SUPREME COURT.

Globe, Volume II, Issue 128, 28 October 1874, Page 2

SUPREME COURT.

STTIINGS IN CHAMBERS. Tuesday, October 27. (Before His Honor Mr Justice Gresson.) His Honor eat in the Court Chambers at 11 a.m. RE DEED OF ASSIGNMENT OF SELIG- AND BENJAMIN. His Honor gave judgment in this case as follows : In this case a rule nisi "was obtained by the provisional trustee in bankruptcy, calling upon David Davis, a trustee for the creditors of Messrs Selig and Benjamin, under a deed of assignment, to show cause why he should not pay to the provisional trustee certain personal charges incurred by him in manner set forth in his affidavit. The material facts appear to be that on the 21st of July last Alfred Aaron Selig and George Benjamin, trading as tobacconists and fancy goods dealers, under the style or firm of Selig and Benjamin, filed their declaration of insolvency in this Court, and on the evening of the same day Mr Joynt, as the solicitor of Mr Davis, a creditor who afterwards became a trustee under a deed of arrangement, requested Mr Walton, as provisional trustee, to take possession of the stock and premises of the debtors, which he accordingly did by placing his bailiff in possession, and that he retained possession until after the declaration by this Court of the complete execution of the deed of arrangement—that a few days after Walton had placed his bailiff in possession, Davis informed him that he had been elected a trustee of the estate by the creditors, and demanded delivery to him of the stock, which delivery, however, Walton declined to give, until the deed had been approved of by the Court; that thereupon an angry correspondence ensued between the provisional trustee, and the solicitor of the trustee under the deed of arrangement. That the amount claimed by the provisional trustee was made up of three items, the first and principal being for the number of days the bailiff was in possession at 8s per diem ; the next being a charge of £5 8s claimed by the provisional trustee for filing inventory, &c, and the third being a charge of £1 Is for delivering up possession. I am not aware that there has been any decision of this Court defining the duties of the provisional trustee under circumstances like the present. The case of Turnbull v Mills (Court of Appeal case) is not a decision upon the point, although the operation of section 46 of the Bankruptcy Act of 1867 was incidentally alluded to by more than one of the judges in delivering judgment. That section provides that on and after the filing of thu declaration of insolvency the provisional trustee shall become and be the receiver of

the property of the debtor, and as such shall act and account as directed by rules to be made by this Court. It was contended by counsel on behalf of the trustee under the deed, that it was plain from the language of this section that the property still remained in the possession of the debtor, and that, therefore, Walton went into possession, not as provisional trustee, but by the licence of Davis as representing the creditors, and that such licence beiDg revocable and revoked, it was the duty of Walton thereupon immediately to give up possession, and in support of this contention, sections 53 and 151 of the Act of 1867, and sections 9, 10, 11, and 12 of the Amendment Act of 1858 were relied upon. To this it was answered that the letters addressed to Mr Walton as provisional trustee showed that the application to take possession was made to him in that character, and that although section 53 contemplated the possibility of dealings by the debtor with his estate between the act of bankruptcy and adjudication, such dealings could only be validated by being made with the approval of the provisional trustee. I cannot understand how the provisional trustee can be held accountable as receiver unless he have the power of taking possession, if he should find it necessary for the safe custody of the property so to do ; and section 151 of the Act of 1867, as well as the sections referred to of the Amendment Act, seem to me not inconsistent with this view, as section 151 plainly deals with the position of the provisional trustee after adjudication, immediately upon which it becomes his duty to take possession of the estate, and retain such possession until the choice of a trustee by the creditors and the confirmation of such choice, unless it be found unnecessary for the protection of the creditors to keep such possession, and section 152 extends to the provisional tnstee in the interim between the adjudication and the confirmation of the choice of the trustee named by the creditors, all the powers vested by the Act in the creditors' trustee after the confirmation, including the provisions relative to the vesting of the estate. The Amendment Act, section 9, empowers any creditor immediately after the gazetting of the declaration of insolvency, to obtain from the Court an order vesting the estate of the debtor in the provisional trustee, unless (section 11) the debtor give security to the Court for the due protection of the estate, pending the order of adjudication ; and section 12 provides that the effect of such interim vesting order shall be to vest the whole estate in the provisional trustee until the election of a trustee by the creditors, and to make it a duty of the provisional trustee thereafter to seize and, if necessary, to remove the property. The effect of the Acts taken together appears to me to be that immediately upon the filing of the declaration the provisional trustee becomes the receiver of the property, and as such accountable for it to the Court and bound by rule 14 of Reg. Gen., of July, 1870 (which assumes that he is possessed of the property), to deliver to the Registrar a schedule thereof ; that upon the gazetting of such declaration, any creditor may obtain from the Court an order vesting in the provisional trustee the estate of which he was before possessed, and that immediately upon adjudication, without such order, it becomes his duty to take and retain possession until the choice of a trustee by the creditors has been confirmed, unless the keeping of such possession shall be unnecessary for the protection of such creditors ; and moreover that in the interim between adjudication and the confirmation of such choice he is liable to all the duties and clothed with all the powers which are by the Act conferred upon the trustee for the creditors from the time of the confirmation of their choice ; the effect of which order of confirmation (sec 153) is to transfer to the creditors' trustee the estate which was before vested in the provisional trustee. The conclusion deducible from the Acts according to the foregoing construction seems to be that from his taking possession, Mr Walton became responsible for the safe custody of the property, and that he could not be absolutely released from such responsibility before the order of the Court was obtained, declaring the deed to have been completely executed, except an order had been made previously, pursuant to section 269, which order, however, the Court would probably have declined to make unless the deed was assented to by the requisite number of creditors. Possession was demanded by Walton a few days after the declaration of insolvency was gazetted, therefore long before the time had expired for taking proceedings to obtain adjudication founded on such declaration ; and even if such time had elapsed until the declaration of the deed having been completely executed was obtained, the provisional trustee had no security that it might not be disapproved of, and its execution be deemed an act of bankruptcy, and made the foundation of a petition for adjudication of bankruptcy, under section 272 of the Act of 1867. No doubt such a conclusion is unsatisfactory, as it burdens the estate with a considerable outlay for keeping possession, and for rent of business premises, &c. But Ido not see how this can be avoided, unless the trustee under the deed of arrangement obtains an order of the Court under section 269, or the agreement of the creditors to indemnify the provisional trustee in consideration of his immediately giving up possession. I think, moreover, that Mr Walton was justified in taking the opinion of the Court upon this question, as if there be a reasonable question, a trustee is entitled to have it determined—Merlin v Blagrave, 25 Beav 125. I think the sum of £5 ss, claimed for making the inventory and valuation, would be too much if there were no object in making the valuatioa ; but although the rule of Court only requires that a schedule of the property be delivered by the provisional trustee to the registrar, I am informed that the practice has always been to make a valuation at the time that the schedule is being prepared, and I think that such valuation may be useful as a check upon the debtor's four-day statement. In the present case, considering this, as well as the time occupied in the negotiations and the length of the correspondence on the subject, I am not disposed to weigh the claim in very nice scales. lam of opinion, therefore, that the rule must be made absolute, and with costs, to be paid by the trustee out of the estate. RE HENRY ROSSITER. On the application of Mr Thomas, an order of adjudication was made in this case, and the first meeting of creditors fixed for Wednesday, November 4th, at eleven o'clock. RE MARY MAUNSELL, DECEASED. Mr Wynn Williams applied for probate n this case to issue to S. P. Andrews and Wm. Colter as executois named in the will. His Honor made the order,