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Infringement notices

Inspector-General Practice Statement 18 explains Infringement notices.

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  1. Introduction

    1. The Bankruptcy Act 1966 includes a range of offence provisions.  Some of these are “strict liability” offences.[1]
    2. Division 2 of Part 14 of the Bankruptcy Regulations 2021 includes an infringement notice regime (“the regime”).  The regime applies to the strict liability offences, found in section 277B(2) of the Bankruptcy Act.  This practice document relates only to those offences.
    3. Under subsection 11(4) of the Bankruptcy Act, the Inspector-General in Bankruptcy is responsible for managing the regime.[2]
    4. Under the regime, AFSA can issue an infringement notice to an alleged offender to pay a penalty.  This penalty payment would be applied instead of criminal prosecution.  The regime allows AFSA to penalise behaviour that, while relatively minor in criminality, could still have serious consequences.  This assists AFSA to:
      • ensure effective bankruptcy administrations
      • regulate personal insolvency practitioners
      • preserve the integrity of the National Personal Insolvency Index, which is a public record of personal insolvencies in Australia.

  2. Infringement notice offences

    1. All the infringement notice offences are found in section 277B(2) of the Bankruptcy Act.  The penalty that applies varies depending on the offence.  The amounts payable are linked to section 4AA of the Crimes Act 1914 (“the Crimes Act”).  As at 1 July 2020, one penalty unit equals $222.
    2. For an individual, the maximum amount payable under the regime is one-fifth of the maximum penalty that could be imposed by a Court.
    3. For a corporation, the maximum penalty a court can impose is 5 times the maximum penalty that could be imposed if the offence was committed by an individual.[3]

    4. Example 1

      If a trustee receives a proposal for a composition or arrangement, they must give a copy to the Official Receiver within 2 business days (as required by subsection 73(1A) of the Bankruptcy Act).  If the trustee fails to comply, they would be liable to pay an infringement notice of $222.  This amount is one-fifth of the maximum court-imposed penalty of $1,110.
    5. Certain offence provisions in subsection 277B(2) of the Bankruptcy Act (such as subsections 73(1A) and 224A(5)) require compliance within a particular number of business days.  Other offence provisions rely on calendar days, and in these cases the time for compliance may be affected by section 36 of the Acts Interpretation Act 1901 (“the Acts Interpretation Act”).
    6. The Acts Interpretation Act states that, when an act (e.g. filing a document or making a payment) needs to be done by a certain date, that date will exclude the day of the event.  If the act needs to be done on a Saturday, Sunday or public holiday, it can be done on the next working day.

    7. Example 2

      If a trustee has 2 (calendar) days from Friday to file a document, the document would notionally have to be filed by Sunday.  Under the Acts Interpretation Act, the document would need to be filed the following Monday (assuming it is not a public holiday).

  3. Issuing an infringement notice

    1. Under section 90 of the Bankruptcy Regulations, AFSA can issue an infringement notice if there are reasonable grounds to believe[4] someone has contravened an infringement notice provision.  The notice must be issued within 12 months after the day the contravention is alleged to have taken place.
    2. AFSA may consider these factors before issuing an infringement notice:
      1. the nature of the alleged contravention
      2. the likelihood of an infringement notice being a successful deterrent
      3. practical considerations, including whether or not the alleged offender has a history of non-compliance
      4. previous warnings
      5. whether the alleged contravention is better dealt with by a Court
      6. whether there is a more appropriate resolution or sanction
      7. the possible defence of mistake of fact.[5]
    3. The above factors are not weighted, and other factors may be considered.
    4. Section 6.1 of the Criminal Code Act 1995 states:
    6. Although multiple infringement notices can be issued to someone for the same offence if they continue to not comply, section 90 of the Bankruptcy Regulations provides that a single infringement notice relating to multiple contraventions of the same offence may be issued.
    7. AFSA can also refer these matters to the Commonwealth Director of Public Prosecutions to consider prosecution action if someone is continuously non-compliant.[6]
    8. If there are 2 trustees appointed to an administration, any infringement notice that relates to that administration will be issued in both trustees’ names.
    9. AFSA must record all factors considered when deciding whether or not to issue an infringement notice.  It must be documented according to the Australian Government Investigation Standards and the APS Code of Conduct and Values.

  4. Serving an infringement notice

    1. Section 90 of the Bankruptcy Regulations provides that AFSA can give an infringement notice to a person.  Section 102 of the Regulations and section 28A of the Acts Interpretation Act outlines how this can be achieved.  An infringement notice can be given to an individual in person or by post or by leaving the notice at the person’s last-known place of residence or business.
    2. An infringement notice can be served on a corporation by leaving it at, or sending it to, the corporation’s head office, a registered office or a principal office.
    3. An infringement notice can be served on a registered trustee or a registered debt agreement administrator via email.  The email will be sent from enforcement@afsa.gov.au.
    4. An infringement notice that is posted will usually be sent by Registered Post with a delivery confirmation receipt.

  5. Receiving an infringement notice

    1. Someone who receives an infringement notice has 4 options:
      • pay the penalty within 20 business days after the day the notice is given
      • request an extension of time to pay
      • request a review
      • choose not to pay the notice (the matter may then be referred for prosecution).

    2. Requesting an extension of time

    3. The recipient may apply in writing to AFSA for an extension of time within which to pay.  All applications for an extension of time must be accompanied by a detailed statement outlining the reason(s) why an extension is sought.
    4. The recipient can request an extension via email to enforcement@afsa.gov.au or via post to:
    5.                       Enforcement and Practitioner Surveillance
                            Australian Financial Security Authority
                            GPO Box 1550
                            ADELAIDE  SA  5001
    6. If the application for an extension is made before the payment period ends, AFSA may grant an extension of time within which to pay.  AFSA can do this before or after the original payment period has expired.
    7. AFSA will advise the recipient of the decision in writing.
    8. Where an extension is granted, the recipient will have to make the payment by the new deadline.  If the recipient fails to make the payment by the new deadline, the matter may be referred for prosecution.
    9. Where an extension is not granted, the recipient will be required to make payment before the original payment period expires, or within 7 days after they have been notified of AFSA’s decision not to extend, whichever is later.

    10. If payment is received

    11. If the recipient pays the penalty on time:
      • any liability for the alleged contravention is discharged
      • they cannot be prosecuted for the alleged contravention
      • they are not regarded as having admitted guilt or liability for the alleged contravention
      • they are not regarded as having been convicted of the alleged offence.

    12. Requesting a review

    13. The recipient can request a review if they disagree with the infringement notice. The request for review must be submitted within the 20-business day payment period.  The recipient must outline the reasons for the review and provide any additional information for consideration.
    14. The recipient can request a review via email to enforcement@afsa.gov.au or via post to:
    15.                       Enforcement and Practitioner Surveillance
                            Australian Financial Security Authority
                            GPO Box 1550
                            ADELAIDE  SA  5001
    16. AFSA must consider any written representations seeking withdrawal that were given by the recipient and may take into account the following factors before withdrawing, or refusing to withdraw, a notice:
      • whether a court has previously imposed a penalty on the person for a contravention of an infringement notice provision
      • the circumstances of the alleged contravention
      • whether the person has paid an amount, stated in an earlier infringement notice, for a contravention of an infringement notice provision if the contravention is constituted by conduct that is the same, or substantially the same, as the conduct alleged to constitute the contravention in the relevant infringement notice
      • any other relevant matter.
    17. AFSA will advise the recipient of the decision in writing in a reasonable period, generally within 14 days.
    18. If AFSA decides to withdraw the infringement notice, it will not affect the liability of a person for an alleged contravention on an infringement notice provision.  If a notice is withdrawn after the penalty has been paid, AFSA will refund that payment.
    19. Where the infringement notice is not withdrawn, the recipient is still required to make payment before the original payment period expires, or within 7 days after they have been notified of AFSA’s decision not to withdraw the infringement notice, whichever is later.

  6. If payment is not received,

    1. AFSA will contact the recipient if payment is not received on time.  If necessary, AFSA will ask the recipient to attend an interview to explain the reason(s) for non-payment.[7]
    2. If the person or representative from the corporation claims they did not receive the infringement notice, AFSA will consider the circumstances and, if necessary, re-issue the notice.

    3. Prosecution

    4. There is no provision in the Bankruptcy Act that requires an infringement notice to be issued.  AFSA has the power to refer the alleged contravention for prosecution in the first instance (or following non-payment of an infringement notice).
    5. Subsection 4K(1) of the Crimes Act states that, when an act needs to be done by a particular time, then:
    7. This means that the requirement to comply with the notice is ongoing, even after the due date has passed.  A person may be found guilty of an offence each day they refuse or fail to comply with their obligations.

Footnotes

[1] See section 6.1 of the Criminal Code Act 1995

[2] The powers of the Inspector-General are delegated to officers in AFSA’s Enforcement and Practitioner Surveillance division

[3] See section 4B(3) of the Crimes Act

[4] Reasonable grounds to believe require a higher standard of knowledge than reasonable grounds to suspect

[5] See section 9.2 of the Criminal Code Act 1995

[6] See paragraphs 91(1)(h) and (k) of the Bankruptcy Regulations

[7] See Division 3 of Part 1C of the Crimes Act