§ Amendments reported (according to Order).
§ THE EARL OF HALSBURYMy Lords, I propose to move several Amendments to this Bill, but I think it would be more convenient in the circumstances if I adjourned the discussion of them until the Third Reading. I will put the Amendments down to-night and move them at the next stage.
§ THE EARL OF GRANARDThe course proposed by the noble and learned Earl will meet the convenience of the Government, and, subject to his agreeing to it, I propose to put the Third Reading down for next Thursday.
§ Clause 1:
§ Prosecution of Offences Summarily, 32 & 33 Viet. c. 62.
§
1.—(1) Any offence under, or which may be dealt with as if it were an offence under, the Debtors Act, 1860, alleged to have been committed by a person who has been adjudged bankrupt., or in respect of whose estate a receiving order has been made, may be prosecuted summarily, and if so prosecuted references in the enactments creating those offences to the jury shall be construed as references to a Court of summary jurisdiction:—
Provided that—
§ (2) Where the prosecution of a person for any such offence is ordered by the Court, and the order of the Court is made on the application of the Official Receiver and based on his report, the Board of Trade, if they think that the offender should be prosecuted summarily, may, notwithstanding anything in section one hundred and sixty-six of the Bankruptcy Act, 1883 (hereinafter referred to as "the principal Act"), themselves or through the Official Receiver institute the prosecution and carry on the proceedings, unless in the course thereof circumstances arise which, in the opinion of the Board, render it desirable that the remainder of the proceedings should be carried on by the Director of Public Prosecutions.
§ THE EARL OF GRANARD moved to delete from subsection (2) the words "if they think that the offender should be prosecuted summarily," and to insert, after the word "proceedings" where it first appeared in the subsection, the words 179 "if or so long as those proceedings are conducted before a Court of summary jurisdiction." The noble Earl said: This Amendment is an endeavour to meet the suggestion made by the noble and learned Earl, Lord Halsbury, who objected to so much discretion being left with a Government Department.
§ Amendment moved—
§ Clause 1, page 2, lines 1 and 2, leave out ("if they think that the offender should be prosecuted summarily")
§ Clause 1, page 2,line 6, after ("proceedings") insert ("if or so long as those proceedings are conducted before a Court of summary jurisdiction").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ Clause 2:
§ Provisions with Respect to Offences under the Debtors Act, 1869.
§ 2.—(1) Where under the Debtors Act, 1869, an act or default committed by a person who has been adjudged bankrupt, or in respect of whose estate a receiving order has been made, is an offence unless the jury are satisfied that he had no intent to defraud, or (as the case may be) to conceal the state of his affairs or to defeat the law, it is hereby declared that the onus of proving the absence of such intent lies upon the person accused, and that it is not necessary to allege in the indictment or information charging the offence or to prove any such intent.
§ (2) Any acts or defaults of any person who has been adjudged bankrupt, or in respect of whose estate a receiving order has been made, which under any of the provisions of the Debtors Act, 1869, are made offences if committed within four months next before the presentation of a bankruptcy petition by or against such person, shall, as from the commencement of this Act, be offences if committed within six months next before the presentation of such a petition.
§ (3) Any act or default which under paragraphs thirteen, fourteen, or fifteen of section eleven of the Debtors Act, 1869, as amended by this section, is an offence if committed within six months next before the presentation of a bankruptcy petition, shall be an offence if committed after the presentation of a bankruptcy petition and before the making of a receiving order.
§ (4) Paragraphs fourteen and fifteen of section eleven of the Debtors Act, 1869 (which make certain acts offences if committed by traders), shall extend to the like acts committed by persons who are not traders, and accordingly those paragraphs in relation to persons who are not traders shall have effect as if the words "being a trader," where-ever they occur in those paragraphs, and the words "otherwise than in the ordinary way of his trade," which occur in paragraph fifteen, were omitted therefrom.
§ (5) Section eleven of the Debtors Act, 1869, shall be construed and have effect as if the term "the trustee in bankruptcy" included the Official Receiver.
§ (6) Section fourteen of the Debtors Act, 1869 (which relates to false claims by creditors in a bankruptcy), shall extend to persons claiming to be 180 creditors in a bankruptcy, and accordingly in that section after the word "creditor" there shall be inserted the words "or any person claiming to be a creditor."
§ (7) Notwithstanding anything in section sixteen of the Debtors Act, 1869, it shall not be obligatory on any Court, in the absence of any application by the Official Receiver for such an order, to make an order under that section for the prosecution of an offence, unless it appears to the Court not only that there is a reasonable probability that the bankrupt will he convicted, but also that the circumstances are such as to render a prosecution desirable.
§
THE EARL OF GRANARD moved three drafting Amendments, the first to amend subsection (5) so that it would read—
(5) Section eleven of the Debtors Act, 1869, shall be construed and have effect as if references to the trustee administering an estate for the benefit of creditors included references to the Official Receiver";
and the second and third Amendments to omit the words "in a bankruptcy" in both places where they appeared in subsection (6).
§
Amendments moved—
Clause 2,page 3,lines 2 and 3,leave out("the term 'the trustee in bankruptcy' included") and insert ("references to the trustee administering an estate for the benefit of creditors included references to")
Clause 2,page 3 line 5, leave out ("in a bankruptcy")
Clause 2,page 3 line 6, leave out ("in a bankruptcy").—(The Earl of Granard.)
§ On Question, Amendments agreed to.
§ Clause 4:
§ Punishment of Bankrupt for Gambling, & c.
§ 4.—(1) Any person who has been adjudged bankrupt, or in respect of whose estate a receiving order has been made, shall be guilty of an offence under section eleven of the Debtors Act, 1869, if, having been engaged in any trade or business—
- (a) he has, within two years prior to the presentation of the bankruptcy petition, by gambling or by any rash and hazardous speculations unconnected with his trade or business, materially contributed to or increased the extent of his insolvency; or
- (b) he has, between the date of the presentation of the petition and the date of the receiving order, lost any part of his estate by gambling or by such rash and hazardous speculations as aforesaid; or
- (c) on being required by the Official Receiver at any time, or in the course of his public examination, by the Court, to account for the loss of any substantial part of his estate incurred within a period of a year next preceding the date of the presentation of the bankruptcy petition, or between that date and the date of the receiving order, he fails to give a satisfactory explanation of the manner in which such loss was incurred:
§ Provided that in determining for the purposes of this section whether any speculations were rash and hazardous the Court shall take into consideration the financial position of the accused person at fie time when he entered into the speculations.
§ (2) A prosecution shall not be instituted against person under this section except by order of the Court, nor where the receiving order in the bankruptcy is made within two years from the commencement of this Act.
§
THE EARL OF GRANARD moved to amend paragraph (a) so that it would read—
(a) ho Ins, within two years prior to the presentation of the bankruptcy petition, materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations, and such gambling or speculations are unconnected with his trade or business; or
The noble Earl said: This Amendment deals with the point raised by the noble Marquess, Lord Salisbury, in the previous debate. The noble Marquess desired that it should be made perfectly clear that gambling was only a criminal offence when it was wholly unconnected with the person's trade or business. The object of this Amendment is to give effect to the views of the noble Marquess, and I sincerely trust that it will meet any objection he had to the clause.
§
Amendment moved—
Clause 4, page 4, line 20, leave out from ("petition") to ("materially") in line 22
Clause 4, page 4 line 23, after ("insolvency") insert ("by gambling or by rash and hazardous speculations, and such gambling or speculations are unconnected with his trade or business").—(The Earl of Granard.)
§ THE MARQUESS OF SALISBURYSo far as I am concerned this Amendment meets my point, and I am much obliged to the noble Earl.
§ LORD FABEROn the last occasion that this matter was before your Lordships' House I pointed out that it ought to be very carefully laid down that a man who was engaged, for instance, in the corn trade or in the cotton trade was not necessarily gambling when he dealt in "futures" in corn or cotton. The Amendment which is now proposed by the noble Earl quite meets my view.
§ On Question, Amendment agreed to.
§ THE EARL OF GRANARD moved to amend paragraph (b) by inserting the word "such" before the word "gambling," and by omitting the words "by such" before the words "rash and hazardous speculations."
182
§
Amendment moved—
Clause 4, line 26, after the first ("by") insert ("such") and leave out ("by such").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ Clause 13:
§ Amendment of Section 47 of Principal Act as to the Avoidance of Settlements.
§
13.—(1) The following subsections shall be substituted for subsection (2) of section forty-seven of the Bankruptcy Act, 1883, which relates to the avoidance of settlements:—
(2) Any covenant or contract made by a person (hereinafter called the settler) in consideration of marriage, either for the future payment of money, or for the future settlement on or for the senior's wife or husband or children of property, wherein the settlor had not at the date of the marriage any estate or interest, whether vested or contingent, in possession or remainder, and not being money or property in right of the settlor's wife or husband, shall, if the settlor is adjudged bankrupt and the covenant or contract has not been executed at the date of the commencement of his bankruptcy, be void against the trustee in bankruptcy, except so far as it enables the persons entitled under the covenant or contract to claim for dividend in the settler's bankruptcy under or in respect of the covenant or contract, but any such claim to dividend shall be postponed until all claims of the other creditors for valuable consideration in money or money's worth have been satisfied.
(2A) Any payment of money (not being payment of premiums on a policy of life assurance) or any transfer of property made by the settler in pursuance of such a covenant or contract as aforesaid shall be void against the trustee in the settler's bankruptcy, unless the persons to whom the payment or transfer was made prove, either—
but, in the event of any such payment or transfer being declared void, the persons to whom it was made shall be entitled to claim for dividend under or in respect of the covenant or contract in like manner as if it had not been executed at the commencement of the bankruptcy.
§
(2) The following subsection shall be added at the end of the said section forty-seven:—
(4) Nothing in this section shall affect or prejudice the title or interest of any person who before the date of the receiving order and without notice of the presentation of a bankruptcy petition has bona fide and for value purchased or acquired from the person or persons entitled to the benefit of any such settlement, covenant, or contract as aforesaid the money or property the subject thereof or any interest in such money or property.
§ THE EARL OF GRANARD moved to insert a new paragraph to follow paragraphs (a) and (b). The noble Earl said: This Amendment is also to meet a point which was raised by the noble Marquess opposite. When this Bill was in Committee Lord Salisbury said there might be a covenant or contract of settlement made ten or twelve years before the bankruptcy which might contemplate as one of its provisions that money to come subsequently to the husband from some particular person should be protected for the wife under the settlement. The object of this Amendment is more or less to meet the situation then outlined by the noble Marquess. The question is purely a legal one and a very difficult one. We had an interesting discussion upon it when the Bill was in Committee, and I trust that these words, which have been carefully drafted, will meet the view of the noble Marquess.
§ Amendment moved—
§
Clause 13, page 8, line 41, at end insert ("or
(c) that the payment or transfer was made in pursuance of a covenant or contract to pay or transfer money or property expected to come to the settlor from or on the death of a particular person named in the covenant or contract").—(The Earl of Granary.)
§ THE MARQUESS OF SALISBURYI feel all the more as time goes on my extreme rashness in having embarked upon this discussion. I am very much obliged to the noble Earl, however, for his attempt to meet me. I believe this Amendment does not quite meet all the points I raised, but it meets the substantial part, and so far as I am concerned I accept the additional paragraph.
§ On Question, Amendment agreed to.
§ LORD ROTHERHAM moved to add, at the end of paragraph (c) which the House had just added to the clause, the words "and was made within one month after the money or property came into the possession or under the control of the settlor." The noble Lord said: I do not think this Amendment can be regarded as in any sense hostile to Lord Granard's Amendment which has just been added to the Bill; it is merely supplementary to it. Its object is to protect such payments or transfers only when made within a limited time after receipt by the settlor.
184
§
Amendment moved—
Clause 13, at the end of the new paragraph (c) to add ("and was made within one month after the money or property came into the possession or under the control of the senior").—(Lord Rotherham.)
§ LORD FABERI desire to support the Amendment moved by the noble Lord opposite. This is a very difficult question, and, as the noble Earl in charge of the Bill said, it is one upon which we had considerable discussion on the last occasion. I look at the matter from a business point of view, and it is not always easy for a layman to understand what is said on the other side from the legal poi at of view. In supporting this Amendment my one desire is to prevent commercial fraud. There are two sides to this question. We have, first of all, the trader. The trader gets into difficulties; he has command at that time of a great deal of creditors' money, which he takes. He settles the creditors' money on the lady whom he afterwards marries, and that is held to be a good consideration. The creditors can do nothing at all except look on while the trader lives on the interest of the money happily ever afterwards. That is the creditors' side of the case. I listened with great attention to the remarks which were made by Lord Salisbury in Committee. The noble Marquess put it very fairly from the lady's side, and it certainly seemed hard on the lady that she should be deprived of the money. I confess, looking at it as carefully as I can, that I think the lady's interests are more easily protected than the interests of the creditors. If the father takes the necessary precaution the lady's interests can be fully protected. In my opinion this is an extremely good Bill. I supported the noble Earl's Amendment which the House inserted a few moments ago, and I support Lord Rotherham's Amendment because the new paragraph (c) with these words added goes further in the direction of affording precaution to creditors.
§ THE MARQUESS OF SALISBURYI do not see any objection to the Amendment in principle. I only want to protect a bona fide settlement which the father has had made at the time of the marriage and without which he would not have consented to the marriage in the interests of his daughter. To have that upset years afterwards, which might have happened under 185 the clause as it originally stood, seemed a great hardship. Upon that point I carried the general sense and feeling of the House with me. Now what the noble Lord opposite proposes is to add to the Amendment which the Government have inserted a provision that the money should be paid over immediately. There is evidently a great advantage in having the money paid over at once. The noble Lord proposes that it should be paid over within one month. I think that is almost too short a period, and what I suggest to His Majesty's Government and to the noble Lord is that they should allow, say, three months.
§ THE LORD CHANCELLOR (VISCOUNT HALDANE)I am glad that a settlement has been come to on this point. One wishes, of course, to protect marriage settlements, and, on the other hand, to avoid the scandal which occurs in such cases as that to which attention was called during the discussion of this point in Committee. There is, I think, a great deal to be said for the Amendment now under discussion, which proposes that whenever a property comes into possession there should be a speedy dealing with it. I feel also the force of what the noble Marquess has just said, that a month is a very short time. One knows how difficult it is to get these transactions through speedily, and I suggest to the noble Lord who has moved this Amendment that he would be well advised in giving a little more time. I think the period of three months is a fair one in the circumstances.
§ LORD ROTHERHAMI am quite agreeable to that alteration.
§ On Question, Amendment, as amended, agreed to.
§ Clause 16:
§ Amendment of Section 4 (1) (g) of principal Act as to Acts of Bankruptcy.
§ 16. Section four of the principal Act (which relates to acts of bankruptcy) shall have effect as though in paragraph (g) of subsection (1) (which makes it an act of bankruptcy to fail to pay a judgment debt after bankruptcy notice where bankruptcy notice has been served) references to final orders and to sums ordered to be paid were included in the references to final judgments and judgment debts respectively wherever the same occur.
186§ THE EARL OF GRANARDI move after "subsection (1)" to insert the word "thereof"; after the word "served" to insert "and in section one of the Bankruptcy Act, 1890"; and at the end of the clause to add "and a reference to the proceedings in which the order was obtained was included in the reference to the action in which the judgment was obtained." These are purely drafting Amendments, and were suggested by the Parliamentary counsel.
§
Amendments moved—
Clause 16, page 10, line 9, after ("subsection (1)") insert ("thereof")
Clause 16, page 10, line 11, after ("served") insert ("and in section one of the Bankruptcy Act, 1890")
Clause 16, page 10, line 13, after ("occur") insert ("and a reference to the proceedings in which the order was obtained was included in the reference to the action in which the judgment was obtained").—(The Earl of Granard.)
§ On Question, Amendments agreed to.
§ Clause 25:
§ Avoidance of Deeds of Arrangement unless assented to by a Majority of the Creditors.
§ 25.—(1) A deed of arrangement shall be void unless before or within twenty-one days after the registration thereof, or within such extended time as the High Court or the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed may allow, it has received the assent of a majority in number and value of the creditors of the debtor.
§ (2) The list of creditors annexed to the affidavit of the debtor tiled on the registration of the deed of arrangement shall be prima facie evidence of the names of the creditors and the amounts of their claims.
§ (3) The assent of a creditor shall be established by his executing the deed of arrangement or sending to the trustee his assent in writing attested by a witness, but not otherwise.
§ (4) The trustee shall file with the Registrar of Bills of Sale at the time of the registration of a deed of arrangement, or, in the case of a deed of arrangement assented to after registration, within twenty-eight days after registration or within such extended time as the High Court or the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed may allow, a statutory declaration by the trustee that the requisite majority of the creditors of the debtor have assented to the deed of arrangement, which declaration shall be prima facie evidence of the fact declared.
§ (5) In calculating a majority of creditors for the purposes of this and the next following section, secured creditors shall be disregarded, and creditors whose debts amount to sums not exceeding ten pounds shall be reckoned in the majority in value but not in the majority in number.
187§ THE EARL OF GRANARDThe Amendment standing in my name to this clause is purely drafting and refers to subsection (5).
§
Amendment moved—
Clause 25, page 14, line 6, leave out ("secured creditors shall be disregarded") and insert ("a creditor holding security upon the property of the debtor shall be reckoned as a creditor only in respect of the balance (if any) due to him after deducting the value of such security").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ Clause 27:
§ Penalty on Trustee Acting when Deed of Arrangement Void, 50 & 51 Viet. c. 57.
§ 27. If a trustee acts under a deed of arrangement—
- (a) which is void by reason of non-compliance with any of the requirements of the Deeds of Arrangement Act, 1887, or this Act; or
- (b) after he has failed to give security within the time and in the manner provided for by this Act,
§ THE EARL OF GRANARDI move to leave out "which is" at the beginning of paragraph (a) and to insert "after it has become." This is a purely drafting Amendment.
§
Amendment moved—
Clause 27, page 15, line 2, leave out ("which is") and insert ("after it has become".)—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ THE EARL OF GRANARDI move to add, at the end of Clause 27, the words or that his action has been confined to taking such steps as were necessary for the protection of the estate." There has 188 been a great deal of controversy with regard to this clause. It is considered by some chambers of commerce and other bodies too strict. The words which I propose are added to make the clause somewhat clearer, as it is considered open to doubt as drafted.
§
Amendment moved—
Clause 27, page 15, line 14, after ("inadvertence") insert ("or that his action has been confined to taking such steps as were necessary for the protection of the estate").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ Clause 29:
§ Audit and Accounts.
§ 29.—(1) Where an application in writing is made to the Board of Trade by creditors of a debtor who has executed a deed of arrangement representing at least one-half in number and value of the creditors who have assented to the deed for an official audit of the trustee's accounts, the Board may order the trustee's accounts to be audited, and, if such an order is made, all the provisions of the Bankruptcy Act, 1883, relating to the institution and enforcement of an audit of the accounts of a trustee in bankruptcy (including the provisions as to fees) shall, with necessary modifications, apply to the audit of the trustee's accounts, and the auditor shall have power on the audit to require production of an allocatur for the taxed costs of any solicitor whose costs have been paid or charged by the trustee, and to disallow any costs in respect of which no allocatur is produced.
§ (2) Every trustee under a deed of arrangement shall, at the expiration of six months from the date of the registration of the deed, and thereafter at the expiration of every subsequent period of six months until the estate has been finally wound up, send to each creditor who has assented to the deed a statement in the prescribed form of the trustee's accounts and of the proceedings under the deed down to the date of the statement, and shall, in his affidavit verifying his accounts transmitted to the Board of Trade, state whether Or not he has duly sent such statements, and the dates on which the statements were sent; and, if a trustee fails to comply with any of the provisions of this subsection, the High Court may, for the purpose of enforcing those provisions, exercise on the application of the Board of Trade all the powers conferred on the Court by subsection (5) of section one hundred and two of the Bankruptcy Act, 1883, in cases of bankruptcy.
§ (3) At any time after the expiration of two years from the date of the registration of a deed of arrangement, the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed, or, if he then resided or carried on business in the London bankruptcy district, the High Court may, on the application of the trustee or a creditor, or on the application of the debtor, order that all moneys representing unclaimed dividends and undistributed funds then in the hands of the trustee or under his control be paid into Court.
189§ THE EARL OF GRANARDI move, after the word "Where," at the beginning of the clause, to insert "in the course of the administration of the estate of a debtor who has executed a deed of arrangement, or within twelve months from the date when the final accounts of the estate were rendered." This is to meet some representations made to the Board of Trade as to liability of audit. The consideration was pressed upon us that there ought to be some limit to the liability of audit, and for that reason we propose to insert this Amendment.
§
Amendment moved—
Clause 29, page 15, line 33, after ("Where") insert ("in the course of the administration of the estate of a debtor who has executed a deed of arrangement, or within twelve months from the date when the final accounts of the estate were rendered").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ THE EARL OF GRANARDThe next Amendment is consequential.
§
Amendment moved—
Clause 29, page 15, lines 34 and 35, leave out ("creditors of a debtor who has executed a deed of arrangement representing at least one half") and insert ("a majority").—(The Earl of Granard.)
§ On Question, Amendment agreed to.
§ Schedule:
§ THE EARL OF GRANARDThe final Amendment is in the Schedule, and its object is simply to correct a slip in the Bankruptcy Act, 1890.
§ Amendment moved—
§ Schedule, page 18, line 18, at end insert:—
| Section 164 | The word ("debtor's") shall be substituted for the word ("bankrupt's") |
§ On Question, Amendment agreed to.
§ Bill to be read 3a on Thursday next, and to be printed as amended. (No. 90.)