THE SECRET CASE.

Dominion, Volume 4, Issue 1094, 5 April 1911, Page 6

THE SECRET CASE.

BEFORE THE APPEAL COURT.

LEGAL ARGUMENT.

A TECHNICAL "EXCEPTION."

APPELLANT'S COUNSEL FEELS THE HEAT.

The appeal case Thomas Kennedy Macdonald, appellant, and Mary Rose, Janet Mackay Kose, Ellen Koberta Greenfield, and' John Greenfield, respondents, was commenced yesterday before Mr. Justice Williams (presiding). Mi. Justice iiennis- • ton, Mr. Justice Euwards, and Mr. Justice Cooper. The appeal is against tho judgment of Sir Robert' Stout (Chief Justice) and. Mr. Justice Chapman on February 10 last. That judgment gave .leave to respondents to'issue a writ of attachment against the appellant (then defendant) for tailing to comply with an order of the Court 01 December 22,. 1910, for the payment of a. sum, of over .£3504. The case is thai; •known as'the "Secret Case." ■' Mr. A. W. Blair appeared for tho respondents, and Mr. Treadwell tor the appellant, T. K. Macdonald.

Fact: of the Case, Mr. Treadwell recited the facts of the case at some length. They were given in uetail in the columns of The Dominion yesterday. . The order lor the accounts co bo tasen in the trust estate was made by Mr. Justice Cooper in April, 1907. Accounts were accoruingly taken, and on Deceriiber 22 last an oruer was made for the payment into Court of ,£3017 4s. 3d. A slim of '£U2-Y!'s' Ud.,' included 'in the amount ordered to bo paid, was tor interest. This, said Mr. Treadwell, would become, material at a later stage in the argument. The total also included a sum ot :£2'lo received by way of a division of commission. There were two sets of accounts . brought down, one showing the transactions to the end of 1900, and the other, from that time up to the abandonment of the trusteeship. A sum ,of - .£35,000 was handed over to the new trustees! He called attention to the amended statement of claim which emphasised the position in regard to tho ownership of.the property. Coming to tho motion for leave to issue a writ of attachment, ho said the grounds, set out on the motion were "that the two sums of money agreed upon as being due by tho defendant' were not money recovered in an' action' for debt or damages, that the sum of =£3501 Ss. 9d. being part of the total of the two sums was a sum in\ tho possession of the defendant as a trustee within tho meaning of tho Imprisonment for Debt Limitation Act, 1908, and its amendments, etc."; The affidavit of Mr. Blair (counsel for the plaintiffs in the original action) had, in Paragraph 4 in the printed document, to Which he (Mr. Treadwell) particularly desired to direct ■ the attention of the Court, stated that: "The whole of tho two sums of £26% 14s. lid. and ,£950 Bs. 4d., which the defendant had been ordered to pay into Court, represented, with the exception of .£142 17s. 6d. for interest or surcharges allowed against Mr. Macdonald, the balance of trust moneys that come into the defendant's hands in a fiduciary capacity, etc." This, and Paragraph 8 of the affidavit, comprised the only evidence before the Court of the fact that the balance came within Section 3 of the Imprisonment for Debt Limitation Act. 'Mr. Treadwell..was proceeding with a further citation.of the facts, but saM he supposed their Honours had read if all in the printed appeal documents. : Mr. Justice Edwards: I havo not read It. ; -Mr. Justice Denniston: You have had eivery opportunity ■to read it! ■Mr. Justice Edwards: Where? *. Mr. Justice Deriniston's lips appeared to form the words: "In The Dominion." .'Mr. Justice Edwards was understood to ■reply that he had not read the morning papers. A Compromise,

. Mr. Treadwell proceeded to • refer to the offer of compromise by Mr. Macdonald to the plaintiffs. The latter had not seemed to 'treat this money as being in the possession or control of the defendant. There had been a definite offer to accept a certain sum in settlement of tie transaction. That offer, on its being accepted, was withdrawn by plaintiffs. 'Mr. Justice Denniston: That is denied. ;Mr, Treadwell: On the solicitor going to the office for' the purpose of receiving it, the offer was withdrawn. Mr. Blaif said the visit had been, made for the purposo of getting; the offer confirmed in writing. Mr. Blair.added that the communications now cited by Mr. Treadwell had been entirely "without prejudice." Mr. Treadwell now wanted to make use of them to show that his (Mr. Blair's) side had withdrawn the offer. This matter was quite new, and the letters were put to a use never until now contemplated. Continuing, Mr. Treadwell said that defendant's affidavit showed that tho result of the administration of the estate had Taised its value from £15,000 to £45,000. He then briefly traced the further facts as set forth in the printed statement, leading ■up to the order which was the subject for the present appeal. .

> The Main Argument. •He submitted that the motion had been one for the recovery of debt, and he contended in Rule 392 of the code an "exception" was allowed. in . such a case as this—where the judgment was for the recovery of a sum of money in an action for debt or "damages. His contention was that the action was primarily an action for debt or damages. He went into lengthy legal argument to show that the whole law in reference to writs of execution had been codified in New Zealand. He referred to the laws in England regarding attachment. Their Honours would see that a great deal of care had been given in England to the specifying of cases in which a writ of attachment 6hould bo issued. Ho submitted that the penalties of Rule 392 did not cover this case, inasmuch as tho effect of the action was to recover a debt. It was true it was not an action for debt in the old sense. But under our code certain forms of action were abolished, and what the Court would look to was the substance, of the action and not tho form. This action must therefore come within the definition of an action for debt; that was to say, that the sum of money must be recovered in an action for debt. ■ Justice Williams: No. Tho action was' to replace a sum of money—a sum of money taken out of its proper place. The action was that it should bo put back. AJr. Treadwell replied that he could cite cases in support of his contention. The position was, he continued, that the defendant had allegedly committed a breach of trust by using moneys in a manner not authorised. The effect of the action was to obtain from him an account of his appropriations, and it must como within tho definition of a case of debt within tho exception of Rule 392. Mr. .Treadwell proceeded to cite his enses. Mr. Justice Cooper interposed: I suppose thai in every case where money has been taken tho relationship of debt exists, but can you say that "the suit is an action for .debt? Mr. Treadwell: I submit it is, your Honour: Mr. Justice Edwards: You could not have brought an ordinro-v action for debt. The "Substance" of the Action. Mr. Treadwell went on to repeat that tho old forms of action were abolished under Rule 3'J2, as tho result of the coding of our laws, and the Court must look to the substance rather than to tho form of the action. The substance of tho action was the recovery of money, and why a special remedy should bo given in a case of this kind it was difficult to see when there was an absolute remedy if there had been fraudulent misappropriations. Ho said tho Homo procedure had not been preserved hero as tar as the law of Rule 302 was concerned. The Court, in cases whore tho liberty of the subject was involved, would exercise the greatest cave in applying tho punitive measures to eases where it was clear they were not applicable. , Mr. Justice Edwards: You mean that a man'cannot be got at un'.oS3 ho has tho money in his pocket or in his baok account, and w.on't^a>:c j itjiDj.

Mr. Treadwell replied that this was a reasonable supposition because people had the criminal procedure open to them. Mr. .Justice Edwards: It was not an action for debt. It was an action for accounts and to remove the trustee.

Mr. Justico Cooper referred to the Trustee' Act, and pointed out that therein a liability was created if u tritsteo had money in his own bond or had converted it to his own use. His Honour also suggested that in sub-section 3 of section 91 of tho same Act the Legislature had treated an action to recover trust money as distinct from an action for money having been received. . Mr. Treadwell cited further cases. Mr. Justico Edwards interposed that all the Acts under which such a case as tho present one came went to show that it was not nn action, for debt. There were sufficient Acts outside tho code rule. Mr. Treadwell contended that the effect of the code rule 302 was to limit the jurisdiction. He went on to arguo that where exception was given in that rule, that exception should be given a liberal interpretation, because of tho heavy issues involved. Mr. Justice Cooper said that too liberal a construction might limit tho effect of another Act. Some conversation ensued among the Judges, and Mr. Justice Edwards said tiuv. if,-a man received trust moneys lie was bound to hold them, and hold them in trust for those who owned them. If he came within the action of the Court he might be able to excuse himself more or less, but the extent was with himself. Mr. Treadwell said they would go fully into the matter if they came before that Court. Counsel Unwell. A few minutes later Mr. Treadwell asked bow long their Honours intended to sit. It was then 4.15 p.m. Mr. Justice Williams inquired if Mr. Treadwell was not feeling well. Mr. Treadwell replied that he was not— bo was feeling the heat very much also. The Court was accordingly adjourned until this morning.