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February 6, 1909.]
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1051
CHINA OVERLAND TRADE REPORT.
proceeding. By section 4 of Ordinance 5 of tors, unless they come in, are accurately describ 1864 the old Bankruptey Ordinance it was ed as strangers to the bankruptcy; and therefore, provided that the Supreme Court "shall have by section 102 the Court has power to decide jarisdiction in bankruptcy, and the Chief | the priorities of these creditors among Justice, when sitting in bankruptcy, shall have themselves. I am not sure that this does all the powers rights and privileges which are not furnish an answer to the question, which now exercised or enjoyed by him, except where has been raised as to the jurisdiction of this ordinance otherwise specially provides." this Court; subject to what I have already The subsequent repeal ordinances 20 of 1891, said, I should have thought it clear that bankruptcy, and 6 of 1901, civil procedure, the Chief Justice sitting in bankruptby could preserve rights and privileges etc., jurisdiction or not decide questions of priorities among secured principle, etc., created by the ordinances “sever- creditors in the absence of a provision resembling ally repealed." The argument is this that the section 102. I think therefore that the omission court of bankruptcy by 5 of 1864 has the same of such a provision must have been deliberate. powers rights and privileges as the Supreme I shall have to consider the effect of section 30 Court in its original jurisdiction and in this of the Ordinance which refers to secured jurisdiction by 3 of 1858 the distinction for the creditors, presently. I think that this relieves purpose of jurisdiction between equity and me of the necessity of considering whether the common law is abolished, therefore the court remaining words of this part of section 102- in bankruptcy has equity jurisdiction and "and all other questions whatsoever whether therefore section 102 is unnecessary because it of law or fact"-are to be governed by the would confer a jurisdiction "to decide priorities ejusdem generis rule, for, if one part of the etc." which it already has. It seems to me section was deliberately omitted all of it quite probable that this was in the mind of the must be treated as omitted. But one thing is Attorney-General when drafting the bankruptcy quite clear, that the jurisdiction conferred by ordinance in 1891, but I hesitate to adopt it, section 102 is additional to the normal juris- because sec. 5 of 1864 refers to the Chief Justice diction of the Bankruptcy Court-the section sitting in bankruptcy," and it seems to me that itself begins "subject to the provisions of this the "powers, rights and privileges," which are con- Act"-and it is here that I think I have lighted ferred upon him when he is sitting in bankruptcy upon the weak spot in Mr. Hastings able argn- are those personal privileges enjoyed by a judge ment, Granted that section 102 confers a at common law, as for example the power to special power to deal with questions affecting commit for contempt, and from my experience of strangers, and without going to the extreme drafting I know that it i necessary in order to of saying that this means questions arising remove doubts to confer these old common law between strangers (because although, in the privileges on a judge when he is sitting in a absence of the authorities I should be strongly newly created jurisdiction. I express this inclined to think it did, in the presence of those opinion in order to show that I have not over- authorities I can hardly do so) it does not follow looked Mr. Harston's argument. I am not that all questions affecting strangers are dealt positive whether it is the answer to it, but in with solely under section 102. For there is this view of the opinion I have formed on the question which must frequently arise, and-look- question, loosed at from another pointing at the cases quoted in the books under of view, it is not necessary for me to section 9, I should say has frequently arisen--Is decide the point definitely. I must the creditor who says he is secured really look at section 102 a little more closely secured? If the Bankruptcy Court cannot and see whether what I am asked to do decide this question, but must, as it is contended, in this case does not fall within the inherent always remit the decision of it to another Court, jurisdiction of the Court to carry out the endless litigation would result, with endless Bankruptcy Ordinance, with the administration costs, and the true functions of the Court of of which it is charged. Ellis v. Silber was Bankruptcy would disappear. It seems to me much relied on by Mr. Hastings, but all it impossible to contend that, if a creditor decides is that the jurisdiction conferred on the says he is secured, the Court cannot Bankruptcy Court by section 102 is not an decide whether he is secured.. I think exclusive jurisdiction; and that if proceedings are being taken in the Court of Common Law or Equity, it cannot be said by virtue of this section that they ought to have been brought in the bankruptcy. On the other hand it is undoubtedly the fact that in all the cases either this section or its predecessor, section 72 of the Act of 1869 is referred to. But the contention in this case is that the effect of section 102 is to create all the jurisdiction which is necessary to the Bankruptcy Court to deal with a question whenever a stranger is affected. Now, the first thing which strikes one on looking at the section, is the reference to "priorities." It says that every Court having jurisdiction in Bankruptcy under the Act, is to have full power to decide all questions of priorities. Pausing there for a moment, certain priorities over other debts in respect of a certain class of debts-rates, wages etc. are created by section 31 of the Ordinance, which is to all intents and purposes the same provision as sections 1 and 2 of the Act of 1888, which is added to section 40 of the Act of 1883. Now, as these priorities, which rank among themselves pari passu, are determined by the Act itself, it seems clear that they are not the priorities referred to in section 102. We must therefore go back to section 9 (2), which is section 10 (2) of our Ordinance. That clause provides that the provisions of the section which deal with the effect of a receiving order, are not to affect the power of a secured creditor to realise or otherwise deal with his security. It is obvious that questions of priority may
Mr. J. Scott Harston (of Messrs. Ewens and Harston) represented the Official Receiver, and Mr. John Hastings (of Messrs. Hastings and Hastings) appeared for the purchaser.
His Lordship-said- A motion has been made in this case which is practically to set aside an assignment made by the bankrupt Allana of his business to Marican, for certain reasons which are set out in the notice of motion. say practically to set aside, because I am not quite sure that the motion may not require some amendment, but a preliminary objection was taken by Mr. Hastings on behalf of the purchaser of the business, that this Court sitting in bankruptcy has no jurisdiction to entertain such a motion, and this question was argued on the basis that the motion was, as I have described it. The objection stated shortly is this: That this is a question which concerns a stranger to the bankruptcy; that the Court of Bankruptcy at Home has jurisdiction to decide such a question only in virtue of section 102 of the Bankruptcy Act of 1853; that section has not been introduced into the Colonial Ordinance No. 7 of 1891, which is otherwise based in the English Act, and that therefore this Court being the bankruptcy. side of the Supreme Court, has no jurisdiction. The problem thus raised is one which I have had the greatest difficulty in solving. Sections 122-162 of the Home Act give certain power to the Bankruptcy Court, which is to decide all questions of priorities, and all other questions of law and fact which may arise in any case of bankruptcy, of which it may deem it necessary or expedient to decide for the purpose of doing complete justice or making a complete distribution of property. This section has been omitted from the Hongkong Ordinance for reasons which are not apparent and I do not think I have the right to enquire aliunde as from the explanatory report made by the Attorney-General of the time what the reasons were which induced him to omit it. But I must seek for the reasons as best I may. He cannot have thought it superfluous, because no law officer in a Colony would take upon himself the great responsibility of so deciding with regard to an important section of such a piece of legislation. But he may have thought it unnecessary in this Colony, having special regard to the constitution of the Supreme Court of the Colony and this is the contention advanced by Mr. Harston in support of the motion. Now it has been assumed throughout the argument that the object of section 102 which was section 72 of the act of 1869 is the only section which confers jurisdiction on the court of bank- ruptcy against strangers. This is certainly not said in so many words, but it does not seem as if there is a concensus of opinion that this is its object, that is to give the bankruptcy court jurisdiction to decide questions affecting stran. gers to the bankruptcy which would otherwise be decided by the other court. Now whatever may be said as to the personal jurisdiction of the judges in England, the different jurisdictions of the Supreme Court are well defined, but here everything is vested in the Chief Justice, the Paisae Judge has a co-ordinate jurisdiction, but for all practical purposes the Chief Justice is the justice at common law in equity and in bankruptcy, and the Attorney-General of the time may have said "What is the use of saying that the Chief Justice may do one day in bankruptcy what he may do the next day in the same court, with the same staff in -original jurisdiction "P I do not say that the reasoning is satisfactory and had I been drafting the ordinance, I should not have omitted this section, because it is desirable to preserve in the Colonial courts as far as possible the forms of the courts at Home. But in order to adopt this reasoning I should have to satisfy myself that there is no provision which preserves here the lines of demarcation of the several jurisdictions of the English courts. Mr. Harston's most ingenious argument in brief is this--By section 4 of the repeal Ordinance No. 3, 1855, which dealt with the constitution of the Supreme Court, it is provided that it shall not be necessary to bring any proceed- ing on the equity side of the court for the purpose of bringing to another court any equitable claim, defence or question incid- ent or collateral or arising out of any preceed ing on any other side of the said court, but every such claim may be heard on petition or motion instituted in such last mentioned
arise among the secured creditors; and as they lie outside the bank ruptoy, unless they are brought in by the creditors themselves, the Court of Bankruptey could have no power of dealing with such ques ton. Power is given to the Court at home by section 102 to settle these priorities, and hence I think must have arisen the idea that the sec- ton confers a power on the Court to determine questions affecting strangers; for secured credi-
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that the Court has power under section 43 to decide the question, for under that section (section 50 of the Act at Home) the trustee must take possession of the bankrupt's property, and he may apply to the Court not merely to enforce his acquisition, but also to enforce his retention of it. Now, if the trustee goes into possession of a business; as he might have done in the present case, a creditor who held a security such as Mr. Marican does here, would naturally come forward and set up his cecurity: the Court has power to enforce the trustee's "retention" of the business, and I think on the ordinary meaning of language this must mean to decide the question of his. right to retain possession. What difference can it make if the person who holds the security is not & creditor? It is perfectly true that a secured creditor may under seo- tion 30 of the Colonial Ordinance, which is based on the bankruptcy rules at Home, and not on a section of the Act, realise his security and prove for the balance of his claim; but until he does this he rests on his security, and stands outside the bankruptcy, and is just as* much a stranger to it as a person in the position of Mr. Marican who has bought the business. Now let us see what the position is. I send the trustee into possession, as if he were a receiver of the bankrupt's property; I will assume that the trustee knows nothing of what has taken place between the bankrupt and Marican, but knows only that the business has been carried on by the bankrupt. Then Mr. Marican, finding the trustee in possession, wants to have the rights, which he alleges he has, protected. That he may bring an action at Common Law I have no doubt: but may hẹ not also come to me, sitting in bankruptoy, and say "your order sending the trustee into possession is wrong; the business belongs not to the bankrupt, but to me, because I have a deed of assignment" surely he may, and this without it being necessary to find special authority in the act. If, then, I have jurisdiction
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