AUTOMATIC DISCHARGE OF BANKRUPT (Hansard, 26 October 1976)

§ Mr. Clinton Davis
I beg to move Amendment No. 5, in page 5, line 19, leave out 'absolutely'.

§ Mr. Deputy Speaker
With this Amendment we may also take Government Amendments Nos. 6 and 7.

§ Mr. Davis
This is a somewhat complex matter. Although I shall try to summarise it, I may not accomplish the purpose very well, and then I shall have to go into the matter in greater depth.
Under Clause 7 a person will be granted an automatic discharge on a particular date, usually five years after adjudication, in the circumstances prescribed in the clause if he has not already been discharged under Section 26 of the Bankruptcy Act 1914. The purpose of these amendments is to explain what is meant by the word "discharged", which appears in subsections (2)(a) and (4)(a).
The amendments will have the effect of making it plain, taking account of the fact that various kinds of qualified orders of discharge may be made on a Section 26 application, when a person is to be regarded as undischarged at the relevant date so that the automatic discharge provision will take effect. In the meantime the bankrupt may make an ordinary application under Section 26 for an order to enable him to accelerate the discharge date. If an application is made and the court had granted a discharge by virtue of the fact that any period of suspension has expired, the automatic discharge provisions will not operate because that has become unnecessary.
I hope that with that limited amount of verbiage the House will accept the amendments with acclamation.

§ Mr. Higgins
I shall read with interest in tomorrow's Official Report the Minister's explanation of the amendments. My impression from listening to it was that it made good sense, which in itself is a triumph.
We debated these matters in Standing Committee on 8th June and the arguments are set out in ccs. 317 to 320. However, there is still one point about which I am uncertain. As I understand the situation, there will be an automatic review after five years and, if that goes through, the person concerned will be discharged. I think I am right in saying that if the individual concerned applies for a discharge before then and is unsuccessful, the automatic review does not happen at the end of the five years.
I do not think that that was what we intended, and it certainly seems an odd result. Obviously it will be a deterrent against a person applying for discharge before the end of five years. Therefore, there will be more undischarged bankrupts hanging around than is necessary. Will the Minister confirm whether the wording is such that if a person applied for a discharge within five years, he would effectively be subject to an automatic review at the end of that period?

§ Mr. Clinton Davis
If the man is successful, it does not matter. If he is unsuccessful, the automatic discharge will not take effect. He must therefore carefully consider what he wants to do. We shall be dealing with this matter in subsequent provisions.

§ Mr. Higgins
Do we really want to create a situation in which someone is deterred from applying for a discharge and gives up the right of automatic review at the end of the period? As the Minister says, if that person is successful, it does not matter, but if he is unsuccessful, do we want to force him to apply again at the end of the period when there are certain consequences which, from his point of view, are undesirable? If someone feels that he is able to apply and that he will be successful, he should be able to apply without incurring this penalty. Perhaps the Minister will consider this matter between now and the return of this Bill from the other place?

§ Mr. Clinton Davis
He is seeking to pre-empt the automatic discharge, and the 320 court will have to consider certain circumstances in relation to that application which would have some impact in the determination of automatic discharge. In these circumstances, if he gets an adverse result the debtor has brought it upon his own head.
It is a question of balance. We have given it a lot of thought between Committee and Report. I do not believe that one can reach an ideal solution here. It is always a question of balance and we believe that the right balance has been struck.