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The Pamphlet Collection of Sir Robert Stout: Volume 60

Dunedin Chamber of Commerce. — Report of the Sub Committee — Appointed to Inquire into the — Working of "the Bankruptcy Act, 1883."

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Dunedin Chamber of Commerce.

Report of the Sub Committee

Appointed to Inquire into the

Working of "the Bankruptcy Act, 1883."


The Sub-Committee of the Chamber of Commerce appointed to consider "The Bankruptcy Act, 1883," with the view of suggesting amendments thereto, beg to report as follows:—

We have conferred with the Official Assignee, and been favoured with a perusal of the report which he has sent on this subject to the Minister of Justice, and in the main we agree with the recommendations he has made therein. We have thought it advisable to consider each section of that report carefully, and to express our own views regarding it shortly at the same time. He has divided his report into 22 paragraphs, as follow:—

No. 1 refers to the jurisdiction of the Courts, and makes recommendation, among others, that in remote districts the Resident Magistrates should have jurisdiction in bankruptcy estates up to a certain amount.

No. 2 recommends that the petition of the debtor for adjudication should be considered equivalent to adjudication, which would save delay.

No. 3 deals with the appointment of deputies in remoter districts, and suggests that the Official Assignee should have power to delegate his powers under seal; also that the remuneration of deputies in certain circumstances should be increased.

Nos. 4 and 5 have to do with details pertaining only to the Assignee's own work.

No. 6 recommends that Banks or others holding bills under discount, and who at present prove at meetings for all such contingent debts in full, shall be compelled to value them (for voting purposes only), and suggests that some such proportion as 25% would be fair.

No. 7 recommends that power to appoint only one supervisor should be given in certain cases, as often one would be more suitable than two.

So far the Committee agree with the remarks and suggestions of the Official Assignee, but in respect to No. 8, which deals with the page 2 important subject of Preferential claims, we are scarcely at one with him. The Assignee contends for greater stringency, and wider latitude to be taken by the Court in dealing with payments made or goods delivered within the statutory three months; but we think the clauses (78, 79, and 83) in the present Act are stringent enough, and that it should be easy, as they stand at present, to judge of the "good faith" of any transaction that may be questioned.

No. 9 deals with details of expenses of witnesses, which the Assignee states are not sufficiently defined.

No. 10 recommends that a longer time than three months should be allowed for foreign creditors to prove their debts, although powers to extend the time in special cases is given by the Act; and, in addition to this, we think that at first meetings, and before parties holding powers of attorney have an opportunity of having the claims of those they represent sent in from a distance, it should be sufficient that the sum inserted in the proof of debt shall be the amount of the debt as shown in the books of the bankrupt.

No. 11 deals with the question on which a Supreme Court judgment has been given—viz., whether it was the intention of the Act to limit the landlord's preference for rent to six months only. The Assignee thinks that it should be made clear that six months only should be allowed, and we concur in this.

No. 12 makes certain recommendations in respect to leases, which seem to us fair and reasonable alike to lessors and lessees, or assigns of lessees.

No. 13 deals solely with details of the accounts of the Assignee.

No. 14 suggests the addition of certain words to Clause 137, dealing with payment of wages, and is an unimportant matter.

No. 15 asserts that Clause 145 in the Act, dealing with dividends in joint and separate accounts, is unintelligible.

No. 16 recommends that, whereas, under the present Act, it sometimes suits bankrupts not to come up for their discharge, the Assignee should have power to summon them for that purpose, or that, failing to apply for their discharge, the protection of the Act should be withdrawn.

No. 17 asserts that the Act fails to define whose duty it is to prosecute fraudulent debtors.

No. 18 complains that Clause 178 provides for a second and unnecessary audit of accounts, and suggests that such should only be made if demanded by creditors.

No. 19 has to do with payment to bankrupts' lawyers, and is unimportant

No. 20 suggests amendments to the schedules which arrange the fees of Assignees.

No. 21 refers to an important matter—viz., the disposal by local creditors, perhaps few in number, and representing only a small page 3 proportion of the bankrupt's liabilities, of valuable property, such as household furniture and the like, which personal sympathy often prompts them to present to the bankrupt, to the serious loss of distant creditors, who are not likely to display any such sympathy at the expense of their pockets. To remedy this the Assignee suggests that till the wish of all the creditors in regard to such matters is attempted to be ascertained no property over the value of £100 be disposed of by gift. We recognise the evil here complained of, and commend this or other remedy for it.

The Assignee recommends that in dealing with proofs of debts received after the statutory three months have elapsed the Assignee shall have discretionary power as to admitting them and paying dividend thereon, if he has funds in hand (at present under Clauses 141-144 he has no discretionary power). We go further, and suggest that Assignees, in declaring the first dividend, at the expiry of the three months, shall in doing so have regard to the amount of the sworn liabilities of the bankrupt, and provide for all such, so that if by accident or inadvertence any creditor shall have omitted to prove his debt, he shall have another chance of getting his share of the proceeds of the estate. It might be provided, so that finality might be arrived at, that if by the time the last and final dividend is declared such proofs be not forthcoming—and we are of opinion that it should be the duty of the Assignee to warn any negligent creditor of his omission to prove—then the remaining assets shall be divided, to the exclusion of careless creditors.

No. 22 asserts there is too much advertising required, entailing needless expense.

The above is a brief summary of the report of the Official Assignee, and we think that the suggestions made by him, and which are the result of personal experience of the working of the Act for eight or nine months, are well worthy the attention of the Conference.

We believe the mercantile public would welcome one alteration in the Act which has not been touched on by the Assignee, and which perhaps is foreign to the spirit of the present Act. It is in reference to deeds of arrangement, which used under the old Act to be made between debtors and their creditors. Under the present Act each case must be dealt with under it and through the Official Assignee, but sometimes cases occur where the creditors are few and the assets small, and where a composition is offered and would be accepted, thus saving all the expenses of bankruptcy proceedings. Of course where all the creditors consent the case is simple enough, and a single agreement suffices, but nearly always one creditor or more, generally having small claims on the estate, decline to fall in with the arrangement, in hope of being bought out; and we think that power should be given, as in the old Act, for a certain majority to coerce a minority in such a case, and thus save the expense of putting the estate into the hands of the Assignee. Or if this was deemed hostile to the spirit of the Act, the arrangement might be made through the Assignee on the payment of a page 4 fee to be arranged, such cases to be treated apart from the others in the matter of advertising, examination, etc., which would not be necessary; in fact, they would not be bankruptcy cases at all, but would come under the old name of "Deeds of Arrangement"

In conclusion, we think that the public consider the present Act is an improvement on the old, providing, as it does, for trustworthy keeping of accounts of bankruptcy estates, and giving finality in the winding up of same; and the extra publicity now given is an advantage, and doubtless acts as a deterrent in many cases.

G. L. Denniston

, Convener of Sub-Committee.

Printed at the Evening Star Office, Bond Street, Dunedin.