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Tuesday, 16 April 1985
Page: 1198

Mr LIONEL BOWEN (Attorney-General)(6.17) —in reply-Briefly, I thank honourable members for their contributions to this debate. The area of bankruptcy is virtually a no win area. As honourable members will understand, people who enter that arena are already in jeopardy. The point has been made by a number of speakers that the difficulties experienced by such people are not always alleviated. There is always concern about whether people receive fair value for their assets. In turn, of course, the creditors have to face the situation that they usually do not get paid in full. In the past under bankruptcy provisions, where people have legitimately entered trade and commerce and suffered losses through no real fault of their own, a genuine effort has been made, through a scheme of arrangement or a court order, to liquidate their debts and enable them to start again after a certain period but, during that period of bankruptcy, has prevented them from continuing in business.

I am interested in the remarks made by the honourable member for Makin (Mr Duncan). I believe basically that in a modern society we ought to be looking at law reform in this area. It has been looked at and is still being looked at to see whether it can cover some of the matters raised in this debate. Although the Opposition supports the Bankruptcy Amendment Bill, the main speaker for the Opposition, the honourable member for Menzies (Mr N. A. Brown), was critical of the fact that there appears to be some suggestion of competition between what is called the Official Receiver and private trustees. I think that is a good thing. If he looks at some of the other matters raised by subsequent speakers on his side, he will find that perhaps some of the difficulties related to the fact that trustees appointed privately were not as experienced as they should have been. I would like the honourable gentleman to look at the debate in the Senate on 27 March, at page 859 of Hansard, where he will see six examples given of trustees involved with over 400 estates. He will see that from the point of view of statistics it would be put down to inexperience but the difficulty was perhaps that the bankrupt people felt that they did not get proper treatment in the administration of their assets perhaps and the creditors felt that the matter had not been dealt with in a professional way. I am supported in that view by the fact that I am advised by my Department that the Insolvency Practitioners Association supports this Bill on that very basis. In other words, whilst a genuine effort was made to give the private sector a chance to do the work, experience has shown that it has not been done as well as it could have been in certain circumstances. I admit that there are very efficient private trustees.

I refer now to the contribution made by the honourable member for Mitchell (Mr Cadman). There was an example of what he regarded as inefficient administration, although whether it was I do not know. I would like him to address the fact that this legislation will assist in what he is about. He took the view that the Inspector-General perhaps will not be able to deal with a number of matters. However, the Inspector-General can deal with most matters, certainly all matters relating to bankruptcy. I would welcome a look at whether the Inspector-General will be able to deal with the question of who are deemed to be creditors and the question of voting. If he is not able to do so, perhaps he should be, because such matters directly relate to the conduct, administration and sequestration of the estate.

The Bill is progressive. It certainly covers a number of areas that perhaps have been weak. However, we will never overcome some of the difficulties which were mentioned, for example, by the honourable member for O'Connor (Mr Tuckey), who quite appropriately referred to the fact that perhaps some people had received wrong advice. Whether they did or not, we do not know. However, they certainly were made bankrupt. The difficulty, of course, in all these areas-I understand that it also applies to some of the assets referred to by the honourable member for Mitchell (Mr Cadman) in regard to the other case-is where there are registered mortgagees or hire purchase agreements. Once one starts to enter the area of bankruptcy the mortgagee will exercise powers of sale. I understand that that happened under some circumstances.

Of course there is also an obligation on the mortgagee exercising power of sale to get the best price. However, usually it is a forced sale and an urgent sale and it is usually made at the wrong time from the point of view of getting maximum price. One cannot altogether put the full blame on the trustee if, in fact, any asset has been sold by a mortgagee or an owner pursuant to a hire purchase agreement, which I think might have been the case with the matters referred to by the honourable member for O'Connor. I take the points of both gentlemen. Those cases ought to be looked at. I undertake to see what I can do so that we do not have what appears to be the failure of debtors to get maximum value for assets. That is important.

I say, with regard to the matters raised by the honourable member for O'Connor, that I think it is important that people who perhaps do not know their rights are given time to consult with their creditors rather than being made bankrupt in the first instance and then having the problem of everything being sold, which must happen once one is made bankrupt. That is the whole idea of bankruptcy. I will ask the Law Reform Commission to look at some of these matters because I am convinced that in a modern society we can think of better techniques than the present technique. I have a view, from my own period in practice, that the present technique is cumbersome and expensive and involves delays. There seems to be a gap between the bankrupt person and creditors being adequately catered for by being able to get some portion of their debt recouped. We have all those difficulties.

We will always have bad debts. We recognise that. However, it is important to try to help people at times to remain in business. Creditors are often very understanding. There is merit in suggesting that there might be consultation with creditors or in people getting some sort of advice from consultants or advisers in this field before bankruptcy is declared. In some cases it has to be declared rather quickly to protect assets. I thank everybody for their contribution to the debate. I must say, though, that the evidence even in this debate does not support what the honourable member for Menzies was emphasising, which is that there is necessarily great merit in the private trustee position. I make the point that there seem to be some difficulties involved in sustaining that point of view in the light of subsequent evidence given by other speakers.

Mr MacKellar —What about the extra staff and less money?

Mr LIONEL BOWEN —That is an interesting point. I take it on board. If we keep that theory going we will have a lot of public servants and no debt.

Question resolved in the affirmative.

Bill read a second time.