To Cleanse Business

Sun (Auckland), Volume III, Issue 669, 22 May 1929, Page 8

To Cleanse Business

Bankruptcy Act Needs Altering (Written for THE SUN) WITH inci’easingly fierce competition spurring traders to offer ever more generous terms without very stringent inquiries into the financial position of buyers, the need for a revision of the penal section of the Bankruptcy Act lias become vitally necessary. Greater penalties would serve as a warning to those likely to take advantage of the present commercial situation.

the Act operating as it does at present those who possess the evidence to secure convictions against bankrupts who have flouted the law are deterred from coming forward by knowledge of the ponderous machinery which a charge sets in motion. It seems likely that, if these offenders could be punished by a magistrate without any appearance before the Supreme Court, it would act as a strong deterrent to the criminally reckless as well as simplify the task of the official assignee and the Crown solicitors. There are at present 23 offences under section 138 of the Bankruptcy Act, and of these there are many variations and alternative charges. Offenders are liable to terms of two years’ imprisonment with or without hard labour. All offences are indictable in that the accused person is given the right to ask for trial by jury should he so desire. The breaches may be dealt with in the Magistrate’s Court if the consent of the bankrupt is obtained and if the magistrate thinks it expedient. The maximum penalty is then reduced to six months’ imprisonment. It is always possible that the bankrupt will take advantage of his right of trial in the Supreme Court, and it is this fact that deters creditors who have evidence that could secure convictions, on what are frequently quite flagrant breaches of the law, from coming forward with their testimony. Obviously the majority of these creditors are busy men and the risk of having to spend a considerable amount of time at the Supreme Court as well as when their depositions are taken at the Magistrate’s Court makes them chary of offering themselves as witnesses. Then it is not unlikely that the head of a big firm may feel uneasy about the prospect of giving evidence before a representative jury of men who might quite easily be his own customers. The mass of legal argument that surrounds charges under the Act is often most confusing to a jury and one cannot wonder at that, when, even among solicitors, there are few who can boast a profound knowledge of this most complicated branch of the law.

One of the most prevalent offences found at the examination of bankrupts is that of failing to keep proper

books, yet it is a charge that is rarely brought at the court. It has been the experience of all Crown solicitors that a jury will acquit almost on sight with this charge before it. There is a natural tendency for the seriousness of the offence to be overlooked, as in the majority of cases there is no suggestion of fraud or dishonest dealing. It would do much for business if the failure of a man in business to keep proper books could be looked upon with more severity. As it is, the fact that a man had no proper books is frequently used as a defence when other charges are brought. A bankrupt, for example, is charged with contracting debts without any reasonable chance of paying them. His defence, made to sound quite convincing, is that, as he had no proper books, he was not aware of his financial position when he contracted the debts and went ahead in ail innocence. The bringing of a legal mind to bear on these cases should remove many of the anomalies as well as simplify the duties of the official assignee, who is at present in rather a false position. There must be charges that he knows should be brought, yet his knowledge of the difficulties that would beset the Crown In conducting the cases through the courts must cause him to hesitate. If the charge of failing to keep proper books and perhaps 12 other of the 23 charges under the section were made summary, the position would be eoasiderably simplified. Two great advantages are apparent. Firstly, there would be more certainty of a decision in accordance with the evidence. Secondly, business people who could do so would be more willing to come forward and give evidence. The present system means at least three attendances of perhaps a morning for each. There is the taking of the deposition at the Magistrate’s Court, the appearance before the Grand Jury and the actual trial. Business men whose position was a little precarious would be far more inclined to proceed cautiously with the knowledge that recklessness and carelessness could be punished by a term of imprisonment in the lower court than, as at present, when, they know that the chances are that breaches of the Act must go unpunished. TiKX.