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Friday, 4 March 1927

Senator THOMPSON (Queensland) . - Honorable senators will recall that when the principal bill was before the Senate, I took considerable interest in it, and endeavoured to have inserted a number of amendments which I thought were necessary and desirable. Some I succeeded in getting through, but others I. did not. In the interregnum I asked the Attorney-General's Department if consideration could not be given to some of those alterations which I had advocated, but which were not made. Apparently with the exception of one, they have not met with the approval of the department. I thought that section 6S could very well be extended to give power to a trustee to examine a debtor upon oath privately. I know there is a good deal of objection to that, and honorable senators opposite have stigmatized it as a star-chamber method. As a matter of fact, it is nothing of the kind. We have had it in operation in Queensland for many years, and it has worked most satisfactorily, and with advantage to the estates affected. However, as the Attorney-General is strongly averse to it, I shall not dwell upon it; but 1 should like to say, in passing, that our experience in Queensland has been that this power given to a trustee to examine a debtor privately has had very good results indeed. Presumably one reason why the Attorney-General is opposed to it is that the other States have not had experience of the principle in operation, and do not know of its benefits. Section 75 should be amended. It deals with estates that are being carried on for the benefit of the creditors, and in its present form prevents creditors from supplying the going concern with goods.

Senator McLachlan - Not altogether. They can do so with the sanction of the court.

Senator THOMPSON - Why should it be necessary to apply to the court? To support my contention, I instance one estate of which my firm was the principal creditor. I was appointed one of a committee of inspection, and naturally, as one of the largest creditors I realized that it would not be good business to give orders from the going concern to rivals in business who did not stand to lose any money by it. That is the position under the act as it stands at present. It is absolutely wrong and improper from a business point of view. Then there is section 133, which deals with the remuneration payable to a trustee, and provides that it shall be based on the net amount realized. Let us take the stock of an insolvent debtor. Suppose a trustee is put in to sell off the stock, and it realizes £1,000, less expenses of £200. Is it fair that the trustee should be remunerated on the net return of £800 instead of £1,000? I advocate paying remuneration on the larger amount, although it is against the interests of the commercial community to which I belong, because we should have to pay a little more in commission. Then there is the matter of the small bankruptcies. In Queensland we usually leave the remuneration of the receiver to the creditors, but under the Commonwealth act the official receiver ha3 to deal with all small estates. If we could be sure that the official receiver would be a man of proved commercial experience, and not an official in a Government office, all would be well. We had recently in Queensland the case of the estate of a man who had died in a sanatorium. His assets were quite substantial, but the estate got into the hands of the public trustee, who got sufficient funds out of the assets to pay the sanatorium fees, and was content to stop at that, with the result that the other creditors did not get a shilling. Had that estate been taken in hand properly and handled expeditiously, considerable dividends would have been paid to the other creditors. I hope, therefore, that in the administration of the Insolvency Act there will be a possibility of ensuring that the official receivers shall not be men in government offices, but men with sound commercial experience. Coming to Part XI., section 160, sub-sectionf, which deals with meetings of creditors, we consider that the chairmen of such gatherings have unusual powers, which might very well be modified. However, I believe that the Government wishes to see Part XI. tested out by actual experience with a view possibly to certain amendments being made in the light of experience, so I shall say no more under that heading. Section 175 provides that the trustees shall render an account of an estate within twelve months. We consider that a hardship. Our experience is that it takes much longer than twelve months to wind up an estate. The only subject, I think, on which the Attorney-General's Department met me, but not to the extent I would have liked, is that covered by section 184, which deals with the commission payable to a trustee when carrying on the business of an insolvent as a going concern for the benefit of all the creditors. Authority is given in the act to pay 1 per cent. on the turnover. That amount is altogether too small. Our experience in Queensland has been that 11/2 per cent. is a fair remuneration. Otherwise, I am quite satisfied with the section as it stands; butI suggest that the Minister in charge of the bill (Senator McLachlan) should allow the percentage to be increased to11/4 per cent. This is 1/4 per cent.lower than what experience has shown to be a proper remuneration. I have no desire to interfere with the Government in getting its business through, because I am anxious that the act shall be proclaimed as early as possible. The mercantile community of Australia has been waiting for some time for the proclamation of the act, and I do not wish to take any action which will hamper Parliament and delay the proclamation. I propose to ask the Minister to meet me in respect of the commission on turnover of estates which are being carried on as going concerns, and then if the Ministry will give me an assurance that if, after an experience of twelve months or two years of the working of the act, it is found desirable to amend it, and possibly to include those other variations and improvements from my point of view, which have been mentioned, I shall be prepared to support the Government.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (District Registrars and Official Receivers).

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