Insolvency and Trustee Service Australia
[18:14]
CHAIR: Ms Ingram, good evening. Do you have an opening statement?
Ms Ingram : I do not, thank you.
CHAIR: That is fine. I asked just in case.
Senator BRANDIS: Your agency has received, according to table 1.1 in the portfolio budget statement—I am looking at page 361—a 26.4 per cent increase in funding in the budget. Is that right?
Ms Ingram : Yes. That reflects the taking on of new responsibility for the Personal Property Securities Register.
Senator BRANDIS: Is that entirely due to the Personal Property Securities Register?
Ms Ingram : Yes, it is.
Senator BRANDIS: Does it to any degree reflect your assessment of future demands that might be made upon your agency because of an increase in insolvency?
Ms Ingram : We are actually a cost-recovery-funded agency.
Senator BRANDIS: So these are all outlays, are they?
Ms Ingram : So appropriation reflects past insolvency activity. It is not a forward-looking indicator, although we have entered into a new arrangement with the Department of Finance and Deregulation where, in future years, we will be operating to that effect. So it is fair to say that it is not a reflection of us having a view that there is likely to be an increase in insolvency numbers.
Senator BRANDIS: I see. Turning then to the Personal Property Securities Register, I am aware that there have been a number of difficulties in the commencement of the new arrangements. These are perhaps best understood as teething problems, and we had some remedial legislation in the Senate a little while ago to deal with at least some of them. Can you please describe to the committee how the introduction of the system has gone and identify to us any particular problems that you have identified in the start-up phase.
Ms Ingram : I think I would like to distinguish the legislative amendment from the—
Senator BRANDIS: Administration.
Ms Ingram : Yes, the prescription of the starting of the register on 30 January. The legislation, of course, is a matter for the Attorney-General's Department, but that piece of—
Senator BRANDIS: No, I am interested in the operation of the legislation, please.
Ms Ingram : Okay. You are right that in the first, I think, three days of the register, when it first commenced operation, there were some teething problems, as I think you could call them. They fall into a number of categories. I guess the biggest problem coming out of that related to data migration. There was an issue with ASIC and the ABN and ACN numbers that came across. I think there were about 25,000 of those which came across without their Australian company number, and that did cause issues in the first few days. I think I will turn to our national manager of corporate strategy, who has more details on the different instances of the issue.
Mr McCosker : It would be fair to say that during the first few days of operations there were some significant issues that were faced with regard to the operations and the stability of the system. The system remained available at all points in time, though in some cases almost all functions of the register were unavailable during that period. As for the issues with regard to the actual system functioning, it is a brand-new system replacing a range of state based registers, as you would be aware. It was not an upgrade of a system, where you might expect there would be limited or fewer issues; it is a brand-new, whole, national technology system. It went through a robust testing process. It did, however, on commissioning, experience some technical issues, which were resolved as quickly as possible through that period. I think that turning around those issues in a couple of days is a very big credit to the people working in the background to ensure that the register worked as well as possible at that point in time.
The data migration issues are a little bit separate from the performance. They impacted on the ability of some of the system users to undertake their searching and business practices in their business operations, if you like. We can expand on that little bit further if you want to go down that path.
Senator BRANDIS: All right. So there is the data migration problem. Are you satisfied that the data migration issues have been sorted?
Mr McCosker : The registrar, David Bergman, is the best person to speak on the data migration issues. I can talk about the technical matters.
Senator BRANDIS: I am not going to keep you here beyond 6.30. So, in view of the time, if you can confine your remarks to nine minutes—and I will not keep interrupting you with questions—that is probably ideal.
Mr Bergman : The significant data migration issues that we experienced, as I think Ms Ingram explained, related to some registrations not being migrated and to a number of registrations from the ASIC Register of Company Charges coming across with an Australian Business Number instead of an Australian Company Number, which made it difficult to search for those. That second issue was the most significant in terms of the number, and we have just in the last couple of days completed a programmatic fix to replace those ABNs with the correct ACNs. That affected some 885,000 registrations. So that has now been fixed, although there are a small number, about 400, that have actually come across with an Australian registered business number instead of the Australian Company Number, and they are in the process of being fixed. So that issue is essentially resolved.
The first issue, which related to approximately 6,000 registrations not being migrated from the ASIC register, is with the banks, the financiers and other people who own those registrations to fix them. ASIC have published a list of them so that they are available for searching, just not through the register. It means, unfortunately, that it is a little bit more cumbersome for people to search for them, but the information is available so that due diligence can be applied. That was always part of the arrangements with the pre-existing registers. In the case that there were some registrations that do not migrate, for whatever reason, that register needed to contact the people who owned those registrations to arrange for them to be re-registered, and that process is underway. It has not been completed as yet.
Senator BRANDIS: When do you expect it will be completed by?
Mr Bergman : It is really something that is out of our hands. The larger players, who account for most of those registrations, are already in the process of doing it. But we do have a very significant number of them—potentially 1,000, 1,500 of them—where you are dealing with a bank or a finance company who owns one of them. So it will, I think, take us some time to follow those up individually.
Senator BRANDIS: Do you think you can sort it out by the end of the year?
Mr Bergman : I would certainly hope so. Also, because this is something that comes at a cost to those people to do it, we have advised them that we are going to provide something by way of an incentive in that we will pay them something that covers that cost once they notify us that they have re-registered those interests. The details of that process are being worked out. But that, I think, will encourage more of them to do that.
Senator BRANDIS: All right. My colleague Senator Williams has told me that he has some questions he wants to ask of you. So, in the hope that those questions will not take all that long to ask and answer, I am going to yield the call, if I may, Madam Chair, to him.
Senator WILLIAMS: Folks from ITSA, I want to take you to a couple of issues. I want to take you to Mr Paul Pattison—you would be familiar with the name?
Ms Ingram : Yes.
Senator WILLIAMS: He was deregistered as a trustee in bankruptcy after he had voluntarily resigned from his 272 active matters in July last year. I think I have raised this issue of Mr Pattison with you before. I want to raise with you a matter that involved Mr Pattison and Mr Alex Kane Mircevski, of Victoria. You would be familiar with this long-running battle with Mr Pattison?
Ms Ingram : I am aware of some of the issues, yes.
Senator WILLIAMS: I refer to a letter dated 12 August 2009 signed by you, Ms Ingram. It is a response to complaints Mr Mircevski made to the Attorney-General on 17 and 8 July 2009. You refer to a letter dated 19 June 2009 which indicated the conduct of the trustee was not considered inappropriate. What investigations of Mr Pattison led your Bankruptcy Regulation Branch to that conclusion?
Ms Ingram : It is important to note that the trustee, Mr Pattison, has been deregistered. I do not want to reveal the details of that deregistration, but it principally related to his lack of resources to run a trustee business, if you can call it that. The companies he was using, in terms of his corporate insolvency practice, had gone into voluntary administration. Another one had gone into liquidation. We were examining his systems and files and also came to the view that, after those procedures had happened, he no longer had the resources to undertake a trustee business. As to the issue with Mr Mircevski, yes we did review his matter and we did not uncover any improper conduct on the part of the trustee.
Senator WILLIAMS: I believe he milked Mr Mircevski's assets to the tune of $400,000. I think Mr Mircevski was being sued by the ATO for an amount of $27,000. I think $400,000 was milked out, and not one cent went to the ATO. That might need some more clarification. Obviously Mr Pattison was broke—perhaps he should not have been, the way he milked Mr Mircevski's assets. Take me through in brief what you do to investigate such complaints, including what examination is done of the trustee's books?
Ms Ingram : Generally we review the trustee's books every year to 18 months. We review each trustee's operations. If you are referring to what do we do when we receive a request to review a matter, we would go to the trustee and ask him to respond to the allegations, and we would test them. I cannot respond in relation to this particular matter—I do not have the details before me.
Senator WILLIAMS: Would you take it on notice.
Ms Ingram : Yes. You might be aware that Mr Mircevski is currently before the courts in relation to a criminal matter.
Senator WILLIAMS: I am well aware of that—I do not know about a criminal matter; I know it is in relation to a property at Kinglake that was burnt out. I think Mr Pattison was responsible for the insurance as trustee at the time, and no doubt more of that will come out in the wash. How many other complaints were received about Paul Pattison before Mr Mircevski sought to have him removed?
Ms Ingram : I do not have those details. We will take it on notice.
Senator WILLIAMS: Why did ITSA oppose a subpoena seeking ITSA's records to support Pattison's removal by the Federal Court?
Ms Ingram : I would have to take that on notice.
Senator WILLIAMS: Why did ITSA threaten or actually seek personal costs orders against volunteer members of the Bar Duty Barristers Scheme, a public interest law clearing house which offers help to the vulnerable? Who approves such actions by ITSA? You basically threatened Geoff Slater that if he continued representing Mr Mircevski—he took a voluntary job that I put them in touch with when Mr Mircevski contacted my office in desperation; Mr Slater went and did a charity job for a vulnerable person—you would seek costs from him. Why did you do that?
Ms Ingram : It is not our practice to threaten bankrupts or trustees—or any people.
Senator WILLIAMS: This was a barrister representing Mr Mircevski. I will repeat the question. Why did ITSA threaten or actually seek personal costs orders against volunteer members of the Bar Duty Barristers Scheme—a volunteer scheme where barristers actually donate their time to help the vulnerable? Why did you seek costs?
Ms Ingram : I will have to take on notice the matter in relation to costs.
Senator WILLIAMS: It certainly scared away a volunteer barrister who was there to protect the vulnerable against Pattison, who has now been scrubbed out, I believe, from ASIC as well as a liquidator who has gone broke. He acted like a vulture on this person. That is the way I see it. When a volunteer barrister comes in, you threaten him with costs. If you take that on notice, I would like to know the answer to that please. What happens now to the victims of Paul Pattison, including the bankrupts and the creditors? Will there be an apology from your organisation?
Ms Ingram : Paul Pattison has not actually been found to have mismanaged any estates as yet. We have taken over his files and we are now the trustee of record of those active files. We will obviously have a look at those files to see if appropriate procedures have been taken in respect of each of those files.
Senator WILLIAMS: Are you actually in control of that property in the Kinglake area that was once Mr Mircevski's? Is that now in ITSA's control?
Ms Ingram : I would have to take that on notice.
Senator WILLIAMS: I believe Westpac Bank now has a mortgage on the property and it is worth less than the mortgage; it is in negative. The property might be worth $100,000 and the debt is $140,000. The debt is actually higher. If that is the case and if ITSA has control of the property, are you allowed to release that property for a small sum of money that is in negative equity?
Ms Ingram : I am sorry; I do not understand. Release it to who?
Senator WILLIAMS: If Mr Mircevski is now out of bankruptcy and wishes to buy the block back?
Ms Ingram : The estate is still in administration and those assets remain with the trustee for distribution to creditors.
Senator WILLIAMS: Can the victims of Paul Pattison seek compensation? Do you know if that is possible?
Ms Ingram : I cannot answer your question in globo because I do not know who you are referring to as victims. As far as we are aware the estates that Paul Pattison has managed have not been in breach of the Bankruptcy Act.
CHAIR: Senator, there are a couple of things I am feeling a bit nervous about here. The trustee service is a full fee-paying recovery service. Also, we tend to stay away from very particular personal details and matters. We did that for the first couple of days in Immigration certainly when it came to particular cases. Can I make a suggestion that you either put these questions on notice or perhaps seek to get a private briefing and meet with the trustee.
Senator WILLIAMS: If you like I can be more general in my questions in the future.
CHAIR: That is true.
Senator JACINTA COLLINS: Although we have reached the time.
CHAIR: I do not wish to impinge here but 6.30 is our dinner break so if you have 15 or 20 minutes left then we will need to break, otherwise I am going to suggest that if you wanted to you could put them on notice or we will do it some other way.
Senator WILLIAMS: Why don't we come back after the dinner break?
Senator JACINTA COLLINS: Can I suggest that Senator Williams's questions have often been on matters that Ms Ingram does not have information on before her at the moment. We could spend another 15 minutes continuing to take things on notice.
Senator WILLIAMS: I have more general questions on more general issues and on another issue.
CHAIR: We will need to break and come back at 8.00 pm then.
Ms Ingram : For the record, can I just say that the matters of Mr Mircevski and Mr Pattison have been before the courts and they have arbitrated and they have not found any inappropriate regulatory oversight on the part of ITSA or inappropriate behaviour in terms of seeking costs or otherwise. It has all been before the court and managed by the courts and they have so decided.
Proceedings suspended from 18:35 to 20:00
CHAIR: We will reconvene this public hearing of the Senate Legal and Constitutional Affairs Legislation Committee. This is our consideration of the federal budget, our estimates consideration for 2012-13. We have got the Attorney-General's Department and officers from the Insolvency and Trustee Service Australia with us. Ms Ingram, you were taking questions from Senator Williams before the dinner break. We will keep going there.
Senator WILLIAMS: Ms Ingram, when people go into bankruptcy, there are two ways. There is voluntary bankruptcy and also court appointed bankruptcy. Is that the process?
Ms Ingram : There is the creditor's petitioning, sequestration bankruptcy and debtor's petitioning bankruptcy.
Senator WILLIAMS: At a rough estimation, how many people go bankrupt a year in Australia? You not have to be spot on; I just want some idea.
Ms Ingram : In our annual report, under the Inspector General of Bankruptcy, we have those statistics. I can give you a global figure for personal insolvencies or just the bankruptcies.
Senator WILLIAMS: Just the bankruptcies.
Ms Ingram : If you bear with me, I can give you the figures for the last financial year.
Senator WILLIAMS: Which is up to 30 June 2011.
Ms Ingram : Yes. And I can give you the figures that we have up until the last quarter, which was the end of March.
Senator WILLIAMS: This current year?
Ms Ingram : Yes, up to March 2012. There were 16,800 bankruptcies. In the equivalent period last year, there were 17,494.
Senator WILLIAMS: Over that same period for the three quarters? Is that what that is?
Ms Ingram : Yes, for the same period.
Senator WILLIAMS: Over the nine-month period?
Ms Ingram : Yes, for the three quarters.
Senator WILLIAMS: So they are actually down a bit?
Ms Ingram : Yes.
Senator WILLIAMS: I asked this question of ASIC many times when the infamous Stuart Ariff was running amok. Is ITSA resourced enough? Are you adequately resourced both in financial terms and staff numbers?
Ms Ingram : I believe we are resourced enough. As I said in a previous question, from Senator Brandis I think it was, we are a cost recovery agency principally. We charge our stakeholders for the services that we provide. I believe that those resources are adequate.
Senator WILLIAMS: You are presently handling a matter in relation to a Mr George Lousick, who traded I believe as G & K Aluminium and as Clarence Valley Aluminium and Steel on the North Coast of New South Wales. Mr Lousick is no longer trading and, I believe, left a trail of creditors in his wake. You were seeking to have Mr Lousick sign documents to enable further examination of his affairs. Do you know if he has signed those documents?
Ms Ingram : I would have to take that on notice.
Senator WILLIAMS: I think he had to sign documents.
CHAIR: Senator Williams, the officers will not have information about individual cases here with them. You might want to think about what you put on notice.
Senator WILLIAMS: Okay. I have three or four more questions. I will put them on notice, Chair. I know that ITSA has been working on this issue and there are plenty of creditors lined up who are anxious to find out their future, if I can put it that way, and whether there will be any return. Those are all the questions I have.
CHAIR: As there are no other questions, Ms Ingram and your staff, thank you, very much, for your time and for staying after the dinner break.
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