6th Parliament · 1st Session
The Clerk announced to the Senate that the President was unavoidably absent from the sitting.
The Deputy President took the chair at 3 p.m., and read prayers.
The DEPUTY PRESIDENT. - I have to announce that on Thursday, the 29th October, the President, accompanied by honorable senators, waited upon the Governor-General and presented the Address-in-Reply, and that His Excellency was pleased to make the following reply : -
Mr. President and Gentlemen,
In receiving the Address which has been adopted by the Senate in reply to the Speech delivered by me on tho occasion of the opening of the First Session of the Sixth Commonwealth Parliament, I desire to thank yon for your expression of loyalty to Our Most Gracious Sovereign the King.
Assent to the following Bills re ported : -
War Precautions Bill.
– I ask leave tq -read a statement to the Senate.
– I desire to acquaint the Senate with the following information regarding the destruction of the Emden by H.M.A.S. Sydney: -
About noon oil Monday, 9th November, a telegram was received at Navy Office from Cooos Island, stating that a three funnelled warship had arrived off the island, and was landing a party of men in boats. Communication with Cocoa immediately ceased. It was realised at Navy Office that this must be the Emden, and efforts were at once made to get into touch with Sydney, then believed to be in the vicinity of Cocos Islands. An urgent telegram was despatched to the Perth Radio Station, forwarding a code telegram to be made on the highest power, of which this station in capable, with the “ en clair “ preamble, “ Very urgent. Do not reply,” followed by the. Sydney’s call sign, and the telegram informing her of the Emden’ s presence at Cocos Island.
No further information was received nntil i p.m. on Tuesday, 10th inst., when the Eastern Extension Company brought to Navy Office a telegram received from Cocos that the Sydney was engaging Emden, and that Emden was a wreck on the north of Keeling Island.
This news was confirmed half-an-hour later by a telegram received by the Naval Board from the Naval Commander-in-Chief on the China station, stating that the cable from Perth to Cocos was out of order, but that the - one between Cocos and Batavia was still working. He reported that on the night before Cocos Station had managed to send a short message on extemporized “ instruments that Emden had been engaged by a British cruiser, but that the result was not yet known, and that the German landing party had seized the schooner and left the island. The CommanderinChief stated that later information had been received from Cocos that Sydney had arrived there, and that Emden was wrecked on the north coast of the Island. He added that he was informing Admiralty. A more complete account was received on the morning of Wednesday, 11th. It was then ascertained from Cocos by a telegram forwarded by the courtesy of Mr. Webster, Adelaide representative of the Eastern Extension- Telegraph Company, that Cocos had temporarily restored communication, and was able to supply further particulars. It appears that Emden arrived at 6 a.m., and sent three boats witE a landing party, consisting of three officers and forty men, with four maxims. The Island immediately sent out an urgent wireless call for help, which was received by Sydney just before the installation was smashed by the Germans. The landing party had apparently just completed their work of destruction, and actually put off to the ship when the Sydney hove in sight. The Emden at once put’ to sea, leaving her boats behind. On clearing the Island the Emden apparently opened the action on the Sydney, and it is stated that her shooting was at first excellent, but after she had been under fire from the Sydney her shooting fell off considerably. It is gathered that Sydney must have poured an accurate and deadly fire into Emden, as the latter very soon lost two funnels and a mast, whilst the whole of the after part of the ship was on fire. The action lasted an hour, the Emden being then apparently in a sinking condition and completely on fire.
The captain evidently decided to beach the ship, as she is reported to be wrecked on the north of the island. The Sydney reoeived very slight damage; the casualties consisting of three killed and fifteen wounded. The names have not yet been reported. After Emden was beached Sydney picked up tho doctor of Cocoa Island and his assistants, and proceeded to the help of the Emden. The result of this visit is not yet known. The German landing party seized two months’ provisions, and made off in the schooner Ayesha. The manager of Cocos Island station reported that they had been well treated by the Germans, and were all well. The following are the particulars of Sydney and Emden: -
Sydney - Light cruiser, 0,400 tons; speed, 25 knots; armament, S six inch guns, 4 3-pdrs.
Emden - Light cruiser, 3,600 tons; speed, 24 knots; armament, 10 4.1 inch guns.
The Sydney has recently come out of dock, and has, therefore, an advantage in the matter of speed.
The Government have received this cablegram from the Secretary of State for the Colonies: -
Please convey to your Government my hearty congratulations complete success achieved by H.M.A.S. Sydney, in putting an end to the career of the Emden.
The following message was received by the Governor-General from the merchants of Kingston, in Jamaica: -
Hearty congratulations Sydney’s naval victory. Hurrah for Australia.
Mr. Henry Marks, of Suva, has sent this cablegram : -
Australians in Fiji congratulate Commonwealth first naval victory.
I have received from the Minister of Defence for the Dominion of New Zealand a message congratulating the Commonwealth and the Sydney on her brilliant achievement, and also messages from the Governors of South Australia and Tasmania.
– Is it the intention of the Government to submit to Parliament motions to enable both Chambers to place on record their appreciation of the signal service rendered by the officers and men of the Sydney in engaging and crippling the Emden in this time of national crisis ?
– The matter will receive the attention of the Government.
Appointments at Rabaul.
– Has the atten tion of the Minister of Defence been drawn to the expressions of dissatisfaction at the appointment of Germans and other foreigners to positions of responsibility at Rabaul, in what was formerly German New Guinea ? Is it intended to retain them in those positions, or will an opportunity be given to eligible Aus tralians in New Guinea or the Commonwealth to fill the posts?
– What are the positions ?
– Public Service positions in German New Guinea. In yesterday’s Argus a correspondent drew attention to the fact that reference has been made to the appointments in the Argus of the 2nd instant, and expressed surprise that no protest had been made. Has the Minister any information to furnish ?
– I have read the various despatches from the Administrator of German New Guinea, and no such appointments have come under my notice. The press may have information other than that sent by the Administrator, and I shall make inquiries.
– Is it a fact that the works of the Shaw Wireless Limited, situated at Randwick, are, and have been for some time, under military guard ? Have the premises of the Telefunken Company - the German company - and the Marconi Company been similarly treated?
– I shall make inquiries. I have no personal knowledge of the matter.
– Are the reports in the press, that a contract for unloading prize vessels has been given to a German firm in Sydney, correct?
– The statement has been brought under my notice, and I shall make inquiries with regard to it.
– Is it a fact, as stated in the press, that the Government, exercising powers given them by Statute, have prohibited the sending of newspapers out of Australia? If that is correct, does the prohibition apply to the transmission of newspapers from the Commonwealth abroad by post? If it does not, are newspapers allowed to be sent away by post, and under what conditions?
– The reasons for prohibiting the export of newspapers are such that I prefer to give the honorable senator the information privately.
– Are they prohibited from being sent by post?
– Not permanently.
– May one send a newspaper now through the post to Great Britain ?
– One may post it.
– Will it be transmitted ? I do not want to know the reasons, but I want people to know that it may be useless for the time being to post newspapers abroad. Would it be useless for the present to post newspapers?
– No, it would not.
– I ask the Minister representing the PostmasterGeneral whether, so far as the Commonwealth authorities are concerned, any newspapers posted in Australia, and addressed to the “United Kingdom, will be allowed to reach their destination ?
– Yes ; but they may be subject to some delay.
– -What is meant by “some”?
– Oh, what does the honorable senator want? Why does he not’ get on the housetops ?
– May I be allowed to intervene for the purpose of saying that, if any honorable senator will see me privately, I will give him the information which Senator Stewart seeks? When I give any honorable senator that information, he will know why it cannot be made public.
High Commissioner’s Reports
– I have received complaints from three important centres in Tasmania, namely, Queenstown, Gormanston, and Strahan, that the daily reports as to the progress of the war issued from the High Commissioner’s office are not being posted publicly. I am informed that at Strahan the reports have not been posted until several days after their receipt, and, in other instances, it is alleged they have been posted only after the matter contained in them has been published in the newspapers. Will the Minister make inquiries with a view to remedying this complaint?
-I ask the honorable senator to give notice. Inquiries will be made, and an answer supplied to the honorable senator.
– I desire to direct the attention of the Minister of Defence to the following letter which has been forwarded to me -
Sir, - I wish to bring under your notice thatreatment meted out to some of the members of the Australian Imperial Expeditionary Forcegoing to England. We have refused to be inoculated, and were put off the boat into a steam launch at 1 o’clock on Sunday morning, and landed in Albany without either a shilling in our pockets, or not knowing where we were going to, only had to be landed. After landing and waiting about an hour, a corporal from the fort came clown and marched us up to the fort - about 2 miles. Then there were no blankets or food for us. Only for the kindness of some of the fort men, some of the poor devils would have went hungry, as they shared their breakfasts with them. Some of the men had money, but very few, and very little, which they shared with them they knew. Speaking for myself and eight comrades that came off of A4 s.s. Pera, I think the treatment we have received is very scandalous.
The DEPUTY PRESIDENT -Order r May I ‘call ‘ honorable senators’ attention to the fact that this is question time ?
– I am bringing this complaint forward with a view tohaving an inquiry made into it.
– The honorable senator will have an opportunity to discuss grievances on the Supply Bill.
– Some men on board the Katoomba were landed at Albany, after having travelled from Sydney to Broadmeadows, and after having remained at the latter place for eighteen days. These men were left at Albany because they were not vaccinated. Will the Minister make inquiries into the matter, with a view to ascertaining the facts ?
– If the honorable senator will give notice of his question, I will have inquiries made.
– I desire to ask the Minister of Defence whether it is a fact that thirty men have been returned from Albany who were members of the first Australian Imperial Expeditionary Force because, after they had been vaccinated upon one arm, they refused to be vaccinated on the other?
– Was the first operation successful ?
– Yes. These men. are returning here with arms like footballs. If what I have asked be a fact, will these men be eligible to volun- teer for the third or second Expeditionary Forces, and will thev be deprived of any of their pay?
– Reports have been received concerning a number of men who have been sent back, and those reports assign reasons why they have been sent back. The reasons are not those which are indicated in the honorable senator’s question. If he will give notice of his question, I will furnish replies in detail.
asked the Minister of Defence, upon notice -
– The Acting Director-General of Medical Services has furnished me with the following replies : -
– I ask the Minister of Defence -
– The answers to the honorable senator’s questions are - .
The following papers were presented : -
Customs Act 1901-1910 -
Proclamation (dated 23rd October, 1914) prohibiting the exportation of wool.
Proclamations 2 (dated 28th October, 1914) prohibiting respectively the exportation of hides and sheep skins.
Lands Acquisition Act 1906 - Land acquired under, at -
Phillips Ponds, South Australia - For Railway purposes.
Scottsdale, Tasmania - For Defence purposes.
Papua. - Ordinances of 1914 -
No. 5. - Supply.
No.6. - Constabulary.
Public Service Act 1902-1913-
Postmaster-General’s Department. - Promotion of P. Sukroo, as Postmaster, Grade IV., 3rd Class, Roebourne, Western Australia.
Regulations amended, &c. -
Statutory Rules 1914, Nos. 149, 153, 157.
War, European -
Telegrams of congratulation on destruction of German cruiser Emden, and announcement re the Konigsberg.
Correspondence regarding the naval and military assistance afforded to His Majesty’s Government by His Majesty’s Oversea Dominions.
Correspondence relating to gifts of foodstuffs and other supplies to His Majesty’s Government from the Oversea Dominions and Colonies.
Despatch from His Majesty’s Ambassador at Vienna respecting the rupture of diplomatic relations with the Austro-Hungarian Government.
Grant in aid to the Government of Belgium: Cablegram from the Secretary of State for the Colonies communicating message from the King of the Belgians.
asked the Minister representing the PostmasterGeneral, upon notice -
Regarding holiday privileges to temporary employ6s in the ISlectrical Department (linesmen’s branch), whether the same treatment prevails in the State of Tasmania as in each of the other States; and, if there is any differentiation, will the Minister be good enough to give the reasons for such?
– The answer is -
The Deputy Postmaster-General, Hobart, reports that, owing to a misreading of the instructions laid down regarding certain holidays, temporary linemen of this Department in Tasmania were not paid for such holidays, but the mistake has been rectified.
asked the ‘Minister representing the Postmaster-General, upon notice -
If it is the intention of the Government to substitute the Australian system of wireless for the German system now in use at Pennant Hills and Fremantle stations?
– The answer is -
Important parts of the Commonwealth system have already been installed at the Sydney station, and similar action at the Perth station is being taken.
asked the Minister representing the Minister of Home Affairs, upon notice -
– The answers are -
asked the Minister representing the Treasurer, upon notice -
– The answers are -
It is estimated that the average amount of coin and bullion for the September quarter was- Coin, £34,000,000; bullion, £1,000,000; total, £35,000,000.
– The answers are -
asked the Minister representing the Postmaster-General, upon notice -
– The answer is -
Inquiries arc being made of the Deputy Postmaster-General, Hobart, and his report, together with the relative papers, is expected in the course of a day or two, when replies will be furnished to the questions.
asked the Minister representing the Prime Minister, upon notice -
Has the Commonwealth Government taken any action towards the acquisition of the Australian rights in the Brennan mono-rail, or towards adopting the system for Commonwealth purposes if practicable; if so, will he inform the Senate of the nature and extent of such action?
– The answer is -
No. The opinions of experts as to the possible value of the invention, and its utility to the Commonwealth, have from time to time been obtained. No determination has, however, yet been arrived at. I may add that, in accordance with a resolution passed by the Senate on16th April, 1914, on the motion of the honorable senator himself, the complete departmental file on the subject was laid on the Library table, and remained there for about two months. I shall again lay the papers on the Library table if the honorable senator so desires.
– Arising out of the answer to my question, I wish to ask whether, in future, for the convenience of honorable senators, when papers are laid on the table of the Library in response to requests for information, some steps will be taken to officially inform the Senate, or the honorable senator moving for the papers, of the fact? I may add that I was not aware that these papers had been tabled in the Library, although I had moved for them.
– As one who has suffered in the way suggested by Senator Keating’s question, in the past, I shall endeavour to see that something is done to inform the honorable senator who has. moved for them that papers have been laid on the table of the Library.
– An announcement on the subject from the Clerk of the Senate would supply the information to all honorable senators.
asked the Minister representing the Minister of External Affairs, upon notice -
– The answers are -
Motion (by Senator Pearce) agreed to-
That leave be given to introduce a Bill for -an Act to amend the Defence Act 1903-1912.
Bill presented and read a first time.
In Committee “(Consideration resumed from 23rd October, vide page 313).
Clause 62, as amended -
Where a sequestration order is made against a debtor, he shall make out and sub mit to the official receiver a statement of his affairs. . .
Any person stating in writing that he is a creditor of the bankrupt may, personally or by his agent, inspect the statement at all reasonable times, and make a copy thereof, or extract therefrom, but any person untruthfully stating himself to bc a creditor or agent shall be guilty of a contempt of Court, and shall, on the application of the trustee, be punishable accordingly.
Upon which Senator Keating had moved -
That in sub-clause 3, line 2, after the word “may” the following words be inserted: - “ without payment of any fee, and any other person on payment of the prescribed fee may.”
– The object of this amendment is to make the debtor’s statement available for perusal not merely by the creditors of the debtor, but by any other person. It is obvious that the creditors should have access at all reasonable times to the debtor’s statement without, payment of a fee. But we all know that in practice it is a common thing in the commercial community, here and elsewhere, for information to be ascertained from a debtor’s papers in a case of liquidation or bankruptcy. In ordinary circumstances, bankers, financial institutions, and members of the commercial community generally, get information as to the position of a person who has gone insolvent. That enables them in their future relations with such a person to be mindful of his past experience in his own business. That information is obtained, and, as we all know, in each State it has been the custom for such information to be circulated amongst the subscribers to agencies of a character that are always in a position to give confidential information with regard to the standing and repute, financial and commercial, of different persons. I can quite understand that some honorable senators might take exception to persons other than creditors being able to obtain this information, but I believe that if they did take exception they would do so because they would not be thoroughly informed as to the actual position. As the clause stands there will be nothing to prevent a creditor from obtaining the information, and giving it to anybody outside, and so letting it go through the ordinary course as at present. But with regard to the position of an outsider, that is to say, one who is not a creditor of the debtor, ^ I think that he should be allowed to obtain this information; but there should be a condition, such as the payment of a fee, imposed upon him. Then none but those who have some necessary interest in obtaining the information would pay the fee. As regards creditors themselves, the Bill already provides for them. All that my amendment proposes is that any person other than a creditor shall also be entitled to inspect on payment of the fee prescribed, and in framing the regulations the Executive can have in mind the importance of the position, and what would be a fee proportionate for the occasion. As I said before, without such a provision it will still be competent for creditors to inspect the statement, and to utilize the information in whatever way they please. If the amendment is inserted, creditors will only inspect for their own purposes. Many a time a creditor does not want to see the statement at all. He wants to know what it contains, but he has not time to go and inspect it. He really cannot afford the time to look up the Official Receiver or Registrar, and so he leaves the work of inspection to the authority that issues a trade circular or gazette periodically with regard to bankruptcies, liquidations, probates, administrations, transfers of property, and all such “matters. In ordinary circumstances it is safe to say that, if the clause passes as it stands, not one in ten creditors will ever avail himself of the right to inspect a statement. If it is left to somebody outside the creditor, who acts generally in the interests of the trading community, to make these inspections, then, on payment of two, or three, or five guineas a year, that institution will obtain the particulars and give them to subscribers. If a commercial man wants particulars regarding the affairs of John Jones, bankrupt,he simply applies to the institution, and does not trouble the Official Receiver or Registrar. It is only fair to allow a person who is not a creditor to inspect” on payment of a fee. Experience shows that creditors very rarely directly avail themselves of ‘their legal right to inspect. They have too much else to do in their office or warehouse to spare the time for that purpose. It pays a firm far better to get the desired information through an agency than to send their own clerk, who, possibly, would not be allowed to inspect. Under the clause as it stands, the accountant of a man in Sydney to whom a debt of £87 is owing would not be ableto go and inspect for him the statement of the bankrupt. If he wants to send hisclerk, or his accountant, or an agency to which he is a subscriber, let them be able to inspect the statement on payment of a fee.
– I listened attentively toSenator Keating to hear some reason for the amendment. I am not quite sure that I clearly caught the intention of his last, argument with regard to a business man in Sydney not being able to send hisagent. I point out that the clause provides that, personally or by his agent, a creditor may inspect the statement.
– Yes; that is correct. I had not looked at the clause today.
– What is the reason put forward by the honorable senator for making a change to give greater facilities to very useful people - that is, tothose who give secret and correct information to traders ? I do not know whether it is wise to go out of our way in this Bill merely for that purpose. The honorable senator has not shown any other reason for inserting his amendment, except that it will give facilities to the trading community, through agents, to obtain information which will be available to them with regard to the affairs of a bankrupt. I do not see any reason tomake a change, and, therefore, I trust that the Committee will support the clause as it is.
– The Minister says that he does not see any advantage to be gained from my amendment. If the clause is allowed topass as it is, the agencies to which I have referred will not be denied the means of getting the information.
– By paying?
– Under the Bill the agencies will always get the information through one particular creditor, but they will get it for nothing. Under the Bill, a debtor who has gone bankrupt has to file a statement of his affairs, or submit it to the Receiver. The statement is to be open to any of his creditorswithout payment of a fee, or to any creditor’s agent. At the present time these agencies have to pay a fee to inspect, and the fees help to provide for the administration of the law.
– One fee in each State ?
– Suppose that an agency sends a clerk to make an inspection in respect of three or four estates; he has to pay a fee in respect of each estate. In Tasmania, for instance, a clerk goes into the stamp office to make three inspections ; he has to take out three search orders, and to pay fees amounting, say, to 7s. 6d. The inspections are made, and, at the end of the week, in the Gazette belonging to the agency, is published, “John Jones; number of creditors, 17; amount of liabilities, £877; amount of assets, £212; name of trustee, Mr. Soandso.” Then any subscriber to the Gazette may apply to the proprietors to furnish him with information as to the particular debts of a bankrupt. The agency does not publish that information Broadcast, but when it is asked for by a subscriber, the agency is prepared to give the information for nothing, because the subscriber is paying an annual subscription of three, or four, or five, guineas for this information to be subscribed at call.
– It may be right, or it may be wrong, but they are protected.
– The proprietors state that it is in accordance with the information which is filed; they are not responsible for the truth or otherwise of the statements; it is a confidential communication, and they only limit their responsibility to what is filed. What will be the position under the Bill if my amendment is not adopted ? The agencies will still get the information, but the Government will receive no fees, because any creditor or his agent, as the Minister very kindly reminded me, can go and take the information “ on the nod,” and give it to the agencies.
– Why not?
– Why should we not expect people who are going to use the information for the purpose of getting annual subscriptions to contribute to the revenue, and so enable the Government to carry out the Act?
– Why should we allow a lawyer to get it “on the nod “ ?
– If he is a creditor, should he not stand in the same position as the honorable senator?
– He is an agent.
– Does a lawyer stand below the honorable senator if he is a creditor ?
– I am taking it the other way.
– Suppose that a creditor appointed the honorable senator as his agent, is he to have the privilege of going there? But suppose that I am appointed, am I to be denied the privilege because I am a lawyer ? I would be equally an agent with the honorable senator. Does he claim some superiority over me that he should be entitled to. inspect and I should not?
– Not a bit.
– Then why does the honorable senator deprecate the idea of a lawyer inspecting ? Is a lawyer to be disqualified from being an agent?
-Colonel O’loghlin. - Does the Bill curtail any of the privileges which the public hold at present in regard to investigations ?
– Yes. At the present time, in the States of the Commonwealth, it is competent for creditors and other persons to inspect the statements of a debtor’s affairs, but the latter class have to pay a fee. In this instance I ask for the insertion of a similar provision. By the payment of a fee, the Government will benefit to the extent that it will provide means for the administration of the Act. It is not merely the creditors who are interested in a man’s bankruptcy. The whole public is interested, although, in many instances, to a less degree. The public interest demands that good faith shall prevail amongst those engaged in enterprises, and there is a public, just as there is a private, interest in every bankruptcy.
– Is it regarded as good policy to publish too widely the fact of a man’s bankruptcy ?
– No; but it may be necessary for the protection of persons who have not previously had relations with the bankrupt to give the public access to the statement of his affairs. Suppose a man goes bankrupt, of whom everybody sitting on this . side of the Chamber is a creditor. We all have access to the statement of his affairs. None of those sitting on the other side may have had any business relations with him before he goes through the Court, but afterwards he may approach them with a view to establishing business relations.
It is therefore desirable that they should be able to ascertain what his relations were with other people previously. Without the amendment, the Government and public will suffer, because there will not be the same guarantee as to the accuracy of the information. My proposal will not impose any hardship on the bankrupt.
Senator Lt.-Colonel O’LOGHLIN (South Australia) [3.58]. - I hope the Minister will give way, as it is a small matter, and does not affect the principles of the Bill. The information can be obtained through other sources, and in some of the States is already available in the way Senator Keating suggests. The Bill, if carried as it stands, will in those States deprive the public of a privilege which they already possess, and I do not think that is the object of the measure. Senator Keating’s proposal is a very reasonable one.
– It is not a question of my giving way in the matter; it is entirely a question for the Committee to deal with. Personally, I have heard vo strong reasons yet for altering the Bill in this regard. There are many other splendid things that we might do to protect the honest public; but I do not think the reasons advanced for this change are sufficient. No principle is involved, and it is merely a matter of opinion as to what are the best privileges to give; but we are engaged in passing a consolidating Bill for the benefit of the whole community, and, necessarily, it will not contain all the provisions of the whole six State measures. I will not say that the point raised is a matter of indifference to me, but I do not feel very keenly on it. Still, the reasons that have been advanced make me a little stronger in resisting the change. I can see the danger of agencies, which may become a source of annoyance and trouble, being established for inspecting accounts on payment of a small fee. I am not disposed to make it any easier for agents of that class to get information, because it is a matter largely between the debtor and the creditors, and the creditors can give authority to their agents to inspect now. There is nothing to prevent them doing it, and, so far as I can see, that is all they want.
– Evidently the Minister sees the justice of Senator Keating’s claim, but does not want to make any change in the Bill which will render it easier for debtors’ statements to be inspected. The Bill is making a distinct change from the pre-‘ sent practice, which is for an agent to pay a fee for a search, and make use of the information obtained in a trade gazette, which goes out to each subscriber.
– Is it not a confidential document?
– Yes, it goes to each subscriber; but under the Bill there will be no such fee paid, and the onus of proving the desirableness of the innovation rests upon the Minister.
– The gazette people will just get an order from one of the creditors.
– Exactly, and no fee will be paid. The Government ia making a clear gift of these fees to the gazette people. The practice of charging; a fee obtains in South Australia, and I remember when it was first brought intooperation. There were rival gazettes published there, and when the fees had to be paid only one survived, and this became a monopoly. I see no reason why a fee should not be paid for the inspection of an insolvent’s statement, just as it is for the inspection of a deed or certificate of title.
– Why should a fee be paid for any inspection ?
– Services are rendered for which payment should be made, and the fees will cover some of the administration expenses. I shall be glad to hear the Minister bring forward any strong reasons for making this departure. So far all he has done has been to ask Senator Keating to prove a negative.
– The honorable senator has not stated the case quite fairly. This is really a consolidating Bill. New South Wales and Western Australia have certain provisions on the point, and the other four States have not; therefore, if majorities count, I am on the right side.
– Does the honorable senator say that we have no provision on the point in Tasmania ?
– I should not like to say so if the honorable senator says otherwise; but the information at my disposal leads me to believe so.
– Then your information is very erroneous.
– That is to be regretted, because, whilst I do not claim to be such an expert on bankruptcy as is the honorable senator, I want to maintain a reputation for putting the truth before the Committee. I shall be glad if Senator Keating will produce the proof of his contradiction. In legislation of this kind we should not go out of our way to give conveniences and facilities to these private financial circulartrading concerns to obtain information as to the character of bankrupts; but I am in the hands of the Committee in the matter.
-Colonel Sir ALBERT GOULD (New South Wales) [4.7].- The Minister should consider what is most convenient to the public and most in their interests. He will find that in the trade circulars the name of every man who becomes bankrupt .in the State in which they are published is given, together with the amount of his liabilities and assets. Later will be found a report as to estates that have been released from sequestration, and as to people who have obtained their certificates. Particulars are also given to every bill of sale given in the community, and particulars of judgments obtained against people in trade are published. The object is to’ enable others in trade to know whether they can trust individuals who come to them in the ordinary course of business. When the privilege is not abused, this class of information is very valuable. Under the clause as it stands the Minister would make the whole question a close preserve as between the bankrupt and his creditors, and allow the public to know nothing about it. That cannot be for the good of the community. The provision proposed by Senator Keating, while recognising the right of the creditor to have the fullest information, would allow others who are not creditors to obtain information on payment of a fee, probably, of ls. No man would take the trouble to search for information with regard to a bankrupt’s affairs except in the course of his business. The balance of advantage is wholly on the side of accepting the amendment. This information will be made available only where it is necessary to enable persons to deal with business mat ters. It cannot be denied that trade publications, if honestly conducted, are of great value to the community generally. Of course, their inquiries are of a confidential character as between themselves and their subscribers.
– But they protectonly their subscribers.
-Colonel Sir ALBERT GOULD. - Suppose that a man wished to obtain credit from a storekeeper. The storekeeper would naturally desire to know something about him. If he knew nothing about him, he would probably approach one of these trade societies, with a view to obtaining the desired information.
– The Vice-President of the Executive Council has urged that the Tasmanian law contains no provision on this subject, and has challenged me to produce it. I wish to say that his information is entirely erroneous. Had he been possessed of full information upon the matter, he would have known that if he swept this building through he could not obtain the rules which have been framed under the Tasmanian Bankruptcy Act of 1870, or under the Tasmanian Debtors Act. It i3 true that he might find the Bankruptcy Act itself; but the rules issued under it he would not find, as I had occasion to know last session, when I desired to give an opinion on a certain matter.
– We are not discussing rules, but legislation.
– But the rules are framed under the Act.
– I am merely asking that a rule shall be framed, as has been done in Tasmania, prescribing the fee that shall be paid by any person other than a creditor who desires to inspect the statement of a bankrupt. Let me remind honorable senators that in a bankruptcy the immediate creditors of the bankrupt are not the only persons who are interested. The whole community is to an extent interested, because the funeral of one creditor to-day may be that of another person to-morrow. Even though a man may not be a member of a trade society, he may be approached by a former bankrupt in regard to trading relations. He may have in his mind the fact that the erstwhile bankrupt has failed, and he may wish to know in what respect he has failed. If he were a member of a trades society, he would apply to that organization for the desired information; but, under my amendment, by payment of a fee, he would be able to ascertain exact information as to when the bankrupt failed, what were the amount of his liabilities, and in what particular line he failed. He might then discover1 that the former bankrupt’s greatest indebtedness was to two or three firms who had been handling the same class of goods which he himself is handling, and for which the erstwhile bankrupt is asking credit on long-dated bills. My amendment will give any trader in the community the right to inspect the statement filed by the bankrupt on payment of a certain fee. Why should members of the public be prevented from examining the statement of a bankrupt’s affairs?
– Under the honorable senator’s amendment, a trade society would have to pay a fee for every search it conducted.
– Ido not say that. It may happen that, four or five years after a man has become bankrupt, a trader may be approached by him, and, as a result, the trader may desire to make a search for the bankrupt’s statement of his affairs. Why should he he debarred from doing so? It is a right which exists pretty well throughout Australia at the present time, and this Bill proposes to abolish it. The amendment would impose no hardship on the bankrupt, while it would preserve the interests of the public and of the public revenue.
– What about the fee?
– I am asking that any person who is not a creditor shall be at liberty to inspect a debtor’s statement on payment of a fee.
– Why charge a fee?
– I do not think that a bankrupt’s statement should be thrown open to everybody upon all occasions except on payment of a fee. I trust that the Minister will offer no further objection to the amendment, but by adopting it will bring the Bill into conformity with the established practice.
– Name the States in which it is the established practice.
– In Tasmania, and in other States of the Commonwealth.
Senator GARDINER (New South Wales- -Vice-President of the Executive
Council) [4.20]. - In answer to Senator Senior, I said that this provision found no place in any of the State Acts.
– Not in this form.
– We are dealing with this form, and not with rules and regulations. In answer to Senator Senior I said that there were four States in which it does not obtain. Senator Keating asked me a question regarding it, and put it in such a form as to cast a doubt upon ray veracity.Now I invite him to show in what respect my statement is inaccurate. He merely asserts that it is inaccurate, but does not attempt to prove it. The moic this matter is debated the more I am satisfied of the difficulties that would result from keeping open this door for the convenience of traders. We must recollect that we are legislating, not for a little State, but for a large continent. In view of the ramifications of the trading community, it is unfair to seek the insertion of provisions of this kind in regard to every bankruptcy which occurs. The adoption of the amendment would mean the employment of an army of clerks, and it might mean that some persons would avail themselves of the information contained in the debtor’s statement in a way that is not contemplated. Judging from Senator Keating’s remarks these records would be preserved for years. It might therefore happen that a person who had heard a whisper that an individual was not strictly honest in his trading relations in years gone by, might use the information thus obtained to put a wrong complexion upon current happenings. The more the matter is discussed the more I feel unable to agree with Senator Keating. At the present time the only persons who are entitled to ask for the information that is contained in a bankrupt’s statement are his creditors and their agents. But under this amendment it is proposed to confer that right upon 5,000,000 of people. To my mind nothing could be more absurd than to grant facilities for obtaining this information. The more Senator Keatinsr presses his case, the more reason do I see for maintaining the position which exists at present in four of the States.
– The honorable senator wants star chamber courts of bankruptcy.
– The Vice-President of the Executive Council is maintaining tho traditions of Ministers in charge of Bills in a most excellent manner. Instead of attempting to deal with Senator Keating’s argument he has merely stuck to his Bill. My experience of Ministers in charge of Bills is that they will never listen to reason. An honorable senator may advance a thousand good reasons for altering a clause, but a Minister will not accept one of them. He proceeds on the assumption that the measure of which he has charge is perfect. I regret very much to see an honorable senator like the Vice-President of the Executive Council, who at one time was a very pronounced Democrat, sinking into the ruts of Conservatism in this fashion. Bankruptcy is a public act; it is not a private affair at all. When a man becomes bankrupt, he submits his affairs, not only to his creditors, but to the general public, and the public have a right to know the circumstances connected with the man’s bankruptcy. The Minister has said that if the amendment were agreed to the whole of the people of Australia would turn themselves into a private inquiry agency, and, without rhyme or reason, would be poking their noses into the affairs of any person who might become a bankrupt now or did become bankrupt at any time during the last twenty years. No man will put himself to the trouble or expense of inquiring into the bankruptcy of any trader unless he is interested in the latter as a creditor, or the bankrupt approaches “him for the purpose of trading after his bankruptcy. It is extremely desirable, in the interests of commercial morality, that every opportunity should be given to examine into a trader’s business career. If the VicePresident of the Executive Council had any idea of the amount of swindling that is going on every day in the year in Australia in connexion with trading, he would welcome rather than object to the amendment. Without the amendment this measure will play directly into the hands of mercantile agencies. They will be able, without payment of any fee, to obtain information concerning the affairs of every bankrupt, and will then charge the public fees for circulating that information. I have no fear that, under Senator Keating’s amendment, public
Departments will be overloaded with work in obtaining this kind of information for inquisitive people. The people of Australia have something more profitable to occupy their time than the poking of their noses into the bankruptcies of which they have no concern. I prefer the amendment to the clause as it stands, but I object to part of the amendment which makes provision for the payment of a fee, because I believe that all the information available in our public offices should be free to the public.
– What right has a person to know anything about a bankrupt’s affairs unless he wishes to do business with him ?
– He might wish to do business with him.
– It might be only idle curiosity.
- Senator Lynch seems to think, with the Minister, that the people of Australia are extremely inquisitive. I regard the amendment as a very good one, but I should be glad if Senator Keating would agree to omit that portion of it providing for the payment of fees.
– The payment of a fee would be a proof of bona fides.
– I do not know that it would. Senator Keating also seems to think that people would be rushing to obtain information which did not concern them.
– It would help to carry on the administration of the Act.
– The Consolidated Revenue should provide for all those things. In any case, I prefer the amendment to the clause as it stands.
Senator BAKHAP (Tasmania) T4.30]. - I confess that I have been in somewhat of a quandary concerning this amendment. I listened carefully to the arguments submitted by Senator Keating, and I can see that in some circumstances it is desirable that persons who wish to do business with a man who has once been a bankrupt should have available to them at a reasonable cost a knowledge of the bankrupt’s affairs. But I think there is a strong objection to the indiscriminate publication of the fact that a man has once been a bankrupt. A bankruptcy may be innocent in the eyes of the law. Inability, due to time and chance, to pay 20s. in the £1 is not, in the eye of tho law, an offence; otherwise there would be no bankruptcy law. Bankruptcy Acts are intended, not to penalize persons who have run into debt and wish to liquidate their affairs, but to afford them a measure of relief. I certainly should not, in the circumstances, be in favour of giving the public generally indiscriminate access to the record of a bankrupt’s affairs merely to gratify the idle or vulgar curiosity of persons who may have an animus against a man who has once been a bankrupt. Although after consideration I have determined to support Senator Keating’s amendment, I will do so on the understanding that a fee is imposed, for the obtaining of the record of a bankrupt’s affairs by any person not concerned in the bankruptcy, sufficiently high to deter persons actuated by vulgar or malicious curiosity.
– If the Committee decide to accept the amendment I shall be disposed to agree with Senator Stewart, and say there should be no fee.
– I think the Minister would be in error in adopting that course. Undoubtedly information of this kind should be made available to those who contemplate business transactions with a person who has once been a bankrupt. If I have been insolvent as a business man, and approach another person for business accommodation, it is quite right that he should have an opportunity of inspecting my record; but I certainly see no reason why it should be made available to the outside public at the instance of a man who may have a temporary quarrel with me, and who from vulgar or malicious motives desires to make public the fact that I have once been a bankrupt. I shall vote for the amendment on the understanding that a sufficiently heavy fee is charged to prevent people making public information of this kind, with a view to indulging private animosity.
.- With Senator Stewart, I think that all information of this kind available in public offices should be free to the public. In a case of bankruptcy, the Court is open to the public; any person may attend and make notes of the proceedings, and, as a matter of fact, the daily newspapers publish the accounts of bankrupts. They publish the amount of liabilities and assets, and the whole of the cross-examination of a bankrupt. We do not require any mote than that, and that can be done under the existing law. Why, therefore, should we impose a fee for obtaining this information under this Bill? It is in my mind that the object is to bolster up certain trade protection associations.
– Is an analysis of a bankrupt’s affairs published in the newspapers unless there is some suspicion that the bankruptcy is fraudulent?
– I can refer the honorable senator to innumerable cases of reports appearing in the newspapers of examination of bankrupts regarding the whole of their business transactions by the Commissioners of Insolvency.
– That is where the circumstances of the bankruptcy have been suspicious.
– What more could we get under the amendment?
– Is this to be a court of record, or a star chamber court?
– I wish to make it as open as possible; but the honorable senator, by his amendment, wishes to put the matter in the hands of some syndicate, that desires to publish a trade circular.
– Why should they not pay for information on which they make a profit?
– A man in business subscribes to a trade circular because it saves him the trouble and expense of going to a court to look up the records of various insolvencies. It has been suggested that these trade circulars are confidential documents, but we know that they are thrown into the street and into waste-paper baskets. Any man who is interested in the affairs of a bankrupt can get the information he requires without any fee.
– Could the honorable senator go to the Titles Office for a certificate of title without the payment of a fee?
– I should like to abolish that fee also.
– Could the honorable senator go to the Probate Office to see a will without the payment of a fee?
– Does the honorable senator think that it is right that a man should have to pay a fee to search a title ?
– I do.
– Well, I do not. I think that I should be able to hunt up the particulars of a title in a public office without the payment of any fee.
– No Government can be carried on without the payment of some fees.
– I hope that the Government will stick to the Bill, and that no fee will be imposed for any search in a matter of this kind.
– What is proposed is to make the record of insolvency a permanent record, and there must be attendants provided in offices at which searches of the record have to be made. It will probably be found necessary to preserve the record in strong-rooms, and if I go to a public office to make a search, there must be attendants provided to assist me. The record I wish to see may appear in a certain volume for a. certain year. He would ascertain from an index the particular year in which a person had gone insolvent. All this service has to be rendered, it may be, to satisfy the curiosity of one person, but Senator Guthrie thinks that no fee should be charged. I contend that for services rendered to persons there should be some payment made. The Minister, true to the old proverb of sticking to the Bill, says that, because the law is to operate over a larger area in the future, therefore the service should be rendered free. Surely the fact that the law will deal with a large territory rather than with a small district is a strong reason in favour of requiring a fee to be paid for a service rendered. I do not think that there has been any . argument advanced by the Minister to-day against the amendment except that he has the practice of four States on his side.
– even that is disputed.
– I am giving the ^Minister the benefit of the doubt. The ordinary rule is that when a person goes to an office in which legal and other documents are preserved and desires to make a search he is asked to pay a fee for the privilege. The Minister has not shown a reason why a fee should not be charged for a search made under this clause. Senator Guthrie is in favour of a free search, and apparently he is willing to load up the cost of government. He might as reasonably ask that his sugar : should be delivered at his door by the
Colonial Sugar Refining Company rather than by his grocer. Just as he is prepared to pay his grocer for rendering an intermediate service, so he should be prepared to pay an officer for the service of opening a volume at a particular page and facilitating a search. A man, in paying a fee for a search, is only recouping the Government for the trouble they have taken to provide him with the desired information.
Question - That the words proposed to be inserted be inserted (Senator Keating’s amendment) - put. The Committee divided.
Question so resolved in the negative.
Clause, as amended, agreed to.
Clauses 63 to 69 agreed to.
The committee of inspection shall consist of not less than three nor more than five persons…..
– In accordance with notice, I move -
That the words “less than three nor,” line 2, be left out.
If my amendment is made it will leave five as the maximum, but it will apply no minimum. Many bankruptcies are very small, and a committee of inspection may consist of two persons. Often it does, in practice, consist of one man.
– That is not desirable.
– -That rests entirely with the creditors. A committee of one is often appointed. The correct pronunciation of the word “ Committee,” when it consists of a single individual, . s with the accent on the last syllable. When the bankruptcy is very small, with one principal creditor on the spot, -it would be an advantage to have a Committee of one. The amendment will leave the creditors free to appoint any number from one to five. It is common to have three, but often desirable to have only one. My proposal simply enlarges the rights of the creditors.
– I do not see my way to accept the amendment, although the matter is not one involving any great principle. If one man could be constituted a Committee, it would put great power in his hands, and if he were dishonest he might make recommendations which were not in accordance with the facts. There is safety in numbers in this matter as in others. The Bill follows the beaten track, and though there may be a little difficulty in getting a Committee of three in the case of small bankruptcies, there are greater dangers in trusting one man with the business. I shall let the Committee settle the matter.
– The Minister utterly fails to grasp the purpose of the amendment. When he refers to the danger of a catastrophe arising through one man being dishonest, his mind must be influenced by the existence of a state of war. The committee has no power to do anything. It cannot invoke or put the law in motion against the debtor. Its whole purpose is to look into the affairs of the insolvent, and report to the creditors as to the condition of the estate, and what action is best to be taken in their interests. We are entitled to consider the interests of creditors a little. If they feel that their interests will be better served and expenses kept down by appointing one of their number to make the inquiries, it may be reasonably left to them, as they are the persons most intimately and directly concerned. The Minister might with great advantage to the trading community accept the amendment.
– This is not my own suggestion, but is one of the unanimous recommendations of the special Committee of the Associated Chambers of Commerce held in Sydney in 1913. So far any thing recommended by them has been, opposed by the Government apparently without much show of reason.
– We have accepted quite a number of their recommendations already.
– Can the honorable senator name one?
– Yes, in a previous clause I accepted the honorable senator’samendment to substitute the words “ file with “ for “ submit to.”
– That was not their suggestion, nor was I concerned with the use of the word “ file.” I wanted to make it “ file with the Registrar “ instead of “ submit to the Official Receiver.” The Minister made it “file with the Official Receiver,” and the clause as it stands is a farce. If it goes through in its present form it will be a laughingstock throughout the community. The Registrar is a permanent official, whereasthe Official Receiver is not responsible beany body.
– The honorable senator should know that the Official Receiver is to be the permanent officer under this Bill.
– The honorable senator should not say that, because it exists only in his mind. It is not in the. Bill, and the public will not know it from the Bill. The honorable senatormay know it, or believes he knows it, inhis own mind, but that is not enough for the people. The Bill should express the policy of the Government. Will the Minister search the Bill through, and show me where the Official Receiver haa any responsibilities to anybody? What, are his duties and responsibilities under it? Where is he oompelled to allow * creditor to inspect a statement? If I went to an Official Receiver’s office, and asked to be allowed to inspect the statement of assets and liabilities of a bankrupt, the Official Receiver could say, ‘ ‘Let him wait. I am not going to have him trapesing into my office to look at the statement.” Where is he bound to allow me to inspect? The Act says that he shall, but what obligation is there on him to obey? As a matter of fact, Official Receivers do not want people coming into their offices. They will not be in the position of Registrars, and to say that the amendment which the Minister made was suggested by the Associated Chambers of
Commerce is to depart altogether from the facts. The amendment now before the Committee has been put forward by that body representing the commercial interests of Australia, not in the interests of any section of the community, but after lengthened experience of the bankruptcy laws of the States. It is proposed, not with any sinister intention, but to enable the creditors to have a better control of the affairs of a bankrupt who takes advantage of the Act. It is proposed as the result of their experience, and all the Minister has to say in reply is that it might give a dishonest committee man an opportunity for fraud. Does not that rest entirely with the creditors? If they choose to have one man, why should they not? In many instances the bankruptcy is small, measured by the amount of indebtedness, and if three are appointed to the committee it will often be impracticable to get them together.
– How do they rub along in the Old Country?
– I cannot say from experience, but in Australia it is common when a committee of three is appointed for them to be unable to meet, and to delegate the duty to one. We are arriving at the same result, The amendment has not been submitted without due consideration. It is not merely my own suggestion, and is not submitted simply for the sake of moving an amendment. The Australian Associated Chambers of Commerce considered the Bill very carefully. They invited every Chamber of Commerce in Australia to send a special representative to the 1913 meeting to deal with the Bill in a special committee, and this is one of the unanimous recommendations of that body. To say, as the Minister does, that the English Bankruptcy Act provides for the appointment of three, and the New South Wales Act for three, is very well, but to say, as I do, that the united wisdom and experience of the Chambers of . Commerce suggests this amendment demonstrates that the clause as it stands is not in accordance with the necessities of the times in this Commonwealth.
– When challenged by Senator Keating to mention any amendment made at the request of the Cham bers of Commerce, I quoted what I agreed to in an earlier clause to substitute “ file with “ for “ submit to.”
– I said at the time that I did not regard that as an acceptance of my amendment.
– I do not care whether the honorable senator did or not; but, fortunately, I have his printed amendment with me, and in dealing with the honorable senator’s proposals, I must say that we cannot stick long at anything unless we have it in black and white. -I have here a report, not from the Chambers of Commerce, but from the committee appointed by the Law Institute of Victoria, who also ask for the same amendment. The honorable senator said it made the Bill ridiculous, but I would ask those who are inclined to follow him now to be very careful not to make it more ridiculous. In this matter I am following the well-beaten track of the British bankruptcy law and the New South Wales Act, and something more than Senator Keating putting before mo the representations of the Chambers of Commerce is required to induce me to leave it.
– Does the Minister intend to give any force to the representations of the Law Institute of Victoria ?
– I have given considerable attention to them, but not the attention I should have liked to give had I received them earlier. I wish Senator Keating would treat me in the same way as that body has done, by giving me time to consider the effect of proposed amendments.
– I gave copies to your office for you and Mr. Garran three weeks ago.
– They were circulated to honorable senators last year. Here is my copy.
– Some of us are not as careful as the honorable senator. Senator Keating and others seem to think that a Minister in charge of a Bill wants to stick to its wording merely because he is in charge of it. Nothing could be further from my mind; but it “is only natural for me to stick to the well-beaten track of the English and New South Wales Acts.
– What are their dates ?
– The English Act, I think 1890; New South Wales
Act, 1898. The question of the size of the Committee is a small one in any case, and if I stick to the established practice no wrong will be done. If the Committee decides otherwise, I shall not be even annoyed. I am not here, however, to accept any amendment that may be moved, and particularly not to accept amendments merely because Chambers of Commerce have decided upon them. We are responsible, not only to the Chambers of Commerce, but to the general community.
– I desire to consider the amendment in the light of the interests of the general community, and not of those of the Chambers of Commerce.
– I cannot help feeling - after having listened to the reasons advanced by the honorable senator - that his view of what are the interests of the general community is largely tinged by hia knowledge of what is the view of the Chambers of Commerce.
– I was a member of the Chambers of Commerce committee myself, I have gone into this matter fully, and I have already subscribed to these amendments.
– The clause has not been hurriedly drafted, and is one which follows the well-beaten track of two Acts which have been in operation for some time.
-Colonel Sir Albert Gould. - So that this measure represents largely paste-and^scissors work?
– This is one of the few Bills in which I think the closer we stick to scissors and paste the better.
– It is rather refreshing to hear the Vice-President of the Executive Council lay so much stress on the wisdom of following beaten tracks. It indicates a change in his frame of mind. But whilst it is true that this Bill reproduces the provisions of the Imperial Act and of the New South Wales Act, which have been in operation for some years, it should not be forgotten that the men who have had most experience of their working have, through the Chambers of Commerce, spoken of the way in which they have operated. These persons have now come forward with a suggestion the acceptance of which would, to my mind, constitute an improvement. In dealing with a measure of this kind it would be a mistaken policy for the Minister to decline to accept sug gestions, no matter from what quarter of the Senate they may come. The divisions which have been taken indicate that there are no party lines involved in this measure.
– The last division was very even.
– It could not have been more even without bringing disaster to the Government. The amendment, I repeat, embodies the view of men who have had more experience of the working of bankruptcy laws than has anybody else, and I think that the Vice-President of the Executive Council will be acting wisely if, when a suggestion so recommended is put forward, he consents to adopt it. I can quite understand the natural desire of any Minister, when a Bill touching party politics is being reviewed, to adhere absolutely to its text. But there are no party considerations involved here, and consequently I hope that the Minister in charge of the measure will receive suggestions with a more open mind.
– Nobody can resist the persuasion of the Leader of the Opposition, and consequently I would suggest what I regard as a reasonable compromise. The paragraph specifies that the committee of inspection shall consist of not less than three persons, and Senator Keating’s amendment provides for a committee of not less than one person. Consequently, I am willing to adopt a middle course by substituting “two” for “ three.”
, - The Vice-President of- the Executive Council is very obstinate, but I suppose that we shall have to accept the proposal which he has outlined without prejudice. I therefore ask leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Amendment (by Senator Keating) agreed to -
That the word “three” be left out, with a view to the insertion of the word “ two “ in lieu thereof.
– I would direct the attention of honorable senators to paragraph 5, which says -
The committee may act by a majority of their members present at a meeting, but shall not act unless a majority of the committee are present.
Now, if a committee consists of two persons, where will the majority come in? Clearly the committee could not act unless all its members were present.
– I think that the objection raised by Senator Stewart renders some amendment of the clause necessary. If the Committee will allow it to pass in its present form, I will undertake to have it recommitted at a later stage, with a view to meeting the difficulty which has been suggested.
Clause, as amended, agreed to.
Clause 71 -
– I move-
That the following proviso be added to subclause 1 : - “ Provided, however, that this section shall not apply to the supply by any member of the committee of any goods necessary to carry on the estate of the bankrupt at the rates or prices then current or ruling for such goods.”
The object of my amendment is to enable a member of the committee, who may be a creditor, in certain cases, to supply the goods which may be necessary to carry on the estate of a bankrupt at the rates or prices then current, without making any application to the Court. We all know that very frequently the affairs of a bankrupt are carried on just as if there had been no bankruptcy. They are carried on by the trustee under a committee of inspection, or by whoever represents the creditors. In order that a bankrupt’s business may be carried on, it may be necessary to obtain from his merchant the goods which he has been accustomed to sell to the public. One of his creditors may be a merchant who has been in the habit of supplying him with a large variety of goods. If the creditors choose to appoint that merchant to the committee of inspection, it may be necessary for him to continue to supply such goods. My amendment aims at obviating the necessity of applying to the Court in cases where goods are being supplied at the current or market prices. An application to the Court might involve delay, and, in the interim, the committee of inspection might be unable to obtain from a third person the necessary goods to carry on the business. If a few days, or a week, were absorbed in making an application to the Court, and the bankrupt’s business was not able to supply its regular customers, it is quite conceivable that its trade might be transferred elsewhere. My amendment is designed to provide for the ordinary carrying on of the bankrupt’s affairs. I hope that the VicePresident of the Executive Council will consider it upon its merits, and in a favorable light.
– The honorable senator must see that his proposal would open the door to a very grave danger - the danger of permitting a committee man to supply goods - especially as the clause provides that the Court may grant the necessary permission.
– The adoption of the suggestion of the Vice-President of the Executive Council will be attended with more risk, because the big creditor will stand off the committee, and will thus be free to supply like an ordinary outsider.
– The clause is very clear, and, to my mind, offers every facility which should be offered. If a man wishes to supply goods to enable a bankrupt’s business to be carried on, he should cease to be a member of the committee. If he wishes to remain a member of the committee, then it is open to him to make an application to the Court for the necessary permit. I am very sorry that I have to appear in the role depicted by Senator Stewart - that of a Minister tenaciously sticking to his Bill. But it appears to me that this is one of the clauses in the measure to which I can adhere with complete justification.
– The course open under the clause as it stands as indicated by the Minister is, to my mind, attended with the very risk which he attributes to the amendment. If the principal creditor is appointed to the Committee, it will be open to him to refuse to go on the Committee. Should he do so, he will not then be debarred from supplying the estate with goods. It may be to the interest of the estate and of the bankrupt that the principal creditor should supply the estate with goods, and he may supply them at his own terms. I am assuming in that case, of course, as the Minister did, a lack of bona fides on the part of the principal creditor, and an intention to abuse the position which he holds. If my amendment were carried, and he were appointed to the Committee, he would be able to supply the estate, but at market rates and prices without having to apply to the Court. If, as under the clause, a member of the Committee is obliged to apply to the Court in order to supply the estate, the application, no matter how expeditiously it may be dealt with, will involve delay, and it might be a delay which would prevent the bankrupt’s estate supplying goods to ordinary customers, and cause the permanent loss of their trade to the estate. It is to avoid that that I have submitted my amendment. I can understand that the clause, as printed, might be, as stated, in the interests of the lawyers; but, while I am prepared to consider their interests, Ave have also to consider the interests of the community. When a man becomes bankrupt, the carrying on of his estate is invariably very largely dependent upon his then creditors. Where they are merchants, as is most frequently the case, it is in their interests, as well as in those of the bankrupt, that the business should be carried on as if nothing had happened, because profits may be made for the continuance of the business which will redeem the bankrupt from his position. If the largest creditor is a member of the Committee of inspection, and is permitted, as I propose, to supply the estate without amplication to the Court, but is tied down to current rates and prices, the bankrupt will be advantaged, and not prejudiced.
– Does the honorable senator consider that the tying down as regards rates and prices could be made effective ?
– I do, because otherwise, under my amendment, the largest creditor could not continue to supply the estate except by an application to the Court, which would be attended with delay, involving loss of business. The estate might be a country business, with a particular line of tobacco, for which the bankrupt had the sole agency. This might have attracted a certain number of cus tomers, who, incidentally, would bring other custom to the business. The largest creditor might be supplying this line, might object to the delay involved in an application to the Court to continue to supply the insolvent estate, and might, in the meantime, dispose of the line to a competitor in business, with the result that business and custom would be diverted from the estate. Under my amendment, the largest creditor could continue to supply the estate without an application to the Court, so long as he did so at current prices. Under the clause, the highest creditor could not supply the estate without the sanction of the Court upon application if he were a member of the Committee of inspection. He will, therefore, refuse to go on the Committee, will be in the position of a non-creditor, and, as the creditors will be dependent upon him very largely to keep the estate going, he will be able to supply the estate on his own terms.
– Cash transactions.
– He will be able to fix his own. terms, because he will not be tied up in any way. Those interested in the estate will be very largely dependent upon him, because they cannot go to an outsider, who would say, “ I shall certainly not supply an estate that is in bankruptcy at the present time except for absolute cash.” Under the Bill, the estate will be largely in the hands of the biggest creditor, who, refusing to go on the Committee of inspection, may dictate his own terms for the continuance of the bankrupt’s business. I am prepared, in this matter, to subordinate the interests of the lawyers, and consider the interests of the bankrupt and the community generally, in order that the bankrupt’s estate mav be carried on as if nothing happened, so far as that can be reasonably provided for.
Question - That the words proposed to be inserted be inserted - put. The Com.mittee divided.
Ayes … … … 6
Noes … … … 24
Majority … … 18
Question so resolved in the negative.
Clause agreed to.
Clauses 72 and 73 agreed to.
Clause 74 -
The Court, on the application of the Official Receiver or trustee, may from time to time order that post letters addressed to a bankrupt at any place or places mentioned in the order shall for such time, not exceeding three months, as the Court thinks fit, be re-directed, sent, or delivered by the Postmaster-General to the OfficialReceiver, or the trustee, or otherwise as the Court directs.
Amendment (by Senator Keating) agreed to -
That the word “three” be left out, with a view to insert in lieu thereof the word “ six.”
Clause, as amended, agreed to.
Clause 75 agreed to.
Clause 76 -
The Court may, on the application of the trustee, or of any creditor (at his own expense, and on such terms as to costs as the Court thinks fit to impose), at any time order -
– Sub-clause 1 seems to be contradictory in terms. I refer to the expression, “At his own expense.”
-Colonel Sir Albert Gould. - That applies only to the creditor; it does not apply to the trustee.
– The expression may be held to apply to either. If a creditor applies to the Court he will have to pay all the costs himself.
– The Court may make an order then.
– But it says, “ at his own expense.”
– That means at the expense of the creditor.
– It means that if a creditor makes an application of this kind he will have to pay the costs of the application. The trustee’s costs, of course, would come out of the estate ; but if a creditor makes an application at hisown expense he will have to pay the costs. I think that the intention would be expressed more clearly if this phrase were used -
At his own expense, or on such terms asto costs as the Court thinks fit to impose.
– This provision simply gives to a creditor the right to have a person brought before the Court for examination. The Court may at any time order the attendance of the bankrupt or any person known to have information. I think it is very wise to provide that some person shall be responsible for bringing any persons before the Court, and surely that person should be the one whotakes that course. I think that if Senator Stewart will read the provision carefully he will find that it does not overstep the mark or do injustice to creditors.
-Colonel Sir ALBERT GOULD (New South Wales) [5.45].- If a trustee makes an application to the Court, he is entitled to have his expenses paid’ out of the estate ; but if a creditor desiresto take action he must do so at his own expense, and then it will be in the power of the Court to declare how the costs shall be paid. That, I take it, is clearly the meaning of this provision, although the words used may not be so apt or clear as one would desire. There is no questionthat it is a correct principle that if a person other than a trustee makes an application, and the Court thinks that he was justified in so doing, it should direct the costs of the application to be paid out of the estate.
Clause agreed to.
Clauses 77 to 79 agreed to.
In the distribution of the property of a bankrupt there shall be paid in priority to all other debts -
Where a debt has been proved which ineludes interest, or any pecuniary consideration in lieu of interest, or any claim founded on a claim for interest, the interest consideration or claim shall, for the purposes of dividend, be calculated at a rate not exceeding Five pounds per centum per annum, without prejudice to the right of a creditor to receive out of the estate any higher rate of interest to which he may be entitled after all the debts proved in the estate have been paid in full.
– I gave notice of my intention to move that after the word “bankrupt,” in line 2, the following words should be inserted - or debtor who makes an assignment or composition under this Act for the benefit of his creditors generally.
Since the amendment was circulated, the Minister has, in the course of the debate, intimated that the purpose of the Government with regard to this measure is to have it, like a war-ship, in several distinct water-tight compartments. That is to say, bankruptcy and assignment is each a division of the. Bill complete in itself, and so, too, with regard to the other methods of a debtor compounding or meeting his liabilities with his creditors other than by complete payment. Iwant to get an assurance from the Minister with regard to effectuating the object of my amendment. In my second-reading speech I dealt at some length with this subject. I pointed out that the Bill did not seem to me to make it clear that when a man assigned his estate, or compounded with , his creditors, or took advantage of one of the other forms provided by the Bill, the same priority would be given to wages debts due by him as is given in cases of sequestration. With sub-clause 1 of clause 80 in the Bill, it is abundantly clear that where there is a sequestration order a clerk, or a servant, or an em ploye, will have a priority in claim up to £50, and for four months. But where, instead of the man’s estate being sequestrated, he takes advantage of some of the other provisions and assigns his estate for the benefit of his creditors generally, my contention is that a clerk, a servant, or an employe, should, in relation to the distribution of that estate, stand in precisely the same position as if the man were technically, as he is actually, a bankrupt, and that the same priority of claim should subsist. If the Minister can show me where in the Bill it is so provided, or where it will be so provided, I shall be prepared not to deal with the amendment now, because I think it is the general feeling of the. Committee that the wages or the salary of a clerk, or a servant, or an employe, shall not alone be entitled to priority of claim in respect to the estate of a bankrupt, but shall be entitled to priority of claim wherever a man takes advantage of the Bankruptcy Act to relieve himself as against his creditors. All that I gave notice of my amendment for was to make it abundantly clear that there would be no doubt whatever about this point. I would like to know what is the attitude of the Minister.
– I am quite delighted to be able to give the assurance asked for. Senator Keating will find that provision is made in clause 156 regarding one part of his amendment, and in clause 184 regarding another part. In asking for an assurance the honorable senator has stated exactly the form in which the Government wish the measure to be passed, and that is that each compartment shall be separate from the others. Clause 156 reads -
The creditor shall have the same rights as to sot-off, mutual credit, lien, and priority, and joint and separate assets shall be distributed in the same way, as in bankruptcy,
– That is all right.
– That assurance, I think, will be satisfactory to the honorable senator.
– Yes. But did you not say that there was some other clause dealing with the matter?
– Yes, clause 184 relates to the other part. I shall have no objection to the reconsideration of the
Bill if my assurance is not quite satisfactory in regard to -what the honorable senator thinks should be there.
– In view of the Minister’s assurance I do not propose to move the first amendment I gave notice of. But there is another amendment dealing with the rate of interest on debts.
– Let them off lightly with 5 per cent.
– In the circumstances 6 per cent is a fair rate of interest. Many persons who are in the position of creditors to a debtor are themselves debtors to their own banks, and 6 per cent, would be a very low rate of interest for them to be expected to pay. I think the rate would be generally 8 per cent. Six per cent is a fairer rate of interest than 5 per cent., and, moreover, it would be a maximum rate. Considering how dear money is at the present time, and has been for the last few years, I do not think that 6 per cent is too much as a maximum. I move -
That the word “five,” line 23, be left out, with the view to insert in lieu thereof the word “ six.”
– I am quite astonished at Senator Keating wanting to press for an extra pound in the way of interest. To my mind £5 per cent is really an exorbitant rate. This interest charge is an outrageous thing, and is growing.
– Merchants cannot get money on current account at 6 per cent.
– That is a very good reason for finding means to enable them to get it cheaper. Five per cent, is a fair thing. The difference between 5 and 6 per cent, is so little that I am surprised at the honorable senator desiring to amend the Bill in that direction. I should have been more inclined to accept an amendment to make it 4 per cent, instead of 5 per cent. In our legislation we should not set the example of high rates of interest, and I think even 5 per cent, is on the high side.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [5.56].- T do not think the proposal is at all extravagant. Not every proved debt will carry interest. A man giving a promissory note has to pay certain interest, and 6 per cent, would be a reasonable rate. The discount sometimes exceeds 6 per cent. A man who borrows now, and gives first-class security, cannot get money under 5 per cent., and will probably have to give 6 per cent., unless the amount is very large. The Minister might well accept the amendment, because it applies only to cases where a man is entitled by law to the payment of interest. If money is cheap, the rate will probably be fixed at 4 or 5 per cent., but no matter how dear it may be it cannot go above 6 per cent.
Clause agreed to.
Clauses 81 to 83 agreed to.
The property of the bankrupt divisible amongst his creditors, and in this Act referred to as the property of the bankrupt, shall not include -
Property held by the bankrupt on trust for any other person;
– In accordance with notice, I move -
That the following new paragraphs be inserted after paragraph (a) : - (aa) Property included in a bill of sale, or stock mortgage, or lien on wool or crops, executed and given by the bankrupt and duly registered and valid according to the laws for the time being of any State; (aaa) Life assurance policies so far as exempted by the laws of the State applicable to the same.
The object is to exclude from the property divisible amongst the creditors property such as is described. If, before becoming bankrupt, a man gives an effectual mortgage over certain property, and the mortgage is registered, registration being notice to his creditors and the whole world, it is obvious that that property should not then be included amongst the property divisible amongst his creditors.
– Would not that lend to give a preference over other creditors?
– Not an unjust preference. Where a mortgage has been effected and registered, the property of which the debtor is in apparent possession is not really his own. The mortgagee has become the real owner by paying out his good cash. As soon as the mortgagor becomes bankrupt, he cannot hand over to the creditors his real estate which he has mortgaged, nor should he be able to hand over to them, his personal estate in respect of which he has obtained money, and which he has transferred by way of mortgage, called bill of sale in the case of personal property, or lien in the case of wool or crops. . With regard to life assurance policies, the law in several States provides that up to a limited amount they shall not go to a trustee in bankruptcy. I ask by this amendment that they shall be exempted from the property divisible amongst creditors only so far as they are exempted by State laws.
– I can meet the honorable senator half way in this matter. If the honorable senator will let paragraph aa go by the board, I will accept paragraph aaa, as that follows the track laid down by the State law. The provision regarding property included in a bill of sale would open up a very dangerous prospect. A man may have given a bill of sale for a very small amount of cash and a very large amount of interest, and to accept the proposed
Amendment would simply be playing into the hands of those gentlemen who thrive on the enormous amount of interest that they are able to get from persons who are driven into a tight corner. I see great danger of their interfering with the unsecured creditors, many of whom will not be so shrewd and sharp. I have no objection to the second part of the amendment.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [6.3].- The Minister has wisely accepted the second part of the amendment, because it only carries out the law as it stands. If the clause is passed without the first part of tlie amendment relating to bills of sale, stock mortgages, or liens on wool or crops, the difficulty is that the debtor, with the doubt that will exist as to the value of the security, will have to pay an enhanced rate of interest, and must also give the creditor the right to foreclose whenever he sees fit. The creditor may step in at any moment and demand payment of his money straight away, and this will make the terms of a bill of sale hard. A man who advances money on the class of security “mentioned in this amendment necessarily requires a higher rate of interest than a man who advances money on real estate, because in the latter case the security is good and valid, and will hold as against the official assignee and every one else. At the present time the difficulty under the law is that any property in possession of a bankrupt at the time of bankruptcy vests in the official assignee, but the creditor who has advanced the money has the power to demand payment immediately, and if such payment is not made he takes possession of the whole property, and often sacrifices it in order to recoup himself. The official assignee cannot follow it if the transaction has been bond fide and the security has been registered in accordance with the law of the State. It is necessary in the case of a bill of sale, not only to register at the time, but to register a renewal bill if the amount secured is not paid within twelve months, in order to protect the interests of the person who has advanced the money or holds the property by way of security. It is in the interest of the community and of the individual to recognise transactions which are entered into legitimately. If an attempt is made to give a creditor a fraudulent advantage by means of a bill of sale the official assignee has the power to apply to the Court to have the bill of sale set on one side, and so protect the ordinary unsecured creditors. All the balance of advantage is in favour of the amendment, which will have the effect of making the security just as good in the case of personal as in real estate, so far as the nature of the property will permit. A man who has only personal property ought surely to be entitled to the benefit of it, if he desires to raise a Small loan, just as much as another man is entitled to the benefit of his real estate.
– An amendment such as that suggested by Senator Keating appears to be a very proper one.
.- Clause 84 provides that all property which belongs to or is vested in the bankrupt at the date of sequestration, or is acquired by or devolves upon him before his discharge, shall be divisible among his creditors. Such a provision destroys the security of the man who has advanced money to the bankrupt.
– How is he secured?
– The moment he obtains a hint that there is a probability of the estate of the debtor being sequestrated he makes his demand and the demand not being met he enters into possession of the property.
– What is the position of the individual who makes an advance upon a growing crop?
– He must wait until the crop is available. Under the clause in its present form he would not be protected, and a farmer who wished to obtain an advance on a crop would experience great difficulty in doing so. When a man is compelled to borrow we wish to enable him to do so on such terms that he will have a prospect of redeeming his property within a reasonable period. If the security offered is a valuable one, and one which cannot be affected by extraneous considerations, the borrower usually obtains an advance upon more reasonable terms than he otherwise would do. This is clearly evidenced by contrasting the rate of interest upon real estate with that charged upon live stock, furniture, &c.
– I have listened with great attention to the remarks of the honorable senator, and I must confess that as a result I am farther from yielding to his desire than ever I was. If we give priority to the claims of persons who advance money on bills of sale, the ordinary acute trader will have bills of sale upon almost every security with which he deals.
-But a bill of sale has to be registered, so that its contents are known to every trader in the community. Consequently traders will not give credit where they deem it unsafe to do so.
– It will be generally conceded that most of our farmers are honest men.
– But if the storekeepers who keep many of them going, held liens over their stock or crops, would they not be the most suitable persons to bold such valid securities?
– I do not say that they would not. But I do contend that the adoption of the proposal which we are now discussing would inflict hardship upon borrowers.
– It must be remembered that invariably bills of sale have to be registered, and that fourteen days’ notice of the intention to register has to be given.
– If we insert a provision of this kind, every business man who has been giving credit to our farmers will in future give them credit only upon condition that he obtains bills of sale over their securities. Thus we shall give a greater security to the men who hold these bills of sale than we shall to those who do not.
– We have the ulterior motive of protecting the debtor.
– The honorable senator desires to give to the secured creditor a privilege over the unsecured creditor. That would be the effect of the proposal under consideration. It would confer an advantage on the storekeeper who is cute enough to insist upon getting a bill of sale before he gives a man credit. I do not hesitate to say that there are many times when farmers would be hopelessly bankrupt if they were pushed, and yet these same individuals manfully meet their obligations when good times come again. I am not disposed to give the secured creditor any advantages over the unsecured creditor. I hope that the clause in its present form will be retained.
– The motive actuating the Vice-President of the Executive Council is a worthy one, but he evidently fears a proposal the effect of which would be to afford relief to the very people of whom he has spoken. The general object of the bankruptcy law should be to extend relief to honest persons who find themselves in debt. The old idea that bankruptcy is an offence which ought to be penalized is out of date. The Minister is familiar with the graphic descriptions which are part of our literature relating to imprisonment for debt and imprisonment for bankruptcy. I maintain that the object of all legislation of this character is to afford relief to persons who, not because of any dishonesty on their part, find themselves unable to immediately pay 20s. in the £1. I think that upon reflection the Vice-President of the Executive Council will see that if we can secure individuals, including that worthy class, the country storekeepers, who help to keep our farmers going in times of stress, the latter will be able to obtain accommodation upon much easier terms. This measure is a non-party one. Our numbers upon this side of the Chamber are so few that it cannot be urged that we are taking up our present attitude, because of party considerations. I venture to say that if we can grant a greater measure of security to any person who is in the habit of assisting the farmer, we shall be doing that which is most conducive to the best interests of the producing industry. In no factious spirit I earnestly ask the Minister to say whether the amendment would not have the effect of enabling our producers to secure accommodation on such terms as would obviate the necessity of their taking advantage of our bankruptcy law.
– If I thought that the insertion of this amendment would have the effect which has been outlined by the Vice-President of the Executive Council - namely, the multiplying of bills of sale - I would not propose it.
– Withdraw it, then.
– It is because I think it will have the very opposite result that I intend to press it. We all know that there is a general practice throughout the States in regard to bills of sale. In Tasmania, when a man wishes to give a bill of sale, he is compelled to give notice of his intention. That notice sets out the name of the granter and the name, address, and occupation of the grantee. It describes the property that is to be covered by the bill of sale, it sets out the consideration, whether present, future, or both, and also the rate of interest. In the State which I represent fourteen days must elapse between the filing of the notice of intention to file a bill of sale and the registration. In the meantime it is competent for anybody, who is a creditor of the granter of the proposed bill of sale to the extent of £2 or upwards, to lodge a caveat, and unless that caveat be withdrawn, or the creditor satisfied, the bill of sale cannot be registered. Surely that is a great guarantee of bona fides. To cover stock that he has, a man proposes to give a bill of sale for the sum of £250, payable on demand - they are invariably made payable on demand, for the reasons which Senator Gould has already given - with interest at so much per cent. Now if the proposed grantor of the bill of sale owes another person the sum of £2 or upwards, -that person may file a caveat, and the bill of sale cannot be registered. A man cannot, in defiance of his creditors, give a preference. I do not say that in every detail that is the law of all the. States of the Commonwealth, but it is generally the law of the Commonwealth. In circumstances indicated by Senator Bakhap, a man makes an advance to another to tide him over a difficulty, and he must have some security. He takes the security not in any oblique or surreptitious way, but by a bill of sale, which has to be filed, and notice of which must be given and published for fourteen days. The trade circulars to which reference has been made invariably publish particulars of these bills of sale. It may be seen in one of these circulars that John Jones is about to give a bill of sale to William Smith. A solicitor to whose client Jones may owe £1 sees this notice, and lodges a caveat which prevents the registration of the bill of sale. If the account is not settled, the caveat remains, and the bill of sale cannot be registered. Surely, in a case like this, we should not say that a man who has advanced money on security given him by a debtor at a time when the debtor is solvent should be debarred from making use of that security, even though subsequent to his advance the debtor becomes insolvent ?
– Other creditors may give him valuable security also.
– But the other creditors should know, and they are regarded by the law as knowing, that the debtor has already pledged his property, and it does not belong to him morally, technically, or legally. Why should we, in the circumstances, take away from the man who has made the advance what morally, technically, and legally belongs to him?
– The honorable senator wishes to take away from the unsecured creditors what belongs to them, although they may have been prior creditors of the debtor.
– Will the Minister contend that real estate mortgaged by a debtor must go over to the creditors in an estate? He should know that it does not, and if real estate mortgaged in that way does not go over to the creditors of a bankrupt, why should personal estate go over? The Minister is in this matter clinging like a barnacle to the principles of feudalism. If a bankrupt mortgages real property, it is not distributed amongst the creditors, and, that being so, why should personal property be treated differently ?
Sitting suspended from 6.30 to 8 p.m.
– I was endeavouring to urge upon the Minister the desirableness of including in the property in possession of a bankrupt, exempted from the class divisible amongst his creditors, that mentioned in paragraph aa of the amendment which I have circulated. I have pointed out that there are many safeguards surrounding the filing of a bill of sale of such a character that the general public are notified, if they are interested, that a person proposing to give a bill of sale intends to give it, that it has to be filed, and that an opportunity is allowed to those who are creditors of the person proposing to give it to enter a caveat and so prevent the filing of the bill of sale. In such cases, the caveat is very often lifted where the giver of the bill of sale pays the caveator the amount of his debt. In other cases, the caveat is withdrawn where the caveator is satisfied that ultimately his interests will not be imperilled. In every case a bill of sale is given over personal and not over real property, and I contend that the person who takes the bill of sale should be protected, and his property rights in the personal property upon which he has advanced his money should be recognised by law. I have said that I should be very sorry if by the acceptance of my amendment bills of sale would be multiplied. I think that the amendment would have the opposite effect. I think that one of its effects would be that, instead of the sums secured by a bill of sale being repayable, as they invariably are now, on demand, terms for repayment would very likely be arranged, and that the interest charge usually attaching to a loan secured by a bill of sale would very likely be reduced. Under the present condition of the law in Tasmania, the rule is that sums advanced and secured by a bill of sale are. repayable on demand, and the interest usually charged is 10 per cent. I believe that if there were something like a more definite security given to the holder of a bill of sale, there would be a greater likelihood of provision for the repayment of the money being made for a definite term rather than upon demand; and I feel quite convinced that, instead of the interest charge being 10 per cent., it would be very much less. I do not see why the holder of a bill of sale should be placed in a different position from a mortgagee. If a man mortgages real estate valued at £1,000 as security for a loan of £600, it will not be pretended for a moment that the mortgagee’s interest in the property will be ignored if the borrower’s affairs are afterwards the subject of sequestration under this Bill. Why, then, should the case of a man who advances money on personal security be different? I have suggested that the provisions of the Bill in this regard appear to me to be an adherence to feudal principles. Right through English law there has run, and still continues to run to a certain extent, a very sacred regard for the feudal principle of land ownership. Property right in land is held to be very much more sacred than any other property right. But we know that, as a matter of fact, in modern days, and under present conditions of civilization, property of very considerable value is often acquired without the ownership of any land at all, by ‘the mere application of education, business instincts and ability. Personal property, under English law, has never been regarded as nearly so sacred as landed property, real property. That feudal principle is manifest throughout English law, and this Bill seeks to perpetuate that principle. It will place the mortgagee of real estate, landed estate, in a position of comparative security; but if a man happens to be the mortgagee of personal estate, or of what, for instance, may be growing upon land, this Bill will place him in a totally different position. I do not think that honorable senators desire to perpetuate disabilities due to adherence to one of the main features of feudalism; but they will be doing so if they pass this Bill without the insertion of some such provision as I have suggested. We know that in these days it is not absolutely necessary that a man should own land in order to obtain an advance to carry on a business. Many persons who are enterprising, active, able, and industrious own no land what.ever. All the capital of their business is their ability, their known energy and enterprise, and they are able to obtain advances on this personal security from persons who have confidence in them. Unless my amendment is agreed to, those who advance money to persons on this personal security will not stand in the same position as those who advance money on the security of landed estates. Surely they are entitled to equal, if not to better, treatment. It is for this reason I submit my amendment. I repeat that the proceedings in connexion with the granting and filing of a bill of sale are not necessary in the case of a mortgage of real estate.
– Advances upon real estate, because of the indefeasibility of the security, may be secured at a lower rate of interest.
– Exactly ; and, what is more, a man. may obtain an advance upon the security of real estate without any one knowing anything about it until the mortgage is registered. If a man in business has no real estate, but has ability, enterprise, industry, and everything that goes to make for success, he may obtain an advance on the security of personal property; but before he can register it he must give so much notice of it that all the world is cognisant of it, and every one interested is protected. Then, by this Bill, we say that, so far as that property is concerned, the man who has advanced money on the security of it, under all these precautions for notice, is not to stand in as good a position as does the man who advances money quietly on the security of land. I hope that tlie Minister will see that no one would be prejudiced by the adoption of this amendment,, and that we should be putting the mortgagee on the security of personal estate only in the same position as the mortgagee of real estate.
– The honorable senator’s argument is that the Bill favours the land-owning, as against the landless, bankrupt ?
– The Bill favours the mortgagee of real estate all the time, and it certainly favours the land-owning bankrupt, whilst it places the trading bankrupt, the man whose whole capital is his energy and activity in business, which is of most value to the community, at a tremendous disadvantage. I am asking honorable senators to insert a provision in this Bill which will place the mortgagee of personal estate «in no worse a position than the mortgagee of real estate. If the Committee do not pass this amendment the rights of a mortgagee of personal estate Will not be secured. When a trader goes to a person to borrow £500 he will say, “ I can give you security over all the stock I have now or may have at any time’ in my store during the subsistence of the security.” “Very good,” will say the man who is asked to lend. “ What is the value?” The borrower will enter into a compact to keep the value of his stock up to £1,200 or £1,500 at all times during the subsistence of the security.
– Will this amendment apply to live stock as well as to stock in trade?
– I intend “ stock mortgage “ to cover live stock. A bill of sale may be for stock-in-trade or household furniture, or any personal belongings. When a man has secured money on the security of a bill of sale it is perfectly right that the lender should stand in no worse position, at any rate, than a mortgagee of the land of the bankrupt.
– Would it not bo better if we could bring the mortgagee of real estate into the position of the mortgagee of personal estate?
– I do not know that we can. Even if my amendment is not carried, the position will be still one of doubt, and it will always be open to a person who has advanced money and taken the security of a bill of sale to attempt to assert his rights in a Court. It is precisely because he will be in that doubtful position that he will demand that the money he advances shall be repayable on demand, and invariably require a very much higher rate of interest than would the mortgagee of real estate.
– If a man borrows money on the security of landed property there is a record of the transaction, and every one knows of it.
– If a man borrows money under a bill of sale there must be a record, as the honorable senator will see if he .refers to the terms of my amendment.
– It may be executed after a man has become insolvent.
– It could not be.
– “What Senator Stewart means is that a bill of exchange may be given after a man has become technically insolvent, but has not been declared insolvent.
– The security against that is the laws of the different States, which require that these documents shall be registered, and notice of intention to register given.
– Where would the notice be advertised?
– It is just put into the office of the Registrar, and the way in which the information is received is generally through the trade gazettes.
– Is the notice advertised in the press?
– No. Every firm of solicitors subscribes to a gazette of that kind. It is the only means by which they can get the information without making a search day after day. The moment that a client of a legal firm is affected they advise him even if he does not see the record. Every big business house, too, is a subscriber to a trade gazette, and if a clerk of the firm sees the name of John Jones, of Deep Gully, in the trade gazette, he remembers that John Jones is indebted to the firm, and immediately takes steps to enter a caveat. If, for instance, I happened to be the legal adviser of Senator Needham, and knew through our relations that John Jones was a debtor of his, I would tell him at once that his duty was to enter a caveat. Such a thing cannot take place in connexion with a mortgage of land, yet this Bill will protect, I do not say directly, the mortgagee of land. All that I ask is that the mortgagee of personalty who advances money shall be protected to the like extent - no more, and no less.
– I am sorry that Senator Keating sat down without answering the objection I put forward on a previous occasion. I am afraid that this clause will not only give an advantage to the secured creditor over the unsecured creditor, but will give an unfair advantage. I would like to know on which clause of the Bill the honorable senator bases his opinion that a preference or greater security is given to the owner of real estate?
– I did not say that it was given directly by the Bill; I said that it was given by the law.
– This Bill, when it goes through, will become the law. I think the Committee is entitled to have the point I have raised made quite clear. Then comes the question, Are we going to deliberately put in an amendment which, if the argument is correct, will make the position a little better just for those who have the good fortune to secure a debt by a bill of sale? How would a provision of that kind work out with the farming community? Take the case of a blacksmith who is doing work for a farmer week in and week out, and who has no intention to send in his bill until the harvest is gathered. The blacksmith may make a new waggon for the farmer, knowing that when the harvest is gathered he will get paid, but the season may turn out to be a bad one, like the present season. Then some trader, with a bill of sale, will force a bankruptcy, although the bill of sale was issued after the debt to the blacksmith was incurred, and he will get a priority of claim.
– It is all very well for my honorable friend to say no; but I ask him to point out where it is not so.
– The mortgagee will be protected as against the blacksmith.
– I know how the mortgagee will be protected, because Senator Keating made it clear that it will be a greater security to the holder of a bill of sale.
– That is the position I want to make out. I desire to insure some protection for those people who are engaged in trading - and we have many traders in this country - without going to the trouble of registering a bill of sale. It is well known that many traders give almost unlimited credit, simply because they have full confidence in the men with whom they trade. If the amendment is carried, the danger is that a man who did work for a farmer who continued to trade, although things were getting shaky, perhaps through no fault of his own, would have a priority of claim over a blacksmith who did work for the farmer months before.
– The danger is there, even under your own clause.
– Exactly; but it will be accentuated, because a farmer can get no credit anywhere unless it is based on a bill of sale to secure every man who does business with him, and that will mean registration, the giving of innumerable bills of sale, and the making public of a man’s position in a way which ought not to be done. As regards the conduct of business, if we lay ourselves out to give much greater security to one class of creditors than to another class, we shall compel a trader to take a bill of sale as soon as credit is given to a person. There were two propositions put forward by Senator Keating in his amendment. One of them I accepted forthwith, because I recognised its fairness; but as regards the other proposition I must stand by the clause.
– 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 -
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.
Question - That proposed new paragraph aa be inserted (Senator Keating’s amendment) - put. The Committee divided.
Majority … … 17
Question so resolved in the negative.
Amendment to insert new paragraph acta agreed to.
Clause, as amended, agreed to.
Clause 85 agreed to.
Clause 86 -
– I have given notice of an amendment in this clause with the object of making it apply to assignees or trustees in a composition. The clause is a restriction of the right of creditors under execution or attachment. It is desirable to make the law uniform. The Committee has already decided not to protect the man who advances money on the security of a bill of sale. Are we going to protect the execution creditor if a man happens to assign his estate or compound with his creditors? If that is not covered by this clause, I propose to move the amendment of which I have given notice, to the following effect: -
That after the word “bankruptcy” the following words be inserted: - “or the assignee for creditors generally, or the trustee in a composition under this Act.”
– I ask the honorable senator not to move the amendment. The Bill is made up of separate compartments, and some amendment on the lines indicated may be necessary in another part. The Bill will be before the Committee for some time, and if this amendment or something that will achieve the same object is found not to fit better into another part of the Bill, a full opportunity will be given to the honorable senator to have this clause reconsidered so that he may move his amendment later on. My information is to the effect that it would be more effectively dealt with in another part of the Bill.
– Am I to understand that the Minister recognises the justice of restricting the execution creditor in the case of a composition and in the case of an assignee just the same as in the case of a sequestration ?
– I am not saying anything of the kind.
– I respect the desire of the VicePresident of the Executive Council to adhere to the system which has been followed in the Bill, and under which the several methods of bankruptcy are provided for in separate divisions, each of which is a watertight compartment in itself whilst being part of one harmonious whole. I do not desire to disturb the har mony of the draftsmanship of the measure, and if I could be sure that in other portions of it dealing with compositions and assignments, a similar restriction would be placed on an execution creditor to that which is placed on an execution creditor in the case of bankruptcy, I would be satisfied. I would like an assurance from the Vice-President of the Executive Council to that effect. Is he prepared to make it clear that the execution creditor in the case of assignments or compositions shall have no advantage over the execution creditor in the case of bankruptcy ?
Clause agreed to.
Clause 87 (Duties of sheriff as to goods taken in execution).
– I would like an explanation of
Bub-clause 2 of this provision, which seems to me to constitute an extraordinary interference with the ordinary processes of Courts, quite apart from bankrutpcy proceedings. It appears to be an absoutely anomalous provision. Under it an ordinary debtor summoned for the recovery of a debt is to be proceeded against, and yet the money which the sheriff derives from the sale of the debtor’s property is to be held by that officer in expectation of a possible bankruptcy.
– There is a similar provision in the New South Wales Act.
– Sub-clause 2 provides -
Where, under an execution in respect of a judgment for a sum exceeding £20, the goods of a debtor are sold or money is . paid in order to avoid sale, the sheriff shall deduct his costs of the execution from the proceeds of sale or the money paid, and retain the balance for fourteen days, and if, within that time -
notice is served on him of a petition having been presented by or against the debtor, and
a sequestration order is made against the debtor thereon, or on any other petition of which the sheriff has notice, the sheriff shall pay the balance to the trustee, who shall be entitled to retain it as against the execution creditor.
That seems to contemplate an unnecessary postponement of the payment of the proceeds to the execution creditor. Because a man has been sued for a particular debt, it does not necessarily follow that he is really bankrupt. Yet under this provision the sheriff would be compelled to hold over the proceeds of the sale in expectation of a possible bankruptcy.
. - To my mind the clause is quite clear and quite correct. The money is to be handed to the trustee-
– The sheriff has to hold it for fourteen days in expectation of a possible bankruptcy.
– Which is quite a reasonable expectation when other creditors are pressing.
– In another part of the Bill we have given the judgment creditor a preference. Now it is proposed . to prevent him getting the money immediately it is in the hands of the sheriff.
– The money is held by the sheriff only for a brief period. If, within that period, other creditors take action, they must all be paid in proportion to their proved debts.
SenatorLt.-Colonel Sir Albert Gould. -Why should the term be increased from seven to fourteen days ? Seven days is the term prescribed in the New South Wales Act.
– In matters of this kind it is well to recollect that we have to cover a bigger territory than New South Wales.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [8.46].- 1 take it that we are not going to centralize everything in Melbourne. I presume that if judgment be obtained against a man in Western Australia the matter will be “dealt with in that State under the bankruptcy law of the Commonwealth. That being so, surely the term of seven days, which is that prescribed in the New South Wales Act, would be sufficient.
.- The point which I made was that the reason for increasing the period from seven to fourteen days is
Lt be found in the fact that we have to cover a larger area than is comprised within the State of New South Wales. Of course, most of these matters will be dealt with in the particular States in which they occur.
– I think that the Committee is indebted to Senator Bakhap for having directed attention to this clause. Instead of the marginal note reading “ Duties of sheriff as to proceeds of sale,” it should read, “ Invitation to bankruptcy.” After a man has been sued, and judgment has been given against him, if execution has issued*, and the sheriff has received the proceeds of any sale of the debtor’s goods, that officer is entitled, under this clause, to deduct his expenses and to retain the balance for fourteen days. Why? Why was the man sued? Because he owed the plaintiff a certain sum of money. Why, then, should that money be retained by the sheriff for fourteen days? I repeat that the clause is an invitation to other creditors to bankrupt a debtor. A demand might be made upon a man for the payment of £25, and he might deny his indebtedness. The circumstances might be such as to decide him not to go into Court. Judgment would accordingly go against him by default, and the plaintiff might issue execution. Then, after the debtor had paid over the amount of the judgment with costs, the sheriff would be able to retain the money for fourteen days.
– Take another view. Suppose that one claimant desired to get in first, to the detriment of other creditors.
– The other creditors are entitled to consideration, but they should look after themselves. What is to prevent a judgment creditor from garnisheeing a judgment?
– He would get his money by taking that course.
– Then what would become of the other creditors? The clause is purely an invitation to bankrupt a man against whom a judgment has been given. We should hesitate seriously before we assent to any such provision.
– It is absolutely in conflict with clause 86.
– This clause is quite clear and distinct. After notice has been served on the sheriff, that officer is obliged to hand over the proceeds of any sale to the trustee, so that all creditors may be treated alike.
– Read paragraph 1 of clause 86.
– To oblige the honorable senator I will. It says -
Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due to him, he shall not be entitled to retain the benefit of the execution or attachment against the trustee in bankruptcy, unless he has completed the execution or attachment before sequestration, and before notice of the presentation of any petition by or against the debtor.
The clause which we are now considering contains an exactly similar provision. It will prevent the smart man from getting in first and thus securing the whole of the proceeds of the sale.
– Clause 86 is absolutely in conflict with sub-clause 2 of the provision now under consideration. Under clause 86 a creditor who has issued execution against the goods or lands of the debtor is secured if the execution has been completed. But what is “completion”? Sub-clause 2 of clause 86 provides -
For the purposes of this Act, an execution against goods is completed by seizure and sale.
Sub-clause 2 of clause 87, however, affirms that the creditor may be deprived of the money due to him for fourteen days. It declares that if notice is served on the ‘sheriff, notwithstanding that execution has been completed, the proceeds of the sale are not to be handed to the execution creditor.
– The honorable senator is confusing two things. Under clause 86 the matter is completed, and the creditor gets his money. Where judgment has been given, and seizure and sale have taken place, the creditor has the money in hand.
– No, the money may still remain with the sheriff.
– Clause 87 deals with a different process, where judgment is obtained, and notice of sequestration is given, and the matter is allowed to go no further. Both clauses appear to me to be quite reasonable.
– They are in conflict because, under clause 86, a creditor upon judgment is given protection’, and in. defiance of that, under sub-clause 2 of clause 87, the money awarded to a creditor, upon judgment, may be seized while in the hands of the sheriff.
– Clause 86 deals with what takes place where the whole matter has been completed, whilst clause 87 deals with the proceedings to be taken where, upon one creditor making a claim, other creditors take proceedings to bring about sequestration in order to secure their share. In that case, the matter not having been completed, the money is held for the trustee who is entitled to retain it against the execution creditor. That appears to me to be perfectly reasonable. Clause 86 deals with a case in which a creditor takes action against a debtor whilst other creditors, if there be any, do not take steps to get their share. We could not make provision that a man having received his money on a judgment under the law should be obliged to hand it back again; but where it may appear that a creditor to secure himself is trying to get all there is in an estate, and other creditors take steps to sequestrate the estate in order to secure their share, the matter is held over for consideration by the trustee.
– There is a distinction between clauses 86 and 87, but it is not that which the Minister has put before the Committee. Clause 86 is of general application, and provides that, where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due to him, he shall not be entitled to retain the benefit of the execution or attachment against the trustee in bankruptcy, unless he has completed the execution or attachment before sequestration, and before the notice of the “presentation of any petition by or against the debtor. That means that if he has completed execution before sequestration, or before notice, the execution creditor is entitled to the full benefit of his judgment. But under this clause it is stated that an execution against goods is completed by seizure and sale, and not, as the Minister would have honorable senators believe, by the execution creditor having the money in his pocket. He does not seize or sell; it is the sheriff who does that. Under sub-clause 2 of clause 87 it is provided that a different course shall follow where the judgment is for a sum exceeding £20. I want to know why that should be so. If the amount happens to be £20 or more the sheriff is entitled, under clause 87, to hold it for fourteen days, and, if during that time he gets a notice of sequestration, the execution creditor is defeated. If the amount be under £20 the execution creditor gets it, and if it be over £20 the sheriff holds it for fourteen days, and that is really the distinction between the two clauses.
– Perhaps it is considered that less than £20 is not worth dividing.
– Apparently not. If the amount be over £20 the sheriff sets it aside for fourteen days, giving an opportunity for sequestration to take place, or to have a notice served upon him of the presentation of a petition in insolvency, in which case he holds the amount, not for the execution creditor,, but for the trustee. The Minister will agree that that is really the distinction between the two clauses. I consider the provision of clause 87 purely an invitation for other creditors to bankrupt the debtor. I have pointed out that it does not apply in the case of an attachment, but only in the case of an execution. If I obtained judgment as a creditor for the sum of £20, with £2 added for costs, I would not issue an execution, because, if I did, the sheriff would be obliged under clause 87 to retain the money for fourteen days. But if I find that some other person owes the debtor £20 I take proceedings to garnishee that debt which will add a few more guineas to the costs ; I get it, maybe £26, which the sheriff cannot touch. The clause will not protect creditors against the attachment of a debt due to the debtor, But will only protect them in the case of an execution for over £20. I hope that the Minister will see his way to omit this provision of clause 87 altogether.
.- I move -
That sub-clause 2 be loft out.
– Because it is in conflict with clause 86.
– Senator Keating has just said that it is not in conflict.
– I move the deletion of the sub-clause for reasons which seem to me to be sufficient, and which I believe will cause Judges in bankruptcy when this matter comes before them to make comments similar to those I have made here.
Clause agreed to.
Clause 88 -
Any settlement of property …. shall,
Nothing in this section shall affect or prejudice the title or interest of any person who, before sequestration, and without notice of the presentation of a petition, has bond fide and for value purchased or acquired, from the persons entitled to the benefit of the settlement, covenant, or contract, the money or property the subject thereof, or any interest in such money or property…..
– In accordance with notice I have given, I move -
That the word “ ten,” line 8, be left out, with a view to insert in lieu thereof the word “ six.”
The clause deals with £he voidance of a settlement under certain conditions. The ordinary term of limitation under English law for the recovery of debts that are not specialty debts is six years, and I think that the term in this case should also be six years. We have to go back to the reign of Elizabeth for the first legislation against settlements of this kind, and I am under the impression, without immediate reference, that it is in the Statute 13 Elizabeth, chapter 5, that the term of ten years is provided for. In these days the term of six years has been almost uniformly adopted in connexion with responsibilities of this character. The amendment would mean that if a man made a settlement of his property upon his wife, and went bankrupt within six years after the making of the settlement, it would be void unless the parties claiming under the settlement could demonstrate that at the time he made it he was, without the property he then settled, perfectly solvent, and able to pay his debts, and unless they were also able to prove that the property actually passed at the time of the settlement from him to the trustee of the settlement. That is necessary to prove that it was a bona fide settlement, that it actually took place, and was not merely a cloak.
– Does it apply to both personal and real property?
– Yes, to all property. I think that it is too much in these days to ask us to go back ten years. In these times of rapid progress and keen business competition it is going back a long time to go back beyond six years. Five years is adopted in regard to some of these settlements. I should like to hear the Minister say that the amendment is acceptable to the Government.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [9.7].- The Minister in charge of the Bill has on several occasions quoted from the law in New South Wales in support of the provisions of this Bill, but I should like to -point out that in this case the Bill provides for doubling the terms provided for under the New South Wales law within which settlements may be voidable. Under paragraph (i) a settlement becomes void if the settlor becomes bankrupt within two years after the date of the settlement. That is to say, that the fact that a settlement was made within two years of the bankruptcy of the settlor is sufficient to void it whether the bankrupt was solvent or not at the time he made it. Under the New South Wales Act the term in that case is one year. Again, with regard to paragraph (ii), to which Senator Keating alluded, the term provided for in the clause is ten years, whilst in the similar provision of the New South Wales Act the term is five years. I have not had an opportunity to refer to the Acts of the other States noted in the margin, but I am strongly of opinion that it would be found that they would not assist the Minister in this proposal to prolong the term during which a settlement may be voided. Senator Keating referred to the fact that under the Statute of Limitations a man cannot, unless, in exceptional cases, recover a debt after a period of six years if the debtor sees fit to take advantage of the Statute. I suppose that honorable senators are accustomed to destroy receipts that are six or seven years old, because they recognise that the
Statute of Limitations would apply to those accounts. A man may have destroyed all evidence of the payment of an account which is seven or eight years old, but his creditor at that time might say, “ I have looked through my books, and have found no record of the payment of that account. I will sue him for the amount.” It is very difficult to prove that the debt has been paid. There are the books to show that the debt has been incurred, but there may be no entry of the payment, although it may have been made. Therefore, the law steps in and says, “ Beyond the period prescribed in the Statute of Limitations we will not allow you to recover. If it is not worth your while to take steps in six years to protect your interests, you deserve to receive no assistance from the law, unless there are special reasons such as absence beyond the seas or a specialty debt”: that is a debt which is acknowledged under seal, and which may be recovered within a period of twenty years. Now, is it wise for the Committee to attempt to put upon a man who made a settlement nine years ago, and who unfortunately finds himself involved in difficulties, and has to become bankrupt, the responsibility of showing that nine years before he was in absolutely solvent circumstances, and able to pay the whole of his debts without having recourse to the settled property in any way ? Without an amendment of this kind there will be no safety assured to any individual. Suppose, for instance, that a man who is in a small way of business has a property, and can pay every creditor 20s. in the £1, makes a settlement of a property in favour of his wife and children so as to protect them in the future if anything should happen to him. He carries on his business, possibly gets into a more extensive field, and then makes an unfortunate speculation eight years later which necessitates him going into the Bankruptcy Court in order to pay his creditors whatever assets he may have.
– He does not know for eight years whether the settlement is effective.
– No ; at the end of eight years he is to find out that his settlement is of no value simply because he may not be able to give the particular proof which is required. I think that I might fairly raise an objection to the first part of the provision which says that a settlement should be absolutely void if it was executed within two years prior to the bankruptcy. I doubt very much whether any man with whom an honorable senator is transacting business could give a clear and distinct statement of his position eight or ten years ago. How is a man to prove his circumstances at that time? He will have to produce the whole of his books - frequently men destroy their books after a lapse of five or six years - or he may not keep books ; yet by this provision the onus is put on the man to prove that he was solvent eight or ten years before a certain event. It will be a fatal mistake, I think, if the bankruptcy law of the Commonwealth is made very different from the bankruptcy law which exists to-day, not only in the States of the Commonwealth, but throughout the whole of the British Dominions. It will be an unwise act to make our law more stringent and more difficult both to creditor and to debtor than that which obtains elsewhere. Already to-night we have enacted a provision which is in direct derogation of the law of New South Wales with regard to liens on crops or wool, because such instruments are by the State law specially protected against bankruptcy. We are engaged in passing a measure which will produce some conundrums for the Courts to decide, when by the exercise of simple common sense we could avert all difficulties. Of course, the question will be raised by-and-by, Does the bankruptcy law of the Commonwealth override the State laws which have protected particular transactions? If a man has given a lien over his crop, and becomes bankrupt, the official assignee will step in to the deprivation of the man who has advanced the money. It is a common thing for a man to borrow money from a bank or a financial institution to enable him to cultivate his crop or shear his sheep. Such a security will become valueless; at any rate, it will need a decision of the High Court to know whether it is valueless or not. Honorable senators must recognise that men are not likely’ to advance cash on a rotten security - that is a security of no value -in consequence of a law which the Commonwealth Parliament has seen fit to pass. I trust that the Minister has realized the difficulties which will arise if in the case of a settlement the period is extended from five years to ten years. Senator Keating has suggested a period of six years, but I think that the period of five years is quite ample. The bankruptcy law of New South Wales, which was consolidated in 1898, provides for a period of five years. Can the Minister point to any comparatively modern legislation which contains a provision such as he wishes to enact here ? We are not likely to help the Commonwealth by enacting provisions which are too severe and too difficult. On the contrary, we ought to pass laws which will regard the present circumstances of individuals and their need to obtain assistance wherever it may become necessary, so that they may make their way satisfactorily where otherwise they would become bankrupt.
– You propose to give a settlor a clean sheet after six years?
– As far as the settlement is concerned, I propose to give the man a clean sheet in six years. If persons cannot deal with a matter in their own interests during that period, if they choose to sleep on their rights, why should they be allowed to interfere and injure the rights of other people which have been honorably acquired ? I hope that the Minister will consent to reduce the term, at any rate to the period mentioned by Senator Keating.
– I think that I may accept the amendment; I consider that the reasons given in support of the proposal are unanswerable.
Amendment agreed to.
– In accordance with notice I move -
That the words “ the presentation of a petition,” in sub-clause 4, be left out, with a view to insert in lieu thereof the words “ an available act of bankruptcy.”
If my amendment is passed sub-clause 4 will read -
Nothing in this ‘section shall affect or prejudice the title. or interest of any person who, before sequestration, and without notice of an available act of bankruptcy-
In clause 50 it is- provided ‘that a debtor commits an act of bankruptcy in each of the cases enumerated in paragraphs a to h. The mere presentation of a petition against a “man is nob the only ground on which a man- may be bankrupted. If he commits any of the acts- enumerated in clause 50 he has committed what is known as an available, act of bankruptcy, and if that is known by a person it should be equivalent even to knowledge of the presentation of a petition. A man may no. be aware of the presentation of a petition, but he may be aware that a debtor has committed an available act of bankruptcy, and to all intents and purposes he is just as well aware that the man is bankrupt or on the verge of bankruptcy, as if he knew that there was a petition being presented against him.
– Has not sub-clause 4 reference’ to the presentation of a petition under clause 87?
– No, it. is the presentation of a petition to bankrupt a man, and the expression is used again in the last line of sub-clause 1 of clause 90. I think it is a common thing on the part of the draftsmen of ‘ Bankruptcy Acta to make, not merely knowledge of the presentation of a petition, but knowledge of the existence of an available act of bankruptcy, quite sufficient to put a man on his guard, and to prevent him taking advantage of that knowledge to trade with a bankrupt or with persons through him to the detriment of the other creditors. The effect of this will be to make the man not merely liable to lose the interest he endeavours to acquire when he is conscious of a petition having been filed against a debtor, but equally liable to lose that interest which he has not bona fide endeavoured to acquire when it is known to him that a man is practically in bankruptcy, because he has committed an available act of bankruptcy.
– I have listened attentively to the honorable senator, but I do not think the phrasing will be improved if the amendment is carried. There is nothing as definite in an available act of bankruptcy as in the presentation of a petition. I shall stand by the clause as printed.
Clause, as amended, agreed to.
Clause 89 agreed to.
Clause 90 (Protection of bona fide transactions’ without notice).
– I have given notice of an amendment to the same effect as the; last, but : in view of the decision of the Committee in that case I do not propose to move it.
Clause agreed to.
Clauses 91 to 95 agreed to.
Subject to this Act, the trustee may . . .
Sell all or any part of the property of the bankrupt … by public auction. . . .
.- I move-
That the words “ by publio auction “ be left out.
As the clause stands, the sale must be by public auction. I would make it. competent for the trustee to sell if desirable by private contract. In many -instances a sale by public auction means a sacrifice. In some instances tenders are called, and it would be desirable to leave the matter open.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [9.34].- The general idea has always, been that public, auction gives much greater safety and security,’ and prevents the property being disposed of privately without full knowledge tb “the “detriment of the estate and the creditors.” Senator Heating’s object might be. attained by adding after “ public auction “ the words “ or public tender.” If neither of those methods succeeded the Court might allow the trustee to enter into private negotiations. The utmost publicity is always desirable in these, matters.
.- In South Australia the general practice is to call for tenders. This results in the realization of a larger amount for the benefit of the estate, whereas private tendering is- apt to result more for the benefit of the merchant than for the benefit of the estate or the creditors. Better results can be obtained by public tender than by public auction.
– I shall accept the suggestion of Senator Gould and Senator Senior to add the words “ or public tender,” but I do not like the idea of striking out the words “ by public auction,” because publicity is a great safeguard.
– I -withdraw my -amendment.
Amendment, by. leave, withdrawn.
Amendment (by Senator Lt.-Colonel Sir Albert Gould) agreed to-
That the words “ or public tender “ be inserted after the word “ auction.”
Destruction of German Cruiser “ Emden.” - Military Raids. - InterState Commission Reports. - Order of Business.
– In moving
That the Senate do now adjourn,
I desire to make available further particulars in regard to the destruction of the German cruiser Emden,. The following cable, dated 11th November, has been received from Mr. Webster, the manager of the Eastern Extension Telegraph Company, Adelaide: -
Following further particulars from company’s doctor Ollerhead. Returned from Keeling, reports Emden’!) captain unwonnded prisoner. Kaiser’s nephew also unwounded.
I understand that the Kaiser’s nephew was an officer on the Emden -
About 200 killed. About thirty wounded tuken off Emden, some remaining Keeling, will be picked up by ship returning from Cocos. Nothing seen Ayetha-
That is the launch on which the landing party escaped -
Island will bc visited frequently while unaaptured. Sydney sunk Emden’t collier as flooded prior capture.
I presume that the Germans themselves flooded the collier, and that she was afterwards sunk by the Sydney.
– Can the Minister inform the Senate whether it is the intention of the Government to make any announcement in regard to the recent military raids upon suspected premises? If it is intended to make any announcement, either as to the result of those raids or as to the circumstances leading up to them, when may it be expected 1
– On the 28th October I promised Senator O’Keefe to institute further inquiries in regard to when the Inter-State Commission is likely to report upon the need for Tariff revision. To day I received tie following reply from the Minister of Trade and Customs -
With reference to the attached excerpt from Ilansard of 28th October, I am advised by the Chief Commissioner, Inter-State Commission, that the Commission expects to be able towards the end of the present year to furnish an interim report as contemplated by section 46 of the Inter-State Commission Act.
– In reply to Senator Keating, I can only say that the military raids recently undertaken under the War Precautions Act were carried out by the Attorney-General’s Department. I am not in a position to say whether the Attorney-General intends to make any public statement in regard to them, but I will bring the representations of the honorable senator under his notice. In regard to the business to be dealt with to-morrow, I propose to move the second reading of the Defence Bill, and I may tell honorable senators that we also expect to receive from another place a Supply Bill, which it will be necessary to pass through all its stages at our next sitting.
Question resolved in the affirmative.
Senate adjourned at9.47 p.m.
Cite as: Australia, Senate, Debates, 11 November 1914, viewed 22 October 2017, <http://historichansard.net/senate/1914/19141111_senate_6_75/>.