(Limerick East): This section deals with the adjudication on a creditor’s petition. Since section 11 (1) has altered the requirements that must be fulfilled to entitle a creditor to present a petition (there is the added requirement of the debtor being domiciled in the State or within a year of the petition to have resided or carried on business in the State etc.) this section enacts that these requirements must be fulfilled before the court will make an order of adjudication. Provision is made for service of a copy of the order of adjudication on the debtor.
SECTION 14.
Question proposed: "That section 14 stand part of the Bill."
I wonder if it is right to make it, as the section does, mandatory on the court to adjudicate the debtor bankrupt rather than leaving some residuary discretion with the judge? Might there not conceivably be a situation where, although the various pre-conditions specified in section 11 had been satisfied, it might be possible at that stage for the debtor to satisfy the court that he would be able to meet the debt or make some arrangement about the debt of the petitioning creditor to enable the court to adjourn the application or to take some other step? The section, as it stands, says that the court shall adjudicate the debtor bankrupt, where those requirements are safisfied, even though the court might feel it was equitable to put the matter off for a bit or make some arrangement or something like that. Would it be worth considering to have "may" or something like that rather then to have it absolutely mandatory on the court.
(Limerick East): If the requirements of section 11 have been complied with, then he has to be adjudicated bankrupt. I do not think it should be uncertain. The courts should be in a position where they have certainty. If he pays what he owes he can subsequently be discharged. There is also the show cause situation, where an arrangement can be made and the bankruptcy be annulled.
When that petition came up for hearing, if he was in a position to show, for example, that in a fortnight's time he would be getting a cheque from a rich relation that would enable him to pay off this debt, it seems that as the section stands the court would not be entitled even to grant an adjournment because once the pre-conditions in section 11 have been complied with it is made mandatory on the court to adjudicate him immediately. Once he is adjudicated, notwithstanding the cause shown and the arrangements and so on, nonetheless he has been adjudicated at that point. There could be cases — not often but there could be some — where that whole stigma and the whole complexity of unravelling an adjudication might be avoided. Perhaps we should look at whether we are putting it too strongly. Obviously, in the overwhelming majority of cases, once those pre-conditions have been complied with, the court will accept the petition and adjudicate him but there might be an occasional case where a court, in its own discretion, might feel it appropriate not to do that immediately, but in the light of this section it would have not choice because it is made mandatory there by using the words "the court shall, if satisfied that the requirements of section 11 have been complied with, by order adjudicate the debtor bankrupt".
In so far as I understand the position, the actual decision of the court on adjudication is really only a step in the process. It is almost an ex parteapplication. It is after that, under the provisions of sections 16 and 17, that the bankrupt is asked to show cause. After that he is given the opportunity to have his say. There is provision in section 17 for delaying the publication of the notice of adjudication if he makes an application under section 16. Therefore, the problem raised by Deputy Taylor is solved by the fact that in the example he gave us that person would be able to show cause against the validity of the adjudication.
The adjudication would have been perfectly valid. It is a different matter to say that there was any invalidity. That covers a case, for example, where the creditor says he is owed £1,500 whereas the debtor says he only owes £900 or that there was something technically wrong with the demand made or that there was something invalid about the conditions. Senator O'Leary suggested that the petition was dealt with on an ex parte basis which would mean, in effect, if it were true, that the bankrupt would not have any notice that the petition was presented. I do not think that could be right. I do not think it could beex parte. I think he must be on notice of it. I do not think Senator O’Leary’s point meets the situation. The question of pleading the invalidity of it is a different matter. Obviously if there was anything invalid there he can show cause and have it annulled but this would be a case where a court might on an odd occasion feel constrained just to put the thing off and thereby perhaps avoid the actual adjudication because it is at that point that the adjudication takes place. Section 14 says “adjudicate the debtor bankrupt”.
But if you look at the last two lines of section 16(2) I think it covers the point I am making.
(Limerick East): Even though it is an ex parte petition the debtor would have adequate notice because there would be a summons and a demand and so on. There would be no question of it being sprung on him. Senator O’Leary is right that section 16 covers the eventuality of adjourning a show cause application. But, in any event, the court always has the discretion not to adjudicate if there is any doubt whatsoever that the provisions of section 11 have not been complied with.
Would the discretion not be taken away by section 14? It seems to leave the court with no discretion. Once the conditions have been complied with there is nothing discretionary about that; either they have or they have not. Surely section 14 precisely removes the discretion of the court by saying that the court "shall". It does not say "may".
If you look at section 16 (2) I think it covers the point I was making. It says:
On an application to show cause under subsection 1 the Court shall if within such time the bankrupt shows to its satisfaction that any of the requirements of section 11 (1) have not been complied with.
My point is directed towards a case where they have been complied with.
Listen.
"and may, in any other case, dismiss the application or adjourn it on such conditions as the Court may think fit, having regard to the interests of the bankrupt, his creditors and any persons who might advance further credit to him.
They must consider the validity of section 11 (1) if it is raised with them. For any other reason they can also adjourn the application, dismiss the application on any conditions the court thinks fit not having regard to the validity of the procedure but having regard to the interests of the bankrupt, the interests of his creditors or any persons who might advance further credit to him. I think that the matter is covered by section 16, as I suggested.
(Limerick East): Yes, and in Paragraph 2.6.3. of the report it says:
a petition is an application made ex parte to the court without notice of the debtor which can either be granted, refused or renewed. If an ex parteapplication is granted or refused the court so orders and in the latter case the applicant may appeal.
We are at cross-purposes here. Section 16(2) talks about two categories of cases. It talks about the bankrupt bringing an application to annul the adjudication on the grounds that one of the requirements of section 11 has not been complied with. If he establishes that, then the court annuls the adjudication which has been made. On the point that Senator O'Leary is making, the section says "and may, in any other case, dismiss the application". That means dismiss the application that the bankrupt has made for the annulment. It does not mean dismiss the adjudication. The word for dismissing the adjudication is "annulment". The only situation that is open under section 16 is directed to a case where any of the conditions in section 11 have not been complied with. If you read section 16(2) carefully you will see that that is confined to situations where any of the requirements of section 11 have not been complied with. In that case, indeed, the court annuls the adjudication but in any other case it dismisses the bankrupt's application for the annulment. Is that not the correct reading of section 16(2)?
(Limerick East): The requirements under section 11 are mandatory on the court. If somebody fulfils the statutory requirements he will be declared bankrupt. Then he can make a show cause application where he can sort out the situation but the letter from America with the £2,000 enclosed after his adjudication does not get him out of the situation. He has to move to get his bankruptcy annulled if he can put himself in that position subsequently. Again it comes back to a point the Deputy made previously that bankruptcy is not merely a question of assets. One could be a millionaire and be declared a bankrupt if one has committed an act of bankruptcy and satisfied the other requirements.
There are people committing acts of bankruptcy every day of the week who are not declared bankrupt because petitions are not brought and the procedures are not gone through. Not everybody who commits an act of bankruptcy is adjudicated bankrupt, very far from it.
(Limerick East): That is right but if a creditor petitions and takes it to the stage referred to under section 14, then the court will adjudicate the debtor bankrupt. It has an equitable jurisdiction, which would allow it to exercise its discretion despite the mandatory words of a statute. I would see it that if there is any doubt whatsoever that the conditions under section 11 have not been complied with the court will hesitate and is not obliged to adjudicate. But if it is quite clear that the requirements of section 11 have been complied with, the law is certain and the debtor will be adjudicated. Whether that will be advertised or not at that point is a different matter. A debtor can then proceed and have the adjudication annulled.
Would the Minister help us in this regard because I think Deputy Taylor has made a valid analysis of the situation, whether it is the right way of approaching the matter is a different question. Would the Minister have a look at what the present position is and give us an opportunity to consider the report on that particular point also?
I do no more than suggest that the court might perhaps be left with some degree of discretion — that is all — in a case where, although the conditions in section 11 have been complied with — and of course the court has to be satisfied that those conditions have been met — a short adjournment might avoid the whole thing. There could be such a case. A court might well be satisfied in an occasional petition to grant an adjournment. There could be an exceptional case. If there is such an eventuality can we not rely on a High Court judge to exercise his discretion adequately in that situation rather than make it absolutely mandatory upon him immediately to grant the adjudication? We do rest in our High Court judges tremendous discretion. For a criminal offence we give them the discretion of sending a man to prison for 20 years or giving him the benefit of the Probation Act. Is it going too far to suggest that we would leave him with the discretion in an appropriate case that he might not immediately grant the adjudication? I do not want to labour the point any further than that. If the Minister on reflection thinks there is any validity in the point well and good. If not, so be it.
(Limerick East): I will certainly have it looked at.
We could adjourn without putting the question on the section so that Minister could look at it in the meantime, if that is acceptable?
Is the procedure by which amendments are tabled working out satisfactorily for everybody?
Members
Yes.
The sub-committee is agreeable to take amendments as they come along roughly anticipating the amount of ground we cover each week for the next 88 sessions.
Progress reported, Committee to sit again.
The committee adjourned at 4.05 p.m. until 3 p.m. on Wednesday, 6 March 1985.