§ [Progress 11th June.]
§ Bill considered in Committee.
§ (In the Committee.)
§ Clause 91 (Avoidance of voluntary settlement.)
§
Amendment proposed in Clause 91, page 33, line 41, to leave out from the word "shall," to the words "such settlement," in page 34, line 4, inclusive, and insert the words—
Or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of such settlement, be void as against the trustee of the bankrupt appointed under this Act, and shall, if the settlor becomes bankrupt at any subsequent time within ten years after the date of such settlement, unless the parties claiming under such settlement can prove that the settlor was at the time of making the settlement able to pay all his debts without
1898
the aid of the property comprised in such settlement, be void against such trustee" — (Mr. Rathbone.)
instead thereof—
§ Question proposed, "That the words 'shall if the settlor becomes bankrupt within two years after the date of such settlement,' stand part of the Clause."
§ MR. MORLEYsaid, he had a clause of a somewhat analogous character, but, as he believed the Attorney General was prepared to concur in the present clause, he should not press his clause. He (Mr. Morley) believed that the acceptance of this clause would be most acceptable to all the Chambers of Commerce in the Kingdom.
§ Amendment agreed to.
§ MR. HERMON moved, in page 34, line 4, after "settlement," insert "and unless such settlement shall have been duly registered within three months of its being made, in the same manner as a bill of sale or judgment bond."
§ MR. JESSELcomplained that commercial men, in considering this question, seemed utterly oblivious of everything but the creditor, and reminded hon. Members that social considerations should enter into their reasoning on the matter. The Amendment, if carried, would require that every man in the country would have to disclose the particulars of his marriage settlement.
§ MR. HERMONobserved that his Amendment referred only to post-nuptial settlements.
THE SOLICITOR GENERALbelieved that the Amendment was unnecessary after the one which had just been agreed to.
§ MR. MORLEYsupported the clause, and expressed his belief that if the existence of settlements were better known, tradesmen would not give so much credit. He had that morning received a letter from Bristol illustrating the wrong that was sometimes perpetrated with these settlements. A solicitor and colliery proprietor in Wales made, previous to marriage, a settlement binding himself to trustees to pay to them £500 on the birth of each child. He had six children—£3,000 worth—and subsequently becoming bankrupt, the trustees stepped in, proved for £3,000, and cut out all the other creditors.
THE ATTORNEY GENERALsaid, he wished particularly to avoid any con- 1899 flict with the Chancery lawyers, but he would consider the subject, and if he thought it feasible he would bring up a clause on the Report.
MR. ALDERMAN LAWRENCEsaid, he considered the matter a very simple one. There could be no doubt that great fraud was at present perpetrated under pretext of settlements.
§ Amendment, by leave, withdrawn.
§
MR. RATHBONE moved, page 34, line 5, before "settlement," to insert—
Any covenant or contract made by a trader, whether before or after marriage, for the future settlement or payment of property or money upon or for the wife or children of such trader, shall upon his becoming bankrupt before such property pr money has been actually transferred or paid, be void against his trustee appointed under this Act; and any settlement made by a trader alter marriage in pursuance of a covenant or agreement made before and in consideration of marriage shall be filed in the manner provided in the case of bills of sale by the Bills of Sale Act, 1854, and in default shall be void against his trustee appointed under this Act; but the provisions of the Bills of Sale Act, 1866, as to the renewal of registration, shall not apply to such settlements as last aforesaid.
MR. HINDE PALMERsaid, he was afraid that the Amendment would be rather unfair in certain cases to the wife and children.
§ MR. DENMANsaid, it often happened that a man engaged in a risky trade or profession went to an attorney and told him that, as he might become bankrupt any day, he wished to make over, say £ 10,000, to his wife and children by a post-nuptial settlement. That system of fraud was at the present moment, going on to an immense extent, and he thought the Committee were all agreed that it ought to be put down. He did not understand why the discussion was now re-opened.
MR. HINDE PALMERsaid, he thought that the clause would be too extensive with this addition. He suggested that it should be qualified by the words "unless the Bankruptcy took place within a certain time." say ten, years.
§ MR. SERJEANT SIMONmisted the Attorney General would adhere to his original intention.
THE ATTORNEY GENERALsaid, that after listening to the remarks which had been made in the course of the discussion, he had become satisfied that the clause deserved further consideration. 1900 He would carefully re-consider it before the Report was brought up, and, under the circumstances, he trusted his hon. Friend would withdraw his Amendment.
§ Amendment, by leave, withdrawn.
§ Clause, as amended, agreed to.
§ Clauses 92 to 99, 102 to 111, 113 to 117, inclusive, agreed to.
§ Clauses 100, 101, 112, struck out.
§ Clause 118 (Forfeiture of dividends after six years non-claim).
§ MR. ALDERMAN SALOMONSobjected to the provision under which a creditor failing to claim a dividend for five years forfeited it to the Crown. If the dividend were forfeited at all, surely the other creditors, and not the Crown, should have the benefit of the forfeiture.
§ MR. AYRTONsaid, there was at present in the hands of the Crown, which had been received as unclaimed dividends in the hands of official assignees, no less a sum than £1,000,000 sterling, and which the Crown held until they should be claimed. The object of this clause was to collect all such sums as might be scattered over the country by the operation of the Bill, to be held by the Crown until they were claimed.
§ MR. MORLEYsaid, the objection was to the word ''forfeited" in the clause. He would rather not have to satisfy a Lord Chancellor as to any claim that might be disputed.
§ Clause agreed to.
§ Clauses 119 to 125, inclusive, agreed to.
§ Clause 126 (Regulations as to liquidation by arrangement).
§ MR. RATHBONE moved, in page 42, line 22, after "may," to insert "after a petition has been presented against him:" his object being to put a stop to a system of private compromise which had arisen of late years, and was most destructive to the morality of the country, he had the opinion not only of the commercial, but the legal gentleman of Liverpool in favour of the proposal.
§ MR. MORLEYopposed the proposal. The Chambers of Commerce of the country, with the exception of that of Liverpool, wore unfavourable to the Amendment. While in the years 1866, 1867, and 1868 the property realized through the Court of Bankruptcy amounted to only £2,165,000, that which was paid by means of private arrangement amounted 1901 to £25,270,000; and while the dividend paid through the Court of Bankruptcy was almost nil, under these private arrangements there was paid in 1867 nearly 6s., and in 1868 nearly 7s. in the pound. In his opinion the course to be taken ought to be determined by the creditors themselves.
§ MR. HERMONopposed the Amendment, thinking that it would not have any beneficial effect.
§ MR. RATHBONEsaid, his hon. Friend (Mr. Morley) misunderstood the object of the Amendment. He did not require that the man should be adjudicated a bankrupt, but only that a petition should be presented; then a meeting of creditors might be held, and the whole estate might be taken out of bankruptcy and managed as easily as before. His object was to provide that there should be no secret arrangements.
§ MR. G. GREGORYsaid, he wished to supplement the returns of the hon. Member for Bristol (Mr. Morley) by reference to the dividends of estates under composition and bankruptcy. Taking 10s. in the pound as the standard, out of 8,000 estates in bankruptcy only fifty-seven paid 7s. 6d. to 10s. in the pound, while out of 9,000 compositions, 390 paid 10s. in the pound. This shoved the advantage of composition over Bankruptcy. A very large amount of property was, indeed, realized under composition. True the saying was that "all rubbish went into bankruptcy." He should propose a series of clauses, continuing composition by deeds, and embodying the powers of the Acts of 1861 and 1868, giving the creditors facilities for entering into composition, providing that the deeds should be registered and accompanied by a declaration of the number and names of He creditors who should sign the composition. He was willing to adopt any other precautions, such as enacting that preliminary to the composition there should be a meeting of the creditors, and that a balance sheet should be prepared and laid before thorn. This was indeed the ordinary course at present. He feared that as the Bill stood it would no longer give the friends of a, bankrupt a motive for assisting him. by endeavouring to keep his name out of bankruptcy.
§ MR. WESTsaid, he thought it might be necessary to take greater precautions in these clauses, such as increasing the 1902 publicity of the arrangements. It might also be provided that there should be a public meeting of the creditors, so that these arrangements might not be entered into by written engagements.
THE ATTORNEY GENERALsaid, he could not support the proposal of the hon. Member (Mr. Rathbone). Some hon. Gentlemen would not allow any arrangement to be made between a bankrupt and his creditors without full publicity being given to it, whereas his hon. and learned Friend opposite was of opinion that no publicity was necessary, but that the arrangements should be made in the same manner ns hitherto. For his own part, he wished to protect the minority of the creditors as far as they ought to be protected; but at the same time he had no desire to expose the bankrupt to greater publicity or inconvenience than was necessary. This clause he might add, had been very carefully drawn up and steered a middle course between the two extremes.
§ SIR ROUNDELL PALMERpointed out that if the clause remained alone in the Bill it would produce an important alteration in the present law, and would in effect abolish compositions altogether. The arrangement would be just the same as bankruptcy, with these three differences: first, it apparently allowed the committee of inspection to be dispensed with if the creditors so pleased; secondly, it allowed the audit by the Comptroller to be dispensed with if the creditors so pleased; and, thirdly, it took the case out of the operation of the discharge clause of the Bill, which depended upon the payment of 10s. in the pound dividend, and it enabled the creditors at a general meeting by a majority in number and three-fourths in value to give or refuse the discharge on any terms they pleased. He did not know whether the mercantile world were prepared for the abolition of all kinds of compositions of a more elastic sort.
§ MR. RYLANDSsaid, he hoped the Amendment would be pressed, or, at all events, that the Attorney General would afford a larger amount of publicity than the Bill provided for.
§ MR. NORWOODsuggested that the Attorney General should alter the clause, so as to give full power to the creditors to make any arrangement with the debtor, provided it should be registered, so that it could not be kept secret.
§ MR. HINDE PALMERsaid, he did not think the proposal of the hon. Member for Liverpool (Mr. Rathbone) exactly met the want with a view to which it was designed. He trusted the Committee would allow the clause to stand as it was, because it seemed to be most carefully framed.
§ MR. MORLEYutterly demurred to the Amendment, because it meant Bankruptcy in cases in which it was desired to save a debtor's property, and allow him to pay a composition, and carry on his business. Under the Act of 1868 no deed of arrangement was valid unless it was advertised in the London Gazelle. That, therefore, secured publicity.
THE ATTORNEY GENERALsaid, he was prepared to meet the views of the hon. Member for Bristol (Mr. Morley) and others, by inserting words to give the trustee power to accept composition not subject to the review of the Court; but there must be a meeting of creditors and the appointment of a trustee, and the bankrupt's property must be vested in the trustee, so as to prevent any clandestine arrangement that the bankrupt should keep part of his properly from his creditors.
§ MR. RATHBONEsaid, the difference between him and the hon. Member for Bristol was that the hon. Member had a great objection to call things by their right names. What it was sought to prevent by the Amendment was, not people being called bankrupts, but people becoming insolvent and combining fraudulently to prey upon the public. He should not be able to carry the Amendment against the opinion of the Attorney General; but he hoped that power would not be given to a majority of creditors to hush up matters which might be as disgraceful to them as to the debtor, and that the Attorney General would rather strengthen than weaken the clauses which demand a certain amount of publicity.
§ MR. W. FOWLERsaid, that if a trustee must sell the property, that was not liquidation by arrangement as the term was understood, and there must be arrangements such as there were now, so that the bankrupt might be allowed to carry on his business without his property being liquidated. An attempt was now being made to steer between two things, but we must either retain the present system of arrangement or do 1904 away with it, except under the order of the Court.
§ MR. PEEKtrusted the Attorney General would adhere to the principle that there should be no arrangement without leave of the Court. Nothing had done so much to lower the moral tone of the commercial world as deeds of arrangement.
§ MR. STEPHEN CAVEsaid, this was an extremely difficult question, and the difficulties seemed to be multiplied at every step. They had to meet the case of the dishonest trader who wished to cheat his creditors, and also the case of the man who got into difficulties through misfortune. It was often desirable that the latter should not be driven into Bankruptcy. Again, besides the creditors, there were the public who were often injured by corrupt arrangements between the insolvent trader and his creditors, who said—"We will hush this up if you get credit from others and pay us, and then trust to Providence to pay them." The difficulty was to reconcile legislation for the honest and dishonest classes. There ought to be sufficient publicity and sanction for what was done, and the question was how far these were compatible with a debtor carrying on his business as before. That was a point upon which it was most difficult to express an opinion. If the estate were to be left in the debtor's hands in order that he might work it as well as he could, he (Mr. Cave) did not see the use of handing it over to a trustee, and then take it back again. It appeared to him that the Bill only met one class of arrangements — namely, liquidations under the order of the Court. It had been truly said that more money was recovered under composition; indeed, the waste and expense and delay of liquidation was notorious. What was wanted was some provision for composition which was not necessarily dishonest. He wished the Attorney General would re-consider the matter.
THE ATTORNEY GENERALsaid, the clause had been carefully considered; it steered a middle course between two opposite views, and he did not see how it could be altered so as to be reconciled with the wishes of the two sides.
§ MR. RATHBONEsaid, he would withdraw the Amendment, provided the Attorney General would make some ar- 1905 rangement for securing greater publicity for these composition deeds.
§ MR. JESSELsaid, he did not pretend to speak on this subject for commercial men, but he found from a great many of thorn that there was a very strong feeling among them for the continuance of composition. It had been represented to him that in many cases a larger sum was paid by the debtor under composition than could be obtained under any management whatsoever. If such was the prevalent feeling, the Attorney General ought to meet it by a substantial clause enabling creditors to obtain a composition from a debtor. But then it was said that this should be fenced round by the safeguard of publicity— that is, publicity among the creditors themselves. ["No!"] But a public notice Mould be quite sufficient. What had been suggested by the Chambers of Commerce was that a meeting should be advertised; that could be done by the Court; then the creditors could come together, and, by a vote of a majority in number and three-fourths in value, accept a composition. If they passed the Bill as it stood, they made a man virtually a bankrupt, though they did not call him so.
§ MR. MORLEYbelieved that the law as it stood at present did not require that the meeting should be advertised. If it were advertised it would be a great advantage, and might perhaps meet the views of the hon. Member for Liverpool (Mr. Rathbone).
THE ATTORNEY GENERALsaid, he was prepared to consider the question of a substantial clause as suggested by his hon. and learned Friend (Mr. Jessel) without binding himself by a pledge that he would bring up such a clause. But if his hon. and learned Friend should do so it would have his best consideration. The clause before the Committee, however, was, as far as it went, a right clause, and he hoped they would accept it.
§ MR. PEEKsaid, there was a large house in London that never would take a composition under any circumstances, and the consequence was that where he made twenty bad debts that house never made one. They always sent the debtor into bankruptcy, coute qui coute, and the class of persons who went into compositions always let in the easier traders, and avoided that house. He did not sec why; honest men should not carry a composi- 1906 tion through the Court with the privity and sanction of the Judge.
§ Amendment, by leave, withdrawn.
§ Clause, as amended, agreed to.
§ Clause 127 (Commissioners of London Bankruptcy Court to cease to hold offices).
§
THE ATTORNEY GENERAL moved; page 44, at beginning, insert—
Such one of the present Commissioners of the London Bankruptcy Court ns may be chosen by Her Majesty shall be the first Chief Judge in the London Bankruptcy Court as constituted under this Act, and shall, as to tenure of office, rank, salary, pension, and all other privileges except his title, continue in the same position in all respects as if his office had not been abolished by this Act, but save as aforesaid.
§ MR. RUSSELL GURNEYasked, whether it was not desirables that the Chief Judge of the Court should rank with the other Judges? It was important to give him the same position, and he would therefore propose that the word "rank" be omitted.
§ MR. PEEKsaid, that the hopeful feature of the Bill was that the Chief Judge of the Court, was about to be placed on an equality with the Judges of the land. It would be necessary to provide him with a suitable salary.
§ Amendment, as amended, agreed to.
§ Clause, as amended, agreed to.
§ Clause 128 agreed to.
§ Clause 129 (Abolition of Country District Courts of Bankruptcy).
§ SIR ROUNDELL PALMERsaid, that he could not understand how it would be for the public advantage to send to the right-about a number of officers, the greater part of whom were quite capable of remaining in the public service. The Bill proposed to pay them off, and considering that they held freehold offices, of which they could not otherwise be deprived without their own consent, less could not be done without injustice. But whether they were to receive more or less compensation, he protested against the principle of discharging all these officers without exacting from them such services as they still could give.
§ MR. AYRTONbelieved it was intended that every person whose services 1907 could be used should be used. The Government could certainly not flinch from the responsibility of compelling these gentlemen to serve the public instead of receiving their pensions for doing nothing.
§ SIR ROUNDELL PALMERsaid, that might be the intention of the Government, but the clause made no porvision for it.
§ MR. MORLEYsaid, he would rather pay the officials in the Bankruptcy Court for doing nothing than retain many of them in their present offices.
THE ATTORNEY GENERALsaid, that it seemed desirable to make a clean sweep of the Courts. It was the intention to utilize all that could be used from the London Courts. It had been proposed to retain the District Courts, at least, during the lives of the present Commissioners; but there was such a pressure from the commercial world to abolish them at once, that it was agreed to as the best course. Their jurisdiction was transferred by the Bill to the County Courts.
§ Clause agreed to.
§ Clause 130 (Compensation to holders of abolished offices).
§ MR. AYRTONproposed an Amendment with the object of limiting the clause entirely to the Commissioners. The clause would then run to this effect—
That any Commissioner should from and after the abolition of his office receive out of the moneys to be provided by Parliament, an annuity during his life equal to the amount which he received by way of salary during his continuance in office.The result of that Amendment would be that the rest of the compensations would be dealt with by Clause 131. Under the General Superannuation Act the principle was laid down that compensation should be granted on the abolition of office or employment. That applied however, only to the civil servants of the Crown. He thought that the superannuation no the amount of ten years' service was a fair arrangement. He could conceive nothing more monstrously extravagant than to say that every person employed in the administration of the Bankruptcy Court, whether he had served for one year or fifty, should have for the rest of his life an annuity guaranteed by Parliament. What he wished, therefore, to propose was that the Treasury should be empowered to examine 1908 the position of the persons employed, and the length of time during which they had served, and then to award them sufficient compensation. It might be objected that in that way they would not be guaranteed anything. But he would ask whether it was not the duty of the Executive to insist that such an investigation should be made, and if the officers were dealt with in a niggardly manner it would be competent for them to come to the House of Commons, and no doubt they would easily find advocates to take up their claims. The clause as it stood was of a most ambiguous, but at the same time comprehensive, character. He did not know that there was anybody in the Bankruptcy Court who did not hold his office during good behaviour. Every salary was given for the performance of; certain duties, and was subject to this condition, that those duties should be performed. To say, then, that these; people were to receive their annuities for the rest of their lives was an extravagant proposition. He begged to move his Amendment.
§ SIR ROUNDELL PALMERsaid, that it was no doubt of very great importance that the Committee should arrive at a sound, economical, just, and uniform system of dealing with this class of cases, and not waste the public money by appointing large numbers of officers and then dismissing them with full compensation. One way of avoiding that was by utilizing the officers we had and not discharging them when they were able to perform their duties. He regretted that his hon. Friend had not given the Committee any information on that point, because he believed that employment might be found for all those in the Bankruptcy Court who were fit for their duties. Therefore the number of compensations, if they did not pension those officers unnecessarily, might not be so great as was supposed. He quite agreed with the hon. Gentleman that it would be a good thing if the rules of the Superannuation Act were extended to all public offices, so that if it should please Parliament to abolish the offices the holders might be dealt with on the terms provided under the Act. But if an economical and uniform plan was important it was of equal importance to the public that we should deal justly with all classes of public servants, and that we should not create freehold offices and then by Act of Parlia- 1909 ment dismiss the holders without any fault of their own at less than their full salaries, unless we had previously given them notices that it vas part of the terms on which their offices were; accepted. Mow ex post facto legislation should be made to apply to the officers they were about to dismiss, and who were appointed by Act of Parliament many years ago, he could not see. All these officers held freehold offices, for an office held during good behaviour was a freehold office. The practice of Parliament had always been opposed to that now advocated by the Secretary to the Treasury. In the former Bankruptcy Acts, in the Act abolishing the office of the six clerks, and in most of the legal changes which had been made, the principle had been adopted of giving to these freehold officers their full salaries. Compensation was now being paid under the Acts of 1842 and 1861 to officers displaced by those Acts, upon the name principle of giving them their full salaries and he saw no reason why this principle should be departed from if the Government did not think fit to accept the service which they were willing to give. These gentlemen had made all their arrangements on this footing. If the Government either could not or would it of find any duty for them to discharge they were dismissing them by Act of Parliament, and it had not been the practice to leave the remuneration of such persons to the Treasury. He said make them serve as much as possible, and as to the rest he maintained that the principle of justice was quite, as important as the principle of economy.
§ MR. ANDERSONsaid, the Amendment, of which he had given notice, was to omit this Clause 130 altogether, the effect of which omission would be to make every case depend upon its own merits. Every word uttered by the hon. Gentleman the Secretary for the; Treasury, in respect to these officers, applied with equal force to the Commissioners. He could not, therefore, understand why the Commissioners should be dealt with so liberally, and the minor officers subjected to such different treatment.
§ MR. SCLATER-BOOTHsaid, he hoped that, before the Committee discussed these clauses, they would see them in print.
§ Mouse resumed
§ Committee report Progress; to sit again upon Friday, at Two of the clock.