1. I think it will be desirable that I should give judgment in this matter. In this bankruptcy it appears that there was a question as to whether a certain business belonged to the insolvent and his wife or belonged to the respondent. By a petition filed on the 21st April 1918 the Official Assignee, who had already examined some five or six witnesses under Section 36 of the Act, applied and obtained an order for leave to institute the necessary proceedings for the purpose of recovering the property referred to in paragraph 6 and to engage Counsel and Attorney for that purpose and to pay the costs and expenses therefor out of funds to the credit of the estate. That order was made, and thereupon the proceeding that was commenced was this, that first of all a petition was filed on the 7th May 1918 in which the statements were verified to the best of knowledge, information and belief by the Official Assignee, and the petition asked for an order 'that the respondent do make over and deliver possession of the business, stock in trade, assets and liabilities to your petitioner as such assignee as aforesaid and that the costs of and incidental to the examination of the respondent and other witnesses be paid by the respondent.' I will say nothing about the latter part of that application. On that a Rule apparently was granted: Upon reading a petition of the Official Assignee and hearing (various people) it was ordered that the respondent do show cause before this Court why an order should not be passed against him directing him to hand over the grocer's business carried on at such address,' I understand that the matter was mentioned to my brother Greaves, J., on a previous occasion and he expressed his intention to hear the witnesses examined before he dealt with this matter. It comes on before me to day and I am going to deal with it de novo and to take the matter from the commencement. If the Official Assignee desires to proceed under Section 36, the only way in which he can do that is to take the examination of the respondent by itself and ask the Court for an order that he is justified by the admissions made or evidence given by the respondent and without looking to any further evidence at all. I do not understand that any such admissions by the respondent were made in this case as would enable the Official Assignee to get what he wants under Section 36. The next thing I desire to say is that if people would avoid presenting petitions and obtaining Rules in bankruptcy, the procedure would be a great deal simpler. If in this case simply a notice of motion had been sent to the respondent stating the grounds of the application together with an affidavit filed giving the necessary evidence in support of it, that application would have come on before the Court and the Court would have been in a much better position to deal with it. There were two courses open to the Official Assignee. The one was to start an action and the other was to proceed against the respondent in insolvency. By the second course, if adopted, it is open to the Court in its discretion at the hearing of the motion to refuse to deal with the matter by a motion and direct that the matter be dealt with by an action. The Official Assignee is not able to go on and prove his case by evidence to day, and there seems to be a question as to another respondent being necessary and though this matter has been going on since May up to the present, these proceedings are not in such a position as would justify me in leaving this motion any longer open. Therefore, I am disposed to bring this whole proceeding, this motion, to an end on the best terms I possibly can. If in the future the Official Assignee considers that his evidence is so dear, and the matter is so short that he wants to apply again in the ordinary way by notice of motion to the Court against the proper respondents, I will not prevent him from doing that; alternatively he can bring an action if he is so advised. For the present the only course open to me is to discharge this Rule and to make no order on the motion, i.e., on the present petition. As regards the costs, the order that was obtained was that those are to be paid out of the funds of this estate. All I can do is to make an order against the Official Assignee for the costs and in that case he will recover them out of the assets of this estate. I must give the order in favour of the respondent, but it must be so expressed as not to prevent proper proceedings being taken in the future as regards the ownership of this business, whether by motion or by action.
(Later after argument as to costs.)
2. This is a proceeding by the Official Assignee against a respondent, and what has happened is this the Official Assignee prior to starting the proceeding has been most careful to come to Court to satisfy the Court that the proceeding was one which was proper to undertake. He has got the leave of the Court to do it, and he has further got an order that he be at liberty out of the assets in his hands belonging to the estate to pay the costs and expenses of the proceedings so to be instituted as aforesaid. So there can be no possible question in this case as to the Official Assignee being in any sense in default. Assuming that the Official Assignee is not in any possible way in default, here is a motion which has been brought by the Official Assignee for the benefit of the creditors and which has been unsuccessful. The respondent has got certain costs against which he ought to be indemnified; what is the Court to do? The suggestion is that what the Court ought to do is to make an order that the assets of the estate, so far as they go, and they only, shall bear the respondent's costs. In my opinion that will be entirely wrong. The correct proceeding is to make an order that the Official Assignee do pay the respondent's costs. Having protected himself by obtaining leave from the Court, he has got his right of indemnity, for what it is worth, against the assets of the estate, but if in a case of this sort assets of the estate are insufficient to give a proper indemnity to the Official Assignee, then the Official Assignee, before starting these proceedings, must approach the creditors or somebody and get a guarantee or an indemnity from the people on whose behalf the motion is to be brought: but it is quite impossible that a person against whom an unsuccessful motion has been brought by the Official Assignee should be left in the ordinary course in a position that he has to look to an insufficient fund and take his chance of that being sufficient. I have no doubt at all that the Court would have power to make such an order. I have no doubt at all that in some cases I shall make such order where I think the respondent has done something for which the Court can visit him with penalty or even in other oases, but I do want to lay it down straightway that if the Official Assignee brings an unsuccessful motion, however careful he may have been, the order that will be made will generally be that he pay the respondent's costs, and he will have the right of indemnity given him by the previous order of the Court. If he is not content with that, he must obtain an indemnity from the people in whose interest the motion is brought before he starts proceedings. I want that to be laid down as a general principle, and if there is anything wrong with that general principle, I shall wait for a higher Court to tell me the procedure.