Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 23 March 1966


Mr SNEDDEN (Bruce) (AttorneyGeneral) .- Mr. Temporary Chairman,in this group of clauses, I will move seven amendments. They refer to clauses 122, 123, 124, 153 and 185. The relevant portions of these clauses read -

Clause 122. (7.) In this section, " tax " includes provisional tax and contribution under Division 3 of Part VI. of the Income Tax and Social Services Contribution Assessment Act 1936-1964.

Clause 123. (1.) Subject to sections 118 to 122 (inclusive) of this Act, nothing in this Act invalidates, in any case where a debtor becomes a bankrupt -

(a)   a payment by the debtor to any of his creditors;

(b)   a conveyance, transfer or assignment by the debtor for valuable consideration;

(c)   a contract, dealing or other transaction by or with the debtor for valuable consideration; or

(d)   any transaction to the extent of a present advance made by an existing creditor,

If-

(e)   the transaction took place on or before the date on which the debtor became a bankrupt;

(f)   the person, other than the debtor, with whom it took place, did not, at the time of the transaction, have notice of the presentation of a petition against the debtor; and

(g)   the transaction was in good faith and in the ordinary course of business. (3.) For the purposes of sub-section (1.) of this section, a transaction shall not be deemed not to have been in good faith and in the ordinary course of business by reason only that, at the time of the transaction, the person, other than the debtor, with whom it took place had notice of the commission of an act of bankruptcy by the debtor. (4.) Nothing in this Act invalidates, in any case where a debtor, being a person required by Division 2 of Part VI. of the Income Tax and Social Services Contribution Assessment Act 1936- 1964 to make a deduction from the salary or wages of an employee or a person required by Division 4 of Part VI. of that Act to make a deduction from a dividend, becomes a bankrupt, a payment to the Commissioner of Taxation (including a payment by means of the purchase of tax stamps) by the debtor, on or before the date on which he became a bankrupt, of an amount that he is required by that Division so to pay in respect of deductions so made.

Clause 124. (1.) Notwithstanding anything contained in this Act, a payment of money or delivery of property (including a security or a negotiable instrument) to, or in accordance with the order or direction of, a person who becomes a bankrupt or a person claiming by assignment from him is a good discharge to the person paying the money or delivering the property, if the payment or delivery is made -

(a)   on or before the date on which the firstmentioned person becomes a bankrupt; and

(b)   in good faith and in the ordinary course of business. (2.) The burden of proving the matters referred to in the last preceding sub-section lies upon the person who relies on the validity of the payment or delivery of property. (3.) For the purposes of this section, a payment or delivery of property shall not be deemed not to have been made in good faith and in the ordinary course of business by reason only that, at the time of the. payment or delivery, the person by whom it was made had notice of the presentation of a creditor's petition against the person to whom it was made or of the commission of an act of bankruptcy by that person.

Clause 153. (2.) The discharge of a bankrupt from a bankruptcy does not -

(a)   release the bankrupt from -

(i)   a debt on a recognizance;

(ii)   a debt arising out of a penalty or fine imposed by a court for an offence against a law of the Commonwealth or of a State or Territory of the Commonwealth; or

(iii)   a debt with which the bankrupt is chargeable at the suit of the sheriff or other public officer on a bail bond entered into for the appearance of a person prosecuted for an offence against a law of the Commonwealth or of a State or Territory of the Commonwealth;

(b)   release the bankrupt from a debt incurred by means of fraud or a fraudulent breach of trust to which he was a party or a debt of which he has obtained forbearance by fraud; or

(c)   release the bankrupt from liability under a maintenance order, except to such extent and subject to such conditions as the Court orders.

Clause 185. (1.) Where it appears to the Court that a bankrupt's liabilities do not exceed Onethousand pounds, the Court may order that the estate of the bankrupt be administered under this Part.

I seek leave to move the following seven amendments together.


The TEMPORARY CHAIRMAN -

There being no objection, leave is granted.


Mr SNEDDEN - I move-

1.   In clause 122, omit sub-clause (7.), insert the following sub-clause: - " (7.) In this section, ' tax ' includes any amount payable as provisional tax and contribution, or as provisional tax, in accordance with Division 3 of Part VI. of the Income Tax Assessment Act 1936- 1944, or of that Act as amended.".

2.   In clause 123, after sub-clause (3.), insert the following sub-clause: - " (3a.) Nothing in this Act invalidates a payment by a debtor, on or before the date on which he became a bankrupt, of, or in respect of, a penalty or fine imposed on him by a court in respect of an offence against a law, whether a law of the Commonwealth or not.".

3.   In clause 123, omit sub-clause (4.), insert the following sub-clauses: - " (4.) Nothing in this Act invalidates, in any case where a debtor, being -

(a)   a person required by Division 2 of Part VI. of the Income Tax Assessment Act 1936-1940, or of that Act as amended, to make a deduction from the salary or wages of an employee; or

(b)   a person required by Division 4 of Part VI. of the Income Tax and Social Services Contribution Assessment Act 1936-1959, or of that Act as amended, to make a deduction from a dividend, becomes a bankrupt, a payment to the Commissioner of Taxation (including a payment by means of the purchase of tax stamps) by the debtor, on or before the date on which he became a bankrupt, of an amount that he was required so to pay in respect of deductions so made. " (4a.) Nothing in this Act invalidates -

(a)   a payment by a debtor, on or before the date on which he became a bankrupt, of additional tax or penal tax under a law of the Commonwealth or of a State or Territory of the Commonwealth, not being additional tax or penal tax imposed by a court; or

(b)   a payment by a person who becomes a bankrupt, being a payment made on or before the date on which he became a bankrupt, under section. 218 of the Income Tax Assessment Act 1936-1965 or under any similar provision of a law of the Commonwealth or of a State or Territory of the Commonwealth.".

4.   In clause 124, omit sub-clause (1.), insert the following sub-clause: - " (1.) Notwithstanding anything contained in this Act, a payment of money or delivery of property (including a security or a negotiable instrument) to, or in accordance with the order or direction of, a person who becomes, or has become, a bankrupt or a person claiming by assignment from him is a good discharge to the person paying the money or delivering the property -

(a)   if, in the case of a payment or delivery made on or before the first-mentioned person becomes a bankrupt - it is made in good faith and in the ordinary course of business; or

(b)   if, in the case of a payment or delivery made after the first-mentioned person became a bankrupt - it is made in good faith, in the ordinary course of business and without negligence.".

5.   In clause 124, omit sub-clause (3.), insert the following sub-clause: - " (3.) For the purposes of this section, a payment or delivery of property shall not be deemed not to have been made in good faith and in the ordinary course of business by reason only that, at the time of the payment or delivery, the person by whom it was made -

(a)   knew or had reason to suspect that the person to whom, or in accordance with whose order or direction, it was made was unable to pay his debts as they became due from his own money; or

(b)   had notice of the commission of an act of bankruptcy by that person or of the presentation of a creditor's petition against that person.".

6.   In clause 153, omit sub-paragraph (ii) of paragraph (a) of sub-clause (2.).

7.   In clause 185, sub-clause (1.), omit " One thousand pounds ", insert " Four thousand dollars".

Mr. Temporary Chairman,my first amendment seeks to omit sub-clause (7.) in clause 122 and insert a new sub-clause (7.). The purpose of this amendment is to substitute a new definition of " tax " consequent upon the changes effected by the Income Tax Assessment Act 1965. This Act eliminated all reference to social services contribution as a separate component of income tax. Because it is possible that amounts in respect of provisional tax and contribution due under the Income Tax and Social Services Contribution Assessment Act as it stood prior to the 1965 Act may still be paid after this Bill becomes law, it is necessary to retain, in the definition of tax, the reference to provisional tax and contribution.

My next amendment seeks to insert a new sub-clause (3a.) after sub-clause (3.) in clause 123. This amendment is intended to make it clear that money paid by the bankrupt during the " relation back " period in payment of a fine or penalty imposed by a Court does not have to be refunded to the trustee.

This next amendment is to clause 123. It will omit sub-clause (4.) and insert two new sub-clauses, (4.) and (4a.). These amendments are consequential upon the enactment of the Income Tax Assessment Act 1965. New sub-clause (4a.) is intended to prevent certain payments to the Commissioner of Taxation, if made during the " relation back " period, from having to be refunded to the trustee. The payments in question are payments of additional tax and penalty tax, and payments under section 218 of the Income Tax Assessment Act or like provisions in other taxing statutes.

My next amendment is to clause 124. The purpose of the amendment is to protect a banker who pays out on a customer's cheque from liability to refund the amount of the payment to the trustee merely because the banker knew or had reason to suspect that the customer was insolvent at the time the payment was made. This amendment results from representations which were put forward by the Bankers Association.

By my next amendment I seek to omit sub-clause (3.) of clause 124 and substitute a new sub-clause (3.). The effect of this amendment is to extend the protection given to bankers and others by clause 124 to cover a payment or delivery of property made after the date of the bankruptcy where that payment or delivery is made in good faith, in the ordinary course of business and without negligence. The test of " without negligence " would be an additional test applying only to transactions which took place after the date of the bankruptcy. The result would be to restore to banks the protection in this respect which is now given by section 97 of the existing Bankruptcy Act. Without this protection, country branches of banks would face considerable practical difficulties due to the lapse of time that must necessarily occur between the making of a sequestration order and the time when notice of 'the making of the order is received in a country town. The amendment would not limit this addtiional protection to banks, as at present, but extend it to all persons who carry on the classes of transactions to which clause 124 applies. Essentially, this amendment was made following representations from the Bankers Association. But I must say that the amendment is not all that that Association would have wished. Attention having been drawn to the point by these representations, the clause is amended to include all persons and is not limited in application to bankers only.

I seek by my next amendment to amend clause 153 by omitting sub-paragraph (ii) of paragraph (a) of sub-clause (2.). This amendment is consequential upon the amendment to clause 82. Following that amendment, it is not necessary to provide specifically that discharge of a bankrupt does not release him from the obligation to pay fines and penalties.

My final amendment in this group is to clause 185. I seek to omit " One thousand pounds " in sub-clause (1 ,) and insert in its place " Four thousand dollars ". It is obvious that $4,000 is not the decimal equivalent of £1,000. In fact, it is double the amount. The purpose of this amendment is to increase from $2,000 to $4,000 the limit of the amount of the liabilities of a bankrupt below which the Court may make an order for summary administration of the estate. Under the existing law, an order for summary administration of an estate may be made if the assets of the bankrupt do not exceed $600. The Committee recommended that the proper test to apply in determining whether a bankruptcy should be administered as a small bankruptcy should not be the value of the assets, but the amount of the liabilities, of the estate. It suggested that the amount should be $2,000. Subsequent investigations have shown that -the application of this test would substantially reduce the number of small bankruptcies, and this would result in an increase in the amount of work in the Official Receivers' offices. I asked the members of the Committee to reconsider this matter, and they have now proposed that the figure of $2,000 should be increased to $4,000. The amendment gives effect to this proposal, which should have the effect of leaving the proportion of estates which may be administered summarily about the same as at present.

Amendments agreed to.







Suggest corrections