Defining bankruptcy

The Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 has been introduced into parliament.  It has presumably been drafted by the Office of Parliamentary Counsel (OPC).

It would have been OPC that also drafted the Creative Australia Bill 2023 and described personal insolvency in clause 27 in these terms, that the Minister must terminate the appointment of a board member if the member:

  • “becomes bankrupt; or 
  • applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or 
  • compounds with the member’s creditors; or
  • makes an assignment of the member’s remuneration for the benefit of the member’s creditors …” .

This 2023 drafting is eerily similar to the 1901 drafting of the Audit Act 1901, about the Auditor-General’s vacation of office

“if he becomes insolvent or bankrupt or compounds with his creditors or makes any assignment of his salary for their benefit or takes advantage of the provisions of any Act or State Act relating to insolvency or bankruptcy”.

The drafting of the Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 might therefore need close scrutiny.

Print Friendly, PDF & Email

2 Responses

  1. Assignments of half-pay by officers of the RN used to be void as contrary to public policy (it’s in a footnote to old editions of Halsbury’s) – I wonder whether an assignment of remuneration isn’t also? It’s no masterpiece of drafting, for sure.

    1. You are no doubt thinking of the decision in Flarty v Odlum (1790), that a military officer’s half-pay should not be treated as an asset in the officer’s bankruptcy liable to assignment for the benefit of creditors, although this may be limited to future half-pay.

      The decision was based on public policy. The Chief Justice said that “emoluments of this sort are granted for the dignity of the State, and for the decent support of those persons who are engaged in the service of it. It would therefore be highly impolitic to permit them to be assigned; for persons, who are liable to be called out in the service of their country, ought not to be taken from a state of poverty”.

      See Do members of the armed forces have any rights in their employment? by Garth Nettheim, (1973) 5 FLR 200.

      As to your query, under current law, a Part X agreement may allow the debtor’s income, including future income, to be a source of payment to creditors [s 188A(2)(c)], and I assume the same would apply to a scheme or arrangement under s 73? I doubt there would be any military exceptions. Indeed, the ADF excludes persons subject to weapons protection orders, apprehended violence orders, and bankruptcy.

      Thank you for your interesting comment.

Leave a Reply

Your email address will not be published.