This section re-enacts in modern form the existing law which authorises the arrest of an absconding debtor. The court has power to issue a warrant for the arrest of a debtor against whom a debtor summons has been granted and before a bankruptcy petition is presented against him if the creditor satisfied the court that there is probable reason for believing that the debtor is about to go abroad with a view to avoiding payment of the debt for which the summons is granted, or of avoiding the presentation of a bankruptcy petition against him, or of avoiding examination in respect of his affairs or otherwise avoiding, delaying or embarrassing the bankruptcy proceedings. Although the warrant may be issued after the summons is granted and before it is served, the debtor must be served with the summons before or at the time of his arrest. Subsection (3) provides that the court may discharge him from custody if he offers security or pays or compounds for the debt. Subsection (4) provides that in the event of a debtor being adjudicated, a payment made under this section can be challenged as a fraudulent preference. It re-enacts in modern form the provisions of the 1872 Act which authorised the arrest of absconding debtors and we are retaining the power.
SECTION 9.
I just want to raise some questions with the Minister on this section. He may have the information available. In the context of the former Act does the Minister have any statistics as to the number of cases in recent years in which this type of power has been exercised in effect where some one has been arrested and prevented from leaving the jurisdiction? Could the Minister indicate how that was worked?
The second question I want to ask links section 9 with section 8. It is to carry bankruptcy law in a sense into another but related area. There is a problem that has arisen recently in England. In a different situation, where a husband is absconding, leaving the jurisdiction in a situation in the family law area where a maintenance order has been made for the support of the wife and in respect of substantial arrears of money due a court order has not been complied with, could section 9 in this Bill be invoked to prevent the husband leaving the jurisdiction? Could the mechanism of using a bankruptcy summons issued against him operate in this way to require him to appear in the court and to deal with his debts properly?
The bankruptcy summons has to be granted by the court before this section can be invoked. I have no statistics on how often it has been used but I understand that it has been used scarcely at all in the last number of years. The advice from persons involved in these areas in that it would be well to retain the power even though it has not been used to any great extent, if at all, in recent times, so far as we can establish.
If, when the debtor is brought before the court, he does not cooperate under this Bill what will happen? Is he retained within the jurisdiction? Is he lodged in prison? How would proceedings develop from there?
If he fails to obey the order of the court he could be committed but, in the general context, the Bankruptcy Law Committee received no representations that these and similar provisions should be altered. Secondly, there is a similar provision in the Companies Act, 1963, section 247, providing for the arrest of absconding contributories. Also, the section is retained in Northern Ireland bankruptcy legislation. Even though it is seldom invoked here it has been suggested that the section is a useful provision to have which could be used if circumstances demand. It has some deterrent effect by being in the statute even though it is never used.
Could I again ask the Minister to educate me in this regard? The section in the draft Bill appears to have been split in the Bill before us. The powers of arrest were suggested under section 32 of the draft Bill, page 432. It is the same as section 9 down as far as the end of the second subsection. That is at pages 432 and 433 of the committee's report. Subsection (3) appears to have been separated from this and put into section 23 of this Bill. I am not fully conversant as to where subsection (4) has gone. It may be in subsection (2) of section 23 of the draft Bill.
It is in sections 21 and 23. Subsection (3) of the Committee's Bill is now subsection (1) of section 23. Subsection (4) is now amalgamated in subsection (1) of section 21 and subsection (3) of section 23. Subsection (5) is section 23 (4). It was considered that subsection (2) of section 32 should form a separate section and be inserted in the pre-adjudication provisions. That is why it is now in section 9. Section 32 of the Committee's Bill is split up.
I see that. Could I just ask the Minister one further substantial point on that? The other sections deal with a situation, in the case of section 23, where one of the circumstances which can give rise to an arrest is not only to be leaving the State or to abscond or to have removed or concealed or to be about to remove or conceal any of his property with a view to avoiding payment of his debts. That section about what he is doing with his property does not appear to be in this section here. Does the Minister consider that it might be wise to put that into section 9?
There was a lot of overlapping in the draft Bill as regards summons and arrest. All we are dealing with here is a pre-adjudication stage and consequently we can look at the points the Senator is raising when we come to the other sections.
The power of arrest is absolutely essential. It is one of the most effective mechanisms under the Companies Act and it has to be there as a reserve power even though it might not be used very frequently.
I would agree with the view expressed by Senator O'Leary. I agree with the Minister that it is there more as a deterrent than as something that one would have to operate. Could I ask the Minister again about the linkage between sections 8 and 9 in the context of section 9 as a deterrent? This is a problem with the original Act. It seems to be a problem we are taking with the Bill. You cannot invoke section 9 until a bankruptcy summons has been granted. Under section 8 (1) a bankruptcy summons cannot be granted by the court without a notice in the prescribed form being served. A notice in the prescribed form requires notice of particulars of the debt due and requiring payment within four days. What would be the position if there was a very large debt due? A formal notice has to be served and in the period between when the notice was served and the application for a bankruptcy summons, the person could be about to leave the jurisdiction. We could be talking here of small debts or very large debts up to £200,000. Should this section not also contain a provision that would enable, in exceptional circumstances, some form of court order to be made at the time when a notice is being served to apply at the time when the notice is served. Persons who intend leaving the jurisdiction with a view to avoiding debts under section 9 may not want to wait for the niceties of the law to operate, to let the four days pass before the bankruptcy summons is issued. Would the Minister consider that aspect for the next Stage of the Bill? He may want to make some comment on it now.
I am reading the section as saying that it would apply subsequent to the summons being granted by the court but the summons has to be served before or at the time of the arrest. I will check the position about the time between demand and summons before next week and come back to that point.
The point I am trying to make — perhaps we could deal with this next week — is certainly that the summons may not have to be served but before you could obtain the summons the notice requiring payment of debt would have to be served and there is a four day interregnum period as a minimum within which someone can simply vacate the jurisdiction. As a deterrent mechanism it would seem you could not operate the threat of preventing that person leaving the jurisdiction. There are probably common law powers within the court structure to grant an injunction in those circumstances but in the context of trying to provide a comprehensive statement of the law within this new Bill it is possibly something we should specifically provide for.
At this stage, if the Minister is agreed, we could adjourn on this section and deal with section 9 next week, if that is agreed.
Agreed.
Before concluding, we decided at the last meeting that we would meet at 3 o'clock on Wednesdays. Members may wish to know that the official report of our proceedings will be available generally within a fortnight of each meeting.
The committee adjourned at 4.05 p.m. until 3 p.m. on Wednesday, 27 February 1985.