CHAMBER OF COMMERCE.

New Zealand Times, Volume XXXII, Issue 5152, 27 September 1877, Page 3

CHAMBER OF COMMERCE.

A meeting of the Chamber of Commerce was held yesterday, at the Council Chamber, for the election of new members and the transaction of general business. Mr. DraNSFIELD occupied the chair, and commenced the proceedings by calling on the secretary to read the minutes, which were confirmed. The Secretary stated that there was £36 18s. lOd. to the credit of the Chamber, exclusive of £2OO invested and subscriptions to be collected. SUGGESTED AMENDMENTS TO THE BANKRUPTCY LAWS. The Secretary read a letter from the Auckland Chamber, enclosing a letter from Messrs. Hesketh and Richmond, solicitors, containing recommendations for amendments in the bankruptcy laws, especially with regard to the arrest of fraudulent debtors by means of the telegraphic wire, and as to the powers given to creditors under the Act of 1856. The letters were as follows ; ■— “ Chamber of Commerce, “Auckland, August 31, 1877. “ SIR, —Herewith I have the honor to hand you a copy of an important letter addressed to this Chamber by Messrs. Hesketh and Richmond, solicitors, of this city, on the present state of the law relating to bankruptcy and to fraudulent debtors. A resolution, passed yesterday at a numerously attended meeting of the members of this Chamber, authorises me to ask your co-operation in moving the Government to amend the law in the manner indicated. I take the liberty of expressing, as briefly as possible, the views of this Chamber. Arrest of Fraudulent Debtors by Wire, —This Chamber is of opinion that it is a dangerous power to place in the hands of creditors, unless qualified by compelling the detaining creditor to give such bonds as the Judge may deem advisable. “ Proceedings of Creditors under Section S 9, Debtors and Creditors Act, 1576. —1 t appears to this Chamber that under the present Act the powers given to creditors are very limited, and not sufficient for the purposes of justice. In scattered communities, such as exist in most parts of New Zealand, a country debtor can defeat, and frequently has defeated, the ends of justice ; and it appears thai, although it may be known that a debtor is insolvent, the creditors have no power to petition the Court that he may be adjudicated a bankrupt, unless he has been served with a writ, and has allowed execution to be levied on his property. I respectfully draw your atention to the time that must elapse after the dishonor of a promissory note, by reason of correspondence, serving of the writ, and levying execution, before creditors can take any steps to prevent the debtor from sacrificing his estate, or otherwise acting to their prejudice and for his own benefit. “ I venture to point out that the present action of this Chamber is on a subject in which its members are deeply interested, and eminently qualified to form correct opinions, and that it is of the highest importance to the commercial morality of the colony. I therefore confidently ask your cordial assistance. — I have, &c., A. Heather, Chairman. “ To the Chairman of the Chamber of Commerce, Wellington.” “Auckland, August 30, 1877. “ Sir, —In complin nee with the wish of the committee of your Chamber, expressed at their meeting on Friday last, we have pleasure in contributing such information as we have upon the important questions relating to bankruptcy and arrest of absconding debtors, and in making some suggestions for remedying those defects which at present seem to us to exist. In doing this we shall not overlook the letters received by your Chamber from the Wellington Chamber of Commerce, and from Messrs. Owen and Graham, of Auckland. “ With regard to the first of the above subjects, “Arrest of Absconding Debtors,” the law appears to us to be in a moat unsatisfactory state, for not only is the right to imprison for debt, as formerly understood, altogether extinguished, but for all practical purposes the right of a creditor to arrest his absconding debtor is also gone. As is now well known, a creditor cannot, as a matter of course, issue execution against the body of his debtor, this right having been taken away by the Imprisonment for Debt Abolition Act, 1874. By section 15 of this Act an absconding debtor can only be arrested when his creditor has proved by evidence on oath to the satisfaction of a Judge that the absence of the debtor from New Zealand will materially prejudice the creditor in the prosecution of his suit. These latter words have been interpreted by the Courts to mean that the creditor requires the debtor to give some evidence or in some other way to aid and assist the creditor in proving his case and obtaining judgment against the debtor. If the creditor cannot set forth

facts showing how he will be materially prejudiced in obtaining his judgment by the debtor’s absence, the writ of arrest cannot issue. “To show in a more forcible manner the effect of this section, it has been decided that even where the writ had issued, and the debtor had been arrested and imprisoned or, in lieu of imprisonment, he had deposited the money by way of security, yet as soon as the creditor had obtained judgment, the debtor must be released or the money returned, as the case may be. It is not sufficient for the creditor to show that it will be difficult, or even impossible, for the creditor to realise the fruits of his [judgment if the debtor is allowed to leave the colony. “ This being the law, it will be at once manifest that in the vast majority of cases a creditor cannot show that he requires the debtor's assistance to prove his case. As a rule, creditors are well able to prove their cases without the debtor’s assistance, especially in oases of promissory notes and open accounts. It rarely, very rarely, happens that a plaintiff in an action requires evidence or assistance from a defendant in order to obtain judgment. “ It will at once be seen that while a power to arrest does exist by law, yet that power can only be exercised under such circumstances as to preclude creditors from obtaining the benefit of it, because in the vast majority of cases they cannot swear that they will be materially prejudiced in the prosecution of their action, or, in other words, that they will in all reasonable probability fail to obtain judgment (not the fruits of the judgment) unless the defendant is detained in the colony to aid i hem. This right can only be exercised in the Supreme Court when the debt exceeds £SO. The District Court has no such power. “ Besides the above remedy there is another which is exercisable by the Resident Magistrate in cases within his jurisdiction. This remedy is contained in section 17 of the Resident Magistrates Act, 1868, which section is not repealed by the Imprisonment for Debt Abolition Act, 1874. Here, however, a creditor must show, on affidavit, probable cause, the grounds of which shall be stated in the affidavit, for. believing that the defendant is about to leave the colony with intent fraudulently to evade payment. Now as a rule all that a creditor knows is that the debtor is going away. He may have a belief that the debtor does not intend to return, but belief is not sufficient, the grounds for the belief must be stated. This difficulty, however, might be easily removed ; but unfortunately the word fraudulently occurs, and this imparts to our minds something beyond the failure to pay a debt contracted bona fide. Here again the creditor has a difficulty, and we think that we are safe in stating that by requiring strict proof of a well-grounded belief of an intention to defraud this wholesome privilege would be inoperative, and that rather than the creditor should be without any remedy at all, Resident Magistrates are often induced to strain the law in order to protect the ci editor. Should, however, a compliance with the law be demanded, experience has proved that there are few cases in which a creditor is able to depose to the debtor’s intention, or even to facts from which that intention can be reasonably inferred. It is remarkable that the Legislature have required matters of a totally different character to be proved according to the Court in which the remedy is pursued. 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 necessary in the Resident Magistrate’s Court to prove that the plaintiff will be materially prejudiced in the obtaining his judgment ; while in the Supreme Court this appears to be the principal ground for issuing the writ. “ The result is that in a great majority of cases where the debts are large, but easily proved by the creditor or his clerks, the creditor has no remedy against the debtor, who can with impunity take his departure from the colony, and by writing a letter beforehand admitting the debt absolutely preclude the creditor from swearing that he requires the debtor’s aid in obtaining his judgment. Without infringing the principle of the abolition of imprisonment for debt, we think all Civil Courts within the limits of their respective jurisdictions should have power, either before or after judgment, to arrest any one about to leave the colony leaving unsatisfied claims, and to detain him until security is given to the Court’s satisfaction. But if on the hearing the Court is satisfied that he cannot give any security, or that his detention would be grievous, then that the Court should have power to order his discharge. “ This uower of arrest might be exercised under telegraphic authority, as suggested by the Wellington Chamber; but until there is power to arrest, the telegraphic authority is practically useless. “ With regard to the subject of bankruptcy, experience compels us to admit that the subject is a difficult one to deal with. At the same time we have no doubt that the law ought to be, and could be, made much more perfect than it is at present. We have no hesitation in saying that the existing law is so imperfect, and what there is of it is so difficult to interpret and render workable, that a strong protection is in the circumstances afforded to those who seek relief in bankruptcy. “ At present the law stands thus:—Until a debtor has committed an act of bankruptcy he cannot be made a bankrupt, and it necessarily follows that creditors cannot make him a bankrupt. “ The 29th section of the Debtors and Creditors Act, 1876, sets forth what are acts of bankruptcy ; but we think it will readily be seen that a debtor may do a great deal in the way of protecting himself without coming within any of these acts of bankruptcy. To file a deed of arrangement under sections 128 and 5 of the statute, is not an act of bankruptcy in itself, nor does it become so until the Court has in certain circumstances, detailed in section 149, so declared it, or until there has been a failure, as provided in section 147, to have the deed declared completely executed. “So long, therefore, as a debtor does not furnish his° creditors with evidence of any of these acts of bankruptcy, he may go on until the bulk of his property is realised, and then dictate terms to his creditors. If these terms are rejected, he may continue in possession of what property he has left—leave them to sue him and obtain judgment and issue execution and so constitute an act of bankruptcy, and in the meantime take his pleasure without molestation. Until he has been brought under the laws relating to bankruptcy, the Court has no power or control over him. If, after having committed many acts of bankruptcy and with all his assets converted into money, he wishes to leave the colony, he cannot be molested until the creditor has obtained the evidence of these acts of bankruptcy and has made the debtor a bankrupt. All this takes time, especially in such a case as that referred to by Messrs. Owen and Graham in their letter. There is no doubt a debtor may depreciate his estate with very little risk, especially when he is not under the eye of the creditor, and is allowed so much time within which to effect his purpose. 1 “We fear it would be a difficult task to make the present law reasonably efficient and workable. Its defects are serious and too numerous to point out. There is no doubt as to the source from which it has been taken; but, unfortunately, language and sections have been eliminated, and the Act is in many respects seriously disconnected, and consesequently unworkable. To mention one instance in particular, and one which at the present season concerns the mercantile community of Auckland. If a person makes a voluntary settlement on his wife under section 63, or a fraudulent preference to some of his creditors (who are his friends) under section 64, or has goods in his order and disposition under section 65, and afterwards becomes a bankrupt, his trustee in bankruptcy can (subject to the conditions in the sections) attach all these matters, and claim them for the general body of creditors. But it the person, instead of filing a declaration of insolvency, should file a deed of arrangement assigning all his property to trustees for the benefit of all his creditors, then that person is not a bankrupt, and his trustees would not have any power to impeach any of the transactions referred to in those sections, because,

if the person were bankrupt, be could not file a deed of arrangement under section 128, for the language does not apply to a bankrupt ; and yet unless he is a bankrupt, advantage cannot be taken of section 63, 4 and 5, which refer to the person becoming bankrupt. “ This is all owing to the absence of a section, giving the trustee, under a deed of arrangement, the same powers as a trustee in a bankruptcy. Such a section was contained in the statute from which the Debtors and Creditors Act, 1876, was taken, but for some reason our Legislature has omitted that portion of the section giving such power, and inserted a very insignificant portion of the remainder of the section, which now forms section 146 of our Act. “ There are many better Acts which might be introduced—Acts which have been in use for years, and which have been found to work well and afford all reasonable protection to that which must exist in every mercantile community—viz., credit. These Acts, too, have received judicial interpretation, and would therefore be a great benefit to those who have to administer them. “ If, however, the present statute is to remain in force, we would suggest that it be amended by creating some new acts of bankruptcy. We suggest the following ; —(1) If a person admits, in writing or orally, to two or more creditors that he is insolvent. (2.) If he fail for fourteen days to retire a dishonored bill ; or (3), if for a like time he fail to pay any debt after the same shall have become payable, and after the same shall have been duly demanded “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 might 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 suggest the insertion of a clause giving the same powers to a trustee under a deed of arrangement as those 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 re-enacted. 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.* 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, 1876. At present they are not so.—We have the honor, &c., “ Jlesketh and Richmond. “ To the Secretary of the Chamber of Commerce, Auckland.” Mr. Wallace said he considered the matter such an important one, that as the attendance on this occasion was not very large, the further consideration of it should be adjourned until next meeting. Mr. Woodward moved that this Chamber should co-operate with the Auckland Chamber in the matter, and support any action they might take to carry out the amendments suggested in the recommendations. This was seconded, put, and carried. CHARGES FOR STORING KEROSENE. Mr. Bannatyne said he had not yet received official information from the Mayor as to what charges it was proposed to fix for the storage of kerosene oil. AMENDMENTS TO BANKRUPTCY LAWS. Mr. J. H. Wallace said he did not think the Chamber should dispose of a serious matter like this without further discussion. He should decidedly object to the adoption of all that was contained in the documents which had been read. He protested against the question being disposed of by this small attendance of members of the Chamber without further deliberation. The Chairman said he understood Mr. Woodward’s motion to have been put and carried. Mr. Wallace was placing him (the Chairman) in an awkward position; but he was in the hands of the meeting, and would put it to them whether the question should be re-opened or not. The question was put, and declared carried in the negative, and the Chairman then said he must decline to re-open the question. Mr. Wallace then left the Chamber. AUSTRALIAN JUVENILE INDUSTRIAL EXHIBITION. Mr. W OODWARD laid before the Chairman a circular calling attention to the Australian Juvenile Industrial Exhibition proposed to be held at Ballarat in February next, aud asking for the support of the Wellington Chamber. .He (Mr. Wodward) considered the object a laudable one, deserving encouragement. He would suggest that a committee should be appointed to see what could be done to further the interests of the object in view. He observed that some of the young people in Australia were getting up the model of a railway, aud perhaps some of the young men here—at Mr. Mills’ foundry or elsewhere—might do something of the same sort. He moved, — That from a committee of the Chamber a subcommittee should be appointed to arrange the details, and to promote as far as practicable the objects in view. Mr. Bannatyne said he concurred with Mr. Woodward as to this being a laudable object, and seconded the motion, which was carried. PROPOSED PALMERSTON AND WELLINGTON RAILWAY VIA WEST COAST. The Secretary read the following letter from a committee of the Palmerston North Borough Council, asking the co-operation and assistance of the Chamber in urging upon the Government the expediency of constructing this line of railway;— “ Borough Chambers, Palmerston North, “ August 13, 1877. “ Gentlemen, —In accordance with resolution passed this day at the first meeting of the Palmerston North Borough Council, we were appointed a committee to ask the co-operation and sympathy of your Chamber in urging upon the Government the expediency of authorising the necessary steps for the construction of the West Coast line of railway to connect Wellington with the Patea-Manawatu railway, via Palmerston North. “ The proposed route recommends itself to every traveller on this coast, and we believe must force itself upon your Chamber’s deliberations ; and we have every reason to hope the project will be favorably entertained by you, and that prompt action—such as may seem to you best—will be taken in advising the Government to provide for the cost of the proposed railway during this session of Parliament. “ The Chairman and Members of the “ Wellington Chamber of Commerce.” NEW MEMBERS. The following new members were elected:— C. J. Pownall, W. Finnimore, Captain Holt, and F. H. Wood (Greytown). This concluded the business.