Finlayson Christopher: Insolvency Law Reform Bill — In Committee 
Finlayson Christopher: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:5741] 
CHRISTOPHER FINLAYSON (National) 
: 
 I will take just a brief call on Part 2 of the Insolvency Law Reform Bill because as the Minister in the chair the Hon Lianne Dalziel says it deals with the essential nature of bankruptcy and the process for being made bankrupt. 
Although the National Party is opposing this bill for reasons we have already elaborated on one of the good things about it is that it does away with old-fashioned terminology. Under the old regime one needed— 
Hon David Carter 
: Would Winston have understood it then? 
CHRISTOPHER FINLAYSON 
: I will explain the Winston hypothetical in a few seconds. Under the old regime one needed to petition the High Court if the bankruptcy notice was not complied with within a particular time. Now of course that terminology has gone and the High Court Rules will need to be amended. 
Part 2 deals with what happens if someone fails to comply with a bankruptcy notice. Let me give the Committee this example. A person has proceedings struck out against a member of Parliament in a defamation case and incurs costs. The plaintiff is told to pay those costs but refuses to pay them. Time goes by and the impoverished and excitable defendant gets upset about that. So how does the defendant go about recovering his or her costs? He serves a bankruptcy notice in accordance with clause 29 of this legislation. The bankruptcy notice obviously has to be in the required form and it sets out the amount that the successful defendant in the defamation case wishes to recover from the plaintiff. If that notice is not complied with then the actual bankruptcy proceedings may begin. 
There are a couple of points on adjudication that I want to address briefly. The court has a discretion as to whether to adjudicate a person bankrupt. I refer to clause 36: “The Court may at its discretion adjudicate the debtor bankrupt …”. Indeed the court may refuse to adjudicate in certain circumstances and they are set out in clause 37. It is sometimes thought that bankruptcy will follow simply because the notice has not been complied with. Well that is wrong. I can recall at least one case where the court looked at the situation after the time for complying with the bankruptcy notice had expired and decided that it would not be just or equitable to declare the debtor bankrupt. 
I have one or two concerns about the debtor application procedure. It seems to me that it is almost too easy for a person to go into bankruptcy under this legislation. Clause 45 sets out the circumstances when a debtor may file an application. A debtor may file such an application with the assignee if he or she has combined debts of $1000 or more which is peanuts. I wonder whether the figure should be more substantial particularly bearing in mind the costs to the Government of administering bankrupt estates and the steps for example that the assignee must take after bankruptcy which are set out in this part as well. 
One or two changes have been made to the legislation as it has gone through the select committee. For example clause 24(2) talks about execution process. As the majority report stated the term “charging order” has been deleted because it is not a form of execution process. I wonder whether the Minister ought to check whether the terminology referred to in that clause will continue for very much longer—writs of sale possession arrest or sequestration—because I have an idea that the High Court Rules Committee is completely redoing Part 6 of the High Court Rules dealing with execution. I have a feeling that some of that terminology will change. So if the terminology is going to change in the High Court Rules it should also be changed in this legislation and a couple of Supplementary Order Papers may be required—although I suppose it will be a bit too late to do that. 
Part 2 does not contain anything too magical; it simply sets out the nature of bankruptcy and the process of being made bankrupt. Apart from some of the minor points I have made I have no particular objection to this part but of course we have overriding objections to the bill that colour the way we will look at it.