1939-08-04 — Page 10

FRIDAY AUGUST 4, 1939.

DELAY FATAL

-PAGE 2

NO SUGGESTION OF FRAUD no doubt that he did induce Miss or beginning of 1938 but did not distribution of the debtor's assets. been obtained by fraud, that might the purpose in that each case being It may well be that, had it been Morrison to hand over her bonds well be a good reason for annul- to exclude the debtor from a part shown that Painter's debt to Blls to him mainly by the false pre ment even after two and half nership, and at p.751 of the Report, zard (which arose from a torty tence that he was still compradore Lord Watson states the law in the had been fraudulently incurred, of the French Bank, and therefore years,

his petition would have been dis-in a position to invest her money following terms:-

missed, but here there li no sug to the best advantage, but I cannot The Oficial Receiver submits

"Their Lordships do not dispute gestion of fraud about the liability see why this misrepresentation, that the delay has in no way pre- the soundness of the proposition incurred by the debtor to Mr. Kam-which in 1937 was strongly alleged judiced the position of the credi

for opposing the tors, but it is clear that if the ad- that a plaintiff or petitioner who fat Lay, and though the latter no and yet was not considered by the Judication were now annulled the institutes or insists in a procesa doubt filed his petition mainly in then Official Receiver even as suf- claim of the creditor for the lar- before the Bankruptcy or any the debtor's own interest to save icient cause gest amount, $43,400, would be other court, in circumstances which him from arrest at the instance of closure of the debtor's public ex- make it an abuse of the remedy Miss Morrision there is no possible amination, should now be used as Statute barred.

This objection of delay I hold to sought of a fraud upon the court, suggestion that he knew of the a weapon to attack an adjudication

the other creditors. be per se fatal to this application cannot be said to have acted in circumstances in which the debtor on a creditor's petition which had

Finally, in In re Adáma ex parte As regards the merits of the ap-that proceeding either with rea- had become liable to Miss Morrison the support of a large majority of In respect of the one remaining plication I hold, though" with somel sonable or probable cause. But, in

cannot using that language, it becomes Griffen (1879 Chancery Division, p. doubt, that here too it

necessary to consider what will, in 481) Griffen had obtained the ground on which this application succeed.

serise of the assignment of a judgment debt was based, namely that the assets the proper legal

a debtor's summans in creditors are not and will not be words, be sufident to constitute due from Adams to another and for division among the unsecured what is generally known abuse of process or as frand upon respect thereof on Adams who then sufficient to pay a dividend of 15 the court In the opinion of their committed an act of "bankruptcy, percent, I have already stated that Lordships, mere motive, however, Griffen then fled his petition for this fact must have been patent to reprehensible, will not be sumclent Adam's adjudication which Adams the Official Receiver at least 18 for that purpose; it must be shewn resisted on the ground of inequity months ago and have held that it that, in the circumstances in which and abuse of process. It emerged is now too late for him to rely on » the interposition of the Court is that both Griffen and Adams held the deficiency.

I am also of the opinion, based sought, the remedy would be un-mortgages on the same property, suitable, and would enable the that Griffen was the son-in-law of Again, although there is no evi-person obtaining it fraudulently the mortgager, a solicitor, and held on the cases in the Hongkong Law dence of any concert of friendly to defeat the rights of others, the legal estate as second assignee, Reports which have been cited to creditors, I have no doubt that the whether legal or equitable."

I think it is established that the petitioning creditor who had been paid no interest on his debt for is months did present his petition by arrangement with the debtor, not so much to preserve what he could out of the wreck as to save the debtor from personal execution under Miss Morrison's judgment.

CONCERT

debtor or his family did come to an arrangement with certain of his creditors whereby they should

as an served

Here I cannot see that even the remedy sought by Mr. Kam-fat Lay was unsuitable it enabled him the rights of others.

not prove at all or prove for less in any way fraudulently to defert assignee from whom' Griffen deff i gumiciently large-it amounts to.

QUESTION OF COSTS

that the second mortgage to Adams me, that the reduction, caused by had been made without notice of the admission two years ago of debtor had been able to pay is not the legal mortgage and had been additional proots of debt, in the concealed from the intermediate percentage of his debts that the ived his title; and that, the inter- than their full claims, so as to en-

mediate assignee having obtained only 3 percent to justify me in able the 15 per cent rule to be

a declaration that he was entitled annulling the adjudication on that

ground alone. complied with, but at the same

RIGHT TO ADJUDICATION-

to a first charge on the property time it is undisputed that the

Again, in In re Painter ex parte for the whole of his debt. Adams largest creditor, Mr. Tang Shiu- kin, on getting wind that further Painter (1895 1 Q.B. p. 85), on had thereupon got the mortgager assets might be available for dis-which the Official Receiver replied, struck off the roll of solicitors on tribution, at once came in and but which I agree with Mr. Lo is account of his fraudulent conceal-

The Official Receiver has submit-. proved for the additional sum to against him, the debtor was a re-iment.

ted that his application was made which he was entitled, and that tired police officer on a pension of

MERITS OF CASE

in the public interest in order to the executor of another creditor £1.138.4d. a week. One Blizzard.

The Registrar was satised on disclose something in the nature also came in and proved for a debt had a judgment against him for a which had not previously been slander for £294 and obtained an the evidence that Griffen had taken of a conspiracy to defeat the ends £2 over the judgment debt simply and of justice. I have already held disclosed, a step in either case order for instalments" of which in itself might have result-month. The debtor made default solely to enable him to enforce his that I am not satisfied there was ed in an application for annulment in payment and, to save himself personal aims against Adams by

cial Receiver's claim to have acted of the adjudication for infringe from committal, Aled his petition means of the intimidation of the any such conspiracy and the off-

on which he was adjudged bank-Bankruptcy Court,

in the public interest is to my mind ment of the 15 per cent. rule.

"No doubt the object of the

"

those

alma

It remains to determine the question of costs..

H

I do not, however, think I am rupt. Blizzard then applied for, being to stiffe, the application to further discounted by the final justified in drawing the conclusion, and was granted, annulment of the have the mortgager struck off the paragraph of his formal applica-" for which the Oficial Receiver adjudication on the ground that it rolls and to stifle Adams' equitable tion dated the 23rd May in which he asked, in the event of the strove, that the friendly creditors had been obtained for a purpose claim upon the property.

He therefore dismissed the peti- adjudication being arinuled, for an were actuated solely by friendship foreign to the administration of for, and sympathy with, the debtor the Bankruptcy Law, viz. to defeat tion as being wholly outside the order that the dividends already

his (Blizzard's) claim. On appeal and in no way by self interest... by the debtor it was held that the legitimate purpose of bankruptcy, distributed to the friendly creditors

There is no suggestion here that presentation of the petition had as based on proceedings altogether should be refunded to him. the debtor was able to pay any not. in the circumstances, been legal, inequitable, vexatious and in view of the fact that all the

oppressive, and Griffen's appeal greater percentage of his debts such an abuse of process as to was dismissed by L.JJ. James, Brett creditors, other than Miss Morri

sion and two Indian moneylenders, than he has paid indeed the Off- entitle the court to annul In his and Cotton in scathing language.

are placed by the Official Receiver cial Receiver himself admits that judgment (at p.91) Kennedy J. I can see no true parallel in the category of "friendly cre- he was hopelessly insolvent from said:

between that case and this, since ditors." I cannot escape the con- 1933 onwards-and in such circum-

there is no suggestion here of any viction that the only aim of this stances I cannot see what neces-

vexation or oppression of the part of the application was, if sary impropriety there was if some

available to of the creditors did agree to prove debtor in this case in presenting debtor, but at the most, a friendly possible, to make for less than their just dues when his petition was to protect himself gesture by a creditor to relieve the satisfy the claims of the unfriend- it is obvious that, if Miss Morri-from the payment of this debt; debtor of the burden of one partily creditors the dividends already alon's judgment was to be satisfied, but can we say in the words of the cular debt without knowledge that distributed to the others. From all the available assets of the county court judge that that is at had been fraudulently incurred. those unfriendly creditors the Om-. I am therefore of the opinion cial Receiver could have taken an debtor would be swallowed up and purpose so foreign to the adminis they themselves would get nothing. tration of the bankruptcy law as

to be an abuse of the process of that on the merits also this appli indemnity. If he has neglected to Furthermore, there is abundant the court? I do not think that we cation must fall and I cannot help do so he must bear the conse authority for the proposition that can. No doubt in passing the feeling that in making it the Om-quences as far as the friendly cra-

cial Receiver has lost sight of theditors are concerned. where the debtor (as here) is gen-Bankruptcy Act of 1883 the legis-old adage "hard cases make bad As regards the debtor, the posi ninely insolvent his creditors mo- lature had in view the interests of It may well be that by the tion is somewhat different. His tive in petitioning for his bank the creditors and of the comme adjudication Miss Morrision was honesty was impugned before me ruptcy is, in general immaterial

cial community generally; but they deprived of a considerable part of by direct evidence which he him- had also regard to the interests of the fruits of her judgment, but the self did not think it to contradict, NEITHER FRAUD NOE ABUSE the debtors; and I think that al-Ordinance itself in sections 46-48 and I am not, therefore, prepared Thus in King v. Henderson (1898 though the primary object of makes provisions for this very to make any order as to his costs.- A.C. p.720) it was held by the Privy debtor is to shield himself against Council that it was neither frand the remedies of his, creditors by nor an abuse of process of court to making himself a bankrupt, that apply for a sequestration order in itself is not sunncient to deprive with-an-indirect motive, that is him of his right to an adjudica- for a purpose other than the equal tion on his own petition,"

happening.

DENTOR'S DISHONESTY

I think that justice will be done

if I dismiss the application » and order the Oficial Receiver to pay

As to the dishonesty of the the taxed costs, as between party debtor, I and it established. I have and party only, of the creditors.

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