Section 34 makes provision for the application of partnership property in the case of bankruptcy. It makes statutory part of the provisions of Order 76, Rules 88-90 of the Rules of the Superior Courts governing joint and separate estates.
Subsection (1) provides that the joint property of the partnership must be used in the first instance in payment of the joint debts, that is, the debts owing by the firm, and that the separate property of each partner must be applied firstly in payment of his separate debts.
Subsection (2) provides that, where there is a surplus in the joint property after paying the joint debts, that surplus will be distributed as part of the separate properties, that is, to pay the separate debts of the partners in proportion to the interest of each partner in the joint property.
Subsection (3) similarly provides that, if there is a surplus of any separate property after paying the separate debts of any partner, the surplus will be used so far as is necessary to meet any deficiency in the joint property.
The committee recommended that these provisions should be in the Bill rather than in the rules on the analogy of bankruptcy statutes in other jurisdictions, that is, the English Bankruptcy Act of 1914 and the Canadian Bankruptcy Act of 1949.