COMMITTEE. (Hansard, 13 March 1879)

§ THE EARL OF POWIS
I have given Notice to omit the words in the Interpretation Clause relating to resolutions passed without proxies as the simplest mode of raising the question whether proxies should or should not be abolished. I have had a communication with the Associated Chambers of Commerce sitting last week at London, and have received some pamphlets expressing their opinions against abolition, but equally in favour of regulation. I have also received communications from Manchester that the largest houses connected with the home trade there are in favour of their retention. Your Lordships will observe that the creditors in a bankruptcy are essentially a non-resident constituency. In one case, cited by the Chambers of Commerce, the bankruptcy in South Wales, where there were 78 creditors, was removed to Manchester at a meeting where two creditors holding proxies attended. In another, where the debts were £81,000 and the assets £42,000, and where consequently the estate was worth looking after, 46 were London creditors, and 48 country, including one in Switzerland and one in Australia. Then, again, as almost every County Court is a bankruptcy court, a large house may have to look after half-a- 791 dozen cases in as many counties at once. But this question not only affects commercial but agricultural interests. The farmer sells his corn to a corn dealer, the Suffolk farmer sells his malting barley to a large brewer at Burton. The Midland counties' farmer sells all his beasts to a salesman at Smithfield. The small Welsh farmer or local butcher sends the hind quarters of his Welsh mutton in the season to London, reserving the fore quarters for the local markets. If these are to leave their farms to look after their claims in a case of bankruptcy, it is obvious that they will be utterly disfranchised. The argument from abuse points to regulation, not to abolition. In your Lordships' House no Peer was allowed to hold more than two, and proxies were required to be entered a certain time before the debate. The picture of a Minister coming down to the House with a pocket full of proxies was nothing but a journalistic fiction. I have heard many vague statements as to abuse, but no instance except that of persons canvassing for votes for the appointment of trustees with a view to personal profit. Now, this abuse is much more effectually met by the clause which provides that a general meeting shall appoint a Committee of Inspection of five, who shall appoint the trustees. Again, when the interests are large, if proxies be abolished, it will be easy for those interested to pay the smaller creditors to go down and attend and vote as they are directed. The Bill does not state how far this exclusion of proxies is to be carried. It only mentions one question at one meeting in Section 21 where they are excluded. But it gives the Court an indefinite power under rules and orders of preventing their exclusion. This exclusion is a question not of detail for the Court, but of principle to be settled by the Bill. I trust your Lordships will decline to allow this disfranchisement at the discretion of the Court, and I beg to move the omission of the words of of which I have given Notice.

THE LORD CHANCELLOR
said, that his noble Friend mistook those provisions of the Bill which referred to proxies. The Bill did not abolish proxies, but regulated their use so as to prevent the abuse of them which was now complained of. The object was to prevent the discharge of a bankrupt without the 792 mind of the creditors being expressly directed to that purpose; and this it was thought would be effected by the signature of a special resolution signed by a majority of creditors present at a meeting representing three-fourths in number and value. It would be in the discretion of the Court to allow or disallow voting by proxy for a special resolution.

§ LORD SELBORNE
, agreeing in the object, thought the clause required amendment.

§ LORD SELBORNE
said, he objected to this clause, on the ground he had stated on the second reading, that it afforded great facilities to a man to have himself made a bankrupt. Since 1869 that had not been allowed; and it was not good policy to allow a person to put an end in that way to his full liability towards his creditors. The sounder principle was to allow his creditors to avail themselves of their power to make him a bankrupt.

THE LORD CHANCELLOR
said, that the proposal had been for a considerable time before the public, and that he had not heard from any quarter an objection to it, while he was aware that in many quarters it was highly recommended. It was quite true that under the existing law a person could not be declared bankrupt on his own petition; but, practically, he could do so by availing himself of the liquidation clauses of the Act of 1869, and so enjoy the sweets—if there were such—without tasting the bitters of bankruptcy. Why should not a man who could not pay his debts be able to tell that to his creditors in Court as well as at a meeting? It must be distinctly understood that under this Bill a petitioner could not obtain his discharge without the consent of a large majority of his creditors or the order of the Court. It would be much better to allow a man who could no longer go on with a fair prospect of paying his debts to make himself a bankrupt by direct means than force him to 793 go from bad to worse in business, or to avail himself of such side means as those which were open to him under the existing law.

§ LORD SELBORNE
said, that it appeared to him that under the operation of this clause a bankrupt would be absolutely entitled to his discharge—that, in fact, that would be his right from the Court.

§ THE EARL OF POWIS
said, it seemed to him that under the power given to the Court by this and Clause 18 to make rules, proxies might be abolished altogether.

THE LORD CHANCELLOR
said, he would move an Amendment in the clause, which he thought would have the effect of preventing such a result.

§ LORD SELBORNE
said, that this clause of the Bill required the most mature deliberation.

THE LORD CHANCELLOR
was understood to say that this clause should 794 be further considered before the next stage of the Bill.