 1966, applying to all persons and entities involved in bankruptcy proceedings in Australia, including witnesses summoned to give evidence and solicitors representing petitioning creditors. The amendments adjust the allowable costs for solicitors and the allowances for witnesses to reflect increases since 1979, aligning these costs with those in the Federal Court. Specifically, the amendments increase the scale of allowable costs for solicitors by 25%, and adjust the fees and allowances for witnesses to match those applicable in the Federal Court. The changes are designed to ensure that legal and procedural costs keep pace with inflation and other economic factors. The amendments apply nationwide, covering all Commonwealth jurisdictions, and are effective from the date of their enactment. There are no stated exclusions or exemptions, but transitional provisions ensure continuity for proceedings and work done before the amendments took effect. The scope of application is further extended through subordinate instruments that may update the allowances and costs in line with changes in the Federal Court rules.
Key Provisions
The Bankruptcy Rules (Amendment) 1984 No. 23 introduces several key amendments to the Bankruptcy Rules, particularly affecting allowances for witnesses and costs for solicitors in bankruptcy proceedings. Rule 1 amends sub-rule 127(2) of the Bankruptcy Rules to align the fees and allowances payable for witnesses' expenses with those specified in the Second Schedule to the Federal Court Rules. Rule 2 modifies sub-rule 162(2) of the Bankruptcy Rules to increase, by 25%, the costs allowed to solicitors acting for petitioning creditors in proceedings initiated based on non-compliance with a bankruptcy notice. Rule 3 repeals Schedule 2 of the Bankruptcy Rules, which previously outlined allowances for witnesses. Rule 4 repeals Schedule 3 of the Bankruptcy Rules and replaces it with a new schedule that increases, by 25%, the costs that solicitors can charge and be allowed for work done in bankruptcy proceedings, except for the specific circumstances outlined in sub-rule 162(2). Rule 5 is a transitional provision that ensures the existing provisions continue to apply to attendances, proceedings, and work done before the commencement of the amending rules.
These amendments impose specific obligations and requirements on the parties involved in bankruptcy proceedings. Witnesses attending court or the Registrar must now receive allowances consistent with the Federal Court Rules, as outlined in Rule 1. Solicitors acting for petitioning creditors must ensure they are charging and allowed costs according to the new percentages specified in Rule 2, particularly in proceedings based on non-compliance with a bankruptcy notice. The changes in Rule 4 require solicitors to adjust their billing to reflect the 25% increase in allowable costs for general bankruptcy proceedings, except as specified in Rule 2. Rule 5 ensures continuity by applying the old rules to cases that were ongoing before the amendments came into effect.
Failure to comply with these amended rules could result in civil or criminal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of rules concerning allowable costs and allowances could potentially lead to claims for overcharges or underpayments, and might also implicate the integrity of the proceedings. The increased transparency and alignment with Federal Court Rules aim to prevent such issues by standardising the allowances and costs structure.