HL Deb 07 February 1859 vol 152 cc118-40

said, that in rising to call the attention of their Lordships to the subject of the Law of Debtor and Creditor, he feared he should be obliged to trespass upon their attention for a greater length than he could have wished. The subject he need scarcely remind the House was one of great importance to all, for the community might fairly be divided into two classes, debtors and creditors, and therefore it was necessary that the law relating to it should be made as perfect as possible. Their Lordships might remember that at the close of the last Session he had laid upon the Table a Bill which at the time he said must not be regarded as embodying the ultimate views of the Government, but rather as the redemption of a pledge that some measure should be produced during that Session. That Bill had been prepared by his hon. and learned Friend the Attorney General, and it was more wonderful, notwithstanding his known industry and ability. that his hon. and learned Friend had found time amid his multifarious occupations to draw any Bill at all than that that Bill should have failed to be entirely in accordance with the views of those who would be responsible for if it passed into a law. In fact, he (the Lord Chancellor) had invited their Lordships to accept that Bill rather as a guide to the general direction in which the Government proposed to legislate than as a complete and perfect measure. During the recess the attention of the Government had been bestowed upon this very important subject, and he hoped they had now succeeded in preparing a measure which would receive the sanction of Parliament. Upon this subject there were many conflicting opinions to weigh, many hostile interests to reconcile, and various views both of theorists and practical men to be considered; but he hoped the result of the deliberation of the Government would be found satisfactory as well to Parliament as to the mercantile community. In order that their Lordships should the better understand the questions to be considered, he would briefly explain what was the state of the existing law. At present the laws relating to Insolvents and their estates were administered by two distinct and independent tribunals,—the Insolvent Debtors' Court and the Court of Bankruptcy. The Insolvent Debtors' Court might be regarded as having had its authority confirmed upon its present footing by three Acts of Parliament passed during Her Majesty's reign,—the 1 & 2 Vict. cap. 110, popularly known as the "Prisoners' Act," because only persons in custody could have the benefit of its provisions, and two other Acts of the 5th and 6th of Victoria, and the 7th and 8th of Victoria, generally known as the "Protection Acts." Under the 1st and 2d of Victoria a prisoner in actual custody might, within fourteen days from the commencement of his imprisonment, apply by petition to the Commissioner for his discharge. In the petition he must express his willingness that all his property of every description shall be vested in the provisional assignee. Upon that petition a vesting order is made, and within fourteen days from that time the petitioner is required to file a schedule containing the amount and particular description of all his property of every kind, including debts due to him, and also a list of the debts owing by him, with the names and descriptions of the creditors. Notice is given to every creditor entered in that schedule of a day appointed for a final hearing of the case. Upon that day if the creditors offered no opposition, or if they opposed unsuccessfully, an order is made for the insolvent's discharge; but before his adjudication he is required to execute a warrant of attorney, under which the creditors are enabled to issue execution against any property which he may subsequently acquire. There is no compulsory power in the Court to force an insolvent to file a petition, but if he does not do so within twenty-one days a creditor has the power of presenting a petition to the Court, praying that the property of the prisoner may be vested in the provisional assignee. Upon that petition a vesting order will be made, and then it becomes the duty of the debtor to file a schedule, but there is no power to compel him to do so; therefore, if a debtor is obstinate, and chooses to stop in prison, he can act in defiance of his creditors, and spend his property as he pleases. That Act applies to persons of every description, whether traders or not, and whatever the amount of their debts may be. Shortly after the passing of that measure the "Protection Acts," to which he had previously alluded, were introduced. The jurisdiction under those Acts was at first given to the Bankruptcy Courts, but by an Act of the 10 & 11 Vict. it was transferred to the Insolvent Court in London and to the County Courts in the country. The mode of proceeding under those Acts is, that a debtor presents a petition applying for protection, and at the same time files a schedule of all his debts and assets as under the Prisoners' Act. This petition ought also to contain a proposal of some mode of liquidating his debts. Upon the filing of the petition the property of the debtor ipso facto vests in the official assignee. A day is then appointed for the hearing and notice given to all the creditors. Upon the appointed day, if the conduct of the debtor has been blameless, or his debts have not been incurred within any of the prohibitions of the Act, the Commissioner is empowered to award final protection; but if dissatisfied with the insolvent's conduct, he may in the first instance refuse to appoint any day for the final hearing, or upon the day of final hearing he may, on the opposition of the creditors, refuse to grant any final order. The debtor may afterwards apply for a protecting order, which the Commissioner can grant or withhold at his discretion. During the withholding of protection the debtor is at the mercy of his creditors, but the Act contains a provision that no insolvent shall be detained in custody at the suit of any creditor entered in the schedule for a longer period than twelve months. The "Protection Acts" apply both to traders and non-traders, the latter being unrestricted as to the amount of their debts, but traders owing less than £300 are alone qualified to petition. He (the Lord Chancellor) had been under the impression, and he believed it was one generally entertained, that practically the Insolvent Acts applied only to non-traders and the Bankrupt Acts to traders; but a communication which he had received from one of the Commissioners of the Insolvent Debtors' Court had, to his great surprise, shown a very different state of facts. It appeared that in London from the 1st of January to the 12th of December last year there were 1,024 protection cases, of which no less than 816 were cases of traders, while the small residue only were the petitions of persons who had not been engaged in trade. In the country the facts were still mere surprising; for it appeared, from a return of country cases during two years and a half, that of 4,230 applications for protection, only fifty were those of non-traders. Had it not been for the existence of the Protection Acts, all those humble traders would have been compelled to go to prison in order to obtain the benefit of the Insolvent Act, or they must have had their affairs arranged by the expensive process of the Bankruptcy Court. Having thus explained to their Lordships the position in which the law of insolvency now stood, he should proceed to introduce to their notice the state of the existing law with respect to the administration of insolvent estates in the Court of Bankruptcy, which might be considered to have assumed its present form of jurisdiction in the year 1831. Previous to that period the estates of a bankrupt were administered in London by seventy Commissioners, composed of barristers and solicitors, whose names were distributed over several lists, and before any one of which it was at the option of the person who had the conduct of the Commission to choose the Commissioner to whom he desired the case to be submitted. By the Act of 1831, however, those seventy Commissioners in London were reduced to six, which constituted at present the maximum, number in the metropolis. A Court of Re- view was also established under the operation of the Act as a Court of Appeal, from which tribunal, however, a right of appeal lay to the Lord Chancellor, and under certain circumstances to the House of Lords, without the necessity of submitting the case to the Court of Chancery in the first instance. With respect to the country Commissioners, he might state that it was enacted that they should be appointed by the Lord Chancellor upon the nomination of the Judges of the different Circuits, and in 1842 there were 700 of those Commissioners, who presided over 140 district Courts. He might further state that the Court of Appeal had, after a short trial, been found to be useless; that it had in consequence been abolished; that its jurisdiction had at first been transferred to a Vice Chancellor, and eventually to the Lord Justices, and the Lord Chancellor, who now, sitting either together or separately, constituted the Court of Appeal in Bankruptcy. In the year 1840 a Royal Commission had been appointed to inquire into the state of the bankrupt law, and to suggest the introduction of such amendments into it as they might deem to be necessary. That Commission issued a very elaborate Report, in which they recommended, among other things, that the country Commissioners should be reduced in number, a recommendation which was acted upon, their number having in 1842 been diminished to a maximum number of twelve. The Report contained various other recommendations also, some only of which were adopted. In 1849, however, the whole of the bankrupt law had been reviewed, and all its provisions had been consolidated in one Act, which comprised the existing code upon the subject. That was done under the sanction of a Select Committee of their Lordships' House, and he thought he could not give a better illustration of the difficulty and delicacy of dealing with this subject than by stating that this measure, framed with so much care, and which had received so much of their Lordships' attention, worked so little to the satisfaction of the community, that within four years afterwards, in 1853, another Royal Commission was issued to inquire into and report upon the amendments that might be thought necessary in the Law of Bankruptcy, and to ascertain whether or not it stood in need of amendment. At the head of that Commission was his right hon. Friend the Secretary for the Home De- partment, and from them had emanated a Report containing various recommendations as to alterations in the system as it stood, which they thought it desirable to have introduced. Of those recommendations, however, the greater number had been completely neglected. If he might venture to say so, he believed that this unwillingness to alter the Law of 1849 arose from the premature consolidation which it effected. The whole system was felt to be so entire and complete that men were afraid to touch any part of it lest the whole should come down. If the Legislature had proceeded in a more cautious manner—if they had introduced only such amendments as appeared to them to be necessary, and then, after allowing time to see their working, had brought them all into one consolidated Act, he thought they would have acted much more wisely; but although the Legislature had been stationary in reference to the question, the mind of the public out of doors had been by no means inactive. Meeting after meeting to take the subject into consideration had been held throughout the country. Numerous petitions with regard to it had been presented to that House. A central meeting of delegates from all the commercial towns had assembled in London, and the suggestions which were made and the views which were propounded on those several occasions had enabled Her Majesty's Ministers at last to form some idea of what was the nature of the requirements of the commercial community in connection with the question. Those requirements they had endeavoured to meet so far as they considered them to be just, reasonable, and at the same time practicable. Now, the first point which seemed to have engrossed the attention of those among the public who had directed their attention to the subject was the existence of two distinct and independent tribunals for the administration of insolvent estates, and there had been very strong recommendations made as to the propriety of placing the two Courts—of Bankruptcy and of Insolvency—under the operation of one system. As early as 1840 the Commission to which he had already adverted had given expression to their opinion on the matter in their very able Report in the following terms:—They said— It appears to us that to unite the jurisdiction on matters of bankruptcy and insolvency would, upon principle, tend much to benefit the public; but this benefit cannot, we think, be obtained without placing all insolvent estates under the administration of one uniform system of law. We can perceive no good reason why the estate of one debtor who is unable to pay his debts in full should be administered in a different manner from that of another debtor under the same disability. All such estates should, in our opinion, be administered in some one mode which is best adapted to secure the interests of creditors, by the examination of the debtor's accounts, and the discovery and distribution of his property. They then proceeded to say— The system of the bankrupt law with the alterations and further remedies, which we have humbly suggested to your Majesty, is well adapted to those purposes, but so long as debtors having no assets are liable to be imprisoned—and many thousands are imprisoned every year—it is practically impossible to administer such cases under a law requiring rigorous investigation of accounts, regular proof of debts, with audits, and other proceedings. Their Lordships would bear in mind that the Report from which he had just quoted had been issued prior to the passing of the Protection Acts, so that the only mode of obtaining the benefit of the Insolvent Act was by the debtor's first going to prison. But from the Report of the Commissioners it appears they were of opinion that, in order to accomplish the object which they had in view of uniting the Insolvent and Bankruptcy Courts, it would be necessary to abolish, or, at all events, to modify in a very considerable degree, the law of imprisonment for debt. They had accordingly addressed themselves to that point also, and stated, in words which were precisely the same as those which had been used by the Common Law Commissioners in 1832, in reference to arrests on mesne process, that— The principle of the present law is to do justice by the use of the strong and compulsory means of arrest and imprisonment, applied indiscriminately. The system has been found to be productive of so much hardship and injustice that it was at last deemed necessary to mitigate its consequences by the enactment of the insolvent law. The joint operation of the two opposite processes, for the imprisonment and enlargement of debtors, has been productive of so much evil as to tend to the suspicion which seems to be fully verified by inquiry, that the mischief ought to be obviated, not by provisions designed for the mere mitigation of its consequences, but by removing its cause; that is, by limiting the power of imprisonment itself, and confining it to cases where it is warranted on the plain and just principle of preventing the debtor from fraudulently absconding, or removing his property beyond the reach of justice, or for the punishment of actual fraud, or compelling the debtor after judgment either to pay the debt or to make a cession of his property for the benefit of his creditors. Beyond this, we believe that the practice of imprisonment for debt is neither warranted in principle nor beneficial in practice, and that, on the contrary, while the exercise of the present unlimited power and imprisonment is productive of pecuniary loss, injury, and distress to creditors as well as to debtors, it also occasions great moral evils in its tendency to subdue that proper degree of pride and honest feeling which is inconsistent with the degradation of imprisonment in a gaol, and to level the distinction between guilt and misfortune. With the principles which were enunciated in that portion of the Report of the Commissioners he entirely concurred, and, acting upon the suggestion there made, and in order to clear the way for legislation, their Lordships would find that the Government measure set out with various clauses which were intended to restrain, but not wholly to abolish, imprisonment on final process. For these different proposals he was happy to think that he had the sanction not only of the Commissioners upon these two occasions, but also of many members of their Lordships' House. In 1844 the late Lord Cottenham introduced a Bill for abolishing imprisonment for debt, and upon that occasion his noble and learned Friend Lord Lyndhurst adverted very strongly indeed to what he considered the absurdity of the existing division between the two Courts for administering the law of debtor and creditor, and to the injustice also of that provision by which the after-acquired property of an insolvent debtor was made liable to his creditors. In addition to the authority of Lord Lyndhurst and of Lord Cottenham he had that of the late Lord Denman, and of two noble and learned Friends whom he now saw present, one of whom (Lord Brougham) last Session introduced a Bill for the very purpose of abolishing imprisonment for debt. Thus fortified, he would call their Lordships' attention to the clauses with which this measure set out, and by which imprisonment upon final process was restrained. In future it was only to be permitted—first, in cases where there was an apprehension of the debtor's absconding, which their Lordships were probably aware was provided for at present under the 1st and 2nd of Victoria, and also under the Absconding Debtor's Arrest Act of 1851; secondly, where the debt had been fraudulently incurred or there had been a vexatious defence; thirdly, where the debt was due in respect of damages which had been recovered in any action of tort. In all other cases no imprisonment for debt would be permitted. Having thus cleared the way, it would be seen that the Insolvent Debtor's Court, being deprived of the greater part of its functions, no longer continued to be essential. He was bound, however, to say, that long as imprisonment for debt has existed, and that Court has been intrusted with the duty of discharging debtors who were entitled to their discharge, it was quite impossible that the law could have been better administered than it has been by the present Commissioners. The Government measure proposed to establish one Court only, which was to be called the Court of Insolvency; but in abolishing the Insolvent Court they proposed not to dispense immediately with the Insolvent Commissioners. It was thought that those gentlemen might be called into active service, and might be usefully employed under the new system; and, in this way, not only would the advantage of their services and experience be secured, but the extent of the permanent working staff which would be requisite would be ascertained. One Court only being thus established for the purpose of administering one uniform law of debtor and creditor, there then arose a question of considerable interest and importance—namely, whether it was possible any longer to keep up the distinction between the trader and the non-trader. Their Lordships were probably aware that a great demand had been made for the total abolition of this distinction, and upon careful consideration the Government felt disposed to yield to that demand to a very considerable extent, though they thought—and he apprehended that their Lordships would agree with him—that it would be impossible to do so entirely. For instance, with regard to acts of insolvency, some were peculiar to persons in business, and could hardly be applied to the case of non-traders. The Government proposed, therefore, that upon these three grounds alone should the non-trader either have the benefit of the Act or be exposed to its provisions:—first, where he himself applied for the benefit of the Act, when his property might be distributed among his creditors; secondly, where he left the country for the purpose of defeating or delaying his creditors, or where being abroad, he remained there with the same object; and thirdly, where, a judgment having been obtained against him by a creditor, upon a summons issued he failed to satisfy that judgment, or to enter into some arrangement for that purpose. In these three cases only would the law be applicable to non-traders. The last of these cases, the summons of a judgment creditor, had been introduced by analogy to a trader debtor summons. Under the existing law a creditor might go before a Commissioner of Bankruptcy, make an affidavit of his debts, procure a summons against the debtor, and the latter, if he disputed the debt, must arrange for having the case tried; or, if he admitted it, and made no arrangement for discharging it, this constituted an act of bankruptcy. The Government thought it would be a strong measure to introduce what would be equivalent to a trade-debtor summons against a non-trader, and believed they should sufficiently comply with the fair and just demands of creditors by exposing non-traders to the consequences of not satisfying debts to the extent he had described, where these debts had become judgment debts and the debtor was not prepared to make any arrangement. In bringing non-trading debtors within the operation of this Act, there had been considerable apprehension, which the Government had been obliged to meet, lest where a debtor was the owner of an estate tail in remainder a vindictive creditor should be disposed to sacrifice the interests both of the debtor and the other creditors by anticipating the period at which it would become available and during the existence of the prior estate. It was therefore thought desirable by the 95th clause to prevent a creditor from selling an estate tail in remainder without the consent of the debtor during the existence of the prior estate, but leaving the debt a charge upon the estate when it fell into possession, although the debtor might then have obtained an order for his discharge. There was another provision which would probably excite some discussion, and to which he begged attention. There was, as he had already explained, a distinction between bankruptcy and insolvency in respect to the after-acquired property of debtors. Bankruptcy set a man free, and allowed him the enjoyment of all the property acquired by him after he had obtained his certificate, whereas under the Insolvency Act an insolvent executed a warrant of attorney before his discharge, under which execution might issue against any property subsequently acquired by him. This distinction had been considered an unjust one. He had mentioned that his noble and learned Friend Lord Lyndhurst had condemned the principle and expressed himself strongly on this subject in 1844, and the Commissioners in their Report in 1840 also adverted to it in this way:— The future liability of all insolvent debtors is, in our opinion, a most unjust and impolitic law. The Insolvent Law, after interrupting a man in his business, taking all his property, imprisoning him until his place or business is occupied, and then turning him out destitute, a proclaimed insolvent and unworthy of trust, nevertheless expects him at some future time to acquire property which he is to give up for distribution among his creditors. The practical result is that he makes no exertion beyond supplying his daily wants, and too frequently becomes a permanently degraded character, his family are brought up ill—hence society loses, and the creditors do not gain. It might be said that the observations made applied to the case of traders, and not to non-traders. Traders being exposed to all the hazards and vicissitudes of trading, it was reasonable to expect that they should have the benefit, after having given up all their property, of being protected in respect to their after-acquired property. When they considered the practical effect of the insolvent law, as he had already explained it, the objection was very much weakened, if not altogether destroyed, because they would find the law with regard to after-acquired property applied to traders in the most humble condition of life, and scarcely at all to non-traders. As his noble and learned Friend (Lord Brougham) reminded him, in order to obtain execution against after-acquired property, an application must be made; and it was a practice of the Court never to touch the property acquired by a man's own industry after his discharge; and with respect to property which might have come to him by bequest, or in a fortuitous manner, it was the custom only to take one-third for the purpose of applying it to his creditors; and their Lordships must be aware that it was easy to defeat the law even to this extent, by means of secret trusts for the benefit of the insolvent, or—what was disadvantageous to the insolvent—by not giving him property which, but for this unjust law, he would probably have received. He put it, therefore, to their Lordships, whether, having now for the first time brought non-traders under the compulsory powers of this Act, by which arrangement they might be forced to distribute the whole of their property among their creditors—having stripped and turned them naked out of the Court, it would not be just and reasonable to give them the same benefit which was given to bankrupts, and allow them from the time of obtaining the order of dis- charge, to be free men—to be safe from the claims of their previous creditors, and enabled to pursue an independent course with respect to the acquisition of new property. He had thus introduced to their Lordships the mode in which it was proposed, first of all, to constitute the Court, and next the objects which administration by that Court would embrace. And now he would turn their attention for a short time to what was proposed by the Government with respect to the proceedings in regard to the administration of debtors' estates. Their Lordships were aware that many petitions had been presented to both Houses of Parliament on this subject. The great demand which the commercial community had uniformly made was to obtain a greater control over the proceedings when the affairs of their creditors were administered in the Bankruptcy Court, and in the petition which he had had the honour of presenting last Session from 4,000 bankers and merchants in the City of London this was not only particularly prayed for, but greater facilities were also desired for liquidating the affairs of debtors under proper administration. The Government have considered that the demand made with respect to the property of creditors being allowed to interpose in the management of these affairs passing through the Court is a reasonable and just one, and he would explain the mode in which it was proposed to meet that object. Their Lordships would find clauses in the Bill providing that at the first meeting of creditors for the choice of assignees, the majority in value of them might, if they chose, agree to dispense with the official assignee altogether, and allow the assignee of their choice to have the management and control of the affairs of the bankrupt or insolvent in the course of liquidation; but it had been thought that the creditors might possibly require the experience of an official assignee, and therefore they would be enabled to select that officer as their trustee, if they deemed it necessary. When, however, that officer was so selected, he became to all intents and purposes the trustee of the creditors, and lost his character as official assignee. There was another very important provision—namely, that though proceedings might have commenced in insolvency, and the Insolvent Debtors Court obtained posession of the affairs of the insolvent, yet if the creditors and debtor, in tine course of the investigation, considered that it would be to their advantage that the affair of the debtor should be liquidated by arrangement, they might take the business away from the Insolvent Debtors Court, and convert it into a private arrangement. In accordance, also, with the wishes expressed in the petitions he had referred to, there were clauses which it was thought would facilitate the liquidation of the affairs of insolvents, under the control of the Court, but with an inspector appointed by the creditors, Their Lordships would also find some important clauses with respect to private arrangement by deed. He would not detain the House, by now explaining the nature of those various provisions, which were matters of entire detail. Therefore he would pass to the very important question respecting the certificate. Under the existing law there was a classification of certificates. There were first, second, and third-class certificates, which the Commissioners were empowered to issue according to their notions of the merits or demerits of the bankrupts. There had been no more fruitful source of uncertainty, expense, and litigation than this mode of classifying certificates with which the Commissioners were armed. Naturally enough, the Commissioners took various views, according to the different dispositions of their minds, as to what was delinquency in these matters, and the issuing of these certificates of the first, second, or third class was extremely capricious, and it was difficult to calculate what was to be expected, except from the temper and disposition of each particular Commissioner. The Commisioners had also the power to refuse certificates altogether, so that a man in that case would remain uncertificated for the remainder of his life. In framing the present Bill it was not deemed desirable, expedient, or just that a man should remain unprotected and undischarged for the whole period of his existence, without the opportunity of acquiring any after-property, and with the danger, at the same time, to which other persons were exposed who, not aware of the man's position, might deal with him and entail on themselves the consequences of dealing with an uncertificated bankrupt. According to the Bill no person would ultimately be deprived of his certificate. It was deemed right that on certain grounds the Commissioner should have the power of suspending the certificate, but, inasmuch as under the existing law when protection was denied to a debtor he could only be imprisoned for twelve months, so it was thought that the suspension of the certificate should not be allowed for a longer period than two years. The suspension of the certificate would apply to those cases which were peculiar offences under the bankrupt law, but not to those very important cases which rose to the class of misdemeanours. For instance, the circumstance of a debtor not keeping his books properly was a very serious impediment to the administration of the estate, but still it would be harsh and severe to characterize such matters as offences, and make them liable to extreme punishment. They would, he proposed, in future be visited by a temporary suspension of the certificate—for two years as the maximum. With regard to those real offences which had always been regarded as such and treated as misdemeanours, he was surprised to find that there was a very general demand among the commercial community for a very summary administration of the law in respect to them. They thought that the Commissioners should be intrusted with summary jurisdiction, enabling them to send persons committing those offences to the House of Correction, subject, also, to hard labour, for a period of no less than three years. With great deference he must say that, though that might be an excellent remedy to place in the hands of creditors desirous of gratifying feelings excited by disappointment at not receiving their debts, he would never consent to any man being subject to an imprisonment of that severe kind unless first tried by one of the superior Courts and by a jury. Therefore he had refused to give way to that demand, and their Lordships would find included in the class of offences called misdemeanours (to be tried in a regular manner and punished only after conviction), those offences, which had been regarded as real offences on the part of a bankrupt. He would now turn from the proceedings of the Court to the officers of the Court, and first of all he would direct the attention of their Lordships to the position of the official assignee. There had been great difficulty in determining how the official assignees were to be remunerated. At present they were paid by fees, but the amount of business which they had to transact was so variable and uncertain that in some years they had very little, while in others their emoluments rose to an enormous sum, and he believed that, in the result, it was found that since the date of their appointment their incomes had averaged front about 1,000l. to 1,2001. a year. The inequality between them, however, was very great, especially in the country, where their emoluments varied in some instances from 5001. to 2,0001. per annum. Various suggestions had been made upon this subject. On the one hand, it had been said that payment by salary would at least be certain and invariable; but, on the other, it had been urged that it would destroy a needed stimulus to exertion in getting in the effects of a bankrupt. Some parties had suggested a compounding of the two modes of provision, paying them partly by salary and partly by fees. For his own part, he thought the matter was hardly ripe at present for decision, because it was impossible to say what would be the extent of the business which the new Court would have to transact. If great facilities were given to liquidation, either by private arrangement or under the sanction of the Court, that would of course diminish what was now called bankruptcy, but what would then be called insolvency business, and therefore it was impossible to say what would be the amount of duty performed by an official assignee. But he proposed to introduce a clause into the Bill by which certain persons would be empowered to make general orders, regulating and equalizing the emoluments of official assignees, to fix a maximum and minimum, and from time to time to introduce such alterations as circumstances might seem to warrant. He did not know that any better arrangement than that, considering the uncertain and precarious character of the measure which he proposed, could be adopted at present. He would now take the case of another officer of the Court—most improperly so called—the broker. Up to 1843, the business of taking an inventory of a bankrupt's estate was the duty of the messenger who was in possession of the estate; but in that year it was supposed that it would be convenient, and would diminish the expense, if a broker were appointed to do this duty. The result had disappointed the expectations of those who introduced the alteration, for the expense had been very considerably increased, because the emoluments of the messenger had not been at all reduced, and we had had in addition the expense incurred by the broker, He proposed to do away entirely with the broker, who was improperly called an officer of the Court; he was a person who was only casually employed, not entitled to compensation, and who might therefore be removed without difficulty. He had one word to say with respect to the messengers. He had been told, to his surprise, that some of these persons actually received as much as from £1,500 to £2,000 a year. That very morning a gentleman, practically acquainted with the subject, had assured him that such was the case, and had pointed to one messenger who had £1,500 a year, and £500 in addition, for performing a duty which properly belonged to his office. So that these persons, occupying a subordinate official position, were actually receiving more than the country Commissioners obtained. He thought something should be done with regard to them, though what that something should be must be left for future consideration. He had abstained, as their Lordships must have observed, from entering into minute and particular details of the mode in which the various provisions of this important measure were proposed to be carried out. He had thought that he should better discharge his duty, and that it would be more satisfactory to their Lordships, if he were to explain what were the leading features and characteristics of the Bill, leaving the details to be discussed in Committee. He could not, however, quit the subject without making one or two further observations. In the first place, he would venture to call the attention of their Lordships to the language and style of this measure. Those who were accustomed to the verbose and laboured character of the provisions of modern Acts of Parliament, would perhaps at first be startled, but certainly he thought in the end would be pleased, at the simple, short, and concise style in which the provisions of the Bill were expressed, rendering them perfectly intelligible, even to those who were not acquainted with the law. There was another circumstance to which he earnestly desired to direct attention, although some might, perhaps, regard it as a defect. Their Lordships would observe that this was a Bill strictly and properly for the amendment of the law of debtor and creditor, and that he had not attempted to consolidate the whole of the bankruptcy law into one system. That subject was most carefully and deliberately considered before the Government came to the conclusion that it was desirable, first of all, where such large amendments were proposed to be introduced, to see whether they would or would not be adopted by Parliament, before they ventured to amalgamate the whole law into one consolidating measure. There was a disadvantage, as it appeared to him, in introducing into the same Bill large amendments of the law with consolidation. On the one hand, there was the extreme difficulty of understanding what part was new and what old; and, on the other, if the whole of the law, including that which was considered satisfactory, and which there was no desire manifested to change, were brought under discussion, it would be impossible that that discussion could be carried on with any convenience or advantage, unless the clearest possible distinction were maintained between that which existed and was intended to be unalterable, and that which was to be viewed as an amendment and an amendment only. He had, therefore, thought it proper, where such large alterations of the law were proposed, not to consider that they were so certain to be adopted, or that they would recommend themselves so entirely to the judgment of Parliament, that he might regard the matter as already decided, and proceed at once to a consolidation of the whole law. He had thought it would be infinitely better to submit the amendments which he proposed to introduce, separate and unaffected by other provisions, to the consideration of Parliament, and he trusted their Lordships would approve the course he had adopted. But if the amendments which lie now proposed should receive the sanction of both Houses, he trusted that at no distant time either he or some more fortunate legislator might be permitted to consolidate the whole of this important code of laws, after it had undergone the requisite revision and consideration, into one entire system, which would continue to be the governing code of the commercial community for ages to come.

The noble and learned Lord then presented a Bill to amend the Law of Debtor and Creditor, Bankruptcy, Insolvency, and Execution.


said, he did not intend then to enter into any discussion of the very important, difficult, and extensive subject which his noble and learned Friend had opened so ably to their Lordships. It was clear that they must wait until they had an opportunity of considering the Bill in print before they could form any opinion of the merits or demerits of its provisions. It would be in the recollection of their Lordships that last Session he in- troduced a Bill for the purpose of amending the law of debtor and creditor as regarded the distinction of bankruptcy and insolvency, and that he had withdrawn it in order to allow the Government to bring forward a measure such as that which his noble and learned Friend bad now submitted. He was glad to find that some of the most important provisions of his Bill had been adopted into the Government measure, as, for example, those abolishing the distinction between bankruptcy and insolvency; for throwing both under the jurisdiction of the same Court; and placing the trader and non-trader, so far as possible, upon the same footing. He said, so far as possible, because there were certain exceptions which made it impracticable to say, however much we might desire it, that that distinction should entirely cease. In order to exemplify the difficulty of at present fully discussing the provisions of the Bill which had been introduced by the noble and learned Lord on the woolsack, he would call their Lordships' attention to one manifest difficulty in the way of entirely assimilating the position of traders and non-traders as to the effect of the certificate. If a trader passed well his examination and obtained his certificate, and his future-acquired property, in whatever way acquired, was to be subject to his former debts, it was a mockery to say he had obtained his certificate, that he was a free man, and that he might go and trade again if he chose; because in fact they prevented the possibility of his entering into trade again; for who would trust a man with credit, loan, or goods, when they knew that the credit, the loan, or the goods supplied, were all liable to former creditors, who might sweep away all his property the instant he attempted to re-embark in trade? But, on the other hand, it would be equally unfair to say that if a non-trader, after obtaining his certificate, succeeded to an estate of ten thousand a year, it should not be charged with his previous debts. There was this manifest distinction between the two classes; because in 99 cases out of a 100 where property was acquired by a trader, subsequently to his insolvency, it was obtained by his subsequent successful industry; but in an equal proportion of cases of non-traders it was the result, not of his own exertions, but of inheritance or accidental circumstances. Take the case, for instance, of an eldest son entitled to inherit a large amount of property in prospectu, who contracted debts which he was unable to pay, and came to the Insolvent or Bankrupt Court and got his certificate—would it be right to say that his certificate should protect all his subsequently acquired property, including the estate which had descended to him since his certificate? He mentioned these things to show how impossible it was they could enter upon a full and satisfactory discussion of any measure on this subject without having ample time for consideration. With regard to the classification of certificates he would remind their Lordships it formed no part of his original bankrupt law of 1831; it was only introduced in the Bankruptcy Consolidation Act of 1849, at the instance and on the representation of the commercial interest, particularly of those of the City of London. Much discussion took place upon various points connected with the subject in the select Committee, when the commercial men were ably represented by his lamented Friend, the late Lord Wharncliffe, whose diligence and ability as their representative were greatly admired. The Committee differed from those most worthy and enlightened men on some very important points; for instance, when they sought to obtain the abrogation of that most wholesome Act by which arrest on mesne process had been taken away. Their Lordships refused to alter it, even under any modification which they proposed. But after the fullest consideration of their representations, they agreed to the proposition for the classifications of certificates. Several noble Lords on the Committee were of a different opinion, and in particular his noble and learned Friend (Lord St. Leonards), since his accession to their Lordships' House, had always opposed the system; and he (Lord Brougham) must confess that the practice of the learned Commissioners themselves went very greatly to show that his views were correct, though he himself was, during the inquiry, friendly to the measure. They appeared to proceed upon such different views of the subject each from the others that it was impossible to say there was one uniform law as to the award of certificates; indeed there seemed to be a different law in each Court. The subject, therefore, was one which required reconsideration; and although he was not disposed to abolish it entirely without further inquiry, he must admit that his opinion inclined in that direction. His noble and learned Friend on the woolsack had justly observed that one of the great difficulties of dealing with this question arose from the difference of opinion which prevailed with regard to it in quarters well entitled to respect. A Conference, which was held in London in January, 1857, under his presidency, and which was attended by deputations from all the great mercantile towns and ports of the United Kingdom, showed how great was the discrepancy between the views of these several bodies. Since that, however, there had been a greater concurrence of opinion among the mercantile community, and they had come to a conclusion in favour of a measure differing from that now introduced by his noble and learned Friend, and which was shortly to be introduced into the other House of Parliament by a noble Friend and kinsman of his (Lord John Russell), who had taken charge of it in consequence of his having presided over that section of the Social Congress in 1857, to which this class of subjects had been referred. That measure differed in some important respects from the Bill of his noble and learned Friend on the woolsack; but as to the abolition of the distinction between bankruptcy and insolvency and between traders and nontraders, the two measures were, he believed, in harmony. There were one or two other points to which he would advert. Great objection had been urged, and complaint made of the expense incurred under the present system—expense that was almost fatal in cases of small estates, but also excessive under large ones, but which did not at all vary according to the amount of the estate in the way in which undoubtedly it ought to vary. This unfair pressure of expense had been found to exclude many cases from the Court of Bankruptcy that otherwise would have come into it, and to drive those cases to be settled by private arrangement which, in all probability, could the expense only have been diminished, it would have been more satisfactory to have disposed of in open court. One great head of these expenses was the heavy amount of compensation still paid to officers for the loss of their places under Acts of the Legislature. This was an expense from which present bankrupt estates ought. clearly to be relieved. Then there was another subject—the payment to the official assignees; while one received between £3,000 and £4,000 a year, another perhaps received from £300 to £400. This was an unsatisfactory and anomalous state of things, which ought to be put an end to. Some certain salary should be paid out of the fee fund, and an addition in proportion to the sums collected by the officers, the amount being fixed at a minimum and likewise at a maximum, so as not to diminish the interest of the official assignees in the getting in of the estate. In this way justice would be done both to the public and the official assignee, and a proper stimulus given to him for the due performance of his duty. This arrangement as to fees had been found to work well in the case of other functionaries and tribunals in a far higher position than that of official assignees. It was believed that very high functionaries being paid in part by fees, or having some interest in these fees, and the fees depending on the business done, their exertions were quickened by this consideration. Looking at all these questions, he considered that it would be impossible to discuss the whole subject in the present stage of the Bill, and without a fuller and more substantial knowledge of its details as well as its main provisions. There were many things brought forward by his noble and learned Friend on the woolsack in which he concurred, while there were others to which he took exception, and some on which he entertained doubts. These objections might be removed, and these doubts might cease on further examination of the Bill, and therefore he would reserve the further expression of his opinions until the next stage of the Bill, by which time he would have given it his deliberate consideration.


said, he had listened with great pleasure to the exposition of the Bill of his noble and learned Friend (the Lord Chancellor), because he concurred in much that his noble and learned Friend proposed to do. For example, he had himself constantly urged the abolition of the distinction between traders and nontraders—between bankruptcy and insolvency—and he had always disapproved the enormous amount of fees received in many instances by inferior officers of the Courts by which the existing law was administered. He was disposed, also, to give every facility to private arrangements; and he disapproved of the distinction attempted to be made in the various degrees of merit and demerit, denoted by the classification of certificates. But he must acknowledge that he was greatly disappointed and mortified when he heard his noble and learned Friend conclude his ex- position by saying that his Bill was meant, not to consolidate the entire law upon this subject, but to be a patch on the existing system. His noble and learned Friend looked forward to a complete consolidation of the law at some future period; but why was it to be deferred? His noble and learned Friend had the opportunity now within his grasp, and not to avail himself of it would cause great disappointment to all persons who took an interest in the amendment of the law. The existing Bankruptcy and Insolvency Acts contained between 200 and 300 sections, and as his noble and learned Friend's measure proposed to repeal or alter about 150 of them, it would be quite as easy to reconstruct while improving the law; and he hoped it was not too late for his noble and learned Friend to apply himself to the larger and more desirable work. First thoughts were often the best, and he thought the scheme proposed by his noble and learned Friend towards the conclusion of last Session was, on the whole, a better one than the present. The improvements his noble and learned Friend had suggested were certainly very considerable, and seemed to deserve the approbation of their Lordships; but still he thought, instead of amending the existing system, they should have a new code by which they might hope to place the law of debtor and creditor on something like a satisfactory footing.


said, he would not enter into any discussion either on the merits or demerits of the measure, reserving it for future consideration. As regarded the question of consolidation or amendment, the true principle of consolidation and amendment was, that when you were consolidating, if there were no amendments except what were formal or very small, it was better to introduce the amendments and consolidation together; but when there were extensive amendments, the only businesslike and workmanlike way was to introduce the amendments, and the moment they became law then to frame a consolidated Bill and pass it into law the same Session—a course that had been successfully and satisfactorily followed out in the case of the Merchant Seamens' Act of last Session. There was much in the Bill which he entirely approved, whilst on the other hand there was a good deal as to which he entertained considerable doubt. That a young man should be able voluntarily to take the benefit of the Bankrupt Act and get off scot-free, was a thing everybody would deplore; but whether it was an evil that must be submitted to in order to obtain great advantages was a question for further consideration. He would say no more on the present occasion, except that he thanked his noble and learned Friend for introducing the measure.

Bill read la.

House adjourned at Seven o'clock, until To-morrow, half-past Four o'clock.