these costs was right. We think, therefore, that this appeal must be allowed. I wish to say that this case seems to me to raise even a larger question than that which has been brought before us. Messrs. Ashurst & Co.-I say again without any wrong intention— did accept a retainer from a committee of inspection, one member of which was their own clerk. In my opinion that is not good practice, and I think they made a mistake in doing so. I think, if one of their own clerks was on the committee of inspection they, at least, ought to have got the sanction of the Court before they accepted the retainer at all. In my opinion, if a solicitor accepts a retainer when a member of the committee of inspection is in the same relation to him as one of the committee here was, and an application be made to the Court of Bankruptcy immediately to set aside the retainer and disallow it, the inherent power of the Court ought to be exercised in setting it aside.

LOPES, L.J.: I am of the same opinion. The true construction of the Rule 317 is a matter of importance. I understand that Rule to mean that the sanction of the Court must be obtained before the work in question is done, and that it cannot be obtained afterwards. The sanction of the Court is a condition precedent to the right to do the work. In this case Messrs. Ashurst & Co. employed Mr. Williams, an independent solicitor, as their agent, and we are told that he had special knowledge of the matters in respect of which he was engaged. That is where Messrs. Ashurst & Co. made a mistake I am confident it was only a mistake for they employed Mr. Williams while he was a member of the committee of inspection, without the sanction of the Court. Rule 317 would therefore apply, and Mr. Williams, under the exigencies of that Rule, would not be entitled to derive any profit from any transactions arising out of the bankruptcy. All his out-of-pocket disbursements have been paid.

Then the question arose, whether he was entitled to have a further sum of 1151. which he claimed. On that point the learned Judge came to the conclusion, that he was entitled to the whole of that sum except 401. He thought that 401. represented the profit arising out of the transaction, and he attributed the rest, 75., to a proportionate part of the outgoings connected with his office at Brighton. I have very great difficulty in seeing how he arrived at

that conclusion. As far as I can see, the outgoings of the office were in no ways increased by anything that was done in connection with this bankruptcy, and it cannot possibly be said that he would be entitled to deduct anything for outgoings of the office. All that he really was entitled to was his out-of-pocket expenses. Everything else must be regarded as profit.

In the result, therefore, I come to the conclusion that the learned Judge was wrong in only deducting the 401. I think he ought to have deducted the 401. plus the 75l. This appeal must therefore be allowed.

KAY, L.J.: The duties of a committee of inspection in bankruptcy are obvious. They have to watch the administration of the bankruptcy, and to control, to any extent they think right, what is done by the trustee in bankruptcy by the solicitor or anyone else concerned in administering the estate.

Rule 317 provides absolutely that no member of the committee shall, except under and with the sanction of the Court, derive any profit from any transaction arising out of the bankruptcy. The words are very clear.

He is not to derive any profit, "except under and with the sanction of the Court." That must mean at the time when the profit is derived or made. To say that the Court can afterwards, when the work has been done, say: "We sanctioned what has been done, although you did not choose to ask the Court for its sanction beforehand,” seems to me entirely contrary to both the letter and spirit of the Rule. The sanction of the Court ought to be obtained before the person who requires that sanction does any work which would, if it were paid, be profitable to him. Mr. Williams, who is a member of this committee, did not apply for that sanction beforehand. He was a solicitor, and Messrs. Ashurst & Co. being employed as the solicitors for the trustee, arranged with him that he should act as their agent at Brighton, and he has been paid for acting as such agent.

Then comes the other question that arises in this case. That Mr. Williams should receive any profit at all is entirely contrary to the Rule. He put himself in a position in which his duty to keep down the expenses of the administration within reasonable limits was

entirely in conflict with his interest, which was to raise the expenses, so as to make his profits as agent as large as he could. That is the very mischief which this Rule was intended to prevent.

It is said that what the learned Judge has done is not to allow Mr. Williams any profit. Now, how is that? All this disbursement out of pocket has been allowed, but it is said that the rest of his charges are not all profits because he has a large office at Brighton, and employs many clerks, and in making up his yearly profits he is accustomed to attribute to each piece of work done in the office a certain proportion of those office expenses, and only the remainder is profit. Therefore, he asks in this case, that a proper proportion of those office expenses should be attributed to the sum that he received from the trustee, and that only the balance should be treated as profit. This is the first time I ever heard it argued that the profit-cost of a solicitor should be ascertained in that way.

The object of Rule 317, as I have already pointed out, is to prevent a member of the committee of inspection being placed in a position in which his interest and his duty would conflict. He would be paying part of his office expenses, which would be just the same whether he did this business or not, out of what are ordinarily called profit-costs, and to that extent, therefore, his interest would be in direct conflict with his duty, which is to keep down the costs as much as he can.

I think this case comes entirely within the mischief of the Rule as regards those costs which the learned Judge has allowed. They were "profit," and I think the Judge has no discretion under the Rule to allow them. The Rule is imperative and ought to be supported in its entirety. The 751. which the learned Judge has allowed was, with deference to him, I think improperly allowed and ought to be struck out from the allowance made to the trustee in bankruptcy, who has paid that sum to Mr. Williams.

Solicitors: H. Souton, for J. C. Buckwell, Brighton, for the Appellant.

Ashurst, Morris, Crisp & Co., for the Trustee.

IN RE WILLIAM DURNFORD.

1895, December 19. VAUGHAN WILLIAMS AND KENNEDY, JJ. Bankruptcy Conditional Discharge-Surplus Income-Payment over to Receiver -Lapse of Time-Policy of Bankruptcy Law-Bankruptcy Act, 1883, 8. 8.

It is not the policy of the law that a debtor should be kept for an indefinite time subject to a conditional order of discharge, e.g., to pay over any surplus of income above a minimum allowance to the trustee. Therefore, where a debtor against whom such an order had been made had for ten years from the date of the order striven industriously to maintain himself and his family, but had not been able to pay any surplus to the trustee, the Court granted him his discharge freed from the condition.

WILLIAM DURNFORD, the above debtor, had, prior to the year 1885, practised as a solicitor in Halifax. In that year he was adjudicated a bankrupt. The only creditors were the debtor's partner and his London agent. The debts due to these two persons amounted to about 2,000l. On 14 November, 1885, the debtor applied for his discharge, and on 31 March in the following year, a conditional order of discharge was granted him. The condition was that the debtor was to be allowed 2001. a year out of his nett earnings and income for the maintenance of himself and his family, and was to pay the balance of such nett earnings and income over to the official receiver-who was the trustee in the bankruptcy-filing a yearly account for the information of the trustee. At the time when the order was made it was considered a favourable one to the debtor. The effect of the bankruptcy was, however, to destroy the debtor's professional practice in Halifax, and he found himself obliged to take a managing clerkship to a firm of solicitors at Tenby, at a salary of 130l. a year. He afterwards obtained a managing clerkship at an improved salary of 2001., rising to 250l., at Tunstall, in Staffordshire, where he remained until October, 1893, when he became a managing clerk to Messrs. Lewis & Lewis, of Ely Place, London, at a salary of 300l., rising to 4007. The debtor filed a yearly account in pursuance of the order of discharge, and it appearing by the account filed for the year ending 31 March, 1894, that the debtor's income in that year amounted to 2801., the official receiver at Halifax applied to the Court on 11 June, 1895,

for payment over to him of the balance, and an order was made by the County Court Judge for payment over by the debtor of a balance of 177., the difference of 631. being allowed the debtor for various expenses-removal to London, rent and taxes, railway season ticket, &c. The debtor appealed:

Muir Mackenzie, for the debtor :

The debtor is quite unable to pay this sum. He has a wife and six children dependent on him, and is obliged to keep up a certain social appearance: otherwise he might lose his appointment. He has been ten years under the burden of this order, and has during that time behaved very well. He has worked hard and retrieved his position. The policy of the law is to benefit creditors, not to punish the debtor. Even if it were, the debtor here has been sufficiently punished.

Sutton, for the official receiver:

I am ready to submit to any order the Court may think fit to make.

Cancellor, for a creditor in support of the order:

I rely on the observations of LINDLEY, L.J., in In re Bullen, Ex parte Arnaud (1), at p. 246, and In re Tobias (2).

[VAUGHAN WILLIAMS, J.: I entertain a strong opinion that it is the interest of the State that a debtor should be free after a certain time.

KENNEDY, J., assented.]

We want something definite.

Mackenzie, in reply, cited In re James (3), In re Inman (4), Harnden (5).

(1) 5 Morr. 243; 36 W. R. 836.

(2) 8 Morr. 30; [1891] 1 Q. B. 463; 60 L. J. Q. B. 244; 64 L. T. 115.

(3) 8 Morr. 19.

(4) 6 L. T. 667.

(5) 3 D. & J. 469.