BANKRUPTCY (AMENDMENT) BILL. [H.L.] (Hansard, 4 March 1926)

§ THE LORD CHANCELLOR (VISCOUNT CAVE)
My Lords, I beg to move that this Bill be read a third time.

§ LORD MUIR MACKENZIE
My Lords, on this Bill I had intended to put a question to the noble and learned Viscount on the Woolsack upon one of the clauses but it would have delayed the proceedings on the Bill if I had done so before, and with his kind consent I am going to ask a question on one of the clauses now. It is on the seventh clause of the Bill. The noble and learned Viscount, on the Second Reading, pointed to the fact that 430 the clause was lone of great importance, and I think he even went on to say that if the House desired it on another occasion he would say something further upon the subject. The clause is so important that I venture to ask him if he would be good enough to give some further exposition upon it, although in the direction in which the chief importance lies I do think that the clause is an improvement.

§ THE LORD CHANCELLOR
My Lords, I think I can answer the noble Lord's request in a very few sentences. Under the Bankruptcy Act of 1914 (the present Act) a trader becoming bankrupt for a second time who is found not to have kept proper accounts is liable to prosecution. Both the Committee which reported some years ago, the Committee of 1908 and the recent Committee on this Act, recommended that the same provision should apply in the case of a first bankruptcy. That is the effect of this clause. The result, if it is passed, is this: if a trader, becoming bankrupt, is found not to have kept proper accounts during the two years preceding his bankruptcy he is liable to prosecution. But that provision is safeguarded in more than one way. In the first place, he cannot be prosecuted unless the Bankruptcy Court so directs. Secondly, he cannot be prosecuted in the case of a first bankruptcy unless his total unsecured liabilities exceed £500. The amount is £100 in the present Act and it is proposed to raise that to £500, so that this strict provision will not apply to very small traders. There is a third safeguard—namely, that if it be proved that the omission to keep accounts was honest and excusable then he cannot be prosecuted. There is this further provision on the time when the new rule is to come into effect, that it shall not apply for two years. So if a trader on the day of the passing of this measure begins to keep accounts and keeps them until he is unfortunate enough to become bankrupt he would not be liable to prosecution under the Act. As the proposal is in favour of honest traders—honest traders on any large scale do keep accounts—and it is desirable, in bankruptcy matters that material should be available for seeing how the business is carried on, I hope that the noble Lord will be content with that explanation.

§ LORD MUIR MACKENZIE
My Lords, I am obliged to the noble and learned Viscount for the explanation he has been good enough to give to the House. It does represent what I had thought the clause meant and, if I may respectfully say so, I think the clause is a great improvement on the existing law.