April 25, 1919

UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

The court has power now

in any proceedings to make an official pay the costs himself. Why put the clause in?

Topic:   BANKRUPTCY ACT.
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?

Mr. MOW AT@

I support the motion for

another reason. I do not think when we are trying to establish the fact that we

have a highly respectable and competent class of business men whom we are going to make authorized trustees that we should at the same time suppose for a moment that they would make unjust or excessive demands. I 'think it is very unlikely that any such contingency will ever arise, and I do not see why we should assume it is likely.

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UNION

Hugh Boulton Morphy

Unionist

Mr. MORPHY:

I think the burden should rest as much on the inspectors who approve his action as upon the trustee; if one is liable they all should be liable.

Mr. MO'WAT: This is left entirely to

the trustee.

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UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

I do not think the inspectors have anything to do with the settling of the list.

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UNION

Subsection agreed to. On section 37- Subsection 2-Abstract of receipts and disbursements.


UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

There is a clerical error in that subsection. In line 39 after the word " sheet," the words follow " dividend sheet, dividends " etc. The words " dividend sheet " should be struck out. Amendment agreed to.

Mr. FR.IPP: Is there any time limit

within which the estate must be wound up?

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UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

There is no time limit; that is under the creditors' inspector.

Subsection as amended agreed to.

On subsection 7-Division of property.

Topic:   BANKRUPTCY ACT.
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UNION
UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

It is merely an extension of the time within which a creditor may prove his claim. If he has not proved it within the time prescribed he may apply to the court. The modification is this: We say: "within such further time;" the English Act says, I think: " within sixty

days."

On section 37, subsection (9),-no action for dividend:

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L LIB
UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

I am not clear as to the meaning of that; I ask that this subsection stand.

Subsection (9) stands.

On section 40, subsection (1)-remuneration of trustee:

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UNION

Hugh Havelock McLean

Unionist

Mr. H. H. McLEAN:

Provision is made in the Act that general meetings may be called by the trustee at any time he thinks fit, or by order of the inspectors. In the notice calling the meeting, it is not necessary for the trustee to specify the purpose for which the meeting is being called. A couple of creditors attend and vote whatever remuneration to the trustee they see fit. In such an important matter as this, proper notice should be given to the creditors of the purpose for which the meeting i3 called. I would ask the Solicitor General to consider' this subsection with a view of drafting an amendment to provide for such notice.

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UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

At the first meeting of creditors there is generally a fairly good representation of creditors, and general directions are given for the management or winding up of the estate. At that time no one knows what the estate is going to realize or what amount of trouble the trustee will have; consequently, the remunere tion of the trustee is seldom fixed at the first meeting of creditors. The difficulty is to get an attendance of creditors at all at the next meeting; the dividend as a rule, i3 so small that there is no inducement to them to come. In general practice the first meeting is the only meeting of creditors; the subsequent meetings are meetings of inspectors. This section provides that the creditors, or, in default of the creditors, the inspectors, may decide the amount of the trustee's remuneration. This provision is almost identical with the Ontario Act in respect to assignments and preferences. If we were sure that the creditors would attend and that a majority would vote the salary or remuneration, all well and good; but they will not attend.

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UNION

Hugh Havelock McLean

Unionist

Mr. H. H. McLEAN:

Subsection (2) provides that the remuneration of a trustee shall be limited to five per cent. If he wants to get more than five per cent he should get it at a meeting at which a majority of the creditors are represented. If he wants to get that extra remuneration he must arrange that the creditors be present at that meeting in person or by proxy, and those creditors should know what they are to vote for. Otherwise, he will get the remuneration fixed by the Act.

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UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

This matter dealt with in this clause has been the subject of a great deal of-shall I say-malfeasance in office by assignees and inspectors. In my experi-

ence, assignees and inspectors sit down and simply vote themselves a large remuneration. The creditors, as the Solicitor-General has said, in anticipation of a small dividend, do not pay much attention to the matter. We hould curb the generosity to themselves of these gentlemen. The words " or of any creditor " should be struck out so that the subsection will read:

The trustee in bankruptcy or in authorized assignment proceedings shall receive such remuneration as shall be voted to him by the creditors at any general meeting, or by the inspectors in case the creditors fail to provide therefor, subject to review by the court upon application of the trustee.

I would like to see the court review the remuneration which the trustee is to get.

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UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

Why should not the creditor apply for a review by the court?

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UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

In practice, the creditor does not apply, and we have to protect the creditor against excessive charges oil the part of the trustee or his inspectors.

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UNION

Hugh Guthrie (Solicitor General of Canada)

Unionist

Mr. GUTHRIE:

That is what this clause proposes to do. If the creditors vote too much to the trustee, a single creditor may go to the court and say that it is too much.

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UNION

Alfred Ernest Fripp

Unionist

Mr. FRIPP:

I want to put the boot on the other foot. I want the trustee to satisfy the court, whether the creditor takes any action or not, that the remuneration which he votes to himself or receives by the assistance of the inspector is a proper one. The remuneration should have the approval of the court before it is payable, for the very reason suggested by the Solicitor General- that the creditors do not pay any particular attention to the estate after the assignment has been made. It is all left to the inspectors, and the inspectors are very often appointed by, the trustee himself, in this way: The trustee, or the assignee as we

now call him, . having a majority of the' creditors' claims in his hands, writes to the creditors or gets their proxies and appoints John Brown and William Smith, friends of his, as inspectors. Very often it is a conspiracy between the assignee and inspectors to pay themselves large fees which they have not earned. I want the trustee to satisfy the court, in the absence of any action taken by the creditors themselves, that his remuneration is reasonable.

Topic:   BANKRUPTCY ACT.
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April 25, 1919