An Outline of Some Recommendations for the Amendment of the Bankruptcy Act
| DOI | 10.1177/0067205X6400100102 |
| Author | Sir Thomas Clyne |
| Published date | 01 March 1964 |
| Date | 01 March 1964 |
| Subject Matter | Article |
AN OUTLINE
OF
SOME
RECOMMENDATIONS
FOR
THE
AMENDMENT
OF
THE
BANKRUPTCY
ACT
By
THE
HONOURABLE
SIR
THOMAS
CLYNE*
The Committee appointed to review the bankruptcy law
of
the Com-
monwealth has made many proposals for its amendment. The Report
containing these proposals has been presented to the Attorney-General
of
the Commonwealth.1
In
this article some
of
the more important
of
these proposals will be examined.
In
1924
the Parliament
of
the Commonwealth passed aBankruptcy
Act and in
1927
an amending Act. An Act referred to as the Bankruptcy
Act
1924-1927
came into force on 1August
1928.
Since this date the
Parliament has passed many amending Bankruptcy Acts and the Bank-
ruptcy Act may now be cited as the Bankruptcy Act
1924-1960.
The amending Acts have been enacted to provide for situations
unforeseen, and thus unprovided for, to supplement existing provisions
of
the legislation and to remove anomalies.
In
some
of
these amending
Acts provision has been made to validate acts and things which in the
opinion
of
the High Court were invalid. Abrief account
of
the origins
of
the Commonwealth Bankruptcy Act may not be out
of
place in this
article.
This Act
is
in a large measure founded upon the Bankruptcy Act,
1914
(U.K.).2 An amending Act passed in
1926
3may be disregarded.
The English Act
of
1914
is the latest
of
aseries
of
statutes dealing with
avery old
problem-the
failure
of
adebtor to pay his creditors.
In
1542
astatute was enacted which dealt with this problem.
It
was called 'An
Act against such Persons as do make Bankrupt
'.4
Since
1542
numerous bankruptcy statutes have been enacted from
time to time in England with the object
of
creating asatisfactory law
concerning bankrupts.
For
along time these bankruptcy statutes were
*Judge
of
the Federal Court
of
Bankruptcy.
1Report
of
the Committee Appointed by the Attorney-General
of
the Commonwealth
to Review the Bankruptcy Law
of
the Commonwealth (1962), Serial No. 8440/62; here-
inafter cited as 'Report '.
In
the Third Schedule to the Report
is
adraft Bill that will
give effect to the recommendations
of
the Committee. The Committee has recom-
mended the enactment
of
the Bill by the Parliament as soon as practicable: Report,
para.
8.
In
succeeding footnotes, references are given to clauses
of
the Bill which
correspond with the recommendations in the Report.
24&5Geo.
5,
c.
59.
316 &17 Geo. 5,
c.
7.
•34 &35 Hen.
8,
c.
4.
24
JUNE
1964]
Amendment
of
the Bankruptcy
Act
25
penal in character; they dealt with the
bankrupt
as
an
offender; they
did
not
discriminate between the unfortunate
and
the dishonest bankrupt
and
they made no provision for the discharge
of
the bankrupt from his
debts.
It
has been jestingly said
that
the Bankruptcy Court deals with wrecks
as do the Admiralty
Court
and
the Divorce Court. Bankruptcy law,
however, may well be regarded as
an
important
part
of
the cOlnmercial
law
of
the community
to
which
it
applies
and
of
material concern
to
the
business
and
trading
members
of
that community.
It
is usually said
that
bankruptcy law is acreation
of
statute,
but
this
statement requires some qualification.
In
the course
of
its development
in England various doctrines
apart
from statute have been formulated.
Some
of
these doctrines in the course
of
time have been made
part
of
the statute law
of
bankruptcy.
By
an
Act
of
Queen Elizabeth passed
in 1570,5jurisdiction in matters
of
bankruptcy was vested
in
the
Lord
Chancellor
or
Lord Keeper with power
to
appoint Commissioners
to
carry out various duties under the Act.
The Chancellor
in
the exercise
of
his jurisdiction was guided
by
principles similar
to
those which regulated his jurisdiction in Chancery;
namely, equitable principles.6The Chancellor,
it
seems, exercised this
jurisdiction when the statutes were silent as
to
the mode
of
compelling
obedience
to
the orders necessary for carrying the provisions
of
the
statutes into effect.
But
it
has also been said
that
the Chancellorexercised
this jurisdiction more by practice
than
authority.
The fundamental principles
of
the bankruptcy legislation now
in
force in England
and
in Australia can be briefly summarized.
An
insol-
vent debtor is required
to
surrender his property
to
his creditors in order
that
it
may be distributed equitably amongst them and when this
is
done
he is entitled
to
seek ajudicial release from his debts. As incident
to
these fundamental principles
it
becomes necessary
to
provide machinery
by which
an
investigation
of
the debtor's affairs can be made, and
by
which the debtor can be compelled
to
disclose his property
and
to
deliver
it
up
for the benefit
of
his creditors.
Afurther
and
an
essential
part
of
this legislation is the punishment
of
dishonest
and
fraudulent bankrupts.
In
England during the nineteenth century bankruptcy was the subject
of
many legislative experiments and
in
the course
of
these experiments
the legislature was concerned with the difficult question
of
the nature
of
bankruptcy administration. Should the administration be acreditors'
administration
or
an
official administration?
5
13
Eliz.,
c.
7.
6
Ex
parte Bradley (1812) 1Rose 202.
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