Lords Sitting of 17 February 1879

MINUTES.
PUBLIC BILLS—First Reading— Disqualification by Medical Relief * (6); Workman's Compensation (7); Bankruptcy Law Amendment (8); Debtors Act, 1869, Amendment * (9).
MASTERS AND WORKMEN — WORKMAN'S COMPENSATION BILL.

  BILL PRESENTED. FIRST READING.
  EARL DE LA WARR, in rising to call attention to the state of the law with regard to the liability of employers to make compensation for injuries to persons in their service, and to lay upon the Table of the House a Bill to amend the law on that subject, said, that before asking their Lordships to give a first reading to the Bill of which he had given Notice, he must beg the indulgence of the House if he very briefly referred to the state of the law in respect of the liability of employers to make compensation for injuries to persons in their service. The question was one which very materially affected a large portion of the industrial classes of this country, and he thought it could be shown that the difficulties which surrounded the operation of the law, as it now existed in this respect, had in a great measure arisen from the altered circumstances affecting industrial enterprize. The measure, therefore, which he proposed to introduce would not materially alter the existing law; but was intended to adapt that law to the changed conditions of things. He believed that the law, as now interpreted and acted upon, made a master or employer of labour personally liable for injuries which might occur to persons in his employ when it could be traced to any negligence or want of due precaution on his part. The Bill did not propose to alter that — it commended itself as fair and reasonable. But as matters now stood in regard to large undertakings—such as mines, collieries, factories, railways, workshops, or other industrial occupations — the employer rarely had anything or very little to do with the management of business himself,
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  but generally delegated his authority to other persons. What the Bill proposed to do was this—that when any work was carried on, be it a mine, a factory, a workshop, a railway, a building trade, or any such like industrial undertaking, by a company or by persons who did not themselves superintend the management, but delegated their authority and superintendence to managers or others acting in their stead, the employers or company should be responsible for the acts of those persons whom they had, in fact, put into their places and invested with their authority. It was only comparatively of recent occurrence that large industrial undertakings had grown up which made it, in many instances, impossible for the owners and employers personally to superintend the management; and the consequence, owing to the extent of the work, was this—that a considerable number of persons were appointed, with various responsible duties assigned to them, in superintending the work which the employers were carrying on. The Bill proposed to make the employers liable for the negligence or want of precaution of those persons, the same as if it were the negligence and carelessness of the employers themselves. That seemed to be really only an adaptation of the principle of the liability of the employer for injuries to his servants when it arose from his own want of proper care or precaution; and it might have been supposed that such would have been the natural development of the law when circumstances which he had described became altered. But not so. The law had been interpreted differently—and he might add that there was by no means unanimity between Her Majesty's Judges on the subject—for the law, as at present administered, removed all liability from the employer or master, and gave the workman no redress beyond what he could obtain from the manager or person exercising superintendence. A new difficulty in the administration of the law had arisen in the doctrine of "common employment." This doctrine had been developed to such an extent that the manager or other person in authority in the case of a mine, a railway, a factory, or other industrial undertaking was now considered to be in what was called "common employment" with all workmen or servants engaged

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  in the same work. The consequence was that the company or real employer escaped all liability, as the manager or person in authority was considered to be a fellow-workman with all those whom he was appointed to superintend. The Bill he now submitted proposed to afford some remedy, while it would not, as he had said, materially affect the principle of the existing law. It proposed to alter the law of "common employment" so far as to exclude managers or persons exercising superintendence from being in common employment with those placed under them. But it was not proposed to alter the law with regard to those engaged in actual labour, and the employer would not be liable for injuries caused by one workman to his fellow-workman in the ordinary course of his occupation. It was further provided in the Bill that no compensation should be given if the workman himself had contributed to the accident; and whatever might be the nature of the accident, if there had been exercised by those in charge for the time being necessary care and competency, neither the owner nor anyone else was intended to be made responsible for such accident. The main object of the Bill was to render an employer responsible, when it was shown in evidence that the accident might have been prevented by the exercise of care and ability on the part of those in charge to whom the master or employer had delegated his authority. Such were the chief features of the Bill, and he thought it might be affirmed that it did not alter the principle of the existing law; but proposed, rather, to adapt it to the change of circumstances affecting industrial employments. He could assure their Lordships that the greatest moderation had been shown by those who were interested in this question, and that they desired only what was fair and just.
  Bill to amend the law relative to the liability of employers to make compensation for injuries caused by accidents to persons in their service—Presented (The Earl DE LA WARR).
  THE LORD CHANCELLOR: The noble Earl has brought before your Lordships a subject of great importance and of very considerable difficulty.
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  It has been under consideration and debate in the other House of Parliament during the last Session, and, if I mistake not, it was considered in that House before a Select Committee. After the Report of that Committee, Her Majesty's Government, in the other House, stated that they proposed to introduce a measure on the subject; but owing to the state of Business during last Session, it became impossible to do so. Her Majesty's Government are perfectly prepared, now to redeem the pledge which they gave. They have prepared a Bill upon the subject, and that Bill will be introduced forthwith into the House of Commons. In these circumstances, I hope the noble Earl will understand that it is not through any want of courtesy or respect to him that I do not pursue the subject any further at present; and although I am sure we should be glad to see the Bill which he proposes to lay upon the Table, I do not doubt he will think it right, after laying it on the Table, to await the progress of the measure which will be introduced "elsewhere."
  Bill read 1a; and to be printed. (No. 7.)

BANKRUPTCY LAW AMENDMENT BILL.

  BILL PRESENTED. FIRST READING.
  THE LORD CHANCELLOR,in rising to call the attention of the House to the General Report of the Comptroller in Bankruptcy for the year 1877, and to present a Bill, said: My Lords, some years ago—in the Session of 1876 —it was my duty to call your Lordships' attention to the subject of the Law of Bankruptcy as it now stands. At that time the question did not attract a great deal of public attention, and the urgency of other measures before Parliament made it impossible to carry through the Bill which, on the part of the Government, I had proposed. Since that Session, various occurrences have attracted a much greater amount of public attention to the law of insolvency in this country. I own that I am not sorry that has been the ease. I cannot help thinking that very considerable changes in that law are required, and I feel persuaded that those changes would be much better made under the vigilance of a large and interested body than at

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  a time when attention would have been divided by other subjects. I have placed upon the Notice Paper a reference to a Report of great interest and importance —I mean the Report which the Comptroller in Bankruptcy presents annually as to the subjects over which he has control. Several copies of that Report are on your Lordships' Table. It is not very long, and it is a Report to some parts of which I shall ask your Lordships' particular attention. There are two other documents to which it is my intention to refer at the same time, although they are not included in my Notice. One of these is a Report made in the year 1876 by a small Committee of gentlemen whom I asked to favour me with their views upon the working of the Bankruptcy Law as it then stood. That Committee consisted of Mr. Kettle, a most experienced County Court Judge; Mr. Parkyns, one of the Comptrollers in Bankruptcy; Mr. Brougham, one of the Registrars; Mr. Nicol, an official of experience in connection with the County Courts; and Mr. Hackwood, a solicitor in the City of London, who has had much experience in the administration of the Bankruptcy Law. In 1876 I referred to some parts of the Report made by these gentlemen, and I ventured to recommend the document to your Lordships. The third document is one which I propose to lay upon the Table of your Lordships' House to-night—I allude to the Memorial recently addressed to the Prime Minister, and signed by twenty-three of the principal bankers and an equal number of leading commercial houses in the City of London. It will be satisfactory that I should say that in all of these three documents there is a substantial agreement as to the nature of the evils which exist in the present Law of Bankruptcy; and that they go far in agreement as to the mode in which it will be desirable to cure those evils. Avoiding as far as possible all technicalities, I will state as shortly as I can what I myself understand to be the defects of the existing system, and then I will lay before your Lordships the proposals of Her Majesty's Government. The legislation in regard to bankruptcy in this country during the last 40 or 50 years, has—if I may so describe it —oscillated very violently between two extremes. At one time, the theory has
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  been to leave the administration of bankrupt estates to the creditors, and to constitute them the sole judges as to the manner in which the proceedings should be conducted. At another time, the favourite idea has been to take everything out of the hands of the creditors and to hand the estate over to Courts and officials. The first of these theories —that of administering the law through delegates of the creditors—prevailed up to the year 1832. In that year there was a violent move in the opposite direction, the plan not having been found to work satisfactorily. In that year a Court was consequently instituted, with numerous officials, and from that time to 1860 almost everything connected with bankruptcy was done through the medium of the Courts and officials. In 1860 there came a very strong demand to do away, as much as possible, with the control of the Courts, and to place as much as possible in the hands of creditors. The two great Acts of 1861 and 1869 yielded to the demand which had been very clearly expressed throughout the country. The dominion of the Court was reduced to a very great degree, and the administration of bankrupts' property was handed over to creditors to an extent that had never been the case before. There are two broad distinctions as to the manner in which those who cannot pay their debts are dealt with in this country. Sometimes they are made bankrupt in name, and at others they proceed through a course of what is called "liquidation." In the case of a man who is formally adjudicated a bankrupt in name, the law provides that a meeting of his creditors shall be called, who shall appoint a trustee, whose duty it shall be to take possession of his property, if he have any, and to wind up the estate in the best possible way for the benefit of the whole body of the creditors. In doing this the trustee is to be assisted by a committee of inspection, also chosen by the creditors. In theory nothing could be better than this; because one would naturally suppose that the creditors would be the persons most anxious to make the best of an estate in which they were interested; but the practice has turned out very different from the theory. It was very soon discovered that it was a source of profit to become a trustee under bankruptcy proceedings,

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  and there immediately arose a number of persons who laid themselves out to be appointed trustees and to reap the profits that were to be derived from the proceedings. Therefore, when a man became bankrupt, one of these persons found out who his creditors were, and as the creditors were, as a rule, supine and indifferent as to estates out of which they expected to get little or nothing, they did not make much difficulty about giving proxies to these would-be trustees for use at the meeting of creditors, the result being that these meetings became mere matters of form, some person appearing with his pocket full of proxies, which enabled him to propose and carry the appointment as trustee of some friend of his own; and, further, these proxies were drawn in such a way as that they could be used by the trustee at each and every subsequent stage of the bankruptcy proceedings. One result of this in practice has been that there has existed no means of bringing bankruptcies to an end; and as it sometimes happens that the same person is trustee under 20 or 30 bankruptcies, and has control of the balances belonging to each estate, your Lordships will see that, if he wishes to do it, the same trustee can retain in his hands the control and use of all these balances for years. The Committee of 1876—to whose Report I have referred—describe this state of things in their Report. They say—
  "We are informed that in a certain class of cases it is the common practice for proxies to be held by persons who at the meeting apparently represent the views of independent creditors, but who are in reality paid or retained by the debtor or the candidate for the trusteeship; and that wherever there are assets, out of which heavy costs may be paid, there is much canvassing, and what has been commonly called touting, for proxies. Proxies are, it is also said, often bought and sold, where required to turn the scale in favour of some resolution. It happens, not occasionally, but so frequently as almost to form the rule, that a stranger, so far as appears upon the face of the proceedings, is enabled, by the proxies he has obtained, to vote himself trustee, to fix his own remuneration, to nominate the committee of inspection, to order the payment of his costs, and finally to vote, in liquidation cases, the debtor's discharge.
  Such is the way in which the system which was designed to be so beneficial has been worked. And, as showing what I have said as to bankruptcies never coming to an end, I may say that dur-
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  ing the eight years which followed the passing of the Act of 1869 only 1,843 out of 7,126 bankruptcies were ever closed with the payment of a dividend; the remainder were kept open and floating for the benefit of the trustees, who had the use of the balances as long as there was any money remaining. So much for cases in which persons are actually adjudicated. I will now turn to the other and much larger class of cases, where the debtor who cannot pay his creditors is not adjudicated bankrupt, but has his affairs wound up "by liquidation by arrangement" as it is termed —which in practice, appears to me even worse than the cases in bankruptcy. Now, my Lords, these liquidations by arrangement came about in this way— The Bankruptcy Statute of 1869 provided a code for the administration of the Bankruptcy Law; but then it was naturally supposed that there might be cases where a debtor might arrange with his creditors without bankruptcy, and two sections were put into the Statute to meet those eases. One of these sections provided for the case where a debtor could agree with his creditors to hand over his property to them without going to the Bankruptcy Court at all, so that they might make the most they could of it. The other related to the case where the debtor offered his creditors a composition, by himself or by some of his friends, of so much in the pound on his debts. These two processes were what was called "liquidation by arrangement." There is no doubt that nothing could be better in theory. Clearly nothing could be more desirable than that a man should meet his creditors face to face, tell them the whole truth about his affairs, and make the best proposal he could in the circumstances; but, as in the former case, the practice has worked very differently from the theory. What has been the fact? In these cases, a man who cannot pay his debts is able to fix his own time and place for calling a meeting of his creditors—and, I am sorry to say, the debtor takes care to fix a time and place which are not the most convenient for his creditors to meet him. And, moreover, there is nothing whatever with regard to the principal class of those cases which insures the necessity of his giving notice to all his creditors of the meeting. And then,

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  having proceeded in this way, all he has to do is to have the arrangement confirmed, not by a majority of the whole of his creditors, but of those who are present at the meeting; and, therefore, if he can only contrive to have the meeting so arranged that the greater number of his creditors cannot come to it, or that those at the meeting should be friendly creditors, your Lordships may imagine he will obtain a majority of his creditors who were present at the meeting. Well, my Lords, when he gets the resolution passed accepting his proposition—or in the case of a composition, when he has had it confirmed by another meeting of a similar kind— small as is the control where the debtor is a bankrupt, in these other cases there is absolutely no control at all. There is no security to be given by the trustees, there is no audit whatever of the accounts, and there is no provision that the liquidation shall be completed within any given time. My Lords, as I have described, in words not my own, what happened in bankruptcy—I will now take the liberty of describing, also in words not my own—what occurs in these liquidation arrangements. The statement I refer to is made by the Secretary of the Mercantile Law Amendment Society—
  "A debtor can now file a petition for liquidation by arrangement, and convene a meeting of his creditors at any time within a month, and almost at any place he pleases, and if at such meeting a majority in number, representing three-fourths in value of the creditors there present, or represented by proxy, pass a resolution agreeing to a composition, and such resolution is afterwards confirmed at a second meeting by a bare majority in number and value of the creditors present or represented, such arrangement is binding on all the creditors. As a rule, the chief creditors rarely attend such meetings, and the result is that the debtor, by the aid of proxies of friendly, bribed, oftentimes of fully-secured, and sometimes of fictitious creditors, can get released from his debts upon almost any terms he thinks fit."
  My Lords, it appears by the statistics given in the Report that actually 75 per cent of the several thousands of compositions which have been made in the year have been under 5s. in the pound, and a very large proportion were even of 1s. or 2s.
  Now, that being the working of the present arrangement of bankruptcy and liquidation, I think I have shown the substantial nature of the complaints
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  made by those who object to the existing system. The first, which is strongly dwelt upon in the Memorial from the City, complains—and I am not surprised at it—of the vicious facilities, as they term it, for making private arrangements and escaping the control of the Court; and they complain of the encouragement thus given to reckless and fraudulent trading. My Lords, you will find a most interesting table on this subject in the first page of the Comptroller General's Report made last year for the year 1877. In that year there had been eight years' experience of the working of the Act of 1869, and the Report shows the manner in which those liquidations by arrangement have swelled in number, and how they have completely distanced all the proceedings in bankruptcy. Your Lordships will find, if you turn to the year 1870, that there were in that year 1,351 bankruptcies, while there were of liquidations by arrangement 2,035, and of liquidations by composition 1,616; making together 3,651. There were, therefore, of insolvencies brought to the notice of the Court 5,002. Well, my Lords, eight years afterwards the bankruptcies, which in 1870 numbered 1,351, had fallen in 1877 to 967, while the liquidations by arrangement, altogether free from the control of the Court, had risen to the enormous number of 5,239, and those by composition to 3,327, or 8,566, as compared with 3,651; while the insolvencies brought to the notice of the Court had risen from 5,002 to 9,500, or nearly double, as compared with the year 1870. Now, my Lords, I know it has been said sometimes that this enormous increase was owing to the condition of trade in 1877, and was the result of the depression of the mercantile world at that time. But that cannot be the case; because if your Lordships will take the four years which are generally referred to as the most prosperous years we have had of late— namely, 1871, 1872, 1873, and 1874— you will find that at the end of 1874 these liquidations had risen to 6,924 —and therefore the rate of increase cannot be attributed to the depression of trade, but must be traced to the enormous facilities which are given to debtors who wish to be released from their debts on these easy terms. There has, my Lords, been no Return presented

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  to Parliament for the year 1878, because it takes a considerable time to make it out; but I have been supplied with the number of liquidations by arrangement and composition for that year. For 1877 they were 8,566, while in 1878 they had swelled to the enormous figure of 10,332 — in 1870 they were 3,651.
  I will now ask your Lordships to go a little beyond those numbers and look to the amount of money which has been sacrificed in these proceedings. Your Lordships will find at the 29th page of the Report some startling figures. For the year 1877 the total liabilities which were presented under bankruptcy and liquidation by arrangement amounted, in round numbers, to £20,000,000. Now, what are the assets to meet those liabilities? They amount to within a few pounds of £6,000,000; but from this a very large sum must be deducted, because, your Lordships must understand, the figures in the shape of assets are merely the estimate made by the trustees at the time of the commencement of the liquidation, and, generally speaking, the experience of the Comptroller has been that these Estimates are much too favourable. From what comes under his notice, he says that at least 25 per cent must be struck off for over-sanguine estimates. We will, therefore, take off 25 per cent from the £6,000,000 of assets. For the expenses of winding-up we must also take off a very large percentage. I am sorry to say that 30 per cent of reduction under this head is too moderate. But we will take it at 30 per cent, which, with the 25 per cent previously mentioned, reduces the £6,000,000 of assets to less than £3,000,000, against liabilities amounting, in round numbers, to £20,000,000. My Lords, that is not a pleasant state of things to contemplate, and I am sorry to say that there is another unpleasant feature still to be described. The Comptroller tells us that he has made an Estimate for the three years ending 1877 of the amount by bad debts arising from bankruptcy in this country. I question whether any of your Lordships have ever considered what the amount annually lost by bad debts in this country is as a whole—by this country I mean England alone—I am not speaking of Scotland or Ireland; and, moreover, I am only
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  dealing with those cases which come to light either before a Court or through the medium of an arrangement between the bankrupt and the creditors. Of course, therefore, I only deal with a fractional part of the whole of the bad debts which are made. There are an enormous number which have little or no assets to meet them, and we have no exact material to work upon; but where we have those materials to work upon in the case of England alone, and taking only those cases in which there is some property to meet liabilities, the Comptroller says he finds the bad debts occurring during the three years ending 1877 amount to £18,000,000 a-year. And he says very truly that these £18,000,000 represent a very considerable tax which the country must pay, because the price of articles is necessarily regulated in such a manner as to cover the bad debts, which consequently fall upon the consumers. My Lords, if a tax of £18,000,000 a-year were levied in another shape, I fancy there would be a considerable outcry against it; and yet at present, though falling every year upon some person or another, it passes unnoticed. The words of the Comptroller on this subject are certainly worthy of your Lordships' attention. He says—
  "Individual trade creditors make less or more than average profits as they make more or less than an average amount of bad debts; the average amount being covered by prices, the whole falls in the end on the public as consumers. The loss by bad debts under the Bankruptcy Act alone may be small compared with the aggregate of such losses; but it represents on the average of the last three years a tax on the public of £18,000,000 per annum, which must at least help to increase the cost of living and therefore the cost of production, and so engender a further element of continually increasing prices."
  These, my Lords, are very significant facts. The Comptroller also gives his opinion upon the result of liquidations and the way in which they are usually carried into effect; and I should, before passing to another subject, like to refer your Lordships to what he says on this point. It is as follows: —
  "The increase in compositions has been entirely in the worst rates, and I have no doubt it has been the same in arrangements. If there have been in liquidation generally so many as 1,500 fair cases in each year, there were 2,000 bad ones in the year 1870, and 7,000 bad ones in the year 1877. It is not, therefore, a question

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  of the creditors preferring liquidation to bankruptcy, as has been commonly represented, but of an enormous annual increase in the number of insolvencies; the number suddenly falling, as in 1869 and 1870, by several thousands when any measure is passed tending to prevent dishonest insolvency, and rising again year by year as the debtors, or those who advise them, discover moans of evading the restrictions of the law."
  Further, the Comptroller says—
  "The point to which I have especially desired to call attention is the enormous amount of fradulent insolvency which appears to have been encouraged by the trust deeds of the Act of 1861, and the liquidations of the Act of 1869, judging by its seemingly unparalleled annual increase under these arrangements, but chiefly by the sudden disappearance of several thousands of them immediately following legislation which could not have prevented any but arrangements of a grossly fraudulent character. I cannot doubt that a large majority of the 8,566 debtors who liquidated in the year 1877 did so greatly to their advantage, or that a general appreciation that debtors can liquidate their debts with but little personal or pecuniary inconvenience tends to greatly and continually increase the amount of commercial immorality, insolvency, and loss to the public by bad debts."
  Now, I think your Lordships will see that the complaint which has been made in the Memorial referred to, and in these other Papers, of the "undue and vicious" facilities given for arrangements under the present law, is not unfounded, and that some check upon the evil is required. The second complaint of this Memorial is this—that in bankruptcy proceedings there is not sufficient control over the realization of the assets and the investigation of the conduct of the bankrupt; and I am bound to say I think there is very considerable ground for that complaint also. I have shown your Lordships the way in which trustees are appointed—that the trustee is not appointed by a vigilant body of creditors to represent their interests, but is appointed in his own interest as a person who is to obtain a lucrative office in winding up the concern of the debtor. The control which is exercised over him is entirely general, and some additional check on his action appears to me to be required. Before stating the proposal which Her Majesty's Government have to make, let me briefly explain the existing arrangements in regard to jurisdiction in regard to bankruptcy. In the country districts bankruptcy at present is administered in the County Courts. The Metropolis and a certain surround-
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  ing area is under the jurisdiction of what is called the London Court of Bankruptcy. Now, in the London Court of Bankruptcy there is a Judge called the Chief Judge in Bankruptcy. The Judge is at present Vice-Chancellor Bacon— and I cannot mention Vice-Chancellor Bacon's name without saying that there is, perhaps, no person in this country who has had greater experience or who is possessed of greater learning on the subject of bankruptcy than he. But it was found at the time of Vice-Chancellor Bacon's appointment that inasmuch as he was charged with the conduct of one of the Courts in one of the divisions of the Court of Chancery, where he had a great deal of business to transact, it was quite impossible for him to attend to the routine business of the London Court of Bankruptcy; and therefore an arrangement was made by which the primary jurisdiction for the London district was delegated by him to the Registrars of the London Court of Bankruptcy. These Registrars at that time were six in number; but two vacancies which occurred not having been filled up, they have now been reduced to four. I am bound to say for them also that they have performed with great energy and ability the work committed to their care. At the same time, it is stated, with, I believe, some truth, that it is impossible that Registrars, in administering the system of bankruptcy in London, can carry the weight which a Judge of the first rank would do sitting as a primary Judge in the Court of First Instance. Vice-Chancellor Bacon, as Judge in Bankruptcy, sits, I believe, about one day a week, but only for the purpose of hearing appeals from County Courts in bankruptcy. He does not, as a rule, perform any primary duties as Judge of the London Court of Bankruptcy. That, my Lords, is the state of the judicature in regard to bankruptcy. I mention it now in order that your Lordships may appreciate afterwards the changes which, on the part of Her Majesty's Government, I shall have to propose. The third ground of dissatisfaction is that we have no proper security for the very large funds which come into the hands of trustees under the liquidations by arrangement. Of assets amounting to somethinglike£6,000,000,only£500,000 was in the hands of trustees actually amenable to the Court; while, with re-

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  gard to trustees holding £5,500,000, there is absolutely no jurisdiction whatever to call for any audit. The trustees are expressly exempted from audit, and they hold the money responsible to no persons except the somewhat careless body of creditors who appoint them trustees. All the unclaimed dividends remain in the hands of the trustees without being in any way secured as they ought to be. In old times, before the recent changes in the Bankruptcy Law, the accumulation of unclaimed dividends in the hands of the Court represented £2,000,000, £3,000,000, or £4,000,000; and there is at present a large amount outstanding and unsecured with regard to which some provision ought to be made. With that explanation I will state the proposals of Her Majesty's Government.
  First, with regard to bankruptcy proper—still preserving the distinction between bankruptcy and liquidation— we propose that provision shall be made to meet what has been found to be a source of very considerable unfairness, and that a check shall be placed upon the selection of a Court by a debtor who desires to be made a bankrupt or to arrange with his creditors. At present creditors complain very much that debtors select Courts least convenient for the creditors—a debtor resorting to a part of the country where he has obtained, perhaps, a colourable excuse for presenting a petition by having traded there a short time. Next we propose that the adjudication in bankruptcy is not, as at present, to be made in the first instance by the Court. Very often it happens that a perfectly honest trader is brought into Court and is immediately, by reason of his insolvency, adjudicated a bankrupt; whereas, if this had not been done, all his creditors, being well satisfied with his conduct, would have been glad to have relieved him from the stigma and the odium of bankruptcy. On the other hand, what happens in these arrangements to which I have referred is that a debtor whose conduct has been anything but exemplary suddenly calls a meeting of his creditors and gets his discharge before there has been any investigation of his conduct. We propose to meet that in this way: —In the first instance an order shall be made by the Court which shall be called a provisional order, the property of the debtor
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  shall be secured, and a meeting of the creditors shall be immediately convened. That meeting of creditors is to consider the conduct of the debtor, and what course ought to be pursued with regard to it; and that meeting may do one of three things. It may resolve either that the debtor shall immediately be made bankrupt; or that some further investigation into his conduct shall be made, and that the meeting shall be adjourned for that purpose; or that his affairs shall be wound up under a deed. The bankrupt is to be bound to attend the meeting, and to submit himself for examination. In order to prevent the improper use of proxies, the Court has power to determine whether they shall be admitted or not—or whether the creditors live within such distances that they may attend themselves instead of giving proxies. There is a provision that if any person is found to be soliciting or using proxies in order to obtain an appointment for a trustee, the Court may deprive the trustee of any remuneration. If the majority of the creditors resolve upon bankruptcy, they are to appoint a committee of inspection, and they, and not the creditors at large, are to appoint the trustee, who is to be their officer and servant, with the right reserved to them to dismiss him if they think fit. The discharge of the debtor is to take place in this way —Within the first two years there is to be the consent of a certain proportion of the creditors—a greater number in the first year, and a lesser number in the second year; and after the second year it is to be in the discretion of the Court if the application is made. If it is shown that the debtor has not kept such books and accounts as are usually kept, or a sufficient record of his transactions, or has increased his liabilities by trading at a loss when insolvent, or has contracted debts without a reasonable expectation of being able to pay them, or that the bankruptcy has been produced by rash and hazardous speculations or unjustifiable extravagance, or that he has put the creditors to any unnecessary expense by the frivolous and vexatious defence of an action, or that he has committed any misdemeanour for which he has not been prosecuted—in any of these events the order of discharge is to be suspended for such time as the Court may think fit, or the discharge may be granted subject to conditions with regard to salary, pay,

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  emoluments, wages, or earnings, which may afterwards become due. There is a provision that the trustee shall give security, and that the remuneration shall be limited by a certain maximum being assigned—which is very much wanted. There is a provision that the trustee shall not only pay all monies into the bank, but that he shall pay it to the account of each bankruptcy. It has been found in practice that where a trustee was the trustee of a great number of debtors it was quite impossible to ascertain in any particular case whether the balance which ought to have been forthcoming was actually available. There is a provision which I hope, more than any other, will expedite the winding-up of estates, and it is that at the end of one year after the appointment of a trustee he shall be obliged to hand over all the money and property in his possession to the Court, unless the Court shall find that, under the special circumstances of the case, a greater length of time shall be allowed for the winding-up. I hope that provision will bring about greater rapidity of administration than has hitherto prevailed. A year will be allowed for winding-up an estate, except under special circumstances, which will have to be proved to the satisfaction of the Court. We propose to ask Parliament to authorize the creation of an additional Judge of the High Court of Justice, and in that way to secure the services of a Judge experienced in Commercial Law, who will be able to consider the administration of the Court of Bankruptcy to have the first claim on his time and attention. We propose that the London Court of Bankruptcy shall be a part of the High Court of Justice; reserving still its own peculiarname, it shall be joined to the Chancery Division of the High Court of Justice; and, as I have said, a Judge in the High Court should be Judge of the Bankruptcy Court. We propose that the jurisdiction of the London District Bankruptcy Court shall be somewhat enlarged. The details appear in the schedules of the Bill. We propose that there should be a power, when the parties desire it, or when the Court thinks it desirable, to transfer any particular case or any question in bankruptcy from any County Court for decision in the London Court in the first instance. With regard to offences under the Bankrupt Law which are punishable
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  as misdemeanours, we propose that there should be power to try any of these before the Judge in the Court of Bankruptcy. As to liquidation by arrangement, we propose that it shall no longer be done, as at present, by resolution, but that it shall be done by deed; and, in order to do away with the abuses arising from proxies, we propose that the assent of the majority of creditors shall be obtained by their signatures either to the deed or to a paper stating the effect of the deed, so that every creditor shall know what it is that he is assenting to. We propose that the deed shall not be valid unless the composition for which it provides shall amount to 5s. in the pound at least. We propose, further, that even after the deed has been registered the creditors may, if they think fit, call a meeting and pass a resolution by a certain majority that the deed is not to be proceeded with, but to be superseded by proceedings in bankruptcy; and if the Court find that there has been any fraud in obtaining the deed, or that it has been vexatiously or frivolously obtained, the Court will have power to declare it to be void. The Court will also have the power to remove the trustee of the deed for any failure in the performance of his duty. The trustee in every one of these deeds shall be bound to account to the Comptroller in Bankruptcy; his accounts shall be audited; and at the end of one year, as in the case of bankruptcy, he shall be obliged to pay over all funds in his hands, unless the Court shall consider that further time should be allowed to wind up the estate.
  These, my Lords, are the main provisions of the Bill which I ask your Lordships to read a first time. There are several minor points of importance which will be found in the Bill, but I have not thought it necessary to delay your Lordships by going at length into them. I have only referred to the leading features of the measure. With regard to the mode in which the Bill has been prepared, I may state that the Bill will be found to contain within its four corners the whole Code of Bankruptcy Law; but for the convenience of those who take an interest in the matter, the Bill as printed will show in the margin the different clauses which are simply reenactments, and those which contain

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  the new provisions. Before I sit down, I may say that among the matters urged in the Memorial from the City it was proposed that the same Court which administers the law of bankruptcy should also be charged with the administration of the estates of deceased persons who die insolvent, and with the winding-up of joint-stock companies. One of our proposals is that the London Court of Bankruptcy shall form part of the Court of Chancery Division of the Supreme Court of Judicature, which is at present charged with those duties, and I shall be prepared at the proper time to state the reasons why, after full consideration, we have decided not to include provisions of that kind. Such, my Lords, are the objects of the two Bills which I propose to lay on the Table—the one the Bankruptcy Law Amendment Bill, and the other the Debtors Act Amendment Bill —which contain the criminal provisions with regard to the Law of Bankruptcy. I move your Lordships to give a first reading to those Bills, and I propose to take the second reading this day fortnight.
  Bill to consolidate and amend the law of Bankruptcy, and for other purposes relating thereto—Presented (The LORD CHANCELLOR).
  LORD PENZANCEwas understood to express his approval of the Bills, and especially of those provisions which required that debtors should keep honest books, and desired that exemplary punishment should be awarded in all cases of over-trading after insolvency.
  Bill read 1; and to be printed. (No. 8.)
  Then—

  DEBTORS ACT, 1869, AMENDMENT BILL [H.L.]
  A Bill to amend the Debtors Act, 1869, and for the better punishment of fraudulent Debtors —Was presented by The Lord Chancellor; read 1 (No. 9.)

  CONSERVANCY OF EIVEES—LEGISLATION.—QUESTION.
  THE MARQUESS OF RIPONasked, Whether the report was correct that it was the intention of Her Majesty's Government to introduce a measure relating to the Conservancy of Rivers in the present Session; and, if so, whether it
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  would be brought in in that or the other House of Parliament. It was exceedingly necessary for the interests of those concerned that the subject should be fully discussed; he therefore hoped it would be introduced at as early a date as possible.
  THE DUKE OF RICHMOND AND GORDON: The report to which the noble Marquess alludes is quite correct. The Government have in course of preparation a Bill to deal with this important subject, which, as the noble Marquess is aware, is a very difficult one. I hope, at no distant period, to have the honour of introducing that Bill to your Lordships' notice.
  House adjourned at a quarter before Seven o'clock, till To-morrow, half-past Ten o'clock.