HC Deb 07 June 1867 vol 187 cc1765-75

Order read, for resuming Adjourned Debate on Question [4th June], "That Mr. Speaker do now leave the Chair."

Question again proposed.

Debate resumed.

MR. AYRTON

said, that when this subject was last under the consideration of the House, he felt it to be his duty to call the attention of the House to some of its provisions. He thought the question he then raised so important that it ought to be considered before proceeding further. He had therefore put upon the Paper the Notice of an Amendment he was about to move on the Question that the Speaker leave the Chair, which would raise the question, whether they, in consolidating and amending the Bankruptcy Laws, were to have one set of laws for one class of society and another set for a different class. The line of distinction was drawn on no principle—on no rule of right or consideration of justice. This arbitrary and capricious character in the state of the law they owed to the fact that for the last twenty-five years their legislation had gone on at hap-hazard, was crude, and ill considered. There was no department of the law or its administration which was in a more unsettled and unsatisfactory state than the law of bankruptcy. Within the last thirty or forty years they had three or four new systems and schemes. One after another of these had proved failures. But if, with all their past experience, they were to have another failure, it would be more conspicuous and discreditable than all that had gone before it. It had been said that the best guarantee for the liberties of the subject was when the poorer classes were subject to the same laws as the aristocracy, for then the influential classes would take care that the laws should be well administered. But here the richer classes were proposing to pass a law which exempted themselves from the punishment of imprisonment for debt, while they left the poorer classes to the operation of a law of a comparatively harsh and arbitrary character. The history of the matter was somewhat like this:—Some twenty-three years ago the attention of Parliament was drawn to the deplorable sufferings of the poorer classes who were imprisoned for small debts. They passed a law that imprisonment for debt under £20 should be abolished. It was soon discovered that this law, however humane in its character, did not give sufficient protection to the creditor against a fraudulent debtor, and next year the breadth of the power was somewhat contracted. Provision was made that the debtor should be summoned before a County Court Judge, and interrogated. If there was anything fraudulent in his conduct he was liable to imprisonment. He might also be ordered to pay by instalments. If he failed to pay any of those instalments he was liable to be imprisoned. That law could not be called unfair, for at that time the insolvent debtor, not a trader, was subject to a similar law. So matters continued till the bankruptcy reform of 1861. One of the provisions of that Act, was that if any person was imprisoned for a debt of more than £20 the officers of the Bankruptcy Court were to visit him in prison. They were to get him out of it as quickly as they could on his surrendering his property. If he had been guilty of any impropriety his future-acquired property was to be made answerable for his debts. He (Mr. Ayrton) had asked on that occasion, why the poor debtors under £20 were not to have the same advantage? The noble and learned Lord (Lord Westbury) who then, as Attorney General, had charge of the Bill, said he would bring up a clause that would extend the same benefit to the poorer debtor. He did bring up such a clause, and he wished to ask the Attorney General why that clause had not been preserved in the present Bill? He believed he could answer the question by anticipation. The clause had been left out because it was found to be of no real advantage to anybody, and to be totally useless for its purpose. Although in 1861 the imprisonment for debt was abolished, as far as the upper classes were concerned the abolition was not to the extent since proposed. The Committee upstairs took a comprehensive view of the matter, and arrived at a Resolution that imprisonment for debt should be absolutely abolished. This decision was arrived at without exception or reservation. It was true the Committee recommended that a debtor about to leave the country might be apprehended; but this was only for the purpose of securing the right of his creditors to property he might otherwise carry away with him. Every step of the present Bill was fraught with injustice; it was said that there were cases in which damages had been recovered for injuries where debts had been contracted under circumstances more or less immoral, fraudulent, or criminal; that the delinquent in such cases by the surrender of the property would escape. No doubt that would be so under the project of the Committee if the Committee had stopped there. But imprisonment for debt, as understood by the Committee, was the power of a creditor to imprison a debtor simply for the purpose of extorting money. The Committee saw no reason why a debtor should not be imprisoned for a criminal offence against the creditor. The Committee intended that such debtor should be punished, but punished criminally. The Attorney General had not appreciated, or at least adopted, this view of the question. He proposed that if any person was adjudged to owe £20, even if it were for a most aggravated assault or immorality, he should be imprisoned for six months, unless he sooner paid the money, the Judge having no discretion with regard to criminality of conduct on the part of the defendant, and that after the six months the defendant was to be free, his property only remaining liable. This appeared to be indiscriminate injustice. His hon. and learned Friend seemed to have been misled by looking back to the old insolvent law, instead of the recommendations of the recent Committee. Even the old insolvent law had some redeeming points. On the application of a debtor for discharge, the Judge looked into the cause of action and the conduct of the debtor, and if he saw fit had power to award him imprisonment. In this Bill similar power was given to the Judge. But then the sentence ought to be a criminal sentence. In what position did the hon. and learned Gentleman propose to leave the unfortunate person who incurred a debt to the amount of £50? The Attorney General said that if a man owed, it might be, 100 debts, it might be of small amounts, he should be liable to a particular code of law. But if he contracted only one debt not exceeding £50, or several not exceeding £100, he was to be treated differently. In one case the debtor was to be summoned before the County Court Judge and ordered to pay, perhaps by instalments. If he made default in one of those instalments he was to be liable to forty days' imprisonment, to be repeated till he had paid the last farthing. Under the other law—the law for the rich—the debtor was to be exempt from imprisonment, but was to surrender his present property, and be liable to an order for future payments. The gross injustice of the scheme of the Attorney General was that the bankrupts of the better class, instead of being liable to be sent to prison, would only have their property made liable to their creditors; while the lower class of insolvents, as he had pointed out, might be sent to prison. The awards of the County Court sufficiently showed that this would be no imaginary inequality. The average every year of persons summoned for small debts in the County Courts was 120,000. Against 20,000 of these commitments were made out, and 8,000 were actually imprisoned. But not one in 200 of these persons wire imprisoned for frauds, such as would render the better class of insolvents under the Attorney General's scheme liable to incarceration. The law ought to be made general and uniform for all classes, and they should all be equally exempt from imprisonment for debt. The Select Committee had desired that there should be a separation between the administration of the debtor's assets and the proceedings for punishing him for his delinquencies. They held that the administration of the assets was a matter so purely formal that a County Court might deal with it. Their object was to leave the whole question of the administration of the assets to the creditors, whose property they became by the bankruptcy; and that that business should be treated, without unnecessary delay, trouble, or expense, as an ordinary commercial operation, conducted by the agent whom the creditors might appoint for the purpose. If, however, the scheme proposed by that Bill were adopted, it would be impossible that the simple plan recommended by the Select Committee could be carried into effect, and all the evils and complications which they wished to get rid of would be revived. He regretted, therefore, that these clear and simple views had not been followed in this measure in their entirety, though he admitted that they had been followed in part. On the grounds that he had enumerated, and in order to record his protest against a scheme which would so invidiously distinguish between the treatment of the better and of the humbler class of insolvents, he begged to move the Resolution of which he had given notice.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "it is unjust to pass this measure by which any insolvent person who has contracted a debt amounting to £50, or several debts amounting to £100, shall be discharged from liability for all his Debts, except as regards his future acquired property or earnings, to the extent of half the amount of his debts, while insolvents who have contracted debts to a less amount will be liable to repeated imprisonment to compel them to pay their debts in full,"—(Mr. Ayrton,) —instead thereof.

MR. NORWOOD

said, he desired to thank the Attorney General for the pains he had evidently taken in preparing his measure, and for the courtesy with which he had received the suggestions that had been made to him by the mercantile community. In discussing the question it was necessary to consider in what respect the present law of bankruptcy was faulty. The state of the law, as far as the mercantile community was concerned, was most unsatisfactory. It was expensive, it caused great delay, and it was framed to give undue advantage to the debtor, to the detriment of his creditors. His idea of the right administration of bankruptcy was this—that the mercantile portion of the affair should be confined to the creditors. The bankrupt's assets were really the property of his creditors, to whom alone should be confided the task of realizing and distributing them. The necessity for resorting to a Court of Law should be as rare as possible. The creditors should go to such a tribunal only to record their proceedings, and should appeal to a Judge only when a difficulty arose which they were unable to solve. The present Bill went to a certain extent in the right direction. The Attorney General proposed that as soon as the insolvent debtor was made a bankrupt, his creditors should be called together, that they should elect a trustee — who would in most cases be a commission agent—in whom the property of the debtor should be vested, and whose duty it would be to realize and distribute it. The hon. and learned Gentleman further proposed that a small committee of creditors should be formed, who should act as inspectors, to see that the trustee performed his duty properly. The property of a debtor should, as soon as he committed an act of bankruptcy, be looked upon as the property of his creditors. He ought from that moment to be regarded as a trustee for their benefit. He was sorry to find that that obnoxious officer, the official manager, was still to be retained. Under the Scotch law there were no provisional trustees, and he did not consider them necessary. He also objected to the continuance of the office of messenger. As to the office of accountant in bankruptcy, he was afraid no one official of that kind could, even with a large staff, perform the duties which were discharged by the corresponding officer in Scotland. The more we could utilize our County Courts in those proceedings, the more pleased the mercantile community would be. He regretted that the Bill proposed to make the jurisdiction of the district bankruptcy courts co-ordinate with that of the County Courts, for some confusion would probably be the result. He should prefer having one Judge of a superior court to take cognizance of matters in London to having three Judges in the metropolis. If the three Judges must be retained he would suggest that one of the three should be made superior to the other two. There was in the Bill too much reference to the London Gazette. Some means might be devised by which separate notices might be abolished and a serious expense in the winding-up of bankrupt affairs avoided. The Bill contained no provision for winding-up the estates of deceased insolvents. That was an omission of which he had had communications from the country requesting him to take notice. He objected to the debtor's making himself a bankrupt. To enable him to do so was to give him a power which it was unwise to confer. He looked upon it as entirely a matter for the creditor how the estate should be realized. There was no doubt considerable anomaly, as had been pointed out by the hon. and learned Member for the Tower Hamlets (Mr. Ayrton), between the way in which small debtors and those who owed large amounts were dealt with. But he was not satisfied as to the expediency of altogether abolishing imprisonment. In many cases the only power which a creditor had over a debtor, who, perhaps, having fradulently obtained goods from him, set him at defiance, was that of being able to have him arrested and placed in prison. There seemed to be a vulgar error that he could be kept there. He might soon obtain his discharge through the medium of the registrars in bankruptcy, who made frequent visits to our prisons with the object of releasing those who were confined for debt. With reference to the payment of 10s. in the pound, he regarded that point as one of difficulty. Under the existing state of things a premium was held out to fraud and dishonesty, and many men who, having behaved in a most reckless way, became bankrupts, lifted up their heads in the world in a few months after in a manner perfectly scandalous. The great difficulty was how such cases were to be met. The Bill of the Attorney General appeared to stop short of that true reform which he thought advisable. There were many clauses in the Bill which he considered objectionable, but it might be made satisfactory. Therefore, he should not oppose its going into Committee. If the Attorney General would follow the example of his Chief, and accept suggestions from all sides of the House, it was possible that the measure might emerge from the Committee in a shape to be of lasting benefit.

MR. BARNETT

said, he should regret the success of the Amendment if its success were to have the effect of stopping the progress of the Bill. He concurred in many of the views of the hon. and learned Gentleman (Mr. Ayrton) with respect to the mode in which fraudulent practices should be punished. The hon. and learned Gentleman (Sir Roundell Palmer) had pointed out that the Court of Bankruptcy was not a fit tribunal to take cognizance of criminal acts. Still, it must be borne in mind that those acts were brought to light by the proceedings in the Bankruptcy Court. Under the clauses of the Bill, having reference to the powers of the Judge, nothing could be easier than to transfer the cognizance of such criminal acts to the proper Court to take notice of them. The powers conferred on the Judge would enable him to direct a criminal prosecution to be instituted. The question would arise as to who should be at the expense of the prosecution. One would not desire to see the expense saddled on the creditors. As the case would be one of public morality, the expense should be borne in some respects by the country. The Bill deserved much approval, and he hoped that, after being sifted in Committee, it would, as respects its principal features, become law. The Act of 1861 had failed to give satisfaction, because creditors had no confidence in its working. There existed a strong feeling that some kind of punishment should be held out as a means of preventing the frequent occurrence of men running into debt without any reasonable prospect of discharging their obligations. They were no better than thieves, and should be treated accordingly. With respect to the present power of imprisoning for debt, it was a fair question to consider how far it was advisable to retain it in the case of the smaller class of debtors. The House had pretty well made up its mind that imprisonment for debt should be abolished in this country as far as possible. He much preferred the present Bill to the Bill of last year, and hoped that a careful consideration of its different provisions would enable the House to render it a measure satisfactory to the public.

MR. HENLEY

said, he had had no intention of saying one word on the general provisions of the Bankruptcy Bill. But he now wished to make a few observations as the Amendment moved by the hon. and learned Member for the Tower Hamlets (Mr. Ayrton) had raised a question of great interest. The Attorney General had told him in private that he did not think the Bill afforded a favourable opportunity for raising that great question. He concurred in that opinion. A great many thousands of persons were annually in prison for very small debts under the County Court system. They were so imprisoned, not simply as debtors, but in a way equivalent to and under the same conditions as fraudulent debtors. They were under the same gaol regulations, according to the rules of the Secretary of State. Therefore year by year there was going on a serious injustice, which probably his hon. and learned Friend the Attorney General would designate as a relic of a barbarous age in connection with imprisonment for debt. This practice was being continued against small people under what he had almost called false pretences. A pretence was made that the man was in contempt because he did not pay his debt in the way the Court ordered him to pay. He was put into prison and treated there as if he were a fraudulent debtor. He did not think he had at all overstated the case. He therefore hoped the Attorney General would give this matter his consideration and see whether it was fit and proper that thousands of people should be in gaol under this state of things, when laudably, as he believed, the hon. and learned Gentleman was acting in the true direction for getting rid of the greater evils of the system. He could not understand why a man who £100,000 and did not pay it was to go scot-free, while the wretched man who owed £5 should be locked up at the rate of one day for every shilling, under the authority of the County Courts. He saw many of these poor people in prison every time he went there, and he felt there was something wrong in the law which continued such a state of things. He had felt strongly on the subject for many years, and the Motion of the hon. and learned Gentleman almost compelled him to express his sentiments on it. He had no intention to press the subject now, because he believed this was not the proper time, but he cordially concurred in the opinion the Resolution expressed.

MR. ALDERMAN LUSK

said, he thought they would be almost better without any Bankruptcy Law at all than with the clumsy complicated machinery it was so difficult to apply. Commercial men had no time to look after bankrupts and punish them as they deserved. The law should be as preventive as possible. The great evil was that men not fit to take the command of business got into debt, became bankrupt, got through the Court with ease, then re-commenced business, and became bankrupt again. That was a bad system, and deserved severe reprobation.

THE SOLICITOR GENERAL

said, that although the right hon. Gentleman the Member for Oxfordshire (Mr. Henley) had discussed the Resolution moved by his hon. and learned Friend the Member for the Tower Hamlets, and although he did not anticipate any opposition to going into Committee to-night, he wished to say a few words on one or two points which appeared to be misunderstood. First, as to whether the right hon. Gentleman was correct in saying that this Bill continued that punishment by arrest on final process which existed before the 7 & 8 Vict. He maintained that it did not. This was not the time to alter those most important statutes under which the Small Debts Courts were constituted. Their powers did not extend to imprisonment on final process at all. It was not by any means correct to say that small debtors were imprisoned, while larger debtors went free. In 1845, after they had abolished arrest for debts under £20, it was found utterly impossible to get these debts without some other process. What occurred under the 9 & 10 Vict.? The leniency under that Act to the small debtor was extraordinary. In the first place, instead of a rigid rule that he should have execution against his goods at a certain time, a Judge had to say whether he should pay in lump or by instalments—whether, in case of ill-health or other causes shown, he should be excused for a certain time. Then there was the utmost latitude to the Judge to say in what instalments and at what time the debt should be paid. It was entirely different when the debt was above £20. In the Superior Courts of Law, if a debt above £20 was recovered, execution was issued, and the debtor's goods swept away unless he paid the money, and that without any special clauses in the Act of Parliament, or any discretionary power. The leniency had been shown to the debtor who owed less than £20. He did not find that there had been any difficulty in working that Act. The County Court Judges said they might just as well abolish the County Court Acts altogether unless they had power to oblige the debtor to pay by instalments. It seemed absurd to say that a man who was in the receipt of £3 or £4 per week should not be compelled to pay the 3s. or 4s. per week which he was ordered by the Court to pay in discharge of a debt he had incurred. He believed the right hon. Gentleman the Member for Oxfordshire (Mr. Henley), who spoke of having found so many debtors imprisoned under sentences of these Judges, would have also found, if he had inquired, that most of them were justly imprisoned in consequence of their own perversity. It might be a question whether the Small Debts Act or the County Courts Act ought to be repealed; but his conviction was, that if the clauses abolishing the power of ordering payment of a debt by instalments and imprisoning the debtor in default of payment were to be repealed, the creditor would be left without remedy, and a most unsatisfactory state of things would ensue. Persons who owed an amount of 10s. or the like were not persons to whom the Bankruptcy Laws could be applied, and the creditor was often as poor a man as the debtor, and could as little afford to lose the money. It was correctly stated that the Attorney General had departed from the recommendations contained in the Report of the Select Committee on Bankruptcy. He had done so advisedly, because he thought that many of those recommendations could not be carried into practical effect. The details of the Bill could be better discussed in Committee than in its present stage.

MR. AYRTON

said, he would not divide the House upon the question, but he wished that his Amendment should be negatived, so that it might be placed upon the records of the House.

Question, "That the words proposed to be left out stand part of the Question," put, and agreed to.

Main Question put, and agreed to.

Bill considered in Committee.

Committee report Progress; to sit again upon Thursday nest.