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Gambling and Hazardous Speculation in Bankruptcy

This section discusses the offense of gambling and hazardous speculation in bankruptcy, the possible grounds of objection, and the Inspector-General Practice Statement 6 regarding the referral of offenses. It also explores the risks involved in ticking the 'gambling' box as the primary cause of bankruptcy.

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Gambling and Hazardous Speculation in Bankruptcy

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  1. Section 271: Gambling Presented by: Danny Klopovic, Chris Mosele & Evelyn Barrett

  2. AFSA is responsible for the administration and regulation of the personal insolvency system, proceeds of crime, trustee services and the administration of the Personal Property Securities Register (PPSR)

  3. What we do • Executive agency in the Attorney-General’s portfolio • Our services include: • administering, as the Official Trustee, more than 80% of bankrupt estates annually • the Official Receiver is responsible for the registration of all bankruptcies, debt agreements, personal insolvency agreements and related applications • - ensuring compliance by debtors, bankrupts and their associates, practitioners and others with the requirements of the Bankruptcy Act 1966(‘the Act’) and other legislation.

  4. What we do • Maintain the National Personal Insolvency Index (NPII) • Provide information about formal options for dealing with unmanageable debt under the Act • Regulate trustees and debt agreement administrators • Act as special trustee for government agencies pursuant to court orders - in particular by locating, controlling and selling property under the proceeds of crime legislation and child support matters • Administer and enforce the Personal Property Securities Act 2009, including the national Personal Property Securities Register (PPSR) • Provide information about transacting with the PPSR

  5. What we do How we do ensure legislative compliance? • Operate the bankruptcy registry - debtor’s petitions are lodged, debt agreement proposals are processed and public records on insolvency are maintained • Exercise Official Receiver powers to assist trustees to obtain information and recover property • Investigate possible offences under the Act and prepare briefs of evidence for prosecution

  6. Section 271 Gambling or Hazardous Speculation • A person who has become a bankrupt after the commencement of this Act and: •                      (a)  within 2 years before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt, whether the petition was presented before or after the commencement of this Act, materially contributed to, or increased the extent of, his or her insolvency; or •                      (b)  during any period between the presentation of that petition and the date on which he or she became a bankrupt, lost any of his or her property; • by gambling or by speculations that, having regard to his or her financial position at the time and any other material circumstance, were rash and hazardous, being gambling or speculations not connected with a trade or business carried on by him or her, commits an offence and is punishable, on conviction, by imprisonment for a period not exceeding 1 year.

  7. Section 149DPossible Grounds of Objection • (1)  The grounds of objection that may be set out in a notice of objection are as follows: • (d)  the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt's property, income or expected income, failed to comply with the request; • (g)  at any time during the period of 5 years immediately before the commencement of the bankruptcy, or at any time during the bankruptcy, the bankrupt: • (i)  spent money but failed to explain adequately to the trustee the purpose for which the money was spent; or • (ii)  disposed of property but failed to explain adequately to the trustee why no money was received as a result of the disposal or what the bankrupt did with the money received as a result of the disposal;

  8. Inspector-General Practice Statement 6 • The Inspector-General Practice Statement 6 provides instruction on the referral of offences under section 271 of the Bankruptcy Act 1966 and can be found at: • https://www.afsa.gov.au/about-us/practices/inspector-general-practice-statements/inspector-general-practice-statement-6 • The policy deals solely with decisions made by AFSA concerning the referral of a possible offence and not with any decision made by the Commonwealth Director of Public Prosecutions (CDPP) regarding whether or not to prosecute

  9. Inspector-General Practice Statement 6 • AFSA will not refer a case for prosecution where it appears that the debtor could be classified as having been a 'problem gambler' and had not engaged in any associated criminal activity to finance their gambling habit. • AFSA will consider referring a case to the CDPP only where it involves: • clear criminality • complex offences • ongoing allegations of repeat offending despite warnings to the contrary

  10. The Context • Discussion Points: • Registry’s function in assessing Statement of Affairs and client interaction • AFSA data on bankruptcies and causes • Assessing the primary cause of bankruptcy • Understanding the risks involved in ticking the ‘gambling’ box • Exploring whether financial counsellor and/or client fears about ticking this box are justified

  11. Case Examples • For the period July 2015 to present there have only been two prosecutions for gambling: • 1. Rosenberg https://www.afsa.gov.au/about-us/newsroom/media-release-nsw-rosenberg-twelve-month-good-behaviour-bond-for-offence-against-the-bankruptcy-act • 2. Dintalehttps://www.afsa.gov.au/resources/media-kit/media-archive/media-release-nsw-dinatale-bankrupt-found-guilty-of-gambling-property-proceeds-prior-to-bankruptcy

  12. Case Examples con’t • Two further cases referenced gambling but were in fact for the offence of removal of assets (section 266): • 3. Brewsterhttps://www.afsa.gov.au/resources/media-kit/media-archive/media-release-qld-brewster-bankrupt-couple-faces-court-after-wife-withdraws-44500-which-husband-claims-he-lost-gambling • 4. Phunghttps://www.afsa.gov.au/about-us/newsroom/media-release-nsw-phung-bankrupt-found-guilty-offence-under-bankruptcy-act-0

  13. Review options available • AFSA’s Regulation Area will investigate complaints made by creditors, debtors and other parties in relation to trustees and debt agreement administrators • The Inspector-General is responsible for dealing with reviews of certain decisions made by trustees in bankruptcy, including the Official Trustee • Other avenues also include the Administrative Appeals Tribunal (AAT) and the Commonwealth Ombudsman

  14. Resources • AFSA on YouTube - https://www.youtube.com/user/AFSAGovAu/videos • National Relay Service- a free service that helps people contact us if they are deaf, or have a hearing or speech impairment • Personal Insolvency Information booklet - a publication for people who are contemplating bankruptcy or any of the formal options available under the Bankruptcy Act 1966 • AFSA website: www.afsa.gov.au • AFSA’s National Service Centre: 1300 364 785

  15. Questions • ?

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