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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

12 FEB 2010

HOBS: Conflict with the use of old Bankruptcy Acts in the modern world

Some people question the need for a knowledge of old bankruptcy provisions. Sometimes this issue arises as a matter of statutory interpretation. The issue has been discussed judicially. In considering whether or not the Insolvency Act 1986 was an entirely new code in relation to the Bankruptcy Act 1914, Lord Jauncey of Tullichettle  noted in re Smith (A Bankrupt), Ex p Braintree District Council [1990] 2 AC 215, 237-238:

"the 1986 Act, although re-enacting many provisions from earlier statutes, contains a good deal of fresh material derived from the Insolvency Act 1985. In particular, the legislation now emphasises the importance of the rehabilitation of the individual insolvent, it provides for automatic discharge from bankruptcy in many cases, and it abolishes mandatory public examinations as well as enabling a bankrupt to be discharged without public examination. Thus not only has the legislative approach to individual bankruptcy altered since the mid-19th century, but social views as to what conduct involves delinquency, as to punishment and as to the desirability of imprisonment have drastically changed. It is, for example, most unlikely that anyone today analysing the six exceptions in section 4 of the 1869 Act would conclude, as did Lord Hatherley in 1871, that they all involved an element of delinquency. In these circumstances, I feel justified in construing section 285 of the 1986 Act as a piece of new legislation without regard to 19th century authorities or similar provisions of repealed Bankruptcy Acts: an approach which was, in my view, correctly adopted by the Court of Appeal in Re A Debtor (No 1 of 1987) [1989] 1 WLR 271 . So construed, I have no doubt that, for reasons which I have already given, the words 'or other legal process' in section 285(1) covered the proceedings in the magistrates' court for the issue of a warrant of committal, and that accordingly the registrar had jurisdiction to stay those proceedings."

As a least one judge has noted however that, "What was said in Re Smith (A Bankrupt), Ex p Braintree District Council [1990] 2 AC 215 does not, however, lead to the result that pre-1986 authority must always be disregarded in construing the 1986 Act." Hoffmann J (as he then was) discussed this issue again in Re A Debtor (No 784 of 1991) [1992] Ch 554 . He referred to Re Smith [1990] 2 AC 215 and other authorities and said [1992] Ch 554 , 558-559:

"Those authorities show that, in approaching the language of the 1986 Act, one must pay particular attention to the purposes and policies of its own provisions and be wary of simply carrying over uncritically meanings which had been given to similar words in the earlier Act. It does not, however, mean that the language of the new Act comes to one entirely free of any of the intellectual freight which was carried by words and phrases in earlier bankruptcy or other legislation. Decisions of the court upon the meanings of phrases used in Acts of Parliament may come, in the course of time, to give them the quality of terms of art which Parliament may well be assumed to have intended them to bring with them when used in subsequent legislation. In section 265 , for example, terms such as 'domiciled', 'personally present', 'ordinarily resident', have had attributed to them, both in the context of bankruptcy and in that of civil procedure generally, a wealth of refined construction which it is difficult to suppose Parliament did not intend equally to apply when those words were used in the 1986 Act. Is there any reason why that should not apply equally to the words 'has carried on business'? There does not seem to me to be anything in the policy of the new Act which suggests that in this provision Parliament was intending to give those words a different meaning from those which they had been held to bear under the 1914 Act."

Professor Sir Frederick William Maitland QC was right, to be accounted truly learned in the law one needs a knowledge of the old law! (at least according to the Lord Hoffmann).

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