2004- 2002-2003- 2004 - 2005

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES SENATE

 

 

 

 

 

 

BANKRUPTCY AND FAMILY LAW LEGISLATION FAMILY LAW AMENDMENT BILL   200 5 4

 

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

Amendments and New Clauses to be M m oved on B b ehalf of the Government

 

 

 

 

 

 

(Circulated by authority of the Attorney-General,

the Honourable Philip Ruddock MP)

 

 

 

 

 

 

BANKRUPTCY AND FAMILY LAW LEGISLATION AMENDMENT BILL 200 5 4

 

OUTLINE

The Bankruptcy and Family Law Legislation Family Law Amendment Bill 200 5 4 (the Bill) makes a number of diverse amendments to the makes a number of significant changes to the Bankruptcy Act 1966 and the Family Law Act 1975 (the Act) , implementing a number of key recommendations of the Joint Taskforce Report on the Use of Bankruptcy and Family Law Schemes to Avoid Payment of Tax (Joint Taskforce) , mainly in the nature of procedural and technical changes to clarify and improve the operation of the Act. 

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The se se Government amendments amend section 66X in Part 14 of insert new Schedule 5 the Bill. in the Bill

Section 66X in Part 14 of the Bill allows the court to make orders for recovery of payments made or property transferred by a person under a child maintenance order, in circumstances where it is later found that the person was not liable to support the child as they were not the child’s biological parent . 

The Government amendments remove the amendments to subsection 66X(2) that were passed by the Senate on a Democrat motion , and substitute Government amendments to that subsection. 

The Government amendments will allow the court to recognise that , while a person seeking recovery of moneys paid or property transferred under a child maintenance order is entitled to recovery of that money or property if they are found not to be a parent or step-parent liable to support the child, it might be appropriate in exceptional circumstances to reduce the amount to be repaid, or the value of the property to be restored .

, amending the Family Law Act 1975 (the Family Law Act) in order to clarify the r ights of third party creditors in family law property matters , and to require a separation declaration when certain binding financial agreements are made .

As with the existing provisions of the Bill , these amendments are part of the Government response to the Joint Taskforce recommendations .

The reason for the amendments is to consolidate all reforms relating to family law and bankruptcy law interaction in the one Bill.  The amendments were previously contained in Part 19 of the Family Law Amendment Bill 2004, which was introduced in the House of Representatives on 1 April 2004, and lapsed with the proroguing of Parliament during the 2004 election period. 

As part of the Family Law Amendment Bill 2004, the amendments were referred for inquiry to the Senate Legal and Constitutional Legislation Committee (the Senate Committee), which reported on 30 July 2004.  The amendments incorporate a change recommended by the Senate Committee, changing section 79F to ensure that the court is able to determine the circumstances in which third parties are to be notified of proceedings under Part VII I of the Family Law Act (which deals with financial matters).

Clause 1 of the Government amendments provides that the amendments in new Schedule 5 will commence 28 days after the Royal Assent is given to the Bill.

Clause 2 of the Government amendments inserts new Schedule 5 to the Bill.  Schedule 5 contains 5 items of amendments to the Family Law Act 1975 .

Item 1 inserts new subsection 79(10) in the Act, allowing a creditor of a party to family law property proceedings, or any other person whose interests would be affected by an order in such proceedings, to apply for a family property order. 

Item 2 inserts subsection 79A(4) in the Act.  Section 79A sets out the circumstances in which the court can set aside a family property order.  This new subsection would clarify, for the purpose of section 79A, that a third party creditor has standing in family property proceedings as a person affected by a family property order if the creditor can show that he or she would be unable to recover his or her debt if such an order were made.

Item 3 inserts new section 79F in the Act, to allow for Rules of Court to be made specifying the circumstances in which a party or a person applying for orders in family property or spousal maintenance proceedings may be required to notify a third party (for example, a creditor of a party) of those proceedings.   

Item 4 inserts new section 90D in Part VIIIA of the Act, dealing with binding financial agreements.  This amendment requires that, if parties make a financial agreement under the Act that deals with post-separation property or spousal maintenance arrangements, they must also make a written separation declaration.  The declaration must state that the parties have separated, are living separately, and are unlikely to resume cohabitation.  The agreement will have no effect, to the extent that it deals with those arrangements, if the declaration is not made.

Item 5 inserts new subsection 106B(4AA) in the Act.  Section 106B allows the court to make an order to set aside or restrain a transaction that might defeat a claim or an interest in proceedings under the Act.  The amendment would clarify that an application can be made under section 106B by a party, or by a creditor of a party, or by a person whose interests would be affected by the transaction.

FINANCIAL IMPACT STATEMENT

These Government amendments will have no financial impact.

 

NOTES ON CLAUSES

Clause 1 -   substitution to subsection 66X(2)

1.       Clause 1 of the Government amendments amends the wording of subsection 66X(2) s o that the court must make such order as it considers just and equitable for repayment to the maintenance provider of monies paid or property transferred under a child maintenance order in applicable circumstances under that section .

Clause 2 - substitution to paragraphs 66X(2) (a) and (b)

2.       The amendments support the amendments in clause 1 to subsection 66X(2), and insert additional wording after paragraph 66X(2)(b) to specify that that the court has a discretion to order repayment of less than the full amount of monies paid, or return of less than the full value of property transferred under a child maintenance order in exceptional circumstances.    Th ese circumstances might include, for example, the situation where the likely effect of ordering recovery of the full amount of child maintenance monies paid under the purported order would be to render the original beneficiary of th ose monies bankrupt.

where a maintenance order has been registered under that Act the amounts become a debt to the Commonwealth which may otherwise lead to a potential liability for the Commonwealth to repay. may