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OFFICIAL RECEIVER PRACTICE STATEMENT 7

OFFICIAL RECEIVER NOTICES

Date issued 24 November 2008 Date last updated 21 October 2019 If you have any comments, suggestions or queries about an issue referred to in this practice statement, please contact [email protected].

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ORPS7 – Official Receiver notices

www.afsa.gov.au of 51

CONTENTS 1. INTRODUCTION ......................................................................................................... 5 2. ADMINISTRATIVE CONSIDERATIONS ..................................................................... 5

Making an application .................................................................................................. 5 Notice application fee .................................................................................................. 6 Costs and expenses of the Official Receiver ............................................................... 7 The decision-maker ..................................................................................................... 7 Discretionary power ..................................................................................................... 8 Avoiding a conflict of interest ....................................................................................... 8 Reasons for decision ................................................................................................... 9

3. SECTION 77AA – ACCESS BY THE OFFICIAL RECEIVER TO PREMISES AND

BOOKS...................................................................................................................... 10 Section 77AA of the Bankruptcy Act .......................................................................... 10 What the trustee must establish and provide in the application ................................. 10 Prior arrangements regarding gaining access to premises ........................................ 13 Accessing premises .................................................................................................. 14 Official Receiver’s right to take copies of or extracts from books or to remove books ......................................................................................................................... 15 Official Receiver’s right to keep books....................................................................... 16 Inspection of books being kept by the Official Receiver ............................................ 16 Returning books and records .................................................................................... 16 Protection of information – Privacy Act 1988 ............................................................. 17 Claims of legal professional privilege ........................................................................ 17

4. SECTION 77C – REQUIREMENT TO GIVE INFORMATION, PRODUCE BOOKS

AND/OR PROVIDE EVIDENCE ................................................................................ 18 Section 77C of the Bankruptcy Act ............................................................................ 18 What the trustee must establish ................................................................................ 18 Section 77C notices – abbreviated process .............................................................. 21 Service of the notice .................................................................................................. 21 Conduct of examinations ........................................................................................... 21 Allowances and expenses in respect of attendance .................................................. 23 Custody and return of books ..................................................................................... 24 Protection of information – Privacy Act 1988 ............................................................. 24 Claims of legal professional privilege ........................................................................ 25 Failure to comply ....................................................................................................... 25 Withdrawing notices .................................................................................................. 26 Defending notices ...................................................................................................... 26

5. SECTION 77CA – POWER TO OBTAIN STATEMENT OF AFFAIRS ...................... 27

Section 77CA of the Bankruptcy Act ......................................................................... 27 Registration of the sequestration order...................................................................... 27 Obligation to file a statement of affairs ...................................................................... 27 Filing of a statement of affairs ................................................................................... 28 When the statement of affairs is overdue .................................................................. 29

http://www.afsa.gov.au/



What the trustee must establish ................................................................................ 29 When a notice may not be issued ............................................................................. 29 Service of the notice .................................................................................................. 29 Monitoring compliance with a section 77CA notice ................................................... 30

6. SECTION 81A – OFFSHORE INFORMATION NOTICE ........................................... 31

Section 81A of the Bankruptcy Act ............................................................................ 31 What the trustee must establish ................................................................................ 31 Service of the notice .................................................................................................. 31 Protection of information – Privacy Act 1988 ............................................................. 32 Claims of legal professional privilege ........................................................................ 32 Withdrawing and varying notices ............................................................................... 32 Defending notices ...................................................................................................... 33 Failure to comply ....................................................................................................... 33

7. SECTION 128E – SUPERANNUATION ACCOUNT-FREEZING NOTICE ............... 34

Section 128E of the Bankruptcy Act .......................................................................... 34 What the trustee must establish ................................................................................ 34 Dealings in superannuation interest while section 128E notice is in force ................. 35 Service of the notice .................................................................................................. 35 Revocation of a section 128E notice ......................................................................... 35 Service of the notice of revocation ............................................................................ 36 Defending notices ...................................................................................................... 36

8. SECTION 139ZL – REQUIREMENT TO PAY MONEY TO DISCHARGE A

BANKRUPT’S LIABILITY TO PAY INCOME CONTRIBUTIONS .............................. 37 Section 139ZL of the Bankruptcy Act ........................................................................ 37 What the trustee must establish ................................................................................ 37 Service of the notice .................................................................................................. 40 Creation of a charge over property ............................................................................ 40 Non-compliance with a section 139ZL notice ............................................................ 41 Revoking and amending notices ............................................................................... 41 Advice of revoked or amended notices...................................................................... 41 Contribution reassessments ...................................................................................... 41 Applications to set aside section 139ZL notices ........................................................ 42

9. SECTION 139ZQ – REQUIREMENT TO PAY MONEY WHERE A

TRANSACTION IS VOID AGAINST THE TRUSTEE ................................................ 43 Section 139ZQ of the Bankruptcy Act ....................................................................... 43 Exercising power in good faith and for a proper purpose .......................................... 43 What the trustee must establish – section 120 undervalued transaction ................... 44 What the trustee must establish – section 121 transfer to defeat creditors ............... 44 What the trustee must establish – section 121A undervalued transfer or transfer to defeat creditors ...................................................................................................... 46 What the trustee must establish – section 122 preference payment ......................... 46 What the trustee must establish – section 128B and 128C superannuation contributions .............................................................................................................. 47 Service of the notice .................................................................................................. 49 Creation of a charge over property ............................................................................ 49 Non-compliance with a section 139ZQ notice ........................................................... 49




Withdrawing and amending notices ........................................................................... 50 Applications to set aside section 139ZQ notices ....................................................... 50




1. INTRODUCTION 1.1. The Bankruptcy Act 1966 provides for the exercise of certain powers by the

Official Receiver in certain situations to assist trustees to administer bankrupt estates. Some powers can also be exercised to assist trustees administering personal insolvency agreements and debt agreement administrators in the administration of debt agreements. These powers are far-reaching and can be used to direct the production of books or information, access premises and recover property.

1.2. The powers covered in this practice statement are: section 77AA – access to books and premises section 77C – obtaining information, evidence and books section 77CA – obtaining a statement of affairs section 81A – obtaining information and books from a person outside

Australia section 128E – requiring a trustee of an eligible superannuation plan to

freeze the interest of a member section 139ZL – requiring a person to pay money to discharge a

bankrupt’s liability to pay income contributions section 139ZQ – requiring a person to pay money where the person has

received property as the result of a void transaction.

1.3. This practice statement provides details regarding: the application process the applicable fee for making an application for issuance of an Official

Receiver notice a summary of the principles that apply to the exercise of the Official

Receiver’s discretion to issue each type of notice a brief summary of the practice in relation to withdrawing, amending or

accepting conduct as having discharged the requirements of a notice.

1.4. The requirements of this practice statement apply equally to registered trustees and the Official Trustee.

2. ADMINISTRATIVE CONSIDERATIONS

Making an application 2.1. Applications for all Official Receiver notices will only be accepted through

OR notices online. OR notices online allows trustees and their staff to: apply for various notices online save incomplete applications and access them later generate duplicate applications where multiple notices are required in the

same administration


https://www.legislation.gov.au/Series/C1966A00033

https://www.afsa.gov.au/online-services/or-notices-online



access submitted applications.

2.2. Each application for the issue of an Official Receiver notice must: a. clearly identify the bankrupt or debtor b. clearly identify the nominated notice recipient. The notice must be able

to be issued to a nominated, identifiable person by name or by title or, in the case of a notice issued to a company, entity or organisation, it is to be addressed to “The Proper Officer” and contact details of relevant personnel/agent of the intended recipient are to be provided

c. contain the contact details (telephone, email address) of the recipient and an address for service of the notice. More than one address (for example, a residential address and a business address) can be provided, with the trustee indicating, if known, at which address service is most likely to be successful

d. contain a draft notice schedule. Providing this electronically allows for any suggested amendments to be made directly to the draft

e. with reference to the type of notice being requested, provide the information outlined in the following sections of this practice statement

f. be accompanied by any supporting documentation that the Official Receiver may require in order to be satisfied that the notice should be issued.

2.3. The online application process will prompt the trustee to provide responses specific to the requirements of each type of notice and to attach supporting documentation required by the Official Receiver when considering an application.

Notice application fee 2.4. A fee applies for the application for issue of a notice under section 77AA,

77C, 81A, 128E, 139ZL or 139ZQ of the Bankruptcy Act and a certificate under section 139ZN or 139ZR. Pursuant to clause 2.01 of the Bankruptcy (Fees and Remuneration) Determination 2015, the fee is presently $480.

2.5. Unless an alternative arrangement for payment has been agreed with the Inspector-General or the Official Receiver, payment must be made at the time of application. Payment can be made on account, by credit card or by Electronic Funds Transfer.

2.6. The fee attaches to the service provided by the Official Receiver and to reimburse the Official Receiver for the time spent reviewing and responding to an application for issue of a notice.

2.7. Where the Official Receiver requires additional documents and/or information to make a decision, the trustee will generally be given 90 days from the day of the application, after which they may have to reapply for the notice.


https://www.legislation.gov.au/Details/F2015L00680

https://www.legislation.gov.au/Details/F2015L00680



2.8. Where a notice needs to be reissued, for example where a section 77C notice recipient fails to attend an examination or where it is later discovered that information relied upon in issuing a notice is incorrect, the fee will be payable again for the reissued notice.

2.9. The fee also applies to the issue of amended section 139ZL and 139ZQ notices and to the issue of follow-up notices, such as a section 139ZN certificate following the issue of a section 139ZL notice and the issue of a section 139ZR certificate following the issue of a section 139ZQ notice.

2.10. A reissued notice may be issued without attracting a fee where: there has been a minor correction to the notice ordered or suggested by

the court there was a defect in the notice caused by the Official Receiver. Other circumstances raised by the trustee will be considered on a case-by-case basis, with the decision taking into account the time required by the Official Receiver to attend to the reissue of the notice.

2.11. Neither the Bankruptcy Act nor the Bankruptcy (Fees and Remuneration) Determination make provision for the refund of the fee in any circumstances.

2.12. There is no fee payable by the trustee for the issue of a section 77CA notice or an application for issue of a section 77CA notice.

Costs and expenses of the Official Receiver 2.13. Any costs incurred by the Official Receiver in the exercise of powers in

relation to a bankrupt estate are to be taken to be costs and expenses of the administration of the estate of the bankrupt, pursuant to section 163A of the Bankruptcy Act.

2.14. In some instances, for commercial reasons, the Official Receiver may require a trustee to pay costs and expenses of the Official Receiver at the time the notice is issued (for example, costs of personal service, car hire, travel costs etc.). These will be discussed with the trustee prior to the notice being issued.

The decision-maker 2.15. Pursuant to subsection 15(4) of the Bankruptcy Act, Official Receivers are

able to delegate their authority to exercise powers contained within that Act to authorised employees of AFSA. Given the potential effects of the exercise of these powers, the decision to delegate their exercise is considered carefully. The Official Receiver will take into account the experience of the delegates and the extent to which they have received training and/or been assessed as competent in the application of the Bankruptcy Act and this practice statement.




2.16. As such, a reference in this practice statement to the Official Receiver also refers to a delegate of the Official Receiver.

2.17. Where a delegate of the Official Receiver does exercise a power, the notice will clearly identify that person as a delegate.

Discretionary power 2.18. The Official Receiver is not compelled to issue a notice upon request. The

power to issue a notice is discretionary and will be made after considering the information provided in the trustee’s application and any additional information requested from the trustee.

2.19. The effect of the exercise of the power to issue a notice other than on a sound basis can have a significant effect on the public perception of the role of the Official Receiver, the professional reputation of the trustee and the personal and business affairs of the notice recipient and other parties. Because of this, the decision to issue a notice must be soundly based and directly related to the performance of a trustee’s duties under the Bankruptcy Act and at general law.

Avoiding a conflict of interest 2.20. A conflict of interest exists if the delegate of the Official Receiver has a

personal interest in the outcome that may, or may appear, to prevent him or her from making a decision impartially. The delegate’s personal interest may be financial or personal: “What matters is not the nature of the interest but instead its actual or apparent influence on the [decision-maker’s] ability to decide impartially.”1

2.21. The Australian Public Service (“APS”) Code of Conduct and Values (contained in the Public Service Act 1999) also provide that APS employees must inter alia: disclose, and take reasonable steps to avoid, any conflict of interest (real

or apparent) in connection with APS employment not make improper use of:

- inside information - the employee’s duties, status, power or authority, in order to gain, or

seek to gain, a benefit or advantage for the employer or any other person.

2.22. It is impossible to provide detailed rules identifying or governing every situation in which the exercise of the Official Receiver’s powers may give rise to a conflict of interest. The most appropriate approach is to adopt the question suggested by the Administrative Review Council, namely:

1 Administrative Review Council Best Practice Guide No.2, Decision Making: Natural Justice, August 2007 at page 1





“The question that should be asked is: would a member of the public who knew about this interest reasonably think that it might influence the decision? It is irrelevant that the decision-maker is personally satisfied that the conflicting interest has been put out of mind in arriving at a decision. The important thing is how the decision might appear to an observer.”2

2.23. In order to avoid the most obvious conflicts arising, AFSA has adopted a practice whereby employees administering bankrupt estates do not exercise the Official Receiver’s powers covered in this practice statement in respect of estates they are administering.

2.24. Where a real or apparent conflict does arise, the Official Receiver (or the delegate) must disclose it to the trustee applicant as soon as possible. The Official Receiver will make arrangements for another delegate to determine the application.

Reasons for decision 2.25. It is consistent with good administrative decision-making practices for written

reasons to be prepared that support the exercise of the Official Receiver’s powers.

2.26. In the case of an application for issuance of a notice under section 77AA, 77C, 81A, 128E, 139ZL or 139ZQ of the Bankruptcy Act, the reasons for the decision to issue or not issue the notice will reference the evidence taken into account by the Official Receiver, including verbal evidence provided in any discussions with the trustee or the trustee’s office.

2.27. In the case of a section 77CA notice, the reasons for decision may be confined to the evidence provided by the trustee regarding the date the bankrupt was notified of their bankruptcy and their obligation to file a statement of affairs, together with the information available to the Official Receiver regarding the statement of affairs having not being filed within the statutory time period.

2 Administrative Review Council Best Practice Guide No.2 at page 2




3. SECTION 77AA – ACCESS BY THE OFFICIAL RECEIVER TO PREMISES AND BOOKS

Section 77AA of the Bankruptcy Act 3.1. Section 77AA entitles the Official Receiver to access all premises and books

for any purpose of the Bankruptcy Act in relation to: a bankrupt a debtor who is party to a debt agreement a debtor whose affairs are being administered under Part X a deceased debtor whose estate is being administered under Part XI.

3.2. Section 77AA can be exercised in relation to any premises and any books related to any purpose of the Bankruptcy Act, and not just to premises or books associated with the bankrupt, person, debtor or deceased debtor. This means that access can be obtained to the premises and books of third parties including government bodies, accountants, solicitors, relatives etc.

3.3. Section 77AA provides the Official Receiver with a very significant and invasive power that must be exercised carefully. The Official Receiver will generally exercise this power only where it can be shown that: access to the books will assist the trustee to perform his or her functions

under the Bankruptcy Act there is evidence to suggest that the books are likely to be held on the

premises to which access is sought there are no other available options to gain access to the books. This

may include the occupier of the premises not being willing to provide the books voluntarily or the trustee demonstrating that making such a request to the occupier would lead to a real risk of the books being removed or destroyed.

What the trustee must establish and provide in the application 3.4. In addition to the items listed in paragraph 2.2 above, when making an

application for issue of a section 77AA notice the trustee will need to address and satisfy the following, which are outlined in more detail below. a. Is the notice being issued in connection with the trustee’s role? b. The nominated notice recipient’s association with or link to the

administration. c. What exactly the trustee seeks. d. Have the alternatives been considered and/or exhausted? e. What reason is there to believe that the information, evidence and/or

books sought under the notice exist at the relevant premises? f. If the requested notice is not the first notice, why is an additional notice

required?




g. Who the trustee wishes to have accompany him or her in the event that the notice is issued.

a. Is the notice being issued in connection with the trustee’s role?

3.5. The trustee’s application must confirm that the trustee has considered whether the requested notice and the books sought are relevant to the trustee’s functions under the Bankruptcy Act.

EXAMPLE 1 In a bankrupt estate, the purpose of a section 77AA notice is to assist the trustee in maximising returns to creditors. Therefore, use of the power to obtain information that may lead to property (including income contributions) being recovered for the benefit of creditors is generally appropriate.

b. The notice recipient

3.6. The trustee’s application must correctly identify the nominated notice recipient.

3.7. A section 77AA notice can be issued to any person. The application must establish an association or link between the nominated notice recipient and the administration. The trustee must satisfy the Official Receiver that there is a reasonable belief that the nominated notice recipient has the books to which access sought.

c. What exactly is sought?

3.8. The application should provide an explanation of the books sought under the notice. The books sought, and therefore the explanation, must be as specific as possible.

3.9. At the point at which the application for the notice is made, the trustee will have formed a view about what books exist and how these will assist the investigation to allow the trustee to provide a sufficiently exact description.

EXAMPLE 2 A request for a notice to be issued pursuant to section 77AA for access to “all books and records relating to the affairs of the bankrupt” does not provide sufficient information for the Official Receiver to facilitate issuance of a notice.

3.10. Where the notice seeks access to books concerning an “associated entity” of a bankrupt, it may be appropriate to provide a short table or explanation of how the entity is associated with the bankrupt. The trustee may wish to consider the application of sections 5B to 5E of the Bankruptcy Act to identify the nature of the relationship.




d. Have the alternatives been considered and/or exhausted?

3.11. The trustee must satisfy the Official Receiver that exercise of the power is necessary because other attempts to access or obtain the books have been, or are likely to be, unsuccessful. Where appropriate, the application should indicate whether statutory alternatives have been considered.

EXAMPLE 3 A trustee may wish to consider whether a notice issued under section 77A or a demand under section 129 of the Bankruptcy Act will achieve the same outcome.

3.12. The application is to indicate whether the nominated notice recipient has been contacted informally or formally prior to the issue of the notice to ascertain whether they will voluntarily provide the books sought or cooperate with the trustee. If this has not been done, the application must explain why not (for example, prior statements from the nominated notice recipient indicating no intention to cooperate or a history or obstruction, or there being a real risk of the books being removed or destroyed if they are requested).

e. What reason is there to believe that the books sought under the notice exist at the relevant premises?

3.13. The trustee’s application will need to address the reason for believing that the books are in the possession of the nominated notice recipient (if the recipient is not the bankrupt) and/or they are held on the premises to which access is sought. The Official Receiver will not require the trustee to prove that the books exist but will require something more than a general suspicion – that is, the trustee will need to establish a sound basis for believing that the person has the books. For example, this may be based on the relationship between the person and the bankrupt. It may be necessary to provide more supporting information the further removed from the debtor the recipient is.

EXAMPLE 4 It may be sufficient for the trustee to explain that the person was a business associate of the bankrupt at a relevant time or that the person was a family member who has knowledge of the bankrupt’s affairs. f. If the requested notice is not the first notice, why is an additional notice required?

3.14. If a notice(s) has already been issued to the same recipient, or a notice has already been issued to another recipient in relation to access to the same books presently sought, the trustee’s application will need to explain why an additional notice is required.




g. Persons accompanying the trustee

3.15. Subsection 77AA(1A) provides that the registered trustee who is administering the affairs of the bankrupt or debtor to whose affairs the books relate may accompany the Official Receiver when the section 77AA power is exercised. The Official Receiver must authorise attendance in writing.

3.16. The Official Receiver generally expects the trustee to attend and will only refuse to allow the trustee to attend in exceptional circumstances, for example where the relationship between the trustee and the bankrupt has deteriorated to such an extent that the trustee’s presence may impede the Official Receiver in exercising the right to full and free access.

3.17. Subsection 77AA(1B) of the Bankruptcy Act permits the registered trustee to bring another person nominated by the trustee. It is generally not permissible for the Official Receiver to be accompanied only by the registered trustee’s nominated person without the trustee also being personally present. The reasons for this are to recognise the significance of the power being exercised at the trustee’s request and because it is appropriate in most cases that the trustee be present personally to support the justification for the Official Receiver exercising the power. (Note that, where there are to be separate section 77AA notices issued in the one administration and access to separate premises at the same time is to occur, the premises that the trustee attends will be discussed beforehand.)

3.18. In order to ensure that the entitlement is exercised appropriately, and consistent with the nature of the notice being an exercise of the Official Receiver’s power, the trustee’s application must identify the person nominated by the trustee to attend and the reasons for their attendance.

Prior arrangements regarding gaining access to premises 3.19. Prior to the execution of the notice, the trustee must alert the Official

Receiver to potential difficulties in gaining access. These may include: the likelihood of any danger to the Official Receiver or accompanying

persons during the visit any practical impediments to gaining access an appropriate time to make the visit (for example, if a business

premises, during opening hours).

3.20. Where physical obstruction is expected or encountered, the Official Receiver or authorised officer may take whatever steps that are reasonably necessary and appropriate to remove that obstruction and gain access, for example by forcing open locks on doors. The power to gain full and free access must be used bona fide for the purposes for which it was conferred and should not be




excessive in the circumstances of the case.3 The Official Receiver shall restrain from gaining forced access where it is likely to put at risk the safety of the occupants of the premises and/or the safety of the persons accompanying the Official Receiver.

3.21. The Official Receiver may require particular arrangements to be made to address these issues before the visit occurs. The trustee is required to meet the cost of such arrangements deemed necessary to exercise the power effectively. Where possible, all arrangements are to be made before attendance at the premises occurs.

EXAMPLE 5 The Official Receiver may request police attendance where any person may be in danger or where forced entry may be required.

Where the property is unoccupied or unattended, a locksmith may be required. Where the information sought is likely to be available from a computer or database, a person with appropriate qualifications to replicate the database may be required.

3.22. In addition to potential difficulties in the execution of the notice, the trustee should also give consideration to other matters, such as: whether it is appropriate to bring copying equipment to avoid the need to

remove books from the premises the arrangements required to remove books from the premises.

Accessing premises 3.23. When entering the premises, the Official Receiver or authorised officer must

provide to the occupier evidence of the authority under which they are acting and proper photographic identification. Where a registered trustee accompanies the Official Receiver, the Official Receiver must provide to the occupier written authorisation for the trustee to be present. The trustee should also be prepared to provide appropriate identification. It will be helpful if the trustee has explained to the Official Receiver prior to the visit the types of books likely to be held on the premises.

3.24. At all times during the visit, the trustee will assist the Official Receiver in identifying books to which access is sought. In particular, the trustee will assist the Official Receiver by identifying only those books that are relevant to the performance of the trustee’s functions. However, as outlined below, a determination of which books will be removed and retained is a matter for the Official Receiver.

3 See O’Reilly v State Bank of Victoria Commissioners [1983] HCA 147; 153 CLR 1


http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1983/47.html



Official Receiver’s right to take copies of or extracts from books or to remove books 3.25. The Official Receiver is permitted to take copies of or extracts from books.

Where the books may be relevant to the examinable affairs of the bankrupt, person, debtor or deceased debtor, the Official Receiver may remove the books from the premises and may keep these until they are no longer required.

3.26. Paragraph 77AA(1)(b) permits removal of the books from the premises if they relate to the examinable affairs of the bankrupt, person, debtor or deceased debtor. “Examinable affairs” is defined in section 5 of the Bankruptcy Act: “‘examinable affairs’, in relation to a person, means: (a) the person’s dealings, transactions, property and affairs; and (b) the financial affairs of an associated entity of the person, in so far as

they are, or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs.”

3.27. It is for the Official Receiver, and not the trustee, to decide whether the books may be relevant to the examinable affairs. If the Official Receiver does not think the books are relevant to the examinable affairs, they will not be removed, as the Bankruptcy Act does not provide for such books to be removed.

3.28. Although the Official Receiver may, in the first instance, seek the consent of the occupant to remove the books, failure to provide this consent does not prevent removal of the books.

3.29. Subsection 77AA(1C) allows the Official Receiver to remove books from the premises only where: it is not reasonably practicable to make copies of, or take extracts from,

the books on the premises, or it would be an unreasonable intrusion on the affairs of the occupier of the

premises to remain on the premises to make copies of, or take extracts from, the books.

EXAMPLE 6 The Official Receiver may decide it is impractical to make copies of, or take extracts from, books on the premises where the volume of material to be copied makes it more efficient for this to occur elsewhere.

3.30. The Official Receiver will provide the occupier with a receipt for all books removed from the premises.




Official Receiver’s right to keep books 3.31. Subsection 77AA(1D) of the Bankruptcy Act permits the Official Receiver to

keep the books removed from the premises until it is decided that: the books are no longer needed, or the books are not relevant to the examinable affairs of any bankrupt,

person, debtor or deceased debtor.

3.32. This right to keep books is in addition to the right to remove books from the premises for the purpose of making copies of or taking extracts from them.

3.33. Where books have been removed from the premises, the Official Receiver will: determine as quickly as possible whether any of them are not needed.

Although the trustee may assist the Official Receiver in making this assessment, it is a matter for determination by the Official Receiver

keep them in the Official Receiver’s possession until they are returned to the occupier or provided to the trustee

be responsible for ensuring the books are returned to the occupier in the same condition they were in when removed from the premises.

Inspection of books being kept by the Official Receiver 3.34. Subsection 77AA(1E) of the Bankruptcy Act permits the owner of the books

or the occupier of the premises to inspect them at any reasonable time. The Official Receiver considers “at any reasonable time” to mean during normal business hours.

3.35. Books can be inspected at the place of business of the Official Receiver.

3.36. The Official Receiver will allow this inspection as soon as possible following the making of a request for inspection.

Returning books and records 3.37. As a general rule, the trustee who requested the Official Receiver to access

the premises has no right to keep books but will be able to inspect them, make copies of and take extracts from them.

3.38. However, if the books and records obtained belong to the bankrupt (that is, they are the “property of the bankrupt”), they should not be automatically returned to the bankrupt or occupier. The Bankruptcy Act provides that the trustee must take possession of all of the property of the bankrupt including “deeds, books and documents” (subsection 129(1)).

3.39. The Official Receiver will invite the trustee to identify those books that are claimed to be the bankrupt’s property and should not be returned.




Protection of information – Privacy Act 1988 3.40. The Australian Privacy Principles (“APPs”) contained in the Privacy Act 1988

apply to the collection and maintenance of information obtained as a result of the exercise of this power. The Official Receiver is obliged to ensure that the information is not disclosed to a third party in a manner contrary to the Privacy Act.

3.41. The information obtained through the exercise of section 77AA of the Bankruptcy Act will, in the first instance, be available to the trustee on whose application the power was exercised. The template for the notice to be issued under this section contains specific reference to the disclosure of this information for that purpose.

3.42. Disclosure of the information to a person other than the trustee must be authorised by the Privacy Act.

Claims of legal professional privilege 3.43. Where the occupier of a premises subject to a section 77AA notice claims

that the books sought are subject to legal professional privilege, the owner of the books should prepare a schedule of the books using the headings listed below. The owner should then place the books in envelopes or boxes, which should then be sealed and given to the Official Receiver, together with the schedule.

Schedule headings: item number date (if any) author (if any) description person who claims privilege basis on which privilege is claimed.

3.44. The Official Receiver cannot determine whether the claim is validly raised and, in these circumstances, the Official Receiver will retain the sealed records and make arrangements with the parties for the claim to be determined by a court. That may take the form of an application to the court by the Official Receiver, the trustee or the recipient of the notice.


https://www.oaic.gov.au/privacy/australian-privacy-principles/australian-privacy-principles-quick-reference/





4. SECTION 77C – REQUIREMENT TO GIVE INFORMATION, PRODUCE BOOKS AND/OR PROVIDE EVIDENCE

Section 77C of the Bankruptcy Act 4.1. Section 77C allows the Official Receiver to issue a notice requiring a person

to: give information attend before the Official Receiver and give evidence attend before the Official Receiver to produce books, and/or produce books (without a requirement to attend).

What the trustee must establish 4.2. In addition to the items listed in paragraph 2.2 above, when making an

application for issue of a section 77C notice the trustee will need to address and satisfy the following, which are outlined in more detail below. a. Is the notice being issued in connection with the trustee’s role? b. The nominated notice recipient’s association with or link to the

administration. c. What the trustee seeks. d. Have the alternatives been considered and/or exhausted? e. What reason is there to believe that the information, evidence and/or

books sought under the notice exist? f. The requirements of the notice are not onerous or unreasonable. g. If the requested notice is not the first notice, why is an additional notice

required? a. Is the notice being issued in connection with the trustee’s role?

4.3. The trustee’s application must satisfy the Official Receiver that there is an association or link between the evidence and/or books sought and the performance of the trustee’s functions, and that this is supported by evidence.

EXAMPLE 7 In a bankrupt estate, the purpose of a section 77C notice is to assist the trustee in maximising returns to creditors. Therefore, use of the power to obtain information that may lead to property (including income contributions) being recovered for the benefit of creditors is generally appropriate.

b. The nominated notice recipient’s association with the administration

4.4. The trustee’s application and draft notice must correctly identify the person to




whom it is to be given and set out precisely what the person must do to comply.

4.5. A section 77C notice can be issued to any person. The application must establish an association or link between the nominated notice recipient and the administration of the estate. The trustee must satisfy the Official Receiver that there is a reasonable belief that the nominated notice recipient has the information, evidence and/or books to which access sought.

c. What exactly is sought?

4.6. The application is to provide an explanation of the information, evidence and/or books sought under the notice. The explanation is to be as specific as possible.

4.7. At the point at which the application for the notice is made, the trustee will have formed a view about what information, evidence and/or books exist, how these will assist the investigation and how they relate to the functions of the trustee. This view formed will allow the trustee to provide a sufficiently exact description in the application.

EXAMPLE 8 A request for a notice to be issued pursuant to section 77C for “all books and records relating to the affairs of the bankrupt” does not provide sufficient information for the Official Receiver to determine whether the notice is properly issued.

4.8. Where the notice seeks information concerning an “associated entity” of a bankrupt, it may be appropriate to provide a short table or explanation of how the entity is associated with the bankrupt. The trustee may wish to consider the application of sections 5B to 5E of the Bankruptcy Act to identify the nature of the relationship.

d. Have the alternatives been considered and/or exhausted?

4.9. The trustee must satisfy the Official Receiver that exercise of the power is necessary because other attempts to obtain the information, evidence and/or books have been, or are likely to be, unsuccessful. The trustee’s application must advise whether the nominated notice recipient has already been contacted informally or formally to ascertain whether the recipient will voluntarily provide material or cooperate with the trustee. Where appropriate, the application should indicate whether statutory alternatives have been considered.




EXAMPLE 9 A trustee may wish to consider whether a notice issued under section 77A or a demand under section 129 of the Bankruptcy Act will achieve the same outcome.

4.10. If this has not been done, the application must explain why not (for example, prior statements from the nominated notice recipient indicating no intention to cooperate, a history or obstruction or there being a real risk of the information, evidence and/or books being removed or destroyed if they are requested).

4.11. The trustee will also need to satisfy the Official Receiver that the particular requirements to be included in the notice are necessary in the circumstances. For example, if the trustee requests a notice requiring a person to attend before the Official Receiver, the trustee will need to explain why the person cannot simply be required to provide information in writing.

e. What reason is there to believe that the information, evidence and/or books sought under the notice exist?

4.12. The trustee will need to explain to the Official Receiver the reason for believing that the information, evidence and/or books are available to or in the possession of the nominated notice recipient (if the recipient is not the bankrupt/debtor). The Official Receiver will not require the trustee to prove that the information, evidence and/or books exist but will require something more than a general suspicion – that is, the trustee will need to establish a sound basis for believing that the person has the information, evidence and/or books. This may be based on the relationship between the person and the bankrupt. It may be necessary to provide more supporting information the further removed from the bankrupt/debtor the recipient is.

EXAMPLE 10 It may be sufficient for the trustee to explain that the person was a business associate of the bankrupt at a relevant time or that the person was a family member who has knowledge of the bankrupt’s affairs. f. Requirements of the notice are not onerous or unreasonable

4.13. The application must satisfy the Official Receiver that the request is not onerous and/or unreasonable in nature.

4.14. Where the notice requires attendance before the Official Receiver, the time and place to attend must be reasonable with regard to the person’s circumstances (including, for example, whether the person will be required to travel to the appointed place).

4.15. Where the notice requires the production of books, the trustee’s application




must satisfy the Official Receiver that the proposed timeframe for compliance with the notice is reasonable.

g. If the requested notice is not the first notice, why is an additional notice required?

4.16. If a notice(s) has already been issued to the same recipient, or a notice issued to another recipient in relation to access to the same books, information and/or presently sought, the trustee’s application will need to explain why an additional notice is required.

Section 77C notices – abbreviated process 4.17. It is not uncommon for large lending institutions or other organisations bound

by the provisions of the Privacy Act 1988 to indicate that, while they are willing to cooperate with the trustee and provide the information requested, the provisions of the Privacy Act prevent them from doing so unless compelled by law. A trustee may be asked to obtain a notice to the institution pursuant to section 77C to compel the provision of the information.

4.18. In these circumstances, it is unlikely that Official Receiver will demand a large volume of supporting information. It may be sufficient for the trustee’s application to provide either an account of the discussion with the institution or a copy of a letter or other form of communication outlining the institution’s position.

Service of the notice 4.19. The Official Receiver will attempt service of a notice on the nominated

recipient in the first instance, using the address information provided by the trustee.

Conduct of examinations 4.20. Where a person is required to attend before the Official Receiver and give

evidence, the Official Receiver will preside over the examination. The examination will usually be conducted at an AFSA office or, where this is not possible, another suitable location determined by the Official Receiver.

4.21. The examination will generally be attended by the Official Receiver, the person being examined and the trustee. Other attendees at the examination are admitted at the discretion of the Official Receiver. The person being examined and the trustee are entitled to legal representation. Where necessary, the Official Receiver will allow the examination to be attended by interpreters and transcribers.

4.22. Other parties may be permitted to attend only where there is a clear and compelling reason to conclude that their attendance will assist with the examination. For example, if there is any likelihood of an attendee disrupting




or interfering with the examination or otherwise affecting the examination in such a way as to prevent the examinee providing full and frank answers, they will not be permitted to attend. If there is any likelihood that allowing a person to attend will affect the conduct of a later examination, the person will not be permitted to attend.

EXAMPLE 11 Section 77C notices are issued to a bankrupt and her husband, requiring them to attend separate examinations and give evidence.

Allowing the husband to attend the bankrupt’s examination or the bankrupt to attend the husband’s examination may disadvantage the trustee because any advantage to the trustee of putting the same questions to the bankrupt and her husband without an opportunity for them to discuss their answers will be lost.

In this situation, the Official Receiver would give consideration to excluding the bankrupt’s husband from attending the bankrupt’s examination and excluding the bankrupt from the husband’s examination.

4.23. In conducting the examination, the Official Receiver will inter alia: ensure that the hearing is conducted in an orderly manner confine the hearing to the scope of the notice, having regard to the

performance of the functions of the Official Receiver and the duties of the trustee pursuant to the Bankruptcy Act

disallow questions that are outside the scope of the notice or that constitute harassment.

4.24. An adjournment of the examination for a short period may be permitted either on the Official Receiver’s own motion or if one is sought by one of the parties to the examination (for example, a brief adjournment for personal comfort). The Official Receiver may also choose to place conditions on the adjournment. An adjournment is only available for a short period with the examination reconvened on the same day – adjournment to another day is not possible.

4.25. An audio recording of the examination will be made by the Official Receiver in all cases. A copy of the recording and any notes taken by the Official Receiver will be provided to the examinee and the trustee.

4.26. A transcript will not be provided unless either the trustee or the examinee has arranged for transcription services prior to the examination taking place or a person arranges for the recording to be transcribed after the examination. The cost of this will be borne by the party who arranged for the service.

4.27. Notes taken by a person who attends before the Official Receiver and/or a copy of the transcript of evidence given by a person who attends are available for inspection by creditors for no fee and by members of the public




on the payment of the applicable fee.

Allowances and expenses in respect of attendance 4.28. Section 77D of the Bankruptcy Act provides that, where a person is required

to attend before the Official Receiver under subsection 77C(1), the attendee is entitled to: an allowance of $21 (indexed)4 for every day, or part thereof, that the

attendee is required to attend to be reimbursed by the Official Receiver for any reasonable expenses

incurred for transport, meals and accommodation in connection with the person’s attendance.

4.29. Where an attendee is entitled to an allowance and to be reimbursed for the above items, the Official Receiver must offer an advance for the allowance and expenses before the attendee begins to travel. This offer is therefore included in the notice.

4.30. The attendee may choose to accept an advance for travel costs or submit receipts to the Official Receiver for reimbursement post-attendance. The Official Receiver will determine if the claim is reasonable (subsection 77D(3)) and the bankrupt estate will bear the cost (section 77F). Consequently, the Official Receiver will contact the trustee’s office to obtain a cheque for the required amount for forwarding to the attendee.

EXAMPLE 12 An associated entity is required to attend before the Official Receiver and produce various books, including bank statements. To attend before the Official Receiver, the recipient is required to travel 150 kilometres by car to the relevant AFSA office. The recipient contacts the Official Receiver and requests an advance on their allowance and travel expenses. The Official Receiver then arranges for the recipient to be provided with a cheque for the specified amount, payable from the bankrupt estate.

4.31. To minimise costs to the estate, if a person is required to physically attend before the Official Receiver and produce books, the Official Receiver may authorise an officer in another location to take receipt of those books.

EXAMPLE 13 A business associate of a bankrupt is required to attend before the Official Receiver and produce books. The person resides in Hobart. The Official Receiver can authorise an officer in the Australian Financial Security Authority’s Hobart office to receive the books.

4 Indexed amounts are available on the AFSA website


https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0



4.32. Although the Bankruptcy Act does not require a bankrupt to be given an allowance and travel expenses, the trustees should consider providing reasonable facilities to enable attendance. In these cases, as sections 77D and 77E do not apply, it is up to the trustee to come to an agreement with the bankrupt regarding reasonable expenses.

Custody and return of books 4.33. Where a notice requires the production of books, the Official Receiver will:

issue a receipt for all books retain the books and allow the trustee access to them to make copies of

relevant material return the books to the person as soon as they are no longer required

(but see the following paragraph).

4.34. If the books and records obtained belong to the bankrupt (that is, they are the “property of the bankrupt”), they should not be automatically returned. Subsection 129(1) of the Bankruptcy Act provides that the trustee must take possession of all of the property of the bankrupt including “deeds, books and documents”. The Official Receiver will invite the trustee to identify those books that are claimed to be the bankrupt’s property and should not be returned.

Protection of information – Privacy Act 1988 4.35. The Australian Privacy Principles (“APPs”) contained in the Privacy Act apply

to the collection and maintenance of information obtained as a result of the exercise of this power. The Official Receiver is obliged to ensure that the information is not disclosed to a third party in a manner contrary to that Act.

4.36. The information obtained through the exercise of this power will, in the first instance, be available to the trustee on whose application the power was exercised. This disclosure is consistent with the operation of the APPs, being a use which is directly related to the purpose for which it was obtained (see APP6). The section 77C notice template used by the Official Receiver also contains specific reference to the disclosure of this information for that purpose.

4.37. Disclosure of the information to a person other than the trustee must only be actioned if authorised by the Privacy Act.

EXAMPLE 14 Although subsection 77C(3) of the Bankruptcy Act provides that a copy of the transcript of an examination is available for inspection by a member of the public for a fee, it does not provide that books and records obtained as a result of the exercise of this power are publicly available materials under the Bankruptcy Act.






Accordingly, the disclosure of these materials to any person other than to the trustee is not authorised by law.

Claims of legal professional privilege 4.38. Where a claim of legal professional privilege is made in relation to books that

are required to be produced in accordance with a section 77C notice, the owner of the books should prepare a schedule of the books using the headings listed below. The owner should then place the books in envelopes or boxes that should then be sealed and given to the Official Receiver, together with the schedule. The Official Receiver cannot determine whether a claim for privilege is validly raised.


4.39. In these circumstances, the Official Receiver will retain the sealed records and make arrangements with the parties for the claim to be determined by a court. That may take the form of an application to the court by either the trustee or recipient. In limited circumstances, the Official Receiver may apply to the court for a determination on the matter.

Failure to comply 4.40. Section 267B of the Bankruptcy Act provides for a penalty of imprisonment

for 12 months for a person who, without reasonable excuse, fails to comply with a section 77C notice. The Official Receiver will refer all instances of non-compliance to the Inspector-General. The trustee does not need to also refer non-compliance.

4.41. Section 267D also provides for a penalty of imprisonment for six months for a person who was required to attend before the Official Receiver and who failed to do so, where that person was provided with an advance and where the person does not have a reasonable excuse.

4.42. Where a person has been required to attend before the Official Receiver and he or she fails to do so, the Official Receiver will consider referring the matter to the Inspector-General and/or seeking a warrant for arrest pursuant to section 267E of the Bankruptcy Act.




Withdrawing notices 4.43. The Official Receiver may, at any time, withdraw the notice. This will be

considered: at the request of the trustee, or where the Official Receiver is satisfied that the notice should not have

been issued.

Defending notices 4.44. If a dispute over the merits of a section 77C notice is unable to be resolved,

the recipient of the notice is entitled to make application to the court to have it set aside. This may be by way of ordinary motion for review, such as under section 30 of the Bankruptcy Act.

4.45. Whether it is the Official Receiver or the trustee who is principally responsible for responding to an application will depend on the nature of the notice.




5. SECTION 77CA – POWER TO OBTAIN STATEMENT OF AFFAIRS

Section 77CA of the Bankruptcy Act 5.1. The Official Receiver has the power to issue a statutory notice pursuant to

section 77CA requiring the bankrupt to file his or her statement of affairs.

5.2. Non-compliance with a section 77CA notice can result in imprisonment for up to 12 months.

5.3. It is noted that, from 1 January 2020, the statement of affairs will be referred to as the Bankruptcy Form. However, section 54 of the Bankruptcy Act references a statement of affairs. References in this practice statement to a statement of affairs can be taken to also refer to the Bankruptcy Form.

Registration of the sequestration order 5.4. Following the making of a sequestration order by the court, the petitioning

creditor has an obligation to file a copy of the order with the Official Receiver within two business days.

5.5. Following the filing of the sequestration order, the Official Receiver will register it on the National Personal Insolvency Index and advise the trustee of his or her appointment.

Obligation to file a statement of affairs 5.6. Section 54 of the Bankruptcy Act requires a person who is made bankrupt by

a sequestration order of the court to complete a statement of affairs and file it with the Official Receiver within 14 days of the person being notified of the bankruptcy. The bankrupt is also required to provide a copy of the statement of affairs to the trustee.

5.7. As the completed statement of affairs facilitates the administration of the bankrupt estate by the trustee, it is important that the document is filed as soon as possible after the sequestration order is made, but not later than the 14 days permitted by legislation.

5.8. Discharge from bankruptcy occurs at the earliest three years and one day from the day the statement of affairs is accepted by the Official Receiver, although this period can be extended (see OTPS5 – Objections to discharge from bankruptcy). It is therefore in the bankrupt’s interest to file the document as soon as possible to ensure that his or her discharge from bankruptcy is not affected by failure to file the statement of affairs on time.

5.9. Failure of the bankrupt to file a statement of affairs is an offence of strict liability that, upon prosecution and conviction, can result in 50 penalty units


https://www.afsa.gov.au/sites/default/files/otps5.pdf

https://www.afsa.gov.au/sites/default/files/otps5.pdf



being imposed (presently $10,500).

5.10. The trustee is responsible for locating the bankrupt and notifying him or her of the bankruptcy and of the obligation to file a statement of affairs with the Official Receiver.

Filing of a statement of affairs 5.11. Where a statement of affairs is lodged by the bankrupt, the document is

assessed by the Official Receiver.

5.12. The Official Receiver may refuse to accept a statement of affairs for filing if it is not signed, not dated, not in the current approved form, illegible or substantially blank (such that it is impossible to identify the bankrupt) and/or incomplete.

5.13. If the bankrupt has not reasonably attempted to answer all the questions on the statement of affairs, it may not be accepted. The Official Receiver will assess whether the unanswered question(s) is critical to an understanding of the bankrupt’s affairs and whether the information provided is sufficient.

EXAMPLE 15 An indication that the bankrupt owns assets without details of their locations or estimated values would not constitute a reasonable attempt to complete the statement of affairs.

EXAMPLE 16 An indication by the bankrupt that he or she has creditors other than the petitioning creditor without identifying them would not constitute a reasonable attempt to complete the statement of affairs.

EXAMPLE 17 Where the bankrupt does not appear to have any business involvement, it would not matter if the business-related questions on the statement of affairs were not answered. However, where information on the form suggests that the bankrupt may have had business involvement (for example, there are trade creditors listed), the statement of affairs would not be considered adequately completed unless the bankrupt has answered the business-related questions.

5.14. An incomplete statement of affairs may be accepted in exceptional circumstances but it will generally be the case that, unless the bankrupt has made a reasonable attempt to complete all relevant questions on the statement of affairs, it will likely not be accepted.




When the statement of affairs is overdue 5.15. Where a sequestration order has been registered and a statement of affairs

has not been filed by the bankrupt within a reasonable period from the date of the order, the Official Receiver will write to the trustee seeking certain information about the estate.

5.16. However, trustees do not have to await contact by the Official Receiver and may request a section 77CA notice as soon as there is sufficient evidence available to establish that the bankrupt was notified of his or her obligation to file a statement of affairs, at least 14 days have passed since the bankrupt was notified and the bankrupt has not complied.

5.17. The trustee can request issuance of a section 77CA notice online.

What the trustee must establish 5.18. In addition to the items listed in paragraph 2.2 above, the trustee’s

application will need to include: a. confirmation that the bankrupt has been advised of the bankruptcy and of

his or her obligation to file a statement of affairs b. information about the bankrupt’s address and/or other relevant

information (for example, details of the bankrupt’s place of employment if the bankrupt is unable to be contacted at his or her usual place of residence).

5.19. Any information provided by the trustee in response to the letter from the Official Receiver is assessed in order to determine whether a section 77CA notice should be issued to the bankrupt requiring him or her to file a statement of affairs.

When a notice may not be issued 5.20. The Official Receiver may decide not to issue the notice if:

the trustee has not advised the bankrupt of the bankruptcy and of the obligation to file a statement of affairs

the trustee is unable to confirm the bankrupt’s current address the sequestration order has been stayed by the court.

Service of the notice 5.21. The Official Receiver will attempt service of a notice on the bankrupt in the

first instance, using the address information provided by the trustee.

5.22. Following the Official Receiver’s attempted service on the bankrupt and if the bankrupt cannot be located at the address provided by the trustee, the Official Receiver will advise the trustee that no further action can be taken until an alternative confirmed address is provided. Should the trustee




subsequently provide additional information, such as a new address for service, the Official Receiver will consider issuing a new notice.

Monitoring compliance with a section 77CA notice 5.23. The Official Receiver will monitor compliance by the bankrupt with reference

to the date the bankrupt was served with the notice.

5.24. The bankrupt has 14 days from the date of receipt of the notice to file a statement of affairs with the Official Receiver. Failure to comply with the notice is an offence punishable by imprisonment for 12 months (pursuant to section 267B of the Bankruptcy Act).

5.25. Where the bankrupt fails to comply with the section 77CA notice, the Official Receiver will refer the non-compliance to the Inspector-General in Bankruptcy (via AFSA’s Regulation and Enforcement division) for further investigation and consideration regarding prosecution action. The trustee is not required to also refer non-compliance with section 54 of the Bankruptcy Act where the Official Receiver has already referred non-compliance with a section 77CA notice. The trustee will be advised of the referral to the Inspector-General and the outcome.




6. SECTION 81A – OFFSHORE INFORMATION NOTICE

Section 81A of the Bankruptcy Act 6.1. Section 81A allows the Official Receiver to issue a notice requiring a person

who is outside Australia to give to the Official Receiver information or provide books relevant to the examinable affairs of a bankrupt.

6.2. The information or books are required to be given or produced within a period specified in the notice, with the period to be no more than 90 days after the date on which the notice is issued.

What the trustee must establish 6.3. In addition to the items listed in paragraph 2.2 above, the trustee’s section

81A notice application must establish the following: a. that there is an association or link between the information and/or books

sought and the performance of the trustee’s functions and the investigation of the bankrupt’s examinable affairs, and that this is supported by evidence

b. the nominated notice recipient is outside of Australia and there is a reasonable belief that he or she has the information and/or books sought

c. what specific information and/or books are sought under the notice and how these will assist the investigation and how they relate to the functions of the trustee

d. that exercise of the power is necessary because other attempts to obtain the information and/or books have been, or are likely to be, unsuccessful

e. that the request is not onerous and/or unreasonable in nature f. if a notice(s) has already been issued to the same recipient, the trustee’s

application will need to explain why the previous notice(s) has not been complied with or the reasons why an additional notice is required.

6.4. Issuance of a section 81A notice is not predicated on the existence of the information and/or books overseas exclusively – that is, the fact that they may be available in Australia from another person does not prevent issuance of the notice, although the trustee should explain why the notice is being requested in these circumstances.






Protection of information – Privacy Act 1988 6.6. The Australian Privacy Principles (“APPs”) contained in the Privacy Act apply

to the collection and maintenance of information obtained as a result of the exercise of this power. The Official Receiver is obliged to ensure that the information and/or books are not disclosed to a third party in a manner contrary to the Privacy Act.

6.7. The information obtained through the exercise of this power will, in the first instance, be available to the trustee on whose application the power was exercised. This disclosure is consistent with the operation of the APPs, being a use which is directly related to the purpose for which it was obtained (see APP6).

6.8. Disclosure of the information to a person other than the trustee must only be actioned if authorised by the Privacy Act.

Claims of legal professional privilege 6.9. Where a claim of legal professional privilege is made in relation to books that

are required to be produced in accordance with a section 81A notice, the owner of the books should prepare a schedule of the books using the headings listed below. The owner should then place the books in envelopes or boxes that are then sealed and given to the Official Receiver, together with the schedule. The Official Receiver cannot determine whether a claim for privilege is validly raised.


6.10. In these circumstances, the Official Receiver will retain the sealed records and make arrangements with the parties for the claim to be determined by a court. That may take the form of an application to the court by either the trustee or recipient. In limited circumstances, the Official Receiver may apply to the court for a determination on the matter.

Withdrawing and varying notices 6.11. The Official Receiver may, at any time, vary or withdraw the notice. This will

be considered: at the request of the trustee, or where the Official Receiver is satisfied that the notice should not have

been issued.






Defending notices 6.12. If a dispute over the merits of a notice is unable to be resolved, the recipient

of a notice is entitled to make application to the court to have it set aside. This may be by way of ordinary motion for review, such as under section 30 of the Bankruptcy Act.

6.13. Whether it is the Official Receiver or the trustee who is principally responsible for responding to an application will depend on the nature of the notice, the application and the circumstances on which it has been challenged.

Failure to comply 6.14. Section 81G of the Bankruptcy Act deals with non-compliance with a section

81A notice. The section provides for the information and/or books requested but not provided being inadmissible in a relevant proceeding. “Relevant proceeding” is defined as one relating to the recovery of the bankrupt’s income contributions or relating to the recovery of property under Division 3 of Part VI of the Bankruptcy Act (which are the provisions relating to property available for payment of debts, including sections 116, 120, 121, 128B and 128C).




7. SECTION 128E – SUPERANNUATION ACCOUNT-FREEZING NOTICE

Section 128E of the Bankruptcy Act 7.1. Section 128E allows the Official Receiver to issue a notice to the trustee of

an eligible superannuation plan “freezing” the interest of a member of the plan where the trustee of the bankrupt estate of the member demonstrates that a contribution or contributions made to that plan are void under section 128B or 128C.

7.2. The Official Receiver may issue such a notice only where he or she has reasonable grounds to believe that: a transaction is avoid against the trustee under section 128B or 128C either:

- the whole or a part of the member’s superannuation interest is attributable to the transaction, or

- the trustee has made an application under section 139ZU relating to the transaction and the member’s superannuation interest.

7.3. The effect of a notice under section 128E is to prevent the member dealing in the superannuation interest and thereby preventing the trustee recovering it for the benefit of creditors. Its purpose is to allow a trustee who has evidence of a void contribution to prevent the bankrupt dissipating an interest in a superannuation plan while investigations are continuing. Although the evidence required for the Official Receiver to issue a section 128E notice is less than that required to issue a section 139ZQ notice to recover the contribution, the trustee will need to satisfy the Official Receiver that there is a reasonable basis for believing that a void contribution has been made to the superannuation plan in question.

What the trustee must establish 7.4. In addition to the items listed in paragraph 2.2 above, the trustee’s section

128E notice application must include the following evidence: a. that a contribution made to the superannuation plan in question is void

under section 128B or 128C and the trustee demonstrates that action is underway to apply for a notice under section 139ZQ, or

b. the trustee has commenced action under section 139ZU. An application under section 139ZU will identify the superannuation interest from which the trustee is attempting to recover a void contribution. Therefore, the Official Receiver’s notice under section 128E will be directed to the trustee of that superannuation plan.




Dealings in superannuation interest while section 128E notice is in force 7.5. Where a superannuation account-freezing notice is in force, the Official

Receiver must consent to dealings in that interest. The member may apply in writing to the Official Receiver under section 128H of the Bankruptcy Act for consent to cashing, debiting, rolling over, transferring or forfeiting, in whole or in part, the member’s interest.

7.6. Prior to granting such consent, the Official Receiver is required to consult with the trustee of the bankrupt estate. The Official Receiver is not bound to follow the trustee’s wishes but will take these into account in determining whether it is appropriate to grant consent. The purpose of consultation is to determine whether granting consent will result in a risk that the contribution cannot be recovered.

7.7. The Official Receiver will normally give consent where: a. the request is only in relation to the amount by which the member’s

interest exceeds the value of the void contributions b. the member wishes to roll over the interest for investment reasons and

advises the Official Receiver of the details of the new fund (which will allow a fresh freezing notice to be issued in relation to that new fund)

c. it appears that the trustee will be able to pay all creditors.

Service of the notice 7.8. When an account freezing notice is issued, the Official Receiver must give a

copy to the superannuation fund trustee and two copies to the trustee of the bankrupt estate. The trustee of the bankrupt estate is required to give a copy of the notice to the superannuation fund member (i.e. the bankrupt), pursuant to section 128G of the Bankruptcy Act.

Revocation of a section 128E notice 7.9. Section 128F of the Bankruptcy Act provides for the Official Receiver

revoking a section 128E notice on the initiative of the Official Receiver or on application by the trustee of the bankrupt estate or the member of the superannuation plan (i.e. the bankrupt).

7.10. Section 128F further provides for automatic revocation of a section 128E notice in any of the following circumstances: a. where a section 139ZQ notice is issued within 180 days of the freezing

notice being given to the trustee of the superannuation plan and the section 139ZQ notice is complied with, revoked or set aside by the court

b. a section 139ZU order is made within 180 days of the freezing notice being given to the trustee of the superannuation plan and that order is complied with or set aside on appeal




c. an application for a section 139ZU order is dismissed by the court or withdrawn

d. no section 139ZQ notice is issued within 180 days of the freezing notice being given to the trustee of the superannuation plan

e. no section 139ZU order is made within 180 days of the freezing notice being given to the trustee of the superannuation plan.

7.11. Subsection 128F(8) allows the Official Receiver to apply to the court to have the 180-day period referenced above extended. The Official Receiver can make this application on the initiative of the Official Receiver or on the request of the trustee of the bankrupt estate.

Service of the notice of revocation 7.12. Where the Official Receiver revokes a section 128E notice, a copy must be

given to the superannuation fund trustee and two copies to the trustee of the bankrupt estate. The trustee of the bankrupt estate is required to give a copy of the notice to the superannuation fund member (i.e. the bankrupt), pursuant to section 128G of the Bankruptcy Act.

Defending notices 7.13. Section 128J of the Bankruptcy Act allows the recipient of the notice, the

bankrupt or another interested person to apply to the court to have a section 128E notice set aside.

7.14. Whether it is the Official Receiver or the trustee of the bankrupt estate who is principally responsible for responding to an application will depend on the nature of the notice, the application and the circumstances on which it has been challenged.




8. SECTION 139ZL – REQUIREMENT TO PAY MONEY TO DISCHARGE A BANKRUPT’S LIABILITY TO PAY INCOME CONTRIBUTIONS

Section 139ZL of the Bankruptcy Act 8.1. Section 139ZL allows the Official Receiver to issue a notice for the recovery

of income contributions payable by a bankrupt. A notice can also be issued in relation to a discharged bankrupt whose income contribution liability remains unpaid.

8.2. The Official Receiver will only consider issuance of a section 139ZL notice where the bankrupt has been notified of his or her liability and has then been given an opportunity to comply with a payment due date or payment schedule set by the trustee. That is, a notice will not be issued if the bankrupt has not yet been provided with an opportunity to comply.

What the trustee must establish 8.3. In addition to the items listed in paragraph 2.2 above, when making an

application for issue of a section 139ZL notice the trustee will need to address and satisfy the following, which are outlined in more detail below. a. The bankrupt has an income contribution liability and has been notified of

the liability and the payment due date or schedule. b. The bankrupt has been given an opportunity to pay the liability and is in

arrears. c. The total amount payable under the notice does not exceed the total

liability. d. The nominated notice recipient is covered by section 139ZL of the

Bankruptcy Act. e. What is required of the nominated notice recipient and the time for

compliance is reasonable. f. The amount claimed will not cause hardship. g. The bankrupt’s address.

a. The bankrupt has a liability, has been notified of the liability and has been notified of the payment due date or payment schedule

8.4. The trustee is to provide details of the bankrupt’s total contribution liability, the amount (if any) paid to date and the payment due date or payment schedule.

8.5. Details of when the bankrupt was advised of the liability and the payment schedule or payment due date must be provided.




b. The bankrupt has been given an opportunity to pay and is in arrears

8.6. The trustee must establish that the bankrupt is in arrears with his or her contribution payments with reference to the most recent payment arrangement sent and has been given an opportunity to negotiate a payment arrangement and has failed to do so or, having made such an arrangement, has failed to comply.

8.7. The Official Receiver will consider each application on its own merit and, for some estates, may require additional facts and circumstances to be included in the notice. For example, facts and circumstances described in a notice issued to the employer of a salaried bankrupt would be different to a notice issued to a trust or a company where the bankrupt has a complex employment arrangement. In the later scenario, the schedule to the notice may be amended to include information such as the following: how the contribution liability was calculated (or liabilities for more than

one CAP), such as what type of income was included, the source of the income, the identities of parties who did or should have made payments to the bankrupt etc.

the employment relationship, if any is alleged, between the recipient of the notice and the bankrupt

details of any other employment relationships that the bankrupt has had with other parties who did or should have paid income to the bankrupt

if the contribution liability was calculated as a result of the deeming of the bankrupt’s income under section 139Y or section 139Z of the Bankruptcy Act, specific details of the information and evidence relied upon to calculate the bankrupt’s income

any other particulars relevant to the issuing of the notice as considered necessary by the Official Receiver.

8.8. Trustees need not include the additional information outlined in the preceding paragraph in their initial application. If the Official Receiver requires more detail due to a complex employment arrangement, supporting documents or other information will be requested from the trustee prior to completing the assessment of the trustee’s application.

8.9. The details of the arrears communications or conversations with the bankrupt are required to establish that the trustee has taken reasonable steps to recover the arrears prior to requesting issuance of the section 139ZL notice.

c. Total amount payable under the notice

8.10. The amount claimed in the notice cannot exceed the total amount payable by the bankrupt for the contribution assessment period(s) assessed to date.

8.11. The amount to be paid under the notice can include the total outstanding liability and not just the amount of the arrears (subsection 139ZL(3)).




EXAMPLE 18 Where a bankrupt with a $10,000 liability for contribution assessment period 1 has paid $2000 to date and is $3000 in arrears with reference to the most recent payment schedule set by the trustee, and where the other necessary criteria for issuance of the notice have been satisfied, the notice can require the recipient to pay the remaining $8000 to the trustee (and not just the $3000 arrears amount).

8.12. Pursuant to Bankruptcy Regulation 6.19, the trustee must confirm that the amount claimed in the notice is not protected money or property.

d. Person to whom notice may be given

8.13. The trustee must establish that the nominated notice recipient is a person to whom section 139ZL of the Bankruptcy Act applies. The notice must be able to be issued against a nominated, identifiable person by name or by title and must be issued to a third party (that is, someone other than the bankrupt).

8.14. Notice recipients covered by section 139ZL include a person: from whom any money is due or accruing, or may become due, to a

bankrupt who holds, or may subsequently hold, money for or on account of a

bankrupt who holds, or may subsequently hold, money on account of some other

person for payment to or on behalf of a bankrupt who has authority from some other person to pay money to or on behalf

of a bankrupt who is liable to pay money or transfer property wholly or principally in

consideration of personal services supplied by a bankrupt after the commencement of the bankruptcy, whether the services were supplied to the first-mentioned person or to some other person

who has received money or property wholly or principally in consideration of personal services supplied by a bankrupt after the commencement of the bankruptcy, whether the services were supplied to the first-mentioned person or to some other person.

8.15. Common examples of such a person are the bankrupt’s employer or a bank at which the bankrupt holds money. Notices may also be issued to the Australian Taxation Office in relation to tax refunds that would otherwise be due to the bankrupt or former bankrupt.

e. What is required of the nominated notice recipient and the time for compliance is reasonable

8.16. The trustee’s application must state precisely what the notice recipient must do to comply with the notice. This includes details of the total amount




payable to the trustee, the method of payment and the date(s) of payment(s) to be made.

8.17. The notice must provide the nominated recipient with a reasonable time period in which to comply. For example, where the nominated notice recipient is the bankrupt’s employer and the notice requires ongoing periodic payments, the first instalment should not be due fewer than 14 days following the date of service of the notice or before the date of the next pay day in the pay cycle, to ensure that the employer is given time to implement any necessary payroll adjustments, and ongoing payments should be set to match the regularity with which the bankrupt is paid.

f. Amount claimed will not cause hardship

8.18. Where the trustee is claiming instalments from the bankrupt’s salary and wages, the bankrupt must be left with a sufficient amount to enable him or her to satisfy ordinary living expenses.

8.19. While the Official Receiver recognises that the trustee is permitted to recover the total amount owed within a reasonable time period, a notice will not be issued claiming an amount that will lead the bankrupt to suffer hardship.

8.20. The trustee must provide details of the bankrupt’s net income and the frequency of payment of salary or wages so that the Official Receiver can calculate the percentage of income required to be held under the section 139ZL notice.

g. The bankrupt’s address

8.21. As the Official Receiver is required by subsection 139ZL(6) of the Bankruptcy Act to give a copy of the section 139ZL notice to the bankrupt, the trustee must provide the bankrupt’s address in the notice application.

Service of the notice 8.22. The Official Receiver will attempt initial service on the nominated notice

recipient. The Official Receiver will also provide copies of the notice to the trustee and the bankrupt.

Creation of a charge over property 8.23. Section 139ZN of the Bankruptcy Act provides that, once a person is served

with a notice pursuant to section 139ZL, the property is charged with the liability of the person to make payments as required in the notice. The creation of the charge is automatic by the operation of section 139ZN.

8.24. The charge created generally has priority over any other mortgage or charge unless the mortgagee or chargee can demonstrate that the encumbrance was entered into at arm’s length and for valuable consideration.




8.25. The Official Receiver may provide a certificate to the trustee evidencing the charge for the purposes of registering the interest over real property (subsection 139ZN(4) of the Bankruptcy Act). The Official Receiver will generally not issue a certificate evidencing the charge unless the time for compliance with the notice has elapsed.

8.26. The charge does not have to be registered on the Personal Properties Securities Register under the Personal Properties Securities Act 2009.

8.27. The trustee can take action to realise property over which a section 139ZN charge exists.

Non-compliance with a section 139ZL notice 8.28. Where the notice recipient fails to make payment(s) in accordance with the

section 139ZL notice, the Official Receiver will refer the non-compliance to the Inspector-General in Bankruptcy (via AFSA’s Regulation and Enforcement division) for further investigation and consideration regarding prosecution action. The trustee is not required to also refer non-compliance. The trustee will be advised of the referral to the Inspector-General and the outcome.

Revoking and amending notices 8.29. The Official Receiver may, at any time, revoke or amend a section 139ZL

notice. Revocation or amendment of the notice may occur: at the request of the trustee where the Official Receiver is satisfied that the notice should not have

been issued, or where the Official Receiver is satisfied that the bankrupt has complied

with his or her obligations. The Official Receiver will consider any information supplied by both the bankrupt and the trustee in making this decision.

Advice of revoked or amended notices 8.30. When a notice is withdrawn, the Official Receiver will advise the notice

recipient, trustee and bankrupt.

8.31. Where a notice is amended, the Official Receiver will serve a copy on the notice recipient. Copies will also be provided to the trustee and the bankrupt.

Contribution reassessments 8.32. Where the trustee amends a contributions assessment and a section 139ZL

notice is in place, the trustee must advise the Official Receiver that the amended assessment has been issued. The request for issue of an amended section 139ZL notice will attract the $480 notice fee.




Applications to set aside section 139ZL notices 8.33. If a dispute over the merits of a notice is unable to be resolved, section

139ZM of the Bankruptcy Act provides for the recipient of the notice or any other interested party, which includes the bankrupt, applying to the court to have the notice set aside.

8.34. A section 139ZM application must be made within 60 days of the notice being given to the recipient.

8.35. Whether it is the Official Receiver or the trustee of the bankrupt estate who is principally responsible for responding to an application will depend on the nature of the notice, the application and the circumstances on which it has been challenged.




9. SECTION 139ZQ – REQUIREMENT TO PAY MONEY WHERE A TRANSACTION IS VOID AGAINST THE TRUSTEE

Section 139ZQ of the Bankruptcy Act 9.1. Section 139ZQ allows the Official Receiver to issue a notice to a person who

has received money or property as a result of a transaction that is void against the trustee, with the notice requiring that person to pay to the trustee an amount equal to the money or the value of the property received. Generally, this type of notice applies to transactions that are void against the trustee under the following provisions of the Bankruptcy Act: section 120 – undervalued transfers section 121 – transfers made with the intention to defeat creditors section 121A – a transfer for less than market value or a transfer made

with the intention to defeat creditors where consideration was given to a third party

section 122 – voidable preferences section 128B – superannuation contributions made to defeat creditors

where the contributor is a person who later becomes a bankrupt section 128C – superannuation contributions made to defeat creditors

where the contributor is a third party.

9.2. The Official Receiver does not exercise a judicial function and so is not required or authorised to adjudicate on whether the transfer is actually void. Instead, the Official Receiver must be satisfied that the trustee has provided prima facie evidence of a void transfer, based on the facts and circumstances of the transfer, sufficient to allow exercise of the discretion to issue a notice.5 Any determination of whether a transfer is actually void must be made by a court.

Exercising power in good faith and for a proper purpose 9.3. Case law dictates that the Official Receiver’s power be exercised in good

faith and for a proper purpose. The court found in Tsakirakis6 that the issuance of a section 139ZQ notice, where the result would be that the trustee received information to assist him in a case that was before the court, was an inappropriate use of the Official Receiver’s powers.

5 See Alden John Halse as trustee of the property of Neville Ross Payne v Michael Norman Norton [1997] FCA 673 (23 July 1997) 6 Tsakirakis v Official Receiver & Anor [2013] FCCA 106 (24 April 2013)


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What the trustee must establish – section 120 undervalued transaction 9.4. Section 120 of the Bankruptcy Act provides for a transfer of property (with the

definition of “property” including money) by a person who later becomes bankrupt being void against the trustee if: the transfer took place in the period beginning five years before the

commencement of the bankruptcy and ending on the date of bankruptcy the transferee gave consideration of less than the market value of the

property the transfer is not caught by an exemption stated in section 120.

9.5. In addition to the items listed in paragraph 2.2 above, where the trustee applies for a section 139ZQ notice on the basis of a transfer being void under section 120, the Official Receiver will require the following: a. the date of the commencement of the bankruptcy (including evidence of

the act of bankruptcy on which that date has been determined) under section 115 of the Bankruptcy Act

b. evidence that a transfer took place on a particular date c. a detailed description of the transfer that gave the benefit to the

nominated notice recipient d. if the transfer occurred more than two years prior to the commencement

of the bankruptcy (or more than four years where the transfer was to a related entity), evidence that the bankrupt was insolvent at the time of the transfer

e. evidence of any consideration provided and how this was taken into account in determining the amount the trustee is seeking to recover via the notice, including an acceptable valuation of the property at the time of the transfer

f. evidence of any consideration provided by the transferee and how this has been taken into account

g. an explanation and evidence supporting the assertion that the transfer is void against the trustee

h. a summary of any legal action(s) on foot that relate to the same estate or to the same issue/property within the estate

i. the value of the property received at the time the application for issuance of the notice is made

j. the address of the bankrupt.

What the trustee must establish – section 121 transfer to defeat creditors 9.6. Section 121 of the Bankruptcy Act provides for a transfer of property (with the

definition of “property” including money) by a person who later becomes bankrupt being void against the bankruptcy trustee where:




the property would probably have become part of the transferor’s bankrupt estate if it had not been transferred

the transferor’s main purpose in making the transfer was to prevent, hinder or delay the transferred property becoming divisible among the transferor’s creditors

the transfer is not caught by an exemption stated in section 121.

9.7. In addition to the items listed in paragraph 2.2 above, where the trustee applies for a section 139ZQ notice on the basis of a transfer being void under section 121, the Official Receiver will require the following: a. evidence that a transfer took place on a particular date b. a detailed description of the transfer that gave the benefit to the

nominated notice recipient c. if the trustee is relying on an assumption that the bankrupt was insolvent

at the time of the transfer, evidence of insolvency at that time d. where the trustee is claiming that the transfer was made to defeat

creditors but is not relying on the bankrupt being insolvent at the time, detailed reasons and evidence in support of this claim

e. evidence of any consideration provided and how this was taken into account in determining the amount the trustee is seeking to recover via the notice, including an acceptable valuation of the property at the time of the transfer

f. details of any statements given by the transferee in relation to the transfer (in particular, any statements relating to the matters listed in subsection 121(4))

g. the trustee’s reasons for claiming that the transfer was made with the intention to defeat creditors and that the transfer is void against the trustee

h. a summary of any legal action(s) on foot that relate to the same estate or to the same issue/property within the estate

i. the value of the property received at the time the application for issuance of the notice is made

j. the address of the bankrupt.

9.8. The Official Receiver is unlikely to issue a notice in relation to a transfer claimed to be void under section 121 where the trustee is unable to provide evidence that the bankrupt was insolvent at the time of the transfer but claims that the transfer was made with the intention to defeat creditors. This would require the Official Receiver to adjudicate on the merits of the trustee’s arguments under section 121. The Official Receiver may consider issuing the notice where the trustee produces evidence consisting of clear statements by the bankrupt in relation to his or her intention in making the transfer.




What the trustee must establish – section 121A undervalued transfer or transfer to defeat creditors 9.9. Section 121A provides for an undervalued transfer (section 120) and a

transfer to defeat creditors (section 121) being void where consideration was given to a third party.

9.10. Where a trustee lodges an application for issue of a section 121A notice, the application must: address the items listed in paragraph 2.2 above in the case of an undervalued transaction, the items listed in paragraph

9.5 above, together with evidence of the consideration given to the third party

in the case of a transfer to defeat creditors, the items listed in paragraph 9.7 above, together with evidence of the consideration given to the third party.

What the trustee must establish – section 122 preference payment 9.11. Section 122 provides for a transfer of property, by a person who is insolvent

and who later becomes bankrupt, in favour of a creditor being void against the trustee if the transfer: had the effect of giving the creditor a preference, priority or advantage

over other creditors was made in the period beginning six months before the presentation of

the petition on which the debtor becomes bankrupt and ending immediately before the date of bankruptcy

the transfer is not caught by an exemption stated in section 122.

9.12. In addition to the items listed in paragraph 2.2 above, where the trustee applies for a section 139ZQ notice on the basis of a transfer being void under section 122 of the Bankruptcy Act, the Official Receiver will require the following: a. evidence of a payment to a creditor within the required period prior to the

bankruptcy b. an explanation and evidence supporting the assertion that the payment

had the effect of giving that creditor a preference, priority or advantage over other creditors and that the transfer is void

c. an explanation and evidence establishing that the bankrupt was insolvent at the time of the transfer

d. a summary of any legal action(s) on foot that relate to the same estate or to the same issue/creditor within the estate

e. the address of the bankrupt.




What the trustee must establish – section 128B and 128C superannuation contributions 9.13. Section 128B of the Bankruptcy Act provides for a transfer of property (with

the definition of “property” including money) by a person who later becomes bankrupt to an eligible superannuation plan being void against the bankruptcy trustee where: the property would probably have become part of the transferor’s estate

or been available to creditors if it had not been transferred the transferor’s main purpose was to prevent, hinder or delay the

transferred property from becoming divisible among the bankrupt’s creditors

the transfer occurred on or after 28 July 2006.

9.14. In addition to the items listed in paragraph 2.2 above, where the trustee applies for a section 139ZQ notice on the basis of a transfer being void under section 128B of the Bankruptcy Act, the Official Receiver will require the following: a. evidence that the person made a contribution to an eligible

superannuation plan on a particular date that was on or after 28 July 2006

b. a detailed description of the transfer c. evidence supporting the trustee’s claim that the transfer was made with

the intention to defeat creditors and that the transfer is void d. where the trustee is relying on an assumption that the bankrupt was

insolvent at the time of making the transfer, evidence of insolvency at that time

e. where the trustee is relying on the bankrupt’s history of making superannuation contributions and that the transfer is “out of character” in order to assert that it was made with the intention to defeat creditors, evidence of the bankrupt’s history of making superannuation contributions as well as detailed reasons and evidence to demonstrate the bankrupt’s intention

f. where the trustee is claiming that the transfer was made to defeat creditors but is not relying on either the bankrupt being insolvent at the time or the bankrupt’s history of making superannuation contributions, detailed reasons and evidence in support of this claim

g. a summary of any legal action(s) on foot that relate to the same estate or to the same issue/property within the estate

h. the address of the bankrupt.

9.15. Section 128C of the Bankruptcy Act operates similarly to section 128B, but covers the situation where the transfer to the eligible superannuation plan was made by a person other than the bankrupt and was made on behalf of the bankrupt.




9.16. In addition to the items listed in paragraph 2.2 above, where the trustee applies for a section 139ZQ notice on the basis of a transfer being void under section 128C of the Bankruptcy Act, the Official Receiver will require the following: a. evidence that a transfer was made to an eligible superannuation plan on

a particular date (which must be on or after 28 July 2006) for the benefit of the bankrupt

b. a detailed description of the transfer c. a detailed description of the arrangements (to which the bankrupt must

have been a party) under which the person made the transfer for the bankrupt’s benefit

d. evidence supporting the trustee’s claim that the transfer was made with the intention to defeat creditors and that the transfer is void

e. where the trustee is relying on an assumption that the bankrupt was insolvent at the time the bankrupt entered into the arrangement to defeat creditors, evidence of insolvency at that time

f. where the trustee is relying on the bankrupt’s history of making superannuation contributions and that the transfer is “out of character” in order to assert that it was made pursuant to a scheme entered into by the bankrupt with the intention to defeat creditors, evidence of the bankrupt’s history of making superannuation contributions as well as detailed reasons and evidence to demonstrate the bankrupt’s intention

g. where the trustee is claiming that the transfer was made to defeat creditors but is not relying on either the bankrupt being insolvent at the time or the bankrupt’s history of making superannuation contributions, detailed reasons and evidence in support of this claim

h. a summary of any legal actions on foot that relate to the same estate or to the same issue/property within the estate

i. the address of the bankrupt.

9.17. The Official Receiver is unlikely to issue a notice in relation to a superannuation contribution claimed to be void under section 128B or section 128C where the trustee is unable to provide evidence that the bankrupt was insolvent at the time the contribution was made but claims that the transfer was made with the intention to defeat creditors. This would require the Official Receiver to adjudicate on the merits of the trustee’s arguments under section 128B or section 128C. However, the Official Receiver may consider issuing the notice where the trustee produces evidence consisting of clear statements by the bankrupt in relation to his or her intention in making the contribution or entering into an arrangement whereby the contributions were made by a third party. The Official Receiver may also consider issuing the notice where the trustee provides evidence that the contribution was “out of character” in light of the bankrupt’s history of making superannuation contributions and the bankrupt is unable to provide a sound explanation of




the purpose in making the contribution.

9.18. Where there was a transaction that was void against the trustee under section 128B or section 128C of the Bankruptcy Act, and where the property that was transferred to a superannuation fund is later rolled over to a second superannuation fund, and where the bankruptcy trustee seeks to recover the rolled over amounts from the superannuation fund trustee, the bankruptcy trustee must provide sufficient evidence: tracing the property to the second superannuation fund that the amount claimed does not exceed the amount that would be

available under section 139ZU of the Bankruptcy Act.



9.20. Copies of the notice will be provided to the trustee and the bankrupt.

Creation of a charge over property 9.21. Section 139ZR of the Bankruptcy Act provides that, once a person is served

with a notice pursuant to section 139ZQ, the property is charged with the liability of the person to make payments as required in the notice. The creation of the charge is automatic by the operation of the section. The charge is discharged when payment is made.

9.22. The charge will only arise where a notice is validly given under section 139ZQ in respect of property other than money.

9.23. The charge created generally has priority over any other mortgage or charge in favour of an associated entity of the bankrupt, unless the mortgagee or chargee can demonstrate that the encumbrance was entered into at arm’s length, for valuable consideration and is not void as against the trustee.

9.24. The Official Receiver may provide a certificate to the trustee evidencing the charge for the purposes of registering the interest over real property (subsection 139ZR(4)). The Official Receiver will generally not issue a certificate evidencing the charge unless the time for compliance with the notice has elapsed.

Non-compliance with a section 139ZQ notice 9.25. Failure to comply with a section 139ZQ notice is an offence punishable, upon

conviction, by imprisonment for up to six months (pursuant to subsection 139ZT(1)). The court can also impose on a notice recipient who failed to comply a penalty and can order the person to pay to the trustee the amount




that was required to be paid under the notice (subsection 139ZT(2)).

9.26. Where the notice recipient fails to comply with the notice, the Official Receiver will refer the non-compliance to the Inspector-General in Bankruptcy (via AFSA’s Regulation and Enforcement division) for further investigation and consideration regarding prosecution action. The trustee is not required to also refer non-compliance. The trustee will be advised of the referral to the Inspector-General and the outcome.

Withdrawing and amending notices 9.27. The Official Receiver may, at any time, withdraw, revoke or amend the

notice. The Official Receiver may do so if: satisfied that the notice should not have been issued satisfied that the bankrupt has complied with his or her obligations.

9.28. The Official Receiver will not withdraw the notice unless satisfied that the evidence upon which it was based did not exist. The Official Receiver will not adjudicate on arguments about whether the transfer of property underlying the notice was actually void. The Official Receiver’s only concern is to decide whether the trustee provided sufficient evidence upon which the discretion to issue the notice could be based. If there is a dispute about whether a transfer of property is void, the Official Receiver will let the notice stand and the trustee can take action to enforce the notice and the court will decide on the merits of the arguments about the status of the transfer.

Applications to set aside section 139ZQ notices 9.29. If a dispute over the merits of a notice is unable to be resolved, section

139ZS of the Bankruptcy Act provides for the recipient of the notice or any other interested party, which includes the bankrupt, applying to the court to have the notice set aside.

9.30. Where the party challenging the notice is the notice recipient, a section 139ZS application must be made within 60 days of the notice being given. Where the party challenging the notice is not the notice recipient, the application must be made within 60 days of the party becoming aware of the giving of the notice.

9.31. Given that the basis of a notice issued pursuant to section 139ZQ is the existence of a transaction that is void as against the trustee, where an application is made to set aside a notice the trustee will have principal responsibility for demonstrating the facts advanced in support of the notice.7

9.32. The courts have held that it is not appropriate for the recipient of a section 139ZQ notice to seek judicial review under both the AD(JR) Act and a

7 See Alden John Halse as trustee of the property of Neville Ross Payne v Michael Norman Norton [1997] FCA 673


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statutory appeal under section 139ZS of the Bankruptcy Act (see Kiem Dang Investment Pty Ltd v Mansfield & Official Receiver [2017] FCCA 725).


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