The New Zealand Times (PUBLISHED DAILY.) WEDNESDAY, SEPTEMBER 12, 1877.

New Zealand Times, Volume XXXII, Issue 5139, 12 September 1877, Page 2

The New Zealand Times (PUBLISHED DAILY.) WEDNESDAY, SEPTEMBER 12, 1877.

The law relating to bankruptcy, especially as it affects fraudulent debtors, has been on several occasions the subject of discussion by the different Chambers of Commerce in the colony, who are unquestionably very proper bodies to deal with the question. Since the last meeting, a copy of correspondence which has passed between the Chairman of the AucklandChamber and Messrs. Hesketh and Richmond, solicitors, has been received by the Chairman of the Wellington Chamber, and will bo brought forward at the meeting to be held on the 26th inst. The Auckland Chamber, it appears, entertains the opinion .that the: “ arrest of fraudulent debtors by wire” would be a dangerous power to place in the hands of creditors unless such bonds were given to the Judge as he might deem advisable. They also point out that the present powers given to' creditors by the Debtors and Creditors Act, 1876, are insufficient for the purposes of justice ; that great opportunities are offered to dishonest bankrupts to defraud their creditors, and they draw particular attention to the time which must now elapse after the dishonor of a promissory note “by reason of correspondence, the serving of the writ, and levying execution before creditors can take steps to prevent the debtor from sacrificing his estate, or otherwise 'jk, ting to their prejudice, and his own benefit.” In compliance with the ■ request ; of a committee appointed by the . Auckland Chamber, Messrs. Hesketh and Richmond sent a long and very ably written letter to the secretary, in which they say that in considering the matter they have not overlooked the letters received from the Wellington Chamber, and from the firm of Owen and Graham, of Auckland. The learned gentlemen then proceed to review the Acts bearing on the question, and point out, as regards the arrest, of absconding debtors, , that in a vast majority of cases “a creditor cannot show that he requires the debtor’s assistance to prove his case,” and that although a. power to arrest does exist by law, yet “ it can only be exercised under such circumstances as to preclude creditors from obtaining the benefit of it,” because they cannot swear .that they will be materially prejudiced in the prosecution of their action unless the defendant is detained in the colony. This right to arrest, ■ moreover,, can only be exercised in the Supreme Court when the debt exceeds £SO. The District Court has no such power; but there is another remedy which is exercised by. the Resident Magistrate in cases within his jurisdiction. Here, however, a creditor must show oh affidavit “the probable cause, the grounds of which must be stated, for believing; that the defendant is about to leave the colony with intent fraudulently to evade payment of the debt;” and although a creditor,may know that his debtor is going away, and may believe he is not going to return, he will not be able to swear that ho intends fraudulently to evade payment, as the failure to pay may not after all amount to fraud. Messrs. Hesketh arid Richmond point, out that the Legislature requires matters of a totally different character to be proved according to the

Court in which the remedy is sought. In the Supreme Court it is not necessary to show fraud. In the Resident Magistrate’s Court it;is the principal ground on which the arrest .is made. On the' other hand, it is not Jiecessary in the’ Resident MagisCourt to prove that the* plaintiff will be materially prejudiced in obtaining his judgment, while in the Supreme Court this " 'appears to' be the principal ground for issuing the writ. It is suggested ; that all Civil Courts within the limits of their jurisdiction should have power to arrest either before or .after judgment any: one about to depart from the colony, leaving unsatisfied claims, and to detain until security is given to the Court’s satisfaction ; but if on the hearing of the case the Court is satisfied that the defendant cannot give the security, or that his detention would be grievous, then the Court should have the power to order his discharge. It is pointed out ; that until there is power to arrest, the vise of telegraphic authority would be practically useless.... The existing law of bankruptcy is condemned as useless and imperfect, and after commenting on its shortcomings Messrs. Hesketh and Richmond observe that there are many better Acts which might be introduced—Acta which have been in use or years, and found to work well, and lit the same time affording all reasonable protection to credit. If, however, the present statute is to remain in force, they suggest that it should be amended by creating some new Acts of bankruptcy such as the following : —, (1) If a person admits, in writing or orally, to. two or more creditors that ho is In insolvent. (2) If he f ,il for fourteen days to retire a dishonored bill; or (3) If for a like sura he fall to pay any sum after the same shall have become payable, and after the same shall have been duly demanded. The letter, of which the above is a synopsis, concludes thus : We would also suggest the insertion of a section making all Acts of bankruptcy available for the creditors to petition upon, if committed within six instead of three calendar months before the petition Is filed. ■ ' A person may" easily commit an act of bankruptcy and conceal it for three months, when it would, not avail as a ground on which to petition for adjudication. ‘ ... We also sug.-est the insertion of a clause giving the same powers to a trustee under a deed of arrangement as these possessed by a trustee in bankruptcy, and placing: the estate in the same position as if the debtor had been made a bankrupt. We think that the provisions of the Act of 1867 as to assenting to deeds of arrangement and having them declared completely executed, are much more workable than the present provisions, and should be reenacted. Under the old law such deeds were assented to by a majority in number and three-fourths in value of the creditors simply giving an assent in writing: but now this assent must be given by the same majority of the whole creditors at a meeting held for that purpose (at least it has been so ruled by Mr. Justice Gillies). In practice great difficulty has been found in getting the required majority to attend such a meeting, and there does not seem to be any good reason why a meeting should be necessary. We also think that all debtors making deeds of arrangement should be rendered subject to the provisions of the Fraudulent Debtors’ Act, 1805. At present they are not so. The questions raised by this correspondence are of great interest to the mercantile portion of the community, and, indirectly, to the whole public. They will doubtless be discussed by the Wellington Chamber with that intelligence which always characterises the deliberations of a body composed of the leading men of business in the city, who are well qualified to deal practically with .the. points referred to by Messrs. Hesketh and Richmond, who have 1 evidently taken great . pains in framing an opinion on a subject admittedly no easy one to deal with. Difficult, however, as it may be, it cannot be insurmountable, and if perfection cannot be attained we have little doubt that a reasonably good and workable, measure—a great improvement on the present 1 imperfect law bn: the subject—will .ultimately be arrived at. : ;