INSOLVENCY BILL [H.L.] (Hansard, 15 January 1976)

§ Lord WINTERBOTTOM
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

The DEPUTY CHAIRMAN of COMMITTEES
As there are no Amendments to Clauses 1 to 10, I propose to move them en bloc.

§ The Earl of MANSFIELD
I have a very short point on Clause 7, and I would therefore suggest that it might be in order to move that Clauses 1 to 6 inclusive be 331 agreed to en bloc and then have a separate Motion for Clause 7.

§ The Earl of MANSFIELD
Your Lordships will see that Clause 7 of this Bill is what I might call the disqualification clause, which gives the court powers, in appropriate circumstances, to order the disqualification of directors of insolvent companies. In particular, Clause 7(3) provides: Where the official receiver or Secretary of State intends to make an application under this section in respect of any person, he shall give not less than ten days' notice of his intention to that person, and on the hearing of the application that person may appear and himself give evidence or call witnesses. I should perhaps apologise to your Lordships' Committee, and possibly to the noble Lord, Lord Winterbottom, for not putting down some form of probing Amendment either before today or in manuscript form, but I fear that I have been carrying out public duties in Scotland; and it may suffice if the noble Lord and his advisers consider this short point and either write to me or not, and I can always put down an Amendment at a later stage of the Bill if that course should prove desirable.
The short point is that where a director is to be proceeded against in this manner in some quarters it causes some mild anxiety, to say the least, in that it would appear that insufficient time is being given for the director concerned to prepare a case against the making of such an order. He will have to take advice which may be legal advice, and also advice from accountants. He must if necessary, besides preparing his case, approach witnesses to take statements from them and then try to get them together all in one place, so to speak, at the time when the application is to be heard and the order, if it is to be made, is actually made. It seems to me that it could be said that it would, at any rate, be fairer if a rather lengthier period were given so that there could be adequate opportunity for a director to make up his mind whether he is going to oppose an order of this sort and, if his advice is that he does oppose it, to take the necessary steps.

§ Lord WINTERBOTTOM
I quite understand the problem facing the noble Earl and I have every sympathy with it. I will write to him. All that he is asking is a small change in administrative detail to the benefit of the individual who may have to answer to the court. For this reason I shall consult my advisers and write to him so that if he does not receive satisfaction from me he will have time to put down an Amendment at the Report stage of the Bill, which should be next week.

§ The Earl of MANSFIELD
I have two small points for the consideration of the noble Lord and his advisers. The first relates to that part of Schedule 1—page 10, line 26. which reads: Offence by undischarged bankrupt of obtaining credit confined to cases where value of credit exceeds a minimum amount ", contrary to Section 182 of the original Act. Your Lordships will see that the amount of credit that an undischarged bankrupt may obtain, not disclosing at the time he obtains such credit that he is a bankrupt, has been substantially increased from a figure of £10 to that of £120. I hope that one is not in any way seeking to go against the spirit of this Bill which has been welcomed on all sides. Nevertheless, I think it is to be deprecated if any provision of the Bill in fact makes it substantially easier for those who are in effect unable or unwilling to repay credit once it has been granted. It is something which the noble Lord might consider and I ask him to do so.
In an age where perhaps the standards of honesty are not all that they have been and bankruptcy is not regarded as it used to be (as anybody who read some of the newspapers last Sunday will immediately perceive) it is, I think, something which needs a little thought that such a sum should be raised 10 times. There is finally the point that a sum of £120 may be obtained from several different credit granters and the total may therefore amount up and it would be more difficult to unravel in the end.
There is another point which concerns the next entry on Schedule 1, which is line 31, page 10. Your Lordships will see that the minimum debt required to support a bankruptcy petition under Section 4(1)(a) has been increased to £300. Again, very much of what I have said applies in principle to this figure. The consequence could be that a man with no assets capable of being distrained on may well default in payment of a debt of less than £300 and in such circumstances it would be difficult, even impossible, to enforce payment. I wonder whether this figure of £300 does not go a little too far.

§ Lord WINTERBOTTOM
The noble Earl has made two points. Again I shall study them and write to him or reply at a later stage. The multiplicator of 12 is based on the 1914 Act rather than the 1883 Act because inflation during that happy period was not significant. Nevertheless, all the figures in Schedule I were based on a common base of calculation. It might be invidious to alter the two figures of £120 in Section 182 and £300 in Section 4(1)(a). I shall write to the noble Earl in detail about this to show how these factors were calculated. If he is not satisfied, we will see what we can do at a later stage.

in case of person who has not previously been adjudged bankrupt or made a composition or arrangement with his creditors	£6,000
in any other case	£1,200")