The-Hong-Kong-Weekly-Press-1908-03-02 — Page 20

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THE HONGKONG WEEKLY PRESS AND

is ntitled to this second inquiry. It follows

allow, tha Court shall adjudge from what I have said that in spite of the the debtor bankrupt. RA Pinfold (1892, very wide words in which the itility Q.B. 73) decides that this word "sball" clause is drawn the contract must be inter is not compulsory in so far as regards those preted as a contract of suretyship would natur. equitable grounds upon which the Court has ally be constructed; that is, that the compredore often refused the order, but that so far as stands surely to Messrs Sassoon for their Chi. regards the actual provisions of the section it is nese customers; they cannot be help to gear. compulsory. But I think that the clear meaning antee to Messrs. Sassoon against themselves, of this section is that it contemplated the and therefore any losses which have been application for adjudication being made before occasioned by Messrs. Sassoon's own action is the aceptance of a scheme, and in that case the not covered by the agreement:-I think that, fourteen days provision is absolute; but that if the words 'or otherwise however' must be

a scheme has in fact been accepted the creditor is | interpreted by the ejudem generis rule, and deburred from availing hime If of this povision, that the sentence whether such losses, dam But the who's controversy turns on section 18 ages, costs, charges or expenses shall be incurred (5) which indicates the grounds on which the or sustained by reason of the breach of such court may, in its discretion, refuse to approve contract, agreement, transaction or business or

the scheme. One of these ground is "if the otherwise howsoever can only refer to losses Court is dissatisfied with the conduct of the occasioned by the acts or defaults of the debtor". The later English Act of 19 has Chinese customers. If a lose were occassioned in section 3 (N) and (9) a somewhat different by a breach of contract by Messrs. Sassoon provision:-The Court shall refuse to approve themselves, they would not I suppose contend the proposal in any case where the debtor's I think candact is snch that the Court would be obliged that the compradore was liable. I can deal with this head, and the "Further to refuge his discharge, had he b en adjaiged | Enquiries together. I think they really bankrupt, or where the Court would be all fall under this ruling and I suggest required either to refos, impend or attach that the better form of the enquiry would conditions to discharge it shall refave its on these lines as to any acts committed by approval unless a composition of 7 t in the the defendants which have occasioned the loss

is forthcoming. It is necessary to notice this in respect of which it is sought to impose difference in the two provisiona AS some liability on the defendant. The exact form

English decisions have been referred to. In can be settled by the Folictors in Chambers England the refusal is definitely regulated; in There remains the third head, the deficiency in the local Ordinance it is discretionary. It is price of goods sold & c. I do not know what the clear, however, that the conduct of the deblor word "deficiency" means. It seems to me that

referred to in our ordinance means such conduct this question as well as the consequen' questions in relation to his business as the Curt era cis- which depend on it are matters which a coming its powers under the set, would have to take mercial man is far better able to decide than I

notice of in am. I think the parties ought to agree to take the opinion of some gentleman in the commercial world. If they do not this part of case must be much more fully stated than it is to enable me to arrive at a conclusion.

IN BANKRUPTCY.

SCHEME OF ARRANGEMENT AL PROYED,

His Lordship delivered his decision in te an Wa-sha . Mr. P. W. Goldring (of Messrs. Goldring, Barlow and Morrell) represented the debtor, and Messrs. II. W. Looker (of Messrs. I'eacon, Looker and Deacon), E. J. Grist (of Messrs. Wilkinson and Grist) and C. F. Dixon (of Messrs. Hastings aud Hastings), the creditors.

be

reason for I think I

A

[March 2, 1908. make any remarks on a subject with which I am not conversant I am bound by the Ordin. ance to form an opinion on the facts, sad in a bankruptcy of this importance it is essential that I should attempt to give an intelli. gent, and I hope intelligible, the conclusion I bave come to. am right in saying that this sort of middle. man is essential to the international com- merce which goes on in this Colony, and that this is a fact recognised by all parties. But then this follows:-That a middleman must have a larger command of the commodity in which he deals than an ordinary marohant; that his commercial conduct cannot be judged, and it has to be judged before the bankruptcy court by the standards by which the conduct of a mer- chaut in the same line would be judged. The chief q testion is, of course, that of capital. The apparent lack of proportion between a man's

Aud capital

his

the undertaking which bankruptcy court might think unreasonable in the case of a merchant might possibly

io the

of quite reasonable

Care and mid leman,

I think there is inevitable corollary to this-that the firms who deal with the middleman must be taken to know this. The question which I have therefore to decide in the present case is whether thin debtors dealings were, by the light of these facts, unreasonable; has he acted rashly and bazardously as a middleman, and not as a mer- chaat. I have then to decide this question, really on behalf of the commercial community rather than as a question of fact or law, without the usual assistance of expert evidence on the subjet which I should have in an ordinary cise; I must do so by such light as I can glean, by ordering and the materials before me are not very pro- a prosecution or refusing or suspending, or al mising, for while some of the creditors Arms taching conditions to his discharge under of standing in the Colony are willing to section 27 The conduct of this d-btor relid accept the very

smill composition of 7 on by the opposing creditors is conduct which,per cent, others, also of standing, protest, as alleged, falls within section 27 in regard to ; because I presume they consider the debtor's 80 bad commercially which the discharge may be refused or suspend. | conduct to have been

ron the ed: rash and hazardous speculations, which speaking, that they are willing to include of course contracting debts without a risk of getting at the most 11 per cent-as I am reasonable expectation of being able to pay them,

to assume from the Official Receiver's report or continuing to trade after knowing him if to will be the fact-to incur a loss themselves and be insolvent. This, then, is the question I have

to impose a loss on others, in order to expose to decide. It is not a legal one at all in this and punish his conduct. Now, I find that ap

but a purely commercial one, and I must

to 190 the profits were $27,000 and the ospital do the best I сад with what

increased to $66,000. The debtor does not seem to bare kept very regular accounts, but I gather that all the material facts have been ascertained. But by the end of 1906 everything had been lost except 8570). la 1905.06 the debtor had contracts for yarn amounting to eleven million dollars, of which he had failed to take delivery

Case,

way, as

1

to seems

ara

There is no rule that any misconduct will justify the Court in refusing to sanction a

me rather a difficult problem. There bowever, a few authorities which show the tendency of English judges in considering this His Lordship said In this case I am asked question, which I must first refer in. (In re to approve a scheme of arrangement by which

E.A.B., 192, 1 K-B. at page 5). Vaughan the debtor proposes, or it is proposed on the Williams L.. expressly alluded to the old deci. debtor's behalf, to pay a omposition of 7 persons, and be laid down this important principle cent on all provable debts within a month after the approval of the scheme, the payment to be secured by the personal hond of some person to be approved by the creditors. It is understood that this must mean, or be in fact, by all the creditors. The scheme bas the approval of the requisite majority of three-fourths in value of all the creditors who have proved, and it is supported by the Official Receiver in report. It is rehemeatly opposed by th remaining creditors, One of tue

proxies

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of four million, and had failed to re-sell two million. On 15th August, 19 6, he had to take delivery of three million of which two scheme. l'he misconduct must have been such

million was not re-sold, and on the 17th August as would make it against public policy to sanc

be then or lored dve million of which two tion the scheme, i.e., the misconduct must have million were not re-sold; his uncovered obliga. been of a gross character. Now what is the tins amounted therefore to 71 millions, misconduct suggested here?. In substance, it confess that these figures rather stagger the is only that the debtor has been guilty of rash

uncommercial mind. The debtor says in his and

bazardous speculations leading to his explanation that his customers had given him insolvency; but to say that that is a ground directions to buy, and had arged him to bay,

because they said which the Court should refuz to saDC-

great quantity of yarn upon tion the scheme would be, in effect, to say that

would be wanted, nod that they failed to come in cases where that is reported to the Official ; forward and buy, the close of it all being the Rec-iver there can be no schema Bat," the rise in exchange and a consequent fall in the learned 1. J. adile, "there might be a cua' prices of yarn. The fact is howevert that the where the rash and hazardous speculations bad yaru market was in a precarious condition silver, and been so continued or of such a character as to owing to the abnormal rise in

: that

the forriga

themselves make it against public policy that a man who

importers might be described as A confirmed

closed the market for three months in order to gambler

It all seems to the should get a scheme sanctioned at all Toara redace the st eks on hand. are remarks in re Beer (** I. T, 335) in much

uncommercial mind very rash and very hasar the same sense.

It is clear that these opinions' dous, but it is so rash and so hazardous that I are applicable to the discretion of the Court am juvified in setting aside the wishes of the under the local Ordinance, and it Was

majority of the creditors who have the legal strongly contended that this

right to bind the others to aceipt the proposed I have not to Inquire which falls within The las' d-scription | scheme of stringement,

into rash and hazardous speculation which or express an opinion on the opposing ought to induce the Court to refuse the sanction

creditors action, for it is not directly before ma. of the scheme. The examination of the debtor But indirectly it is, and I cannot refrain from revealed the following facts that in January saying that some of this dealing was dealing with 1903 he commenced business with a ospital of themwires, at a time when things were so shaky $11,000, or perhaps Summ, this does not very

that they themselves had to join in taking violent clearly appear. He was not a yarn merchant, mesares to check a further fall in prios. And strictly so called, hat a middleman, the distri- ; I must assume that they had, or if not, o vald bating centre between the Europeas importers bare obtained some idea of, the debtor's position, and the Chinese large and small buyers through Obviously, I do not say that they were them. out the country

I think this is material, | sites acting rashly or hasaricusly. But what because although I am most antions not to I cannot help thinking from such experience as

that of Talati and Co., - themselves bank. rupt in Bombay-has been chal enged, ard the challenge if sustained would bring the amount of the assenting creditors below the necessary three-fourths. It seems that Talati's proof was dated 11th January, 1907, and that the firm was made bankrupt on 29th April, and that the firm itself sent a proxy to the debtor's solicitor on 23rd November, which clearly was an invalid proxy as it should have beng given by Talati's as-iguee, and not by Talati and Co. themselves. It was, however, confirmed by the assignee, and I musí apply the doctrine of ratification to this, and hold the proof to be validly made. This point would be too highly technical to warrant my refusing to confirm the scheme merely on this ground, but it seems to me to be a great pity that there should have been any laxity in India in a matter of such importance The next point arises in virtue of a definite applica- tion that the debtor be adjudicated bankrupt section 19 (1) of the Ordinance provides that if a composition or scheme is not accep ed or approved within fourteen days after the conclusion of the debtor's examination

or

such further time LS the

Court

of

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