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Wednesday, 11 November 1914

Senator KEATING (Tasmania) . - The Minister has asked me if I will point out where in the Bill the mortgagee of real estate gets an advantage over the mortgagee of personal estate. It is in the very clause which I am seeking to amend. Clause 84 reads -

The property of the bankrupt divisible amongst his creditors, and in this Act referred to as the property of the bankrupt, shall not include.....


But, subject to this A'ct, it shall include -

1.   All property which belongs to or is vested in the bankrupt at the date of sequestration, or is acquired by or devolves on him before his discharge.

When the holder of real estate mortgages it, by English law that property is vested in the mortgagee; the mortgagor has an equity of redemption in his mortgage, and it is because of that it is transferred to the mortgagee for the term of the mortgage, with an equity of redemption in the mortgagor, so that the legal estate does not pass with the bankrupt property. Let us now look at paragraph 3 -

All goods being, at the date of sequestration, in the possession, order, or disposition of the bankrupt, in his trade or business, by the consent or permission of the true owner - which is the case of a bill of sale, under such circumstances that he is the reputed owner thereof.

Those are the circumstances of the bill of sale. It deliberately says, " All property vested in him," and if it is mortgaged as real estate, that property is vested in the mortgagee with the equity of redemption for the mortgagor. He has not a legal estate, but he has an equitable right to redeem the property in certain circumstances. That property does nob pass, but if it happens to be foods, although they belong to someody else to whom they had been transferred by way of mortgage, and he allows the bankrupt to remain in possession of them as the reputed owner, as he must do in order to remain in business, it passes. There is the distinction between- the two. There is no reason for it but the principle of feudalism, which runs right through the law of property. We have derogated from that principle to some extent by legislation in Australia, and there is no reason why we should not here do so again.

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