OBSERVATIONS. (Hansard, 28 July 1882)

§ MR. GREGORY,

who had given Notice that he would call attention to the Bankruptcy Act of 1869, and the Rules made under it; and to move— That, in the opinion of this House, many of the complaints with respect to the present administration of the Law might he removed by alterations of such Rules, said, there were many grievances which the commercial community complained of with regard to the Act of 1869, which some simple alterations of the rules would easily obviate. The first of these complaints was that the trustee in bankruptcy was not bound to give security, as he ought to do, under the Act of 1869. Secondly, no proper provision was made for the costs and charges of the trustees. Thirdly, there was no rule with regard to the collection of the sums of moneys remaining in the hands of trustees. Fourthly, there was the abuse of proxies. Now, all these things would be easily removed if the Act of 1869 were carried out in the spirit; but, unfortunately, that had not been done. With respect to the security that would be taken from the trustee, that was a most important matter. Trustees could not always be relied upon; and, therefore, a provision of this kind was absolutely necessary. It was a fact that in all cases where a receiver under the Court of Chancery was appointed security was given as a matter of course. Indeed, the Act of 1869 provided that security should be taken from trustees in all cases; but it so happened that, by the rules made under that Act, the want of security on the part of the trustee did not invalidate his appointment, so that, although the Act expressly provided for security, the rules went in a contrary direction. The consequence was that the giving of security was utterly neglected. Trustee after trustee was appointed without any compliance with the provisions of the Act. Again, with respect to the costs and charges of the trustee, there was no control so far as he knew. The Act contemplated the taxation of all costs and charges; but, as a matter of fact, the rule provided for the taxation of all parties with the exception of the trustee. As regards the case of proxies, he considered that a very grave matter. At the present time a bankrupt 95 gathered the proxies, or they were gathered for him, so that the meeting was ruled by him, and the independent creditor was absolutely swamped at every stage of the proceedings. In this respect also the spirit of the Act was defeated by the rule. Again, instead of proxies being confined to their proper destination and applied for the purpose originally intended, the person from whom the proxy happened to be secured found that it applied to all the proceedings under the bankruptcy, and that, consequently, he was absolutely excluded from any further part in the transactions, and was committed hand and foot to the person to whom he gave the proxy. That also was done in accordance with the rule, and not in accordance with the Act. With regard, again, to the assets, the Act of 1869 provided for the collection of estates in the hands of trustees in bankruptcy; but, unfortunately, no rules had been made applicable to trustees under liquidation. It was well said that all the rubbish went into bankruptcy, and all the profit into liquidation; and the consequence was that a large amount of property was now in the hands of trustees under liquidation which could not be recovered. The Act of 1869 provided that all estates not applied or distributed within five years should be vested in the Crown. That would be the case where the rules had been made as in the case of bankruptcy; but, unfortunately, no rules, as he had said, had been made applicable to liquidation, and consequently those sums were still outstanding, and had not been carried over to the Crown. He would not object to those sums going over to the Crown by the Act of 1869, because the Crown had power, which it would, no doubt, exercise, to distribute them upon application. What he complained of was that those estates had been outstanding for years and years in the hands of persons who were no more entitled to them than he was. By that means the creditors were defrauded of money to an enormous extent. There was another point he would like to refer to—namely, the mode of dealing with creditors holding security. What he would venture to ask was that the Scotch system, which was a much more equitable one than the English, should be adopted. That system provided that the creditor holding the security should be 96 able to dispose of it, and that the trustees should have the option of taking it up at its value. If the trustees did not take it up, the creditor held the security and made what he could out of it, and was not, as in England, barred from proving until he had given up his security. That, in his opinion, was an equitable arrangement. He had no desire to detain the House at any length, his object was to put those points before the Government, so that when they proposed to amend the Bankruptcy Act they should proceed on the lines which he had just indicated. In default of their being able to close, it was in the power of the Lord Chancellor to so alter the rules as to obviate a great deal of the injustice that now existed, which was sorely felt by the commercial classes. It was the rules that caused the friction; and these, he contended, should be altered. He trusted that his suggestions would receive the favourable consideration of the Government, and that a remedy would be found for the grievances to which he had the honour of calling the attention of the House.