PROCEDURE QUERIED

Dominion, Volume 22, Issue 29, 29 October 1928, Page 15

PROCEDURE QUERIED

A COMMERCIAL “CLEAN- \ UP” t JUDGE’S, COMMENTS ON PETITION FOR BANKRUPTCY Dominion Special Service. Auckland, October 26. The practice of a firm of builders’ suppliers to petition the Supreme Court for adjudication as bankrupts clients against whom they had procured judgment, was queriei. by Mr. Justice Smith this afternoon. Mr. R. B. Purser, appearing for Builders’ Supplies, Ltd., who sought to have J. A. Mason, builder (Mr. Quartley), made bankrupt, said his clients were acting something along the lines of Commissioner Hay. His Honour: To clean up Auckland? Mr. Purser: Yes; he does it morally; we do it commercially. ' Charles H. Booth, accountant of the petitioning firm, gave evidence that the company had obtained judgment in the Magistrate’s Court f r £3O, which had not been satisfied. Mr. Quartley submitted that the petitioning creditor had Involved the debtor in a great deal of unnecessary expense. To Mr. Purser witness said the usual practice of his firm to recover debts was to petition for their bankruptcy when no security was available. Mr. Justice Smitlj: How long has debtor been dealing with petitioning creditor? Witness: About seven years. His Honour: Did you say when anybody owes you money and you are not paid promptly you proceed to have them made bankrupt? Witness: Only when judgment has not been satisfied. ... Mr. Quartley argued that debtor had been coerced by. petitioning creditor. There was vindictiveness in the petition. ’' His Honour: K the man unable to pay? \ Mr. Quartley: He is not unfinancial; he owes £ll2 altogether, but has had trouble in getting satisfaction out of a contract. Id evidence Mason said he had been in business in Auckland since the war. He had always paid his debts. Cross-examined, witness denied that the main reason why he opposed the proceedings in the Magistrate’s Court was that the petitioning creditor had taken lien proceedings for £126 instead of the £9O actually owing. He admitted the mistake had been'rectified. Mr. Purser: The position is quite clear; the debtor is simply sore because my clients went about proceedings in a businesslike way. His Honour: When did your clients start this system of making people bankrupt?—“lt has been done for many years; they found that distress war-' rants were not satisfactory.” His Honour: In the last two yeajs how many bankruptcy petitions have you asked for?—“I should think from eight to ten; one or two have been adjudicated.”

His Honour: I think the matter wants some consideration; your clients may be using the Bankruptcy Act simply to put pressure upon debtors in a way which is not justified. However, I do not say they are doing that. Mr. Purser: The experience of my clients has been that many builders put a whole lot of unsaleable paper equity before creditors and go on trading. We think these people are a menace to the merchants of the city. They go deeper and deeper into the mire until they stage a good crash, thereby causing a great loss all round. His Honour: Then you are acting in a salutary way? Here followed the reference to Commissioner Hay. Hugh H. Bricknell, director of Builders’ Supplies, said that debtor advised him that he was in difiiculties. His firm withheld action as long as possible, and he made it clear to Mason that they bore him no malice but simply wanted their money. They had no knowledge that there were other creditors. Their only intention was to secure their money in a legal way. Mr. Purser: His Honour has raised the question of your viewpoint toward these builders. “We have,” added witness, “acted on our experience of debtors, who, if allowed to carry on, only get deeper and deeper into the mire?’ To His Honour witness said he believed his firm had not put more than three men out of business in the last two years. There was no question of vindictiveness; it was a matter of policy. After ■ hearing- further- argument His Honour reserved his'decision.