COMPANY'S DEBTS

Auckland Star, Volume LXV, Issue 245, 16 October 1934, Page 7

COMPANY'S DEBTS

LONDON PURCHASES.

EFFECT OF EXCHANGE RATE

JUDGE ASKED TO DECIDE.

An interesting issue connected with the liquidation of the firm of Macky, Logan and Caldwell, Ltd., came before Mr. Justice Ostler in the Supreme Court this morning, when his Honor was asked to decide the basis on which certain claims by English firms, arising out of trade bills and promissory notes, which became due subsequent to the date of liquidation, were to be admitted for proof by the liquidator. The question arose because of the increase in the rate of exchange between New Zealand and England between the time the company went into liquidation and the date on which the bills became due for payment.

Mr. Stanton, with whom Mr. Mackay was associated, sought an order determining whether bills and promissory notes amounting to approximately £12,000, due to an English firm, Toolal Broadhurst Lee, Limted, and other English creditors, payable in England, and not in the ordinary course 'due for payment until after the date of the liquidation, became, by the act of liquidation, immediately due for payment, or whether the holder was entitled, notwithstanding the liquidation, to claim for payment as on the due dates, appearing on the documents.

A statement of the facts showed that on November 4, 1932, a meeting of shareholders of Macky, Logan, Caldwell, Limited, passed a resolution that the company should go into voluntary liquidation on the ground that it was not able to pay its debts, and H. J. Mills was appointed liquidator. The rate of exchange between New Zealand and England was at that time 10 per cent, but this was altered to 25 per cent oil January 20, 1933. The bills and promissory notes were due for payment subsequent to the alteration in the rate of exchange.

Mr. Rogerson, who appeared on behalf of the liquidator, agreed with Mr. Stanton that the debt was incurred in London and was now payable as a result of the liquidation in New Zealand currency.

Mr. Stanton submitted that the liquidation did not accelerate the due date of payment, and that, for the purposes of determining the rate of exchange, the date of liquidation was immaterial.

Mr. Rogerson said that there was no dispute on the principle that exchange was calculated when the particular debts fell due for payment. The sole point for his Honor to decide was what was the effect of the liquidation on these debts represented by bills which had not fallen due on the date of liquidation. _ He submitted that the effect of the liquidation was to accelerate the debts. In other words, a debt which was a future debt became one which was presently or immediately payable. After legal argument", his Honor reserved his decision.