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Law and Justice Legislation Amendment Bill (No.2) 1995



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House: Senate

Portfolio: Attorney-General

Commencement: The legislation commences on Royal Assent, subject to the following:

Items 1,5,7,8,10-12 and 58-67 commence on a date to be fixed by Proclamation.

If the above Items do not commence within six months of Royal Assent, then they commence on the first day after the end of that six month period.

If Item 31 of Schedule 2 of the Law and Justice Legislation Amendment Act (No.1) 1995 1 does not come into effect before the date on which the Law and Justice Legislation Amendment Act (No.2) 1995 receives Royal Assent, then Item 13 of the Schedule to the latter comes into effect immediately following the commencement of Item 31.

If Item 43 of Schedule 1 of the Law and Justice Legislation Amendment Act (No.1) 1995 has not come into effect before the Law and Justice Legislation Amendment Act (No.2) 1995 receives Royal Assent, then Item 14 of the Schedule to the latter comes into effect immediately following the commencement of Item 43. 2

Purpose

The Bill amends 14 pieces of legislation in the portfolios of the Attorney-General, the Treasurer and Minister for Finance. It has no underlying theme. The major amendments are described below.

Background

Small Taxation Claims Tribunal

In its Report 326. An Assessment of Tax, the Joint Committee of Public Accounts recommended the establishment of a Small Taxation Claims Tribunal within the Administrative Appeals Tribunal (AAT). 3

Evidence was put to the Committee that the cost of AAT proceedings does not allow taxpayers to challenge actions of the Commissioner of Taxation when the size of a disputed tax is small. As a result, a taxpayer with a small taxation claim may be forced to accept the Australian Taxation Office's assessment or settle an assessment rather than seeking a review.

The Joint Committee recommended that:

...where the amount of tax in dispute with the Australian Taxation Office is less than $5,000, taxpayers be able to elect to have their objections or reviews of decisions heard by the Small Taxation Claims Tribunal. 4

The Committee also recommended that:

a non-refundable fee of $50.00 be lodged by taxpayers seeking to use the Small Taxation Claims Tribunal;

a decision of the Tribunal be final and non-appealable; and

where the taxpayer intends to take a matter before the Small Taxation Claims Tribunal, the ATO have the option to refer the matter to the Federal Court of Australia provided all the taxpayer's costs, including legal representation, are met by the ATO. 5

The Government has responded to the Joint Committee's recommendations on the Small Taxation Claims Tribunal. It accepted the recommendation to establish a Small Taxation Claims Tribunal. However, it further stated:

The Government has decided that the Tribunal (which will deal with disputes involving less than $5,000) will be a new Division of the Administrative Appeals Tribunal. This new review body will provide for an emphasis on mediation and streamlined procedures rather than formal hearings. In relation to this new body, the Government has been advised that it would be unconstitutional for its decisions to be final and non-appealable. Accordingly, a right of appeal to the Federal Court on questions of law will be available.

More details of the amendments to the Administrative Appeals Tribunal Act 1975 are contained below in the Main Provisions section of this Digest.

Bankruptcy and Family Law

Economic conditions have resulted in an increase of simultaneous application of the Family Law Act 1975 and the Bankruptcy Act 1966. 6 Courts are then required to determine how the assets of a debtor should be distributed in the face of competing claims between the debtor's creditors and his or her family.

In additional to genuine disputes which arise from the intersection of these two areas of the law, manipulation of the present unsatisfactory state of affairs may occur as follows:

by debtors bidding to thwart encroaching creditors, by the transfer of assets into the sole name of their spouses under the guise of maintenance agreements. Conversely, some business persons have orchestrated their own bankruptcy and transferred assets into the hands of their creditors (be they bogus or bona fide), in order to frustrate pending actions by their spouses for property settlement.

In 1992, the Family Law Council of Australia produced a report entitled The Interaction of Bankruptcy and Family Law. There are a number of difficulties that arise when bankruptcy and family law intersect. These include:

priorities between non-bankrupt spouses and creditors. It has been noted that:

Under the current regime where priorities between creditor and family are considered only in an ad hoc way, there are many situations where the Family Court would be tempted to set aside an order of the Federal Court, and vice versa, in order to achieve what each court perceives to be justice between the parties with whose interests it is dealing. Neither court has jurisdiction to set aside the other's orders.

ability of a non-bankrupt spouse to intervene in bankruptcy proceedings. While a trustee in bankruptcy can intervene in Family Court proceedings, a spouse who cannot prove a debt generally cannot intervene in proceedings in a bankruptcy court.

The Family Law Council recommended, among other things, that:

prior to the distribution of the estate of a bankrupt to creditors, the non-bankrupt spouse should be able to retrieve from the assets of the bankrupt any property to which he or she might be entitled under 'New Equity' principles. This would involve recognising indirect contributions made by the party to the acquisition, conservation or improvement of property and towards non-economic contributions;

where there are competing claims under the Bankruptcy Act 1966 and the Family Law Act 1975, one court should determine those competing claims; and

the appropriate court to hear competing claims is the Family Court of Australia.

Amendments contained in the Law and Justice Legislation Amendment Bill (No.2) 1995 affect the Family Law Act 1975 and the Bankruptcy Act 1966. They represent the Government's response to some of the problems presented by the interaction of bankruptcy and family law (see Main Provisions section of this Digest).

Freedom of Information Act 1982

The Freedom of Information Act 1982 (the FOI Act) creates a legally enforceable right of access by people to information contained in documents held by a Commonwealth Government body. The FOI Act also contains exemptions. Section 7 of the FOI Act provides for bodies listed in Schedule 2 of the Act to be exempted from the Act either wholly or in part.

Part I of Schedule 2 contains a list of agencies which are wholly exempted from the operation of the Freedom of Information Act 1982. Those bodies include Aboriginal Land Councils, Aboriginal Land Trusts, the Auditor-General, the Australian Industry Development Corporation, the Australian National Railways Commission, the Commonwealth Trading Bank, the Commonwealth Savings Bank, Pipeline Authority etc. The reason given for the exemption of such bodies is that they are in competition with private sector bodies and would be placed at a serious disadvantage if their private sector competitors could gain information under FOI about their operations.

Part II of Schedule 2 contains a list of agencies which are exempted from the operation of the Freedom of Information Act 1982 in respect of certain documents. In many cases, these exemptions relate to documents related to their commercial activities. The purpose of the exemptions relating to commercial documents in Part II of Schedule 2 is to protect those documents from access applications under the Freedom of Information Act 1982 which could be made by commercial competitors.

Part II of Schedule 2 is divided into a number of Divisions. Agencies appearing in Division 1 of Part II are also exempted from the operation of certain aspects of the Privacy Act 1988 - by virtue of the operation of section 7 of the Privacy Act 1988. Agencies listed in Division 1 of Part II of Schedule 2 of the Freedom of Information Act 1982 include the Aboriginal and Torres Strait Islander Commercial Development Corporation, the Albury-Wodonga Development Corporation, the Attorney-General's Department, the Australian Broadcasting Corporation, the Australian Pork Corporation, the Australian Postal Corporation, Telstra Corporation etc.

.

Amendments to the Freedom of Information Act 1982 contained in the Law and Justice Legislation Amendment Bill (No.2) 1995 provide for certain exemptions in respect of two agencies - the Department of Administrative Services and the Indigenous Land Corporation (see Main Provisions section).

Cross Vesting Legislation

In 1987, the Commonwealth enacted the Jurisdiction of Courts (Cross-Vesting) Act in order to:

establish a system of cross-vesting of jurisdiction between federal, State and Territory courts.... The essence of the scheme ... is that State and Territory Supreme Courts will be vested with all the civil jurisdiction - except in certain industrial and trade practices jurisdiction - of the Federal courts, at present the Federal Court of Australia and the Family Court of Australia, and the federal courts will be vested with the full jurisdiction of the State and Territory Supreme Courts. 7

The purpose of cross-vesting legislation is to ensure that litigants are not put to unnecessary delay or expense because of uncertainties about the jurisdictional limits of Federal, State and Territory courts. Such uncertainties arise particularly in family and trade practices law - areas which touch the everyday activities of many individuals and businesses. The legislation was also introduced to ensure that proceedings instituted in different courts but which should be heard together are tried in the one court. 8

The national cross-vesting scheme came into operation on 1 July 1988 following the enactment of Commonwealth legislation and parallel legislation in all the States and the Northern Territory. At present the Australian Capital Territory participates in the cross-vesting scheme as a result of the operation of the Commonwealth legislation.

A Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT) has been passed by the Australian Capital Territory Legislative Assembly. The legislation was regarded as desirable because of the ACT's status as a self-governing polity and because responsibility for the ACT Supreme Court had been transferred from the Commonwealth to the ACT. In his Presentation Speech, the then ACT Attorney-General said:

The Bill now before the Assembly is the result of the agreement of the Standing Committee of Attorneys-General to the Australian Capital Territory participating in the cross-vesting scheme in its own right. The Australian Capital Territory Act will commence on the say day as the complementary amendments to the Commonwealth Act commence. .... In addition, there will be complementary amendments made to the cross-vesting legislation of the States and the Northern Territory to recognise the participation of the Australian Capital Territory in its own right. 9

The proposed changes to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cwlth) in the Law and Justice Legislation Amendment Bill (No.2) 1995 contain complementary Commonwealth amendments (see Main Provisions section).

Privacy Act 1988 (Cwlth)

Part IIIA of the Privacy Act 1988 provides safeguards for individuals in relation to credit reporting. 10 It regulates how credit reporting agencies and credit providers handle information about individuals.

The legislation places limits on the content, use and disclosure of credit reports. It attempts to protect information relating to consumer credit worthiness of individuals and to ensure that the use of this information is restricted primarily to assessing applications for credit submitted to credit providers. 11

Amendments to the Privacy Act 1988 contained in the Law and Justice Legislation Amendment Bill (No.2) 1995 deal largely with the credit provider and credit reporting aspects of the Act.

Service and Execution of Process Act 1992 (Cwlth)

The Service 12 and Execution 13 of Process Act 1992 enables a writ or other process 14 commencing civil or criminal proceedings in State and Territory courts to be served throughout Australia. The Act also provides that other process in proceedings, including process to secure witnesses (eg subpoenas and summonses) may be served throughout Australia. The Act establishes procedures for the execution of warrants for the apprehension of persons throughout Australia and procedures by which orders made by a court in one State or Territory may be enforced in another State or Territory.

The need for the legislation arises out of the independent legal nature of the States and Territories. Without such legislation it would not be possible for a person in one State or Territory to take legal proceedings against a person in another jurisdiction to enforce their legal rights or to enforce the criminal law.

One of the amendments to the Service and Execution of Process Act 1992 contained in the Bill is designed to address a 1994 decision of the Supreme Court of Western Australia. The case of Lavelle v. Commissioner of Police 15 involved a warrant of apprehension issued in Victoria against the applicant, Lavelle, who subsequently moved to Western Australia. Lavelle was later imprisoned in Western Australia for separate offences and had been told mistakenly that plans to extradite him to Victoria had been abandoned.

Prior to the passage of the Service and Execution of Process Act 1992, the relevant legislation was the Service and Execution of Process Act 1901 (the 1901 Act). Under the 1901 Act it was possible for a magistrate exercise a discretionary judgment in relation to an application to stay an extradition order. Under the Service and Execution of Process Act 1992, a different statutory scheme was put in place and the exercise of a discretionary judgment appears to have been eliminated.

The issue considered by the Court in Lavelle v. Commissioner of Police was whether, apart from the provisions of the Service and Execution of Process Act 1992, the Court had an inherent jurisdiction to set aside the extradition order to prevent an abuse of process or because it would be unjust, oppressive or unfair for the extradition order to operate.

The Supreme Court of Western Australia held that it did have such an inherent jurisdiction and exercised that jurisdiction on the facts of the case before it.

In inserting new section 86A into the Service and Execution of Process Act 1992, the Government has stated that it is ensuring that reviews of extradition proceedings will be governed exclusively by the statutory regime contained in the Act - thus removing any inherent jurisdiction in the courts.

Main Provisions

The amendments are set out in a Schedule to the Bill.

Part I - Amendments of the Administrative Appeals Tribunal Act 1975 (Cwlth)

Item 7 of the Schedule inserts Part IIIAA into the Administrative Appeals Tribunal Act 1975 (the AAT Act). Part IIIAA deals with the Small Taxation Claims Tribunal.

According to the Explanatory Memorandum and the Second Reading Speech, the application fee for a Small Taxation Claims Tribunal matter will be set by regulation and will be a non-refundable amount of $50.00. 16

New section 24AC provides that the Small Taxation Claims Tribunal is to hear tax disputes which are for less than the 'determined amount'. The 'determined amount' is defined as $5,000 or a higher amount if so provided in the regulations.

New subsection 24AC(1) provides that, when hearing such disputes, the Taxation Appeals Division of the AAT is to be known as the Small Taxation Claims Tribunal.

New section 24AD provides that if the Small Taxation Claims Tribunal considers that the tax in dispute is not less than the 'determined amount' then it can make an order declaring that new section 24AC is not to apply. Such a matter is heard by the Taxation Appeals Division (not the Taxation Appeals Division sitting as the Small Taxation Claims Tribunal). The applicant must pay an additional fee to have such a claim heard (unless this fee is waived).

Item 8 inserts new paragraph 34A(1A)(a) provides that an applicant to a proceedings before the Small Taxation Claims Tribunal must be given a statement setting out the procedures to be followed by the Tribunal and the mediation processes that are available.

New paragraph 34A(1A)(b) provides that if the Small Taxation Claims Tribunal considers that mediation may assist the resolution of a dispute before it, then it must recommend mediation to the parties and, if the parties consent, direct that the matter be referred to a mediator.

Item 12 inserts new paragraph 45(1)(c) amends subsection 45(1) of the AAT Act. Section 45 of the AAT Act deals with the referral of questions of law to the Federal Court of Australia. New paragraph 45(1)(c) requires the presiding member of the Small Taxation Claims Tribunal to consider the applicant's interests before referring a question of law to the Federal Court.

It is difficult to know the purpose that will be served by new paragraph 45(1)(c) and what the consequence would be if a decision were made not to refer a question of law to the Federal Court.

Item 14 inserts new section 69C which enables the Small Taxation Claims Tribunal to award reasonable costs if it forms the opinion that a party or representative of a party to proceedings has engaged in conduct that should not have been engaged in and another party to the proceedings has incurred costs as a result. Some examples of conduct are given in new subsection 69C(2). They include failure to comply with a direction or order of the Tribunal.

Part 3 - Amendments to the Bankruptcy Act 1966 (Cwlth)

Item 16 inserts new section 30A of the Bankruptcy Act 1966 which will enable the Federal Court to exercise the powers that can be exercised by the Family Court of Australia under Part VIII of the Family Law Act 1975. Part VIII of the Family Law Act 1975 relates to property, spousal maintenance and maintenance agreements.

New subsection 30A(2) provides that these powers can be exercised by the Federal Court of its own motion or on the application of a person who is entitled to bring Part VIII proceedings under the Family Law Act 1975.

As a result, a non-bankrupt spouse of a bankrupt who cannot, at present, intervene in bankruptcy proceedings because of inability to prove a debt, will be able to intervene in those proceedings.

Item 17 inserts new section 35B of the Bankruptcy Act 1966 enabling the Federal Court to transfer matters which relate to Part VIII of the Family Law Act 1995 to the Family Court of Australia if it considers it appropriate or just to do so.

Where such a proceeding is transferred, new subsection 35B(3) enables the Family Court to exercise jurisdiction over matters not otherwise within its jurisdiction and to grant remedies and make orders that could have been granted or made by the Federal Court.

There is no appeal from a Federal Court decision about the transfer of proceedings to the Family Court ( new subsection 35B(5)). New subsection 35B(5) is similar to provisions under cross-vesting legislation which provide that no appeal lies from a decision on transfer of proceedings under such legislation.

Item 18 amends subsection 116(2) of the Bankruptcy Act 1966 by inserting new subsection 116(2AA). Section 116 of the Bankruptcy Act 1966 provides that property belonging to a bankrupt at the commencement of his or her bankruptcy is divisible among the bankrupt's creditors. Subsection 116(2) excludes certain property from such division.

New subsection 116(2AA) provides that if, before the property of a bankrupt is distributed among the bankrupt's creditors, a declaration or order is made under the Family Law Act 1975 giving the spouse or former spouse of the bankrupt an interest in the property, then that property is not divisible among the bankrupt's creditors.

This amendment will enable the non-bankrupt spouse of a bankrupt to retrieve property which is the subject of a Family Court order or declaration and which has not already been distributed to creditors of the bankrupt spouse.

Part 4 - Amendments of the Family Law Act 1975 (Cwlth)

Item 19 of the Schedule inserts new section 79B into the Family Law Act 1975. New section 79B provides that if property proceedings (under Part VIII of the Family Law Act 1975) are pending in the Family Court, then they may be transferred to the Federal Court of Australia if it is appropriate or just to do so. A transfer may be made by the court of its own motion or on the application of either party to the marriage.

New subsection 79B(2) of the Family Law Act 1975 provides that the Federal Court may grant remedies or make orders that could have been granted or made by the Family Court.

New subsection 79B(4) provides that there is no appeal from a decision of the Family Court in relation to the transfer of proceedings to the Federal Court.

The amendments contained in Parts 3 and 4 of the Schedule to the Bill are designed to operate so that the most appropriate court - either the Family Court or the Federal Court - hears property proceedings between the parties to a marriage where one of the spouses is bankrupt.

Part 8 - Amendments of the Freedom of Information Act 1982 (Cwlth)

Item 32 of the Schedule inserts into Division 1 of Part II of Schedule 2 of the Freedom of Information Act 1982, the words:

Indigenous Land Corporation, in relation to documents in respect of its commercial activities

Item 33 of the Schedule inserts into Division 2 of Part II of Schedule 2 of the Freedom of Information Act 1982, the words:

Department of Administrative Services, in relation to documents in respect of its commercial activities.

The effect of these amendments is that documents relating to the commercial activities of these two agencies are not accessible under the Freedom of Information Act 1982. Additionally, the Indigenous Land Corporation is exempted from certain provisions of the Privacy Act 1988.

Part 10 - Amendments of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cwlth)

Items 35-38 of the Schedule amend the Jurisdiction of Courts (Cross-Vesting) Act 1987 to provide that the legislation applies to the Australian Capital Territory.

Part 11 - Amendments of the Privacy Act 1988 (Cwlth)

Item 41 of the Schedule inserts a new paragraph in subsection 11B(1) of the Privacy Act 1988. Subsection 11B(1) provides that certain persons are credit providers. Such persons currently include banks, building societies and credit unions. New paragraph 11B(d) provides that an agency will be regarded as a credit provider for the purposes of the Privacy Act 1988 if it carries on a business that involves making loans and is determined by the Privacy Commissioner to be a credit provider for the purposes of the Privacy Act 1988.

Such a determination must be gazetted and, like other determinations made by the Privacy Commissioner under section 11B(1)(b)(v)(B), is a disallowable instrument under the Acts Interpretation Act 1901.

Item 44 of the Schedule inserts new paragraph 18E(1)(ba) into the Privacy Act 1988. Section 18E of the Privacy Act 1988 deals with the permitted contents of credit information files. Section 18E(1) of the Privacy Act 1988 provides that, except in certain cases, a credit reporting agency must not include personal information in an individual's credit information file.

New paragraph 18E(1)(ba) will add to the list of exceptions contained in subsection 18E(1), that the information relates to a record of an overdue payment by the individual as a guarantor where the borrower has defaulted. Such information can only be recorded in certain circumstances - set out in new subparagraphs 18E(1)(ba)(i)-(iv).

Items 46 and 47 provide for the maximum period during which a credit reporting agency can keep a record of an overdue payment under guarantee.

Item 48 inserts new subsection 44(2A) into the Privacy Act 1988. Section 44 of the Privacy Act 1988 enables the Privacy Commissioner to give a person a written notice requiring that that person produce certain information or documentation which the Privacy Commissioner believes they have in their possession and which is relevant to an investigation being conducted by the Commissioner into allegations of interference with an individual's privacy.

New subsection 44(2A) provides that if documents are produced in accordance with such a requirement, the Privacy Commissioner may do certain things in relation to them - such as making copies of them and keeping possession of them for certain periods.

Part 12 - Amendments of the Service and Execution of Process Act 1992 (Cwlth)

Item 49 of the Schedule amends subsection 3(1) of the Service and Execution of Process Act 1992 by inserting a new definition of 'magistrate.'

The present definition of magistrate contained in subsection 3(1) of the Service and Execution of Process Act 1992 includes, except in sections 57 and 67 of the Act, a justice of the peace who has power to issue warrants under a law of the State in which the justice holds that office.'

The new definition of 'magistrate' contained in new subsection 3(1) adds to this definition a bail justice under the Magistrates Court Act 1989 (Vic).

Item 51 amends subsection 8(4) of the Service and Execution of Process Act 1992 and excludes a State or Territory law relating to the service or execution within the State or Territory, of process, judgments or orders of another State or Territory.

Item 55 inserts new section 86A into the Service and Execution of Process Act 1992. New section 86A provides that where an order is made by a magistrate under section 83 of the Service and Execution of Process Act 1992, a court may not review that order except under section 86 of the Act.

Section 86 provides that an application for review must be made within seven days of the order being made under section 83 and sets out the process by which review is to occur.

New section 86A is proposed because of the recent Western Australian case of Lavalle v. Commissioner of Police (see Background section). The Explanatory Memorandum to the Bill states that 'The new section is intended to prevent the purported use of common law powers to frustrate the intention of the Act as shown in section 83.' 17

Part 14 - Amendments of the Taxation Administration Act 1953 (Cwlth)

The Taxation Administration Act 1953 is consequentially amended to provide for the establishment of the Small Taxation Claims Tribunal.

Endnotes

1

. See Law and Justice Legislation Amendment Bill (No.3) 1994.

2

. The reason for this part of the commencement provisions is unclear. The explanation for this provision given in the Explanatory Memorandum is 'because Item 14 repeals and replaces Item 43 and subclause 2(5) is intended to ensure that Item 43 commences before Item 14. Item 14 adds a new section (section 69C) to the legislation. Item 43 inserts new section 69B into the legislation. Repeal and replacement is not relevant in these circumstances.

3

. See recommendations 140-145 (inclusive) of the Committee's report.

4

. Ibid, p. 331.

5

. Ibid.

6

. Lindenmayer, TE Doolan, PA 'When bankruptcy and family law collide', Australian Journal of Family Law, vol.8, no.2, July 1994, pp-111-41.

7

. Second Reading Speech, Jurisdiction of Courts (Cross-Vesting) Bill 1986, House of Representatives, Parliamentary Debates, p.2555.

8

. Ibid.

9

. Debates of the Legislative Assembly for the Australian Capital Territory, Weekly Hansard, 13 May 1993, p.1404.

10

. A credit reporting agency is an agency that keeps credit history records on individuals for use by credit providers in assessing credit applications.

11

. Privacy Commissioner, Sixth Annual Report on the Operation of the Privacy Act. For the Period 1 July 1993 to 30 June 1994.

12

. 'Service' is the delivery of a writ, summons, subpoena, or other document relating to court proceedings.

13

. 'Execution' is the enforcement of a court order - such as a warrant for the apprehension of a person.

14

. 'Process' means the documents by which legal proceedings are commenced or by which witnesses are brought to court.

15

. Supreme Court of Western Australia, 13 May 1994, unreported.

16

. See Explanatory Memorandum, p.7 and Second Reading Speech.

17

. See p. 21.

Jennifer Norberry (06 2772476)

Bills Digest Service

23 August 1995

Parliamentary Research Service

This Digest does not have any legal status. Other sources should be consulted to determine whether this Bill has been enacted and, if so whether the subsequent Act reflects further amendments.

Commonwealth of Australia 1995

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