Court of Insolvency, Melbourne

Full description

Historical background

A separate administration developed for dealing with insolvency matters in Port Phillip District following the appointment of a Chief Commissioner of Insolvent Estates in February 1842. Commissioners for Insolvent Estates were appointed for Portland in the 1840s, Geelong in 1855 and Beechworth in 1866.

In the English legal system a distinction was made between bankruptcy and insolvency. Bankruptcy law had related only to traders or those engaged in commercial activities while insolvents were non-traders who could not pay their debts. The titles of early insolvency act (refer to 5 Vict. No.17, December 1841 and 7 Vict. No.19, December 1843) indicate that the legislation was effected as a means of giving relief to insolvent persons and subsequently imprisonment for debt was abolished. The Supreme Court was given jurisdiction over both residents and persons carrying on business in the Colony. The system differed from the English practice, for it combined, in one insolvency jurisdiction, the two branches of law, insolvency and bankruptcy.

The Commissioners of Insolvent Estates who administered the provisions of insolvency acts appear to have been administrative officers of the Supreme Court of New South Wales for the District of Port Phillip (VA 914, 1842 to 1852) and of the Supreme Court of Victoria (VA 2549, 1852 to 1871).

From 1852 to 1859 the master in Equity (VA 2624) also held the position of the Chief Commissioner of Insolvent Estates. In 1859 the two offices were separated.

Court of Insolvency, Melbourne VA 2304

In 1871 under the provisions of the Insolvency Statute (No.379) the offices of Chief Commissioner and Commissioners of Insolvent Estates were abolished and these officials were deemed at the commencement of this Act to have become judges of the Court of Insolvency.

A Court of record called the Court of Insolvency was established in and for Victoria. The Court of Insolvency was a Court of law and equity and was to have a seal to seal all records, documents, proceedings and copies. The court was to have all the powers, rights and privileges of the Supreme Court of Victoria.

The Court was to have original jurisdiction and control in all matters of insolvency and to hear and determine any matter relating to the disposition of insolvent estates or of property taken under sequestration and claimed by the assignees or trustees for the benefit of the creditors.

All judges of County Courts in Victoria, except the judge of the County Court at Melbourne were also to be judges of the Court of Insolvency. The Melbourne Court of Insolvency was presided over by a judge of the Supreme Court.

The Governor-in-Council was empowered to establish Insolvency Districts for Victoria and appoint places and times for the court to sit in each District. The Clerks of Insolvency Districts were required to send a copy of the Order of Sequestration to the Chief Clerk at the Court of Insolvency at Melbourne.

Appeals against an order of the court of insolvency could be made to the Supreme Court.

The clerks of the District Courts of Insolvency and the Chief Clerk of the Court of Insolvency at Melbourne were required to send a copy of the Order of Sequestration to the Registrar-General to be registered and details of Orders of Sequestration were published in the Government Gazette.

The officers of the Court of Insolvency including the Chief Clerk were officers of the Crown Law Department. The Chief Clerk reported to the Secretary of the Law Department.

Apparently, from 1900, the Registrar of the County Court also held the position of Chief Clerk in Insolvency.

Transfer of Function to Commonwealth

A Bankruptcy Act, passed by the Commonwealth Parliament in October 1924 and amended in 1927, was brought into operation on 1 August 1928. It superseded the Bankruptcy and Insolvency Acts of the States. A Federal Court of Bankruptcy was established and directly exercised its jurisdiction in Victoria from 1928.

Function

The jurisdiction in insolvency encompassed the legal proceedings governing the distribution of the property of insolvent persons among their creditors and the relief of insolvents from responsibility for the unpaid balance of their liabilities.

Procedure

A person was considered insolvent when he/she was unable to meet his/her debts in full. A debtor could petition to be declared insolvent by the court and as such to be discharged of all debts. In the case of compulsory sequestration, (confiscation) a persons creditors would petition the court for an order. The court would determine whether an Order of Sequestration should be granted. An Order of Sequestration gave temporary control of an insolvent persons property to an official assignee or trustees. The Insolvency Statute 1870 provided for dealing with insolvent estates not merely by the insolvency machinery but also by arrangement and liquidation. If no composition or scheme of arrangement was approved, he/she was ajudged an insolvent and his/her property was vested in a Trustee to determine how the property should be distributed among the creditors.

Court Records

For insolvency records from the Melbourne and metropolitan area see inventory of series below.

Records of local insolvency courts were attributed to grouping of courts by geographic location, e.g., for Geelong see Geelong Courts, and so on. Even though the clerks of the District Courts of Insolvency were required to send a copy of the Order of Sequestration to the Chief Clerk at Melbourne, these orders were not incorporated into the Register of Insolvencies VPRS 757 created by the Court of Insolvency at Melbourne.

Registrar-General's Records

Researchers are also advised to consult the registers and indexes which were created by the Office of the Registrar-General and Office of Titles to register copies of Orders and adjudications of Sequestration forwarded to the Registrar-General under the provisions of successive Insolvency Acts. See Inventory of Series for VA 862.