Inspector-General Practice Statement 18

IGPS 18 - Issuing of infringement notices by the Inspector-General in Bankruptcy
Date of release: 
December 2010
Last updated: 
September 2017

1. Introduction

1.1 The Bankruptcy Act 1966 (the Act) contains a range of offences provisions, some of which are specifically described as 'strict liability'1 offences.

1.2 Division 2 of Part 14 of the Bankruptcy Regulations 1996 (the Regulations) provides an infringement notice scheme which applies to the strict liability offences that appear in the table in subsection 277B(2) of the Act. This practice statement relates only to those offences.

1.3 Under the infringement notice regime, the Inspector-General in Bankruptcy is empowered to issue an infringement notice to an alleged offender for the payment of a specified penalty in lieu of criminal prosecution action being instigated. This regime will provide an efficient means of 'penalising behaviour which, while relatively minor in criminality, can have significant repercussions for the effective administration of bankrupt estates, integrity of the National Personal Insolvency Index or regulation of insolvency practitioners.'2 The infringement notice regime will not replace the current penalties within the Bankruptcy Act, but will serve as an alternative to prosecution action.3

Importantly, these offences will assist to preserve the integrity of the National Personal Insolvency Index. This index is the public record of bankruptcy and personal insolvency events and is an important tool for business and lenders.4

1. See section 6.1 of the Criminal Code Act 1995.
2. Bankruptcy Legislation Amendment Bill 2009, Explanatory Memorandum, The Parliament of the Commonwealth of Australia, House of Representatives, page 18.
3. Bankruptcy Amendment Regulations 2010, Explanatory Memorandum, Attorney-General’s Department, page 7.
4. The Hon Robert McClelland MP, Second Reading Speech Bankruptcy Legislation Amendment Bill 2009, Parliament House, Canberra, 28 October 2009.

2. Infringement notice offences

2.1 Those offences subject to the infringement notice regime are detailed in the table listed at section 277B of the Act. The penalty that applies varies depending on the alleged offence. The amounts shown in subsection 277B(2) of the Act are linked to section 4AA of the Crimes Act 1914 (Cth). Currently one penalty unit equates to $210.

2.2 On 1 July 2017 Schedule 1, Item 1 of the Crimes Legislation Amendment (Penalty Unit) Act 2017 was introduced to increase the penalty unit amount. Previously one penalty unit equated to $180. This amount will continue to apply for offences subject to the infringement notice regime committed before 1 July 2017.

2.3 For a natural person, the maximum amount payable pursuant to an infringement notice is one-fifth of the maximum penalty that can be imposed by a Court should the matter be determined by a court of law.

2.4 If the entity that contravenes the Act is a corporation then the maximum penalty a court can impose is five times the maximum penalty that could be imposed had the offence been committed by a natural person.5

2.5 Annexure A lists these offences, their statutory references and provides a description of the offence, the court-imposed penalty and the penalty imposed in accordance with the infringement notice regime.

Example 1 If, within two working days after receiving the proposal for a composition or arrangement, the trustee fails to give a copy of the proposal to the Official Receiver pursuant to subsection 73(1A) of the Act, the trustee will be liable to pay an infringement notice in the sum of $210. (That is one-fifth of the potential maximum court-imposed penalty of $1,050.)

5. See section 4B(3) of the Crimes Act 1914.

3. Issuing an infringement notice

3.1 The Australian Financial Security Authority (AFSA) Regulation and Enforcement division will have sole carriage and responsibility for the issuing of infringement notices on behalf of the Inspector-General in Bankruptcy.

3.2 Enforcement’s Compliance team will have primary responsibility for investigating relevant allegations contrary to the Act, issuing infringement notices and preparing prosecution briefs for those who do not pay the fine or opt for the matter to be determined by a court of law.

3.3 Regulation 14.05 of the Regulations provides that once the Inspector-General has reasonable grounds to believe6 that a person has committed an offence that is subject to the scheme, the Inspector-General may, within 12 months after the alleged commission of the offence, issue the person with an infringement notice. The decision on whether or not to issue an infringement notice is a matter of discretion for the Inspector-General.7

3.4 In accordance with subsection 11(4) of the Act, the Inspector-General has delegated the power to issue infringement notices to authorised employees within AFSA Regulation and Enforcement. Subsequent references to the Inspector-General in this practice statement also therefore include reference to a delegate of the Inspector-General for these purposes.

3.5 Areas for consideration before issuing an infringement notice may include:

  • the nature of the alleged breach
  • the likelihood of an infringement notice being a successful deterrent
  • practical considerations, including whether or not there is a history of non- compliance by the alleged offender
  • previous warnings
  • whether the alleged breach should best be dealt with by a court of law on
  • public interest or other grounds
  • whether there a more appropriate resolution or sanction that ought to be applied.

3.6 The above factors are not weighted, nor are they an exhaustive list of considerations to be taken into account before deciding whether or not to issue an infringement notice.

3.7 When considering whether or not to issue an infringement notice the possible defence of mistake of fact should be considered.8

3.8 Section 6.1 of the Criminal Code Act 1995 states:

(1) If a law that creates an offence provides that the offence is an offence of strict liability:

(a) there are no fault elements for any of the physical elements of the offence
(b) the defence of mistake of fact under section 9.2 is available.

3.9 An infringement notice may be issued to a person more than once for the same offence if a person continuously fails to comply with their obligations under the Act. The issuing of subsequent infringement notices for continued non- compliance remains discretionary as the Inspector-General may decide to refer the matter to the Commonwealth Director of Public Prosecutions for prosecution action.

3.10 All factors considered in the issuance, or non-issuance of an infringement notice, must be documented in accordance with the Australian Government Investigation Standards and the APS Code of Conduct and Values.
Note: access to information held by the AFSA is subject to the Freedom of Information Act 1982.

3.11 Annexure B provides a template infringement notice.

Joint trustees

3.12 Where an infringement notice is issued and there are two trustees appointed to the administration, the notice is to be issued in the names of both trustees.

6. Reasonable grounds to believe require a higher standard of knowledge than reasonable grounds to suspect.
7. See regulation 14.03(2).
8. See section 9.2 of the Criminal Code Act 1995.

4. Reckoning of time

4.1 With the exception of subsections 73(1A) and 224A(5) of the Act, time within in which to comply is to be reckoned in accordance with section 36 of the Acts Interpretation Act 1901.

4.2 The Acts Interpretation Act provides that where a document is to be filed or a payment made by a given date, that date will be reckoned exclusive of the day of such an event. Furthermore, where the last day of the period given for a document to be filed or a payment made falls on a Saturday, on a Sunday or on a day which is a public holiday in the place in which the thing is to be or may be done, the thing may be done on the first day following which is not a Saturday, a Sunday or a public holiday in that place.

Example 2: If the trustee has two days from a Friday to file a document, the document would notionally have to be filed by Sunday. However, the Acts Interpretation Act provides that an act (such as filing a document) that is required to be done on a Saturday, Sunday or public holiday can be done on the next working day – in this case the following Monday (assuming it too is not a public holiday).

4.3 The time in which to comply for subsections 73(1A) and 224A(5) of the Act are defined by subsections 73(1B) and 224A(6) respectively.

5. Service of an infringement notice

5.1 Regulation 14.07 of the Regulations provides the basis upon which infringement notices may be served.

5.2 For the purposes of the operation of the regime, an infringement notice may be served on an individual:

a. personally or by post

b. by leaving the notice:

i. at the last-known place of residence or business of the person
ii. with a person, apparently over the age of 16 years, who appears to live or work at the place.

5.3 An infringement notice may be served on a corporation:

a. by leaving it at, or by sending it by post to, the address of the head office, a registered office or a principal office, of the corporation

b. by giving it, at an office mentioned in paragraph (a), to someone who is, or who the person serving the notice reasonably believes is, an officer or employee of the corporation.

5.4 An infringement notice may be served on a registered trustee or a registered debt agreement administrator by sending it by electronic communication to their business email address and which the Inspector- General could reasonably expect the practitioner to access. When email service is undertaken the email will be forwarded from InfringementNotice [at] afsa.gov.au.

5.5 Where prepaid post is utilised, best practice stipulates that the notices will be sent by registered post and be accompanied by a delivery confirmation receipt.

6. Receipt of an infringement notice

6.1 If an infringement notice is issued the recipient has four options:

  • pay the infringement notice
  • request an extension of time within which to pay the penalty
  • request a review, which will result in the infringement notice being withdrawn or upheld
  • elect not to pay the infringement notice, which results in a brief of evidence being submitted to the Commonwealth Director of Public Prosecutions.

Annexure C provides a flow chart of the infringement notice process.

Payment options

6.2 The recipient of an infringement notice may elect to pay the prescribed penalty within the 28-day period and thereby avoid the matter being referred for prosecution action.

6.3 If the recipient of an infringement notice requires more time to pay the penalty, they may write to the Inspector-General by email at InfringementNotice [at] afsa.gov.au or mail c/- Assistant Director Enforcement, GPO Box 2851, Melbourne Vic 3001, before the 28-day payment period lapses and request an extension of time within which to pay. An extension of up to 28 days may be granted.

6.4 If the application for a payment extension is made after the 28-day period specified for payment, then the application must include a statement explaining why the recipient could not deal with the notice within that period.9

6.5 The Inspector-General will consider the matter and, within 14 days, advise the referrer in writing as to whether or not an extension has been granted. If an extension is granted, the recipient will have to make payment with the period of extension otherwise the matter will be referred for prosecution action. If the extension is not granted, the recipient will be required to make payment within seven days of the letter of determination or before the end of the initial 28 day period, whichever is later.

6.6 Regardless of the decision concerning a request for an extension, the party requesting the extension will be advised of the decision in writing, and the new date for payment compliance will be stipulated within that advice.

6.7. If a person pays an infringement penalty by cheque made payable to the Australian Financial Security Authority, payment is not taken to have been made until the cheque has been honoured on presentation.10

Effect of payment

6.8 If the recipient of an infringement notice pays the specified penalty within the period allowed by the regulations:

a. any liability of the person for the offence is discharged
b. a prosecution of the offence cannot be brought against the person for the offence
c. the person is not regarded as having admitted guilt or liability for the offence
d. the person is not regarded as having been convicted of the offence.

Disputed infringement notices

6.9 Should a recipient dispute the issuing of an infringement notice by AFSA they can request that the matter be reviewed. Any request for a review will require the recipient to write11 to the Inspector-General by email at InfringementNotice [at] afsa.gov.au or mail c/- Assistant Director Enforcement, GPO Box 2851, Melbourne Vic 3001, within the 28-day payment period outlining the reasons for the review and providing any additional information for consideration by the Inspector-General.

6.10 The Inspector-General will consider the matter and, within 14 days, advise the recipient of the determination. Before withdrawing, or refusing to withdraw, a notice the Inspector-General must consider:

  • the circumstances of the offence stated in the notice
  • whether there are exceptional circumstances to justify the withdrawal
  • any other relevant matter.

6.11 If the Inspector-General refuses to withdraw the infringement notice the recipient will be required to make payment within 28 days of receiving notification of the determination. If a decision to issue the infringement notice is upheld and the recipient fails to make payment, the matter may be referred for prosecution action.

6.12 If the Inspector-General determines the infringement notice ought not to have been issued it may be withdrawn on a without prejudice basis.

6.13 If an infringement notice is withdrawn after the penalty amount has been paid, the Inspector-General will refund the amount of the penalty to the person who paid it.

9.  Regulation 14.09(2).
10. See Regulation 14.14.
11. Section 9 of the Electronic Transactions Act 1966 (Cth) provides that where an act requires information to be given in writing, electronic communications (ie email) is deemed to comply.

7. If payment is not received

7.1 When payment is not received within the 28-day time period the Inspector- General may choose to contact the intended recipient of the notice to determine the reason/s for non-payment and, if necessary, offer the recipient the opportunity to take part in an interview to answer the allegation.12

7.2. If the person or representative from the corporation to whom the notice was issued claims not to have received the infringement notice, the Inspector- General will consider the circumstances pertaining to this claim and, if necessary, re-issue the infringement notice.

Prosecution

7.3 All offences subject to the infringement notice regime are offences of strict liability.13 There is no provision within the Act that requires an infringement notice to be issued in the first instance. Furthermore, the decision-maker retains the discretion to forward a brief of evidence for prosecution of an alleged offence in the first instance, or following the withdrawal of an infringement notice.

7.4 Subsection 4K(1) of the Crimes Act 1914 states that where a law of the Commonwealth requires an act or thing to be done within a particular period, or before a particular time, then 'the obligation to do that act or thing continues, notwithstanding that the period has expired or the time has passed, until the act or thing is done.' As a consequence, the requirement to comply with the obligations listed in the table (Annexure A) in subsection 277B(2) of the Act are ongoing and a person may be found guilty of an offence in respect of each day the person refuses or fails to comply with their obligations.

7.5 It should also be noted that infringement notice regimes will only be effective if they are appropriately enforced. 'A scheme in not likely to be effective if persons who do not pay the penalty specified in the notice are routinely not prosecuted'.14

12.  See Division 3 of Part 1C of the Crimes Act 1914.
13.  See Section 6.1 of the Criminal Code Act 1995.
14.  Attorney-General’s Department, “A guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers”, December 2007.

Annexure A – offences of strict liability

The table below sets out the relevant offences of strict liability in subsection 277B(2) of the Bankruptcy Act 1966, their penalties and the infringement notice penalty.

PROVISION

OFFENCE

RELEVANT 
TIME LIMIT 15

COURT 
PENALTY

INFRINGEMENT 
NOTICE PENALTY

s52(1A)

If the court makes a sequestration order, the creditor who obtained the order must, within two days of the making of the order, give a copy to the Official Receiver.

2 days

5 penalty units

1 penalty unit

s73(1A)

The trustee must, within two working days after receiving the proposal for a composition or arrangement, give a copy of the proposal to the Official Receiver.

2 working days

5 penalty units

1 penalty unit

s74(5A)

The trustee must, before the end of the period of two days from the passing of a special resolution that annulled the bankruptcy, give the Official Receiver a written notice setting out the name and the bankruptcy number of the former bankrupt, and the date of annulment.

2 days

5 penalty units

1 penalty unit

s153A(2)

The trustee must, before the end of the period of two days from the date the bankruptcy is annulled pursuant to section 153A, give the Official Receiver a written notice setting out the name and the bankruptcy number of the former bankrupt, and the date of annulment.

2 days

5 penalty units

1 penalty unit

s153B(3)

The trustee must, before the end of the period of two days beginning on the day the trustee becomes aware of the order, give to the Official Receiver a written certificate setting out the former bankrupt's name and bankruptcy number and the date of annulment.

2 days

5 penalty units

1 penalty unit

s155J(1)

If a person ceases to be registered as a trustee, the person must, within seven days of ceasing to be registered, give his or her certificate of registration to the Inspector-General.

7 days

5 penalty units

1 penalty unit

s168(1)

A trustee of the estate of a bankrupt shall not pay into a private account any money received by him or her as trustee.

N/A

10 penalty units

2 penalty unit

s170A(1)

If, during a financial year, the trustee administered the estate of a bankrupt, the trustee must within the period of 35 days after the end of that year give the Inspector-General a return, in the approved form, in relation to the administration of that estate.

35 days

5 penalty units

1 penalty unit

s173(1)

The trustee of the estate of a bankrupt shall keep such accounts and records as are necessary to exhibit a full and correct account of the administration of the estate and shall permit a creditor of the bankrupt to inspect, at all reasonable times, either personally or by an agent, the accounts and records relating to that estate.

N/A

5 penalty units

1 penalty unit

s175(5)

The trustee shall produce to the person carrying out an audit under subsection 175(1), as and when required, such books and information as that person requires.

At any time (no date required)

5 penalty units

1 penalty unit

s182(4)

The person administering the deceased estate of a trustee must, within 28 days of becoming aware of the death, notify the Official Receiver, in writing, of the trustee’s death.

28 days

5 penalty units

1 penalty unit

s185LEA(1)

If, during a financial year, the DAA administered a debt agreement, the administrator must within the period of 35 days after the end of that year give the Inspector-General a return, in the approved form, in relation to the administration of that agreement.

35 days

5 penalty units

1 penalty unit

s185ZA(1)

The person administering the deceased estate of a debt agreement administrator must, within 28 days of becoming aware of the death, notify, in writing, the Official Receiver of the administrator’s death.

28 days

5 penalty units

1 penalty unit

s186N(1)

A person who surrenders their registration as a debt agreement administrator must, within  seven days of surrendering the registration, return the certificate of registration to the Inspector-General

7 days

5 penalty units

1 penalty unit

s186N(3)

A person whose registration as a debt agreement administrator is cancelled by the Inspector-General must, within seven days of being notified of the cancellation, give their certificate of registration to the Inspector- General.

7 days

5 penalty units

1 penalty unit

s186N(5)

A company, whose registration as a debt agreement administrator is cancelled by the Inspector-General must, within seven days of being notified of the cancellation, give their certificate of registration to the Inspector-General.

7 days

5 penalty units

1 penalty unit

s186N(6A)

A person whose registration as a debt agreement administrator is cancelled by a court order must, within seven days of the cancellation, give their certificate of registration to the Inspector-General.

7 days

5 penalty units

1 penalty unit

s218(2)

The trustee of a personal insolvency agreement (PIA) must, within two days after the execution of the agreement by the debtor and the trustee, file a copy of the agreement with the Official Receiver.

2 days

5 penalty units

1 penalty unit

s224A(1)

The trustee must, before the end of the period of two days beginning on the day of the termination or variation, file a copy of the resolution or special resolution in relation to termination or variation of the PIA with the Official Receiver.

2 days

5 penalty units

1 penalty unit

s224A(2)

If a PIA is varied in accordance with subsection 221A(5), the trustee of the agreement must, before the end of the period of two days beginning on the day of the variation, file a copy of the variation with the Official Receiver.

2 days

5 penalty units

1 penalty unit

s224A(3)

If a PIA is terminated by any event or occurrence of which the deed provides that it is to terminate, the trustee must before the end of the period of two days beginning on the day of the termination notify the Official Receiver in writing of the termination of PIA.

2 days

5 penalty units

1 penalty unit

s224A(4)

If the court makes an order setting aside or terminating a PIA the registered trustee must give written notice of the order to the Official Receiver before the end of the period of two days beginning on the day the trustee becomes aware of the order.

2 days

5 penalty units

1 penalty unit

s224A(5)

If the court makes an order setting aside or terminating a PIA, or a PIA is terminated otherwise than because of an order of the court, the trustee of the PIA must give written notice of the order or the termination to each of the creditors within two working days of the making of the order or the termination, as the case may be.

2 working days

5 penalty units

1 penalty unit

s244(14)

If the court makes an order that the estate be administered under Part XI, the creditor who obtained the order must, before the end of the period of two days beginning on the day the order was made, give a copy of the order to the Official Receiver.

2 days

5 penalty units

1 penalty unit

s245(3)

If the court makes an order that the deceased estate be administered under Part XI, the creditor who obtained the order must, before the end of the period of two days beginning on the day the order was made, give a copy to the Official Receiver.

2 days

5 penalty units

1 penalty unit

s246(1)

The legal personal representative of a deceased person in bankruptcy shall, within 28 days from the day on which he or she is notified of the making of the sequestration order, make out and file with the Official Receiver a statement of affairs form.

28 days

25 penalty units

5 penalty units

s247(3)

If the court makes an order upon hearing the petition, the person administering the estate of the deceased person must, before the end of the period of two days beginning on the day the order was made, give a copy of the order to the Official Receiver.

2 days

5 penalty units

1 penalty unit

s252A(2)

The trustee must, before the end of the period of two days beginning on the date of annulment give the Official Receiver a written certificate setting out the name and the administration number of the deceased estate and the date of annulment.

2 days

5 penalty units

1 penalty unit

s30-1(5)

A person who is a registered trustee during all or part of a trustee return year for the person must, within 1 month after the end of that year, lodge with the Inspector-General a return that conforms with subsection (3).

1 month

5 penalty units

1 penalty unit

s35-5(2)

A registered trustee must lodge with the Inspector-General a notice, in the approved form, if any of the following events occur:

(a) information included in an annual trustee return, or in an annual administration return, prepared by or on behalf of the trustee is or becomes inaccurate in a material particular;

(b) any other event prescribed.

The notice must be lodged within 10 business days after the registered trustee could reasonably be expected to be aware that the event has occurred.

10 days

5 penalty units

1 penalty unit

s65-40(3)

The trustee of a regulated debtor’s estate must deposit in a bank:

(a) the bills of exchange; and

(b) the promissory notes; and

(c) any other negotiable instrument or security;

payable to the regulated debtor or the trustee as soon as practicable after they are received by the trustee.

As soon as practicable

5 penalty units

1 penalty unit

s70-10(4)

The trustee of a regulated debtor’s estate must keep proper books in which the trustee must cause to be made:

(a) entries or minutes of proceedings at meetings relating to the administration of the estate; and

(b) such other entries as are necessary to give a complete and correct record of the trustee’s administration of the estate.

The trustee must:

(a) ensure that the books are available at the trustee’s office for inspection; and

(b) permit a creditor, or another person acting on the creditor’s behalf, to inspect the books at all reasonable times.

N/A

5 penalty units

1 penalty unit

s70-11(2)

If the trustee of a regulated debtor’s estate carries on a business previously carried on by the regulated debtor, the trustee must:

(a) keep such books as are usually kept in relation to the carrying on of a business of that kind; and

(b) permit a creditor, or another person acting on the creditor’s behalf, to inspect the books at all reasonable times.

N/A

5 penalty units

1 penalty unit

s70-25(4)

The trustee of the estate must give to the person carrying out the audit such books, information and assistance as the person reasonably requires.

N/A

5 penalty units

1 penalty unit

15 See paragraph 4.2 in the 'Reckoning of time'.

Annexure B – sample infringement notice

Sample infringement notice - page 1

IGPS18 Annexure B Sample Infringement Notice  page 1

Sample infringement notice - page 2

Annexure C – infringement notice process

IN - Infringement notice
IG - Inspector-General
NFA - No further action
CDPP - Commonwealth Director of Public Prosecutions