§ LORD JOHN RUSSELLSir, I rise to move for leave to introduce a Bill to amend and consolidate the laws relating to Bankruptcy and Insolvency. And I think it is due to the House that I should, in the first place, explain the reasons which have induced me to introduce to its notice a subject at once so difficult, so intricate, and so important. It happened to be my fortune, at a meeting two years ago at Birmingham for the purpose of considering questions of social science, to be placed in the chair of a section devoted to jurisprudence, and the amendment of the law. That section was attended by the present learned Attorney General, by several other gentlemen of the profession of the law, and also by many traders and persons engaged in commerce. I found in that section a general complaint of the present state of the law in relation to Bankruptcy. I suggested that the various Chambers of Commerce and Trade Protection Societies should meet with certain gentlemen at Birmingham who had studied this subject, and that they should endeavour to come to some agreement before any proposal was submitted to Parliament. They adopted that suggestion. They met accordingly in the early part of last year. They agreed upon the heads of a Bill; at a later period they drew that Bill in a proper form, and requested me to undertake the introduction of it into Parliament. As I have the honour of representing the City of London—a great body of traders—I thought I could not decline that task, and accordingly, last year—but at a period when the matter could not be sufficiently considered—I introduced the Bill which they had placed in my hands, and the provisions of which met with my full approval. In again bringing forward this subject I think it is necessary, as the matter will, I trust, receive full consideration in the course of the present year, whether by this House or by the Government, to state both what is the law which the Bill affects, and what are the changes which it proposes to introduce. The question of debt is one which, of course, has received the attention of the Legislatures of all countries. The law of England, as stated by Sir W. Blackstone, gives no less than five different writs or remedies for a creditor against his debtor. Some of these writs affect the person, others the chattels, others the land of the debtor, and some touch all these 414 different objects. It seems, whatever these provisions may be, whether merciful or harsh, that there can be nothing more just, nothing more due by society towards its members, than to give a remedy for those to whom any property is owing by others. But when the Legislature of England began to consider the relations of traders to their creditors, there arose other questions upon which our Bankruptcy laws are founded. There was not merely the question of whether a debtor was able to pay his creditors, whether he might at any future time have property sufficient for that purpose, but there were other questions relating to his future course and position. On the one hand it was found that traders, by collusion, by fraud, by combination with certain of their creditors, concealed or did away with their property, thereby injuring the great body of their creditors: and it was discovered on the other that the trader, who, by unavoidable misfortune was unable to satisfy the claims of his creditors, remaining liable to those debts during the whole of the rest of his life, was unable ever to regain his position and to carry on his trade in a creditable and industrious manner as he might otherwise have done. The Roman law had provided for such cases. In a similar spirit laws passed in the reign of Henry VIII., in the reign of Elizabeth, and in the reign of James I. provided for the same class of cases. The mode of providing for them was in principle that after a certain period, either by the act of the creditors demanding payment, and thereby forcing the debtor into bankruptcy, or by the act of the debtor himself, placing himself in a position of bankruptcy, all his property was at once given over to certain persons—call them as you please, and that those persons assumed from that time the power of distributing his effects among the creditors. But then, when that operation was performed, when the whole property had been fairly distributed, there came the second part of the process in favour of the debtor. If it was found that the debtor was not guilty of fraud, if his debts were owing to unavoidable misfortunes, if he had made a clean breast in regard to all his affairs, and stated unreservedly the entire amount of his property and his obligations, the law then stepped in to declare that he was free from the debts which he had incurred previous to his bankruptcy. Although he might have paid only 10s., only 5s., or even only 2s. 415 in the pound, the law declared he was thereafter free, able to undertake any other matter of trade or of commerce, and could not be made liable for the debts which he had formerly contracted. This provision is, I believe, greatly to the benefit of commerce, greatly to the benefit of the creditor, greatly also to the advantage of the honest debtor, and tends very much to the promotion of the best interests of society. The mode in which the law in this respect was carried out may be described in few words. When either the creditors or the debtor wished to constitute an act of bankruptcy, application was made to the Lord Chancellor, who issued a Commission to certain Commissioners. These Commissioners appointed an assignee or trustee, in whom the whole of the property was vested, and who made, after full inquiry, a distribution of the effects, the lands, the chattels, and property of every kind belonging to the debtor, and granted a certificate by which certificate the bankrupt was set free, whether from imprisonment or from the liability to imprisonment, and thereby enabled to regain his former position and re-enter the commercial world. The laws which were made in the reigns I have mentioned, afterwards altered by an act of George II., continued in operation in the same spirit and without any great difference till the time of Lord Chancellor Brougham. Their defects were brought under the notice of that eminent man. The chief defect was that the Commissioners appointed in the way I have described were not a fixed Court; were not persons by whom the whole of so difficult a branch of law could safely be administered. They consisted of some seventy gentlemen, who were paid at first at the rate of 20s. a-day while employed on the duties of their office, but afterwards by fixed salaries, though very small ones. Many of them were persons just come to the Bar, who had very little experience, and the whole of whose proceedings, therefore, were irregular and unsatisfactory. Lord Chancellor Brougham, with that spirit for the improvement of the law for which he will ever be memorable, and which has placed his name with those of Romilly and Mackintosh among the great legal reformers of our country, constituted by Act a new Court of Bankruptcy, and prescribed its mode of proceeding. In 1849 a general Act was passed for the amendment and consolidation of the law with respect to 416 bankruptcy. But this law occasioned very great complaints, and in 1852, I think, a Commission was appointed, which made its report in 1853. That Commission of which the present Home Secretary was a distinguished member, made a most elaborate Report pointing out the defects of the law, and offering many suggestions of the highest value and importance, with a view to its amendment. Many of these suggestions may have been introduced into Bills, but I do not think that the greater part of them have yet been productive of the benefit they might effect. They are, most of them, contained in the Bill which I hope to have the honour to introduce to-night; and they will, I trust, if Parliament agrees to the measures, make a very great amendment in the law. I will now state what are the general complaints respecting the present state of the Bankruptcy Law. The first complaint is the very great expense of the Court. The matter is gone into in great detail by the Commissioners to whom I have referred. I have stated that under the law before it was amended there were very great defects, very irregular modes of proceeding, and abuses, which were inseparable from the then state of the law; but the number of officers, and the delay and difficulty in the mode of proceeding have been such as greatly to destroy the remedy which the Legislature meant to give. The House, no doubt, will agree with me in the statement I have made as to the principle of these laws—namely, that the object is to obtain as quickly and as cheaply as possible a full explanation and revelation of the affairs of a bankrupt, and, having ascertained what is the amount of property he possesses, to divide that property among his creditors. This has been done in such a way under the existing state of the law that on an average no less than 30 per cent, and sometimes much more, are consumed in the expenses of the court. Therefore, for every £100 of actual assets that may come into the possession of the assignee, the creditors received no more than £70 net for the payment of their debts. I have here a statement which I copied from one of the tables given in the appendix of the Report of the Commissioners; it is the statement of Mr. Edwards, an Official Assignee, with respect to a certain sum that came into his possession in 1847. The net amount of the assets received by him was £23,029. On that amount the Court Fees were 9 per cent; the broker's and auctioneer's charge 417 was 5¾ per cent, the messenger's, 5⅞ per cent; the official assignee's, 5⅞ per cent; but the great charge of all was the solicitor's for law costs, which amounted to 16¼ per cent, making altogether, without the solicitor's charge, 26¾ per cent, and with the solicitor's charge, 43 per cent of the amount of the assets. I find that the same assignee gives the amount divided in a period of six years, and the percentage for those six years is 33⅝ on the amount. Now, when we are told that in Scotland all this business is done, and done effectually to the satisfaction of the people and to the satisfaction of those engaged in trade in that commercial country at no more than 12 per cent, I think the House will agree that the present state of the law here is capable of amendment. I will now explain the mode in which we propose to amend that part of the law. In the first place, we do away with the absolute necessity of resorting to the official assignee. In the former state of the law, to which I have adverted the creditors on their meeting appointed their own assignee. The persons engaged in trade in this country are of opinion that the appointment of an official assignee, however much that might give regularity to the proceedings, is a cause of very great expense, and that the official assignee, as might be expected, is hardly so diligent and so rapid in his operations as the persons appointed by the creditors themselves, and in whose proceedings they bear a part. We propose, therefore, in the first instance, that the creditor should place the whole of the sum belonging to the bankrupt in the hands either of the official assignee, or of an assignee chosen by themselves. At all events, supposing that they place in the hands of the official assignee the whole of the proceeds in the first instance, they would afterwards have full power to name an assignee of their own, and thereby be enabled to get rid of the delay and expense of the official assignee. I have, however, alluded to other officers, whose expense is very great, and who, at every step of these proceedings, diminish the estate of the bankrupt. I have mentioned the broker and messenger. It is thought that the broker and messenger might be entirely dispensed with, and that the assignee might employ persons to have the custody of the property, which is all that is required in these cases. Besides this, it is proposed, with respect to some of the expenses I have mentioned, which consist of compensation,—of payments not for 418 duties now performed, but for duties which were performed a long time ago by other persons then having offices in the Court, that some part of those expenses should be placed on the Consolidated Fund. It is thought—and I think reasonably—that, while other Courts in this country which administer justice are placed on the Consolidated Fund, the Court which is to administer the affairs of a bankrupt—not commercially, but judicially—should also be maintained at the public charge. I come next to the distinction, which has existed from the earliest of the Acts I have mentioned, between trader and non-trader. This state of things has given rise to a great deal of difficult discussion, and to distinctions which hardly seem valid, and which often have no foundation in reality. For instance, while an apothecary, who sells drugs, might be made at any time a bankrupt, the physician, who trades upon his skill, cannot be subject to the same law. According to an exception made in one of the Acts of Parliament, farmers and innkeepers are not liable to the Bankrupt Laws. The farrier, who converts a bar of iron into a horseshoe, may be made a bankrupt; but the farmer, who changes milk into butter and cheese is not liable to the same laws. There arise every day questions respecting the capacity and character of a person who is in debt, as to whether he ought or ought not to be reckoned a bankrupt or insolvent. What I propose on this subject is, to abolish the distinction altogether. We propose that persons in debt should all come under the same law, that there should be a law applicable to bankrupt and insolvent alike in one Court, which should make the distinction which the particular character of the transactions might warrant. Of course, there is a great difference between the case of an insolvent who has had nothing to do with trade, but has incurred debts wantonly and extravagantly, and the case of a trader who, by some failure in a well-grounded speculation, has become a bankrupt. But it is better that the distinction should be made by the Judges—should be made by the Court—and that each transaction should be treated according to its merits and character, than that an attempt should be made by law to persevere in maintaining the present distinction. Another benefit would arise from this—namely, there being only one Court, much greater economy, simplicity, and uniformity would be found in the proceed- 419 iags. That one Court being called by the name of the Bankruptcy and Insolvency Court, or by whatever other name, would be empowered to deal with all these matters, and the persons at the head of it would be persons of high standing, fully equal to deal with all questions of Bankruptcy and Insolvency that might come before them. Another evil, which is much complained of by traders, is the distance of the present Courts from their places of residence and business. There are seven Courts in the country, besides the Courts of Bankruptcy and Insolvency in London. A trader living, for instance, in the western part of Cornwall would be put to great expense to go to Exeter in order to proceed against a person owing him a debt, and in that manner justice is frequently defeated. On this subject Lord Brougham proposed some years ago that County Courts should have jurisdiction. That proposal was objected to by the Commissioners to whom I have referred, and who gave reasons why, in their opinion, the County Courts should not administer these affairs. Nevertheless, considering how much has come within the jurisdiction of the County Courts—how much every day their business carries them into matters of considerable difficulty in point of law, and considering the very great convenience which traders would have in resorting to a tribunal within an easy distance of their own residence. I think it perfectly right that the proposal should be made in this Bill, that if the creditors on meeting think fit by a certain majority in number and value to carry the case before the County Court, they shall be empowered to do so. It is not proposed to abolish the jurisdiction of the present Bankruptcy Courts in the country. In many instances creditors may think that their cases will have a more satisfactory decision in those courts. But wherever they are of opinion that they would best find their remedy in the County Courts, it is proposed to allow them to avail themselves of it. Although it has taken a quarter of a century, with all parties concurring and no party opposition, to make the change, I believe that of late years no change has been so beneficial among our amendments of law as that which established local courts, and enabled those who were aggrieved to resort to a Court within an easy distance in order to procure a remedy for the evils under which they suffered. The next proposal of the Bill refers to another evil in the present bankruptcy law, which 420 is much complained of—namely, the power of making voluntary settlements. It is quite true that these voluntary settlementcy or arrangements have been very much resorted to. It is quite true that the Courts of Bankruptcy, as the Commissioners stated, have had their quantity of business relieved by the number of voluntary arrangements. It is quite true that the evils which I have mentioned have prevented many traders going into the Court of Bankruptcy; but, while this has been the case, there has been no sufficient authority or sanction given to the mode in which voluntary arrangements have been carried out. In Scotland there is such a mode, but in this country a minority of creditors—a very small minority—have it in their power to defeat any such arrangement. It has been stated, and by a person of long experience and authority upon this subject, that it is desirable that even if only one creditor should stand out voluntary arrangement should not take place—that even if only one creditor should propose that the matter should be carried into Court, it is not right to allow of any such arrangement. But that opinion is founded on the supposition that in every case the great majority of creditors wish to make some unfair arrangement which should be unknown to the public, and that the one creditor is a patriotic and public-spirited man, who wishes justice to be done, and is not contented with such a concealed and secret proceeding. But facts do not agree with this supposition. It is very often the case that these one or two creditors, who stand out, are men who wish to indulge their spite, are unreasonably obstinate, or are opposed from some caprice or other to voluntary settlements. We propose, therefore, that in cases where a majority of creditors in number, and four-fifths in value, shall agree to one of these private arrangements, then with due precautions and with sufficient sanction it shall be lawful to settle the affairs out of Court. Another complaint which has been made is with regard to the uncertainty of the punishment of fraud. Traders in the country generally complain very much—I will not say with how much reason—but they complain that in cases where they consider the conduct of the debtor has been fraudulent, undue lenity is shown on the part of the Commissioners. I own it appears to me—and I believe a very high authority can be quoted in favour of my opinion—that the best way will be that whenever there ap- 421 pears to be a primâ facie case of fraud, means shall be taken to send such a case before a jury; that only upon conviction by a jury shall any punishment be awarded; but that punishment, when awarded by the Court or Judge, shall be sufficient to deter persons from entering into trade, and carrying on trade in a most fraudulent manner, thereby not only cheating their creditors, not only defrauding all those with whom they are brought into contact, but inflicting a stigma and disgrace upon the commercial character of the country. With regard to what I have just stated as to voluntary arrangements, it is proposed that a memorandum shall be signed by a majority in number of the creditors and four-fifths in value; that such deed or memorandum shall be registered in the Bankruptcy or County Court district, and due publicity given to it by means of advertisement; that its provisions shall be enforceable by summary application to such court; and that to prevent fraudulent arrangements the Judge of the court shall have power to call the debtor before him and to examine him as to his conduct. The last proceeding which takes place in Bankruptcy is the certificate. According to the old state of the law, the certificate was either granted or refused. In certain cases, Where no adequate grounds for granting a certificate could be found, it was refused; but in every case when it was thought that the debtor had given a fair account of his transactions, that he had entered with honesty into his trade, and that he had been only destroyed by those revolutions in commerce which overthrow even those who carry on business with the greatest integrity,—in all such cases the certificate should be granted. It was then thought to be an improvement on the law in this respect that there should be three classes of certificates; one class of those who had got into debt by unavoidable misfortunes; another class of those who might have got into debt by unavoidable misfortunes or not; and a third class, of those who had not fallen in debt through unavoidable misfortunes. But these distinctions are somewhat too nice for human reasoning, and human affairs. In the first place, the words "unavoidable misfortune," although we apply them in charity to men who have failed in trade, to a very critical eye seem inapplicable to most cases in which, though the misfortune may not have been easily avoidable, it might have been avoided by a great degree of prudence 422 and sagacity. And, on the other hand, with regard to the third-class certificate, saying that the debtors' troubles were, not owing to unavoidable misfortune, affixed a stigma to a man for the rest of his life, which perhaps in many cases was unjust. We think it better to recur to the old distinction of simply granting a certificate, or refusing it. On the whole, it makes a distinction between the fair trader and the fraudulent speculator, and therefore I propose in this Bill to abolish altogether the difference of certificates. I do not wish at the present time to go into the various details of this Bill; I will only say that it is proposed in this Bill to consolidate, as well as to amend, the law of Bankruptcy; and it appears to me that those who have desired that the Bill shall be introduced in this shape have judged rightly in desiring that it should contain consolidation as well as amendment. With regard to amendment, I think there are but very few points on which there is any great difference of opinion. When I introduced the Bill last year there were many provisions of that Bill upon which there appeared to be on the part of the Government, and on the part of professional gentlemen who considered it, great objections. But many of those provisions, as I understand, are now to be adopted. If that be the case, it is better that we should attempt at the same time to consolidate the law. Of course, tile few points of difference which remain and the language of consolidation must be carefully considered, and, perhaps will be better considered by a few Members of both Houses than in Committee of the whole House. All I wish is to lay the Bill on the table of the House, in order to have it fairly considered, and hereafter, when the House has time and leisure to deal with such a subject, that all its provisions shall be considered with care and deliberation. There is no person in this country who has shown more desire for law reform than the present Attorney General and the present Solicitor General. The law officers of the Crown, I am sure, will be willing to adopt any measure which they think will be an improvement of the law, and, at the same time, raise the character of those who carry on the trade and commerce of the country. I trust, therefore, that this being a matter of deep and serious concern to all classes of the community, and one on which men of all parties must desire to see a good measure passed, I may be permitted now to introduce the Bill, and time will be 423 hereafter given for a fair consideration of its merits. I beg, therefore, to conclude by moving for leave to bring in the Bill.
THE ATTORNEY GENERALsaid, he was sure the House would feel that the noble Lord needed no excuse and no apology for bringing so important a subject as that of the laws relating to Bankruptcy and Insolvency under their consideration. The noble Lord had stated that he had entered into communication with several mercantile communities, and that he had received their counsel and assistance in the preparation of this measure. But he thought that the authority of the noble Lord himself on this as on every other question of Law Reform, or indeed on the reform of any of our institutions, scarcely required the additional weight of the opinions, important as they undoubtedly were, of those mercantile bodies to whom he had alluded. He had listened with great interest to the statement of the different points arising on the measure proposed by the noble Lord, in order that he might judge whether the Bill now introduced corresponded in every particular with the Bill which the noble Lord introduced in the last Session of Parliament, with the principal provisions of which he had made himself acquainted. He did not, however, quite understand from the statement of the noble Lord whether various important principles on which it was proposed to legislate in the Bill of last Session were dealt with in the like manner, and without change, in the Bill now proposed. But with regard to the changes to which the noble Lord had expressly adverted, although it might he premature to enter into them until the Bill was actually before the House, he should, perhaps, be pardoned if he detained the House in alluding to one or two of the most prominent. The noble Lord had stated that he proposed to diminish very considerably the expense of proceedings in bankruptcy, but there were many other defects which it would be found necessary to remedy before he could accomplish his object. The noble Lord, as he understood, proposed that instead of every case in bankruptcy being placed under the management of an official assignee, it should be open to the creditors to place the whole administration of the estate of a bankrupt under a single assignee of their own choice. Now he doubted whether that would in any degree diminish the expense of bankruptcy, when once the affairs of a bankrupt were brought under the control 424 of the Court. There would be this difficulty, too, attending such a proceeding, that instead of the official assignee, an officer appointed by the Court, from whom large and ample security was taken, who exercised the duties of his office under a heavy responsibility—responsibility to the Court for conducting the affairs of bankrupts in accordance with the law, responsible for all the assets that might come to his hands, there would be substituted a single assignee appointed by the creditors, who might be in narrow circumstances, and who must necessarily leave no great business of his own if he could leave it to undertake the management of a large bankruptcy. He could not but think, therefore, that the substitution would expose the creditors to the risk of the loss of whatever funds might come into his hands. However, when the Bill came before the House, if it were found to contain any means by which a diminution of the enormous expense of proceedings in bankruptcy could be safely attempted, Her Majesty's Government—at least he could speak for himself—would be glad to adopt the suggestions of the noble Lord. The next point to which the noble Lord had called the attention of the House was, perhaps, the most important of the topics to which he had referred. He was rejoiced to hear that the noble Lord lent his sanction to the total abolition of all distinction between traders and non-traders under this law. That distinction had for many years past ceased to exist in Scotland, and he quite concurred with the noble Lord in his commendation of the Bankruptcy Law of that country. He might, however, remind the House that a measure embracing the entire Law of Bankruptcy and Insolvency had been brought before the other House by the Lord Chancellor, and would soon come on for discussion. One of the objects of the Lord Chancellor's Bill was the abolition of this distinction. That measure embraced, moreover, all the Amendments of which the law was thought capable at the present time, and he would suggest that whatever might be the merits, and no doubt they were great, of the Bill of the noble Lord, at least it was desirable that the noble Lord should abstain from pressing it forward through its future stages till ample time had been afforded to the House and the country to consider the Bill brought into the other House, so that the whole subject might be treated in the most comprehensive spirit. The noble 425 Lord's proposition that jurisdiction in Bankruptcy should be given to County Courts was of considerable importance. He understood it was not proposed to confer original jurisdiction, either in great or in small cases, on the County Courts, but to allow the creditors in every case to judge for themselves at a meeting whether the conduct of a case of Bankruptcy should be transferred from the Bankruptcy Court to some one of the County Courts. Now it seemed very plausible to say that whatever the creditors themselves might resolve, as they were the parties principally interested, should be done. But he did not know whether it had occurred to the noble Lord, that if a Bankruptcy of any magnitude in town or country were transferred to the County Court, he gave to the County Court in question the entire controul of the whole proceeding, the determination of every question of law and of fact, however difficult, and important, and complicated they might be, and that from the decisions of that Court, unless special provision were made for it, there could be no appeal. Whether the noble Lord had provided or not for such an appeal, of course he could not say until he had seen the Bill; but unless some appellate jurisdiction were provided for—either the House of Lords or the Privy Council—he would venture to suggest that it would be most dangerous to entrust to a County Court the decision of questions which might be (for such questions did arise in Bankruptcy) not only of the greatest difficulty, but of the greatest possible importance, both as regarded questions of law and in relation to the amount of property that might be involved. He was far from saying, however, that in some matters in Bankruptcy it would not be better to give a co-ordinate jurisdiction to County Courts—in matters, for instance, of a limited amount, and of no considerable difficulty—with an appeal to the principal Bankruptcy Court established in London, than to confer on them not only a co-ordinate jurisdiction as to amount, but a jurisdiction equal in all respects to that of the principal Court. The next subject to which the noble Lord had alluded was also one of the utmost importance, It was the question whether the creditors of a bankrupt might not, if they thought fit, adopt in all cases a voluntary system of liquidation, totally apart from the Bankruptcy Court, and with no other relation to the Bankruptcy Court, or any Court whatever, but such as might be 426 necessary to obtain the aid and support of its jurisdiction in carrying out the liquidation by a certain majority of the creditors in concurrence with the debtor. The great principle of all Laws of Bankruptcy and Insolvency, which prevails or ought to prevail in all commercial countries, is that when a debtor becomes insolvent, his whole property should at once pass into the hands of his creditors and be applied in liquidation of his debts under the control of his creditors, in the cheapest and most expeditious mode that the law could provide; that the honest debtor, on giving up his property to his creditors, should be at once and for ever acquitted and discharged, and that the fraudulent debtor, although also acquitted and discharged of his debts, should be adequately punished according to the degree of his offence. But when they came to apply these principles to any measure of liquidation, the greatest practical difficulties arose; and he had not collected from the statement of the noble Lord what provision he made to obviate the difficulties which must occur when either Bankruptcy or Liquidation is to be carried into effect. When the noble Lord's Bill was before the House last Session, he considered it with great attention, and it appeared to him at that time that the clauses relating to liquidation were utterly inadequate to effect the desired purpose. Probably, in the mean time, the noble Lord might have reconsidered and amended those clauses. However that might be, he should give his best attention to all the provisions bearing upon this important part of the subject, and, should they appear to him to be well suited for the purpose in view, he would do his utmost to give effect to them.
Another subject which had been adverted to was involved in difficulties of a constitutional character. He meant the provision by which a fradulent debtor should be punished when fraud was clearly made out. The difficulty at the outset was this. A great number of acts might be done by a debtor, a trader especially, in the course of his dealings with his creditors, which, though of such a nature that it would be highly inexpedient, if not impracticable, to bring them directly under the operation of the criminal statute law of the country, yet were of such a character that it was impossible to allow such acts to pass when they were proved before a Court of Bankruptcy without some punishment being inflicted on the debtor. Such, for example, 427 was the contracting of a debt when it was apparent that the debtor knew he had no prospect of paying it; a fraudulent preference to a favoured creditor; or the circulating of accommodation bills. To make these offences punishable generally by the criminal law of the country, would be unjust as well as inexpedient, from the hardships thus inflicted on individuals who perhaps might never have intended to commit any offence at all, and who at all events had paid their debts before misfortune had fallen upon them. On the other hand, when offences of such a character came before a Court of Insolvency, where creditors had been defrauded and the whole estate of a trade wasted and made away with it, became just and expedient to punish the debtor under some law specially framed for that particular purpose. But then this difficulty arose:—If the offender must be tried before a Judge and jury, no bankrupt's estate would bear the expense of the prosecutions. Again, if a jury were dispensed with, it would be said, the constitution of the country was disregarded. Under these circumstances he should look with great anxiety to the Bill of the noble Lord, to see in what way these many and great difficulties were met. It had appeared to those who had paid great attention to this subject that a discretionary power should be given, subject to appeal to the Court of Bankruptcy, to punish these minor offences in a summary manner as soon as the offences were proved before the Court, and, in cases of greater magnitude, and where the estate was of value, with the consent of the creditors to bring the case before a jury. But all these were matters of detail on which he need not further trouble the House. He trusted however, that with the Bill of the noble Lord, and that introduced into the other House, they might succeed before the Session was over in perfecting a measure which would give satisfaction on this important subject to the great trading and mercantile interests of the community. He could not sit down without offering a single observation on the last point in the speech of the noble Lord, the question of consolidation. He need not say that he had now for many years bestowed the most anxious consideration on that great question. It was now under the consideration of Her Majesty's Government, and it was their intention, within a few days of the present period, to call the attention of the House to the whole subject of consolida- 428 tion. It would be to him a great satisfaction if, while they were improving the law of Bankruptcy, or any other branch of the law, they could also consolidate it. But it possibly might have occurred to those who had framed the Bill in the other House, and which the noble Lord seemed to have forgotten, that the law of Bankruptcy had been consolidated within the last few years; that there was one consolidated statute containing almost the entire provision of the Bankruptcy law as it now existed; and it would at least be inexpedient on their part to proceed with any consolidation Bill on this subject till the sense of one or the other House of Parliament had been taken on the general scheme of consolidation. The noble Lord and the House, however, might be assured that there was no disinclination on the part of the law advisers of the Crown, or on the part of Her Majesty's Government, to combine consolidation with amendment.
MR. HEADLAMsaid, he quite agreed with the hon. and learned Attorney General that it would not be altogether in accordance with the feelings of the House to go into the provisions of the Bill at any length, and therefore he should only offer a few observations upon those particular points that had been referred to. speaking generally, this Bill had one great advantage, that it embodied all those provisions which were considered essential for their own interests by the delegates from the great commercial bodies, and contained, moreover, a complete consolidation of the whole bankruptcy law. He was very glad to hear that the learned Attorney General intended to call the attention of the House to the consolidation of the laws, and, if the House were to legislate at all, on the subject of Bankruptcy it should be done in a complete form. With respect to the provisions of the Bill he would first allude to those which gave jurisdiction in bankruptcy to the County Courts. On this point he had found throughout the north of England a very strong opinion in favour of powers of administration being given to those Courts. In that opinion he fully concurred; at the same time he also agreed with the learned Attorney General that there should be an appeal to the Chief Court in Bankruptcy. That appeal was provided for by this Bill. The real difficulty to contend with was obviously the expense attendant on the liquidation of a bankrupt's estate. It was almost impossible to estimate the magnitude of this evil at present. Generally 429 speaking, the expense averaged over 30 per cent, but of course if the average were over 30 per cent, the cost in particular cases must be infinitely greater, and he believed that sometimes it amounted to as much as 80 per cent. The expense, however, was not the only evil. There was the length of time in winding up cases in bankruptcy. It was an important feature in this Bill of the noble Lord that it proposed to diminish those expenses, and in order to do so it provided that a portion of the costs should be borne by the Consolidated Fund in the same way as the expenses of other courts were paid. Courts of bankruptcy were not merely civil courts, but they were courts in which great principles were laid down for the purpose of elevating the tone and character of the whole of the commercial portion of the population. Consequently it was reasonable that a portion of the expense of maintaining the land should be borne by the public in general. Another great defect in the present system arose from the small amount of control which the creditors had over the assets of the debtor. He did not agree with the learned Attorney General in thinking that the appointment of an assignee by the creditors themselves would not lead to the management of the estate in a manner at less expense, and the opinion of the commercial world was opposed to that of the learned Attorney General. The general idea was that if an assignee were appointed by the creditors, and entrusted with the duty of administering the fund, he would do it at much less cost than an official assignee would administer the assets. He did not think it would be desirable to go further into the subject at present, but he might add that as, when the Bill for the Reform of the Court of Chancery was before the House, great assistance was derived by the labours of the right hon. Baronet the Member for Carlisle (Sir J. Graham) and the right hon. Gentleman the President of the Board of Trade (Mr. Henley), so they had a right to expect that the assistance of the noble Lord the Member for London would be of the greatest benefit to the commercial body in passing a sound and efficient measure.
MR. MOFFATTsaid, that as one of the commercial Members of the House, he would venture to offer a few remarks on behalf of the great commercial body. In the first place he might observe that the present state of the law was so unsatisfactory that not one in ten—he thought he 430 might say one in twenty of those who were bankrupts passed through the Court of Bankruptcy. The machinery of the Court was so cumbrous, and so expensive, dilatory, and unsatisfactory, that very few creditors were willing to resort to the Court—they preferred to wind up the estate themselves. He had expected, after the note of preparation which had been sounded, that some large and clearly-defined reform of these laws would have been brought before them that night. He expected that the noble Lord would have brought forward some broad and effective plan by which the expense and delay now experienced would have been greatly lessened; but no such measure had been laid before them. The general complaint of creditors was that they could not get at the assets of their debtors—that debtors had in the present state of the law the means of preventing the distribution of their assets, and so driving their creditors to a compromise, although they might be under the conviction that they were not obtaining all the assets of the debtor. He wished to see some strict and stringent measure proposed by which the debtor should be summarily compelled to surrender his entire property into the hands of his creditors, but he was compelled to say he did not find a single clause in the Bill of the noble Lord which would give any relief in that respect. In fact, all the defects of the present enactments would be continued in the new Act if this Bill passed. The noble Lord had alluded to the state of the Scotch law, and, if he had been so minded, he might have found something in that law to introduce into this Bill. By the Scotch law, if a confessed debt was not paid within a certain period, there was a power reserved to the creditor to register a protest, and within forty-eight hours the debtor was bound to pay the debt, or the creditor had power to place the property under arrestment; and if it were not paid within six days from that proceeding, the creditor had full power over the property and person of the debtor. As regarded the person of the debtor, he did not believe there was any desire in the community to oppress or harass hint unduly, but there was a strong desire, when a person was unable to meet his debts, that (as the Attorney General had expressed it) the whole of his property should pass entirely and promptly to the creditor. The experience of every commercial man would affirm that opinion. Again, with regard 431 to fraud, the noble Lord did not propose to give the Commissioners power to punish fraud, but provided that such punishment should be awarded through the medium of an action at law. Now, he would ask the noble Lord what creditor would bring an action? Who would go to the expense, or give himself the trouble to punish any individual guilty of fraud? His conviction was, no creditor would do so. Creditors were indifferent to everything but getting the most they could out of the assets. In conclusion he must express his great doubt whether the provisions of the Bill would be any improvement upon the law as it now stood.
§ Leave given.
§ Bill to amend and consolidate the Laws relating to Bankruptcy and Insolvency, ordered to be brought in by Lord JOHN RUSSELL and Mr. HEADLAM.