Michael.1
Insolvency and related law and policy, and more

Michael Murray is an Australian author and commentator on corporate and personal insolvency law and related issues, in Australia and internationally. He has a strong law and policy background, is independent of any connections, and his views are his own. He gives no legal advice. 

Service of insolvency documents by email

With law well into the process of change to accommodate electronic communications and dealings, following COVID-19 in particular, we should expect some legislative consistency and co-ordination.  It turns out we shouldn’t.

In insolvency law, communications with creditors are necessary but the costs of doing so can be prohibitive. Under the old ways, back in 2001, the ballpark costs of communication with Ansett’s creditors were estimated to approach $28m.[1]

A substantial effort was made in 2016 to limit the costs involved in having separate rules for each of personal and corporate insolvency with the introduction of the ‘harmonised’ Insolvency Practice Schedule and Rules, for the Bankruptcy Act and the Corporations Act. (There is still much unnecessary inconsistency but put that aside for the moment).

This followed a recommendation nearly 30 years earlier, back in 1988, with acknowledgment that it was up to the government and its officers to implement this, which they never did.  That same attitude is now prevailing in the small area of insolvency.

Electronic service

Personal insolvency

In personal insolvency, former Bankruptcy Regulation 16 provided that a document could be sent by “electronic transmission … for example, by electronic mail”: see Fuller JR, in the matter of Alford v Alford [2017] FCA 782.

We now have new Bankruptcy Regulation section 102 which provides that a document may be sent or served by courier to an address or left at a DX, with a time of deemed service. And, then, as if an afterthought, we have: “Note: See also section 28A of the Acts Interpretation Act 1901”.  We are then told, only by the Explanatory Statement, the means of service include “personal service, service by post and service by electronic communication”.

Section 28A says in part that the Electronic Transactions Act 1999 deals with giving information in writing by means of an electronic communication, meaning a communication of information in the form of data, text or images etc.

So, assuming this makes sense, Office of Parliamentary Counsel (OPC) has decided on a new way to describe how documents can be served by email and such, with an intention, one would think, of adopting a whole of government approach.

But no, corporate insolvency had to be different.

Corporate insolvency

The new drafting of s 600G Corporations Act is that:

(2) The document may be given to the recipient by means of an electronic communication.

(3) The document may be given by giving the recipient (by means of an electronic communication or otherwise) sufficient information to allow the recipient to access the document electronically.

(4) However, an electronic communication or electronic access may only be used if, at the time the electronic communication is used or information about the electronic access is given:

(a) it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference; and

(b) there is a nominated electronic address in relation to the recipient.

Neither section 29A nor the Electronic Transactions Act are referred to though s 600G does refer to “an electronic communication”, repeating, it seems, the ETA for good measure.  Section 105B adds law about the place of service.

I won’t go on and explain how OPC has ensured that the ‘harmonised’ insolvency rules are now not so harmonised in other respects.[2]

“clearer Commonwealth laws …”?

All this is unsatisfactory given some attempt made to harmonise the rules between corporate and personal insolvency in 2016, pursuant to a recommendation in 1988, and more following.

While Treasury has lawyers, including those in law design, the responsibility appears to lie with the Attorney-General, whose department, as she tells us, “has a whole-of-government responsibility for issues relating to legislation in key areas such as clearer Commonwealth laws …” and that it is “committed to working with agencies including the … (OPC) to develop laws that are clear, fair, simple, effective, etc”, as to which, it directs us to ‘Developing clearer commonwealth laws’.[3]

[1] In the matter of Ansett Australia Limited and Mentha [2002] FCA 2

[2] Compare new IPRC s 50‑7  Electronic recording and keeping of minutes with IRRB s 50‑60  Decisions made at a meeting

 

[3] OPC was contacted for comment but as yet I have not heard back.

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One Response

  1. The lack of consistency appears to be reflected in remote witnessing. Introduced during COVID lockdowns it appears that it has been left to each State and Territory to make, or not, the change permanent. One country, one law may be more beneficial.

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