The Southland Times. TUESDAY, APRIL 12. 1870.

Southland Times, Issue 1236, 12 April 1870, Page 2

The Southland Times. TUESDAY, APRIL 12. 1870.

The present Bankruptcy Law of New Zealand is about the most cumbrous, costly, and ineffective piece of machinery that can well be imagined. If the objects of its enactment have been to facilitate fraud, and to furnish to creditors vexation in addition to loss, they have been amply secured by the different clauses of the Act. Leaving out of view the vicious principles of the Bill, the least objectionable reference that can be made to it, is to designate it as the most clumsy enactment that, in all probability, even colonial legislation has framed. One of the Judges of the Supreme Court has compared the operation of the Bankruptcy Law to that of employing a steam hammer to crack a nut. Severe as is this criticism, it but refers to its ineffectiveness, and ranks for little or nothing as compared with what maybe said of its absolute mischief. The Act was framed in 1867, and amended in 1868, consequently some reasonable time has been afforded to test its character. The test has proved its powerlessness. "With every facility for the escape of the scheming and dishonest trader, there are almost number less obstacles in the way of the honest but unfortunate one, desiring to do the best for those who have been so unfortunate as to lose by him. The published list of . insolvencies for the past year, exclusive of deeds of arrangement, which have not come within the office of " the Provisional Trustee," shows a number of 180, and in a very large majority of these cases the assets may be set down either as nil, or as barely sufficient tq pay the fees of the court. Yet such is the nature of the difficulty to creditors in the way of investigation — -so great the worry and loss of time (even where good grounds exist for the imputation of fraud) in prosecuting an examination, that in nearly every case discharges have been obtained by the debtors with the utmost facility. It need scarcely be said that this facility is but too likely to suggest to unprincipled debtors a repetition of the process. It is well known that in the .majority of instances the sympathies of creditors are to a very great extent with the debtor, and but few instances occur in which undue harshness or severity is exercised, and, granting this, the necessity is seen for some simple plan of operationby which the true state of matters may be realised, apian from which the honest debtor has nothing to fear, and by which the dishonest one may be compelled to undergo a searching investigation. The returns of the year 1868 show that in that year 294 adjudications of bankruptcy were made,, and that the total of debts represented under these adjudications amounted to very nearly £250,000. Nearly the whole of this money may be assumed to have been lost to the trading community, ' the instances in which a dividend has been declared under the operation of the Bankruptcy Act having been few and far between. The same remark will apply to the case 3of last year, the assets of the 187 cases returned having been quoted as almost nil. Turning to the 52nd section of the Act of 1867, it is there provided that, until twenty-one days after filing a declaration of insolvency, the debtor, shall not be deemed to have committed an act of bankruptcy, and not even then unless within three days from the expiration of the said twenty-one days proceedings to obtain adjudication shall have been taken by a creditor, or within twenty-six days from the filing of the declaration such | proceedings shall have been taken by the debtor himself. The facility for fraud afforded by this clause is obvious, and may go far to account for the absence of assets. In the amendment of 1868, this section has been repealed by the substitution of ten days for twenty-one, being in other respects the same, and virtually allowing a schemer fifteen days in which to conceal his estate and arrange for his examination. The costs absolutely necessary to be incurred in the prosecution of an examination, and carrying out a bankruptcy under the ' Act, are such as would absorb a small estate, while as far as the bankrupt himself is concerned, he need be but at little cost and trouble. In this latter particular, no objection need be taken, as the honest trader who has given up his estate ought not to be expected to make any outlay to obtain his discharge ; but the disadvantage to creditors in the case of.. a dishonest insolvency is readily apparent. The mercantile portion of this community have happily had but little acquaintance with the working of the Act, but in the small cases which have been brought under its operation in the Province, the conviction of creditors has been, even where suspecting dishonesty on the part of the debtor, that they had no redress, and that conse-

quently it was wisdom oa their parts to give themselves no further trouble or loss of time about the matter. That a reform in the Bankruptcy Law of the colony is of imperative necessity, the mercantile portion of the community, without exception, admit, and the wonder is that no steps have been taken to remedy an evil of which the magnitude is admitted. It is not intended hers to lay down the principle that debt is a crime ; far from this, yet there are ' circumstances in which it is so. It is "nqi* desirable, at any rate, to afford facilities to unprincipled men to carry on operations at. the cost of others, nor yeW putting the case in a milder forai— to afford to men who have nothing to lose the opportunity of carrying on business which may or may not succeed, with the consciousness that in the event of failure (as is most probable), they can at once, without trouble, wash their hands of all liability. The present Bankruptcy Act does all this, and therefore it ought to be at once repealed. Much may be said of the contradictory nature of eertaiu clauses of the Bill, but the whole may be summed up in declaring the measure to be unworkable and radically bad. In this ©pinion the Judges of the Supreme Court apparently coincide, judging from the fact that they have not yet framed rules for procedure under the Act, although powers are therein, given them to enable them so to do. In a case recently occurring in Otago, the certificate of a bankrupt has been suspended for two years, His Honor Mr Justice "Ward having also directed a criminal prosecution against the bank - rapt. If this case be cited in attempted proof that the Act is equal to the detection and punishment of fraud where =existing, the attempt must fail, because of the peculiarities of the case ; the nature of the property in respect of which alleged fradulent representations were made (a policy of life assurance), being such as to render detection -'all but inevitable. There appear, too,in this case tohjave existed special reasons for the pushing on of proceedings, apart from those which ordinarily exist between debtor and ,cfeditor. It will be. remembered that many years back the tone of the English bankruptcy laws was that of severity to: the debtor — perhaps improperly so. Modifications have, one after another, been made, until it has been assumed the reverse point has been realized, and a premium afforded for laxity and fraud. Under the idea that more .stringent provisions were necessary for the protection of creditors, Sir Eobebt Collieb's new Bankruptcy Act has been framed. The idea formed of the new Act by either the reckless or the unfortunate heeding to appeal to the protection of the* Bankruptcy Law, may be gathered from the fact that the rush of applicants to be dealt with under the old law in preference to the new, was so great as that the list could not be prepared for the Gazette within the specified time. With all proper sympathy for the honest unfortunate debtor, it must be conceded that the trader who necessarily gives credit in the legitimate course of his business, is entitled to protection. Such protection he naturally looks for in the laws affecting the relation between debtor and creditor. The interests of the creditor ought not to be imperilled by undue leniency, or any" laxity affording a loop-hole for fraud. . ...