CAANZ took a worthy leap some years ago in bringing the Australian and New Zealand accounting professions together. Given that an “accountant” has a limited legal basis or status, at least in Australia, the differences in the laws of the two countries should not be so much of an issue.
But where accountants assume a legal role, as insolvency practitioners, there is potential for different, and conflicting, rules and regulatory approcahes to apply.
New Zealand is about to have its “insolvency practitioners” regulated by the law, with the Insolvency Practitioners Regulation Act 2019 commencing on 1 September 2020. Up until now, NZ had no specific licensing or regulation, adopting the long time position of England up until its profession became regulated under the Insolvency Act 1986.
In fact, NZ is adopting the same co-regulatory approach as England, with, as is expected, CAANZ and RITANZ undertaking that regulatory role of their respective members.
Australia has quite a different system, with its two regulators themselves directly conducting the registration and regulation processes of “trustees” on the one hand, and “liquidators” on the other. The “industry bodies” in Australia – including CAANZ, CPA, IPA and ARITA – have some limited regulatory roles under the law, to which it seems they have given limited attention.[1]
Reciprocal appointments?
Under the new NZ law, an Australian liquidator can take an appointment in NZ, on certain conditions, but must register as a NZ IP within 10 days. There is nothing to say that Australia will reciprocate by allowing NZ practitioners to take appointments here. Under s 20-20(4)(i) of Schedule 2 to the Australian Corporations Act 2001, a condition of registration as a liquidator is that the person be “is resident in Australia or in another prescribed country”. It may be that NZ will be prescribed but nothing has been announced.
If that is permitted, some might see CAANZ as being in an odd position.
- It will be regulating NZ IP Smith according to NZ law, but will have only a limited role in relation to IP Smith’s conduct as a liquidator according to their (at the moment, hypothetical) registration in Australia.
- And it will be regulating Australian liquidator Brown in a minor way according to Australian law but regulating IP Brown’s conduct in NZ according to their (at the moment, pending) registration under New Zealand law.
No doubt this will be managed.
Structural differences
Apart from the respective laws, which are reasonably compatible, but also sufficiently different, there are some major structural differences between the two jurisdictions in how the insolvency system is framed.
All personal insolvencies in NZ are handled by the government Official Assignee; there is no private bankruptcy trustee profession as in Australia, shared with our Official Trustee.
But corporate insolvencies in NZ are shared between the Official Assignee and the private profession, but not in Australia. Australia has no government role, hence, as CAANZ has described of its members, Australian [CAANZ] liquidators “typically take assetless insolvencies in the normal course of their business”.[2].
The insolvency cliff and Australia’s unpaid assetless insolvencies
CAANZ predicts these assetless jobs to increase in Australia, as part of CAANZ’s looming “insolvency cliff”. It is not likely that New Zealand CAANZ IPs would want to assist their Australian practitioners in assuming an unpaid role but paid appointments will arise.
Apart from the appointments within the respective jurisdictions, there are good examples of insolvencies crossing the Tasman, requiring appointments and co-ordination in both jurisdictions. Halifax Investment Services appears to be one; but problems can arise.[3]
Finally, for the moment, there are the cross-border insolvency laws of both countries, if a practitioner’s trans-Tasman registration application fails.
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[1] Bodies everywhere — the role of professional bodies in regulating insolvency practitioners, (2018) INSLB, Murray.
[2] Insolvency cliff looming, Ainslie van Onselen, CEO CAANZ, Australian newspaper, 6 July 2020, p 18. This may explain the high comparative charge out rates in Australia, and the limited returns to creditors?
[3] See ANZ National Bank Ltd v Sheahan and Lock [2012] NZHC 3037; [2013] 1 NZLR 674; discussed in Cross-border regulation of insolvency practitioners, (2018) INSLB, Murray.
