Legislative framework and purpose of Section 77A
A trustee in bankruptcy has various tools available to them to facilitate their investigation into the examinable affairs of a bankrupt and in discharging their duties (Section 19 of the Bankruptcy Act 1966 (Cth) (Act)) and exercising their powers (Section 19AA)
Section 77A of the Act authorises a trustee in bankruptcy to require a person (or entity) to produce specified books or classes of books for the purposes of investigating the bankrupt’s financial affairs. The statutory power extends to associated entities, which may include companies, trusts, partnerships or individuals whose interests are connected to the bankrupt’s financial or business dealings (refer ss 5B to 5E of the Act).
The reasoning is straightforward - trustees must have access to the information necessary to maximise returns to creditors and to investigate potential recoveries, including transfers of property, other voidable transactions and undisclosed assets. Without these powers, trustees could be effectively hindered by uncooperative third parties.
Properly understanding the basis, obligations and practical risks associated with section 77A notices is essential.
Who may be served with a Section 77A notice
A section 77A notice can be issued to any person or entity in possession of books relevant to the bankrupt’s examinable affairs. In practice, this most often includes:
Businesses or corporations where the bankrupt was a director, officer, shareholder or contracting party.
Family members or associates with whom the bankrupt had ongoing financial arrangements.
Third parties holding records that document the bankrupt’s transactions or property interests.
Typically, the notice will specify:
The books or classes of books to be produced.
The person to whom they must be produced.
The place and timeframe for compliance.
The term “books” is broadly defined to include accounts, deeds, papers, writings or documents, and records of information, irrespective of the format in which they are stored. The broad definition ensures trustees can access all material relevant to tracing assets, examining transactions and understanding financial relationships that might affect the estate.
Compliance obligations
Once a section 77A notice is validly served, the recipient has a statutory obligation to comply unless a reasonable excuse exists. Compliance means producing the books requested “as they are”. It is not sufficient to provide summaries or partial books unless agreed between the trustee and the recipient.
A recipient may refuse or limit compliance only if.
There is a legitimate inability or legal impediment (for example, books not in the person’s possession or subject to legal privilege). Courts have recognised that mere inconvenience or cost is generally insufficient.
The production of books may include personal information relating to third parties or material subject to confidentiality. While statutory compliance generally overrides privacy obligations under the Privacy Act 1988, Courts have, in specific cases, ordered that documents be redacted to protect third-party privacy while still complying with the statutory notice.
Consequences of non-compliance
Failure to comply with a section 77A notice without a reasonable excuse is an offence under the Act and may expose the recipient to:
Criminal penalties, including potential imprisonment or fines.
Court orders compelling compliance.
Adverse inference in estate administration.
Directors and officers of corporate entities should be alert to the risk that non-compliance could give rise to personal liability, especially where obstruction of trustee investigations leads to enforcement action.
Practical steps for recipients
Professionals and entities served with a section 77A notice should adopt a structured approach:
Confirm the notice is validly issued under the Act and identify the specific records requested.
Determine whether the books requested genuinely relate to the bankrupt’s examinable affairs.
Consider whether any records contain third-party personal information.
Prepare records to ensure completeness and accuracy.
Maintain a record of steps taken to comply with the notice in case of later dispute or challenge.
Where there is uncertainty — whether about the scope of records requested or obligations under the Privacy Act, seeking professional advice (such as your local Worrells Principal) is recommended.
