§ 28. ceased to be any reasonable prospect of his retrieving himself. So, the mere vexatious defence of an action, it was held, so as to gain time, was not a sufficient cause for the refusal of his certificate (). But the certificate would be refused altogether if it appeared that he had systematically bought on credit to sell at less than cost price (m). The mere number of distinct trades in the absence of proof of insolvency was held not to have been reckless trading (n). Contracting debts without reasonable ground of expectation of being able to pay. As under the Act of 1861, contracting such debts will apply to all bankrupts, whether traders or not. It seems the onus will lie upon the bankrupt in any case to prove that he had reasonable ground. The debt must strictly arise out of a contract (6). Rash and hazardous speculation or unjustifiable extravagance in living. This was likewise formerly a ground for suspending the discharge. Such living has been described as "ostentatious, selfish, or extravagant expenditure," and it has been said that differences of opinion may prevail as to the granting of a certificate to a bankrupt who has been negligent, careless, rash, improvident, or lavish, but it will be refused where there has been wilful falsehood and dishonesty on his part (p). Vexatious Defences. Under the old law such defences were always a ground for refusal, or at least for suspending the certificate (q). (1) Ex parte Johnson, 4 De G. & S. 25; 20 L. J. Bank. 6. (m) Ex parte and Re Holthouse, 1 De G. M. & G. 237. (n) Ex parte Wakefield, 4 De G. & S. 18. As to bankers continuing to receive deposits being deemed trading, &c.; Ex parte and Re Rufford, 21 L. J. Bank. 32. (0) Ex parte Goodier, 22 L. T. 426; and see also as to costs, Simpson v. Mirabita, L. R. 4 Q. B. 257. (p) Ex parte Dobson re Strong, 6 De G. M. & G. 781. (1) Ex parte Spicer, 3 De G. & S 601; Ex parte and Re Blackhurst, 1 De G. & J. Bank. App. 219. Undue preference within three months. § 28. Under the Act of 1869, it was not an uncommon occurrence Grounds for for a debtor who had given an undue preference to a creditor to refusing discharge. give afterwards such evidence as enabled his trustee to prove the fact, and yet himself run no risk of punishment, although the author of the preference: now for giving such a preference as under Sect. 48 would be void, his discharge may be suspended. The preference must be such a preference as the Court would declare to be void as against the trustee, and probably it will be necessary for the Court to have pronounced its judgment upon the particular transaction by setting it aside. So a curious effect will be, that if the bankruptcy can be postponed until after the lapse of three months, not only will the transaction be unassailable, but the bankrupt will have escaped the penalty. Former Bankruptcy, &c. This is a restriction upon repeated bankruptcies by the same person, and probably the course of conduct of the bankrupt or debtor under the former bankruptcy or composition will be taken into account, as well as the lapse of time. Fraud or fraudulent breach of trust. Purchasing goods on credit for the purpose of pledging them Breaches of has been held to be fraudulent and punishable with severity (r), trust. A sale under cost price of goods purchased on credit, and carried on for a considerable length of time and to a large amount, was decided to be a sufficient evidence of the debts having been contracted by fraud, and sufficient for refusing the certificate (s). So, contracting a debt by means of false pretences or false representations as to stability or credit, would be fraudulent. And so will obtaining money, though in the course of trade, by false pretences (t). So also if credit be obtained within the meaning of Sect. 31 of this Act. The mere parting with accommodation bills without stating that they were such, has been held not to be a ground for re (r) Ex parte and Re Martyn, 2 De G. M. & G. 225. (8) Ex parte and Re Coleman, 3 De G. & J. 43. (t) Ex parte and Re Staner, 2 De G. M. & G. 263. § 28. fusal. Knight Bruce, L. J., considered that there was no authority for saying that the mere parting with a bill without saying it was an accommodation bill amounted to an implied representation that it was not an accommodation bill (u). Misappropriation of trust money by a bankrupt using it in his trade, was held to be such conduct as the Court might take into consideration (x). But a breach of trust simply was not "conduct as a trader" with respect to the certificate (y). As to debts incurred by fraud to which the bankrupt is a party, see Sect. 30 and notes. Consent to Judgment. As we have seen, under the Act of 1849, the assignees of bankrupts and creditors were judgment creditors to the extent of the unpaid balance due to them, whilst the certificate was suspended and the bankrupt was liable to arrest. Now the Court may, as a condition of granting the discharge, require the bankrupt to consent to judgment against him by the official receiver or trustee; but it does not seem absolutely necessary that such judgment should be so entered in the name of the receiver or trustec. Under the Act of 1861 the creditor was himself entitled to the "certificate of execution," as it was called. The leave of the Court to issue execution may be given on proof that the bankrupt has since his discharge acquired property or income available for payment of his debts. This provision seems entirely independent of the provisions of Sect. 53 as to the appropriation of pay, salary, or income. The Court has also power to refuse, suspend, or grant a conditional order of discharge in cases of fraudulent settlements by the debtor. See Sect. 29. Revocation of a discharge or committal for contempt are now the penalties imposed upon a debtor for refusal or neglect to give assistance to his trustee in realizing his estate. Demands in the nature of unliquidated damages (arising otherwise than by reason of a contract, promise, or breach of trust), not being provable, any action in respect of such torts (u) Ex parte and re Hammond, 6 De G. M. & G. Bank. App. 479; 24 L. J. Bank. 2; and see Ex parte Simond, 3 Jur. N. S. 424; 26 L. J. Bank. 49. (x) Ex parte Jardine, 1 Fonb. Bank. C. 182. (y) Ex parte Wakefield, 4 De G. & S. 18. may proceed, notwithstanding the discharge, and the Court will §§ 28, 29. not restrain it (z). The promise of a bankrupt to pay a debt from which the discharge releases him, is held to be nudum pactum, and cannot be enforced except upon a fresh consideration (a). Unless the earnings and income of the bankrupt be dealt with under the conditions named in this section, it may be taken as a general rule that, although after-acquired property passes to the trustee, and income may be apportioned, yet that mere personal earnings or the fruit of the bankrupt's labour will not pass; but where an architect sued for an alleged wrongful dismissal from employment under a contract made before bankruptcy, he being undischarged, it was held that the cause of action passed to the trustee, and that the proper course was to add him as a co-plaintiff and give him the conduct of the action (b). 29. In either of the following cases; that is to say, (2.) In the case of any covenant or contract made in (z) Ex parte Baum re Edivards, L. R. 9 Ch. 673; 44 L. J. Bank. 25. (a) Jakeman v. Cook, 4 Ex. D. 26; 48 L. J. Ex. 165; cf. Heather v. Webb, 2 C. P. D. 1; 46 L. J. C. (b) Emden v. Carte, 17 Ch. D Fraudulent settlements. § 29. Fraudulent settlements. time when it was made, the Court may refuse or suspend an order of discharge, or grant an order subject to conditions, or refuse to approve a composition or arrangement as the case may be, in like manner as in cases where the debtor has been guilty of fraud. This provision is entirely new, like the penalty for giving a fraudulent preference, it was first introduced into the Bill by the Grand Committee. Made before and in consideration of Marriage. It is necessary to mark the distinction which there is between this section and Sect. 47, avoiding voluntary settlements. In that section, antenuptial settlements not otherwise void are not within the provision, as they are deemed to be settlements for valuable consideration. Under this section, however, reading the entire section together, it would seem that the Court can consider the right to the discharge upon three distinct grounds : 1. Where the settlement is by an insolvent person and the Court thinks such settlement "unjustifiable," having regard to the state of the settlor's affairs. 2. Where the settlement is by an insolvent person and it is established that such settlement was made "in order to defeat or delay creditors." 3. Under Sub-sect. 2, in respect of future-acquired property in which the settlor had not, at the date of his marriage, any estate or interest (not being money or property in right of his wife (d). Under No. 1 of the above divisions it is submitted that the settlement, upon proof of the facts, would not be void, even under the statute of Elizabeth if bona fide, and would certainly •not be void in bankruptcy. (d) Where a person by ante-nuptial settlement covenanted to settle all property which he should acquire in future, the settlement was held void under similar words in s. 91 of the Act of 1869, Ex parte Bolland re Clint, L. R. 17 Eq. 115; 43 L. J. Bank. 16; but if the property when specific were transferred, or the money paid before the bankruptcy, the settlement was not void. Ib., see also Ex parte Bishop re Tonnies, L. R. 8 Ch. 718; Re Andrew's Trusts, 7 Ch. D. 635; 38 L. T. 137. |