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Part VIII—Trustees

Division 1—Appointment and official name

154A.  Application to become a registered trustee

(1)    An individual may apply to the Inspector‑General to be registered as a trustee.

(2)    The application must be in the approved form.

(3)    The application must be accompanied by:

(a)    any information or documents prescribed by the regulations; and

(b)    the fee determined by the Minister by legislative instrument.

(4)    The application is properly made if subsections (2) and (3) are complied with.

155.    Processing of an application

(1)    After receiving a properly made application, the Inspector‑General must convene a committee to consider the application.

(2)    The committee must consist of:

(a)    the Inspector‑General; and

(b)    an APS employee; and

(c)     a registered trustee chosen by the Insolvency Practitioners’ Association of Australia (A.C.N. 002 472 362).

(3)    The committee must consider the application and interview the applicant.

Note:  The regulations may provide for the way in which the committee must do its work: see section 315.

155A.  Committee’s decision on an application

Time limit for decision

(1)    Within 60 days of interviewing the applicant, the committee must decide whether the applicant should be registered as a trustee or not.

Exam to assess suitability

(1A)  For the purpose of deciding whether the applicant should be registered, the Committee may require the applicant to sit for an exam.

Mandatory decision in favour of registration

(2)    The committee must decide that the applicant should be registered if the committee is satisfied that the applicant:

(a)    has the qualifications, experience, knowledge and abilities prescribed by the regulations; and

(b)    will take out insurance against liabilities that the applicant may incur working as a registered trustee; and

(c)     has not been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty; and

(d)    has not been a bankrupt or a party (as debtor) to a debt agreement or Part X administration within 10 years before making the application; and

(e)    has not had his or her registration as a trustee cancelled within 10 years before making the application on the ground that:

(i)      he or she contravened any conditions imposed by a committee on his or her practice as a registered trustee; or

(ii)     he or she failed to exercise the powers of a registered trustee properly; or

(iii)    he or she failed to carry out the duties of a registered trustee properly.

Discretion to decide in favour of registration

(3)    If the committee considers that the applicant is suitable to be registered as a trustee, it may decide that the applicant should be registered even if it is not satisfied that the applicant has the qualifications, experience, knowledge and abilities prescribed by the regulations for the purposes of paragraph (2)(a).

Mandatory decision against registration

(4)    The committee must decide that the applicant should not be registered if it is satisfied that the applicant:

(a)    will not take out insurance against liabilities that the applicant may incur working as a registered trustee; or

(b)    has been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty; or

(c)     has been a bankrupt or a party (as debtor) to a debt agreement or a Part X administration within 10 years before making the application; or

(d)    has had his or her registration as a trustee cancelled within 10 years before making the application on the ground that:

(i)      he or she contravened any conditions imposed by a committee on his or her practice as a registered trustee; or

(ii)     he or she failed to exercise the powers of a registered trustee properly; or

(iii)    he or she failed to carry out the duties of a registered trustee properly.

(4A) The Committee must decide that the applicant should not be registered if the Committee is not satisfied that the applicant has the ability (including knowledge) to perform satisfactorily the duties of a registered trustee.

Conditions on registration

(5)    If the committee decides that the applicant should be registered, it may decide that specified conditions should apply to the applicant’s practice as a registered trustee.

Report of decision

(6)    The committee must give the applicant and the Inspector‑General a report on all of its decisions relating to the application, and the reasons for them.

Review of decision

(7)    The applicant may apply to the Administrative Appeals Tribunal for review of a decision of the committee.

155B.  Effect of committee’s decision

The Inspector‑General must give effect to all of the committee’s decisions, subject to paragraph 155C(1)(b).

155C. Registration as a trustee

(1)    The Inspector‑General must register the applicant as a trustee if:

(a)    the committee has decided that the applicant should be registered; and

(b)    the applicant has paid the fee determined by the Minister by legislative instrument.

(2)    The Inspector‑General registers an applicant by entering in the National Personal Insolvency Index the details relating to the applicant that are prescribed in the regulations.

(3)    After registering a person as a trustee, the Inspector‑General must give the person a certificate of registration.

(4)    The registration has effect for 3 years.

155D. Extension of registration

(1)    The Inspector‑General must extend the registration of a person as trustee for three years from the expiry of the person’s registration if:

(a)    the person applies in writing to the Inspector‑General for the extension before the person’s registration expires; and

(b)    the person has paid the fee determined by the Minister by legislative instrument (and any late payment penalty under subsection (3) of this section).

(2)    The Inspector‑General must not extend the registration of a person if:

(a)    the person owes a total of more than $50 for the following:

(i)      charge under the Bankruptcy (Estate Charges) Act 1997 (the estate charge);

(ii)     penalty under section 281 of this Act in respect of that charge; and

(b)    the Inspector‑General notified the person of the unpaid estate charge at least 14 days before the due date for payment of the charge under subsection (3) on the extension of the registration.

(3)    The fee for an extension of registration is due for payment one month before the expiry of the registration. If the fee is not paid by then, an additional amount equal to 20% of the fee is payable by the trustee by way of penalty.

155E.  Application for change of conditions on practising as a registered trustee

(1)    If a committee has decided under this Division that conditions should apply to a person’s practice as a registered trustee, the person may apply to the Inspector‑General for the conditions to be changed or removed.

(2)    The application must be in the approved form.

(3)    The application must be accompanied by any information or documents prescribed by the regulations.

(3A) The application is properly made if subsections (2) and (3) are complied with.

(4)    After receiving a properly made application, the Inspector‑General must convene a committee to consider the application.

(5)    The committee must consist of:

(a)    the Inspector‑General; and

(b)    an APS employee; and

(c)     a registered trustee chosen by the Insolvency Practitioners’ Association of Australia (A.C.N. 002 472 362).

(6)    The committee must consider the application and interview the applicant.

Note:  The regulations may provide for the way in which the committee must do its work: see section 315.

155F.  Decision on application for change of conditions

(1)    Within 60 days of interviewing the applicant, the committee must:

(a)    decide that the conditions on the applicant’s practice as a registered trustee should not be changed; or

(b)    decide that specified modifications should be made to the conditions that apply to the applicant’s practice as a registered trustee.

Note:      See the definition of modifications in subsection 5(1).

(2)    The committee must give the applicant and the Inspector‑General a report of its decision relating to the application, and the reasons for the decision.

(3)    The applicant may apply to the Administrative Appeals Tribunal for review of the committee’s decision.

(4)    The Inspector‑General must give effect to the committee’s decision.

155G. Voluntary termination of registration

(1)    A person who is a registered trustee may give the Inspector‑General a written request that the person cease to be registered as a trustee.

(2)    The person ceases to be registered as a trustee when the Inspector‑General accepts the request.

155H.  Consideration of involuntary termination of registration

(1)    The Inspector‑General may ask a registered trustee to give the Inspector‑General a written explanation why the trustee should continue to be registered, if the Inspector‑General believes that:

(a)    the trustee no longer has a qualification or ability that is prescribed by the regulations made for the purposes of paragraph 155A(2)(a); or

(aa)  the trustee no longer has the ability (including knowledge) to perform satisfactorily the duties of a registered trustee; or

(b)    the trustee has been convicted of an offence involving fraud or dishonesty since registration as a trustee; or

(c)     the trustee is not insured against liabilities that the trustee may incur, or has incurred, working as a registered trustee; or

(d)    the trustee is no longer practising as a registered trustee; or

(e)    the trustee has contravened any conditions imposed by the committee on the trustee’s practice; or

(f)      the trustee has failed to exercise powers of a registered trustee properly or has failed to carry out the duties of a registered trustee properly; or

(g)    the trustee has failed to comply with a standard prescribed for the purposes of subsection (5).

(2)    If the Inspector‑General does not receive an explanation within a reasonable time, or is not satisfied by the explanation, the Inspector‑General must convene a committee to consider whether the trustee should continue to be registered.

(3)    The committee must consist of:

(a)    the Inspector‑General; and

(b)    an APS employee; and

(c)     a registered trustee chosen by the Insolvency Practitioners’ Association of Australia (A.C.N. 002 472 362).

(4)    In considering whether the trustee should continue to be registered, the committee must take into account the matters mentioned in paragraphs (1)(a) to (g).

Note:  The regulations may provide for the way in which the committee must do its work: see section 315.

(5)    The regulations may prescribe standards applicable to the exercise of powers, or the carrying out of duties, of registered trustees.

155I.    Decision on involuntary termination of registration

(1)    The committee must:

(a)    decide that the trustee should continue to be registered; or

(b)    decide that the trustee should cease to be registered.

(2)    The committee may decide under paragraph (1)(a) that:

(a)    the trustee should continue to be registered unconditionally; or

(b)    the trustee should continue to be registered on the condition that:

(i)      the trustee meets specified conditions; or

(ii)     specified conditions are imposed on the trustee’s practice; or

(iii)    specified modifications are made to conditions on the trustee’s practice.

Note:      See the definition of modifications in subsection 5(1).

(3)    The committee may decide under paragraph (1)(b) that:

(a)    the trustee should cease to be registered unconditionally; or

(b)    the trustee should cease to be registered if the trustee fails to meet specified conditions.

(4)    The committee must give the trustee and the Inspector‑General a report of its decision relating to the application, and the reasons for the decision.

(5)    The trustee may apply to the Administrative Appeals Tribunal for review of the committee’s decision.

(6)    The Inspector‑General must give effect to the committee’s decision.

Note:     Sections 176 and 182 specify other circumstances in which a trustee may involuntarily cease to be registered.

155J.  After termination of registration

(1)    If a person ceases to be registered as a trustee for any reason, the person must give his or her certificate of registration to the Inspector‑General.

Penalty:  1 penalty unit.

(1A) Subsection (1) is an offence of strict liability.

Note:      For strict liability, see section 6.1 of the Criminal Code.

(1B)  Subsection (1) does not apply if the person has a reasonable excuse.

Note:   A defendant bears an evidential burden in relation to the matter in subsection (1B) (see subsection 13.3(3) of the Criminal Code).

(2)    A person who ceases to be registered is not entitled to a refund of all or part of any registration fee that the person had paid.

155K.  Payment of fees etc. for application, registration and extension

If a person gives the Commonwealth a cheque or payment order in payment of a fee under section 154A, 155C or 155D, the amount is taken not to be paid until the cheque or payment order is paid by the institution on which it is drawn.

156A.  Consent to act as trustee [see Table B]

(1)    A registered trustee may, by instrument signed by him or her and filed with the Official Receiver, consent to act:

(a)    as the trustee of the estate of the debtor specified in the instrument in the event that the debtor becomes a bankrupt; or

(b)    as the trustee of the joint and separate estates of such of the debtors specified in the instrument, being members of a partnership or joint debtors who are not in partnership with one another, as may become bankrupts, or, if only one of those debtors becomes a bankrupt, as the trustee of the estate of that debtor.

(2)    An instrument under subsection (1) shall be in accordance with the approved form.

(3)    Where:

(a)    at the time when a debtor becomes a bankrupt, a registered trustee has, under subsection (1), consented to act as the trustee of the estate of the debtor and the consent has not been revoked, the registered trustee becomes, at that time, by force of this subsection, the trustee of the estate of the bankrupt; and

(b)    at the time when 2 or more debtors, being members of a partnership or joint debtors who are not in partnership with one another, become bankrupts, a registered trustee has, under subsection (1), consented to act as the trustee of the joint and separate estates of those debtors and the consent has not been revoked, the registered trustee becomes, at that time, by force of this subsection, the trustee of the joint and separate estates of those bankrupts.

(4)    A creditor may file with the Court an application for the removal by the Court of a trustee of the estate of a bankrupt, being a trustee who is the trustee of that estate by virtue of subsection (3), on the ground:

(a)    that the trustee is not fit to act as trustee; or

(b)    that the connection of the trustee with, or the relation of the trustee to, the bankrupt is likely to make it difficult for him or her to act with impartiality in the interests of the creditors generally.

(5)    Where an application under subsection (4) is filed, the Court may, if a ground specified in that subsection is established, remove the trustee from office and may appoint another registered trustee to be trustee in his or her place.

(5A)  If the Court removes the trustee and appoints another trustee, the creditor who applied for the removal must give the Official Receiver written notice of the removal and appointment as soon as practicable.

(6)    Where the Court appoints a person as trustee under subsection (5), the Official Receiver must issue to the person a certificate of appointment.

(7)    The appointment of a trustee under subsection (5) takes effect from and including the date on which the Court makes the appointment or such later date as the Court directs.

157.    Appointment of trustees [see Table B]

(1)    Where a debtor becomes a bankrupt, the creditors may, if the Official Trustee is the trustee of the estate of the bankrupt, by resolution, at a meeting of creditors, appoint a registered trustee to the office of trustee of the estate of the bankrupt in place of the Official Trustee.

(2)    The person (in this section referred to as the relevant trustee) who is the trustee of the estate of a bankrupt at the time of an appointment, under subsection (1), of a registered trustee as the trustee, or as one of the trustees, of the estate shall, as early as practicable, notify the registered trustee, in writing, that he or she has been so appointed.

(3)    If the registered trustee appointed under subsection (1) informs the relevant trustee in writing, within 10 days after he or she is notified by the relevant trustee of his or her appointment, that he or she accepts the office, the Official Receiver shall issue to him or her a certificate of appointment.

(4)    The appointment of a trustee under subsection (1) takes effect from and including the date of the certificate of appointment issued by the Official Receiver.

(5)    If the registered trustee appointed under subsection (1) does not so inform the relevant trustee within 10 days after he or she is notified by the relevant trustee of his or her appointment, he or she shall be deemed to have declined the appointment, and the relevant trustee shall, unless the resolution of creditors has made provision for the contingency, convene another meeting of creditors as soon as practicable for the purpose of appointing, under subsection (1), another registered trustee to the office of trustee.

(6)    A creditor may file with the Court an objection to an appointment of a person under this section on the ground:

(a)    that the appointment was not made in good faith by a majority in value of the creditors voting;

(b)    that the person appointed is not fit to act as trustee; or

(c)     that his or her connexion with, or relation to, the bankrupt or his or her estate or a particular creditor is likely to make it difficult for him or her to act with impartiality in the interests of the creditors generally.

(7)    Where such an objection is filed, the Court may, if any of the grounds specified in subsection (6) is established, cancel the appointment and may appoint another registered trustee to be trustee in his or her place.

(7A)  If the Court cancels the appointment of a trustee and appoints another trustee, the creditor who filed the objection must give the Official Receiver written notice of the cancellation and appointment as soon as practicable.

(8)    Where the Court appoints a person as trustee under subsection (7), the Official Receiver must issue to the person a certificate of appointment.

(9)    The appointment of a trustee under subsection (7) takes effect from and including the date on which the Court makes the appointment or such later date as the Court directs.

158.    Appointment of more than one trustee etc. [see Table B]

(1)    The creditors may, if they think fit, appoint 2 or more registered trustees jointly, or jointly and severally, to the office of trustee, and in either such case the property of the bankrupt vests in those registered trustees as joint tenants.

(2)    The creditors may, if they think fit, appoint registered trustees to act as trustees in succession in the event of one or more of the registered trustees appointed declining to act or ceasing for any reason to hold the office of trustee.

(3)    In this section, a reference to a registered trustee, in relation to the appointment of a trustee of the estate of a bankrupt, includes a reference to a registered trustee who is, by virtue of subsection 156A(3), the trustee of the estate of the bankrupt.

159.    Vacancy in office of trustee [see Table B]

(1)    The creditors may, at a meeting of the creditors, fill any vacancy in the office of trustee.

(2)    An Official Receiver shall, on the requisition of a creditor, summon a meeting of creditors for the purpose of filling such a vacancy.

(3)    For the purposes of this section, an office of trustee shall be deemed to be vacant notwithstanding that it is for the time being filled by the Official Trustee by reason of the operation of section 160.

(4)    The provisions of sections 157 and 158 apply, so far as they are capable of application, to and in relation to the appointment of a new trustee under this section.

160.    Official Trustee to be trustee when no registered trustee is trustee [see Table B]

If at any time there is no registered trustee who is the trustee of the estate of a bankrupt, the Official Trustee shall, by force of this section, be the trustee of the estate.

161.    Trustee may act in official name [see Table B]

(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, make contracts, enter into engagements binding on the trustee and his or her successors in office and do all other acts and things necessary or expedient to be done in the execution of his or her office.

(2)     For the purposes of subsection (1), the prescribed official name is “The Trustee (or Trustees) of the Property of (name of bankrupt), a Bankrupt”.

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

(4)    If:

(a)    a person (the first trustee) ceases to be the trustee of a bankrupt’s estate; and

(b)    proceedings to which the first trustee was a party were pending under the Family Law Act 1975 immediately before the cessation; and

(c)     another person (the second trustee) becomes the first trustee’s successor in office;

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

161A.  Registered trustee to notify Inspector‑General of certain events

(1)    If a registered trustee is convicted of an offence involving fraud or dishonesty, the registered trustee must give the Inspector‑General written notice of the conviction and the nature of the offence as soon as practicable.

(2)    If a registered trustee becomes a bankrupt, or enters as debtor into an insolvency administration, under the law of a foreign country, the registered trustee must give the Inspector‑General written notice of the fact as soon as practicable.

Division 2—Remuneration and costs

161B.  Trustee’s remuneration—minimum entitlement [see Table B]

(1)    If the total remuneration payable to the trustee under section 162 would be less than $1,109 (the statutory minimum), the trustee is entitled to be paid additional remuneration equal to the shortfall.

(1A) The statutory minimum (as affected by section 304A) is increased by 8.4% if the trustee’s remuneration is consideration for a taxable supply (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999).

(2)    If there are insufficient funds in the bankrupt’s estate to pay the trustee the amount (if any) payable under subsection (1), the trustee may recover that amount from the person who is or was the bankrupt as a debt due to the trustee by action in a court of competent jurisdiction.