Automobile Assn wins appeal

Press, Volume CXII, Issue 33068, 8 November 1972, Page 12

Automobile Assn wins appeal

(N.Z. Press Association) WELLINGTON, November 7. The Court of Appeal has allowed the appeal of the Canterbury Automobile Association against the decision of Mr Justice Wilson, who had ruled that three contract notes handed to the association by Australasian Secured Deposits, Ltd, were void as against the liquidator of the firm, Mr H. Beattie, who was named as one of the respondents in the hearing. The three notes were in respect of $40,000 lent to the company by the association on deposit on 24 hours call. Mr Justice Wilson had ruled that the charges conferring security in favour of the appellant were void as a result of non-registration pursuant to the provisions of the Companies Act, 1955. The liquidator had alleged that the three contract notes which purported to confirm the sale of local government stock were in reality mortgages securing the repayment of the $40,000. The Court of Appeal comprised Mr Justice Richmond, Mr Justice Turner (presiding) and Mr Justice Speight. Mr J. F. Burn and Mr A. J. Forbes appeared for the appellant, and Mr E. J. Somers for the respondents. Mr Justice Richmond said that the combined effect of the contract notes, together with the accompanying stock certificates and transfers, was to create a mortgage of the stock to secure the moneys on deposit with the company. He supported this view of the trial judge.

, He said that the documents were given by the company to the association by way of security only and were not intended to be an absolute sale with right of repurchase.

The second question to be decided in the appeal was that if the series of transactions were mortgages, were they of a kind required to be registered by the Companies Act, 1955?

Under that act, if they were of such a kind and were not registered, then they were all void as against the liquidator of the company and the Automobile Association would then only be an unsecured creditor. Mr Justice Richmond said that this point was raised by the appellant only in the Court of Appeal and was not therefore considered by Mr Justice Wilson. His Honour concluded that the charges created in the present appeal were not of a kind requiring registration under the Companies Act and would therefore not be rendered void against the liquidator.

The other Judges concurred.