BANKRUPTCY AND FAMILY LAW LEGISLATION AMENDMENT ACT 2005 NO. 20, 2005 - SCHEDULE 1 - Amendments relating to the interaction between family law and bankruptcy law

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BANKRUPTCY AND FAMILY LAW LEGISLATION AMENDMENT ACT 2005 NO. 20, 2005 - SCHEDULE 1

- Amendments relating to the interaction between family law and bankruptcy law
Part 1—Amendments

Bankruptcy Act 1966

1
Section 27

Omit all the words after "all courts", substitute:

other than:

(a) the jurisdiction of the High Court under section 75 of the Constitution; or
(b) the jurisdiction of the Family Court under section 35 or 35A of this Act.
2 After section 34A

Insert:

35
Family Court's jurisdiction in bankruptcy where trustee is a party
to property settlement or spousal maintenance proceedings etc.

(1): If, at a particular time:

(a) a party to a marriage is a bankrupt; and
(b) the trustee of the bankrupt's estate is:
(i) a party to property settlement proceedings in relation to either or both of the parties to the marriage; or
(ii) an applicant under section 79A of the Family Law Act 1975 for the variation or setting aside of an order made under section 79 of that Act in property settlement proceedings in relation to either or both of the parties to the marriage; or
(iii) a party to spousal maintenance proceedings in relation to the maintenance of a party to the marriage;

then, at and after that time, the Family Court has jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy of the bankrupt.

(2): Subsection (1) does not limit the Family Court's jurisdiction under section 35A.
(3): In this section:

"property settlement proceedings" has the same meaning as in the Family Law Act 1975 .

"spousal maintenance proceedings" means proceedings under the Family Law Act 1975 with respect to the maintenance of a party to a marriage.

3 After section 59

Insert:

59A Orders under Part VIII of the Family Law Act 1975

Sections 58 and 59 have effect subject to an order under Part VIII of the Family Law Act 1975 .

4 Paragraph 116(2)(n)

Omit "and".

5 Paragraph 116(2)(p)

Omit "(4).", substitute "(4);".

6 At the end of subsection 116(2)

Add:

(q) any property that, under an order under Part VIII of the Family Law Act 1975 , the trustee is required to transfer to the spouse of the bankrupt.
7 At the end of section 140

Add:

(11): This section has effect subject to an order under section 114 of the Family Law Act 1975 (which deals with interlocutory injunctions).

8 At the end of section 161

Add:

(3): This section applies to proceedings under the Family Law Act 1975 in a corresponding way to the way in which it applies to a suit.
(4): If:

(a) a person (the first trustee ) ceases to be the trustee of a bankrupt's estate; and
(b) proceedings to which the first trustee was a party were pending under the Family Law Act 1975 immediately before the cessation; and
(c) another person (the second trustee ) becomes the first trustee's successor in office;

the second trustee is, by force of this subsection, substituted for the first trustee as a party to the proceedings.

Family Law Act 1975

9 Subsection 4(1)

Insert:

"bankruptcy trustee", in relation to a bankrupt, means the trustee of the bankrupt's estate.

10 Subsection 4(1)

Insert:

"debtor subject to a personal insolvency agreement" has the meaning given by section 5.

11 Subsection 4(1) (after paragraph (c) of the definition of matrimonial cause )

Insert:

(caa) proceedings between:
(i) a party to a marriage; and
(ii) the bankruptcy trustee of a bankrupt party to the marriage;
with respect to the maintenance of the first-mentioned party; or
12 Subsection 4(1) (after paragraph (ca) of the definition of matrimonial cause )

Insert:

(cb) proceedings between:
(i) a party to a marriage; and
(ii) the bankruptcy trustee of a bankrupt party to the marriage;
with respect to any vested bankruptcy property in relation to the bankrupt party, being proceedings:
(iii) arising out of the marital relationship; or
(iv) in relation to concurrent, pending or completed divorce or validity of marriage proceedings between the parties to the marriage; or
(v) in relation to the divorce of the parties to the marriage, the annulment of the marriage or the legal separation of the parties to the marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104; or
13 Subsection 4(1)

Insert:

"personal insolvency agreement" has the same meaning as in the Bankruptcy Act 1966 .

14 Subsection 4(1)

Insert:

"property settlement proceedings" means proceedings with respect to:

(a) the property of the parties to a marriage or either of them; or
(b) the vested bankruptcy property in relation to a bankrupt party to a marriage.
15 Subsection 4(1) (after paragraph (a) of the definition of property settlement or spousal maintenance proceedings )

Insert:

(aa) the vested bankruptcy property in relation to a bankrupt party to a marriage; or
16 Subsection 4(1)

Insert:

"trustee", in relation to a personal insolvency agreement, has the same meaning as in the Bankruptcy Act 1966 .

17 Subsection 4(1)

Insert:

"vested bankruptcy property", in relation to a bankrupt, means property of the bankrupt that has vested in the bankruptcy trustee under the Bankruptcy Act 1966 . For this purpose, property has the same meaning as in the Bankruptcy Act 1966 .

18 After section 4A

Insert:

5 Debtor subject to a personal insolvency agreement

For the purposes of this Act, if:

(a) a person who is a debtor (within the meaning of Part X of the Bankruptcy Act 1966 ) executes a personal insolvency agreement; and
(b) the agreement has not ended (within the meaning of the Bankruptcy Act 1966 );

the person is a debtor subject to the personal insolvency agreement.

19 Subsections 44(3), (3A) and (3B)

Omit "or (ca)", substitute ", (caa), (ca) or (cb)".

20 After subsection 45(1)

Insert:

(1A): For the purposes of subsection (1), if the bankruptcy trustee of a bankrupt party to a marriage applies under section 139A of the Bankruptcy Act 1966 for an order under Division 4A of Part VI of that Act, proceedings relating to that application are taken to be proceedings in relation to the marriage.

21 At the end of section 71A

Add:

(2): Subsection (1) does not apply in relation to proceedings of a kind referred to in paragraph (caa) or (cb) of the definition of matrimonial cause in subsection 4(1).

22 At the end of section 72

Add:

(2): The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.

23 At the end of section 74

Add:

(2): If:

(a) an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and
(b) either of the following subparagraphs apply to a party to the marriage:
(i) when the application was made, the party was a bankrupt;
(ii) after the application was made but before the proceedings are finally determined, the party became a bankrupt; and
(c) the bankruptcy trustee applies to the court to be joined as a party to the proceedings; and
(d) the court is satisfied that the interests of the bankrupt's creditors may be affected by the making of an order under this section in the proceedings;

the court must join the bankruptcy trustee as a party to the proceedings.

(3): If a bankruptcy trustee is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the bankrupt party to the marriage is not entitled to make a submission to the court in connection with any vested bankruptcy property in relation to the bankrupt party.
(4): The court must not grant leave under subsection (3) unless the court is satisfied that there are exceptional circumstances.
(5): If:

(a) an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and
(b) either of the following subparagraphs apply to a party to the marriage (the debtor party ):
(i) when the application was made, the party was a debtor subject to a personal insolvency agreement; or
(ii) after the application was made but before it is finally determined, the party becomes a debtor subject to a personal insolvency agreement; and
(c) the trustee of the agreement applies to the court to be joined as a party to the proceedings; and
(d) the court is satisfied that the interests of the debtor party's creditors may be affected by the making of an order under this section in the proceedings;

the court must join the trustee of the agreement as a party to the proceedings.

(6): If the trustee of a personal insolvency agreement is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the party to the marriage who is the debtor subject to the agreement is not entitled to make a submission to the court in connection with any property subject to the agreement.
(7): The court must not grant leave under subsection (6) unless the court is satisfied that there are exceptional circumstances.
(8): For the purposes of subsections (2) and (5), an application for an order under this section is taken to be finally determined when:

(a) the application is withdrawn or dismissed; or
(b) an order (other than an interim order) is made as a result of the application.
24 After paragraph 75(2)(h)

Insert:

(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
25 At the end of paragraph 75(2)(n)

Omit all the words after "section 79", substitute:

in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party;
26 At the end of section 75

Add:

(4): In this section:

"party" means a party to the marriage concerned.

27 Subsection 79(1)

Repeal the subsection, substitute:

(1): In property settlement proceedings, the court may make such order as it considers appropriate:

(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;

including:

(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
28 Subsection 79(1A)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

29 Subsection 79(1A)

Omit "party to the proceedings", substitute "party to the marriage".

30 Subsection 79(1B)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

31 Subsection 79(1B)

Omit "parties to the proceedings" (wherever occurring), substitute "parties to the marriage".

32 Subsection 79(1C)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

33 Paragraph 79(1C)(a)

Omit "those parties", substitute "the parties to the marriage".

34 Paragraph 79(1C)(c)

After "parties", insert "to the marriage".

35 Subsection 79(1C)

Omit "either party", substitute "a party".

36 Subsection 79(4)

Omit "proceedings with respect to any property of the parties to a marriage or either of them", substitute "property settlement proceedings".

37 At the end of paragraphs 79(4)(a), (b), (c), (d) and (e)

Add "and".

38 Subsection 79(5)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

39 Paragraph 79(5)(b)

Repeal the paragraph, substitute:

(b) that an order that the court could make with respect to:
(i) the property of the parties to the marriage or either of them; or
(ii) the vested bankruptcy property in relation to a bankrupt party to the marriage;
if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:
(iii) the property of the parties to the marriage or either of them; or
(iv) the vested bankruptcy property in relation to a bankrupt party to the marriage;
40 Subsection 79(5)

After "requested by either party to the marriage", insert "or the relevant bankruptcy trustee (if any)".

41 Subsection 79(5)

After "that party to the marriage", insert "or the relevant bankruptcy trustee, as the case may be,".

42 Subsection 79(6)

Omit all the words after "appropriate with", substitute:

respect to:

(a) any of the property of the parties to the marriage or of either of them; or
(b) any of the vested bankruptcy property in relation to a bankrupt party to the marriage.
43 Subsection 79(8)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

44 Subsection 79(8)

Omit "either party to the proceedings", substitute "a party to the marriage".

45 Paragraph 79(8)(b)

Omit all the words after "appropriate with", substitute:

respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
46 Subsection 79(9)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

47 At the end of section 79

Add:

(11): If:

(a) an application is made for an order under this section in proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them; and
(b) either of the following subparagraphs apply to a party to the marriage:
(i) when the application was made, the party was a bankrupt;
(ii) after the application was made but before it is finally determined, the party became a bankrupt; and
(c) the bankruptcy trustee applies to the court to be joined as a party to the proceedings; and
(d) the court is satisfied that the interests of the bankrupt's creditors may be affected by the making of an order under this section in the proceedings;

the court must join the bankruptcy trustee as a party to the proceedings.

(12): If a bankruptcy trustee is a party to property settlement proceedings, then, except with the leave of the court, the bankrupt party to the marriage is not entitled to make a submission to the court in connection with any vested bankruptcy property in relation to the bankrupt party.
(13): The court must not grant leave under subsection (12) unless the court is satisfied that there are exceptional circumstances.
(14): If:

(a) an application is made for an order under this section in proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them; and
(b) either of the following subparagraphs apply to a party to the marriage (the debtor party ):
(i) when the application was made, the party was a debtor subject to a personal insolvency agreement; or
(ii) after the application was made but before it is finally determined, the party becomes a debtor subject to a personal insolvency agreement; and
(c) the trustee of the agreement applies to the court to be joined as a party to the proceedings; and
(d) the court is satisfied that the interests of the debtor party's creditors may be affected by the making of an order under this section in the proceedings;

the court must join the trustee of the agreement as a party to the proceedings.

(15): If the trustee of a personal insolvency agreement is a party to property settlement proceedings, then, except with the leave of the court, the party to the marriage who is the debtor subject to the agreement is not entitled to make a submission to the court in connection with any property subject to the agreement.
(16): The court must not grant leave under subsection (15) unless the court is satisfied that there are exceptional circumstances.
(17): For the purposes of subsections (11) and (14), an application for an order under this section is taken to be finally determined when:

(a) the application is withdrawn or dismissed; or
(b) an order (other than an interim order) is made as a result of the application.
48 Subsections 79A(1) and (1A)

Omit "proceedings with respect to the property of the parties to a marriage or either of them", substitute "property settlement proceedings".

49 Subsection 79A(1B)

Omit "party to the proceedings", substitute "party to the marriage".

50 Subsection 79A(1C)

Omit "either party to the proceedings", substitute "a party to the marriage".

51 At the end of section 79A

Add:

(5): For the purposes of this section, if:

(a) an order is made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them; and
(b) either of the following subparagraphs apply to a party to the marriage:
(i) when the order was made, the party was a bankrupt;
(ii) after the order was made, the party became a bankrupt;

the bankruptcy trustee is taken to be a person whose interests are affected by the order.

(6): For the purposes of this section, if:

(a) a party to a marriage is a bankrupt; and
(b) an order is made by a court under section 79 in proceedings with respect to the vested bankruptcy property in relation to the bankrupt party;

the bankruptcy trustee is taken to be a person whose interests are affected by the order.

(7): For the purposes of this section, if:

(a) an order is made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them; and
(b) either of the following subparagraphs apply to a party to the marriage:
(i) when the order was made, the party was a debtor subject to a personal insolvency agreement;
(ii) after the order was made, the party became a debtor subject to a personal insolvency agreement;

the trustee of the agreement is taken to be a person whose interests are affected by the order.

52 Before section 80

Insert:

79G Notifying bankruptcy trustee etc. about application under section 74, 78, 79 or 79A

(1): The applicable Rules of Court may make provision for a bankrupt who becomes a party to a proceeding for an application under section 74, 78, 79 or 79A to give notice of the application to the bankruptcy trustee.
(2): The applicable Rules of Court may make provision for a debtor subject to a personal insolvency agreement who becomes a party to a proceeding for an application under section 74, 78, 79 or 79A to give notice of the application to the trustee of the agreement.

79H Notifying court about bankruptcy etc.

Bankruptcy

(1): The applicable Rules of Court may make provision for a person who:

(a) is a party to a marriage; and
(b) is a party to a proceeding for an application under section 74, 78, 79 or 79A; and
(c) before that application is finally determined, becomes a bankrupt;

to notify a court exercising jurisdiction under this Act that the person has become a bankrupt.

Debtor subject to a personal insolvency agreement

(2): The applicable Rules of Court may make provision for a person who:

(a) is a party to a marriage; and
(b) is a party to a proceeding for an application under section 74, 78, 79 or 79A; and
(c) before that application is finally determined, becomes a debtor subject to a personal insolvency agreement;

to notify a court exercising jurisdiction under this Act that the person has become a debtor subject to a personal insolvency agreement.

Institution of proceeding under the Bankruptcy Act 1966

(3): The applicable Rules of Court may make provision for a person who:

(a) is a party to a marriage; and
(b) is a party to a proceeding for an application under section 74, 78, 79 or 79A; and
(c) before that application is finally determined, becomes a party to a proceeding before the Federal Court or the Federal Magistrates Court under the Bankruptcy Act 1966 that relates to:
(i) the bankruptcy of the person; or
(ii) the person's capacity as a debtor subject to a personal insolvency agreement;

to notify a court exercising jurisdiction under this Act of the institution of the proceeding under the Bankruptcy Act 1966 .

(4): The applicable Rules of Court may make provision for a person who:

(a) is the bankruptcy trustee of a bankrupt party to a marriage; and
(b) applies under section 139A of the Bankruptcy Act 1966 for an order under Division 4A of Part VI of that Act;

to notify a court exercising jurisdiction under this Act of the making of the application.

When application finally determined

(5): For the purposes of this section, an application for an order under section 74, 79 or 79A is taken to be finally determined when:

(a) the application is withdrawn or dismissed; or
(b) an order (other than an interim order) is made as a result of the application.

(6): For the purposes of this section, an application for a declaration under section 78 is taken to be finally determined when:

(a) the application is withdrawn or dismissed; or
(b) a declaration is made as a result of the application.
79J Notifying non-bankrupt spouse about application under section 139A of the Bankruptcy Act 1966

The applicable Rules of Court may make provision for a person who:

(a) is the bankruptcy trustee of a bankrupt party to a marriage; and
(b) applies under section 139A of the Bankruptcy Act 1966 for an order under Division 4A of Part VI of that Act in relation to an entity (other than the other party to the marriage);

to notify the other party to the marriage of the making of the application.

53 At the end of section 80

Add:

(4): If a bankruptcy trustee is a party to a proceeding before the court, the court may make an order under paragraph (1)(d) directed to the bankrupt.
(5): If the trustee of a personal insolvency agreement is a party to a proceeding before the court, the court may make an order under paragraph (1)(d) directed to the debtor subject to the agreement.
(6): Subsections (4) and (5) do not limit paragraph (1)(d).

54 Subsection 83(1)

Omit "In proceedings with respect to the maintenance of a party to a marriage, if there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of that party by the other party to the marriage:", substitute "If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:".

55 After subsection 83(1)

Insert:

(1A): The court's jurisdiction under subsection (1) may be exercised:

(a) in any case—in proceedings with respect to the maintenance of a party to the marriage; or
(b) if there is a bankrupt party to the marriage—on the application of the bankruptcy trustee; or
(c) if a party to the marriage is a debtor subject to a personal insolvency agreement—on the application of the trustee of the agreement.
56 Subsection 83(5A)

After "by a party to the marriage", insert ", or by the bankruptcy trustee of a party to the marriage,".

57 After subsection 106B(1)

Insert:

(1A): If:

(a) a party to a marriage is a bankrupt; and
(b) the bankruptcy trustee is a party to proceedings under this Act;

the court may set aside or restrain the making of an instrument or disposition:

(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

(1B): If:

(a) a party to a marriage is a debtor subject to a personal insolvency agreement; and
(b) the trustee of the agreement is a party to proceedings under this Act;

the court may set aside or restrain the making of an instrument or disposition:

(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
58 Subsection 106B(2)

Omit "such instrument or disposition", substitute "instrument or disposition referred to in subsection (1), (1A) or (1B)".

59 At the end of section 114

Add:

(4): If a party to a marriage is a bankrupt, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the bankruptcy trustee from declaring and distributing dividends amongst the bankrupt's creditors.
(5): Subsection (4) does not limit subsection (3).
(6): If a party to a marriage is a debtor subject to a personal insolvency agreement, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the trustee of the agreement from disposing of (whether by sale, gift or otherwise) property subject to the agreement.
(7): Subsection (6) does not limit subsection (3).

Part 2—Application provisions
60 Application of amendments

(1) Subject to subitems (2) and (3), the amendments of the Family Law Act 1975 made by this Schedule , to the extent to which they relate to bankruptcies or personal insolvency agreements, apply in relation to:

(a) bankruptcies for which the date of the bankruptcy is after the commencement of this item; and
(b) personal insolvency agreements executed before, at or after the commencement of this item.

(2) The following provisions:

(a) subsections 74(2), (3) and (4) of the Family Law Act 1975 as amended by this Schedule;
(b) subsection 74(8) of the Family Law Act 1975 as amended by this Schedule, to the extent to which that subsection relates to subsection 74(2) of the Family Law Act 1975 as amended by this Schedule;
(c) the definitions inserted in subsection 4(1) of the Family Law Act 1975 by this Schedule, to the extent to which those definitions relate to subsections 74(2), (3) and (4) of the Family Law Act 1975 as amended by this Schedule;

apply to proceedings instituted after the commencement of this item, whether the date of the bankruptcy is before, on or after the date of commencement of this item.

(3) The following provisions:

(a) subsections 79(11), (12) and (13) of the Family Law Act 1975 as amended by this Schedule;
(b) subsection 79(17) of the Family Law Act 1975 as amended by this Schedule, to the extent to which that subsection relates to subsection 79(11) of the Family Law Act 1975 as amended by this Schedule;
(c) the definitions inserted in subsection 4(1) of the Family Law Act 1975 by this Schedule, to the extent to which those definitions relate to subsections 79(11), (12) and (13) of the Family Law Act 1975 as amended by this Schedule;

apply to proceedings instituted after the commencement of this item, whether the date of the bankruptcy is before, on or after the date of commencement of this item.

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