25th Parliament · 1st Session
The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 3 p.m., and read prayers.
– I direct my question to the Acting Leader of the Government in the Senate. Will the restrictions on British investment in Australia announced in the British Budget this morning have any marked effect on the Australian economy?
– This is, of course, a very important subject which does not lend itself to question and answer in this House. I understand the Treasurer will be making a statement today in another place and I hope that by leave of the Senate I will be able to repeat that statement at some stage later today.
– My question is addressed to the Minister representing the Minister for Labour and National Service. Does the Government support the present campaign to attract more women, and in particular married women, into employment? Will this contribute further to the falling birth rate about which the Government has expressed concern? Will the Government take notice of the strong body of public opinion which believes that by either a just wage system or higher child endowment it should be possible for women with young children to care for them at home rather than have to work while the children are tended in State nurseries?
– When this matter has been raised previously I have pointed out that quite properly more than one opinion can be held on this matter of the employment of married women and that indeed in many cases married women, particularly those who have had and raised a family, can live a fuller life and feel more satisfaction if there is employment to which they can go. I would not agree entirely with the honorable senator’s statement. I think the other matters he raised are also questions of opinion rather than of fact.
– I direct my question to the Minister representing the Treasurer. I refer to cases within my knowledge where the Commonwealth Development Bank has not made provision, when granting finance for land development, pasture improvement and so on, for the purchase of the additional stock required. I ask: While 1 do not suggest that it applies to every case, will the Minister request the Treasurer to draw the attention of the Development Bank to the problems that are likely to arise because of this policy? As the borrower is unable to obtain additional finance either from the Development Bank or from other sources, he either has difficulty in servicing his commitments or is unable to make the most efficient use of the original loan.
– It is clear from the honorable senator’s question that he is not suggesting that this is a general policy which is followed by the Bank, and that he believes that assistance should have been given in some particular cases which have come to his knowledge. 1 think that the only way the question can satisfactorily be handled is for him to bring to the notice of the Treasurer the particular cases within his knowledge which he thinks ought lo be looked at.
– My question is directed to the Minister for Customs and Excise. ls the Minister aware that the Special Advisory Authority has recommended increased duties and import restrictions on imports of polyethylene monofil and rope? Is the Minister also aware that polypropylene has been imported for the purpose of avoiding the recommendation of the Special Advisory Authority? Does he know that polypropylene is not now available? Has the Government taken any action to prevent the entry of polypropylene into Australia; if not, why is it not available?
– The honorable senator has asked a question which required some research on my part. Therefore, I am grateful to him for giving me an opportunity to get the information in advance. The answer to the first part of his question is “ Yes “. Following receipt of the Special Advisory Authority’s advice, the following action was taken: In regard to polyethylene monofil falling within sub-item 5 1 .02. 1 1 , a temporary duty of an amount per pound equal to the amount, if any, by which the f.o.b. price per pound is less than $0.40 was imposed, in addition to the normal duties of 20 per cent, general, 10 per cent, preferential and 5 per cent. New Zealand. In regard to polyethylene rope falling within sub-item 59.04.99, these goods were brought under temporary import licensing control, as indicated in the question.
In regard to the other part of the honorable senator’s question I am not prepared to say, nor am I aware, that polypropylene has been imported for the purpose of avoiding the recommendation of the Special Advisory Authority, or that it is not now available. However, provision exists in the Customs Tariff for polypropylene monofil to be imported without payment of any additional duty. There are no import restrictions. The goods fall within sub-item 51.02.12 of the Customs Tariff and are charged with duty at the following rates: 20 per cent, general, 10 per cent, preferential and 5 per cent. New Zealand.
– I desire to ask a question of the Minister representing the Minister for Primary Industry. What is the present situation with regard to the availability of molybdenum in a form suitable for use in fertilisers? What is the present cost per cwt. of available supplies? What is the present retail price of available supplies?
– I have been able to obtain the following answer from the Minister for Primary Industry: All molybdenum used by the Australian fertiliser industry is imported and it is currently in very short supply due to a strike at the Climax Molybdenum Works in the United States of America. The molybdenum compounds normally used by fertiliser manufacturers throughout the world are sodium molybdate, calcium molybdate, molybdenum oxide and molybdenum trioxide. Molybdenum imports from the United States of America are subject to a very high duty, and the practice in the past has been to purchase supplies in the sterling area even though the material actually originated in the United States and was available direct from that country. With regard to the cost of available supplies, a leading superphosphate manufacturer in New South Wales, Australian Fertilisers Ltd., Sydney, has supplied the following information in regard to recent importations of molybdenum trioxide: The material is supplied in two grades - medium, which contains 60 per cent, molybdenum, and low, which contains 30 per cent, molybdenum. The price for medium grade prior to July 1964 was 14s. 9d. per lb. An order placed in July 1964 was supplied at a price of 24s. lid. per lb. for medium grade and 25s. Id. per lb. for low grade, the price paradox apparently reflecting the difficulties of obtaining supplies on a scarce and rapidly rising market. The cost of subsequent purchases was as follows: In March 1965. 46s. per lb. of low grade; in April 1965, 51s. per lb. for medium grade; and in September 1965, 46s. per lb. for low grade. On present indications it appears likely that the present shortage will continue for some considerable time.
It is difficult to quote a retail price for molybdenum, as only very small quantities are sold retail for specialised horticultural purposes the bulk of molybdenum being incorporated, in mixtures with superphosphate or mixed fertilisers. Due to the small quantities sold, retail prices probably vary considerably with the length of time the retailer has held the stock and possibly other factors. Preliminary inquiries of retail sources indicate a current retail price for sodium molybdate of about 22s. 6d. to 23s. 3d. per lb.
– My question is directed to the Minister in Charge of Commonwealth Activities in Education and Research. Was a committee under the chairmanship of the Director of the Commonwealth Office of Education invited in January 1964 to advise the Government on educational television services in Australia? Did the Committee submit its report to the Australian Broadcasting Control Board in November 1 964? Did the Board forward the report to the Postmaster-General in February 1965? Did the Postmaster-General forward the report to the Minister in Charge of Commonwealth Activities in Education and Research in August 1965? Have the two Minister between them already taken longer to consider the report than the committee took to compile it? When can the Australian people expect some action to be taken on this matter?
– Without accepting the accuracy of the various dates quoted by the honorable senator - I think that at least one of them is inaccurate - 1 inform him that the report is in hands of the Postmaster-General. It is out of my hands. I hope and believe that the PostmasterGeneral will be presenting it and making a statement on it during this session of the Parliament. That is my understanding at the present moment.
– My question is directed to the Minister representing the Treasurer. Has the Government considered financially helping the Australian Paraplegic Council to send a team of paraplegics to the Commonwealth Paraplegic Games to be held in Jamaica in August? If not, will the Treasurer consider doing so, particularly in view of the fact that Australia was the first country to conduct these Games and that the incentive to participate in sporting activities, of which these Games are the culmination, plays an invaluable part in the spiritual and physical rehabilitation of these people?
– I had notice of this question and was able to consult the Treasurer, who has provided the following answer -
As fur as I am aware, there has been no request for financial assistance from the Australian Paraplegic Council for the purposes mentioned. However, I should point out that it is a lone standing policy that Commonwealth financial assistance is given only in respect of the Olympic Games and the Commonwealth Games, and not to meet requests for Financial assistance by individual sporting bodies
– My question is addressed to the Minister representing the Minister for Health. On 27th October last I asked whether the then Acting Minister for Health would inquire whether Alupent tablets, which cost approximately 38s. a week and are used by asthma and chronic bronchitis sufferers, could be placed on the
November medical benefits list. Senator McKellar promised to refer my question lo the then Acting Minister for Health and to let me have a reply. I have not yet received a reply. I now ask the Minister representing the Minister for Health to request her colleague to add these tablets, and also the Alupent spray and atomiser, to the free list and thus benefit many thousands of asthma and chronic bronchitis sufferers.
– I will be very glad to take this matter up with my colleague, the Minister for Health, and to obtain some information for the honorable senator.
– I direct a question to the Minister representing the Prime Minister in the Senate. By way of preface 1 would point out that although many Australians believe that the ultimate goal for the people of Papua and New Guinea is independence, the Minister for Territories has said that independence as a separate sovereign nation is not such a sure thing as many people think and that the Papua and New Guinea Committee on Constitutional Development was asked to go back to the Territory to find out what the people there wanted. Sir Donald Cleland-
– Order! The honorable senator is giving information; he should ask his question.
– J am leading up to my question, Sir Donald Cleland has said that the Territory should be the seventh State of Australia; the United Nations Trusteeship Council has made its recommendations, and we are all confused by the contradictions. I should like to know whether the Territory of Papua and New Guinea has become a bigger plateful than those who sought a mandate after the First World War anticipated, and what kind of future the people of the Territory can expect to evolve out of the aimlessness and confusion of the present Government’s policy?
– I find myself at somewhat of a loss in understanding what the honorable senator means when he asks whether the Territory has become a bigger plateful than those who sought a mandate after the First World War thought, but no doubt this is something that he can explain. If he is asking whether the Australian people are putting great economic efforts into the development of Papua and New Guinea, then the answer is undoubtedly; “ Yes “. The future of the Territory has been the subject of statements by the Minister for Territories himself. In answer to the precise question as to what might happen in the relationship between Papua and New Guinea and Australia at some undefined time in the future, I think it is perfectly right and sensible to say that this decision will be made ultimately by the people of both countries and cannot now be made, for the future, by any specific parliament.
– I wish to ask the Minister for Customs and Excise a question which follows on the reply I received from the Minister representing the Minister for Primary Industry to an earlier question that I asked regarding molybdenum. Having regard to that answer, will the Government refer to the Tariff Board the question of the desirability of discontinuing the very high duty on imports of molybdenum for use in Australian industry?
– A comprehensive and lengthy answer was given to the honorable senator on behalf of the Minister for Primary Industry and I think it is unreasonable to ask me to express views about it on short notice. I point out to the honorable senator that the question about a reference to the Tariff Board is clearly one to be directed to the Minister for Trade and Industry and I will refer it to him.
– My question is directed to the Minister representing the Prime Minister. Will the Prime Minister outline the arrangements made for his Press conference in Singapore during his South East Asian tour? Does he consider that ample facilities were available for Asian journalists to obtain an adequate briefing on the current policy of the Australian Government in regard to relations with Asian nations?
– Obviously I do not know what precise arrangements were made for the holding of a Press conference in Singapore during the Prime Minister’s recent tour, but I will ask the Prime Minister’s Press Secretary - or the Prime Minister himself, if the honorable senator would prefer that - and let him know the answer. If he wishes to obtain a public answer he can put the question on the notice paper.
– I direct a question to the Acting Leader of the Government in the Senate with reference to the Freedom from Hunger Campaign being organised throughout Australia for the relief of the hungry and the poor throughout the poorer countries of the world. Is it a fact that the previous Federal Government allowed donations to this campaign to be tax deductible? Will the Government consider allowing such donations to be deductible for tax purposes for a period of two years as from 30th June 1966?
– This is, in effect, a suggestion that what would otherwise be Government revenue should be devoted to some other purpose and, therefore, it is, I think, a matter which should be referred to the Treasurer. To the best of my knowledge, such donations are not now tax deductible and the question of whether or not they should be made tax deductible in the future would, I think, be a matter of financial policy.
– I direct a question to the Minister representing the Minister for Labour and National Service. Is it a fact that the Department of Labour and National Service refuses to disclose what birthday dates have been drawn in the call-up ballots for national service? If it is a fact, what is the reason for the secrecy?
– I understand that it is a fact that the Department of Labour and National Service does not disclose the birthdays drawn for those who are to be called to national service. I can get a list of reasons if the honorable senator would like them all, but one of the reasons which I remember as being advanced for this is that it could well be that on the publication of birthdays people who had refrained from registering could, on seeing that their birthdays were not amongst the ones drawn, make late applications for registration, thereby making the best of both worlds. There are a number of other reasons.
– I direct a question to the Acting Leader of the Government in the Senate. On 27th April I asked certain questions concerning action taken or proposed to be taken by the Government in relation to the Loder Report and requested that the Minister arrange for the information to be supplied as soon as possible, owing to the urgency of the question. Can the Minister now advise whether he has been able to secure the information? If he has not. when is the information likely to be available?
– I have not secured that information as yet and it is in the hands of the Prime Minister, not of myself, as to when it will be available.
– 1 address a question to the Minister representing the Acting Attorney-General. On 1 7th March 1 asked the Minister -
Arc the telephones of any members of Parliament tapped by the Commonwealth Security Service? 1 subsequently raised the matter in an adjournment debate and I was assured that an early answer would be given. As no answer has been given, can the Minister inform honorable senators as to whether or not there is any reason why an answer should not be given?
– All I can do in this case, which concerns the Attorney-General, and all 1 can do iri the case of other Ministers whom I represent in this chamber, is bring the request for information to the knowledge of the Ministers and remind them from time to time if the information is not promptly supplied.
– During the coming recess., will the Minister for Housing make a thorough examination of the working of the aged persons’ homes scheme in order to be able to inform the Senate whether or not abuses have arisen under the legislation, such as excessive charges or donations being exacted from those people seeking accommodation?
– I would first remind the Senate and the honorable senator who asked this question that the housing of aged persons under the Aged Persons Homes Act is not a matter for my Department but comes under the administration of the Minister for Social Services whom I represent, of course, in this chamber. I will be very pleased to bring before the notice of the Minister for Social Services the question raised this afternoon and obtain an answer from him.
– Could the Minister representing the Minister for Civil Avia.tion inform the Senate what has happened about what is termed the “I.P.E.C. affair”? If the Minister remembers the case, he will remember that during a debate in this chamber the Government promised that it would make payment for the abortive trip to London by the Interstate Parcel Express Company representative which was caused by the negligence of the Government. Has this payment been made? Honorable senators were told that if the company again applied to the Government for a licence, and if it again put its case to the Government, it would be given favorable consideration. Has the company put its case again and has it been given favorable consideration?
– The honorable senator asked me whether I recalled what he termed the “I.P.E.C. affair”. Yes, I remember it. As for the rest of the question he puts to me on this subject, I do not accept as fact some of his statements. In fact I would resist quite strongly the truth of some of the information which he offered. As to the substantive matter that may have been in his question, I will refer it to the Minister for Civil Aviation for an answer.
– My question is directed to the Minister representing the Acting Minister for Supply. Are there any indications from the recent European Launcher Development Organisation meeting that the use of Woomera and the Weapons Research Establishment at Salisbury, South Australia, will in future be reduced in any way? Should Darwin be finally selected as a launching site, would Woomera and the launching establishment be redundant to an extent or be less active?
– As the honorable senator knows, Senator Henty is overseas attending a conference in connection with the European Launcher Development Organisation. It would be inappropriate for me to make any comment. No doubt when he returns and reports to the Government, he will be in a position to give certain information in relation to the matter posed by the honorable senator.In the meantime, I suggest that he put his question on notice.
– I ask the Minister representing the Minister for Civil Aviation another question. In regard to the previous question I asked,I certainly withdraw the words “ negligence of the Government” and substitute the words “ maliciousness of the Government “. Does the Minister deny that a statement was read on behalf of the Government to the effect that it was prepared to pay the costs of the Interstate Parcel Express Co. Ltd. at the end of the litigation before the Privy Council?
– What about the other half of the question?
– I shall ask the other half of the question. Does the Minister deny that the Government gave an assurance, if not in this chamber then to I.P.E.C., that if the company put its case to the Government again it would receive favorable consideration?
– The honorable senator wants almost to cross-examine me. What I said in reply to his earlier question was that he had referred to a number of matters which, in my understanding, were not facts. I still advance that contention. The honorable senator tried to make his remarks an amalgam of a speech and questions. As I said earlier. I shall refer the question part to the Minister concerned.
(Question No. 846.)
asked the Minister representing the Minister for Territories, upon notice -
– The Minister for Territories has now supplied the following answers -
(Question No. 861.)
asked the Minister representing the Minister for Shipping and Transport, upon notice -
In the light of the recent Privy Council decision which seriously curbs the rights of the States to compel interstate road hauliers to pay a just contribution for highway maintenance, will the Minister consider an early conference with State Ministers for Transport to overcome this impasse?
– The Minister for Shipping and Transport has supplied the following answer -
My understanding is that the recent Privy Council decision relates in particularto the activity usually known as border hopping. This term is applied to the carriage of goods by one or more carriers from a place in a State to another place in the same State when in the course of the movement the goods are transported outside that State.
In certain circumstances the transaction may be regarded as interstate transport of goods and be protected from certain State taxation and regulation. This recent decision is one of a number concerning such activities. The matter is one that mainly concerns State Governments and, if the States so desire, the matter could appropriately be discussed at the meeting of the Australian Transport Advisory Council to be held in July next and on which the States are represented by their Ministers for Transport. The subject of interstate road haulage, including border hopping has been discussed at past meetings of the Council.
(Question No. 867.)
asked the Minis ter for External Affairs, upon notice -
– The Minister for External Affairs has furnished the following reply -
I present the report of the Parliamentary Standing Committee on Public Works relating to the following subject -
Laboratories for Commonwealth Scientific and Industrial Research Organisation at lndooroopilly, Queensland.
I ask for leave to make a statement.
– There being no objection, leave is granted.
– The summary of recommendations and conclusions of the Committee is as follows -
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Gorton) read a first time.
.- I move-
That the Bill be now read a second time.
This Bill seeks parliamentary authority for the payment of an Australian subscription to the Asian Development Bank. The Agreement establishing the Bank was signed at Manila at a Conference of Plenipotentiaries held on 2nd to 4th December 1965. That Agreement was signed on behalf of Australia by my colleague, the Minister for External Affairs (Mr. Hasluck), who announced that, subject to parliamentary approval, Australia was prepared to consider joining the Bank on the basis of a subscription of $US85 million.
The Asian Development Bank will be located in Manila, it will have the financial backing of nearly all the countries in the region of Asia and the Far East and it will concentrate on the development problems of those countries. Its establishment is the result of an Asian initiative, and, in a sense, the whole proposal is a reflection of the desire of Asian countries to improve their economic position and to co-operate to that end. That is a trend of events which we can only welcome and support.
While the Bank is essentially Asian in its origins and objectives, it is nevertheless realistic in recognising that financial support from countries outside the region will be required. Accordingly, the Articles of Agreement make provision for non-regional countries to be members of the Bank, to subscribe to the capital stock of the Bank and to participate in the management of the Bank. The United States of America will be subscribing $200 million and Belgium, Canada, Denmark, Germany, Italy, the Netherlands and the United Kingdom will also be contributing. But the bulk of the capital will be made available by countries in the region and control of the management will rest with those countries. It is fair to say that the Bank constitutes a new and imaginative approach to the problem of matching the hopes and aspirations of the developing countries in Asia and the Far East with the realities of international finance. The form and functions of the Bank are laid down in the Articles of Agreement which are attached to this Bill.
I turn first to the capital of the Bank. In brief, the Articles of Agreement provide for an authorised capital of $US1,000 million, of which SUS650 million is available for subscription by regional members including Australia and New Zealand, while the remaining SUS350 million is reserved for subscription by non-regional member countries. Half the authorised capital is paid in and half is callable only to meet obligations of . the Bank. Payment of subscriptions is to be in five equal instalments of 20 per cent. each.
Australia’s total subscription to the Bank is $US85 million. The paid in portion of this subscription is SUS42.5 million. Of this, JUS21.25 million will be payable in convertible currency in five equal annual instalments of SUS4.25 million. The remaining SUS21.25 million will be payable in Australian currency. This local currency subscription will be met initially by the issue of non-interest-bearing securities and will not require any budgetary outlay until such time as demands are made on the securities.
I should mention at this point that a special provision has been made for Australia and New Zealand to tie the local currency portion of our subscription to purchases of Australian goods and services for use in Bank financed projects. This is a valuable concession which has been extended to Australia and New Zealand alone of the developed members of the Bank. The major industrialised countries who are members of the Bank can expect that over a period of years most, if not all, of the foreign exchange component of their subscriptions will return to them through the normal process of competitive tendering for Bank financed projects. Australia is not in the same position, lt is still mainly an exporter of primary products and does not have the same opportunities as the industrialised countries to obtain contracts for the large basic construction projects on which most loans by institutions of this nature are spent. This has certainly been our experience in the International Bank, and while we expect >to improve our performance over the years ahead it will be some time before we can hope to compete on equal terms over the whole field of industrial manufactures with the larger developed countries. Under the special position negotiated for Australia and New Zealand, Australian manufacturers will have an opportunity to supply goods and services for Bank financed projects which might not otherwise have been available. This will provide a valuable .opportunity to introduce more Australian manufactured goods into the region and, we hope, to increase knowledge and appreciation of them in other countries. The Bank’s subscribed funds may be supplemented by borrowings in member countries or elsewhere against the backing of its callable capital. But no borrowing may take place in the territory or in the currency of a member without the prior approval of that member.
I come now to the operations of the Bank. The funds available to the Bank will normally be lent out at commercial rates of interest for economic development projects in the developing countries of the region. The precise rates which the Bank will charge have not yet been decided but they will undoubtedly be related to some extent to the costs of raising money in the international capital markets. There is provision for a small fund, not exceeding 10 per cent, of the capital, which will be used for loans on softer terms. The general feeling at the meetings leading to the establishment of the Bank was that these soft loans should be kept to a minimum, at least in the early years of the Bank’s operations, because of the importance of the Bank being able to establish its reputation as a viable businesslike organisation. Although it is not intended that Australia should borrow from the Asian Bank, the Government is anxious that Papua and New Guinea should be eligible for loans. We understand that this objective can be achieved by amending the terms of Australia’s membership of the United Nations Economic Commission for Asia and the Far East to include not only continental Australia but the Territory as well. We shall be looking into the possibility of doing this.
I turn now to management. The Bank will have a president, one or more vice represented on the board of governors and, board of directors. Each member will be represented on the board of governors and of the ten directors, three will be from outside the region and seven from inside. Each member country will have an equal number of basic votes, and additional votes depending on the size of its subscription. The proportion of basic votes has been fixed at 20 per cent, of the total. Decisions on most matters will be taken on a simple majority of the voting power. This system of voting does mean that, as in the International Bank, the countries which provide the bulk of the capital will have a corresponding influence in the management of the Bank. Th,e size of Australia’s subscription will entitle it to a seat on the board of directors in its own right. Except for certain provisions relating to taxation and communications concessions, acceptance of the Articles of Agreement of the Bank would raise no difficulties for Australia.
The immunities from taxation provided for in the Articles are wider than those we concede to the specialised agencies of the United Nations. Accordingly I consider we should make clear, when ratifying the Articles, that we are prepared to extend tax immunities similar to those we grant to the specialised agencies, but no more than that. At the same time, because we cannot guarantee telecommunications concessions as wide as those contained in the Asian Bank Charter and as we have already reserved our position on telecommunications privileges in respect of mp Convention on the Privileges and Immunities of the Specialised Agencies, it is considered necessary to do likewise in respect of the relevant Articles in the Asian Bank Charter. These Australian reservations will have little practical importance for the Asian Bank itself.
Countries wishing to become charter members of the Bank must ratify the Articles of Agreement not later than 30th
September 1966. It is important to note, however, that the Agreement comes into force - that is, the Bank becomes established - as soon as it has been ratified by 15 countries, including at least 10 regional countries, whose subscriptions amount to $US650 million. At present it is anticipated that this will happen about 1st July 1966. As soon as the Bank is established the first meeting of the board of governors may be held. This first meeting may transact much important business, including the election of the president and the board of executive directors. If we are to join the Bank, it is clearly in our interest to do so by the time the Agreement comes into force. Especially as large subscribers such as the United States and Japan are already well advanced in the legislative steps necessary for ratification, it is desirable that we should enact the legislation required for Australian membership as soon as possible.
The Government welcomes the establishment of the Asian Development Bank as a practical and imaginative step forward in economic co-operation in Asia. It is only when the basic problems of economic development have been overcome that there can be any significant improvement in living conditions and real prospects for lasting political stability in the area. The Asian Development Bank can make a notable contribution to this process. A heavy burden will rest on the management of the Bank to establish, in as short a period as possible, an efficient and businesslike organisation. Only in this way will Ft have the high standing in international financial circles which is so essential if the Bank is to have access to the capital markets of the world. This Government will do all it can to assist in this task. We have participated in an active way in the steps leading to the establishment of this Bank and it is our intention to continue to lend it our full support. I commend this Bill to the Senate.
Debate (on motion by Senator Bishop) adjourned.
Consideration resumed from 3rd May (vide page 734).
Clause 109. (1.) Subject to this Act and to sections 221p and 221 yu of the Income Tax Assessment Act 1936-1965, the trustee shall, before applying the proceeds of the properly of the bankrupt in making any other payments, apply those proceeds in the following order: -
sixth, in payment of amounts (including amounts payable by way of allowance or reimbursement under a contract of employment or under an award or agreement regulating conditions of employment, but not including amounts in respect of long service leave, annual leave, recreation leave or sick leave), not exceeding in the case of any one employee the sum of Six hundred dollars, due to or in respect of any employee of the bankrupt, whether remunerated by salary, wages, commission or otherwise, in respect of services rendered to or for the bankrupt before the dale of the bankruptcy;
seventh, in payment of amounts, not exceeding in any individual case Two thousand dollars, in respect of compensation, being compensation the liability for which accrued before the date of the bankruptcy, under any Act or Slate Act or Ordinance of a Territory of the Commonwealth providing for compensation for personal injury by accident arising out of, or in the course of, employment;
eighth, all amounts due to or in respect of any employee of the bankrupt, whether remunerated by salary, wages, commission or otherwise, in respect of long service leave, annual leave, recreation leave or sick leave in respect of a period before the date of the bankruptcy;
Upon which Senator Wright had moved by way of amendment -
In sub-clause (1), leave out paragraph (f), insert the following paragraph: - “ (f) Sixth, in payment of all wages or salary of any clerk, servant, labourer or workman (not being the wife, husband, child, parent, brother or sister of the bankrupt) not exceeding $500 whether payable per time or piecework in respect of services rendered to the bankrupt within 4 months before the date of the sequestration order;”.
.- When consideration of clause 109 was interrupted last night, I was submitting arguments in support of an amendment to the clause. The Committee will remember that the clause as printed provides for priority payment in a bankruptcy in the case of each employee of the bankrupt whether remunerated by salary, wages, commission or otherwise, in respect of services rendered to or for the bankrupt, at any time before the bankruptcy, of an amount not exceeding in the case of any one employee the sum of $600. I wanted to limit that provision, and my amendment would limit it, in respect of the class of employee who would benefit, to a clerk, servant, labourer or workman not being the wife, husband, child, parent, brother or sister of the bankrupt.I sought to limit the period during which the accrual of the priority payment might take place to four months before the dale of the sequestration order.
I base the view that that amendment should be accepted upon the fact that the clause as printed will defeat its own purpose if it allows priority to the whole range of employees; and furthermore, it will defeat its purpose if it allows priority for stale claims. It is truly beneficial for the narrow section of people whom the clause intends should benefit only if it provides for accruals that occurred in the period when bankruptcy was becoming imminent. I do not wish to repeat at length the arguments that I advanced yesterday.
– We discussed this matter last night and I then tried to make clear the Government’s position. We do not think that it would be right to exclude, as Senator Wright wishes to exclude, from the protection afforded to employees those who happen to be close relatives of an employer. The approach of the Bill is to the effect that payment to employees for services rendered should take precedence over payments for goods supplied. Whether or not Senator Wright agrees with it, that is the approach of the Bill, and I think it would attract the support of most honorable senators. If that is an approach which would attract the support of most honorable senators, I suggest it would be unfair to exclude from that protection people who had worked just as hard as anybody else, had discharged their duties just as faithfully and had provided services just as onerous, merely because they happened to be close relatives of the employer.
I have pointed out that on many farms throughout Australia in particular the employer’s son works for him. We could have the situation, for example, where a small farmer was employing an employee who was not related to him, and also employed his own son. If the farmer was unfortunate enough to go bankrupt, protection would be afforded to the outside employee, as it .were, but no protection would be afforded to the son, in spite of the fact that he had performed the same work as the other employee. There could be cases, for example, where an employer in a small mixed business employed an outside female assistant who was not related to him, and also his own wife. If he was unfortunate enough to go bankrupt, protection would be afforded only to the outside employee and not to his own wife. This seems to me to discriminate against people who have not themselves gone bankrupt, who have performed all the services that have been asked of them, and who are merely unlucky enough to be working for a relative whose relationship is as close as that set out in the amendment, lt seems to me that it would be an injustice to do that. The Government certainly would not want the Committee to accept that amendment.
In regard to the limitation of the time during which people are protected in respect of claims for services rendered but not paid for, I think it was Senator Cohen who pointed out last night that often there is a considerable delay between the time when the employee is not paid and the time when the sequestration order is made. One could think of numerous cases in which there could be even longer delays than Senator Cohen envisaged. An employer might tell his employee: “ 1 am sorry; ] am a little short of money at the moment and I. cannot afford to pay you your wages.” The employee might work for a little longer in the hope that ultimately he would receive his wages; or he might say to his employer: “ I will have to leave, but I will not sue you for my wages. I will give you a chance to keep your business going and to be able to pay me my wages.” Such circumstances could extend the period of time during which an employee went without his wages. Whatever period of time was laid down, we would run the risk of having just outside that period somebody who had a proper claim for payment for services that he had rendered to an employer and who would be excluded unnecessarily from having the relevant priority of payment from the assets of the employer. So the Government hopes that neither of these amendments will be accepted.
Senator COHEN (Victoria) 13.57;).- Having regard to what was said in the debate in Committee last night, 1 think I should say that broadly we support the position taken up by the Minister on this clause. The record should show that what the Government has done in respect of this clause is to adopt in all respects the relevant recommendations of the Clyne Committee. Paragraph 127 of the report of that Committee says -
Further, the Committee does not consider that the exclusion of the relatives referred to in the existing paragraph is just and recommends that those relatives be not excluded from the priority.
I think there will be cases in which there is some fraudulent or improper imposition by a relative of the bankrupt; but every creditor must file a proof of debt in the bankruptcy. It will be for the trustee to say, in individual cases, whether he will recognise particular claims. If, in the case of a close relative, some circumstances give rise to suspicion, the trustee is at liberty to reject the claim and to leave the person affected to make his claim at law. It seems to us, on reflection, that the Government has acted correctly in adopting the relevant recommendations of the Clyne Committee.
.- I shall not pursue the debate on the general amendment. I shall let it be put to a vote without further debate. I indicate that I intend to break up the amendment to enable the various issues involved in it to be voted on separately. In view of that, Mr. Chairman, I ask you to put the amendment in a form which would not preclude submission of my further proposed amendments.
-(Senator DrakeBrockman). - Order! I point out that the amendment now before the Chair is that paragraph (f) be deleted. If that question is resolved in the negative, Senator Wright may not be able to move his proposed amendments.
– Then I ask for leave to alter my amendment by substituting for the words “leave out paragraph (f). insert the following paragraph “ the words “ amend paragraph (f) by substituting the following paragraph”. Will that meet the position?
– The honorable senator may leave the amendment in the form in which he moved it if he can secure the agreement of the Committee.
– Then I ask leave to put it in that form.
– I am not clear on this andI want to be clear on it before we take any further steps. If amendment No. 4 standing in Senator Wright’s name is withdrawn will it not be possible for him thento move the other amendments that he wishes to move?
– I do not wish to withdraw my amendment. I wish it to be voted on.
– Then I will have to ask you to change the form of the amendment so that the question to be put will be: “ That the amendment be agreed to “.
– I ask leave of the committee to submit the amendment in the form: “ That the amendment be agreed to “. The only effect of that will be to enable me to follow up with further amendments as to the details.
– Is it the wish of the committee that Senator Wright be given leave to change his amendment to read: “ That the amendment be agreed to “? There being no objection, leave is granted.
– I so move.
– I move-
In sub-clause (1.), paragraph (f), leaveout “employee”, insert “cleric, servant, labourer or workman “.
During the debate yesterdayI pointed out that in my view priority of payment should not be accorded to employees who are of the status of executives, accountants or people who, in effect, are of the same degree of commercial independence as are trade creditors.
– What about legal fees?
– It was pointed out to me that although it could be said that a solicitor was employed by the bankrupt, he would not, in fact, be an employee, and I conceded that in argument, so I do not wish again to confuse the matter in regard to legal fees, estate agent’s commission or anything of that sort.
– What does “ servant “ mean? How wide is that term?
– I should think that a solicitor, an estate agent or a commission agent renders services to the bankrupt. There should be no question involved there. I am trying now to focus the attention of the Committee on the specific question of whether or not the employee who receives this priority benefit should be anybody coming within the category of “ employee “ or only that class of employees who could properly be called clerks, servants, labourers or workmen. I have pointed out that there can be managerial employees - executives who are, in effect, partners and who exercise the same degree of independent control of the bankrupt’s business as an outsider - and that, in my view, the priority afforded by this provision should not go to that class of employee.
– The Government does not wish to accept this amendment, which I think stems from Senator Wright’s opinion that it is not proper to give priority to those who have rendered services and have not been paid for them over those who have rendered goods and have not been paid for them. If priority is to be given to those who have wage or salary claims, the Government seeks to confine that priority to as small a class of persons as possible. I think that the aim of the Committee of the Senate would be much better served by leaving the definition of “ employee”to cover those who are, in fact, employees and not trying to constrict and confine the definition to the particular type of employee covered by the words “ clerk, servant, labourer or workman “. We have already heard some discussion across the chamber by two legally qualified senators as to what would be meant by “ servant “, and rather than include words which are constrictive and are the subject of argument and construction I believe it is much better to leave the position so that the employee will have this priority. That is what we prefer.
.- My contention is not based only on the viewpoint that in many cases those who have supplied goods are entitled to a dividend on an equal basis with those who have supplied services. My view is that the dependent servant or employee is the one who should receive this priority payment. The employee who has the status of independence comparable with that of the outside trade creditor is not in need of this priority payment and my amendment is based upon that principle.
– He would not be an employee under those circumstances.
– With all deference to Senator Cohen, 1 think his vision is being obscured by a legal veil. It is true that in most cases an employee would be subject direction; but not in all cases. Many employees - for instance an accountant, a medical man on the staff or an employed solicitor on the staff - have, by inherent elements of their duties, a right not to be encroached upon in the discharge of those duties. They are protected from an infringement of their proper functions even at the instance of their masters; but it is an employee relationship. In other fields of law we discuss the question of whether there is a contract for service or a contract for services, but that is not the point here. I want to narrow this priority to that class of employee who is in an inferior position, from the point of view of commercial standing, to that of the higher executive or higher professional employee who is on the staff of the bankrupt employer. I do not wish to pursue the matter further lest 1 make myself open to reproach in that I wish to prejudice employees as a class. My advocacy is directed to gaining this priority for that class of employees who are dependent in the sense that 1 have explained. The inclusion in that class of other people who have independence of a commercial nature equal to that of trade creditors will militate against the true purpose of the clause and I think would make the clause self-defeating.
– I point out again to Senator Wright that he has moved that the word “ employee “ be left out and, in the normal practice, if that question is resolved in the negative it will prohibit him from moving his subsequent amendments. I suggest again that he seek leave of the Committee to move “ That the words proposed to be left out be agreed to “.
– 1 ask leave of the Committee to use that method of putting the question.
– There being no objection, that course will be followed.
.- The further Senator Wright went the more he convinced me that this amendment should not be accepted. It is plain from the discussion that has gone on in the chamber that we may not all be agreed as to who would be comprehended in the expression “ employee “. That is the first difficulty. The other difficulty is of far reaching importance, because it stems from the general argument that he put to us in the second reading debate - and I for one was very interested in his remarks - that the great defaulters so far as relates to nonpayment of debts these days are the great companies. They are corporations. When you are dealing with individual bankrupts, in the commercial world at any rate, generally speaking you are dealing with men in not such a large way of business as some of the bigger corporations. If you reach any size these days in the business world so that you can have employees who are executives, the chances arc that you will be a company.
– There are very big partnerships still in business.
– I know that there are some. But then you get very real difficulties as to the level at which you say a man moves out of the status of clerk to that of junior executive. Sometimes employers are not very keen to define that boundary line.
– And between technician and scientific employee.
– Yes. Then you reach into difficult areas where you may have to examine the duties of a particular employee in order to see whether he would fit the circumscribed definition given by Senator Wright. For those reasons as well as the others advanced in the course of argument, we would not support the amendment.
.- 1 now wish to put as an alternative proposition another amendment. 1 move -
In sub-clause (1.), paragraph (0, leave out “ employee “, insert “ clerk, servant, labourer or workman, not being the wife, husband, child, parent, brother or sister,”.
– Is this not the same as the amendment with which we just dealt?
– No. This raises the question of the family man.
– So does the first amendment with which we dealt.
– That was generally inclusive. I now wish it to be dealt with as a specific matter. I seek to exclude from the priority employees near relatives of the bankrupt - the husband, wife, brother, sister or child of the bankrupt. Under the legislation in force today these neatrelatives are excluded from priority payment and that outlook is accompanied by a provision that any money or other estate of the wife of the bankrupt, lent or entrusted by her to him, should be treated as assets of the estate, and the wife should not be entitled to claim any dividend as creditor in respect of any such money or other estate until all other claims of his creditors for valuable consideration in money or money’s worth have been satisfied. So not only are near relatives, and particularly a wife, excluded from priority payment for services rendered under the bankruptcy legislation today, but also in respect of moneys that a wife has entrusted to her husband, she is actually postponed from participating in a dividend until other creditors have been paid. That legislation recognises the realities of a situation where separate ownership of property is permitted to husband and wife, but when they are in a venture of this sort, where she is an employee in the undertaking, it is not proper that she should be a creditor preferred to outside creditors.
First, there is no limitation as to reasonableness upon the amount that is agreed lo for remuneration for her services. Secondly, she has an interest in servicing her husband’s undertaking that should be discharged by other than a money payment. It is completely unjust to outside creditors that she, serving that interest and with all the confidence that comes from her inner relationship, should be permitted to allow her remuneration to accrue in arrears, knowing that when bankruptcy supervenes outside creditors who are not in the know will be postponed for payment for services that they have rendered, if they have rendered them other than as an employee, and for goods that they have supplied, which may be for the very necessaries of life for that husband, wife and family. It is not at all a reasonable proposition, I submit, that she should have preference. I am not advocating that we should adhere to the idea that she should be postponed in respect of money lent but I do submit that she should not occupy a position of preference over the creditors that I have mentioned.
– To repeat very briefly the argument that was addressed to a previous amendment which was of a very similar kind, we do not seek that a close relative of an employer should be put at any advantage over any other employee but we do think that all employees should have equal protection and that merely because one is a son or wife of an employer one should not be excluded from the protection given for providing services that have not been paid for, which is available to all employees. I believe that there is a limitation on the reasonableness of an amount agreed, in that the Bill provides $600 as the greatest amount that can be paid. I understood from Senator Cohen’s previous contribution to the debate that a trustee himself, looking at a claim, would have a right not to accept it. I do not believe that the question of whether a son or wife assisting a father or a husband who is employing him or her has a special interest enters into this matter, but it does seem to me that it is pure justice that if an employee has registered, has given service, and has not been paid for it by virtue of the employer’s going bankrupt, that employee should be protected as proposed in the Bill and should not be excluded because he is a relative.
– The only thing that I wish to say in reply is that the Minister is misguiding the debate when he suggests that there is within the clause as printed a limitation as to reasonableness. There is a limitation only as to $600. If the contract between husband and wife provides for $200 a week and she is three weeks in arrears, she will have a preference payment up to $600, unless it can be shown that that obligation has been incurred by the bankrupt since he committed an available act of bankruptcy, and it has the effect of preferring a creditor against other creditors, and she is in a position of being affected by that invalid preference.
– The honorable senator disagrees with what I thought was Senator Cohen’s suggestion that the trustee was to be satisfied with the reasonableness of the terms?
– No. Senator Cohen did not say that he had to be satisfied with the reasonableness of the amount. If the parties fix an amount by contract, the court reviewing a proof of debt has no basis upon which to revise the amount. The sense of Senator Cohen’s submission, as I understood it, was that the trustee, upon receiving a proof of debt, would say: “ Am I satisfied, in fact, that this contract was made?” If the trustee rejects the proof pf debt and it goes before a judge, the judge would only ask himself: “ Am I satisfied, in fact, that this contract was made?” If it was made for a fixed amount the judge is bound to allow that proof of debt unless the incurment of the obligation by the bankrupt amounts to an invalid preference within the later sections of the Act. I need not go over the explanation of that again. All I have risen to state is that it is quite erroneous to say that the existence of $600 as the limit of each priority claim constitutes a criterion whereby the claim, in amount, can be rejected simply because the amount of remuneration stipulated in the contract is unreasonably high.
– If the contention is that Senator Wright is correct when he says there is no limitation on reasonableness, then it is also correct that there is a limitation on the total sum that can be secured in this way by an employee. I have listened to what I regard mainly as the theoretical consideration that a man might make a contract for, let us say, $600 a week, with his wife and son for the last week and that that contract might stand up. You could equally well say in these situations that you could imagine that a man in collusion with an employee who was not a close relative could make that sort of agreement and get some of the money back. All these things can be imagined. But the possibility of that type of thing is not enough, 1 suggest, to exclude from the protection afforded to employees the infinitely vast majority of cases where you will have an employee who has rendered service and is entitled to reasonable protection.
.- I move -
In sub-clause (I.), paragraph (f), after “bankrupt” insert “within 12 months”.
I move this amendment to test the opinion of the Committee as to whether or not there should be any limitation of the period during which the priority payment should accrue. As it is left at the present time, any debt which accrued within six years, or which was acknowledged by the bankrupt in writing within six years, or as to which there had been any part payment within six years, would be provable and although six years or more old would have priority for payment as against current creditors and on an equal basis with current employees. That seems to me to be so absurd that some revision of it should be undertaken. Under the law as it exists at the present time, the employee has priority only in respect of remuneration over the four months preceding the date of the bankruptcy order. I would like to have the benefit of a little consideration from the Minister for Works (Senator Gorton) and his advisers on this point. I point out that priority is given for four months before the date of the bankruptcy order, but under the Bill it is given for any period before the date of the bankruptcy order. 1 am uncertain myself as to what the expression “ date of the bankruptcy “ means. Perhaps I need not trouble to refer to that matter further. I simply put the proposition that this priority should be limited to accruals within 12 months before the date of the bankruptcy, assuming that that means the date of the sequestration order.
– We would prefer that there be no time limit placed on this in the expectation that if a time limit were placed upon it circumstances could arise which would work to the disservice of, and create injustice for, some employee who had a legitimate claim for protection.
.- 1 move -
In sub-clause (1.), paragraph (.g), leave out “by accident ‘”.
To any parson not familiar with workers’ compensation statutes this may appear to be an amendment of no special moment. But ] can assure honorable senators that those two words “ by accident “ are of verycritical importance in workers’ compensation legislation. This sub-clause takes a correct step in increasing from $400 to $2,000 the amount of compensation which may be claimed as a priority. But it is compensation “ the liability for which accrued before the date of the bankruptcy, under any Act or State Act or Ordinance of a Territory of the Commonwealth “ - and 1 am coming to the significant words - “ providing for compensation for personal injury by accident arising out of, or in the course of, employment “. Those words have stood in the Bankruptcy Statute since it was first enacted and they follow the expression used in the Commonwealth Employees Compensation Act. The expression “ personal injury by accident “ is still contained in some of the workers’ compensation statutes. But in the course of the last 20 years and more a number of the States - the majority of States now - have amended their workers’ compensation statutes to delete that expression “ by accident “.
The significance of that, in broad nontechnical terms, is that it is no longer necessary in Victoria, New South Wales, Queensland, and, I am given to understand, quite recently in South Australia, to prove an accident in the strict technical legal sense before the injured worker is entitled to compensation. He has to prove merely an injury arising out of or in the course of his employment. Over the years, the courts have given a great deal of attention to the construction and interpretation of workers’ compensation legislation. There are many cases brought on behalf of injured workmen which have failed because the injured party has failed to prove an accident in the technical legal sense. But most of the statutes have now been liberalised. A much broader approach has been taken to the operation of workers’ compensation legislation and in the majority of States, although not yet in the Commonwealth and one or two of the States - the legislation has been amended.
What is the significance of that in the point of view that I am now putting? There will be no priority under sub-clause (l.)(g) unless the compensation is payable under a State Act or an ordinance of a Territory which provides for compensation for personal injury by accident arising out of, or in the course of, employment. It seems to be clear to the Opposition that workers in Victoria, New South Wales, Queensland and South Australia will not qualify for priority under this provision because the statute under which the employer will be liable for compensation is not a statute which provides for compensation or personal injury by accident. That seems to me to be something that is capable of very swift cure.
I hope that the Minister will appreciate the significance of the distinction and will accept the argument that to allow the clause to pass in its present form would be to give it an extremely limited operation and would deprive workers who are injured in circumstances where they clearly are entitled to compensation under a statute of their own State of any priority. I would have supposed that it was not the intention of the Government to impose this artificial limitation on the scope of the benefit to be conferred by the new sub-clause. I put that consideration to the Minister. This is a matter of very great importance to an injured worker. If the provision contained in the Bill is retained the worker is really being offered something that is quite illusory if he happens to reside in a State which does not have the expression “ by accident “ in its workers’ compensation statute.
– It seems to the Government that the amendment, if accepted, would remove any doubt which might exist. Although the Government is not prepared to say that the amendment is necessary, it sees value in removing any doubt that might remain. Therefore, it is quite prepared to accept the amendment.
Amendment agreed to.
– 1 should like to refer to sub-clause (1.) (j)- Over the years great difficulty has been experienced in relation to priority of claims against a bankrupt’s estate, particularly in relation to taxation. In its report, the Clyne Committee said that the Commissioner of Taxation should not be put in a preferential position. Section 221 (J .) (b) of the Income Tax and Social Services Contribution Assessment Act states - a person who is a trustee within the meaning of the Bankruptcy Act 1924-1933 shall apply the estate of the bankrupt in payment of tax due under this Act (whether assessed before or after the date on which he become bankrupt) in priority to all other secured debts other than debts of the classes specified in paragraphs (a), (d) or (e) of sub-section (1.) of section eightyfour of that Act;
I invite the attention of the Minister to the provisions of clause 109(1.) of the Bill. They indicate that the exemptions proposed by section 221 (I.) (b) (i) of the Income Tax and Social Services Contribution Assessment Act will not operate unless the Government intends to amend that Act during this session. I am interested mainly in the priority that is set out in section 84 (1 .) (e) of the existing Act and in clause 1.09 (1.) (f) of the Bill. 1 should like to obtain from the Minister a statement of intention in regard to the Income Tax and Social Services Contribution Assessment Act.
– I am told that this clause will prevail over the provision in the Income Tax and Social Services Contribution Assessment Act.
– I regret that 1 was called out of the chamber on urgent business for a few minutes. Will I be permitted to comment on sub-clause (l.)(g), to which Senator Cohen was addressing himself when I left the chamber? Has the Committee yet agreed to the amendment?
– The Government has agreed to accept Senator Cohen’s amendment.
– Has the clause, as amended, yet been put to the vote?
– 1 should like to raise a question in relation to the language that is used in this provision. Has it been made quite clear that it is confined to what we call workmen’s compensation? Since this provision was first drafted, perhaps many of the State Acts have dealt with matters of common employment as related to the common law liability of an employer. The Fatal Accidents Act deals with this matter, too. These are State Acts which gives rise to compensation for liability in general fields, including compensation for personal injury arising out of, or in the course of, employment. Since common employment was abolished, frequently the dependants of employees have sued for common law compensation in respect of some accident arising out of, or in the course of. the employees’ employment and by virtue of the existence of Lord Campbell’s Act passed pursuant to a State Act. It occurs to me that the general language of paragraph (g) may need a little closer scrutiny with a view to confining it to what we refer to as workers’ compensation. By that we mean statutory compensation that arises merely by the occurrence of the accident or the disease. What is the Minister’s view on this? Was it intended to cover compensation that accrues pursuant to an act abrogating the defence of common employment or pursuant to a State act which give rise to a dependant’s claim under a State act which replaced Lord Campbell’s Act in a case where an accident has occurred or a disease has been inflicted upon a person clue to negligence in not preventing the fumes of a deleterious substance from injuring an employee? I think it desirable that we give some consideration to that matter.
– I can only say that I am informed that the Attorney-General’s Department and the Parliamentary draftsman did consider the point and are satisfied the language does refer only to what it is supposed to refer to.
Senator WRIGHT (Tasmania) [4.421. - I move -
In sub-clause (1.), leave out paragraph (a).
Paragraph (h) provides for priority payment for - . . all amounts due to or in respect of any employee of the bankrupt, whether remunerated by salary, wages, commission or otherwise, in respect of long service leave, annual leave, recreation leave or sick leave in respect of a period before the date of the bankruptcy.
J do not know what the term “ a period “ is intended to convey and perhaps some comment could be made to clarify that point. I assume it is intended to mean any period so long as it is a period before the date of the bankruptcy. But in previous bankruptcy legislation, the priority that has been given in this sphere has been confined to salary and wages. Since the last Bankruptcy Act was passed in 1924, the industrial courts and tribunals have awarded as part of award conditions, annual leave, sick leave and recreation leave. Of course, modern thought accepts these as normal incidents of employment; but they are not the staff of life as are salary and wages. 1 submit that it is the essential payments that accrue to the employee that should have priority and not those added conditions of leave payments.
Let us take sick leave, for example. Take the case of a man who is entitled to six months sick leave and who is injured by accident and is on sick leave payments for three months. It has been decided recently by the Court that he can recover something for compensation on account of the debit that has to be made to his sick leave account. But it is not necessarily the equivalent of three months salary. Because he was enjoying good robust health, he might never need the accruals of sick leave. Therefore, appropriate discounts according to the circumstances of each particular case arc made when it comes to a question of compensation. The same process would have to be made in relation to the evaluation of the loss of his sick leave credited when the Trustee in Bankruptcy had to adjudicate on the proof of debt. So if his employer went bankrupt today and he had accruals of six months sick leave on the books and found employment with another employer next week, the question would arise as to whether he was entitled to salary.
I ask the Minister representing the
Attorney-General what his advice is on that point. Honorable senators will notice that there is no limit of $600 under this pro vision in the case of each employee. What is the Minister’s advice on the meaning of this provision? Will the person concerned be given the equivalent of salary for six months sick leave as if salary accrued during that time, or will it be simply the accrual of salary between the date of bankruptcy and his getting other employment?
I will not go into the question of recreation leave or annual leave but 1 pose another problem in relation to long service leave. We are not concerned with statutes that brought into effect long service leave under State employment because we do not envisage that the States or their instrumentalities will go bankrupt. But we have long service leave applicable to the trading community, and if I take Tasmanian legislation in this field as up to date and typical. 1 suggest it does not provide for any cash payment on the supervention of bankruptcy. Lt does provide for conversion of the long service leave accrual into a cash payment in the case of the death of either the employer or the employee, it does provide for the conversion of long service leave accrual in cash in the case where there is mutual agreement. That is by a recent addition to the Act. But ordinarily, I think the statutes in most of the States will insist that long service leave cannot be converted into cash even by mutual agreement. If an employee is entitled to long service leave as at 31st December, I suggest that most of the legislation upholds the principle that the employee shall enjoy not the cash equivalent. The purpose is so that he will be a person who gets the amenities of life. His salary goes on while he takes his leave, but it is not the equivalent of cash.
What are we to understand, then, to be the amount of debt for which the claim is provable? Here I want to emphasise again that there is no limitation on the amount applicable to any individual person in this connection. In the other cases we were dealing with, there was a limitation of $600 in respect of accruals under an employee’s contract of employment. It seems to me that this matter has been insufficiently considered and this is not merely my own individual view. The difficulties to which I have adverted are of my own thinking but the basic view that these claims for leave should not be priority payments have some support in paragraph 128 of the Clyne
Committee’s report where it refers to long service leave. It states -
However, the Committee does not believe that the provisions of the bankruptcy law should give any further priority to long service leave claimants than this.
That is a reference to the provisions of clause 109(l.)(f). The Committee continued -
The Committee considers that some fair adjustment must be made between competing claims of employees and other creditors; for example, claims of unsecured creditors who have supplied a bankrupt and his family with food and clothing should not be forgotten.
I hope that this matter will receive the purposeful consideration of the Committee.
.- The Opposition will not support Senator Wright’s proposed amendment. I do not suppose that anybody will be surprised at my saying that. Sub-clause (l.)(h) of clause .109 has had an interesting history. When the Bankruptcy Bill was introduced in another place last year it contained no provision equivalent to that sub-clause. The priority for amounts in respect of long service leave, annual leave or recreation leave was included in the sixth category of priorities; but as is known, the AttorneyGeneral (Mr. Snedden) allowed that alteration to the Bill after it was introduced, to await criticism and comment from interested persons. When legislation came before the House of Representatives for final debate at the Committee stage, the Attorney-General accepted a large number of amendments including suggestions made to him on behalf of the trade unions and others that a separate category should be offered for long service leave, and so on. Previously, such payments were all included in the overall amount of £300 or $600, and payments for long service leave, annual leave or recreation leave were only recognised within the limits of that amount. Now the Government has moved to permit a separate priority for all amounts due to or in respect of any employee of the bankrupt for long service leave, annual leave and recreation leave; and in our opinion, sick leave is properly added.
The Opposition does not agree with any of the arguments put forward by Senator Wright against this clause. When the
Attorney-General accepted the amendment and inserted it in the revised Bill, he said -
As the Bill stands, amounts due in respect of leave are lumped in with amounts due in respect of wages or salary, with a limitation of $600 to any one employee, in the sixth priority.
The Attorney-General said that the change would bring the Bill into line with the uniform companies legislation in respect of the priority given to payments due for leave. It is clear from the report of the Clyne Committee that the Committee was aware of the existence of those provisions in the uniform companies legislation. The Committee did not see fit to recommend their translation into the Bankruptcy Act. The Attorney-General has seen fit to insert the new priority and the Opposition believes that this provision should stand, because it is eminently proper to be inserted in this legislation.
– The Government also would not wish to accept Senator Wright’s proposed amendment because the Government believes it is a reasonable provision - that is why it is included in the Bill - that there should be a place in the priorities for sick leave, recreation leave and other leave and benefits which are, in fact, part of the remuneration of an employee, and which he would lose if protection of this kind were not given to him.
I cannot answer the specific question on sick leave asked by Senator Wright. I am told, and I also understand from some knowledge of the matter, that awards vary very considerably as to their provisions for sick leave. Under the provisions of most awards, employees do not get paid for sick leave unless it is taken. However, under other awards payment may be made in lieu of sick leave not taken. We believe that employees should be protected, as subclause (1 .) (h) seeks to do, against loss through the bankruptcy of an employer of benefits which have accrued to them besides wages which have become due. The provision seeks to establish a priority for such claims and we believe that it gives protection to employees of all types.
– I wish to add a few words, because I would appreciate any interpretation that either Senator Gorton or Senator
Wright can place on the words “ all amounts due” included in clause 109(1.) (h). I would like to know whether the word “ due “ relates to the past. As the Minister has said, most awards - all awards to my knowledge - provide that an employee shall not suffer a deduction from his wages if he is absent on account of personal sickness or injury. As I understood Senator Wright, he referred to the case of a healthy, robust type of individual who might not need to take sick leave. Sub-clause (1.) (h) of clause 109 refers to a period when an employee may be away sick and should receive payment for that period. For such payments eighth priority is accorded. Sub-clause (1.) (f) accords sixth priority to amounts payable as wages, allowances or reimbursements under a contract of employment, an award or an agreement regulating conditions of employment, but not including amounts in respect of long service leave, annual leave, recreation leave or sick leave. If an employee worked three weeks in one month and was absent from work sick for one week, and his award entitled him to payment for the week he was absent, would he receive sixth priority under sub-clause (1 .) (f) for his three weeks wages and eighth priority under sub-clause (1 .) (h) for payment in respect of sick leave for one week?
– And if the employee had an accrual of five months’ sick leave that he had not taken -
– I am wondering how an employee can accrue sick leave.
– By credits of so much a year.
– I believe that in a recent judgment an employee was granted payment in lieu of sick leave not taken. I believe that only one or two awards would contain such a provision. The awards with which I am familiar provide that a deduction shall not be made from the wages of an employee for absence from work due to sickness or accident. That is a standard clause in awards. Sick leave accumulates for a period of five to seven years, but an employer’s liability is limited to the extent of five days a year, subject to that accumulation. If during that period of five to seven years an employee has had no time off from work through sickness, he receives no payment in lieu of sick leave under the provisions of his award. Surely this provision in the Bill must mean that priority is accorded to payments due to an employee under his award for sick leave taken at a period prior to the bankruptcy.
I turn now to long service leave and I ann only seeking clarity on this. If the award provides for three months leave after 20 years service and if long service leave is due, surely at some date before bankruptcy the man must have served 20 years with the employer. The long service leave is something he should have taken some time in the past. It is something due to him.
On the other question, I think most awards provide for three months leave after 20 years service and a proportion of that leave after 15 years service if a man is dismissed by the employer. If an employee is dismissed because of the bankruptcy, does the leave become due at the time of dismissal? Does he receive payment according to paragraph (h) of this clause? I hope that the Minister and Senator Wright, as reasonable men with a knowledge of legal interpretation, can decide these issues and enlighten someone who is looking for enlightenment on this question of when leave becomes due and when payment is made.
.- I suggest that Senator Cavanagh has put. his finger right upon the point. He has discerned the key words that gave rise to the problem I discussed previously - what amount is due in respect of sick leave before the date of bankruptcy except during the period when the employee was sick?
– I do not follow that.
– Some awards - I may be thinking only of the Public Service and this may not apply to private employment - permit unlimited accruals. Let us take the case of accruals, under the award which has been mentioned, of a period equivalent to, say, four weeks.
– This is sick leave?
– Yes, sick leave. Let us consider also that the employee has not been sick for one day before the bankruptcy. How can it be stated that there is any amount due to that employee in respect of sick leave?
– But if he had been off work sick for one week-
– That is the other question. 1 have taken the case where he has not been sick and away from work. It seems to be agreed that no amount is due. Here we have from the floor of the Committee the answer to a question which I posed to the Minister and which the Minister did not answer. My question related to accruals of sick leave not exhausted by sickness at the time of bankruptcy.
– No obligation.
– The honorable senator said “ No obligation “. In my previous speech I suggested that at any rate there was no obligation to pay salary for the period of accrued sick leave which had not been exhausted by sickness but Senator Cavanagh’s intervention clarifies that to my satisfaction.
– But there may be an obligation in the case of some employees.
– The honorable senator can state his point of view later because I think this deserves a little discussion if only for the purpose of demonstrating to the Attorney-General’s Department the need for a little care in the’ consideration of these matters. Let me now refer to the case mentioned by Senator Cavanagh of a man who, under the award, is entitled to four weeks sick leave and who has accrued some sick leave but who was off duty sick for one week before bankruptcy. It would appear to me to be plain that he is entitled only to eighth priority in respect of the salary for one week, 1 turn now to long service leave and ignore annual leave and recreation leave not taken, in respect of which problems will appear comparable to those which have appeared in relation to sick leave. If I am correct in thinking that many State statutes insist on the principle that the employee should enjoy leave and is entitled to convert it into a cash payment only in the event of death or of wrongful dismissal, then what amount is due for long service leave if he has not entered upon his long service leave at the date of bankruptcy? Remember that the statutes relating to long service leave do accord some right to the employer in his discretion to decide when an employee shall be permitted to commence his long service leave. In other words, if there is provision for three months leave after 20 years service, this does not mean that on the 20th anniversary of commencement of service an employee can put on his hat and say to the employer: “I am going off on my leave now”. There is a discretion still retained to the employer as to whether, having regard to the demands of other employees and the exigencies of business, he shall permit an employee to take leave. Where bankruptcy supervenes in a case such as that, what amount is due to the employee for long service leave at the date of bankruptcy?
– A proportion.
– A proportion. That is the kind of glib thinking that goes on. What amount is due? The employee is not entitled to salary; he is not entitled to money; he is entitled to leave and the payment of salary during leave. Although that leave is not commenced before the date of bankruptcy he may become entitled to it after bankruptcy. These are problems that show the degree of inattention and lack of consideration that were given to the decision disclosed by Senator Cohen whereby, after the Bill was originally introduced, the recommendation of the Clyne Committee was rejected and this loose clause adopted. I hope this Committee will reject the whole clause.
– I want to try to cover some of the points raised by Senator Cavanagh in accordance with the advice given to me by the Attorney-General’s Department which I would like to assure the Senate has not, as Senator Wright suggested, introduced this provision without any consideration or any attempt to cover questions which might arise in relation to long service leave. I am informed that all legislation relating to long service leave provides that an employee is entitled to a payment in lieu of long service leave should he be dismissed after, say, 12 or 15 years service. Under this Bill the date of bankruptcy would be taken as the equivalent of the date of dismissal and the employee would be entitled to the amount of long service leave to which he would have been entitled had he been dismissed.
On the question of the accrual of sick leave, Senator Cavanagh posed two different cases. One was (he case of a man who had been working for, say, a month before bankruptcy. During that month he had worked for three weeks and been sick for one week, the award in this case providing that he was entitled to payment at the full scale for the period while he was away. I am informed by the Attorney-General’s officers that the amount to which he was entitled for the period he was away would be classed as wages due to him under priority 6 so long as it did not exceed the stated limit of $600.
– The wording does not say that.
– The words “sick leave “ mean nothing.
– It does not necessarily follow that the words “ sick leave “ mean nothing because there are other awards, which are different from the one I have just mentioned, which state that a man is entitled to payment for a week if he is away. There are other awards which provide, for example, that if sick leave is not taken, the employee is entitled to some payment at the end of the year, because of the fact that he has not taken sick leave.
– There are many such awards.
– Yes. Senator Wright’s claim that my first point disposes of sick leave is, I think, not correct. Under particular awards, not only is a man entitled to payment in lieu of sick leave at the end of the year, but he is entitled to pro rata payment during the year if he has not taken sick leave. This would be accrued sick leave under the eighth priority, whereas the first case which Senator Cavanagh mentioned would be under the sixth priority. I believe it is reasonable to say that these accrued benefits ought to rank after the wages due to an employee. After all, we are dealing with the estate of a bankrupt. If a man is bankrupt, it is almost certain that his assets will not cover all of his liabilities. He cannot pay off everybody. He might have a number of employees, of whom two or three or one or two have accrued benefits, and they could get those accrued benefits, or part of them, at the expense of other employees who did not have accrued benefits but did have the right to payment for the actual services they had rendered over the weeks before. That is why the priorities are 6et out in that way.
, - Some important problems have been raised by Senator Cavanagh. There is no doubt that difficulty will arise in the application of this clause. That is inescapable. The Committee may think that the difficulty arises not from the drafting of the clause or from any defect in the legislation, but rather from the nature of the field in which the clause will operate. This is an important clause in the Bankruptcy Bill. It provides for the proper disposition, in a reasonable order of priority, of the money of the bankrupt to the various claimants. The claims are dealt with by way of payment of money.
The clause refers to amounts due. If difficulty arises in the application of this clause to various State provisions for sick leave, annual leave, recreation leave and long service leave, it is because of the varying industrial provisions. There are a hundred and one provisions throughout the Commonwealth under State law. State laws differ in the provisions which they make. Various State awards differ. The Commonwealth itself cannot have any uniform scheme in relation to employees in general; it can have a scheme in relation to its own employees. The simple fact is that there are all sorts of provisions. I cannot concede that the problem in connection with the varying industrial provisions could be solved in this bankruptcy legislation.
What has happened is that the people who framed the Bill have said: “ We will provide an order of priority for amounts due. If other people who have responsibility in relation to industrial laws want to do something about this matter, they can. They may make a proper provision as to when amounts will be due and under what circumstances. We cannot solve the conflict in relation to industrial laws under this bankruptcy clause.” That is the source of the trouble, not the provision relating to the amounts due. Senator Wright, who is now smiling, will perhaps agree that not even he, with his undoubted learning and application, would be able to draw up a clause to cover all the situations which would arise under the various industrial provisions now operating throughout the Commonwealth. The provision which is included at least is a reasonably clear one.
It refers to the amounts due. They are either due or they are not due.
– If they are not due, there is no priority.
– Yes, and that is the end of it. If the honorable senator wants to make some further extension to his proposal, he should suggest it. But simply because the clause does not deal with all the cases and all the injustices and because a man says: “ I was nearly due for leave “, or “ Had my State legislation been a little different, something would have been due to me “, that is no reason why we should scrap the whole clause: Where amounts are actually due, why should not they have priority? If a man has become entitled to payment in respect of long service leave, why should he be denied any priority? If there is an amount actually due in respect of sick leave, why should he not be paid?
– Why should the man who supplied the bankrupt with milk not be paid?
– Because there is a difference between the two situations. Senator Wright has put forward an argument which is really directed at scrapping the whole clause. First he put forward an argument that the clause does not go far enough and does not deal with all situations. Now, by way of interjection, he puts forward another argument. He asks: Why should a man who is entitled to payment in respect of long service leave or sick leave have priority over a .man who supplies milk or other things? There is a simple answer to that argument.
The man who is entitled to long service leave or annual leave is entitled to those accruals in respect of his employer, and in most cases the wages, long service leave and sick leave benefits to which he is entitled are often his only source of income. If he is in some way denied those entitlements, then the blow is a blow at his only source of income. Presumably, a man who supplies milk has hundreds of customers. In his instance, it is a rare thing if one of them goes bankrupt. It is a kind of statistical happening to a man in business. It is not the same type of blow which would occur if a person had his whole source of income cut off; if he had moneys that he thought had accrued to him by way of long service leave or something else, entirely taken away from him because of an act which was not his fault. There is a clear distinction between the supplier of goods, such as milk and so on, and a person who is employed by someone who goes bankrupt.
– lt was an interesting experience to hear Senator Murphy contribute his last remarks to the debate. He is grateful for anything that is introduced under this heading. It is quite obvious that he sees that difficulty will arise in relation to beneficiaries who make a claim under this clause. Nevertheless he tries to explain that although the clause is not good enough, it will be accepted and the States can repair it after we pass the Bill. Let us forget the substantial argument. I did not introduce that only by way of interjection; I put it last night and I put it, in substance, again this afternoon. But I preceded it with argument designed to analyse the clause for the purpose of seeing whether or not the people who drafted it had any clear idea of what they were providing. By the process of attrition or analysis we may clarify the clause still further.
Clause 82 provides that all debts and liabilities, present or future, certain or contingent, are provable in bankruptcy, but that demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy. When we come to the clause that deals with the priority of those provable debts - clause 109 - we see that paragraph (f) speaks of “ amounts due “ and paragraph (g) speaks of “ amounts in respect of compensation, being compensation the liability for which accrued”. The paragraph in question uses the words on which Senator Cavanagh put the spotlight, namely, “ amounts due “.
It appears that Senator Murphy plainly admits that, in a multitude of awards in respect of leave and in statutes providing for long service leave, no amount is due at the date of bankruptcy. But he says: “ It is good enough. We will pass it. We will leave it to the States or the tribunals concerned to put their statutes or awards in a form under which amounts will be due at the date of bankruptcy “. That may satisfy some of his colleagues. Most of my colleagues seem to be satisfied with the result one way or the other. So, let it be. My purpose is not to make this provision more ample. My submission is that it should be deleted. If Senator Murphy is content with the draftsmanship that is offered, m the light of the discussion in Committee, I will leave him to the consolation that it gives.
– If Senator Murphy is content in the light of the discussion in Committee, I believe that he is following a perfectly logical and proper course. He indicated that the clause provides for the payment of amounts due and that is reasonable. He pointed out that we could hardly have a clause that provided for the payment of amounts which were almost due or which would have been due if the circumstances had been different. That seems to me to be self-evident. The clause does provide for payment of amounts due. Under some awards amounts might not be due; but to delete this paragraph because of that, as Senator Wright suggests should be done, is to say: “ Under some awards no amount is due; therefore, we will refuse to pay anybody, whether amounts are due to them or not.” I do not think the Committee would accept that.
– I feel somewhat guilty because we were getting along quite well until I raised the question: “ What does this word ‘ due ‘ mean?” I raised it with the intention of defeating Senator Wright’s amendment, which seeks not to give priority to certain payments; but apparently 1 reinforced him in his belief that he was correct in moving his amendment. It was not my intention to do that when I entered the debate. Neither is it my desire to do it now. What has come out of the discussion is the importance of the wording. Both the Minister and the Opposition know what this clause should refer to and what it should mean. We are agreed that, if a man worked for 15 years and, on dismissal, would be entitled to payment in respect of long service leave and any sick leave that had accrued to him, he should receive that payment.
The question is whether that is what the Bill actually says. We are supported in our belief that it is by the fact that the AttorneyGeneral’s Department, through the Minister, says that it is and by the fact that Senator
Murphy says that it is. But that ignores Senator Wright’s legal capabilities of interpretation. We cannot say that because that belief is held by the Attorney-General’s Department it is correct, because the Commonwealth Government has been known to lose court cases. I do not know Senator Murphy’s record. But when he argues a case in court in opposition to Senator Wright, it is the judge on the bench who decides what the Parliament meant when it passed the relevant legislation. So, if there is any possibility of ambiguity it should be eliminated. All of us, except Senator Wright, agree on what we intend the clause to mean. The question that arises is whether or not it means that. Paragraph (f) reads - sixth, in payment of amounts (including amounts payable by way of allowance or reimbursement under a contract of employment or under an award or agreement regulating conditions of employment, but not including amounts in respect of long service leave, annual leave, recreation leave or sick leave) . . .
The amount due at the date of bankruptcy is the norma] wages of the employee. In my opinion, his sick leave entitlement under an award, because he was away sick, cannot be paid under paragraph (f) or be given sixth priority, despite what the AttorneyGeneral’s Department says, because that paragraph contains a complete exclusion of any entitlement to sick leave as a sixth priority. Such an entitlement is an eighth priority. As we understand it, that is not what the Department thinks the paragraph means and that is not what is intended. If Senator Murphy and Senator Wright argue the matter before a judge, it is what the judge says that counts.
On second thoughts, I believe that deep consideration must be given to whether there is not some logic in the proposition that payment to which a man is entitled because he was off sick must come under paragraph (h). I do not see how any other definition can be given. As that is not what we intend, surely the matter should be tidied up now. Senator Wright said that there should be more thorough consideration of matters in the drafting of legislation.
– The legal people from the Attorney-General’s Department reject entirely the honorable senator’s interpretation of the law.
– I accept that; but what I am saying is that this is not only myinterpretation. When this matter was argued before a court an alternative legal viewpoint would be put to the court. If people who wanted to put a legal viewpoint had no alternative but to engage Senator Wright, on the basis of the opinions that he has expressed here his interpretation would be entirely different from that of the Attorney-General’s Department.
– He is likely to be 50 per cent, wrong in any case just as is any other lawyer.
– He might be 90 per cent, wrong, but we are concerned that the entitlement of employees is at stake on this occasion and it may be the one occasion when Senator Wright could be legally right. Therefore I believe that greater consideration should be given to the wording. As we on this side of the chamber are happy about the position, I only hope that the Attorney-General’s Department is right in its interpretation when these points are argued before the courts.
.- I rise only to make one observation in respect of paragraph (k) of sub-clause (1.). There, priority of payment is to be given in favour of any creditor or group of creditors as a general meeting of creditors so decides by special resolution. That could give unusual powers to three-quarters of the creditors in value and might create an injustice to a minority, but sub-clause (5.) enables the bankrupt or a creditor to go to the court to reverse or vary the decision of the creditors.I mention that only because there is no such provision in clause 116 for reviewing resolutions by creditors.
Clause, as amended, agreed to.
Clause 110 agreed to.
Clause 111 (Postponement of spouse’s claims).
.- I feel an inferiority complex, having regard to the prevailing flood of wisdom, but I point out that the Committee has just passed a clause giving the wife of a bankrupt priority for payment for services rendered to her bankrupt husband at any time when a debt accrues. Clause 111 provides that any money or other property of the wife lent or made available to her husband shall be treated as part of the bankrupt’s estate and that she shall not receive any dividend in respect of it until after ail other creditors have been paid. The thinking of the Bill is just cranky.
– I am sure that the thinking behind that provision is that in one case the wife is an employee who has money owing to her for services rendered, and in the other case she is a lender of money or a provider of property to her husband. If we wish, as we do, to provide priority for the employees who have rendered service and who have not been paid, it would be silly to exclude the wife from the provision relating to an employee even though the money or property she had lent was part of the family estate.
Clause agreed to.
Clauses 112 to 115 - by leave - taken together, and agreed to.
Clause 116. (1.) Subject to this Act-
any right of the bankrupt to recover damages or compensation -
.- I wish to draw attention to paragraph (g) of sub-clause (2.), which provides that property divisible among the creditors of a bankrupt does not extend to any right of the bankrupt to recover damages or compensation -
So, such damages or compensation are not part of the property divisible among the creditors, whether they have been recovered before or after the bankruptcy. This raises a question which is somewhat novel. The exclusion of this type of right to compensation is, I think, new.If a bankrupt is entitled to compensation in respect of the death of a member of his family, he is entitled to it not as a solatium for bereavement and not for any personal suffering that he might have sustained, but purely as recompense for the economic value of the deceased member of the family. The law takes the view that loss of human life is not compensable in money. It is only in respect of its economic value that it is compensable. I would like to hear the Minister’s argument as to why the compensation is for an economic right of that sort. Suppose compensation is not for the death of a member of a family, but for what we commonly refer to as personal injuries. Let us take the case of a leading engineer who suffers disablement in a car accident three months before bankruptcy and suppose that if he had not suffered that accident he would have gone on earning £5,000 a year for the next 20 years: It can be presumed that had bankruptcy not supervened, his creditors would have been paid out of such amount as that earning capacity would have provided. But he suffers the accident and he loses the amenities of life. It is a serious and disabling accident and, quite properly, any amount that is attributed to the loss of the amenities of life and his own personal pain and suffering can be reckoned as part of the claim for compensation, but only part. In the case I have put the major part of his compensation would be that attributable to loss of future economic earnings. If a man of 30 years and of high status in engineering life is disabled he might be awarded £60,000 in compensation. It may be £20,000 for pain and suffering and loss of amenities of life and £40,000 for loss of future economic earnings. He gets a verdict in that amount three months before bankruptcy and it appears that he has creditors for £20,000. He invests the £40,000 and it is not available to the creditors, as I understand it. Whereas, if he became bankrupt and that accident occurred to him after bankruptcy - say 20 years afterwards - he would have earned the money for which the £40,000 is compensation and either invested the surplus or made it available to creditors. I have difficulty in seeing how any compensation for economic loss in the case of death of a member of the family or, in the case of disablement, for loss of earning capacity, should be put beyond the reach of creditors.
– The question is one of compensation which might be payable to a bankrupt for personal injury or wrong done to the bankrupt or his wife or a member of his family. This damage having been done, the bankrupt has the right to claim damages and the act can be done whether before or after he becomes a bankrupt. Senator Wright believes that money payable in damages as a result of personal injury suffered by the bankrupt ought to be available for distribution among the creditors of the bankrupt as part of the bankrupt’s assets. We believe that a bankrupt may well have suffered some serious personal wrong or some serious injury which in the extreme might lead to payment of recompense of the amount suggested by Senator Wright. He mentioned £60,000. The Committee should have in mind that the injury might lead to a payment of £5,000, £10,000 or £12,000. It is not to be taken that all of these payments would be in the vicinity of £60,000. In the sort of case that Senator Wright mentioned in the second reading debate, the payment would be made because a man was unable as a result of the hurt or the wrong to maintain himself by working in the normal way. The compensation isto keep him from being a charge on the community because he is unable, as a result of the wrong, to earn in the future. It would appear to us to be wrong to take away from him the money awarded - I presume as a result of a trial by jury or by a judge - to compensate him for personal damage and to take care of him in the future, because his creditors have a claim upon him for what he did in the past. This may well be a matter of opinion, but this is the opinion that we express.
.- In reply, I point out that the expression “ personal injury “ occurs only in paragraph (g) (i).
– The sub-clause covers such matters as claims on behalf of widows and children.
– Yes, but it also covers a husband’s claim for the death of a child or a wife. It covers a widow’s claim, where she has creditors and becomes bankrupt.
Sitting suspended from 5.45 to 8 p.m.
– Prior to the suspension of the sitting I was addressing the Committee on clause 116 (2.) (g) which contains the words -
for personal injury or wrong done to the bankrupt, the spouse of the bankrupt or a member of the family of the bankrupt; or
That right to cover damages or compensation is excluded from the moneys available for distribution amongst creditors. I wish to add certain words to the end of that paragraph. I move -
In sub-clause (2.), paragraph (g), after “person; “, add the following words - “ but this paragraph shall not be construed to exclude from the property of the bankrupt any damages or compensation for any economic or property injury or wrong; “.
I do so for reasons which I will briefly state.
– You have moved the first part of the intended amendment?
– I have moved in the language that I read from the typewritten draft circulated.
– The one I am referring to is in respect of paragraph (d).
– I am referring to my amendment No. 7 on page 2 of my list of amendments.
– I would like to point out that you have not moved amendment No. 6.
– That is so. Before the suspension of the sitting, we had gone on to a discussion of this clause. The clause is being put as a whole. Therefore the Committee had already debated, for some 20 minutes before the suspension of the sitting, the particular paragraph to which I was addressing my attention. I would suggest that I meet the convenience of the Committee by allowing that debate to proceed to a conclusion and then deal with the preceding paragraph. If I could recount the theme that I was putting to the Committee, I was trying to say that the Minister for Works (Senator Gorton) had been good enough to explain to us that the subject of this paragraph in the Bill was damages or compensation for personal injury or wrong. I had pointed out that that expression existed only in one sub-paragraph and does not exist in the second sub-paragraph.
I submit that it is quite clear that in many cases there will be excluded from the moneys distributable among creditors of the bankrupt compensation that has been recovered by the bankrupt before bankruptcy or is recoverable by the bankrupt at the commencement of the bankruptcy by way of damages or compensation for economic wrong. I think I am at one with the Minister in thinking that in the ordinary case of accident liability, where a person suffers bodily injury or death, the whole of the recovery in that case is referred to as compensation or damages for personal injury. One may recover damages also for damageto property. But the whole of the compensation for incapacity is recoverable under the language of most of traffic legislation and of motor insurance policies under the description of “ personal injury.” I submit that that expression is not sufficent to exclude the moneys recoverable for economic loss.
I would like the Minister to give to the Committee a list of those injuries or wrongs which he considers come within the description of personal injury. For instance, suppose that there is a claim for compensation for seduction. That originally arose out of a proprietary notion. But one would have thought that, in ordinary outlook today, it would be considered as personal injury. Consider damages that are recoverable from a co-respondent in divorce: Is that the sort of thing being excluded from the property distributable among creditors? I wish to make this clear by adding to the paragraph as printed the words in my amendment -
But this paragraph shall not be construed to exclude from the property of the bankrupt any damages or compensation for any economic or property injury or wrong.
– I think I should endeavour to answer the points raised by Senator Wright. The Bill, and the way it is expressed, is in line with the recommendations -of the Clyne Committee. I am told that section 63 (3.) of the present Act is along the same lines in excluding actions for injury or wrong done to the bankrupt or because of the death of his spouse. I do. not know of any decisions which I could cite to Senator Wright as to how that section has been construed. But that is the provision in the exist ing Act and these provisions are those recommended by the Clyne Committee.
.- I feel that Senator Wright has an argument on this point. Until now, I think that possibly the minds of most honorable senators have been directed towards the personal injury aspect of damages. The case set out by Senator Wright indicates to me that this aspect can have a much broader impact than the legislation indicates to us. I think that in a bill such as this the matter of the rights of creditors is as paramount as anything else. From the way that Senator Wright has put the situation I am in accord with his view on this matter.
.- I draw the attention of the Committee to paragraph (f) of clause 116, and I refer also to paragraphs (d) and (e). The clause excludes from the divisible property of the bankrupt -
It also excludes -
I refer in particular to paragraph (d), where the criterion of exclusion is two years before the commencement of the bankruptcy. If policies have been taken out more than two years before the date of the bankruptcy, they are absolutely excluded. If they have been taken out within that period, they are absolutely included. With all respect to those who think otherwise, I suggest that it is much more equitable to give the exclusion to policies generally, except insofar as the moneys of the bankrupt have been spent to maintain them over a period of either two years or five years - whichever you prefer - before the bankruptcy. A period of two years is provided in the current Act. I move -
In sub-clause (2.), leave out paragraphs (d) and (e), insert the following paragraph: - “ (d) policies of life assurance or endowment in respect of his own life or the life of his spouse except to the extent of a charge on the policies in respect of the amount of premiums paid on the policies during the S years next preceding the date of the petition; “.
I have adopted a period of five years. There is something arbitrary about the choice of two years. If a newly married man takes out a life policy for £5,000 18 months before he becomes bankrupt, if he pays a premium of £150, and if he then meets with a car accident and is killed and no compensation can be recovered, a sum of £5,000 accrues under that policy. Under the provision in the Bill, the whole of that sum would go to the creditors, whereas under the existing provision in the Act a sum of only £150 which he had spent to maintain that policy would go to the creditors.
For more than a century life assurance has been regarded as a means of saving and thrift whereby people may provide for accidents to their family or the death of the breadwinner. That is why traditionally such policies have been excluded from bankruptcy. To my mind, there is an arbitrariness about choosing a period of two years as the criterion for protection in the one case and in the other case of forfeiture of the proceeds to the creditors. I submit that there is no warrant for rejecting the old principle and substituting the new. This is a matter where principles of thrift investment and family protection are invoked. Anybody who has an interest in this purpose has a right and a duty to express himself.
– I have here a note which states that a life assurance policy which is held by a bankrupt is property which, in the absence of a special provision to the contrary, would pass to the trustee in bankruptcy. The trustee would be under a duty to surrender the policy and to pay the proceeds to the creditors. That is what the situation would be if there were no provision to the contrary either of the sort I am suggesting or of the sort that Senator Wright is suggesting. The Bill provides that policies of certain classes, that is whole of life and endowment policies, which have been in force for a certain time - two years in the case of life assurance policies and five years in the case of endowment policies - shall not pass to the trustee for the benefit of the creditors. If a whole of life policy or an endowment policy in which respectively the amount is payable on the death of the assured or upon reaching a specified age, whichever is the earlier, had been in force for more than two years prior to the date of the bankruptcy, that policy would not pass to the trustee. If it had been in force for less than this period, the policy would pass to the trustee, who would surrender it for the benefit of the creditors. This is one case quoted by Senator Wright in which this could happen.
– Is the Minister stating the effect of the Bill?
– Yes. If a policy of pure endowment, which is a special kind of endowment policy, has been in force for more than five years prior to the date of the bankruptcy, it similarly is protected. But if it has been in force for less than this period, then under the Bill as it stands it would pass to the trustee. Senator Wright’s amendment seeks to delete these provisions and to substitute a different one. The effect of his amendment would be that no whole of life or endowment policy held by a bankrupt would pass to the trustee and that the creditors would be entitled to a charge on the policy only in respect of the premiums paid during the five years preceding the bankruptcy. This would mean that the bankrupt would be entitled to keep his policy intact; it would not have to be surrendered even if it had been in force for only a year. So the creditors would not get anything until the policy matured on the death of the life assured or upon attainment of a specified age.
The objection to a provision on the lines suggested by Senator Wright, which is substantially the same as the existing law except that the existing law makes provision for a charge of only two years’ premiums, is that a person, seeing he is likely to become bankrupt, may take out a policy and pay large amounts in premiums and the creditors may not be able to get at that money until the policy matures. The advantage of the provision in the Bill is that a policy recently taken out must be surrendered and the surrender value becomes part of the bankrupt’s estate. If a person saw that he was going bankrupt and took out a large life assurance policy and paid a very large premium on it, probably after quite a short time that policy would have a surrender value; but that surrender value would not be required to go into the bankrupt’s estate. That means that at least part of the money paid in premiums, depending on the surrender value, would be dealt with in that way. On the other hand, a policy which had been in existence for some time before the date of the bankruptcy, and which clearly was a genuine policy and not one taken out simply to divert moneys from creditors in the event of bankruptcy, would be completely protected by the provision in the Bill and the whole benefit of the policy would remain available for the bankrupt or his beneficiaries. The Bill seeks to protect the genuine policy but not to protect a policy taken out just prior to a looming bankruptcy.
As against those advantages which we see in the Bill as it stands, we can see an advantage in Senator Wright’s amendment; but we do not think that it counterweighs the advantage in the Bill. From Senator Wright’s amendment it would follow that a policy taken out shortly before a bankruptcy would be allowed to run, subject to the charge that he suggests. The proceeds of that policy, subject to that charge, would be available at the date of maturity to the bankrupt or his beneficiary. We believe the advantages in the Bill outweigh the advantage suggested by Senator Wright, and that advantage if accepted would wipe out the greater advantages that the Bill gives.
What we seek is a compromise between the bankrupt’s family, for whose benefit a genuine policy is generally taken out, and the interests of the creditors to see that in fact the policy that was taken out is genuine. That is the compromise which the Bill seeks to ensure. It was a compromise recommended by the Clyne Committee and we believe it to be the best compromise we could reach.
.- I submit that the fallacy of the argument advanced by the Minister is that he stigmatises all policies taken out within two years of bankruptcy as not genuine. Secondly, he based his whole argument on the application of his views to large policies involving large premiums. I am offering an argument in favour of the policy that is genuinely taken out within the two year period so that the family will be protected by the proceeds of that policy. At the same time, my proposal offers to the creditors all that to which they are entitled. The bankrupt has invested in the policy as a matter of thrift and protection for the family, but under my proposal, the family would get the proceeds of the policy if death should overtake the bankrupt within a short sequence, and the creditors would get recovery of the premiums that had been paid on it.
– For five years.
– Yes, for five years. There is no question about the creditors having to wait for the maturity of the policy before they recovered that charge. I have not yet seen a policy which, at the end of five years, was not worth something more than the aggregate of the five years premiums, and there is ample provision in the Bill for creditors to enforce any charge that they had. They would have a charge on the policy and would not have to wait until the policy matured. But no doubt the family, or some of the friends of the family, if they saw wisdom in maintaining a policy as continuing protection for the family, would arrange for a loan to repay the creditors the premiums and then would continue the policy.
I do suggest that great injustice could be done from the assumption that all policies taken out two years before the bankruptcy would not be genuine. There is great fallacy in the argument also if it is applied only to large policies and large premiums. The case that the Minister has put b a useful illustration of some instances that might occur, but it certainly does not illuminate justice in the case in which the policy is one for £5,000 or £10,000 and is taken out by an ordinary small trader whose family is entitled to the protection of the policy. Since 1870 or 1880, life assurance has been regarded as a matter to be protected specially for the benefit of the family and I submit that it should not be determined by the arbitrary limit of two years. Further, I would think that if there was a policy that was not genuine, and if it were taken out for a large amount more than two years before the bankruptcy, the payment of the premiums, if done within the period stated in the old sections 95 and 96, would be in effect the disposal of property with intent to defeat creditors. Therefore, the payment itself could be void. Notwithstanding these provisions, I would think there is reasonable ground to recover the property constituted by that payment; but you do not have to invoke that argument so long as you have a charge on the policy for the premiums and thus preserve to the creditors everything to which they are entitled.
I submit that it is quite an affront to justice to say that in the case of a genuine policy taken out within two years, the creditors should take the benefit of the proceeds of the policy and not merely a refund of the premiums, and that the family should be deprived of the whole of the proceeds of the policy. I say that in deference to what the Minister has said and in reply to him.
– I would simply like to say that I do not believe it is a true expression of the arguments I put to the Committee to suggest that I said that every large policy that was taken out must be not a genuine policy. What I did say was that a policy that had been in force for a period of more than five years before the bankruptcy was most likely to be a genuine policy. I said that it was possible - I did not say that this was so in every case - that a man seeing bankruptcy coming close to him could take out a large policy for the purpose of taking care of himself and his family at the expense of his creditors. 1 do not believe it is good enough for honorable senators to be told in response to that argument that a particular senator thought there would be an argument for the recovery of this money. That is not a good enough basis when we are considering these laws.
I point out that the law as it is expressed in the Bill follows the existing proposals in the law, and that it is unlikely that the members of the Clyne Committee who recommended this after considering the interests of both creditors and the possible bankrupt, would have made recommendations which could properly be described as an affront to justice. After all, look at the personnel of the Clyne Committee which made these recommendations. The Chairman was Sir Thomas Clyne, Federal Judge in Bankruptcy. The members were Mr. J. Q. Ewens, Commonwealth Parliamentary Draftsman; Mr. S. T. Jaques, Acting Inspector-General in Bankruptcy; Mr. C. A. Law, chartered accountant; Mr. D. L. Roberts, appointed on the nomination of the Associated Chambers of Commerce of Australia; Mr. H. N. Wardle, appointed on the nomination of the Law Council of Australia, and Mr. N. S. Young, chartered accountant. This follows the recommendation put down by the Committee.
Clause agreed to.
Clauses 117 to 138 - by leave - taken together, and agreed to.
Clause 139. (3.) Where a trustee of the estate of a bankrupt carries on a business previously carried on by tha bankrupt, he is not personally liable for any payment in respect of long service leave for which the bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt, or the legal personal representative of such a person, becomes entitled after the date of the bankruptcy.
– I should like to have some information on the provisions of clause 139. Paragraph (2.) states -
The trustee is not personally liable for any rates, land tax or municipal or other statutory charges imposed by or under a law of the Commonwealth or of a State or Territory of the Commonwealth , . . except to the extent, if any, of the rents and profits received by the trustee in respect of that property on or after the date of the bankruptcy.
The trustee is not responsible unless he is receiving a return from the property in the form of profits. If he is receiving such a return, he is responsible for payment of the rates and taxes. Sub-clause (3.) provides -
Where a trustee of the estate of a bankrupt carries on a business previously carried on by the bankrupt, he is not personally liable . . .
The trustee must carry on a business. 1 would think that a trustee would be appointed to carry on a business because of a belief that a profitable return could be gained from that business. Sub-clause (3.) continues - . . for any payment in respect of long service leave for which the bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt, or the legal personal representative of such a person, becomes entitled after the date of the bankruptcy.
I shall take it piece by piece. If a trustee is carrying on the business of a bankrupt, it would be returning income or profit, we can assume. Why should the trustee not be liable for payment of long service leave that has accrued to an employee, and which the employee would not be paid under the provisions of clause 109 because the payment was not due at the date of the bankruptcy? If it is right for the trustee to pay rates and taxes when he is receiving rents or profits from the business, why is it not right to pay the employees of the business the long service leave to which they have become entitled?
– The Bill does not say that.
– Yes, it does.
– The clause states “ not personally liable “.
– The clause does not say that the business is not liable.
– That is the whole point. Why should the trustee not be personally responsible as the manager of the business, just as an employer is responsible for the payment of long service leave? A trustee becomes personally responsible for the payment of rates and taxes when he is receiving rent or profits from the business. It is not intended that a trustee should accept responsibility to pay rates and taxes out of his own pocket. Irrespective of whether a trustee decides to wind up or carry on a business, he must take into consideration what is his responsibility. If he carries on a business as an administrator, why should he not be responsible for the entitlements of the working man, when he is receiving a return from the business and incurs personal responsibility for payment of rates and taxes?
Sub-clause (3.) goes further than that. It states that a trustee is not personally liable for any payment in respect of long service leave for which the bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt, or the legal personal representative of such a person, becomes entitled after the date of the bankruptcy. An employee of a business may establish the major part of his entitlement to long service leave when the business is conducted by a trustee, and not by the bankrupt. But the trustee is not responsible for payment of that long service leave. Unfortunately, the Opposition has not offered an amendment to this clause. It appears to me to place employees at an unfair disadvantage. Although a trustee is personally responsible for payment of rates and taxes when he is receiving a return or profit from the business, he is not personally responsible for payment of long service leave.
– I think the two cases referred to by Senator Cavanagh are completely different. A trustee is not personally liable for payment of rates and taxes, or municipal rates, except to the extent to which rents or profits come into the estate of the bankrupt for whom he is trustee.
– That is by virtue only of the provisions of this Bill.
– I am talking about this Bill. We are all talking about this Bill. A trustee is not personally responsible for payment of any rates or taxes in excess of the returns which come into the estate. He would be responsible for seeing that any rents or profits coming into the estate were used to carry on the business by the payment of rates, taxes and by payment for any other requirements of a business or farm, or whatever the case may be, so that the business may continue in existence to seek to make money to pay off the creditors in accordance with the priorities of clause 109.
In the case of long service leave, an estate which receives a profit is liable to pay off creditors in accordance with the priorities set out in clause 109, which we have discussed, then to pay the money due to employees who have given their services and have not been paid, and then to pay for long service leave, sick leave and so on. A trustee carrying on a business which is earning a profit must pay off the creditors according to the priorities laid down in clause 109, but he could not be held to be personally liable for any payment in respect of long service leave for which the bankrupt was liable. The honorable senator will notice that the clause states that point. A trustee cannot be held personally responsible for such payments.
So far, I have stated what I am sure are the facts. I will now say what I think is the position. Senator Cavanagh suggested that a man might be employed by a trustee and have long service leave entitlement accruing to him, or some entitlement of that kind, because of his employment by the trustee. That position would not be affected by this clause. Clause 139 refers to long service leave for which the bankrupt was responsible at the time of his bankruptcy. The trustee is not personally liable for that payment, any more than he is personally responsible for any of the other payments.
– What is meant by the latter portion of sub-clause (3.)? It states that a trustee is not personally liable for any payment in respect of long service leave to a person employed by him in his capacity as trustee of the estate of the bankrupt.
– I should like to discuss that point with my advisers. I have expressed what I thought was the correct view.
.- I should like to intervene in the debate because I think the point that has been raised relates not only to long service leave but also to the interests of municipal authorities. Nowadays, subdivisional charges are very high. A subdivider incurs huge expenses, sometimes through municipal authorities. Sub-clause (2.) provides -
The trustee is not personally liable for any rates, land tax or municipal or other statutory charges imposed by or under a law of the Commonwealth or of a State or Territory of the
Commonwealth upon or in respect of property forming part of the estate of the bankrupt, being rates, land tax or municipal or other statutory charges that fall due on or after the date of the bankruptcy, except to the extent, if any, of the rents and profits received by the trustee in respect of that property on or after the date of the bankruptcy.
We were told that these rates and charges were not given a rating in the priorities for payment because they are secured debts. Here we have the situation where rates may have remained unrecovered; the trustee may delay realisation for two years; three months after bankruptcy streets may be completed and water and sewerage may be connected under contracts that the bankrupt made 12 months before bankruptcy. The trustee is not to be personally liable except to the extent of the rents and profits that he receives in respect of that property on or after the date of the bankruptcy. In that case what is the difference between rents and profits and sales realised? We must remember that on the supervention of bankruptcy the property automatically vests in the trustee and becomes the trustee’s property. I should like to hear the Minister’s explanation of that.
With regard to the long service leave aspect, this paragraph obviously has been inserted to nullify the provisions of State statutes which provide that on transmission of businesses the transmittee carries the liability for long service leave. When the trustee of a bankrupt takes over, he will look at the business and say: “ I will carry on the business “ or “ I will realise the business.” If he says: “I will realise the business “ he employs no-one. Then these people who had hoped for long service leave will be relegated to such priorities as were enumerated in the paragraph we discussed this afternoon. But if the trustee says: “ I will carry on the business “ what is there to give him a special privilege outside the class of general transmittees which relieves him of the liability of continuing long service leave accruals which are provided for in State statutes? I put that point of view because it has been raised before us. I should like my mind satisfied upon both questions.
– I have gathered from my advisers that the point raised by Senator Cavanagh is substantially correct. A trustee is not personalty responsible for any long service leave for which a bankrupt was liable nor is a trustee responsible for any long service leave which may accrue to someone working for him after the date of the bankruptcy. The trustee is not personally responsible because he is not carrying on the business for profit. Indeed, he cannot make any profit from the business. He is carrying it on purely in the interests of the creditors. He is endeavouring to put the bankrupt estate into a position where it will be able to pay to creditors all debts which existed at the date of bankruptcy.
.- This is unheard of. The time arrives when the trustee has to decide whether he will wind up the business or whether he will carry it on. For what reason does he carry on the business?
– For the benefit of the creditors.
– He will make a profit and will get satisfaction for the creditors but in doing so he exploits someone who does not receive the benefit of the award conditions for the work he is doing.
– The honorable senator should put his argument on the basis that the trustee is carrying on the business for profit and should carry ordinary business liabilities.
– The business is liable for long service leave. There is no personal responsibility.
– One would never get a trustee to take on the job if there were personal responsibility.
– We accept that the business is responsible for it, but what is the business? Who is head of the business? If the business is carried on, where in this Bill is there provision for the employee to qualify for long service leave if he had not already qualified at the date of bankruptcy? There is no provision whereby he qualifies, so he could work for 10 or 15 years in a business carried on by a trustee without having any rights to long service leave as provided in State legislation.
– He would qualify under the State Act.
– Surely the Federal Act supersedes the State Act.
– Not in that case.
– The Constitution says it does but Senator Morris says it does not.
– No, I do not say that.
– The Federal Act must supersede the State Act, and while the State Act makes provision-
– A Federal Act does not supersede a State Act in a different field. That is the point I am trying to make.
– No, but in this case both are in the field of long service leave. There is a State Act relating to long service leave and there is a Federal Act relating to long service leave but the Federal Act provides that an employee will be deprived of the benefit of the State Act because he is working for the trustee of a bankrupt estate. The business is carried on to make a profit to satisfy the creditors.
– Not necessarily.
– That is what the Minister said. He used the words “ to satisfy the creditors “. The creditors would get the preference provided in the clause, but the profit is being made with the assistance of workers who do not qualify because they had no long service leave due at the date ot bankruptcy. Having nothing due at the date of bankruptcy, they do not qualify for the ordinary benefits contained in State legislation although they are making a profit to repay someone else. I submit this procedure is wrong.
If there are reservations in the form of rates and taxes limited to the income earned by continuing the business, surely the first consideration should be given to the men who are contributing to the earning of that profit, men who have entitlements under State legislation. The Bill before us takes their rights away completely. Obviously there is something wrong in this clause. The business is carried on and a profit is made which will benefit employee A who had entitlement at the date of bankruptcy which gave him sixth preference on wages or eighth preference on long service leave, but employee. B, who did not start in the business as early as did employee A, has to contribute towards the earning of that profit without receiving the entitlement received by employee A. This anomaly needs to be rectified. It is unfortunate that the Opposition has not an amendment to this particular clause because it creates an injustice to the employee.
I would mention, in relation to Senator Manner’s earlier interjection, that the trustee is personally responsible for rates and taxes.
– To the extent that he collects.
– To the extent that he collects, and therefore he is accepted as the administrator, the man to be sued, the man with a body to be kicked or a soul to be damned when employee A submits his claim. But employee B is in a completely different category. He assists the trustee to carry on the business and make a profit but he has no entitlement similar to that of employee A. I do not think the trustee can be exempted by the words “ personally responsible “. He is the one who made the decision, at a meeting of creditors, to carry on the business or to wind it up. Having seen all the liabilities, he decides that there will be so much due to Jones in three years for long service leave. At that point he has to decide whether he will carry on. If he accepts the responsibility of carrying on, he should be made liable for the benefits to which his workmen are normally entitled under awards of the court.
Senator MATTNER (South Australia; [8.51]. - 1 would not have entered the debate except for two matters that have been raised. I think I can agree with Senator Cavanagh on one or two points. We come to the point at which a man is bankrupt. Senator Cavanagh would say that at that point of time the business has ceased. The creditors appoint a receiver. It is then decided whether the business is to be carried on or whether it is to be disposed of.
– If it is carried on, it could not have ceased.
– I will not be led astray. The business is carried on, as Senator Wright says, under new management.
– Senator Cavanagh said that.
– If I understood Senator Wright correctly, he said that the business is carried on under management.
– I said under new ownership.
– Very well, under new ownership. The trustee is responsible for the men’s wages. Senator Cavanagh would have us believe that he is not responsible for paying the ordinary wages of the men. The honorable senator is referring to the question of superannuation. The business is carried on with the idea of making a profit or being able to protect the interests of the creditors. Up to the point at which the business is closed, as Senator Cavanagh said, a man may have had some entitlement to long service leave. The Bill covers that point. It sets out the order in which settlement is to be made. From that point of time when the trustee carries on or takes charge of the business, a man is employed under what we might call new ownership. Naturally any entitlement he might have from that point of time onwards would be taken into consideration, but up to the point of time when the trustee takes charge, his superannuation is set aside, as it we:e. He knows that is a claim on the estate. This matter is set out in the Bill. How can Senator Cavanagh say that the new trustee is liable for superannuation that has accrued up to the time when he takes charge? It is already a charge on the estate. I would agree with Senator Cavanagh up to that point, but from the point of time when the trustee begins to carry on the business until it is wound up, perhaps he is liable for superannuation that accrues in that period. But he is not to be charged for everything that has happened up to the time when the business went bankrupt and he was appointed the trustee.
.- I think that we should understand that the provisions in clause 139, to which Senator Cavanagh has drawn attention, are entirely new. They have no parallel in the existing legislation. The present section 111 seems to me to be a parallel provision to subclause (1.) of clause 139. Sub-clause (2.) of clause 139 has the support of a recommendation from the Clyne Committee. The report of that Committee states -
The Committee recommends that a trustee should not be personally liable for any such rates, land tax or municipal or other statutory charges that fall due on or after the date of the bankruptcy, except to the extent, if any, of the rents and profits received by the trustee in respect of that property on or after the date of the bankruptcy.
I accord great respect to that recommendation, but it does seem to me that the Committee had in mind only revenue relating to rates and charges. It did not have in mind capital charges relating to sewerage, road and sub-divisional charges that may have been incurred at the instance of the local authority. The local authority would have a charge on the land, and under State authority, that charge would take priority before even a secured mortgage. Therefore, local authorities can protect themselves, even if sub-clause (2.) of clause 139 of the Bill remains as it is. But the Clyne Committee did not recommend the provision which is contained in sub-clause (3.) of clause 139. If the trustee of an estate is in a position where he carries on the business of a bankrupt, he does so because he thinks that he can, out of the profits from carrying on the business, pay off the liabilities, or by husbanding the goodwill of the business in association with the value of the undertaking, improve the return to the creditors by a capital profit. He is in it for the profit.
– Not to himself.
– Of course not to himself. Being a good trustee, he is in it for his beneficiaries.
– Then Why should there be personal liability?
– Just a minute. Do not tread on my heels so much. If he were to incorporate the business in a company, he would have no personal liability. The company would have liability. But let us suppose that this was an ordinary business and the benefactors, such as those who have been interjecting in the last few minutes, said: “ We have a business that is worth £100,000. We want you to run it for the Salvation Army. We want you to transfer it to trustees of integrity. We will select A and B.” Suppose that A and B say: “ Yes, this is a good thing. We will carry on the business for the Salvation Army for an indefinite period.” A and B, being very good trustees, certainly accept personal liability for rates and taxes accruing after ownership is vested in them. They do so because they are confident that out of the assets entrusted to them they will be able to discharge the rates and taxes. I am instancing the situation in which ordinary individuals cannot claim the protection of the Commonwealth draftsmen, who will protect the Commonwealth functionaries simply because a trustee in bankruptcy has a Commonwealth origin. The trustees who took over the business for the Salvation Army would become transmittees under State legislation dealing with long service leave and would be personally liable for long service leave accruals, so long as they carried on the business.
I thought that Senator Cavanagh’s rejoinder was well made. He said that in the case of a bankruptcy, where the trustee decides to carry on the business, the business does not cease but continues. When I refer to the transmittees of the business, I include those who purchased the business, those who took it on lease and those in whom it is vested by the operation of law, whether it be by bankruptcy or death or any other method of transmitting the business. There may be some aspects arising out of the duties of a trustee in bankruptcy that make it peculiarly proper for him to be exempted from this obligation.
All that I rose to point out is that in relation to rates the clause has the support of the Clyne Committee; but in relation to long service leave there is no recommendation of the Clyne Committee to the effect of sub-clause (3.). Each of the subclauses puts the trustee in bankruptcy in a different position from that of a trustee who takes over a business in the ordinary course of business. I believe that we should know the circumstances that justify the distinction between a trustee in bankruptcy continuing a business and an ordinary trustee continuing a business, in respect of both rates and long service leave. I am simply seeking to be satisfied. I am offering no definite view one way or the other.
– I advert again to the matter that is worrying Senator Cavanagh. I take it that he believes that there should be a personal responsibility on the part of the trustee for any long service leave that might accrue to an employee who works for the estate after the bankruptcy occurs and after the trustee takes over. The first thing that I say about that point is that the employee in such a circumstance is no more precluded from receiving his long service leave entitlement than from receiving wages during the time that he is working for the business that is being carried on.
– Why is he not? He receives his wages.
– 1 just said that he is no more precluded from receiving his long service leave than from receiving his wages. He receives them from the business. The business, if it makes money after going bankrupt, is responsible for paying an employee’s wages while he is working for it. It is also responsible for any other amenities to which he is entitled, such as long service leave. The State law is the decider as lo when a man becomes entitled to long service leave after he begins to work for such a business. He would have to receive such payments just as he would have to receive his wages; and, as the Bill is drawn, he would have to receive them from the business itself and not from the personal funds of a trustee who was put in to run the business.
I point out to Senator Cavanagh that clause 134 (1.) indicates the things that a trustee may do. The honorable senator will see that a trustee may sell the property of the bankrupt or he may carry on the business of the bankrupt so far as may be necessary for its beneficial disposal or winding up. If the trustee believes that it will be beneficial to carry on the business because property values will rise or because it will be able to weather the difficulties, make a profit and pay off all the creditors, including the employees who previously have not been paid and the employees who previously were due for long service leave and so on, then he can carry it on until such time as it can be wound up beneficially. Obviously, it is of great benefit to all of those creditors that the business be carried on until it is able to discharge the debts which are owing and which it would never be able to discharge if it just went into immediate forced sale or liquidation.
In my view, we would not get trustees to act for the benefit of all concerned if they were to have hanging over them all the time the risk that they would be personally responsible for the payment of debts out of funds which they accumulated in their own right and which had nothing to do with the particular business. Of course, they would be held responsible for payments out of any profits that they made from the business.
– The business retains the responsibility for wages and long service leave.
– The business itself - not the trustee personally - is responsible for the payment of wages and other debts, according to whatever State law lays down.
.- I persist with a point that Senator Cavanagh raised, lt seems to me that his inquiries and questions have elicited from the Minister the view that only the personal liability of the trustee is in issue here. A side note says that the clause deals with the protection of trustees from personal liability in certain cases. As I understand the Minister, his construction of this clause is that there would remain in the estate of the bankrupt a liability for payments in lieu of long service leave and so on in the same way as there would be a liability for wages. This argument has become somewhat circumlocutory. I suggest to the Minister that a simple amendment would clear the matter up and spell out what he has just indicated. Therefore, I move -
At end of sub-clause (3.), add the following words: - “ Provided that this sub-section shall not operate to relieve the estate of the bankrupt from any such liability “.
It may be said that that is merely spelling out the construction that the Minister has given to the sub-clause. However, I have discussed this matter with Senator Cavanagh. He remains unsatisfied about the extent to which a workman continuing in the business of a bankrupt that is being carried on by a trustee may look to the estate for his entitlement, whether by way of wages or by way of long service leave. To my mind, sub-clause (3.) spells out that there is an entitlement, but it does not spell out from whom there is an entitlement. I believe that the matter could be put right in a very simple way - by the Minister’s agreeing to accept the amendment that I have moved.
.- I dispute the efficacy of Senator Cohen’s amendment. Perhaps the first thing that I ought to say at this stage of the debate is that I dispute the accuracy of the Minister’s statement that this clause does not preclude the long service leave liability any more than it precludes the wages liability. I submit that where the trustee in bankruptcy carries on the business of the bankrupt he will be personally liable for all wages that are earned from the date of the bankruptcy until he ceases the business or discharges the servant. He is entitled to indemnity out of the trust assets in respect of those wages, to the extent of those assets.
Sub-clause (3.) says that he is not liable for any payment in respect of long service leave for which the bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt becomes entitled after the date of the bankruptcy.
– Then from whom is the employee entitled to payment?
– If this clause prevails, he has no personal action against anybody.
– What about suing the trustee of the estate, but not personally?
– As trustee he does not incur a liability.
– Can he not be sued as trustee of the estate?
– No, of course he cannot. He is one person. As trustee of the estate he is not a separate juristic person, and if he is not personally liable there is no liability in covenant or contract, or statutory liability. The point is that the denial of personal liability is put there to dislocate the continuity of liability that the State statute envisages as being passed to the transmittee of the business. It is only when a business has gone over to the trans.mittee that the continuing accrual of long service leave goes on.
– To whom does the honorable senator suggest the person should look for entitlement? The clause says that he becomes entitled, after the date of the bankruptcy, to certain payments in respect of long service leave.
– I do not read that into it at all and to make the position clear I will read the sub-clause. It states - (3.) Where a trustee of the estate of a bankrupt carries on a business previously carried on by the bankrupt, he ls not personally liable for any payment in respect of long service leave for which tha bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt, or the legal personal representative of such a person, becomes entitled after the date of the bankruptcy.
– That is what Senator Cohen said.
– The sub-clause says what I have read.
– And what the honorable senator read is what Senator Cohen said but Senator Wright denied it.
– The employee is robbed of none of his rights. He is protected up to the time of the bankruptcy and he is protected after it.
– With great deference to Senator Mattner, the sub-clause says, referring to the trustee - . . he is not personally liable for any payment in respect of long service leave for which the bankrupt was liable or for any payment in respect of long service leave to which a person employed by him in his capacity as trustee of the estate of the bankrupt, or the legal personal representative of such a person, becomes entitled after the date of the bankruptcy.
That means that if the employee serves his term to qualify him for long service leave after the bankruptcy then the trustee is not discharged of personal liability in respect of that. By denying personal liability, the clause breaks the continuity of the period upon which long service leave is based. Therefore there is no continuing of the employee’s right after the bankruptcy in respect of service rendered before the bankruptcy. I believe that Senator Cohen’s proposed amendment will not achieve what is in his mind.
– After listening to Senator Cohen’s proposed amendment and to Senator Wright’s exposition regarding whether the trustee could or could not be sued in any other than his personal capacity, I do not think the amendment is necessary and I am certain that the exposition from Senator Wright was wrong. I direct the attention of the Committee to clause 161, which says - (1.) The trustee of the estate of a bankrupt may sue and be sued by the prescribed official name and may, by that name, hold, dispose of or acquire property of every description . . .
So he can, in his prescribed official name, be sued for amounts to which employees working for the estate after it became bankrupt become entitled. It is therefore quite wrong to say that there is no-one who can be sued simply because the trustee has not a personal liability. That being so, I do not think the amendment is necessary, as I think the position is covered.
– I would have thought the Minister’s statement in reply more clearly demonstrated the point that the workman is deprived of his entitlement under this provision. He referred to clause 134, which slates - (I.) Subject to this Act, the trustee may do all or any of the following things: -
So he is carrying on the business. I think perhaps we have had too much in mind businesses such as Myer’s, Coles and H. G. Palmer’s, where the trustee has become something lost in the organisation. I think a more simple example would be to take Tom Jones, a small builder, with a private company of his own which goes bankrupt. The creditors appoint a trustee who, under the provisions of clause 134, makes the decision to carry on the business.
– They do not make the decision.
– The clause says -
Subject to this Act, the trustee may do all or any of the following things: -
And among them is to carry on the business. So the trustee carried en the business in place of Tom Jones. Under awards of the Commonwealth Conciliation and Arbitration Commission, and perhaps under State determinations, the employee has some claim against whoever is carrying on the business. He has a claim on the trustee for his wages, every Thursday night or every Friday night. Because the award says that he shall be paid so much each week it is a contract between an employer and an employee - the employer is the trustee and the employee is the particular workman. Likewise, under a State Act, he has a claim against that employer for his long service leave entitlement. But clause 139 deprives him of that claim, because it says that the employer will not be responsible. This over-rides the State Act and so the claim does not exist.
– The liability does not rest on him personally.
– What I am saying is that the term “ personally “ is accepted as referring to the one responsible for deciding whether or not to carry on the business. Having decided to carry it on, he should be personally liable for what the employee is entitled to.
– Would the honorable senator not say that the business should be responsible and liable to pay his long service leave?
– What I am saying is that in regard to rates and taxes we use the term “ personally “. I can agree that the business should be responsible but I challenge the honorable senator or the Minister to show me where, in the legislation, anyone is entitled to payment, or where the business is responsible for payment. The Minister quoted clause 161.
– That is the clause which gives the right of suing the trustee in his name.
– That is the whole point; it gives the right of suing the trustee.
– In his official name.
– In respect of obligations.
– Yes, in respect of obligations. There must be the liability, because he can be sued. But he cannot be sued for long service leave that the employee is disentitled to because of the effect of clause 139. So clause 161 makes no contribution towards getting over the provision of clause 139. If we have all agreed that the business being carried on should meet its responsibility under the provisions of court awards and State Acts, Senator Cohen’s amendment, to my mind, makes provision whereby that can be achieved. If we are sincere in saying that this should be paid out of the estate, as Senator Morris said, let us either accept the amendment or decide upon an amendment which will make clear that there is a responsibility on the estate to meet the requirements of State law and awards.
– Would Senator Cohen again read the words of the proposed amendment?
.- Certainly. I propose that we add after the present sub-clause these words -
Provided that this sub-clause shall not operate to relieve the estate of the bankrupt from any such liability.
I listened carefully to what the Minister had to say andI appreciate the force of his comment in relation to clause 161. It may be that that is an answer but it seems to me, with respect, that although he says my amendment is not necessary, it is merely spelling out what the Minister says is the effect of the present clause. In view of the fact that there has been a substantial debate here and some difficulty about it, it does not seem to me that the Minister would be making any concession in principle if he said: “ Very well. You have spelt it out and we accept that as defining what has apparently been left unclear.”
– If the amendment would in fact do what Senator Cohen expects it would do, I cannot see that there would be an objection and I can see that there would be things in favour of it. However, so that we shall have a chance to examine this and see whether in fact it might have implications which do not appear to us in this off the cuff discussion, I move -
That clause 139 be postponed.
Question resolved in the affirmative.
Clauses 140 to 148 - by leave - taken together and agreed to.
Clause 149. (1.) Subject to this section, a person who becomes a bankrupt after the commencement of this Act is, by force of this section, unless sooner discharged in accordance with the next succeeding section, discharged from bankruptcy upon the expiration of five years from the date of the bankruptcy. (2.) Subject to this section, a person who was an undischarged bankrupt immediately before the commencement of this Act, whether he became a bankrupt under a law of the Commonwealth or of a State or Territory, is, by force of this section, unless sooner discharged in accordance with the next succeeding section, discharged from bankruptcy upon the expiration of five years from the commencement of this Act. (3.) This section does not operate to discharge a bankrupt from a bankruptcy if -
.- I have circulated two amendments to clause 1 49. As a matter of fact, there are three in all but I want to deal with those numbered 4 and 5 on the list of amendments circulated in my name and to explain the purport of them. I think it would be conceded by all honorable senators that clause 149 is an extremely important one, because it effects a substantial change in the method by which bankrupts are discharged from the state of bankruptcy. Prior to this, the position has been that no bankrupt could be discharged merely by operation of law. He has had to make application. He has bad to satisfy the court hearing the application that he had brought himself within the provisions relating to discharge from bankruptcy. Over the years that has worked hardship on a good many people whose bankruptcy involved no fraud or no dishonest conduct but simply an inability to meet debts. Very often people with small assets have been put to the expense and sometimes public humiliation of having to make application to the courts for discharge from bankruptcy, perhaps having that application from time to time deferred for merely technical reasons.
Clause 149 is an important step in the development of bankruptcy law in Australia because it is to operate by its own force to discharge certain eligible people from bankruptcy. Anybody becoming a bankrupt after the commencement of this legislation, will, under sub-clause (1.), be automatically discharged from bankruptcy at the expiration of five years from the date of the bankruptcy, so he does not have to make application. He is not put to expense, although provision is made, and properly made, for objection to be taken on certain specified grounds. Subject to any such objection, the discharge would operate automatically. Subclause (2.) reads -
Subject to this section, a person who was an undischarged bankrupt immediately before the commencement of this Act, whether he became a bankrupt under the law of the Commonwealth or of a State or Territory, is, by force of this section, unless sooner discharged in accordance with the next succeeding section, discharged from bankruptcy upon the expiration of five years from the commencement of this Act.
That means that anybody who is bankrupt when this Act commences to operate will not get the benefit of any period for which he has been bankrupt up to that date. Time will begin to run in his favour as from the date of this Bill becoming law. I believe that that will operate somewhat harshly, particularly against people who have been bankrupt in years gone by, perhaps some of them as far back as the days of black depression when, through no fault of their own, people found themselves quite unable to meet their obligations. There are, as I understand it, perhaps thousands of such undischarged bankrupts in Australia whose offence to society, if that is the correct way of putting it, goes back to the distant past. Many of them have carried that burden ever since. They include people against whom orders were made many years ago and who are still subject to the law and to imprisonment if they commit bankruptcy offences.
In the amendments that I circulated I was proposing to put the view that the Act should operate to allow time during which bankrupts have been bankrupt prior to the Act coming into operation to run in their favour, so that if a person had been bankrupt for five years or more he would be automatically discharged upon the Act coming into operation. If he had been bankrupt for three years prior to the commencement of the Act, three years would run in his favour and, at the end of another two years, the automatic discharge provision would operate. That was the purport of the amendments that I circulated. I have since had an opportunity of some discussion on this matter with the Minister and it is now not my desire to press the amendments in the form that I orginally proposed. As I understand the Minister, the Government is prepared to accept an amendment that I propose to move, which would have the effect of leaving out of sub-clause (2.) of clause 149 the words “ five years from the commencement of this Act “ and inserting the words - three years from the commencement of this Act of five years from the date on which the sequestration order was made against his estate or he otherwise became a bankrupt, whichever is the later.
That seems to me to be a concession on the part of the Government that some hardship would be caused to persons who had been bankrupted in the past and in respect of whom we would seek an automatic discharge. I believe that an amendment in that form would do justice to the principle that we are contending for here. If the Minister indicates his view on the matter, I shall be prepared formally to move the amendment.
– If this amendment were moved, the proposed amendment to clause 149 (1.) would be withdrawn?
– On behalf of the Government, I am prepared to accept the amendment that has just been foreshadowed by the honorable senator.
– I thank the Minister for his courtesy. I now formally move -
In sub-clause (2.) leave out “ five years from the commencement of this Act “, insert “ three years from the commencement of this Act or five years from the date on which the sequestration order was made against his estate or he otherwise became a bankrupt, whichever is the later “.
– Does the honorable senator withdraw his circulated amendments to sub-clauses (1.) and (2.)?
– I have not formally moved amendments Nos. 4 and 5 on the list which I circulated. I am not proceeding with those amendments. Although the amendment I have just moved does not fully meet the position that I originally set out to put to the Committee, I am satisfied that a proper concession to the principle has been made. The Minister has indicated formally to me that he would not be able to go beyond this amendment in meeting the position that we put forward.
Amendment agreed to.
.- I desire to move a further amendment to clause 149. Sub-clause (3.) (b) reads -
This section does not operate to discharge a bankrupt from a bankruptcy if -
the Registrar, the trustee or a creditor has entered an objection, in the prescribed manner, to the discharge of the bankrupt by force of this section and the objection has not been withdrawn before the time when the bankrupt would have been so discharged but for this sub-section.
I move -
In sub-clause (3.)(b), at end of paragraph (b), add - “ Provided that an objection by a creditor shall give grounds (other than the bankrupt’s indebtedness to such creditor) which in the opinion of the Registrar are sufficient”
I believe that an objection by a creditor should have some substance apart from the fact that he is still unpaid all or some of his original debt. I regard it as being proper that the Registrar or a trustee should enter an objection in the prescribed manner. I am told that it is common experience, whether at the level of accountancy, of trusteeship or of the legal profession, for a creditor to object to the discharge on no other ground than that part of the debt is still unpaid.
It is my view and the view of the Opposition that a creditor who is in that position should be under an obligation to disclose some ground on which the discretion of the Court should be exercised against a discharge from bankruptcy. Many creditors are unforgiving and remain so, and they do not regard themselves as being under an obligation to make a clear allegation against a bankrupt. What we have proposed in the amendment would be a simple way of meeting the position, provided the Registrar was satisfied that the objection was a sufficient one. In other words, we propose that it should be left to the Registrar to indicate whether in his opinion the grounds stated by the creditor are sufficient. We believe that that would not entail any addition to his duties. It would do ample justice in a situation that is often complex and in which the debtor finds himself unable to get past a blanket wall of opposition without any reason being given by a creditor.
– The Government does net accept the amendment or either of the propositions advanced in support of it. In the first place, the Government does not think that it would be proper to decide in advance that a creditor could not go along and state, as a ground of objection, merely that he bad not been paid sufficient of the money that was owing to him. We think there could well be cases in which at the end of a five year period bankrupts could be receiving a substantial income, that the creditors might well expect that more would be paid to them, and that the situation could arise where that in itself would be sufficient reason for lodging an objection. Moreover, we do not believe that we should give to the Registrar, who is an officer of the Court, the right to decide whether an objection by a creditor gave sufficient grounds. We think it would be proper for the Court to decide that, and that it would be likely that the capacity of the Court to award costs in the case to a frivolous objection would be a sufficient deterrent against such objections being lodged.
Clause, as amended, agreed to.
Clauses 150 to 186 - by leave - taken together, and agreed to.
Clause 187 (Interpretation).
.- Clause 187 (1.) reads -
In this Part, unless the contrary intention appears - “ composition “ means an arrangement by which the creditors of a debtor -
agree to accept payment of the debts due to them by instalments; or
agree to accept, in full satisfaction of the debts due to them, less than the full amount of those debts, whether in the form of money or other property and whether by instalments or otherwise;
An amendment to be moved later by Senator Cohen will deal with some of the provisions applicable to that composition. Clause 187 is in a context which follows immediately on the provisions of clauses 185 and 186 dealing with small bankruptcies. I submit to the Committee that small compositions should not have to go through the whole of the procedure and expense involved in this Part X. I suggest for consideration that the definition of a composition would be an appropriate place to provide for this. I suggest that where the liabilities were less than $4,000 - and in that I accept the guide as to small bankruptcies - and where the composition was accepted by a resolution of the creditors in meeting, it should be possible to have a composition without a registered trustee and without any of the other provisions for registration of the deed applicable to it.
It is the commonest experience under present practice for a debtor who has, say, £500 or £1,200 worth of liabilities, to go along to a debt collector and say: “ Look, I have liabilities totalling between £500 and £1,200 owing to 10 or 20 creditors. Would you call them together and put my position before them? I think I will be able to pay £5 a week. I offer to pay £5 a week definitely and if I am not subjected to a running fire of garnishees and executions and other cost producing vexatious approaches, I will be able to work myself out of this liability in two years. If I can pay it to you, the creditors can have the satisfaction that you will deal with each of them on an equal basis. They will be satisfied at 20s. in the £1 and I will be saved expense and vexation and will be able to get through without the stigma of a registered deed of composition or a bankruptcy.” 1 would submit to the Committee the general proposition that we should make a provision whereby a composition of not large dimensions - I would be prepared to accept the liability criterion of $4,000 - could be accepted legally and be not void. Thus it would be exempted from the provisions of this Part whereby it comes within the definition of a deed of composition which will be void unless it is registered and unless the person who registers it is a registered trustee. It is very desirable in the interests of small debtors to have some procedure of that sort legally permissible. I abstain from moving any amendment at this time hoping that some indication will be given of the viewpoint of the Committee on this proposal.
– I want broadly to support what Senator Wright has said. As the honorable senator has not moved an amendment, it is not necessary to direct our attention to any specific language in which the thought might be couched ultimately; but I indicated in opening the second reading debate on behalf of the Opposition, that we had certain things in mind in relation to compositions where small bankruptcies were involved. 1 think that generally what Senator Wright has put to the Committee would coincide with our approach to the matter. No doubt more mature attention would have to be given to the precise proposals that came forward, whether from the Opposition side or from Senator Wright himself. We believe that some such provision as this is necessary to cure what might amount to injustice to a large number of unfortunate small debtors. If the measure is passed in the present form without some degree of flexibility being introduced into it in this respect, it might work hardship on all sorts of people.
I do not think that 1 should say any more at this stage except that we are proposing in the amendments that will come forward some arrangements which would, where a composition was possible, relieve the small debtor from the detailed and at times tortuous procedures of having trustees and certain types of meetings and resolutions, and a detailed administration of the bankrupt estate. I make these observations so as to indicate that there should be some basis upon which provision could be made for the people to whom Senator Wright referred and whom I mentioned earlier.
– I listened with interest to Senator Wright’s suggestion of what could happen at the moment in the case of a man who went bankrupt for a small amount of money. Senator Wright said that such a man could call together his creditors and a debt collecting agency or a legal adviser of his own choosing and say: “ I cannot pay my bills, but if left alone I will pay £5 a week and that will eventually pay off my debt”. It was suggested that if this were agreed to by those of his creditors who were present, the debtor would endeavour to carry out that promise and procedure. If he failed to do so, he was liable to have action taken against him by one of the creditors. This happens now. I do not think that in all cases that sort of arrangement would be legally enforceable. Indeed, I would say that in few cases would such an arrangement be legally enforceable although I speak subject to correction. Certainly, I am told, such an arrangement would not be legally enforceable under the present bankruptcy law. lt would be an arrangement between a man and his creditors and not legally enforceable.
I am informed that in Western Australia in particular, and I think in Tasmania, many of these arrangements are made and are, in fact, gentlemen’s agreements between the creditors and the men concerned. Such agreements are not prevented by anything in this Bill from continuing in that way just as they have continued in the past, but they will not be given legal enforceability under this Bill any more than they are given that status under the existing Bankruptcy Act.
The intention of the Bill is that legal enforceability can be given only in the compositions and in the forms set out in the Bill which follow a procedure designed to ensure that all the creditors are consulted and have an opportunity to participate in the shaping of the composition which will be properly supervised by a trustee answerable to a court. It is provided that such a composition cannot be upset by some other creditor who may be dissatisfied with the composition but, under the provisions of the Bill, cannot prevent the composition being entered into if a majority of the creditors agree. The Bill is designed to give legal enforceability only to that kind of composition but there is nothing in the Bill to prevent the sort of arrangement to which Senator Wright referred being carried on in the future, as such arrangements have been carried on in the past, though they will be carried on not under the aegis of legal enforceability.
.- My difficulty about that point relates to clause 213 and clause 215. I am not sure whether the deed referred to therein is intended to include a deed of composition. Probably that is- not so. Is there any provision in the Part which states that a deed of composition that does not go through all the procedures of Part X is void? Is there any provision in the Part saying that a trustee under any composition because of the provisions of this Part must be a registered trustee? I thought it might be suggested that the clauses refer only to a deed of assignment or a deed of arrangement. Do the clauses include a deed of composition?
– I am informed that sub-clause (3.) of clause 213 includes a deed of composition.
– Taken in conjunction with clause 215 it seems to make void such an arrangement as I have put. Therefore it seems to me as though this Bill directly avoids small compositions made in the way that I have suggested. It does not seem to me as though a trustee who operates small compositions is in a position of security. I believe it would be better to exempt small compositions from the provisions of this Part, so that if they do not comply with the long and expensive procedure of this Part, they will not be declared to be void by virtue of this Part.
.- The definition of a debtor in this legislation is a person who is unable to pay his debts as they become due out of his own money. The definition of composition is contained in clause 187, to which Senator Wright referred. Clause 204 provides for special resolutions accepting a composition and requires creditors to appoint a registered trustee of the composition. Clause 213 (3.) provides that subject to Part X, a composition made by a debtor after the commencement of the Act, not being a composition accepted by a special resolution of a meeting of creditors under section 204 of the Act, is void. The provisions I have referred to when taken together amount to the position as I understood it to have been stated by the Minister: Any debtor defined as I have indicated cannot legally make any arrangements, no matter how little or how great may be the aggregate amount of his debts, to pay out of his limited earnings or income an amount to be ultimately divided amongst his creditors unless he goes through certain procedures. He has to call a meeting of his creditors.
– It is not illegal for him to do so, but such an arrangement is not legally enforceable.
– That is so. He may make an arrangement in good faith, and the persons with whom he is dealing may act in good faith, but they do it all without the sanction of legality or enforceability.
– Just as it is being done now.
– Where an attempt is made to streamline the provisions of this legislation so that they form a coherent pattern, we believe that in the case of a small composition there should be some flexibility in the machinery. We propose when the Committee comes to the precise amendments under clause 204 to move to test that position and to invite the Government to insert certain provisions and qualifications in the Bill.
Clause agreed to.
– Is it the wish of the Committee that clauses 1 88 to 203 be taken together?
.-I suggest that all clauses from clause 188 to 243 be postponed, other than clause 204, until a liter consideration of clause 204 so as to enable Senator Cohen to bring forward his amendments. If we can mould them into a sufficient amendment to achieve this purpose, the rest of the Part can then be taken as agreed to.
– I do not see any point in that procedure. An amendment is to be suggested to clause 204 andI cannot see why we should not put through the clauses to which amendments are not proposed.
– I will test the position, if it is necessary.
– The question is-
That clauses 188 to 203 be postponed.
I think the Ayes have it. Does the honorable senator wish me to call for a division?
– Before you call for a division, Mr.Chairman, let me say that the purpose of my suggestion is to find a basis for debating this legislation. Senator Cohen will move amendments to clause 204. I simply wish to adopt a procedure whereby we can advance straight to that clause and if it provides a solution, then the rest of the Part need not be considered. Through you, Mr. Chairman,I ask the Minister whether that would not be by far themost convenient course, rather than that I should offer an extempore amendment to the definition of “ composition “ in clause 187 which may, in some way, be unnecessary if Senator Cohen’s amendments pro vide a solution in clause 204. I simply want to meet the convenience of the Committee.
.- -Clause 187 has been agreed to and consequently, unless I can be shown that there is an amendment between clause 187 and clause 204 that might flow from an amendment of clause 204,I prefer to follow the normal processes.
.- My reason for supporting Senator Wright is not that I have notice of a specific amendment that he has in mind. He indicated to me before this part of the debate began that he had some suggestions to make in relation to small compositions. I do not see what harm would be done by proceeding to clause 204, to which I wish to propose some amendments. It may be that no further time will be needed in relation to the clauses188 to 203. I would be prepared to act on Senator Wright’s assurance that something may turn ultimately on the fate of my amendments to clause 204. I would not want to shut the honorable senator out of moving something that may or may not commend itself to the Opposition, which has indicated broad support for the approach. It seems to me that the Minister would be making no sacrifice of principle if he merely agreed to postpone those clauses. At the moment I cannot say whether any amendment is likely to be moved to them. As the result of the consideration we have given to them so far, we have not proposed, nor have we had under advisement, any specific amendments.
– I only wish to say that I have not had sufficient time, in the pressure of the discussion on this Bill, to give adequate consideration to Senator Cohen’s proposed amendments to clause 204. I can move my amendment when we come to clause 243. I simply wish to adopt the course of convenience so that any matter requiring decision by the Committee can be brought forward by Senator Cohen’s proposed amendments to clause 204. I hope all honorable senators will understand that that will cause no inconvenience and, in fact, is designed only to produce convenience.
– No reason having been given for this proposal, and as the proposal is different from the normal way in which a bill is approached, I think it would be quite inconvenient and unusual to adopt the policy of postponing large portions of the Bill and returning to them later. We would be jumping from here to there for no reason. If Senator Wright proposes to move an amendment to clause 243, that is fine. But let us pass the clauses to which no amendment is proposed, deal with Senator Cohen’s proposals and then give Senator Wright an opportunity to move his amendment in the ordinary way.
.- We are sitting here as a Committee debating a very complex bill. In the first place, the Minister is to be congratulated on the ability he has displayed in handling this Bill because he is not the AttorneyGeneral. However, the Committee must be given every opportunity to achieve the best possible result. I see nothing wrong with postponing a part of a bill, dealing with later sections and then returning to the clauses which have been postponed. If nothing has arisen in relation to them, they can be automatically passed by the Committee. I see the possibility that something will arise out of the later clauses of the Bill which may influence a decision on the clauses which have been postponed. As I have said, every opportunity should be given to debate this legislation as fully as is possible. In the circumstances, I see nothing wrong with the request which has been made to rearrange the order in which the clauses of the Bill are to be discussed.
– If the Committee wishes to take unlimited time to discuss the Bill clause by clause, that is satisfactory to me. But no reason has been advanced for postponing consideration of certain clauses so I think we should deal with the Bill in the normal way. To do otherwise would be most untidy.
– I would find some difficulty in supporting Senator Wright’s proposal. As I understand it, clause 187 has been passed by the Committee and this is the clause to which Senator Wright would want to return if some satisfactory solution were not found to certain problems relating to clause 204.
Clause 187 would then have to be recommitted so that an amendment relating to the definition of “ composition “ could be advanced. Unless clause 187 is recommitted I cannot see why we cannot move directly to clause 204.
Question resolved in the negative.
Clauses 188 to 203 agreed to.
Clause 204. (3.) A special resolution accepting a composition shall specify the terms of the composition. (4.) Where a special resolution requiring the debtor to execute a deed of assignment or a deed of arrangement under this Part or accepting a composition has been passed, the creditors shall, by resolution, nominate a registered trustee or registered trustees to be trustee or trustees of the deed or composition. (7.) Where the creditors pass a special resolution or a resolution under this section, the chairman of the meeting shall -
– by leave - I move -
I do not propose to canvass at length the arguments put broadly by Senator Wright and myself in introducing the debate on this part of the Bill. The new Part comprehends Parts XI and XII of the existing Act. In clause 204 certain provisions are made governing resolutions for deeds of assignment, compositions and so on. We propose that an exception be made with regard to compositions.
When one looks at the three amendments that I have moved, it is plain that, without specifically excluding compositions from the general provisions of the Act, we are introducing certain provisions which will allow for some flexibility, especially in application and administration in the case of small bankruptcies. I think it is necessary to look briefly at the provisions contained in clause 204. Sub-clause (1.) states -
The creditors may, at a meeting called in pursuance of an authority under section 188 of this Act, by special resolution -
where the debtor’s property is subject to control under this Division, resolve that the debtor’s property be no longer subject to control under this Division;
require the debtor to execute a deed of assignment or a deed of arrangement under this Part;
accept a composition;
Sub-clause (2.) states -
A special resolution requiring the debtor to execute a deed of arrangement under this Part may, subject to this Act, specify provisions to be included in the deed.
Sub-clause (3.), which is the first sub-clause to be subjected to my amendments, reads -
A special resolution accepting a composition shall specify the terms of the composition.
I shall read on because sub-clause (4.) also is important. It states -
Where a special resolution requiring the debtor to execute a deed of assignment or a deed of arrangement under this Part or accepting a composition has been passed, the creditors shall, by resolution, nominate a registered trustee or registered trustees to be trustee or trustees of the deed or composition.
I draw attention to the words “ the creditors shall, by resolution, nominate a registered trustee.” In other words, the obligation to nominate a registered trustee or trustees is absolute under the clause as it now stands. It applies to compositions as well as to deeds of arrangement. The amendment which I have moved to sub-clause 4 is to leave out the words “or accepting a composition “. Sub-clause 4 would then read -
Where a special resolution requiring the debtor to execute a deed of assignment or a deed of arrangement under this Part has been passed, the creditor shall by resolution, nominate a registered trustee or registered trustees to be trustee or trustees of the deed.
I exclude from sub-clause 4 any reference to composition. It would be confined to deeds of assignment and deeds of arrangement.
So far as composition is concerned, We want to add something to sub-clause (3.), which states -
A special resolution accepting a composition shall specify the terms of the composition.
We want to add the words -
It may at the option of the creditors provide for the appointment of a trustee, the giving of security and for provisions thereof to be amended, extended or repealed, or for other terms or conditions to be added thereto by subsequent special resolution or resolutions.
The effect of this amendment would be to empower the creditors by special resolution to include certain terms in the resolution. If our amendment is carried, it will not be compulsory for a trustee to be appointed. That will be no longer obligatory, but it will be permissible if the creditors, at their option, believe that that is the most convenient way in which to administer the affairs of the bankrupt or the most convenient way to proceed on the basis that there has been a composition between them.
– Would one still have to go through all the procedures provided for in the Part of relation to registration?
– I think you would have to go to the stage of having a special resolution, but you would not need to go beyond that. Under section 188 of the Act the creditors, at their meeting, would be free to determine what they thought was proper in all the circumstances of the composition. They would not be required to go on and compulsorily appoint a trustee, and he would not then be subjected to all the innumerable procedural obligations that trustees incur under the Act. That is the simple case that we are making on this clause. As I have said, the broad argument in support of this more flexible arrangement was advanced in the second reading debate and in dealing with defences under section 187.
.- The Government asks the Committee not to accept these amendments because it believes that in the case of compositions which are entered into under the Act, there ought to be a registered trustee appointed in order to see that the estate is impartially administered and is under proper supervision. This clause of the Bill provides that a registered trustee should be appointed for these purposes. We believe that if the Act is to be used for creditors for the purposes of bankruptcy, there ought to be a registered trustee, as I have said, to see that the estate is administered impartially, and to take care of the interests of the creditors. If the amendments were accepted, this would not be required to be done.
A group of people could meet and appoint a trustee who was not a registered trustee, or could appoint one of the creditors to take charge or to do whatever they might wish to do. As I said before when discussing this matter, there is nothing to prevent a group of creditors from entering into a private arrangement or a private composition, particularly if a small amount of money is involved. That is what happens now. It could continue to happen, hut it would not be legally enforceable under the Act. We believe that it should be legally enforceable under the Act. For the reasons that I have gwen, we believe that there should be a provision which requires a registered trustee to be appointed in the case of a composition made under the Act.
– I was waiting to hear what Senator Cohen had to say in support of his amendments. Having heard what he said, I do not think they solve the problem. The language of the first amendment seems to me to be inappropriate. Instead of reading: “ lt may at the option of the creditors provide for the appointment of a trustee “, I think the amendment should read: “ The creditors may by resolution provide for the appointment of a trustee.” The words “ at the option of the creditors “, unless reference is made to a resolution of a group of creditors, seem to be inappropriate.
– The word “ lt “ does refer to a resolution. These words would follow immediately after the expression “ special resolution “ in sub clause (3.), which reads “ A special resolution accepting a composition shall specify the terms of the composition.” The word “ It “ refers to a special resolution. If the honorable senator likes, we could alter the word “ It “-
– Order! Senator Wright has the call.
– I am most obliged to Senator Cohen for enabling me to understand what is intended in the amendment. I was listening to him with some attention, Mr. Chairman.
Senator Cohen. -I apologise for interjecting.
– I am most obliged to Senator Cohen for his comment; but it does not meet my point of view. I would have thought that the other provisions in the amendment - to enable the giving of security and the provisions thereof to be amended, extended, repealed and so forth - were entirely unnecessary. However, at the same time, I had the idea that we should try to exempt from this Part all compositions where liabilities were less than $4,000 and where a resolution of the creditors so required. But, on looking more closely at the Part, I see that its provisions specifically in relation to compositions may be beneficial in that creditors and debtors may order their arrangements belter by generally applying the protection of the Court to compositions that come within the Part. Therefore, I resile from the original proposition that [ put before the Committee. Rather than accept the amendments that have been moved by Senator Cohen, I would prefer the clause to remain as printed.
– The amendments that have been moved by Senator Cohen come before the Committee largely as a result of representations made to various honorable senators by some legal practitioners in Western Australia who have tried, as far as is possible, to retain some of the provisions relating to assignments which are found in the existing Bankruptcy Act and which are followed largely in Western Australia and to a certain extent in South Australia. I do not wish to speak at any great length at the moment. I believe that Senator Cohen has said nearly all that there is to be said about this matter. The sole purpose of the amendments is to retain the provisions of clause 204 relating to compositions, with all the requirements and all the demands that are made under that clause in the carrying out of compositions, and at the same time to say that if the creditors do not desire to appoint a trustee under the terms of the Act they shall be at liberty not to appoint such a trustee. There seems to be no reason why a composition cannot work with all of the safeguards that exist.
– Can the honorable senator refer me to the clause that requires registration of the composition?
– I am afraid that I cannot do that offhand. At the moment I am not particularly concerned with registration. I am concerned rather more directly with the appointment of a trustee. In proposing these amendments, we members of the Opposition feel that we can retain all of the safeguards that are contained in clause 204 of the Bill while at the same time not putting the person who wishes to enter into a composition with his creditors to all the expense entailed in appointing a trustee. I submit with respect that, in order successfully to oppose the proposition that Senator Cohen has put forward in his amendments, it must be established that a trustee is necessary in all circumstances in such compositions, even when the debtor and the creditors themselves are not insisting that such a trustee be appointed.
.- I have two other amendments to clause 204. The first is: “ In sub-clause (7.) paragraph (a), leave out ‘ forthwith ‘, insert ‘ within seven days ‘.” The second is: “ In subclause (7.) paragraph (b), leave out forthwith ‘, insert ‘ within seven days ‘.” I ask that the two amendments, which are identical, be taken together.
– Order! Is leave granted?
– No, because I submit that different considerations apply to them.
– Order! There being an objection, leave is not granted.
– Very well. Sub-clause (7.) reads as follows -
Where the creditors pass a special resolution or a resolution under this section, the chairman of the meeting shall -
forthwith sign a certificate to that effect in accordance with the prescribed form; and
forthwith cause the certificate to be filed in the office of the Registrar.
I move -
In sub-clause (7.) paragraph (a), leave out “ forthwith “, insert “ within seven days “.
My submission on this amendment is quite short. The word “ forthwith “ is difficult to interpret because there is no flexibility about it. We would prefer that a definite period of time within which the obligation that is imposed by this sub-clause must be carried out be fixed. So, we suggest a period of seven days. If some other period, either shorter or longer, commends itself to the Minister, I am not wedded to seven days.
I move the amendment in this form so that some specific period of time will be provided within which the obligation on the chairman of the meeting to sign a certificate in accordance with the prescribed form must be carried out. Under clause 33 of the Bill, the Court has power to extend the time for the doing of any act. It reads -
The Court may -
extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act for doing an act or thing or abridge any such time.
It is very difficult to see how any court could abridge a time that is specified merely as “ forthwith “. But a court can abridge or extend a time if it is 24 hours, 3 days, 7 days or 28 days. We want to preserve the right of people, whose interests are affected and whose obligations arise under this Bill, to go to the Court in a proper case and apply for an extension or abridgment of time. It is for that purpose, because it seems to us that circumstances could arise in which it would be quite impracticable to do something forthwith or immediately - if that is the correct construction of the word “ forthwith “ - and because there ought to be some small but proper degree of flexibility in the administration of this Act, that I have moved this amendment.
.- I think that the certificate should be signed forthwith in the interests of certainty and conclusiveness, but that the person who has to file it in the office of the Registrar should have seven days - which is a reasonable time - in which to do so.
.- We believe that the word “ forthwith “ is better than the words “ within seven days “. I am informed that the Attorney-General believes that the courts have construed the word “ forthwith “ as meaning as soon as is possible having regard to all the circumstances. If this is so and if it is also so - as I believe it is - that the certificate should be signed and filed as soon as possible, it might well be, having regard to all the circumstances, that it could be signed and filed within seven days and, in those circumstances, should be signed and filed within seven days. On the other hand, it is possible to imagine a case in which a court, having regard to all the circumstances, might consider that it was reasonable that there should be a period longer than seven days. So rather than include a particular period of time we prefer the Bill to use the word “ forthwith “, because on our interpretation “ forthwith “ means as soon as possible having regard to all the circumstances of the case.
– With respect to the Minister I think that “ forthwith “ normally does not mean as soon as possible. As I understand it, quite different legal terminology is used when the requirement is for something to be done as soon as practicable or as soon is possible. The word “ forthwith “ does not mean that, so far as I know, either in ordinary language or in legal drafting.
– Would the honorable senator take it as meaning as soon as reasonably practicable having regard to all the circumstances?
– No, I would not.
– Then I would disagree with the honorable senator.
– I rose only to say that 1 have been informed by one legal practitioner - I have no personal knowledge of this - that considerable difficulties were mct with in one instance when a certificate was filed within four days. The judge took strong exception to that and maintained that four days was not forthwith. I believe that this is the consequence of having such a vague term as “ forthwith “. However I believe that “ forthwith “, although vague, is not so vague as the Minister seems to believe it is.
.- As I understand it, the Committee has just voted on the first of two amendments. I do not propose to say much more on the second leg of the proposition. Senator Wright has indicated that some reasonable period would be proper for the filing of the certificate in the office of the Registrar, and I move -
In sub-clause (7.) paragraph (b) leave out “ forthwith “, insert “ within seven days “.
I submit that this is a proper and reasonable amendment in the circumstances.
Clause agreed to.
Clauses 205 to 212 - by leave - taken together, and agreed to.
Clause 213. (3.) Subject to this Part, a composition made by a debtor after the commencement of this Act, not being a composition accepted by a special resolution of a meeting of creditors under section 204 of this Act, is void.
.- I move -
Leave out sub-clause (3.).
Had the Committee seen fit to agree to the amendments that were proposed to clause 204 this amendment, would not have been necessary, but consistently with the approach that we made, and without arguing the matter further, I have moved for the deletion of the sub-clause.
– And consistently with our approach, I do not wish to accept it.
Clause agreed to.
Clauses 214 and 215 agreed to.
Clause 216. (3.) The time within which a deed of assignment or a deed of arrangement is to be executed shall not be extended under section 33 of this Act after its expiration.
.- I move -
Leave out sub-clause (3.).
This clause deals with the execution of deeds. Sub-clause (1.) provides -
A deed of assignment or a deed of arrangement shall be executed by the debtor and the trustee within twenty-one days from the day on which the special resolution requiring the debtor to execute the deed was passed.
Sub-clause (2.) reads -
The execution of the deed by the debtor and by the trustee shall be attested by a witness.
Sub-clause (3.), which we submit should be left out, reads -
The time within which a deed of assignment or a deed of arrangement is to be executed shall not be extended under section 33 of this Act after its expiration.
It is the view of the Opposition that there is no warrant whatever for excluding from an application to a court for an extension of time, under section 33 of the Act, the case where the deed has not been executed with 21 days. It seems to us to be entirely unreasonable. Of course it is perfectly proper to provide that the deed should be executed within a specified number of days, whether it is 7 days, 21 days, or 3 months. This is a matter for the judgment of the Government as to what is a reasonable time to allow for the execution of such an important deed. It is mandatory and the Government has gone one step further and has said: “ Once that time has expired you are precluded from invoking the jurisdiction of the court to extend or abridge the time in appropriate cases “.
– What is the reason for that special provision?
– The Minister may be good enough to tell us the reason, if there is one, but it seems to the Opposition that it would need a lot of explaining before we were satisfied that under no circumstances should there be the right to approach the court for an extension of time. As I indicated earlier, in dealing with another amendment, clause 33 (1.) which has now been agreed to by the Committee, provides -
The Court may -
extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act for doing an act or thing or abridge any such time.
– And on such terms and conditions as it thinks fit.
– No, under paragraph (a) it is the Registrar who deals with other matters. Paragraph (c) does not include the proposition that extension shall be upon such terms as the Court thinks fit. I should have thought that that would be implied in the Court’s general jurisdiction to extend. lt may be upon payment of costs. It maybe upon certain undertakings being given. But in any event, where the plain justice of the matter requires an extension or an abridgment of time, the court is there to be approached and to do justice in the individual case. For the life of me, I cannot see why the Government has found it necessary to select this particular Bill as the occasion to preclude the right of approach to the Court. The period of 2 1 days suggests that this is not something to be done in a tearing hurry. It is something for which a reasonable time should be allowed. If, for some reason outside the control of the debtor or the trustee, it is impossible to execute the deed, the whole venture is frustrated. I can imagine either the debtor or the trustee taking seriously ill so that he is not in a position to execute any deed within 21 days. Would the Government then take the view that that was just too bad. Would it say: “ He was sick - perhaps grievously sick - and unable to sign it, but there is nothing we can do about it and there is nothing that they can do about.”? Surely reason shrinks from such a proposition. That is why we propose our amendment. If the Minister has any special reason to justify this sub-clause, I ask him to give us the benefit of his advice on the subject.
– What we are dealing with, as I understand it, is the case of a man who has gone bankrupt and there has been a meeting of his creditors, who have passed a special resolution calling on him to sign - l am told that in the language of those of us who are not lawyers “ execute “ in this case means “ sign “ - a deed of assignment. The Government believes that the time within which that deed of assignment which the resolution of his creditors has called upon him to sign should be signed should not be longer than 21 days. The reason for not wanting an extension of time in those cases in any circumstances is that we think it very desirable that the signing of the deed so called for should take place within a fixed time after the passing of a special resolution of the creditors requiring the debtor to sign the deed. The parties to the deed are the trustee and the debtor. It does not seem unreasonable to expect that they will be in close touch with each other and should be enabled to execute the deed within 21 days. Its signing is necessary in order to give effect to the special resolution that has been passed by the creditors. Until it is signed, the debtor’s affairs are in a state of uncertainty and, indeed, so are the creditors’.
.- I should think that the reasons given by the Minister are wholly insufficient. I do not think that they touch the fringe of reason for a provision such as this. Clause 40(1.) (1) provides that an act of bankruptcy occurs if a debtor, having been required by a special resolution of a meeting of his creditors to execute a deed of assignment or a deed or arrangement, fails without sufficient cause to comply with the requirements of the legislation as to the execution of the deed by him. Therefore, failure to comply without sufficient cause is recognised. Let me draw an analogy with bills of sale which give security over personal chattels and have something of the same operation as deeds of assignment and deeds of arrangement and which are required to be registered every two years. It is common form to give the court power to extend the time for reregistration and the reregistration take’s effect subject to any rights that have accrued in the meantime. The Bill attempts to arbitrarily abridge the court’s discretion to extend a time. There may be some inadvertence. It often happens in the pressure of modern life. It may be due to accident, illness, and all sorts of other circumstances, where creditors, registered trustees, solicitors and debtors are concerned. Here the court’s discretion is to be denied in a case where application is not made before the expiration of 21 days. 1 should think that this is a case fo official arbitrariness.
.- I suggest to the Minister that he has not given consideration to the point that we made. Senator Wright’s commentary enforces that suggesion. What is to happen, in the Government’s view, if the debtor or the trustee - the two persons who are to sign the deed - has a stroke and his incapacity to deal with the matter lasts for more than 21 days?
– In those circumstances the creditors would be required to meet and pass another resolution calling on signature to take place by the debtor and some other trustee appointed in the place of the one who had a stroke.
– What if it is the debtor and not the trustee who has the stroke?
– There would, presumably, be somebody who would be able to act on behalf of the debtor. They would have to have another resolution. They would have to start again. This is not precluded by the clause at all. That is the only way in which we think the time ought to be extended. In fact, this is putting it in the hands of the creditors to extend the time, in a way, as it would be they who would call the meeting and pass the new resolution. I think there is a difference between failing to comply with the requirements of a deed without sufficient cause and failing to comply with a requirement within a given time, but that, no doubt, is also a matter of opinion.
.- I suggest again that the Minister should consider, for example, what does happen in the ordinary affairs of life. One party to this two party deed becomes incapacitated by illness or infirmity of some kind and is unable to do the job within 21 days. The Minister said that in such a case the creditors would have to start again. They would have to go through the procedure of calling a meeting. They would have to put many people to inconvenience. That is all that could be done. What would happen if on the twenty-fourth day the debtor recovered sufficiently to be able to execute his deed? He could not execute it properly under clause 216. He could not apply to the Court for an extra seven days or an extra fourteen days in which to execute the deed. He would have to start an involved rigmarole. In such circumstances that would be a proper way in which to describe the procedure. He would have to get the creditors together and start again.
Clause 33 seeks to give the Court power to extend the time provided. In other words, if the Court cannot be approached before the 21 days have expired, the Court may be approached after the expiration of the 21 days and authority obtained to proceed as under the original provision. Clause 33 (1.) provides -
The Court may -
extend before its expiration or. if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act for doing an act or thing or abridge any such time.
Clause 216(3.) expressly provides to the contrary. Under the terms of that provision, a person cannot go along afterwards and get the approval of the Court. Indeed, a person cannot be along before and get the approval of the Court. He is bound hand and foot in a nonsensical situation. If this is the first time during the long debate on this Bill that 1 have raised my voice to indicate complete impatience with the attitude of the Government, then be it so. I do not think that the Minister has said anything that could possibly justify such an arbitrary withholding of the rightto approach the Court.
– I shall be extremely patient in answering the question as to what would happen if the debtor recovered on the twenty-fourth day. The creditors would have had to meet during the illness, either before or after the expiration of 21 days, and pass a resolution calling on the debtor to sign the deed. If he recovered on the twenty-fourth day he would sign it on the twenty-fourth day. There would then be certainty in his mind and in the mind of others as to what would happen. No great rigmarole would be involved in the creditors meeting and asking the debtor to sign a deed of assignment. There would be no more rigmarole, but possibly less, in doing that than there would be in approaching the Court.
Question put -
That the words proposed to be left out (Senator Cohen’s amendment) be left out.
The Committee divided, (The Chairman - Senator T. C. DrakeBrockman.)
Ayes . . . . . . 24
Noes .. .. ..21
Majority .. .. 3
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clauses 217 to 264 - by leave - taken together, and agreed to.
Clause 265. (1.) A bankrupt -
Penalty: Imprisonment for one year.
– I wish to direct the attention of the Committee to a comparison between paragraph (b) and paragraph (h) of sub-clause (1.). It will be noted that, in making offences, clause 265 (1.) provides -
A bankrupt -
shall, to the best of his knowledge and belief, fully and truly disclose to the trustee particulars of any disposition of property made by him within the period of two years immediately preceding the date on which he became a bankrupt;
– Order! In conformity with the sessional order relating to the adjournment of the Senate,I formally put the question -
That the Chairman do now leave the chair and report to the Senate.
Question resolved in the negative.
– Paragraph (h), in contrast to paragraph (b), provides that the bankrupt shall absolutely, and not merely to the best of his knowledge and belief, give to the trustee a full and proper explanation of any loss or depreciation of any assets or part of any of his assets, that occurred within the period of two years immediately preceding the date on which he became bankrupt.I suggest to the
Minister that there should properly be inserted in paragraph (h) the qualifying phrase: “ to the best of his knowledge and belief “; otherwise, the court noticing the difference in the language must apply the terms of paragraph (h) in an absolute sense. Therefore, the court has to require a full and proper explanation of any depreciation or loss over a period of two years. Any one loss or depreciation has to be explained absolutely. I move -
In sub-clause (1.), paragraph (h), after the word “ shall “ insert the words “ to the best of his knowledge and belief”.
.- The officers of the Attorney-General’s Department have informed me that the reason for the variation is that paragraph (b) deals with a question of fact as to the disposition a man has made of his property. He must give information on matters of fact to the best of his knowledge and belief; that is, the fact of an action carried out. Paragraph (h) is not dealing with an action carried out by the man but is concerned really with an explanation by him as to why he believes there has been a depreciation of his assets. That is all he can do. He must explain why he believes there has been depreciation over a period or a loss of his assets. I am informed that the phrase suggested by Senator Wright is not appropriate in any of the relevant circumstances.
– There is no distinction at all in substance between an obligation fully and truly to disclose the particulars of any disposition of property and to give a full and proper explanation of the loss or depreciation of any asset. The obligation ought to be qualified at all times as a matter of justice to make it an offence only if there is failure to give a full and true explanation to the best of his knowledge and belief.
– I point out to the Committee that the form in which this clause is presented is the same as the form expressed in the relevant section of the Bankruptcy Act which has stood for a number of years. Section 210 (1.) (a) of the Bankruptcy Act requires a bankrupt to tell the trustee to the best of his knowledge and belief what has happened to his property, real and personal, and paragraph (g) of section 210 requires the bankrupt to give a complete and satisfactory account of the loss of any substantial portion of his estate within a period of one year immediately preceding his bankruptcy. This clause of the Bill follows exactly the same legal practice.
Clause agreed to.
Clauses 266 to 272 - by leave - taken together, and agreed to.
Proposed new clause 272a.
.- I move -
That the following new clause be inserted in the Bill:- “272a. - No prosecution under this Part shall be instituted without the written consent of the Attorney-General.”
I shall put my submission on this amendment quite briefly. During the second reading debate, I referred to the multiplication of offences by this Bill.I indicated then that while we considered that in proper cases persons guilty of fraudulent conduct in bankruptcy matters should be subject to the penalties of the criminal law, we did not want to get back to the old days when the prime object of bankruptcy statutes was to punish fugitives and offenders rather than to achieve an equitable distribution of the bankrupt’s property among his creditors. In the Bankruptcy Act which the Bill will replace, there was a provision which was often subject to some very justifiable criticism to the effect that the judge of the Court of Bankruptcy could himself order the prosecution of a bankrupt for an offence. Section 216 of the Act provides - (1.) Where-
Section 216 also provides - (2.) When, in pursuance of the last preceding sub-section, the Court orders that a bankrupt be prosecuted, the Attorney-General shall institute and carry on the prosecution.
Section 217 provides - (1.) If the Court, in any application for an order of discharge either voluntary or compulsory, has reason to believe that the bankrupt has been guilty of an offence against this Act punishable by imprisonment, it may -
Fortunately, these sections are being replaced by new provisions dealing with offences but there have been introduced into this Bill new offences, particularly that in clause 265 (8.) which states -
A person who has become a bankrupt and, within two years before he became a bankrupt and after the commencement of this Act, has contracted a debt provablein the bankruptcy of an amount of Five hundred dollars or upwards without having at the time of contracting it any reasonable or probable ground of expectation, after taking into consideration his other liabilities (if any), of being able to pay the debt, is guilty of an offence and is punishable, upon conviction, by imprisonment for a period not exceeding one year.
Similarly, clause 271 creates an entirely new offence. It reads -
A person who has become a bankrupt after the commencement of this Act and -
within two years before the presentation of the petition on which, or by virtue of the presentation of which, he became a bankrupt, whether the petition was presented before or after the commencement of this Act, materially contributed to, or increased the extent of, his insolvency; or
during any period between the presentation of that petition and the date on which he became a bankrupt, lost any of his property, by gambling or by speculations that, having regard to his financial position at the time any other material circumstance, were rash and hazardous, being gambling or speculations not connected with a trade or business carried on by him, is guilty of an offence and is punishable, on conviction, by imprisonment for a period not exceeding one year.
It is striking there at conduct not connected with the trade or business carried on by the bankrupt. I have in mind the case of a person who by speculation might win the Tattersall’s lottery or an Opera House sweep. He may proceed to gamble away his gains. He may become the defendant in a motor accident case and incur a debt arising out of judgment against him for a substantial amount. He can be punished under this legislation retrospectively for his gambling, although at the time that he was gambling he was quite entitled to do so.I am putting forward what may be an extreme case, but I am saying that conduct outside a bankrupt’s own business can be struck at.
It seems to me that in a jurisdiction like the bankruptcy jurisdiction, with the proliferation of offences and varied penalties provided for wrongdoers and people guilty of fraudulent or dishonest conduct, there ought to be at least a high authority to prosecute. We suggest that the position can be met no longer as it was under the provisions of the Act by a judge asking that a prosecution be launched, but by the AttorneyGeneral certifying that this is a proper case for a prosecution. I think the last report of the Attorney-General on bankruptcy indicated that during the year ended 30th June 1965 there were about 14 prosecutions. So it cannot be said that the courts would be inundated with prosecutions. The experience has been that there have not been many prosecutions. From my reading of the report it appears that a high percentage of the prosecutions occurred in South Australia. No prosecutions at all occurred in some States. I have mentioned that because it may be said against our proposed amendment that there are many prosecutions and that it would involve too heavy a responsibility on the Attorney-General. We think this is a proper precaution to take having regard to the heavy penalties imposed by these clauses.
. -I shall attempt to answer briefly the points made by Senator Cohen on the question of whether a man who is thought to have transgressed against the provisions of this legislation is proceeded against summarily or whether indictment is left to the decision of a court. The effect of the proposed amendment would be to require the consent of the Attorney-General in writing for all prosecutions, irrespective of the nature of the offence and of whether those prosecutions were being carried out other than by indictment. The present situation is that if a man is proceeded against on indictment, the consent of the AttorneyGeneral is required, so that the amendment would add nothing to that position. However, in cases where the court said that it was not thought proper to proceed by indictment and that proceedings should be taken summarily, the consent of the Attorney General would be required, lt seems to me that to acquire the AttorneyGeneral’s consent for all summary prosecutions is an unnecessary complication and normally the Attorney-General’s consent to a summary prosecution is given only where policy considerations are involved in the prosecution of an offence.
Proposed new clause negatived.
Clause 273. (2.) Where proceedings for an offence that is punishable as provided by the last preceding subsection arc brought in a court of summary jurisdiction, the court may either determine the proceedings or commit the defendant for trial, but shall not, if it determines the proceedings, impose a period of imprisonment exceeding one year in respect of the i offence. (5.)- Where proceedings for an offence other than an offence that is punishable by a fine only are brought in the Court, the Court may either determine the proceedings or commit the defendant for trial before a court of competent jurisdiction, but shall not, if it determines the proceedings, impose a period of imprisonment exceeding one year in respect of the offence.
.- I have two amendments to offer to sub-clauses (2.) and (5.) of clause 273. I ask for leave to have them dealt with together because they involve the same point.
– I would like Senator Cohen to give an indication of the length of time he thinks it will take if both subclauses are dealt with together.
– About five minutes; no more.
– There being no objection, leave is granted.
– I move-
Sub-clause (2.) refers to the right given to a court of summary jurisdiction, in dealing with a matter that is punishable by thai court with a period of imprisonment of up to one year, to determine proceedings itself or commit a defendant for trial. The pur pose of the amendments can be simply stated. I want to guarantee to a defendant who is in jeopardy of a year’s imprisonment the right to trial by jury, if he wants it. The present clause does not provide such a right. I think the Minister would concede that to be so. It is for a court of summary jurisdiction to say: “ I think this is a case in which I will try you here and now, notwithstanding that you are not asked to consent or object to it “. Or a court may say: “ I will commit you for trial. You have your trial before a judge and jury because I regard this as a very serious offence.” I want not to compel every matter to go to a jury, but to give to every defendant who is in peril of imprisonment for up to a year the right to say: “ Sir, I want my case tried by a jury “. The magistrate who takes that plea should be obliged to commit the defendant for trial. If, on the other hand, a magistrate invites a defendant to have a matter dealt with summarily and the defendant consents to that course, there can be no objection to it, but there has to be in any statute of this type a guarantee of a right to trial by jury; otherwise, it seems to me that the legislation is defective.
The same remarks are applicable to the proposed amendment to sub-clause (5.). Sub-clause (4.) deals with a court having jurisdiction to try summarily any offence against this legislation. That is dealing not with a court of summary jurisdiction but with a court as defined in this Bill which includes the Federal Court of Bankruptcy and the various courts exercising bankruptcy jurisdiction. If my proposed amendment to sub-clause (5.) is accepted it will read -
Where proceedings for an offence other than an offence that is punishable by a fine only are brought in the Court, the Court may either wilh the consent of the defendant determine the proceedings summarily or commit the defendant for trial before a court of competent jurisdiction, but shall not, if it determines the proceedings impose a period of imprisonment exceeding one year in respect of the offence.
The principle is the same in both amendments. The Opposition does not want it to be open to a court, whether it is a court of summary jurisdiction or a court exercising bankruptcy jurisdiction, to be able to say to an accused man who stands in jeopardy: “ Notwithstanding you want to be tried by a judge and jury it is my decision that I will try you here, and if I find you guilty I have power to commit you to prison for a period of up to one year”. I do not think that accords with our customary and traditional principles of justice.
The whole approach to the administration of the criminal law in this country, in British countries., in countries which hold hard to the tradition of protecting a man until he is proved guilty, is to assume his innocence of all serious and indictable offences on which he appears. 1 do not think it is consistent with that tradition to deny a nian the right to trial by his peers, a trial on the issues of fact by a jury of men drawn from ordinary citizens in the community. That is why we advance this proposed amendment. The Court should not have ;o commit him for trial in any event, but if he insists upon being sent for trial by a jury he should have that right. This clause is notably deficient in that respect.
.- On such an important matter I want to make a statement of the utmost brevity. We must remember that the Constitution provides that trial on an indictable offence within the Federal judicial power should be by jury, but indictable offences are not defined. However, there has always been a distinction between indictable offences and offences punishable summarily.
– Senator Cohen did not say that. He said trial on indictment. That is the critical difference.
– Thank you. I speak as one very strongly in favour of preserving the principles of trial by jury. We have a complexity of life, particularly in the bankruptcy jurisdiction where statutory offences are necessarily tried summarily. Otherwise the wheels of justice would be, so clogged that they would be ineffective. If there were a proper analysis of these offences and those which involve fraud or dishonesty - proverbial issues for trial by jury selected - and were a defendant to be given the right to elect to be tried on an issue such as that, in my view there would be great merit in such an amendment. But this amendment is altogether too wide.
The only other thing I want to say is that we had an eye to this situation, as provided for in this clause, when we accepted the amendment the other night extending the right of appeal to an appeal on questions of fact where convictions involve a fine of more than $200 or six months imprisonment, and to an appeal on a question of law in relation to any offence. Those are my reasons for not supporting the amendment. I rose to obtrude my remarks on the Committee only because of the importance of the subject matter of the amendment.
– I rise to support Senator Cohen. He said there should be a preservation of the right to trial by jury and that where that right is not exercised a person should not be subjected to one year’s imprisonment. In other words, there is a distinction to be drawn between those cases where a person is liable to one year’s imprisonment and those cases where a person is liable to imprisonment for a lesser period. Senator Wright has said: “No, that should not be the line of distinction. It might be permissible if there were some other offence such as fraud.” In my submission to the Committee, the distinction which Senator Cohen has drawn is the correct one because this same line is drawn by the Constitution. A conviction for which a person would be liable to one year’s imprisonment is of great importance to every citizen. I direct the attention of the Committee to section 44 of the Constitution which states, amongst other things -
Any person who . . . has been convicted and is under sentence, or subject to be sentenced, for any offence punishable under the law of the Commonwealth or of a State by imprisonment for one year or longer . . . shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.
That provision applies to this very Parliament so it applies to an important civil right of all citizens. One finds similar provisions in the statute law applying to various other positions in the Commonwealth. There are similar provisions in State law. One should bear that in mind when considering the proposition advanced by Senator Cohen.
First of all, it is agreed on all sides that it was the intention of those who framed section 80 of the Constitution that all serious offences should be tried by jury but by a most curious and much criticised decision of the High Court that provision has been rendered virtually ineffective and it applies only when a trial is on indictment. In effect, this has been rendered a nonsensical provision. One day it may be restored to what was intended by the framers of the Constitution. But there is the policy that serious matters should be tried by jury. We know that it is an extremely serious matter if a person is liable to imprisonment for one year. It does not matter whether he is in fact sentenced to less than that. The importance lies in the fact that the offence concerned is punishable by imprisonment for one year or longer. A distinction is drawn in the Constitution itself, and it is copied elsewhere. It indicates that the criterion which has been offered by Senator Cohen is the correct one. I support entirely his amendments.
Question put -
Th at the amendments be agreed to.
The Committee divided. (The Chairman - Senator T. C. DrakeBrockman.)
Majority . . . . 1
Question so resolved in the negative.
Clause agreed to.
Clauses 274 to 315 - by leave - taken together, and agreed to.
Senate adjourned at 11.37 p.m.
Cite as: Australia, Senate, Debates, 4 May 1966, viewed 22 October 2017, <http://historichansard.net/senate/1966/19660504_senate_25_s31/>.