November 26, 1906.]
creditor now he wants to put in as a secured creditor, therefore, I think I shall not call on Mr. Blade to argue that point. I shall call on yon (Sir Ilenry Berkeley) if you have any strong cases to argue oo.
Sir Henry said he was prepared to deal with that. At the outset his Lords'ip would find that the proposition from which the conclusion had been drawn was false. It was not because Ho Tang voted against the proposition pro- posed by the debtor that therefore that proposition could not be passed at the meeting of August 3rd. According to the Bankruptcy law a debtor who submittel a scheme of com- position to creditors must have that scheme supported by a majority in number of the creditors who had proved and were entitled to vote, and by a majority in number and in value of the debts proved. Even if the whole body of creditors, or & majority. voted for & scheme, the Court need not
necessarily approve it The total debts spproved in round numbers amounted to $139,000, while the total amount represented by creditors present who had proved they were entitled to vote was only $75,000, which was not three-fourths of the value as required by section 18 (2) of Ordinance No. 7 of 1891. The trustes had refused to call a meeting to put the matter again before the creditors unless and until the creditors satisfied him they were bona fide creditors. Mr Ho Tung's action in this matter as an unsecured creditor was wholly immaterial to the question whether he should be allowed to amend. The composition against which he voted was not made and supported in good faith, and the scheme could not have been approved by his Lordship even if it was passed by the ' creditors, because it was not bona fide; it was not likely to ba carried out because there W88 no guarantee; and the proved debts of the oreditors supporting the composition had not been investigated by the trustee
Mr. Slade-My friend is referring to an affidavit in which Mr. Lowe makes comments on a subsequent scheme put forward after the man was made bankrupt. He is not referring to the scheme put forward by the Official Receiver.
Sir Henry-It is the same scheme only amplified. Counsel then proceeded to give a
digest of Mr Wakeman's affidavit.
Mr. Slade-I am sorry to interrupt, but my friend is making a misstatement of fact.
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Sir Henry Interruptions never affect me in the slightest. They delay the Court, but they don't put me out. Proceeding, he sub. mitted on general principle that clause 9 So far as it related to the time with- in which the trustee bad to call upon creditors for evidence to support the claim put in was merely directory, not imperative. The Court was not compelled to accede to the wishes of creditors. It sat to protect the commercial morality of the country and in the general interests of the public, and it was not to the general interests of the public that the debtor should have a composition approved which was not a good and honest one. These proceedings should be stopped at once, and the other side should give the particular asked for. The debtor had wilfully refused to disclose his property in the statement of affairs. His Lordship ordered him to file a proper statement on August 16th, but he had not done so. That amounted to contempt.
His Lordship-I did not make such a stringent order as that, because the man was not capable of doing it, and he has no books or papers.
Sir Henry-Being without papers is a very grave ma fer.
His Lordship Of course he is not mens res, Sir Henry-Then he shouldn't be a trader. Mr. Slade-He's not a trader.
CHINA OVERLAND TRADE REPORT.
His Lordship-I am sure he did.
Sir Henry-I don't know whether this lack of mens res is not assumed. The debtor had the mental capacity to attempt to bribe Mr. Lowe. I think the man's as much rogue as fool. In a paragraph in Mr. Lowe's affidavit he stated that the debtor had been tempting him to agree | to the scheme by pointing out that it would be to his interest, as if it were carried through be should get increased remuneration. The general effect of this is to show that the con- duct of the debtor is not such as to be approved by the Court. With respect to the leave which your Lordship gave to Ho Tung, I understood my friend to submit last time before you that your power to give leave to amend was derived from rale 10 of the first schedule to the Bankruptcy Act, 1883. I submit you are not bound by rule 10 or any rule whatsoever. You have the right to relieve a creditor who has made a mistake in the filling of bis proof, and the power to give him that relief is not conferred upon the Court by any power made by aot of parliament,
Mr. Slade argued that lodging the proof did not constitute proof of debt.
His Lordship-I don't think he's got the mens res to commit any offence, even ander the Bankruptcy Act.
Sir Hleury-Then he has not the mens res to draw us a composition.
His Lordship-I don't think he has. Sir Henry-According to the Bankruptcy Law the debtor is under every obligation 10 afford every facility to the trustee in connection with his affairs Tere is an affidavit by Mr. Lowe stating that he had the greatest difficulty
n getting information.
Mr. Wakeman, Official Receiver, questioned by Mr. Slade, said he admitted the proofs of debt presented by Mr. Slade's clients but did not admit them to vote at the creditors' meeting.
The Court was adjourned till to-day when the motions will be proceeded with,
Friday, November 23rd.
IN BANKRUPTCY,
BEFORE SIR FRANCIS PIGGOTT
(CHIEF JUSTICE).
CHUNG SHUN-KOO'S AFFAIRS, The hearing of Mr. Slade's motion asking his Iordship to discharge an order allowing Mr. Ho Tung to amend bis proof was continu-d.
Sir H. S. Berkeley, K.C., instructed by Mr. D. V. Steavenson (of Messrs. Deacon, Looker and Deacon) appeared for the Trustee, Mr. A. R. Lowe, on behalf of whom Mr. J. S. Harston (of Messrs. Ewens, Harston and Hard- ing) also watched proceedings, while Mr. M. W. Slade, instructed by Mr. Jackson (of Messrs. Johnson, Stokes and Master) and Mr. F. X. d'Almada e Castro, represented a number of creditors.
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when we come to confirm that resolution it requires not only the votes of those present but of those who are entitled to vote. The first meeting has to be confirmed by the second meeting.
His Lordship-The second me÷ting was never called.
Sir Henry-No one asked us to call it. It was never called, and it was on the movement of the petitioning creditor that the man was made bankrupt. The petitioning creditor was one of those who were supporting the composition.
Mr. Slade -I am instructed by his solicitor that the petitioning creditor did not apply for adjudication. Mr. Wakeman applied.
His Lordship-The question is whether the resolution is, in fact, good in law.
Sir Henry-It is not good in law unless and until it is confirmed.
His Lordship-Before that, it is not an effec- tive resolution unless two-thirds of the number in value of creditors is present. Now $106,000 is the value of the creditors present, three- fourths of that including Ho Tun g's amount is $79,500.
Sir Henry-If you are going to bring him in you must include him.
His Lordship-Now they had not got three. quarters in consequence of Ho Tung's vote as an unsecured creditor. It seems to me that Mr. Lowe fell into the same mistake we fell into yesterday of treating the matter as if it came under the second subsection.
Sir Henry-The two must be read together. His Lordship-The position is that there were not three fourths in value of the persons present, therefore this resolution cannot go forward. The trustee had among other reasons, one which he did not take, which was that this resolution is not a special resolution within the terms of the definition, therefore every. thing falls to the ground. That is the point he should have taken. It was accepted by the trustee under quite a mistaken view of what his duties were thea.
Sir Henry-When that resolution was passed and accepted, then it became necessary to have it confirmed.
His Lordship-It couldn't be.
Sir Heary-Then if it couldn't be Ho Tung couldn't have done any wrong.
His Lordship---He did not vote. If he had voted for $19,500 as he should have done there would have been a valid special resolution, and then the trustee might have come forward with this other o jection. but he really assisted in passing something which was not a special resolution at all, and therefore put the trustee in the course of wrong proceedings which have led to this argument.
Sir Henry What has Ho Tung done; what injury bas he inflicted, and upon whom has he inflicted it that it shall prevent a Court of equity relieving him of a mistake? amount which prevented a special resolution
His Lordship Because he voted for
being pissed.
an
Sir Henry-Bat would that resolution have been passed? That gets to the root of the thing. We ask for relief because we have done nobody an injury. The error arises merely on a highly technical consideration of a subsection of the ordinance.
His Lordship-Without giving a formal judgment on the figures Mr. Slade mentioned last night, unless you (Sir Henry Berkeley) can upset them I think the harm has been done. and that I cannot allow Mr. Ho Tung to amend his proof. When you argued on the figures we overlooked the meaning of the words "special resolution." Under subsection 2 of section 18 a resolution was to be passed by a majority in number and three-fourths of value of all the creditors who have proved.
We had not got to that meeting by which the special resolution was to be confirmed. We were only at the first meeting, and under the first subsec ion creditors may resolve to entertain a proposition by special resolution. In the report made by the Official Receiver we find that there were alleged to be present a number of creditors whose claims amounted to $144,000, in that included Ho Lok-kam who represented three people whose claims amounted to $31,500, As no proxies were produced they were not present, and the amount represented at that meeting was $106,380 including Ho Tung's $19,500 (secured). Therefore the net value would have been $86,800 and three-fourths of that is 365,100. Therefore the special resolution was in fact carried at that meeting, and the view that I take of the authorities is this, that although it may be perfectly clear that the Court has a discretion in respect of any expressed rules or provisions in the Statute to allow a proof to be mended, yet if the harm has been done then,
and Now, the harm has this will not be allowed. been done undoubtedly, and for some reason the second meeting was never held, therefore by the vote of Ho Tung at that first meeting the special resolution was not come to. Unless you can disprove that—
Sir Henry-That I can quite easily. At the first meeting Ho Tung voted against the proposition, but what happened? The resolation was put, passed, and accepted, but
His Lordship-Supposing the trustee bad proved, and supposing the whole of the procedure required by the second subsection had • been enforced, then if it came up before the court the whole thing would be set aside because ab initio it is wrong.
Sir Henry-We are asking for relief against s mistake. What wrong has been done here? The scheme which could not be approved has been defeated. We are doing right.
His Lordship-If the vote had been for $19.800 there would have been a special resolution. Sir Henry-There was, a special resolution Ho Tung did not prevent it coming on a second time.
His Lordship-It never came on a second time.
Sir l'enry-That is not the fault of Ho Tung.
His Lordship-The trustee took steps at the end of the first resolution which he ought to have taken at the end of the second. Even supposing Ho Tung had voted properly there
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