COUNSEL: M. J. Muir Mackenzie, for the bankrupt

S. G. Lushington, for the official receiver.

 

SOLICITORS: For appellant: Batchelor & Cousins.

For respondent: Solicitor to the Board of Trade.

 

JUDGES: Wright and Darling JJ.

 

DATE: 1901 March 26.

 

 

Bankruptcy – Annulment – Payment of Debts in Full – Application to annul Adjudication – Discretion to refuse Order – Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), s. 35, sub-s. 1.

 

Where a bankrupt, whose debts have been paid in full, applies, under the Bankruptcy Act, 1883, s. 35, sub-s. 1, for an order annulling his adjudication, the Court has discretion to refuse an order, if, having regard to the conduct of the bankrupt, it seems right to do so.

 

Therefore, where a bankrupt, in his statement of affairs, and on his public examination, concealed the fact that he possessed a large sum of money, and afterwards handed to the official receiver a portion of that money sufficient to pay his debts in full, with interest and expenses, and applied for an order annulling his adjudication, which was refused:–

 

Held, that the refusal was right.

 

APPEAL by the bankrupt from the refusal of the registrar of the county court at Greenwich to make an order annulling his adjudication in bankruptcy.

 

A receiving order was made against the bankrupt on September 26, 1899. On October 5 the bankrupt filed a statement of affairs, from which he omitted a sum of 500l. in bank-notes, which he had in his possession, nor did he disclose this sum on his public examination. Afterwards the bankrupt handed to the official receiver a sum of 450l., part of the above-mentioned sum of 500l. This sum of 450l. was sufficient to pay all the creditors of the bankrupt in full, with interest and expenses. The bankrupt was not prosecuted. He applied, under s. 35, sub-s. 1 (1), of the Bankruptcy Act, 1883, for an order annulling his adjudication, which was refused, on the ground that he had been guilty of falsification of his statement of affairs, and of substantial concealment of assets, with regard

 

(1) 46 & 47 Vict. c. 52, s. 35, sub-s. 1: “Where in the opinion of the Court a debtor ought not to have been adjudged bankrupt, or where it is proved to the satisfaction of the Court that the debts of the bankrupt are paid in full, the Court may, on the application of any person interested, by order, annul the adjudication.” [*745] to the above-mentioned sum of 500l. From this refusal he now appealed.

 

M. J. Muir Mackenzie, for the bankrupt, in support of the appeal. It is not disputed that the debts have been paid in full with interest and expenses, and that being so the bankrupt is absolutely entitled, under the Bankruptcy Act, 1883, s. 35, sub-s. 1, to an order annulling the adjudication. “May” in that section is almost, if not quite, equivalent to “must.” There is no reported case of a refusal of such an order where the creditors had been paid in full. In In re Duncan, Ex parte Official Receiver (1), the bankruptcy was annulled(2), although it does not appear that the bankrupt had submitted himself to public examination, as the bankrupt in the present case has, but the point was not argued. [He also referred to Alderman Backwell’s Case (3), commented on by Lord Blackburn in Julius v. Lord Bishop of Oxford (4); Re Horniblow, Ex parte Official Receiver (5); Re Gyll, Ex parte Board of Trade (6); In re Hester, Ex parte Hester. (7)]

 

S. G. Lushington, for the official receiver. Sect. 35 gives discretion to refuse an order, and the discretion was rightly exercised. The proper course is to refuse this application, and leave the bankrupt to apply for his discharge.

 

[He was stopped.]

 

WRIGHT J. I do not think that we can say here that the discretion of the registrar was wrongly exercised. He has a discretion, under the section, as to whether he will annul the adjudication or not. This debtor admittedly was guilty of two of the worst crimes which a bankrupt can commit – the crime of falsifying his statement, and the crime of substantial concealment of assets. Having committed these crimes, if he had come for his discharge he could not have got a discharge “unless,” as the section (53 & 54 Vict. c. 71, s. 8, sub-s. 2)

 

(1) [1892] 1 Q. B. 879; reported only as to costs.

 

(2) [1892] 1 Q. B. at p. 882.

 

(3) (1683) 1 Vern. 152.

 

(4) (1880) 5 App. Cas. 214, at p. 241.

 

(5) (1885) 53 L. T. (N.S.) 155.

 

(6) (1888) 5 Morr. 272.

 

(7) (1889) 22 Q. B. D. 632. [*746]

 

says, “for special reasons the Court otherwise determines,” and none were suggested here. He could not have got his discharge, even by paying in full, unless there were some special reason. Why? Obviously because the Legislature thought that, when a debtor who had become bankrupt committed crimes like these in his bankruptcy, he ought to be punished by the stigma which attaches to an undischarged bankrupt, and by whatever disqualifications are attached to it. It is sought to get behind that by seeking to annul the adjudication. Sect. 35 gives a discretion, and it seems to me that it was rightly exercised. I do not say that if another application were made after a reasonable time the Court might not properly say that this unusual status had lasted long enough, but I should say certainly, so far as I am concerned, that it would be useless for him to apply until a period of something like five years from the bankruptcy had elapsed.

 

DARLING J. I agree, and I have nothing to add.

 

Appeal dismissed.