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Bankruptcy changes announced
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1. Superannuation payments
The Australian Government has announced proposed amendments to address concerns about the powers of bankruptcy trustees to recover contributions which have been made to a superannuation fund by bankrupts, prior to bankruptcy.

Those concerns arose following the recent decision of the High Court in Cook v Benson. The effect of the decision is that bankruptcy trustees are powerless to recover these contributions. This allows debtors to convert assets into cash and place this money into superannuation, defeating creditors in the event of bankruptcy.

The changes will clarify the existing powers of bankruptcy trustees to set aside certain transactions.

In particular, the changes will include a specific clawback provision which will give bankruptcy trustees the power to recover 'excessive' personal contributions above an annual limit of $5,000 made by bankrupts from after-tax money, prior to bankruptcy.

Additional provisions will be made available to bankruptcy trustees to allow them to recover superannuation contributions which were made with an intention to defeat creditors.

These powers will provide trustees with the necessary capacity to ensure that a bankrupt's assets are available to satisfy creditors, while preserving reasonable, legitimate retirement savings.

The changes will also take into account the obligations already imposed on superannuation funds and seek to avoid any unnecessary obligations which may affect their efficient management. The changes will not affect employer-funded superannuation contributions or certain other legitimate member contributions.

Once enacted by Parliament, the legislative changes would apply to all superannuation contributions as prescribed by the legislative amendments, which are made after 16 December 2003.

2. Rights of creditors
High income earners who try to use bankruptcy to avoid paying their tax and other debts are targeted by changes to the bankruptcy laws announced on 16 December by Attorney-General Philip Ruddock.

Mr Ruddock said the changes meant high income earners who become bankrupt would not be able to shield their real assets from creditors.

"The changes will enable the trustee in bankruptcy to recover assets held in the name of the bankrupt's spouse, or a property or trust, where the bankrupt has paid for and uses the asset," Mr Ruddock said.

"Other changes include clarifying the rights of the parties when family law and bankruptcy issues need to be resolved, giving the trustee stronger powers to collect income contributions during bankruptcy, and preventing bankrupts from putting their assets beyond the reach of creditors by transferring them under a family law financial agreement."

Mr Ruddock said that these changes are based on the recommendations contained in the Joint Taskforce Report on the Use of Bankruptcy and Family Law Schemes to Avoid Payment of Tax.

 
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Copyright preserved for 2D industrially applied works
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The Federal Government has amended the Copyright Act 1968 (Cth) to preserve copyright protection for drawings that become designs for mass-produced two-dimensional artistic works.

The amendments are targeted at t-shirt patterns, label designs and other 2D creations that previously lost copyright protection once they were industrially applied.

Designs for mass produced items currently need to be registered under the Designs Act in order to be protected, as they lose copyright protection once they are industrially applied.

The amendments mean that only artistic works reproduced in 3D industrially applied products will be denied copyright protection . Artistic works used as 2D patterns or ornamentations will continue to receive copyright protection.

Example 1

The design for the shape and appearance of a perfume bottle may lose copyright protection once the bottle is mass produced. However, the artistic work comprising the label will continue to be protected.

Works of artistic craftsmanship and buildings will also retain copyright protection even after being industrially applied.

Example 2

If the design for a decorative park bench is a work of artistic craftsmanship, it will be protected by copyright notwithstanding that the bench is mass produced.

Significantly, artistic works that are exploited as 2D designs may have dual protection if they are registered under the Designs Act. This will be desirable for owners who wish to acquire monopoly rights in their works, rather than simply have the works protected against plagiarism.

The amendments were passed by the Senate on 4 December 2003 and will come into force on the same day as the new Designs Act commences, which is expected to be proclaimed in next 6 months.

 
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ACCC Institutes Action Over Alleged Real Estate Underquoting
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The Australian Competition and Consumer Commission has instituted legal proceedings against Victorian real estate agent, Gary Peer & Associates Pty Ltd, alleging misleading and deceptive conduct in respect to the advertising for the sale of the property at 341 Glen Eira Road, Caulfield, Victoria. The property was passed in at auction on 14 September 2003 for $781,000.

Apparently the reserve was actually $850,000.

The ACCC alleges that in advertisements appearing in various media during August and September this year, Gary Peer & Associates Pty Ltd advertised the property at ‘price guide $600,000 plus buyers should inspect’ and later at ‘price guide $650,000 plus buyers should inspect’ which falsely represented the price at which:

- the vendors of the property were prepared to sell;

- the vendors of the property had instructed the respondent to sell;

- the respondent believed and was of the opinion that the property would be sold; and

- the market valued the property.

The ACCC further alleges that Gary Peer & Associates Pty Ltd did not have reasonable grounds for making the price representations about future matters that it did in these advertisements.

A directions hearing has been set for Monday, 2 February 2004 in Melbourne.

The NSW Office of Fair Trading has already introduced rules banning underquoting and Victoria legislation coming into effect at the beginning of February will do the same. But the ACCC now views underquoting to be misleading and deceptive under the Trade Practices Act.

 
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Government responds to ASIC v Rich judgement
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The Family Law Act 1975 has been amended to expand the jurisdiction of the court to deal with applications by third party creditors to set aside financial agreements that have been entered into for the purpose of defeating or defrauding a creditor of either party or with reckless disregard for the interests of a creditor of either party.

The Bill also made a range of other amendments to the Act. Of particular importance were the provisions that provided clear power for courts to make orders binding on third parties (such as financial institutions) when dealing with property settlement proceedings under the Act.

 
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Spam Act 2003 passed
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The Commonwealth Parliament has passed the Spam Act 2003.

When it commences (estimated to be by May 2004) it will ban the sending of unsolicited commercial electronic messages including email and SMS. It would also ban harvesting of email addresses.

The Australian Communications Authority (ACA) will become Australia’s spam watchdog . The legislation gives the ACA an investigative and regulatory role with the electronic marketing industry that is similar to its established role with the telecommunications industry.

Commercial electronic messages would only be able to be sent with the consent of the recipient, they must contain information about the originator and must incorporate a functional ‘unsubscribe’ facility. There are some exceptions, such as non-commercial organisations, including political, religious or charitable organisations, and factual material.

The ACA has also been given powers to:

enforce undertakings by originators of commercial messages
issue formal warnings and court injunctions
issue infringement notices and fines in lieu of court proceedings, and
seek court imposed penalties.

Provision had also been made for court orders to be issued and individuals fined up to $44,000 and companies up to $220,000 for a first offence