68
SUPREME COURT.
Monday, January 18th.
IN BANKRUPTCY.
BEFORE HIS HONOUR SIR FRANCIS PIGGOTT (CHIEF JUSTICE).
THE ALLANA ESTATE.
In the matter of 8. E. Allana, Mr. J. Scott Harston (of Messrs. Ewens and Harston) ap peared in support of a motion brought by the Official Receiver to set aside the sale of the bankrupt's property to 8. A. Marican. The pur chaser was represented by Mr. John Hastings (of Messrs. Hastings and Hastings).
Mr. Harston read the motion, which asked that the sale and assignment by the debtor on Nóvember 2nd, 1908, of the business carried on by him with the stock-in-trade, book debts, other debts and goodwill thereof, to S. A. Marican in consideration of $12,500, agreed to be paid in instalments of $400 a month, should be set aside on the ground that the same was either (1) a conveyance or assignment of the property of the debtor to a trustee for the benefit of his creditors generally within the meaning of subsection A of section 3 of the Bankruptcy Ordinance of 1891, or (2) A frau- dulent conveyance, gift, delivery or transfer of the property of the debtor within the meaning of subsection B of section 3 of the said Bank ruptcy Ordinance and therefore void as an act of bankruptcy. And for a declaration that the said business formed part of the estate of the debtor.
Mr. Hastings I have a preliminary objection to take to the application: that is, the juris- diction of theourt.
Mr. Harston-Mr. Hastings gave me notice of this, and it was arranged between us that this objection should be dealt with, and in the event of the Court, holding that it has jurisdiction, that the substantive motion should come on at a later date.
THE HONGKONG WEEKLY PRESS AND
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Mr. Hastings-If this deed is not set aside, the Official Receiver will receive $400 a month.
His Lordship-Those are assets depending on the deed.
Mr. Hastings-Maybe the bankruptcy pro- ceedings would have to stop until this question is decided, but the Bankruptcy Court has no jurisdiction to deal with it against a person who is a stranger to the bankruptcy proceedings.
. His Lordship-That is a point which I find some difficulty in appreciating. As the bank- ruptcy proceedings are based on this deed he cannot be held to be a complete stranger.
Mr. Hastings-I think he is a stranger because he has never appeared before the Bankruptcy Court, and he is not a party to the proceedings. In order to ascertain this matter I would ask you Lordship to look at the jurisdiction of the Bankruptoy ourt. This jurisdiction has been exercised at home, but under a special section of the Home Act which is not in our Ordinance. Even with the section in the Home Act it has been hold that it is a question of dis- cretion in the Bankruptcy Court. The jurisdiction of this court sitting in bankruptcy is extremely limited, and the Legislature have specially cut out jurisdiction in such a case as this.
His Lordship-There is no general reference to the English Act.
Mr. Hastings--None at all that I can find. Mr. Hastings then referred his Lordship to a number of cases in which it was held that the Court at home had no power to deal with matters such as this.
His Lordship The debtor might pass off his goods by fraudulent sale and oust the juris- diction
Mr. Hastings-Your Lordship has perfect power to decide between the parties to a bank ruptcy, as to whether this is an act of bankrupt- oy, but that question does not affect my client.
His Lordship Supposing a creditor files a petition in bankruptcy against a trader, and the trader produces a document saying his property has been sold, the Bankruptcy ourt is there- fore suspended, pending the trial of that ques- tion.
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Mr. Hastings-Only with regard to that
His Lordship Then a wily debtor would transfer his whole property over to another?
Mr. Hastings-It might be a wise thing that we had this section, but why has our Legislature cut it out?
His Lordship-I am pointing out that we ought to have it in.
Mr. Hastings-I think the Bankruptcy Court most decidedly ought to have this jurisdiction. His Lordship What about fraudulent. preference; has not the Court power to decide that question ?
Mr. Hastings--Yes, as between official trustee and creditors.
His Lordship Your client was not a creditor? Mr. Hastings--No.
Mr. Hastings submitted that the Court sitting in bankruptcy had no jurisdiction to entertain the motion. His Lordship would see that the motion asked the Court to set aside the assign-particular property. ment on the ground of fraud. That was pre- eminently a case for the equitable jurisdiction of the ourt, and it was only by exercising its equitable jurisdiction that the ourt could set aside the deed. The sections referred to in the motion dealt solely with acts of bankruptcy, that was to say, acts on which a bankruptcy petition could be granted. An assignment of this sort might possibly be an act of bankruptcy. so far as the debtor was concerned, but his Lordship would understand that he (Mr. Hastings) appeared for Mr. Marican, the purchaser under the assignment. The debtor was not represented, and was not affected in any way. The only parties before the Court were the Official Receiver and the purchaser under the assignment. Jurisdiction to set aside a deed was equitable jurisdiction, and to make this clear Mr. Hastings referred his Lordship to section 34. (3) of the Judicature Act of 1873. The question, continued Mr. Hastings, was whether the Court sitting in bankruptcy could exercise equitable juris diction. He submitted that it could not. proper course for the Official Receiver take to set aside this deed was to bring an action in the original jurisdiction of the ourt. He could not proceed in bankruptcy against a person not amenable to the bankruptcy law. Mr. Marican was neither creditor nor debtor; he was merely purchaser. He submitted that the jurisdiction of the Bankruptcy Court was simply to deal with bankruptcy petitions, and parties to those petitions.
The to
His Lordship-Supposing, as you say, the Official Receiver must bring an action in original jurisdiction, that would mean suspending the bankruptcy proceedings?
Mr. Hastings-Not necessarily. His Lordship--The bankruptcy proceedings are based on this assignment, therefore, to & certain extent, the Court has cognizance of this
deed.
Mr. Hastings-Whether this deed is set aside or not, there would be assets for the Court to proceed on.
His Lordship-To what extent?
His Lordship-He simply comes in as an ndependent purchaser P
Mr. Hastings-Yes. I don't think your Lordship can read section 102 into our Or dinance when it is not there.
His Lordship-I quite see the force of your argument, but the question is whether section 42 does not give jurisdiction.
Mr. Hastings-This matter does not refer to the Bankruptcy Court.
His Lordship-Supposing he had notice that the bankruptcy would invalidate the con- veyance ?
Mr. Hastings. It is a question of an avail. able act of bankruptcy before the date of the assignment.
His Lordship-Supposing the Official Re- ceiver comes into Court under section 43 P He goes into the shop and takes possession of these things, whereupon Mr. Marican says they are his. The trustee then comes into ourt and says he wants the property, but someone else claims it. Has not the ourt jurisdiction to decide the claim? ;
Mr. Hastings I think not, for this reason: immediately the assignment is produced by Mr. Marican the Court says this is not the property of the bankrupt until that assignment has been set aside. With regard to property admitted to be the property of a bankrupt, it is a different thing.
[January 23, 1909.
His Lordship (to Mr. Harston)-Do you object to this question of fraud being tried by jury?
Mr. Harston-I don't know that I do, but I think I shall satisfy you conclusively that this Court has jurisdiction.
His Lordship-Is the equity jurisdiction of this Court the same as the hancery jurisdiction P Has it ever been defined?
Mr. Harston-Yes, under Ordinance 2 of 1901. Proceeding, Mr. Harston said the point raised by Mr. Hastings was one of very great im- portance because it was one thing to move in bankruptcy and another to bring an action in the original jurisdiction of the Court. He could not go into the facts of the case, except so far as there were facts on the affidavits, two of which he wished to call his Lordship's attention to. The first was that it was clear from an affidavit filed by the debtor that the sale was made on November 2nd; the other fact was that on the very next day the same solicitors who had put through that sale filed the debtor's petition. In dealing with the question of jurisdiction, Mr. Harston asked his Lordship to note the points to be found in Marwell. The first was that there was a presumption against ousting the jurisdiction; the second was that jurisdiction might be conferred by implication; the third was that a ground of jurisdiction implied a ground of machinery to enforce it; the fourth point was that the conduct of the party objecting might be an estopper. It was necessary in considering the question of jurisdiction to consider the various ordinances passed in the olony conferring jurisdiction on the Court. After referring to various ordinances dating back to 1844, Mr. Harston said his submission was that under those ordinances, as now enforceable in the Colony, the Court clearly had equitable jurisdiction in bankruptcy. In the present case the only assets were the assets in this business, and he was merely dealing with the question of discretion.
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His Lordship-Those assets have been substituted for $400 a month.
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Mr. Harston-Yes, and now is the Official Receiver, in the interest of the creditors, to institute an action which will run into $3000 or $4000 costs, when he can obtain the same object, and the ourt can deal with the matter just as effectively by a motion in bankruptcy? It is obvious from the terms of the Bankruptcy Act that this case. is really within the machinery, because, as your Lordship will see, the allegations set out in the notice of motion are alternative allegations. In this case the Official Receiver is setting up a superior title against the bankrupt.
is Lordship-Is this an assignment for the benefit of the creditors generally ?
• Mr. Harston-It does not purport to be on the face of it.
Mr. Hastings-It is an assignment of ab- solute sale.
Mr. Harston-I submit that there is juris- diction in this Court by virtue of the ordinances at present existing in the Colony.
After further argument his Lordship reser-
ved his decision.
IN CRIMINAL JURISDICTION.
BEFORE HIS HON. ME. H. H. J. GOMPERTZ (ACTING, PUISNE JUDGE).
USING VIOLENCE WITH INTENT TO ROB.
han Shui was indicted on a charge of attempted robbery at Hunghom on January 7th. Prisoner admitted going to the house men tioned, but denied taking any goods.
The Attorney-General-He is charged with using violence with intent to rob. It is not alleged that he took anything away.
On the charge being explained to the prisoner he pleaded guilty, and his Lordship sentenced him to three years' imprisonment with hard labour.
ROBBERY AND LARCENY. Lam Tim. Chan Shin and Po Tun were indicted on charges of robbery and larceny at Chinwan on November 29th. Prisoners pleaded not guilty and the following jurors were called: P. F. Nicholson (foreman), J. Lysaught, E. H. Neave, J. M. McHatchon, E. G. Smith, F. 0. Day and P. Davidson.