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FAMILY LAW AMENDMENT BILL 2005

                                  2004-2005





               THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA





                                   SENATE






                       FAMILY LAW AMENDMENT BILL 2005





                    SUPPLEMENTARY EXPLANATORY MEMORANDUM



     Amendments and New Clauses to be Moved on Behalf of the Government






              (Circulated by authority of the Attorney-General,
                      the Honourable Philip Ruddock MP)







                       FAMILY LAW AMENDMENT BILL 2005



OUTLINE

The Family Law Amendment Bill 2005 (the Bill) makes a number of diverse
amendments to the Family Law Act 1975 (the Act), mainly in the nature of
procedural and technical changes to clarify and improve the operation of
the Act.

These Government amendments amend section 66X in Part 14 and insert new
Part 17 in the Bill.

Part 14 amendments

Section 66X in Part 14 of the Bill allows the court to make orders for
recovery of payments made or property transferred by a person under a child
maintenance order, in circumstances where it is later found that the person
was not liable to support the child.

The Government amendments to the proposed section 66X will allow the court
to recognise that, in some exceptional circumstances, it might be
appropriate to reduce the amount to be repaid, or the value of the property
to be restored.

The amendments also insert new subsection 66X(5), to clarify that the Child
Support Agency is not a person to whom the monies have been paid, for the
purposes of section 66X, even if the Child Support Agency has been an agent
for collection of monies payable under the original purported child
maintenance order through the operation of the Child Support (Registration
and Collection) Act 1988.

New Part 17

These amendments insert new subsection 79(10A) into the Family Law Act 1975
(the Family Law Act) in order to clarify the role of third party creditors
in family law property matters, where the trustee has the role of
representing the interests of creditors.

These amendments relate to the interaction of bankruptcy law and family
law, and are intended to supplement other amendments to the Act contained
in Schedules 1 and 5 to the Bankruptcy and Family Law Legislation Amendment
Act 2005 (the BFLLA).

These amendments were previously contained in Schedule 1 to the Bankruptcy
and Family Law Legislation Amendment Bill, which was considered by the
House of Representatives Standing Committee on Legal and Constitutional
Affairs, as part of a package of family law and bankruptcy related reforms.


At that time, there were other family law and bankruptcy law related
reforms contained in the Family Law Amendment Bill, which were removed from
that Bill and consolidated into the BFLLA before it was passed.  Subsection
79(10A) was omitted by oversight in that consolidation, and the effect of
this Government amendment is to reinstate subsection 79(10A) with other
related amendments to section 79 of the Act affecting third parties and
family property matters.
The BFLLA was enacted when it received Royal Assent on 18 March 2005.  The
amendments to the Family Law Act contained in Schedule 1 to the BFLLA are
due to commence operation on 18 September 2005, or on an earlier date if
fixed by Proclamation.  For consistency, the amendments to the Bill will
commence immediately after commencement of the amendments to the Family Law
Act in Schedule 1 to the BFLLA.

These amendments are intended to qualify the operation of subsection 79(10)
of the Family Law Act, which was inserted by an amendment in Schedule 5 to
the BFLLA, and which commenced operation on 15 April 2005.

As with the provisions of the Bankruptcy and Family Law Legislation
Amendment Act 2005, these amendments are part of the Government response to
the recommendations of the Joint Taskforce Report on the Use of Bankruptcy
and Family Law Schemes to Avoid Payment of Tax.

FINANCIAL IMPACT STATEMENT

These Government amendments will have no financial impact.

NOTES ON CLAUSES

Clause 1 - Commencement

1. Clause 1 of the Government amendments provides that the amendments in
   Part 17 of Schedule 1 to the Bill will commence immediately after
   commencement of Schedule 1 to the Bankruptcy and Family Law Legislation
   Amendment Act 2005.

Clause 2 - Item 136

2. Clause 2 of the Government amendments omits the words 'to ensure that'
   and substitutes the word 'for'.  This change supports the amendments that
   follow to paragraphs 66X(2)(a) and (b), that allow the court the option
   of ordering less than the full amount of child maintenance monies to be
   repaid, or less than the full value of transferred property to be
   returned, in exceptional circumstances.

Clause 3 - substitution to paragraphs 66X(2)(a) and (b)

3. These amendments expand the original proposed paragraphs 66X(2)(a) and
   (b) to allow the court to order the repayment of an amount up to, or
   equal to, the full amount of child maintenance monies paid, or the value
   of property transferred under the original purported order.

4. The amendments specify that that the option of ordering less than the
   full amount of monies paid, or the value of property transferred, is only
   available to the court in exceptional circumstances.   These
   circumstances might include, for example, the situation where the likely
   effect of ordering recovery of the full amount of child maintenance
   monies paid under the purported order would be to render the original
   beneficiary of those monies bankrupt.

Clause 4 - new subsection 66X(5)

5. This amendment inserts new subsection 66X(5) at the end of section 66X.
   The provision is the equivalent of subsection 143(4) of the Child Support
   (Assessment) Act 1989, and makes it clear that the Child Support Agency
   is not to be taken to be the 'person' to whom the amounts of maintenance
   were paid, for the purposes of section 66X, so that the Child Support
   Agency cannot be ordered to repay amounts of child maintenance paid to
   the Agency under the purported maintenance order.  Section 30 of the
   Child Support (Registration and Collection) Act 1988 provides that where
   a maintenance order has been registered under that Act the amounts become
   a debt to the Commonwealth which may otherwise lead to a potential
   liability for the Commonwealth to repay.

Clause 5 - insertion of Schedule 5

6. Clause 5 of the Government amendments inserts new Part 17 of Schedule 1
   to the Bill.

Part 17 - Alteration of property interests

Item 139 - After subsection 79(10)

7. Item 1 inserts new subsection 79(10A) in the Act.  This amendment is
   intended to  qualify the operation of subsection 79(10), being an
   amendment to the Act contained in Schedule 5 to the Bankruptcy and Family
   Law Legislation Amendment Act 2005.

   Subsection 79(10) provides that a creditor of a party to property
   proceedings is entitled to become a party to those proceedings, if the
   creditor may not be able to recover his or her debt if an order was made
   in those proceedings.  Also, any other person whose interests would be
   affected by an order in family property proceedings may apply to become
   a party to those proceedings.

   Subsection 79(10A) provides that subsection 79(10) does not apply to a
   creditor of a party to the proceedings in two situations. Firstly, if
   the party is a bankrupt, subsection 79(10) does not apply to the extent
   that the debt is a provable debt (within the meaning of the Bankruptcy
   Act 1966). Secondly, if the party is a debtor subject to a personal
   insolvency agreement, subsection 79(10) does not apply to the extent
   that the debt is covered by the personal insolvency agreement.