Victorian Bills Explanatory Memoranda Victorian Bills Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
Courts Legislation Amendment (Funds
in Court) Bill 2014
Introduction Print
EXPLANATORY MEMORANDUM
General
The Courts Legislation Amendment (Funds in Court) Bill 2014 amends the
Supreme Court Act 1986, the Guardianship and Administration Act
1986, the County Court Act 1958, and the Magistrates' Court Act 1989 to
improve the operation of Funds in Court by bringing provisions more in line
with current industry practice.
The Bill will--
· enable the separate management or custodianship of some or
all funds held by the Senior Master in Funds in Court to be
transferred from the Senior Master to one or more external
fund managers or custodians at the discretion of the Supreme
Court;
· clarify there is no presumption that funds be administered by
the Senior Master when an order is made by a court in relation
to funds administration for a person under a legal disability;
· clarify beneficiaries' ability to apply to the Supreme Court at
any time to transfer funds to an external funds administrator;
· provide for new objectives of the Senior Master, annual
reporting requirements, a legislative audit requirement and
annual statements to beneficiaries; and
· provide for complaints handling procedures.
571132 1 BILL LA INTRODUCTION 16/9/2014
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the main purpose of the Bill, being to amend the
Supreme Court Act 1986 in relation to the administration,
custodianship and management of funds in court.
Clause 2 provides that the Bill comes into operation on a day or days to be
proclaimed, but, in any event, by no later than 1 July 2015.
Clause 3 provides that, in the Bill, the Supreme Court Act 1986 is called
the Principal Act.
PART 2--AMENDMENT OF THE SUPREME COURT
ACT 1986
Clause 4 amends the rule making power in section 25(1)(d)(iii) of the
Principal Act in relation to the new Division 2AA of Part 7.
Clause 5 inserts new subsections (1A) and (1B) into section 51A of the
Principal Act.
New subsection (1A) makes it clear that there is no presumption
that the administrator specified by the Court for the purposes of
section 51A(1)(b) of the Principal Act should be the Senior
Master, in preference to administration by an administrator.
New subsection (1B) makes it clear that this does not limit
any other factors that the Court may consider in making an
order relating to the administration of children's funds under
section 51A(1)(b).
Clause 6 inserts a new heading creating new Division 2AA of Part 7 of the
Principal Act regarding the role of the Senior Master and the
administration of funds in court.
Clause 7 inserts new sections 112 to 112C into the Principal Act.
New section 112 provides definitions for the new concepts of
beneficiary, complaint and funds in court under this Division,
introduced into the Principal Act by subsequent clauses of the
Bill.
2
New section 112A sets out the objectives of the Senior Master in
investing and administering funds in court under the new
Division, which is money referred to in section 113(1) of the
Principal Act. The objectives in investing any funds in court are
to ensure that Senior Master acts in the best interests of the
beneficiaries of those funds and uses best efforts to obtain
maximum possible returns. Subject to this primary obligation,
the Senior Master must have regard to each beneficiary's age,
need for liquidity and risk preferences.
In administering any funds in court, the Senior Master is to have
regard to modern principles of supported decision-making, by
giving all practicable and appropriate effect to a beneficiary's
wishes and taking reasonable steps to encourage the beneficiary
to participate in decisions affecting his or her affairs.
This includes when making decisions regarding the use of a
beneficiary's funds. At all times, the administration of funds in
court, including the common funds and the beneficiaries are to be
dealt with in a transparent and accountable manner by the Senior
Master.
New section 112B requires the Senior Master to report annually
on the management of funds in court. The new section prescribes
the following items to be included in the Senior Master's report--
· the performance of the common funds, including before
and after costs and expenses are deducted;
· a breakdown of costs and expenses of funds in court,
together with an explanation of any increase or decrease
in costs and expenses compared with the preceding
year;
· a comparison of the annual performance of the funds to
appropriate benchmarks covering return and risk;
· investment of funds, including the asset classes into
which funds are invested;
· the number of new beneficiaries whose funds are to be
administered by the Senior Master;
· identification of the number of beneficiary requests to
transfer to an administrator and how many of those
requested transfers were made;
3
· the results of the survey of beneficiary satisfaction, if
conducted in that year;
· any requirements prescribed by the rules of court;
· any other matter considered appropriate for inclusion by
the Senior Master.
It also requires that the Senior Master's report must be included
in the Supreme Court's annual report.
New section 112C requires the Senior Master to conduct a survey
of beneficiary satisfaction not less than every three years, which
is consistent with existing practice.
Clause 8 amends section 113 of the Principal Act in relation to fund
custodians and external fund managers.
Subclause (1) inserts new section 113(18)(bc) into the Principal
Act. This enables money standing to the credit of the Common
Funds Guarantee and Reserve Account to be applied for the
payment of costs and expenses incurred in appointing State
Trustees or any external fund manager, or a fund custodian,
under new section 113(28) and (30).
Subclause (2) amends section 113(26), with the effect that,
subject to obtaining the consent of the Chief Justice, and
section 113(27), the Senior Master will be empowered to engage
external fund managers for the management and investment of
money held by the Senior Master, the maintenance of necessary
accounts and the establishment and management of common
funds.
Subclause (3) inserts subsections (27) to (30) into section 113 of
the Principal Act. This is in addition to the existing power to
enter into arrangements with State Trustees Limited.
These subsections provide--
· that if the Senior Master is considering whether to
appoint an external fund manager, not less than
4 months prior to making the appointment, the Senior
Master must consult the Treasurer in relation to the
proposed appointment. This will facilitate
consideration by the Treasurer of any risks;
4
· in the case of section 113(28), that costs or expenses
incurred as a result of the appointment of State Trustees
or any external fund manager, and the costs or expenses
of external fund managers associated with funds in
court, are chargeable as part of the costs and expenses
of administering, investing and managing the relevant
funds;
· in the case of section 113(29), that the Senior Master,
with the consent of the Chief Justice, may appoint one
or more fund custodians to hold funds and undertake
functions associated with the holding of funds for or on
behalf of the Senior Master;
· in the case of section 113(30), that the costs or expenses
associated with appointing a fund custodian, and with
any custodianship of funds in court, are chargeable as
part of the costs and expenses of administering the
relevant funds.
Clause 9 inserts sections 113BA to 113BH into the Principal Act.
New section 113BA requires the Senior Master, at least annually,
to provide each beneficiary whose funds in court are invested in a
common fund a statement of the details of the person's money in
the relevant common fund, the return on investments on those
funds, the extent to which the return on investments has been
diminished by administrative costs and expenses, and any
taxation incurred in relation to those funds in the period covered
by the statement.
New section 113BB establishes a statutory information disclosure
regime applicable to the administration of funds in court.
The regime requires the Senior Master to provide each person
who becomes a beneficiary information about investment of the
person's funds in court. The regime also requires the Senior
Master to provide beneficiaries with supplementary information
if there is a material change to information previously provided.
The information that must be provided by the Senior Master
includes the process of administration, including disclosure of the
involvement of any external fund manager or fund custodian,
how the costs recovery affects the returns of the beneficiary, the
procedure for requesting the transfer of funds to an administrator,
5
the risks of funds investment by the Senior Master, and
complaints handling procedures.
New section 113BC permits a beneficiary, or a person authorised
to make applications on behalf of a beneficiary, to apply for
funds in court to be transferred to an administrator. If the
application is for transfer to State Trustees, any public trustee in
Australia or any licensed trustee company regulated by
Chapter 5D of the Corporations Act, the Court is required to
grant the application unless it is satisfied that the transfer would
not be in the best interests of the beneficiary. If the application is
for transfer to any other administrator, the Court must grant the
application if satisfied that the transfer would be in the best
interests of the beneficiary.
New section 113BD requires the Senior Master to institute and
operate a process for receiving and resolving complaints in
respect of services provided.
New section 113BE requires the Senior Master to prepare a
report regarding complaints for inclusion in the Supreme Court's
annual report.
New section 113BF permits a beneficiary, any person authorised
to make applications on the beneficiary's behalf, or a carer or
relative to make a complaint to the Senior Master about a matter
relating to the administration of a person's funds in court or
matters affecting beneficiaries generally in relation to funds in
court. Complaints may be oral, in writing or made by any other
means appropriate in the circumstances.
New section 113BG provides that a person may not make a
complaint under this Division about the exercise of, or the
manner of exercising, a judicial function by the Senior Master or
a judicial registrar. It is intended that the normal court appeals
process apply to complaints regarding the exercise of a judicial
function.
New section 113BH requires annual auditing by the Auditor-
General (or a person authorised by the Auditor-General) of the
accounts of the Senior Master relating to funds in court and the
administration of those funds.
6
PART 3--AMENDMENT OF OTHER ACTS AND REPEAL OF
AMENDING ACT
Clause 10 inserts new subsections (1A) and (1B) into section 39B of the
County Court Act 1958. The new subsections make it clear that
there is no presumption that the administrator specified by the
Court for the purposes of section 39B(1)(b) of the County Court
Act should be the Senior Master, in preference to administration
by an administrator. This amendment is consistent with the
amendment made to the Principal Act by clause 5.
Clause 11 inserts new subsections (3A) and (3B) into section 66 of the
Guardianship and Administration Act 1986. The new
subsections make it clear that there is no presumption that the
administrator specified by the Court for the purposes of
section 66(3)(b) of the Guardianship and Administration Act
should be the Senior Master, in preference to administration by
an administrator. This amendment is consistent with the
amendment made to the Principal Act by clause 5.
Clause 12 inserts new subsections (1A) and (1B) into section 101A of the
Magistrates' Court Act 1989. The new subsections make it
clear that there is no presumption that the administrator specified
by the Court for the purposes of section 101A(1)(b) of the
Magistrates' Court Act should be the Senior Master, in preference
to administration by an administrator. This amendment is
consistent with the amendment made to the Principal Act by
clause 5.
Clause 13 provides for the automatic repeal of the Act on 1 July 2016.
The repeal of this Act does not affect in any way the continuing
operation of the amendments made by it (see section 15(1) of the
Interpretation of Legislation Act 1984).
7