Replacement Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Hon Christian Porter MP)Schedule 5 - Unclaimed money
AMENDMENTS TO THE BANKRUPTCY ACT 1966
GENERAL OUTLINE
302. The amendments in Schedule 5 modify the requirements for registered personal insolvency practitioners to pay unclaimed moneys to the Commonwealth, as well as the process for persons to apply for unclaimed moneys.
Item 1 - Subsection 153A(5)
303. Under section 153A a bankruptcy is annulled upon the registered trustee's satisfaction that all debts have been paid by the bankrupt. If money is paid to the Official Receiver under subsection 153A(4) because the creditor cannot be found or identified, it is taken to be paid in full to the creditor. Currently subsection 153A(5) provides that if money is paid to the Official Receiver under subsection (4) then the provisions of subsections 254(3) and (4) apply. Item 4 of Schedule 5 repeals and replaces those provisions with new subsections (3) to (9).
304. Accordingly, item 1 of Schedule 5 amends section 153A(5) to insert references to new subsections (3) to (9), which will enable a person to make an administrative claim to the Official Receiver, rather than the Court, for moneys paid to the Commonwealth under section 254. The new subsections set out the processes for making, assessing and giving notice of the outcome of an application as well as provide a mechanism for review of the Official Receiver's original determination by the Court.
305. The amendment to section 153A will ensure that despite annulment of a bankruptcy, a person can apply to have any moneys owed repaid to them by determination of the Official Receiver or order of the Court.
Item 2 - Subsection 252A(5)
306. Under section 252A if the trustee of a deceased person's estate is satisfied that all the debts of the estate have been paid in full, the order for the administration of the estate under Part XI of the Bankruptcy Act is annulled, on the date the last payment was made.
307. If money is paid to the Official Receiver under subsection 252A(4) because the creditor cannot be found or identified, it is taken to be paid in full to the creditor. Currently subsection 252A(5) provides that if money is paid to the Official Receiver under subsection (4) then the provisions of subsections 252A(3) and (4) apply. Item 4 of Schedule 5 repeals and replaces those provisions with new subsections (3) to (9).
308. Accordingly, item 2 of Schedule 5 amends section 252A(5) to insert references to new subsections (3) to (9), which will enable a person to make an administrative claim to the Official Receiver, rather than the Court, for moneys paid to the Commonwealth under section 254. The new subsections set out the processes for making, assessing and giving notice of the outcome of an application as well as provide a mechanism for review of the Official Receiver's original decision by the Court.
309. The amendment to section 252A will ensure that despite annulment of an administration of a deceased person's estate, a person can apply to have any moneys owed repaid to them by determination of the Official Receiver or order of the Court.
Item 3 - Paragraph 254(2)(a)
310. Paragraph 254(2)(a) provides that a trustee or a debt agreement administrator must pay to the Commonwealth any unclaimed dividends or moneys. The requirement for a debt agreement administrator to pay unclaimed dividends or moneys to the Commonwealth should only apply where the debt agreement administrator has identified the person entitled to the moneys. In some circumstances, the debt agreement administrator will identify the person but it will not be practicable to pay them, such as if the person cannot be located.
311. Item 3 of Schedule 5 amends paragraph 254(2)(a) to ensure that the paragraph applies where the person entitled to the money has been identified but is unable to be located despite the debt agreement administrator making all reasonable efforts. In situations where it is clear that some person is entitled to the money, but that person cannot be identified because the source of the money cannot be ascertained, section 254 does not apply.
Item 4 - Subsections 254(3) and (4)
312. Section 254 requires trustees and debt agreement administrators to pay unclaimed dividends or moneys, or moneys that are not intended to be distributed, to the Commonwealth. Under subsection 254(3), a person who claims to be entitled to any moneys paid to the Commonwealth under section 254 can apply to the Court for an order declaring they are entitled to the money that they are claiming. However, in many instances, the costs of seeking a court order would exceed the amount of money they are seeking to claim.
313. In comparable regimes, the regulator has the power to pay applicants unclaimed moneys. For example, under section 1341 of the Corporations Act 2001 , the Australian Securities and Investments Commission (ASIC), rather than the Court, has the authority to pay the applicant unclaimed moneys that ASIC determines they are entitled to.
314. Item 4 repeals subsections (3) and (4) and inserts new subsections (3) to (9) into section 254 to enable a person to make an administrative claim to the Official Receiver, rather than the Court, for moneys paid to the Commonwealth under section 254. These amendments set out the processes for making, assessing and giving notice of the outcome of an application as well as provide a mechanism for review of a decision made by the Official Receiver by the Court.
315. New subsection (9) clarifies that a determination made under new subsection (4) (Official Receiver satisfied person is entitled to moneys) or new subsection (6) (Official Receiver not satisfied person is entitled to moneys) is not a legislative instrument within the meaning of subsection 8(1) of the Legislation Act 2003 .
Item 5 - Application and saving provisions
316. Paragraph 1(a) of item 5 of Schedule 5 provides that a person can apply to the Official Receiver for unclaimed moneys paid to the Commonwealth on or after the commencement of Schedule 5, being immediately after the end of the period of 6 months after the Amending Act receives the Royal Assent, using the new subsection 254(3).
317. Paragraph 1(b) of item 5 Schedule 5 provides that a person can apply to the Official Receiver for unclaimed moneys paid to the Commonwealth before the commencement of Schedule 5 under new subsection 254(3) where an application had not been made to the Court under the current subsection 254(3) prior to commencement. This ensures, where possible, applications can be processed by the Official Receiver, rather than the Court, which is a more efficient and cost effective mechanism.
318. Subsection (2) of item 5 Schedule 5 provides that where a person has applied to the Court for an order under subsection 254(2) or (2A) (for moneys owing) before commencement of item 5 Schedule 5, subsections 254(3) and (4) as in force immediately before commencement of item 5 shall continue to apply. This will ensure consistency in the administration of applications currently before the Court.