Amendments of the Act

To carry out the views of the Committee as expressed in the foregoing suggestions for additions to the present law, and to render various Clauses of the Debtors and Creditors Act more workable and more calculated to render justice both to Debtors and to Creditors, the following amendments of the Act are required :—

1. In all cases where there would, under the Act, be a vesting of the Estate of a Debtor in the Registrar of the Court, the Estate should vest in the Official Assignee.

The last Clause of Section 19 should provide that on the filing of the resolution of Creditors appointing a Trustee, the Estate shall forthwith vest in such Trustee; and that an attested copy of the said resolution should be, in all cases, sufficient evidence of such vesting.

2. It should be provided that a Creditor for £25 may move the Court to call on a Debtor to show cause why his Estate should not be liquidated under the Act, if he shall have made demand on the said Debtor for payment of a debt due to him, and such debt shall not have been liquidated within forty-eight hours after such demand. Also, that the Registrar may order a meeting of Creditors, if he shall be satisfied that a Debtor is unable to meet his engagements, or that it is necessary for the interest of the whole body of Creditors that such meeting should be called. The same rights should be given to two or more creditors whose joint claims amount to £25.

The Registrar should also have power to order a meeting of Creditors, if any of the acts of Bankruptcy mentioned in Clause 20 of the Act be proved to his satisfaction.

Under the law as it stands at present, a Creditor cannot move at all, unless he can show that certain Acts of Bankruptcy or Fraud have been committed by the Debtor, and, therefore, not in any case, until the Debtor's Estate has been materially damaged. The risk of failing to prove any of the grounds on which a motion may be made, and of consequent reprisals on the part of the Debtor, will, in almost all cases, deter Creditors from taking action.

3. It should be provided that if a sufficient number of Creditors should not be present or represented at the first meeting, it should stand adjourned for three days, and that the Registrar should cause notice of such adjournment to be gazetted; and that if a sufficient number of page 4 Creditors are not present or represented at such adjourned meeting, the Estate of the Debtor should vest in the Official Assignee, and be administered by him forthwith. Also, that the remuneration of the Official Assignee in such cases should be the same as it was under the Bankruptcy Act.

Also that any first meeting or adjourned first meeting may be further adjourned on resolution duly passed by the Creditors present thereat.

Also that, in order that distant Creditors may have proper opportunity of being represented thereat, the first meeting should take place within such a number of days, being not less than three nor more than ten, after the filing of a statement of inability to pay debts as the Registrar may appoint.

4. In Clause 24, provision should be substituted that any execution against the property of a Debtor shall be staid on notice of filing a statement of inability to pay his debts, or of a Creditor's motion for a liquidation under the Act being gazetted or served on the bailiff or any of the other persons mentioned in Section 73.

5. Section 3 of Clause 24 of the Act should be amended so as to provide that, failing an appointment by Creditors of a substitute in case of the death, &c., of a Trustee, the Official Assignee should become Trustee.

6. No distress for rent should be allowed after a statement of inability to pay his debts has been filed by any Debtor, or after a motion for a liquidation has been made by any of his Creditors.

7. Three months' rent and no more should be a preferential claim on any insolvent Estate.

8. Section 49 should be amended so as to provide that dividends should only be set aside and retained for a Creditor who has proved a contingent debt until the date of the contingency, and that, if such contingent debt does not then become a claim, the amount so retained shall be divided amongst the other Creditors who have proved. As the law now stands, a contingent Creditor may receive dividends, although it should ultimately turn out that he has no claim whatever on the Estate, and there is no provision by which he can be made to refund sums thus paid to him.

9. The words "other than a pre-existing debt" should be added at the end of Section 75, so as to make it clear that no security given to a Creditor in preference to others within three months of insolvency can stand as against the Trustee of a Debtor's Estate. No part of the Act requires more careful revision of its wording than this Clause. A recent decision given in this Province by Judge Ward has made it manifest that the law does not render void preferential payments made to one Creditor to the detriment of others, unless in some very exceptional cases.

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10. The same words should also be added after the words "valuable consideration" in Section 3 of Clause 77.

11. The words "when sufficient funds have been realised to provide for a dividend," should be inserted in this Clause, so as to render its provisions inapplicable to those cases in which the assumed assets of the Estate prove valueless.

12. If no quorum is formed at a meeting of Creditors called to close a liquidation under Clause 90, the liquidation ought to be thereupon deemed to be closed, and the Trustee should file a declaration to that effect in Court.

13. A Debtor should be allowed at any time, on giving seven days' notice of his intention so to do to the Trustee in writing, and by notice in a gazette, to apply to his Creditors for an order of discharge. If such order be thereupon refused by the Creditors, or there should be no quorum at the meeting called for the purpose, the Debtor should be allowed to apply to the Court for an order on gazetting notice of his intention so to do. Under the present Act there can be no order of discharge until the Debtor's Estate is wholly distributed, however deserving the Debtor, or however willing his Creditors may be to grant a discharge.

14. That the following should be added to 76:—"Provided also that nothing herein contained shall be held to apply to consignments of goods held by the Debtor in the ordinary course of his business for sale on account of any other person, the identity and ownership of which can be proved to the satisfaction of the Trustee of the Debtor's Estate, or of the Registrar of Court, and in respect of which the owner shall tender payment to the Trustee of all advances made thereon by the Debtor, and of all charges due thereon to the Debtor's Estate, and shall surrender to the Trustee any acceptances granted by the Debtor in his favour by way of advance thereon."