Joint Committee on Legislation debate -
Wednesday, 27 Feb 1985

SECTION 12.

Senator O'Leary

I move amendment No. i1b:

In page 11, line 21, before "statutory" to insert "commencement of the".

The purpose of this amendment is to highlight something. The amendment does not quite achieve what I had set out to do. I do not think this is the proper place to achieve it. The cost of the proceedings of having somebody adjudicated bankrupt is to be borne by the petitioning creditor right up to the statutory sitting referred to in section 17(3). I want to make it clear that it is the start of that sitting in case the statutory sitting was adjourned or elongated in any way, rather than including the statutory sitting. It may well be that is the proper interpretation of the section even as it is before us and if it is I am very happy with it.

There is a more serious problem raised by the section. I would like to ask the Minister whether his understanding of the situation is that the responsibility of the petitioning creditor will cease at the commencement of the statutory sitting or does it include the statutory sitting?

Deputy Noonan

(Limerick East): It would include the statutory sitting up to the appointment of a creditor’s assignee which is one of the purposes of the first statutory sitting under existing law.

Senator O'Leary

I understand. I would like to expand a little as this is only one part of the problem. At the preliminary stages to be dealt with under section 17, before the actual meeting under section 17(3), if we are recognising the existing practice where things are successively adjourned, the petitioning creditor is put at an enormous disadvantage because in seeking to have somebody adjudicated bankrupt he might be getting himself into a situation where the application would be adjourned 20 times. If this were the case he would have to bear 20 sets of costs. The adjournment might be done by the court in order to give the bankrupt every opportunity to set his house in order but it could have a detrimental effect on the petitioning creditor at the same time. Therefore, there appears to be two dangers for the petitioning creditor. Firstly, his costs will be astronomical by reason of successive adjournments on the one hand; secondly, the statutory sitting, itself, referred to in section 17(3) might be a very expensive operation. I would like to ask the Minister for his views on that.

Deputy Noonan

(Limerick East): He will get his costs back, if it goes to the statutory sitting, out of the estate of the bankrupt in whatever course of priorities is to be settled by the rules of the court. In the case of an adjournment that would arise in a show cause proceeding, which would enable him to reach an arrangement, provision would be made for costs. A situation would not arise, where without a show cause there would be continual adjournments at the cost of the creditor.

Senator O'Leary

Section 16(1) which we will deal with later, states as follows:

The bankrupt may within three days or such extended time not exceeding fourteen days as the Court thinks fit from the service of the copy of the order or adjudication on him, show cause to the Court against the validity of the adjudication.

Presumably that will be listed on a particular day. You go into court and the solicitor or barrister for the future bankrupt stands up and says "I would like a further three weeks, my lord", and he gets another three weeks; then he gets another three weeks and another three weeks or three months or three years. I understood — correct me if I am wrong — that it is at that stage the adjournments are being given at present.

Deputy Noonan

(Limerick East): The court would have discretion to adjourn a show cause application but if it dismissed it the creditor would bear the costs up to and including the appointment of the creditors’ assignee at the statutory sitting. Until the day one arrived at a statutory sitting and until the creditor’s assignee was appointed the creditor would be liable for costs but then he would be repaid as a first charge, after the costs and fees of the official assignee.

Senator O'Leary

I am happy with that.

Deputy Noonan

(Limerick East): If it is a show cause proceeding you could have a situation where somebody might not be deemed to be bankrupt at all or where he might have come to some arrangement in the show cause proceeding.

Deputy Taylor

Is it at the statutory sitting that the debtor is adjudicated or is that at a different sitting?

Senator O'Leary

Section 15 states where the petition is presented by a debtor the court shall, on proof that he is unable to meet his engagements with his creditors and that his available estate is sufficient to realise at least £500, adjudicate the debtor bankrupt. Section 14 says:

where the petition is presented by a creditor the Court shall, if satisfied that the requirements of section 11 (1) have been complied with, by order adjudicate the debtor bankrupt.

It is after both of those things that the statutory sitting is heard. As I understand it, right up to that stage the creditor is carrying the can for the costs.

Deputy Noonan

(Limerick East): The date of the adjudication should be the same as the date of the presentation of the petition. The bankruptcy proceeds then to the statutory sitting. There may be adjournments before it would arrive at that point if a show cause application is made.

Senator O'Leary

They are the ones I am concerned about.

Deputy Noonan

(Limerick East): If there are adjournments before it arrives at that point, as I understand it the costs will be borne by the creditor but if the bankruptcy proceeds to the statutory sitting then there will be a charge on the bankrupt’s estate which the creditor can claim.

Deputy Taylor

Can the Minister say, even approximately, what the costs of a bankruptcy are up to that particular point? I know it would vary very much but perhaps the Minister has a guideline.

Deputy Noonan

(Limerick East): I do not have any figures that would help the Deputy on that point. I am told that the costs vary enormously. I do not have any guideline to hand.

Amendment, by leave, withdrawn.

Question, "That section 12 stand part of the Bill", put and agreed to.