RECOVERY OF DEBTS.—LEAVE. (Hansard, 26 February 1861)

§ MR. HODGKINSON
in moving for leave to bring in a Bill to prevent frivolous and fictitious defences to actions for the recovery of debts remarked, that in a country where the giving of credit had become a matter not of choice but of necessity, it was highly desirable that the law on the subject should be as simple as possible, and that while debtors were protected from extortionate demands on the part of their creditors, creditors in their turn should be protected against the vexatious and frivolous defences of unscrupulous debtors. Much had been done of late in that direction. The abolition of arrest on mesne process in 1837, the County Courts Act a few years afterwards, with jurisdiction to a certain amount, the Common Law Procedure Act of 1852; and, lastly, the Bills of Exchange Act of 1855, had all been important steps in legislation on this subject. But though much had been done something still remained to be accomplished he-fore they could claim for the law, as regards the subject of debtor and creditor, even an approach to perfection. Before passing the Act for the abolition of arrest on mesne process, it was open to a creditor, on making an affidavit of the correctness of his debt, to arrest his debtor; a proceeding liable to abuse, and which it was therefore desirable to put an end to. That was a boon to the debtor; but it left the creditor in a far worse position to that which he had before occupied and, the measure should have been accompanied by some provision for the advantage of the creditor. The creditor who brought an action to recover a debt, even though he should have a perfectly passive debtor to deal with, was necessarily subject to very considerable delay and expense. The writ was followed by a declaration and pleading before he could obtain judgment. The Common Law Procedure Act of 1852 made a very important change for the better in this respect. It provided that a creditor might endorse on the writ the particulars of his demand, and then, if no appearance was entered by the debtor, the creditor was allowed to take judgment without the expense of further proceedings; but it still 947 left it open to the debtor to enter an appearance in the action, without even an allegation that there was any ground whatever of reasonable defence, and thus put the creditor to great delay and expense. By the Promissory Notes and Bills of Exchange Bill the debtor was prevented from defending the action without an order from a Judge founded on an affidavit; but, as regarded all other debts, except those on bills and notes, it was still open to debtors to delay their creditors without having any real defence. In at least ninety-nine cases out of a hundred in which a creditor sued for a debt there was no defence whatever to the action. It possibly happened that it was inconvenient to the debtor to meet the demand. Perhaps in a time of pressure, when money was scarce and at a high price, it might be worth his while to delay his creditor by entering an appearance. That was a matter of every day occurrence, the extent of the delay depending not on the validity of the defence, but on the part of the country in which the cause of action arose, and the time of the year when the creditor sued for his debt. Suppose a creditor issued a writ in July, the debtor, at the expense of a few shillings, entered an appearance; the long vacation intervened, and the creditor could take no other step till the 24th of October. Was it, he asked, desirable that such a state of things should continue without subjecting the debtor to some preliminary proof or some preliminary allegation that he had a ground of defence? In country districts, in almost any time of the year, there must be delay. There were but two assizes in the year, and by entering an appearance and pleading to the action the debtor was enabled to stave off the creditor till the approaching assizes. He might be told that the number of defended cases tried at the assizes contradicted, or was at variance with, this state of things. But such was not the fact. He admitted that a great number of those undefended cases did not come on for trial. And why? Because, just at the eve of the assizes, when the debtor found it was no longer open to him to procrastinate he allowed judgment to go by default; or, probably, finding the debtor determined, the creditor went to him and said, "I know you can put me off till March; I do not want, for your sake or my own to incur further expenses; if you will give me a Judge's order for March I will not go farther." The remedy he proposed for the evil was founded in some 948 measure on the Bills of Exchange Act of 1855, which had been found to operate most satisfactorily. He did not propose to go the full length of that Act, which required that the debtor should go before a Judge and satisfy him that he had a good ground of defence or that he ought to have leave to defend the action. That would be one of the grounds; but he would also let every debtor come in and enter his appearance, provided he made a short affidavit averring that he had a good defence to the action or some part of it. He should only subject him to that one test, convinced that, although some men might, perhaps, make an affidavit which, strictly speaking, they were hardly justified in doing, yet in ninety-nine cases out of a hundred that preliminary would be sufficient to prevent many of the evils which were now found to exist, and which operated most harshly upon creditors. He moved for leave to bring in a Bill to prevent frivolous and fictitious defences to actions for the recovery of debts.

§ MR. HADFIELD
seconded the Motion.

THE SOLICITOR GENERAL
said, he had no intention to oppose the introduction of the Bill, which, if found to be in its provisions free from material objection, would be a considerable improvement in the law bearing on the relation of debtor and creditor. At the same time, as the procedure recommended was identical with or analogous to what was adopted with reference to bills of exchange, it must be recollected that in all such cases the amount of the debt for which the action was brought was reduced to certainty on the face of the instrument. But when the debt arose for unliquidated sums, as for wages, for goods sold and delivered, or the like, a variety of questions might arise, some of them more or less complicated, which in practice might be found to interpose considerable difficulties in the application of the improvement to which the hon. Member referred. The hon. Gentleman had omitted to state that as the law stood, very considerable impediments were thrown in the way of these frivolous and vexatious defences; because if a debtor who had set up a frivolous or vexatious defence to an action brought by his creditor should in the end be driven by stress of circumstances either into the Court for the Relief of Insolvent Debtors or into the Bankruptcy Court, he would be brought to task for that defence; such a course exposing him in the one case to imprisonment, and in the other to the suspension of his certificate. The Bankruptcy 949 Bill of his hon. and learned Friend, the Attorney General, also contained a clause rendering it punishable, by the withholding or postponing of his certificate, for a bankrupt to set up a frivolous or fictitious defence. On the other hand, it was not to he denied that some debtors who made these frivolous defences did not subsequently figure in either the Insolvent or Bankruptcy Court, and the Bill of the hon. Gentleman might be usefully applied in such cases. He should, therefore, he glad to see it carried out in a manner that would he free from objection.

§ MR. M'MAHON
said, he thought the Bill so utterly fallacious in its principle that the House could not assent to its second reading. It professed to be founded on the analogy of the Bills of Exchange Act, but the case of ordinary debts and that of bills of exchange were wholly dissimilar. The acceptor of a bill of exchange signed his name to the instrument, and, therefore, there being a primâ facie case against him, it was thought reasonable that a judgment should he given upon it unless the judge in chambers was satisfied that the defendant had a good defence to the action. In the case of an ordinary debt, on the other hand, there was no evidence against the debtor except the statement of the other party, and yet under this Bill it would depend on the caprice of a Judge in chambers whether a man was to he allowed to defend an action. The principle of the measure had been tried in New York, but without success, for although the defendant was there obliged to swear that he had a good defence, frivolous defences were just as common in New York as they were in this country. It was urged as an argument in favour of the Bill that our assizes were held only twice a year. The answer to that, however, was—let them be held oftener. They had the County Courts sitting much more frequently, and debtors were there made to pay by instalments. The cry for excessive speed reminded him of the old law maxim, that "haste was the mother of injustice." It was not the duty of Parliament to encourage any man to lend his money. he disputed the principle that credit was a necessity of trade, and he thought according to true political economy, instead of being encouraged it should be discouraged. The Bills of Exchange Act was itself an exception to our general mercantile legislation, and when that measure was under discussion the House deliberately refused to extend its 950 principles to bonds, because they were not an equal mercantile necessity.

§ MR. HADFIELD
said, the plain English of the whole matter was that a man who owed money ought to pay it. The Bill would enable a creditor to get his debts in without great expense, and it would therefore have his support.