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Thursday, 22 October 1914


Senator KEATING (Tasmania) . - I think I should congratulate the Vice-President of the Executive Council upon having the opportunity of introducing this measure. It should have, and I believe it will have, a fairly easy passage through both Houses of the Parliament. When it has become the law of the Commonwealth we shall have made a very distinct legislative advance. It will be a piece of legislative work which will not only reflect credit upon the Parliament of the Commonwealth, but will redound very greatly indeed to the advantage of the whole community. As the Minister pointed out in moving the second reading of the Bill, each of the States has its own system of bankruptcy law more or less approximating to the principles of the English bankruptcy law, upon which, to a very large extent, they have been framed. On this subject, as on others where the legislation of the States has largely been modelled upon English precedents, slight deviations have been made from the original provisions, and as time has gone on, in each State the deviations from the original have become more marked. Should we allow the State bankruptcy laws to prevail, no matter how strong may be the desire of the State Parliaments to keep as closely as possible to the English model, we should still find the difference between the legislation in the several States accentuated. It is not merely because this difference would be accentuated that we in Australia would be handicapped by the situation. Under Federation we are one community for trading purposes, and creditors and debtors are not found boxed up, as it were, in separate compartments or States. Individuals and firms in the various States carry on the operations of trading throughout the Commonwealth, and the relation of debtor and creditor is consequently not a relation confined to the territorial limits of single States. When, therefore, a bankruptcy occurs in the case of an individual or of a corporation or trading firm, it is not merely the individual, firm, or trading corporation in the State of the defaulting individual or firm that is concerned, but the traders, corporations, and firms trading throughout the whole of the Commonwealth. For that reason, if for no other, it is eminently desirable that throughout the Commonwealth there should be a uniform bankruptcy law. In fact, the Bill will amount to a codification of the bankruptcy law, and for that purpose we have drawn largely in it upon the existing law in each of the States. I am especially pleased to be taking part in enacting the provisions of this Bill into Federal legislation. The Minister will pardon me for saying that it is now seven years since the original Bill to be submitted to Parliament was drafted. This was in 1907, when a great deal of time. care, and labour was expended in the preparation of this measure. It was recognised that it was not a party measure, but one to which all parties in both branches of the Parliament could apply themselves assiduously without any sense of party feeling, animated solely by the intention to put upon the statute-book a good Act that would be of practical benefit and utility to the trading community throughout the Commonwealth. At that time we, as a Government, had prepared a document, which I have here now, showing the divergencies in the law of the several States, and between these several systems of law and the English law upon which they, to a greater or lesser extent, had been moulded. Mr. Groom, the then Attorney-General, took a particularly interested part in formulating the original Bankruptcy Bill that was to have been submitted to Parliament, and of which this is the outcome. T had the honour and privilege of being very closely associated with him in the original collation of the different clauses of the measure, and putting it into form. It was not submitted to Parliament in 1907. There was a great crush of other legislation demanding more urgent consideration, and it was impossible to lick this Bill into final shape. It was too much to expect Parliament at that time to be able to give a measure such as this attention commensurate with its importance. In a later Government Mr. Glynn went through the Bill as he found it upon the stocks, and some time after its provisions had subsequently become public property delivered a very interesting and informative address in Adelaide before the South Australian Chamber of Commerce upon its main provisions and the general principles of bankruptcy law. It was not until December, 1912, that a subsequent Attorney-General, Mr. Hughes, brought the Bill out of the Ministerial office and tabled it in Parliament. It' was not tabled with any 'intention at the time of allowing it to pursue its course through Parliament, as the termination of the session was too near. Mr. Hughes very wisely and properly had the Bill read a first time in the other House, and circulated amongst members and allowed to get into circulation in the community. I saw at the time that so far as Tasmania was concerned those who had had practical experience of the working of the bankruptcy law - those in the legal profession, trustees, accountants, and those associated with the Courts in relation to bankruptcy proceedings - should have copies of the Bill. I invited their comments and suggestions in regard to it, the obvious intention of the Government at the time in having the Bill made public being that all interested might submit any suggestions they thought desirable to be taken into consideration before the Bill received final treatment by the Legislature. In June, 1913, there assembled in Sydney the annual conference of the Associated Chambers of Commerce of the Commonwealth, a body consisting of representatives from each Chamber of Commerce in all the States. I had the honour of being sent as one of the representatives from Tasmania by both the Launceston and Hobart Chambers. When the notice went out from the central body convening a meeting to be held in June of that year in Sydney, each Chamber of Commerce was notified that one matter to receive special consideration was the proposed bankruptcy law which Mr. Hughes had circulated in the previous December, and each Chamber was asked specifically to nominate either one of its ordinary delegates, or some person to represent it specially in connexion with that particular subject, which was to be gone into most carefully. I had the honour, on behalf of the Hobart and Launceston Chambers of Commerce, to be appointed as their representative at the Conference upon the special Committee that met to consider in detail the provisions of this bankruptcy measure. There were representatives from Victoria, Sydney and Newcastle in New South Wales, South Australia, and Western Australia, and several Chambers of Commerce in Queensland. We sat for several days as a separate Committee, going into every detail of the Bill, and the final paragraph of our report was -

We have considered the whole Bill in the light of the conditions obtaining in each State, and we believe that the Bill, with the amendments we have suggested, will, if passed into law, create a comprehensive and satisfactory code of bankruptcy, and one, undoubtedly, an improvement on any existing State system.

Several of those who had taken part in the consideration of the Bill by the Committee, including myself, added to that report verbally our opinions in regard to the Bill, and these went very much further than the qualified admiration I have quoted. The recommendations or suggestions of the Committee were printed and brought under the notice of the Government. I dare say they are upon record in the files relating to the measure, but no steps were taken last year by the Government to proceed with it. Senator Stewart took steps to introduce a Bill which, I believe, was, in the main, moulded upon this, but this is the first time, for really working purposes, that the Bill has been launched in Parliament, as it has been by the Vice-President of the Executive Council. I again congratulate him upon having the opportunity of so doing. He has disclaimed anything like an extensive knowledge of the subject of bankruptcy, or a detailed ' acquaintance with all the provisions of the measure. It was hardly necessary for him to do that ; and, in fact, it would have been hardly necessary for anybody even with a legal training, or with considerable experience in bankruptcy procedure, to have done it, because it is a highly technical subject, and the Minister can be fortified by the knowledge that the Bill in general form has run the gauntlet of three or four AttorneysGeneral, and of a most searching bond fide criticism on the part of the associated Chambers of Commerce of the Commonwealth. The amendments which. I have circulated are, to a large extent, the amendments that I, as one of the members of the special Committee, was a party to suggesting. In the Committee there were men of my own profession, such as Mr. McLachlan, of Adelaide, accountants of the high standing of Mr. E. B. Lemmon of Victoria, and Mr. Borchard of New South Wales, whose name is a household word throughout the Commonwealth in connexion with insolvency law and administration. There were also men who were qualified to judge of the value of the provisions of this Bill, not alone from the stand-point of the trading community, whose members are frequently represented as creditors, but from the point of view of the debtor. As the Vice-President of the Executive

Council remarked yesterday, it is not only necessary that there should, be expedition in dealing with the estates of bankrupts, but that some measure of punishment, not harsh, rigorous, or severe, but adequate, should be meted out to those who may default through neglect which was avoidable. At the same time, sympathy should be extended to those who have fallen by the way financially notwithstanding that their every effort has been bent in the direction of keeping their heads above water. We have to look after the interests of the man who becomes bankrupt through no fault of his own, and to see that be is not unduly penalized. We have also to guard the community generally against the consequence of the actions of those who, through their own wilful default, have embarrassed themselves financially, and have detrimentally affected a whole circle of persons with whom they have had trading relations. I was glad to hear the VicePresident of the Executive Council draw attention to the necessity which exists for holding the balance carefully between these two classes of debtors and the general community. I repeat that the men who comprised the Committee of which I have spoken were not those who could expect at all times to be interested in bankruptcy proceedings as creditors. They included others who frequently represent the interests of men who have recourse to bankruptcy, either in the nature of a composition or a liquidation, as the last resort. We know that sometimes individuals find themselves compelled at long last to take advantage of the procedure provided by the bankruptcy law to make some final arrangement with their creditors. Frequently they take that step in the full knowledge that they have done all that they possibly can to avoid it. Their interests have, therefore, to be safeguarded against creditors who might be too oppressive, and who might be disposed to press their advantage unduly. I have circulated a list of amendments which I intend to submit, and, with the Minister, I recognise that the Bill is chiefly one for consideration in Committee. When the Law officers, who will advise the Vice-President of the Executive Council, come to look into those amendments, I believe they will find that not one of them aims at destroying any vital principle of this Bill, or establishing any' other system than that contemplated by it. Indeed, many of the proposals I have outlined are in the nature of drafting amendments, and, although some of them cover three or four pages of print, they comprise merely repeats. For instance, it will be found that I propose to substitute the words " Official Receiver" for "Registrar, and vice versa. The amendments do not touch the framework of the Bill at all. There are two or three which contain new provisions, but the adoption of these will not alter the colour or texture of the measure. I had intended to circulate an amendment in regard to the definition of the word "bankrupt." As the Vice-President of the Executive Council has pointed out, there are four methods of bankruptcy provided for in this Bill. These include bankruptcy under a sequestration order, deeds of arrangement, deeds of composition


Senator Bakhap - Will all these methods be equally bankruptcy in the eye of the law?


Senator KEATING - That is the point. ' I had intended to circulate an amendment setting out that the definition of the word "bankrupt" should be extended so as to apply to a debtor who takes advantage of the provisions of this Bill to make a deed of arrangement or a composition with his creditors. The conditions which apply in the case of bankruptcy would .then apply in the case of a debtor who assigns his estate for the benefit of his creditors. The Bill provides that when a man's estate is sequestrated there are certain debts, such as wages, for example, which have priority. I desire that when a man makes a deed of arrangement, a deed of assignment, or a deed of composition for the benefit of his creditors generally,- the same rule shall apply - that priority shall be given to the individual who is entitled to wages from that debtor. Then, too, when a man's estate is sequestrated, certain restrictions are imposed upon an execution creditor. In other words, a creditor who may have obtained judgment against a bankrupt may not put in an execution and seize goods to tie detriment of creditors generally. I desire a similar provision to be made applicable to deeds of arrangement and deeds of composition under this Bill. Similarly, the restrictions which are im posed upon a landlord in distraining for rent against a bankrupt should be made applicable to cases in which men assign the whole of their estates for the benefit of their creditors generally. For this purpose I had intended to circulate an amendment, the effect of which would have been to make " bankrupt " include any debtor who takes advantage of the provisions of this Bill. But I am not unmindful of the fact that such action might entail other consequences which are not desirable, and, as I know the VicePresident of the Executive Council, following the usual practice, will postpone the consideration of the definition clause till the other provisions of the measure have been dealt with, I would like him to consult with his officers as to the best way of securing the results which I have indicated. I desire to see men who assign the whole of their estates for the benefit of their creditors placed in the same category as persons who become bankrupt.


Senator Blakey - Would not the honorable senator be in favour of fixing a date with a view to safeguarding the interests of a creditor at a time when the bankrupt believed he was solvent?


Senator KEATING - I do not understand the honorable senator.


Senator Blakey - Suppose, for example, that a creditor in all good faith obtained an order against a person who became bankrupt a week or two later.


Senator KEATING - If he had got in his execution before the date of the order of sequestration he would not be debarred from proceeding with it. If he had obtained judgment it would be only a matter of issuing a form or two, and the bailiff could be put in. But after the date of sequestration he would not be entitled, nor should he be, to proceed to execution if the debtor had assigned his estate generally to a trustee for the benefit of his creditors. I ask the Minister to consult with the Law officers before we reach the definition clause, in order to ascertain whether that result could be achieved by extending the definition of "bankruptcy," or whether a special clause ought to be inserted, towards the end of the Bill, making certain provisions, contingent upon bankruptcy, apply also in the case of assignments and compositions.


Senator Bakhap - But the honorable senator would not class with an ordinary bankrupt, whose estate had been compulsorily sequestrated, a man who had entered into a satisfactory arrangement with bis creditors?


Senator KEATING - For this purpose I certainly would do so. The object which a man has in view in making an assignment for the benefit of his creditors generally is to take care that the creditors shall obtain pro rata from his estate the greatest value that it is capable of realizing. If the estate could pay, say, 12s. in the £1, it would not be fair that an execution creditor should come in and get his 20s. in the £1, so lessening the value of the estate to the remaining creditors.


Senator Blakey - But if a genuine creditor "got in early," to use an everyday expression, or if he got in, in good faith, when he thought the debtor was solvent, would the honorable senator debar him?


Senator KEATING - That is quite another matter. Proceedings taken against a debtor are, in many instances, the actual occasion of his insolvency.


Senator Long - Would not the honorable senator secure the wages of a worker ?


Senator KEATING - -I have said so.


Senator Long - I understood the honorable senator to say that he should participate in the distribution of the estate.


Senator KEATING - No; I said that it was one of the incidents of bankruptcy that wages due by a bankrupt over a certain period should have priority of claim upon his estate, and that I desired that that provision should apply also where a man assigns his estate for the benefit of his creditors.


Senator Bakhap - But, except for that purpose, you would not class a man who had assigned his estate with an ordinary bankrupt?


Senator KEATING - No. I have given notice of my intention to move for the insertion of such words as " or assignee " in several clauses, in order 1 o secure the wages in such cases, and to restrict the execution creditor, or a landlord, from distraining for rent. One division of the Bill, which, I think, will be gratifying to all of us, is that relating to administration. We have also the assurance of the Vice-President of the Executive Council that, so far as is practicable, convenient, and consistent with the proper administration of this law, it is the intention of the Government, in exercising their power to constitute Courts, appoint officers, and so forth, to utilize the existing institutions and officers of the States, endowing them with the necessary powers and jurisdiction, and clothing them with the authority which the Bill purports to give officers under it.


Senator Senior - Would not a State Judge, who is largely engaged in insolvency work, become a Federal officer J


Senator KEATING - His jurisdiction then would be Federal.


Senator Blakey - The honorable senator does not desire any overlapping.


Senator KEATING - There is no necessity for any. This Bill, when it becomes law, will supersede the State bankruptcy laws. It does not repeal the existing law, but as soon as it is passed the existing law will scarcely be worth the paper it is written on. Where we have been codifying the law in those matters which are not expressed ,to be within the exclusive jurisdiction of the Commonwealth, we have not proceeded to repeal any State Act; we have simply passed another Act which supersedes the State law. In like manner, this Bill will supersede the State Acts, and the jurisdiction of the State Judges under those State Bankruptcy Acts will cease.


Senator Guthrie - But many of the State bankruptcy officers have other duties to attend to. What will happen to them?


Senator KEATING - I take it, as I have said, that, wherever practicable, the Commonwealth Government will invest them with a Federal jurisdiction corresponding to the State jurisdiction which they now exercise.


Senator Guthrie - But some insolvency officers have other duties to attend to.


Senator KEATING - And their duties under this Act will be only part of their work.


Senator Blakey - But they will be serving two masters.


Senator KEATING - In many instances to-day, public servants are serving both State and Commonwealth. It is very desirable that these men, some of whom have had a lifelong experience in insolvency administration-1 - who not merely know the insolvency law governing the procedure in their own particular

State, but have a general grasp of the fundamental principles of insolvency law - should be invested, in the offices created by this Bill, with a jurisdiction corresponding with that which they now exercise. I should also like to see the Registrar under this Bill endowed with even greater powers than are specifically given to him; I should like him to be invested with the powers that are enjoyed by the Registrar in Bankruptcy in New South Wales. These, however, are matters more for consideration in Committee than for discussion here. I shall content myself by saying that some of the amendments of which I have given notice are aimed at investing the Registrar under this Bill with the powers at present possessed by the Registrar in Bankruptcy in New South Wales. I think that, in drafting this measure, there has been some little confusion regarding the functions of the Registrar in South Australia. That officer exercises functions that are not exercised by the Registrars in the larger States such as Victoria and New South Wales, and in several of the amendments of which 1 have given notice, special attention is drawn to the substitution of "Registrar" for "Official Receiver." This happens so many times that it helps probably to swell the volume, if not the importance, of the sheaf of amendments that have been circulated. In most instances, these amendments will be determined by the decision of the Committee in regard to one, or, perhaps, two of them ; those following becoming merely consequential. There is one procedure which is not fully provided for under this Bill, and which, I think, ought to be. It is a procedure which prevails in South Australia. Even although it comes from that State, it may be said to be worthy of adoption. It is a long time since we heard South Australia referred to in the Senate as " the model State." It is time we revived that expression, and we can, to some extent, revive it in dealing with this Bill. The basis of the legislation there in relation to either a bankruptcy assignment or composition is that, as early as possible, there should be a meeting of creditors, who should have the power to decide what course is to be taken, namely, whether they should accept a composition and discharge the debtor, or whether they should refuse a composition and demand that the estate be sequestrated by order of the Court; and, in either case, whether they should appoint a trustee, and whom he should be, instead of the Official Receiver, to take over the whole of the assets of the bankrupt and administer them in behalf of the creditors. In other words, the creditors are invited into the fullest confidence, and are given the fullest measure of power to deal with what is, after all, only theirs.


Senator Lt Colonel O'loghlin - ls that not the procedure in the Bill before us!


Senator KEATING - Not quite; it requires perfecting in that direction. That is very largely the South Australian system, and some of the amendments of which I have given notice aim at bringing the South Australian procedure into this Bill, and making it an unmistakable feature of the measure.


Senator Lt Colonel O'loghlin - The nearer you get to South Australian conditions the better.


Senator KEATING - Another amendment I shall propose is that, when the creditors do assemble, if they refuse to accept a scheme of composition, they shall be able to nominate a trustee, who shall apply to the Court-f or an order of sequestration, and shall be sanctioned by the Court in taking over the whole of the property of the bankrupt, to be divided amongst the creditors, as provided by the general provisions of the Bill. In regard to clause 163, I have given a similar notice of amendment. It is not my intention to deal in detail with any of the proposed amendments at this stage; the proper time to do that will be when we are in Committee. But, speaking of them generally, I invite the serious assistance of honorable members in the incorporation of those provisions in this Bill. As I have said - and the Minister may be able to verify this, either by personal examination or by reference to his officers - they are not aimed in any way at interfering with the colour, form, or texture of the measure; their object is its perfection, and, in some instances, a variation of the drafting in order that the intention of the Legislature may be more unmistakably expressed than it is in the present terms of the Bill. There is one necessary provision of which I have not given notice; but, before we reach the final Committee stage, I hope to have an opportunity of drafting a clause. I had not the opportunity of consulting to-day the New South,

Wales and South Australian Statutes dealing with bankruptcy and insolvency, because, when I went to find the books, I discovered Senator Senior up to his eyebrows in them, and I anticipate that he will be assisting me with some of those provisions. One is, as in the New South Wales law, the ante-dating of the bankruptcy wherever necessary, and another provision is that, where the debtor happens to omit, either wilfully or otherwise, from his schedule or list of creditors the name of any single creditor, the creditor so omitted shall have reserved to him the right to sue the bankrupt, notwithstanding his bankruptcy, not for the debt itself, but for the amount of the dividend or dividends that are paid. If such a provision as that is not included, bankruptcy proceedings may be taken, and the name of a creditor may be omitted; and there are provisions that, when a discharge is obtained, it is final and conclusive as against everybody. Any creditor, whether declared so or otherwise, should be protected to the extent of the dividend, by having the right to sue the bankrupt.


Senator O'Keefe - Is he not protected by the right to sue the trustee ?


Senator KEATING - The trustee should not be personally responsible. The debtor has power to come in at any time, but he may not be aware of the bankruptcy, and the proceedings may terminate so quickly that the trustee is freed, and the estate is wound up, before the debtor has a chance to make his claim. It is for that reason that the debtor should have the opportunity reserved to him to sue the bankrupt for the amount of the dividend after the bankrupt has been discharged.


Senator Gardiner - Does not the dividend depend largely upon the proved debts ?


Senator KEATING - Yes ; one could estimate what would have been the dividend by adding this particular debtor's claims to the others, but, whether it is necessary to enter into the matter with that mathematical detail, I do not know. I would simply adopt the system of suing the bankrupt for the amount of the dividend. The omitted debts might make a fractional difference, but that would depend on whether the omitted creditor was a small or large ona*


Senator Bakhap - You would start the discharged bankrupt on a fair way to bankruptcy again.


Senator KEATING - It would not be for the amount of the original debt that he would be sued,, but for the amount of the dividend. There is one matter in connexion with the Bill to which I would invite the consideration of the Government, and that is the total omission of Part XII. That part is really a work of. supererogation. It is a part that exists in the Victorian law; but Part XI. embraces all that is in Part XII., and more. It gives effect to what is in Part XII., and does it more efficiently. Therefore, there is no necessity for Part XII., and the Committee of which I have already spoken, after considering the matter, in all its bearings, said, in the report put before the associated Chambers of Commerce in June, 1913, that the whole of Part XII. should be eliminated. I think the only reason why Part XII. was included was that it is practically a transcript of the Victorian law, and it has been thought that those who are familiar with the working of the Victorian law would find themselves versed in it; but as Part XI. includes all that is in Part XII., and more, and brings the provisions up to date, it seems quite unnecessary to have the latter part in the Bill, because I do not think it will be availed of. Further than that, Mr. Lemmon, who is an accountant of high standing in Melbourne, and who had been deputed by the Chamber of Commerce to represent them on more than one occasion in bankruptcy matters, has indorsed the opinion that Part XII. is totally unnecessary. He is familiar with Part XII. through practising in Victoria, and he says that Part XI. embraces the whole of Part XII and is an immense improvement on it. That opinion indorses the report of the Committee that the whole of this part should be eliminated. Some of the members of that Committee, and I was one of them, seemed to think that there should be incorporated in the Bill a provision, which obtains in Queensland and Tasmania, for what is known as liquidation by arrangement. The proceedings are very simple, and I will explain them to honorable senators. A man finds that he is in financial difficulties. He is unable to meet all his creditors with 20s. in the £1, and he finds that his position is going from bad to worse. He does not wait to be declared a bankrupt. He lodges with the Registrar a petition for the liquidation of his affairs by arrangement or composition with the creditors. After that, or simultaneously, he lodges with the Registrar a list of creditors on a particular specified form, with a request to the Registrar to send to the enlisted creditors, at the enlisted addresses, the accompanying notice. The notice sets out that the debtor is calling a meeting of his creditors under sections so-and-sb of the Bankruptcy Act to deal with his affairs by way of liquidation, arrangement, or composition. It will be observed that he does not send the notices himself, nor does his solicitor send them; they must go through official channels. The solicitor acting for the debtor presents to the Registrar a list of creditors. If there are twenty-two creditors, he must send out twenty-two notices, each notice indicating the name of the debtor, and stating when and where it is proposed to hold the meeting. All must go through the Registrar. Each notice must bear the seal of the Registrar. The notices go through the post in the ordinary way. Then on the day of the meeting, when the creditors assemble, they may decide that the affairs of the debtor be liquidated by arrangement. Of course, the debtor, who is in attendance, is subject to questioning by any creditor. If the creditors are dissatisfied entirely with his answers, they may resolve on nothing, in which case the debtor stands where he stood before. If he asks the creditors to accept a composition of 5s., 6s., 8s., or any other sum in the fi, and the creditors resolve to accept it, another meeting, which must be held not less than fourteen, nor more than twenty-eight, days from the first meeting, is necessary to confirm' the resolution.


Senator Guthrie - That is already provided for in the Bill.


Senator KEATING - Yes ; but I am not dealing with that single phase of the matter. Instead of agreeing to a composition, the creditors may resolve that the affairs of the debtor be liquidated by arrangement, and they may, by resolution, appoint a trustee. Also at that meeting, or an adjourned meeting, they may resolve that the debtor be granted his discharge, or that he be granted a> conditional discharge, such as that he has disclosed to the trustee his affairs wholly and truly, or that the estate has realized so much in the £1, to which the trustee certifies. All resolutions and all proxies must be lodged with the Registrar within three days ; and if the trustee gives a certificate - which is a necessary condition of the discharge of the debtor - that certificate must be lodged with the Registrar. Except in the matter of his appointment, the trustee holds nothing. Everything must pass through the Registrar, and, in certain' cases, bear his seal.


Senator Bakhap - Gould such a debtor be legally classed as a bankrupt?


Senator KEATING - Though the affairs of the debtor are liquidated by arrangement, and not by rendering him bankrupt, the whole procedure comes, under the bankruptcy law. Under this system that I suggest, when the debtor gets his discharge, it is a discharge free from all his obligations existing on the date on which he has filed his petition.


Senator Lt Colonel O'Loghlin - What is the advantage of that system over the regular procedure?


Senator KEATING - For one thing, it has the advantage over a composition in that it obviates the necessity for two meetings. It also places everything in the hands of the creditors, and they can deal with the whole matter at one meeting, and put the debtor out of suspense at once. Further, it is a very inexpensive, as well as expeditious, method of dealing with the affairs of a debtor who is involved for an amount which is not very large.


Senator Bakhap - It is always easier to get an attendance at one meeting than at two meetings.


Senator KEATING - Yes. In the case of a composition, it is necessary to' hold another meeting within twenty-eight days of the first meeting, in order to confirm the resolution passed at the first meeting, and it is sometimes very difficult to get an attendance at that second meeting, so that the whole of the proceedings, may lapse.


Senator Lt Colonel O'loghlin - Does the decision of the majority of the creditors bind the rest ?


Senator KEATING - A majority in number , of those present at the meeting or represented by proxy and representing three-fourths in value of the creditors is binding upon the other creditors.


Senator Gardiner - Does not Part XI. of the Bill, dealing with compositions and with assignments without bankruptcy, provide sufficiently for what the honorable senator suggests?


Senator KEATING - No. That part of the Bill deals with direct assignments. The method I suggest provides for a simple resolution being passed to the effect that the debtor's affairs be liquidated by arrangement, and not by bankruptcy. This resolution is filed with the Registrar, whereupon every part of the debtor's property passes to the trustee. It is an inexpensive method, as the fees are very low, and it is expeditious. It has proved satisfactory in the States of Queensland and New South Wales to men who have become involved. They have not to be dragged on month after month with the knowledge that they are bankrupt, and cannot get a fresh start. I should like to see the Commonwealth adopt these provisions. They are practically the same in both States. We might adopt them instead of Part XII., which is, as I have said before, a work of supererogation. There are only one or two other matters upon which I should like to speak briefly before concluding. When we come to the part dealing with offences, I hope the Minister will consider the advisableness of making the " punishment fit the crime." Some of the penalties provided are grossly inadequate. There are provisions which make offences of certain conduct, which is nothing more nor less than downright swindling, yet the penalties are totally inadequate. I need not go into particulars now. When we come to that portion of the Bill in Committee, perhaps we can make the penalties a little more commensurate with the offences. There is one provision in the Bill which should be welcomed by honorable senators and the community generally - that is, that proceedings in bankruptcy will bind the Crown. Hitherto the Crown has claimed priority in payment of its debts. Very often, when a man has become involved in bankruptcy or has assigned his estate, the Crown has claimed in full, allowing the other creditors to receive dividends proportionately less. Clause 4 provides -

The provisions of this Act relating to the remedies against the property of a bankrupt, the priority of debts, the effect of a composition or scheme of arrangement, and the effect of an order of discharge, shall bind the Crown.

We must realize that we have now in existence in the Commonwealth an institution which we all know and hope will extend - I refer to the Commonwealth Bank - but which, unlike the preexisting State Savings Banks, carries ordinary trading accounts. In the case of a bankruptcy or assignment under this Bill of a trader who has an account with the Commonwealth Bank, it is questionable whether the bank could not claim payment in full, whereas in the case of a man having an account at another bank that bank would be bound by the bankruptcy proceedings. I think it is desirable, in the case of bankruptcy or assignment, that the Crown should stand as an ordinary creditor.


Senator Bakhap - Should not the Crown have priority in the case of taxes or rent?


Senator de Largie - That is an oldestablished principle.


Senator KEATING - It is, but there is a departure in this Bill. If a man is involved in his affairs, or so embarrassed that he is not able to pay his creditors 20s. in the £1, I think it is fair that the Crown should waive any right that existed under common law in the past to its full pound of flesh, thus compelling other creditors, individuals in the community, who can less bear the loss, to accept something less than the full amount.


Senator de Largie - When we deal with that matter I shall be found intensely loyal.


Senator KEATING - I presume that the honorable senator will stand by the Crown ?


Senator de Largie - Yes.


Senator Guthrie - The trustee would be in a position to take over the debtor's land for the benefit of the other creditors though the rent owing to the Crownmight not have been paid.


Senator KEATING - I do not think that priority for the Crown, as claimed in the past, has been altogether a definite assertion on the part of the Crown. This has arisen from the fact that very little attempt has been made to call in question the justification for the procedure; and in a community such as ours the conditions are totally dissimilar in this regard from those in older countries like Great Britain. Here, the Crown carries on various functions that it does not carry on in other parts of the Empire; and I am pleased to see that the representatives of the Crown are quite prepared to stand in with the other creditors, and receive an amount proportionate to the debt. I again congratulate the Minister on the introduction of this Bill; and I sincerely hope that we shall make reasonable progress, and place it on the statute-book this session.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clauses 1 to 4 agreed to.

Clause 5 postponed.

Clause 6 -

This Act shall not affect -

(a)   any provision in any State Bankruptcy or Insolvency Act relating to matters not dealt with in, or within the scope of, this Act ....







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