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Decisions of the Superior Courts of New South Wales, 1788-1899

In re Clegg (1828) NSW Sel Cas (Dowling) 606; [1829] NSWSupC 77

insolvency, repeal of legislation - imprisonment for debt, campaign to abolish

 

Supreme Court of New South Wales

Forbes C.J. and Dowling J., 12 December 1829

Source: Sydney Gazette, 15 December 1829[1 ]

INSOLVENTS.

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A question was raised in the Supreme Court, on Saturday last, as to whether a person who had been declared insolvent, and whose effects had been vested in trustees, could, so long as he conformed to the orders of the Court in assisting to discover and collect his debts, be arrested for a debt contracted prior to his declaration of insolvency, even though the insolvent should not have obtained his certificate.  The Chief Justice in delivering the opinion of the Court on the subject, observed ``that the law with respect to insolvents, quoad proceedings initiated under the old Act of Parliament, stood precisely in the same state as it did previous to the repeal of that statute - in other words, that the Court still had the power to go on and perfect proceedings commenced under that Act, although the present Act created no provision for the relief of insolvents.  The old law on this subject, was very short and touched but a very few of the first principles; leaving the rest to be filled up by such rules of the Court as should seem best adapted to carry the intention of the Legislature into effect.  As the process of insolvency was to take the property of the debtor, and place it in the hands of trustees, in order to an equitable distribution amongst all the creditors, the Court would not allow a vexatious creditor to arrest the person of the debtor, so long as he acted in conformity with the conditions under which he was suffered to be at large; a principle which was in strict analogy with the English law.  In the present case, what were the rights and duties of the parties concerned?  The creditor unquestionably had a right to demand an account from the trustees of the insolvent, and if they did not satisfy him, to come before the Court and make his complaint.  But he had thought fit to commence his action; and though he had a right, under his judgment, to take the effects of the insolvent, if he could find any, the Court would not permit him to arrest his person, unless it could be shewn that the insolvent, had not conformed to the orders of the Court by delivering up his property.  To take the property first, and the person after, was against all analogy to English law: and as the Court could not see, wherein the case before it differed from ordinary cases under the old insolvent law, it conceived that the insolvent was entitled to his discharge from custody."

 

Source: Dowling, Select Cases, Vol. 2, Archives Office of N.S.W., 2/3462

[p. 255] [Where a trader had been duly declared Insolvent under 4 G  4. C. 96.  Held that the Court would perfect proceedings under that act though repealed.  A declaration of Insolvency under that act will protect the person of the debtor from arrest for debt contracted prior to his insolvency though he has not obtained his certificate.]

[p. 255]

December 12th 1829

In re Clegg

In Sept 1828 the Defend was declared insolvent under the s. 22 & 28 of 4 G 4. C. 96 and trustees were appointed to whom he made a full disclosure of his estate and effects, and he was liberated, since there one of his Creditors had taken out execution against him on a Ca Sa for a debt due before the declaration of Insolvency, and he was now in confinement under that execution.

A former day Keith obtained a rule nisi to discharge the prisoner out of Custody on the ground that as the prisoner had conformed to the Statute by surrendering his Estate and effects, his person was free from arrest.

Rowe was heard contra.  Forbes CJ and Dowling J were of opinion 1st that the Court might perfect proceedings initiated under the 4 G 4 C.96. now repealed; and 2nd that from analogy to the Bankrupt and Insolvent terms of England the person of a debtor [p. 256] was free from restraint where he had duly conformed to the order of the Court.  the declaration of insolvency did not protect his future effects from liability unless he had obtained his certificate but his person was free in the absence of any proof of fraud which was not suggested.[2 ]

 

Notes

[1 ] See also Australian, 16 December 1829.

The insolvency provision on which this case was based was enacted in the colony's constitution, the New South Wales Act (4 Geo. 4 c. 96).  It was not repeated in the succeeding legislation, (1828) 9 Geo. 4 c. 83.  The British government decided that insolvency, like foreign attachment, was better delegated to the New South Wales Legislative Council: the policy of the new legislation was discussed in Murray to Darling, 31 July 1828, Historical Records of Australia, Series 1, Vol. 14, pp 260f.  For other 1829 cases on the then repealed insolvency provisions of the New South Wales Act, see Neely v. Rowley, 1829; and In re Smith, 1829; and see Australian, 30 June 1829, which recorded the following: "Mr. Sydney Stephen applied for an injunction to stay execution of the Sheriff upon the goods of Christopher Wright, now a debtor in the gaol of Sydney, at the suit of T. Horton James, Esquire, on the affidavits of certain of Wright's creditors.  Granted."

The decision in In re Clegg was made at a time when there was considerable conflict over whether there was a need for a local insolvency Act.  It was a time of financial crisis, when there were so many imprisoned debtors that they spilled over into the condemned cells of the Sydney gaol (Sydney Gazette, 7 November 1829).  By November 1829, there were 44 debtors in gaol (Sydney Gazette, 21 November 1829).   In the second half of 1829, 164 debtors were received at the Sydney Gaol: Darlinghurst Gaol Debtors Book (which also covers the gaols before Darlinghurst was built, the book running from June 1829 until 1900), Archives Office of New South Wales, 4/6446-4/6647.  The figures indicate that by 1829, a crisis was being reached in debt recovery law.  One debtor, named Appleyard, had been imprisoned for debt for 18 months: Australian, 6 January 1829.  As in the general purpose gaols in London, debtors in the Sydney gaol usually had their own apartments separate from criminals: Sydney Gazette, 7 May 1827.  See also Australian, 31 March 1825 on the legislative basis for imprisonment for debt; and R. v. Hines,1829, for litigation flowing from the debate.

In September 1829, the debtors petitioned for an insolvent law, which would have allowed their release from gaol.  In reporting that, the Sydney Gazette, 22 September 1829, claimed that one of the petitioners had an English income three times the debt and lived in a genteel manner in prison.  Another Derwent merchant on the list, it said, was ruining families, and the newspaper concluded that a petition like this was like felons petitioning against capital punishment.  On 8 December 1829, the Gazette published a remarkable letter against insolvency relief, which claimed that debtors lived luxuriously in prison.  The Gazette thought that claim to be exaggerated: 15 December 1829.  See also C.H. Currey, Sir Francis Forbes: the First Chief Justice of New South Wales, Angus and Robertson, Sydney, 1968, ch. 32. 

On 28 December 1829, Forbes C.J. showed a desire to obtain details of a bill which had recently been placed before the parliament at Westminster, on the abolition of imprisonment for debt: Forbes to Thompson, 28 December 1829, Mitchell Library, Forbes Papers,  Doc 40.  Eventually, the New South Wales Legislative Council passed the first New South Wales insolvency law in April 1830, 11 Geo. IV No. 7.  Early in 1828, Forbes C.J. drafted a bill to `regulate' arrests in civil cases, and sent it to the governor for consideration.  Forbes wanted it to be passed into law: Forbes to Darling, 2 February 1828, Chief Justices' Letter Book, Archives Office of New South Wales, 4/6651, p. 135.

This debate was similar to the English campaign against imprisonment for debt, which was at its peak in the late 1820s.  One side emphasised the horrors of imprisoning unfortunate debtors, while the other assumed that those in gaol were generally dishonest rather than unfortunate.  The Sydney newspapers picked up this English literature, particularly a pamphlet by Dance.  The Australian declared itself to be opposed to imprisonment for debt, except in proved cases of fraud: 21 October, 13 November 1829.  As was its habit, the Sydney Gazette published very many articles once it declared itself interested in a public issue: see its issues between October and December 1829.  On the campaign to abolish imprisonment for debt in England, see B. Kercher, "The Transformation of Imprisonment for Debt in England, 1828 to 1838", (1984) 2 Australian Journal ofl Law and Society 60.

[2 ] The Chief Justice of Van Diemen's Land (Pedder C.J.) reached the opposite conclusion, saying that he could not allow the completion of insolvencies commenced under legislation which had since been repealed: Sydney Gazette, 9 February 1830.

 

Published by the Division of Law, Macquarie University