CRITICISM BY JUDGE

Press, Volume LXXVII, Issue 23378, 11 July 1941, Page 8

CRITICISM BY JUDGE

ASSIGNMENT OF AN ESTATE ACCOUNTANT’S ACTION (F.0.0.R.) GRBYMOUTH, July 10. Comment on the action of a Christchurch public accountant in taking an assignment of an estate while acting as assignee of the principal creditor was made by Mr Justice Northcroft in the Supreme Court this afternoon. Ross and Glendining, Ltd. (Mr G. G. Lockwood) proceeded by notice of motion for an order granting leave to proceed with a creditor’s petition to adjudge W. J. M. Hayward, of Ruatapu, storekeeper, bankrupt. Mr E. B. E. Taylor appeared for Hayward and Mr A. J. L. Martin for Frank Blundell Wright, of Christchurch, public accountant, the assignee under a deed of assignment executed by Hayward. Edward John Williams, Christchurch manager for the petitioning company, said that Hayward owed the firm £79 0s 9d. He produced the deed of assignment signed by 18 creditors but not by his firm or the Kaiapoi Woollen Company, Ltd. To Mr Taylor, the witness said that money did not enter into the matter as the case was being taken on a question of principle, this being that his company had never been consulted before the execution of the deed of assignment. He had been informed by Wright that the latter had no intention of. calling a meeting of creditors. As the second largest creditor, his firm considered they had a right to be considered. To his Honour: The assignment had been executed before his company knew it was in contemplation. Wright, in evidence, said that he had been asked by T. H. Green and Company, Ltd., of Christchurch, in February, to act as assignee of the estate of Gooch, the principal creditor of Hayward. He had at first declined, but subsequently accepted. He later went fully into Hayward’s position and advised him to consult a solicitor, but Hayward said he had no wish to file in' bankruptcy because of his family responsibilities. Witness told Hayward he would be agreeable to take an assignment and this was prepared by Mr Brice, representative of Caltex, Ltd. (Gooch’s largest creditor), who got Hayward to sign it To his Honour: He and Brice had done this without having consulted the other creditors. He agreed It was unusual..

His Honour: It is most unusual. -In addition to being judges, we. have practical experience as lawyers, you know, i

His Honour said that Wright might have been the best trustee in the world, but in this case he had become trustee, although he was the trustee of the biggest creditor. It was not easy to justify. To Mr Lockwood, witness said the first meeting of Gooch’s creditors was held on June 10. Hayward’s deed of assignment was completed in 24 hours. He did not bring the deed from Christchurch in blank for Hayward’s signature. '

His Honour; Did the creditors know you and 'Hayward and Luney had a secret arrangement concerning the insurance policies?—l would not say a secret arrangement. Did you tell them that the proceeds were to go exclusively to Luney?—No. To Mr Lockwood: He had taken a formal transfer of the policies in his own name.

His Honour: Why not in Luney’s name?— Well, Hayward did not wish Luney to .know he had assigned.

His Honour: Under this deed it is your duty to distribute the proceeds among all the creditors. How can you justify entering into a secret arrangement with Luney about the policies? —I thought the letter I gave was sufficient. His Honour: Oh, Mr Wright!

To Mr Lockwood: It was true that in St circular letter he had stated that he had pressed Hayward to assign. He agreed Hayward should have called a meeting of his creditors, but that did not occur to him. The creditors were scattered. ' His Honour: I expected that answer. There were seven in Hokitika and five in Greymouth, with seven elsewhere. Five of those not on the Coast are creditors for only £l6. Witness continued that Caltex, the new name for Texas Oil Company, had £4OOO owing to them by Gooch’s and that T. H. Green and Company were the next biggest creditors, with £3OOO owing. After the luncheon adjournment, Mr Taylor said there had been discussions and he submitted two suggestions: that the deed of assignment should stand with a new trustee to be appointed; and that the creditors of Hayward’s estate should be paid in full, with the exception of Gooch’s estate. His Honour said he thought the money should be found by Gooch’s estate, as the assignment was clearly in favour of it.

Mr Lockwood said that the action was taken quite literally in the interests of commercial morality.

His Honour: I quite agree. His Honour said it would be unfortunate if an outsider was induced to put money in for sentimental reasons to save Hayward from bankruptcy. It was subsequently announced that an agreement had been reached, under which the unsecured creditors would lie secured in full. His Honour said he accepted Mr Lockwood’s assurance that the case had been brought on principle, and he was pleased to see it, settled. He thought, that the petitioning company would'have acted not only injudiciously, but also unfairly, if it had acquiesced in an agreement forced on a person. .. Mr Lockwood’s application for costs was granted, these being fixed at £2l, and disbursements to be borne by the assignee under the agreement.