Commonwealth Numbered Regulations - Explanatory Statements

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RULES UNDER THE FEDERAL COURT OF AUSTRALIA ACT 1976 1991 NO. 70

Statutory Rules 1991 No. 70

Issued by the authority of the Judges of the Federal Court of Australia

AMENDMENT TO THE RULES OF THE FEDERAL COURT OF AUSTRALIA

Section 59 of the Federal Court of Australia Act 1976 (the Act) empower the Judges of the Court (of whom there are thirty three (33) including the Chief Justice) or a majority of them to make Rules of the Court, not inconsistent with the Act, making provision for or in relation to the practice and procedure to be followed in the Court, and for and in relation to all matters and things incidental to any such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business of the Court. Subsection 59(3) of the Act provides that Rules of Court made under s.59 have effect subject to any provision made by another Act, or by rules or regulations under another Act, with respect to practice and procedure in particular matters. Section 59(4) of the Act provides that sections 48, 48A, 48B, 49 and 50 of the Acts Interpretation Act 1901 apply in relation to these Rules of Court made under section 59 of the Act as if references in those sections of Acts Interpretation Act to regulations were references to Rules of Court.

The present Federal Court Rules came into operation on 1 August 1979. They have been reviewed regularly since then.

Subsection 60(1) of the Corporations Act 1989, as amended, (Corporations Act) provides that the power to make Rules of Court conferred under s.59 of the Act extends to making Rules of Court, not inconsistent with the Corporations Law of the Australian Capital Territory, with respect to proceedings and the practice and procedure of the Federal Court under the Corporations Law of the Australian Capital Territory; with respect to matters required or permitted to be prescribed by rules under the Corporations Law of the Australian Capital Territory, or which it is necessary or convenient be prescribed by rules for carrying out of giving effect to Corporations Law; and with respect to costs and rules as to meetings ordered by the Court.

Subsection 60(2) of the Corporations Act provides that the Court must apply the rules of court made under s.60(1), with such alterations as are necessary, when the Court exercises jurisdiction with respect to matters arising under the Corporations Law of a State or Territory which is conferred on the Court by a law of the State or Territory corresponding to Division 1 of Part 9 of the Corporations Act of the Australian Capital Territory. Accordingly, Order 71 of the Federal Court Rules will apply to proceedings which arise under the Corporations Law of a State or Territory and are heard by the Court in the exercise of jurisdiction conferred under that law.

These amendments to the rules are made to increase the efficiency and effectiveness of the rules of Court set out as Order 71 (the Corporations Rules) which came into operation on 1 January 1991. They result from consideration of suggestions made by members of the legal profession and by liquidators at various meetings convened by the Court and from correspondence regarding the practical operation of these Rules.

Rule 1

Provides that these Rules come into operation on 29 April 1991.

Rule 2

This rule provides that Order 71 is amended by these Rules.

Rule 3

This rule amends an error in the Order 71, subrule 11(2), which referred to "13(4) to 13(8)" instead of "14(4) to 14(8)".

Rule 4 - Order 71, rule 37.

4.1       Subparagraph 37(2)(c)(h) is amended to overcome an arguable inconsistency in the standard of knowledge of the deponent of the affidavit of debt required to be filed in support of an application to wind up a company. The deponent is now required to swear to his/her own knowledge as to the indebtedness of the company.

4.2       Subparagraph 37(3)(b) is deleted as it is not considered necessary to have an affidavit of debt sworn on the day on which the application to wind up a company is filed or the immediately preceding day. It is difficult to obtain and file an affidavit in such a short period.

4.3       The words "(unless it is the company)" are inserted in subrule 37(4) for clarity.

4.4       The insertion of subrule (4A) after subrule 37(4) is necessary in light of the changes to Order 71 rule 38 which follow, Greater efficiency will be achieved if the company is notified of the nomination of an official liquidator when it is served with the application for winding up. This may save service of additional documents on the company at a later stage.

Rule 5 - Order 71, rule 38.

5.1       Subrule 38(1) is amended by omitting the requirement to serve certain documents set out in paragraphs (a), (b) and (c) on the respondent company.

5.2       Paragraphs 38(1)(c), (d) and (c) are omitted and a new paragraph 38(1)(c) substituted which amends the time in which an applicant may swear an affidavit of debt from 2 days before the date of service of an application to 7 days before the date of the final hearing of an application. A more up to date affidavit of debt will be available at the final hearing. The amendment removes the requirement that a draft order and notice of appointment of a liquidator be filed and served on the respondent company.

5.3       Subrule 38(2) is amended by omitting the requirement to serve documents referred to in subrule 38(1). This repeats the requirement in subrule 5.1 above in circumstances where the applicant wishes to proceed on the hearing of a winding up application at a directions hearing.

Rule 6 - Order 71, rule 66.

This rule is amended to remove the requirement that a liquidator must request a bill of the costs, charges or expenses of a solicitor, special manager, auctioneer, broker or other person employed by the liquidator which exceed $7500 for the purposes of taxation. Where major litigation is involved in a liquidation, costs regularly exceed $7500 and removing these requirements prevents the unnecessary running up of costs associated with the winding up. The liquidator is left with a resulting discretion when to ask that a bill be taxed.

Rule 7 - First Schedule (Forms) - Form 89

This rule substitutes a new Form 89 to the First Schedule. It replaces the declaration required of the official liquidator that no member or senior employee of his firm has any social or professional association with the company or any of its present or past office holders with a less onerous declaration. Many of the larger firms have numerous members and senior employees and to require a liquidator to conduct time consuming inquiries is unreasonable. The declaration now requires that a liquidator declare to the best of his/her knowledge information and belief that no conflict of interest exists.