CREDITOR’S PETITION

Dominion, Volume 22, Issue 77, 24 December 1928, Page 6

CREDITOR’S PETITION

FURTHER HEARING NECESSARY Palmerston North, December 22. Reserved judgment in the case heard by His Honour, Mr. Justice Smith, at the recent Supreme Court sittings at Palmerston North concerning a judgment summons to a debtor, Duncan Carmichael McPhail, farmer, of Daunevirke, upon a creditor’s petition, to show why he should not be adjudged bankrupt, has been received. Catherine Christobel de Vere Holt, wife of Edward Durniug Holt, farmer, of Koropiko, near Napier, was the petitioning creditor. The petition was based upon the failure of the judgment debtor. McPhail, to comply with the terms of a bankruptcy notice issued out of the Supreme Court on a final judgment on September 7, 1928. The notice was served on October 15. The creditor’s petition was filed on October 26. It was heard . befor His Honour on November 24. Before that date debtor filed a notice that he intended to dispute the act of bankruptcy in that the bankruptcy notice was invalid on the face of it, and further, that he intended to dispute the petitioning creditor’s estimate of her security. Along with the notice and on the same day, debtor filed an affidavit that the petitioning creditor had underestimated the security, and that if the security had depreciated, it was due to. the creditor’s neglect. At the hearing of the case debtor’s counsel (Mr. Lloyd) argued only the point that'the bankruptcy notice was invalid in that it had not been served within one month from the issue thereof, as required by rule 88 of the Bankrupcy Rules. It was claimed, and it was admitted, stated the judgment, that the bankruptcy notice was not served within that time.

“The object of the rule appears to be,” said-His Honour, “that as noncompliance with the bankruptcy notice creates an act of bankruptcy, it must be served'within a limited time, and not kept in reserve as a weapon of extortion or threat. In the present case the petitioning creditor could have asked for an order of extension, either before or after October 7, that being the date of expiry of the month from the issue of the bankruptcy notice, namely, September 7. Having obtained that order of extension, the creditor could then have validly served the bankruptcy notice under the authority of the Court,- The petitioning creditor did not do this, but effected service at a time not authorised by the Court or by the rule.” It was later stated that' that delay in effecting service could not be taken as an immaterial irregularity. It was evident that debtor might waive the irregularity by taking any separate step to appear before the Court to contest the petition founded upon the notice. His Honour thought that the filing of a-notice under rule 105, contesting the statements in the petition as to the value of the security contributed such a waiver. This was as a. waiver of the defect in the service, notwithstanding the co-existing claim of the debtor to rely upon the defect.

“The objection which has been taken fails, but the debtor should be given an opportunity to object to the statements in the petition specified in his notice,” said His,Honour, The petition was accordingly adjourned for further hearing at Palmerston North.