A BANKRUPT ESTATE

Dominion, Volume 14, Issue 301, 14 September 1921, Page 7

A BANKRUPT ESTATE

APPLICATION TO CANCEL PRIOR ' TRANSACTIONS & THE DEFENDANT’S CASE I "■ ~ ■ ! Trom Our Own Corra»Dondont.' Masterton, September 13. Further evidence was heard in the Supremo Court to-day regarding the up- ’ plication by the Official Assignee to nave 'antecedent transactions between Wright, JStephenson and .Co, and the bankrupt instate of Thomas Hardy declared null And void. ” ■ ! Mr H. C. Robinson, with Mr. 11. E. /Hart, appeared for the Official. Assignee, /and Mr.. H. It. Bias for Wright, Sto jphensou and Co. I Mr. Biss said that his' defence would be short. Hardy . had been merely an {ordinary client of Wright, Stephenson 7 ■ end do.' Ih February last, when , a ' ' slump was considered inevitable, defehl dants got a statement from Hardy, and I the result was that Hardy was shown Ito be solvent. It was not until April 9 that preferential securities were asked for. It was after that that defendants knew of the large amounts, owed to the other firms. In advancing Hardy money defendants took into consideration the fact that he was a particularly able farmer, and was sure to come out all right. Th® mopey was advanced to tid< him over. . , „ His Honour Mr. Justice Salmond: But ithe securities were taken behind the backs of the other firms. Mr. Biss: "The securities were taken in good faith; Your Honour." Continuing, counsel said that since April 9 all moneys received by defendants had been paid to the Official Assignee, Wright, Stephenson’s expenses being first deducted. A total of approximately .£lBOO had thus beeh paid to the Official Assignee. Wright, Stephenson and Co. had always boon willing to hand over the money; they had,never refused. At the meeting on April' 9 between the ■bankrupt, Wright, Stephenson’s representative, and Mr. D. K. Logan, representing Gawith and Logan, solicitors, the defendants had’offered to pay over the , money's. . J,. His Honour; According to the Official Assignee’s report |of the meeting pf creditors on May, 10, Wright, Stephenson and Co. did not offer to make over any of 'the money. My. Biss: The evidence we will pro- . duce to-day will show that at the meeting on April 9 defendants stated their, willingness to .make a payment. Bankrupt’s payments, to defendants, continued counsel, had been made in the ordinary course of civil business, and were not intended-to favour defendants, more than other companies. Not one tittle of evidence had been brought t© show that bankrupt had been guilty of fraudulent preference. The payments had been made and accepted in good faith. It was not enough to prove that a creditor had benefited by the payments made. Counsel contendedthat the absence of proof of fraudulent preference left defendants' story, that the payments and securities had been received in good faith, still uncontested. Wright, Stephenson and Co. had abandons! both land and stock mortgages as to past advances, but hadi maintained them as to future advances, His Honour: Then you abandoned past claims on these securities, including your land mortgage? Mr. Biss: Yes, as is shown by defendant’s actions since April 9. Mr. Robinson: This is the first I have ' heard of them giving up their land mortgage. Continuing, counsel contended that for . the Official Assignee to'succeed he must prove fraudulent motive. This had not been done. The defendant company had not.wanted to carry Hardy; if anyone else had taken the responsibility, the defendants would not have carried Hardy. The defendants’ objects in receiving payments from Hardy were to enable him to avoid becoming bankrupt, and to settle, with the smaller creditors, if not in full, then at least in a manner equitable to all parties, including the bankrupt. Mr. Robinson contended that an important point in favour of his case was that they had allowed Hardy to overtrade. Even after Hardy’s affairs had been discussed by defendants,, they had allowed him to continue to trade with other firms without warping them of the position.'. '*> . His Honour reserved’ his decision.