On section 8, we have amendments of f.1 and h.1 which are cognate.
SECTION 8.
Deputy Taylor has asked me formally to move them and I understand from the comments made by the Minister that he is amenable to raising the amount from £500 to £1,000. I will move those amendments so that we can discuss them and the Minister can comment on them. I move amendment No. f1:
In page 9, subsection (1)(a), line 39, to delete "£500", and substitute "£1,000".
Yes, the increasing of the amount from £500 to £1,000 — those amendments — and there will be consequential amendments put down by me — are acceptable.
Amendment agreed to.
I formally move amendment No. g1;
In page 9, subsection 1 (c), line 43, after “debtor.” to add the following:
"Such notice may be served by prepaid registered post addressed to the debtor at his last known residence or place of business and such notice shall be deemed to have been served when the same would, in ordinary course of post have been delivered to the address to which it was sent."
This is a sensible amendment and I support it.
I am opposing this amendment. It is not a matter of substantive law but rather of procedure and, therefore, its subject matter should be dealt with in the rules. The normal mode of service in bankruptcy legislation is by personal service. No reason was given to the committee or since then as to why this method should be changed. It reflects the gravity of bankruptcy proceedings that there should be personal service.
I think that makes sense.
It is understood that before allowing any other form of service, for example, substituted service, the court requires to be satisfied that all efforts to serve the debtor personally have been fruitless.
Could I just respond to that? I cannot speak an behalf of Deputy Taylor but, of course, the Minister is correct is saying that the normal position in court proceedings of a serious nature, particularly High Court proceedings, is that there must be personal service. I accept what the Minister says, that it should be a matter for the Rules of the Superior Courts to provide for substituted service in the event of its not being possible to effect personal service. I would certainly accept the Minister's view on this.
Deputy Taylor would know the procedure regarding personal service. Does he propose by that amendment that in the event of a person not being able to be traced this procedure might be followed?
The normal position in any High Court proceedings is that if personal service does not prove possible and an affidavit is sworn describing the attempts made at personal service, if you have an address for somebody, and it is the only address you have for them, you can apply to the court for substituted service. That is something that is normally contained in the Rules of the Superior Courts. The Minister's explanation is quite correct.
Yes. Order 76, Rule 19 of the Rules provides for an extension of the time for personal service where it cannot be effected within the specified time limit or for substituted service where the circumstances so require. The Bankruptcy Law Committee recommended a similar rule in the report on page 486. I do not think the committee should accept this amendment.
Amendment put and declared lost.
I move amendment No. h1:
In page 9, subsection (2), line 45, to delete "£500" and substitute "£1,000".
Amendment agreed to.
Question proposed: "That section 8, as amended, stand part of the Bill."
I would like the Minister to give us the benefit of his advice. If you look at the draft Bill that was included in the report, page 426, there are, in so far as I have been able to establish, two substantial differences between that and the section as before us. It was section 10 in the draft Bill and it is section 8 in this Bill. I am not referring to the difference between £100 and £500 which we have now made £1,000. Subsection (3) of the draft Bill says:
Particulars of the demand shall set out the debt due and require its immediate payment.
In this case the corresponding section, which is subsection (3), of section 8 says:
The notice requiring payment of the debt shall set out the particulars of the debt due and shall require payment within four days after service thereof on the debtor.
The Minister might explain why he has taken that different attitude. Secondly, the Minister might like to go on and discuss subsection (5) in the draft Bill which is in some way but not totally related to what we have been discussing, which required that the bankruptcy summons shall require the debtor within 14 days after the service to do this that and the othej thing and state that in the event of the debtor failing to pay the sum it shall be an act of bankruptcy and have endorsed on it a formal affidavit of service. Why is the Minister not including that in the Bill before us? Is it his intention to include it in statutory instruments? What is the agreement? Why is it not in the Bill itself when it appears to be quite sensible?
It will be in the Rules. On the question of "immediately" in the committee's draft Bill and "four days" in our Bill, I understand the committee intended four days but in the draft Bill they put in "immediately". The Committee's draft form requires payment within four days of the service.
Was there an error in the recommendation of the committee?
There is an inconsistency between the two. We understand their intent was four days.
There is one other matter I would like to bring to the Minister's attention. If you look back at the corresponding section in the report, page 61, an important issue is raised which goes to the heart of the matter. It is covered in one sentence:
In these circumstances we considered whether or not a bankruptcy summons should be granted if all normal methods of collecting a debt had not been tried, for example, if a judgment had not been obtained by the creditor against the debtor.
In other words, they considered whether or not they should forbid the use of a bankruptcy summons except in cases where judgment had already been obtained. On balance, they come out against that. They come out in favour of allowing a bankruptcy summons to be issued in any case where it is relevant, in other words, where the £500 is due and it is a liquidated sum, and the various other requirements, but that no earlier action has been taken to collect the money. It would appear to me that there is at least a case to be made for insisting that the judgment would have been obtained prior to the issuing of the bankruptcy summons. The Bill as drafted is such that if somebody owes me £1,000 and I have never taken any action to collect that £1,000, I can nevertheless issue a bankruptcy summons forthwith. I know it does not have dramatic legal consequences but it imposes tremendous psychological and moral pressure on somebody. I know that the corresponding section in the Companies Act is being used increasingly against companies to put pressure on them, in other words, indicating that you are going to petition for their winding up. The court has, by and large, looked unfavourably on people who petition to wind up companies where they have not gone through the normal collection process. In all the circumtstances would the Minister like to comment on that point?
I understand that the position is that the court has a discretion and in practice it would require that all procedures available would be availed of, and before a bankruptcy summons is granted that payment must have been demanded at least twice so that the automatic nature of the procedure would not arise along the lines the Senator suggests. The committee also pointed out that the stringent pre-conditions before a bankruptcy summons is granted would have to be fulfilled and they were continuing with these.
The stringent conditions are basically that he has to carry his own costs. It appears that if somebody owes you money you can serve him with a bankruptcy summons without ever having got an order of the court against that person for that sum of money. I wonder is it wise? I wonder if we should insist that, before you go into the bankruptcy summons procedure, the court should adjudicate that the sum is, in fact, due. I know the court ultimately adjudicates on it when it considers the bankruptcy summons. It is important that we should stop people taking this action precipitously.
If there is any doubt about the debt the proceedings will no longer be stayed. The Court may dismiss the summons and the disputed debt will be decided in the appropriate court.
But in the meantime problems have been caused to the recipient of the bankruptcy summons. Is this a public document? Is the bankruptcy summons generally known to the general public?
There would be no question of its being advertised, or publication, or anything like that, but in so far as it is a summons it becomes public in that sense. The payment would have to be demanded twice before the creditor could apply for a summons. I will have the points the Senator is raising examined and see if I can give a more detailed explanation.
I certainly do not feel so strongly about it that I would be opposing the section. I do not think that that is justified in the circumstances. I know the committee had, in fact, come to the same conclusion as the Minister has come to. That weights heavily with me in that quite a number of people who are expert in the area have looked at it. I am more interested in where there are differences rather than where there is a view. From my own experience it appears to me that this can be a traumatic experience for people. I would like the Minister to have a look at it. It probably is of less significance now that the amount is being raised to £1,000. It will be more commercial people who will be involved here rather than the person who owes a casual amount of money from time to time. If the Minister would look at it I would be very happy.
I will do that.
Question put and agreed to.