"A FAULTY MEMORY"

Evening Post, Volume CX, Issue 104, 29 October 1925, Page 8

"A FAULTY MEMORY"

ALLEGED FRAUDULENT PREFERENCE

OFFICIAL ASSIGNEE V. LEVIN AND CO.

JUDGMENT RESERVED,

Legal argument was heard, by his Honour Mr. Justice Ostler at the Supreme Court to-day in the case of tho OfJieial Assignee v. Levin and Co. h\ this case the' Official Assignee attacked as a fraudulent preference an assignment given to Levin and Co. by Alexander M'Kay, of Masterton, farmer, "aver his share in ;.the' estate left by his father, the late George M'Kay. Sir John' Findlay, K.C., with him Mr. O. N. C. Pragnall, appeared for the Official Assignee, and Mr. M. Myers, K.C., with him Mr. H. E. Biss, for Levin and Co.

Tho defence was that there was no fraudulent preference,, and that Levin and Go. had acted throughout in entire gdod faith.

Mr. Myers submitted that the. crux of the case was simply a question of fact. ■ '

His Honour asked if Sir John Findlay, agreed with that view; but Sir John said that he could not wholly agree to it, as he was not sure what Mr. Myers meant by "good faith." Mr. Myers explained what he meant by '' good faith by reference to authorities.

His Honour said that he had come to a very definite conclusion as to the facts. Perhaps if he stated that conclusion it might shorten the proceedings. Counsel assenting, his Honour said: "I accept without question the evidence of Mr. Summerell, manager of Levin and Co. at Mastcrton, in this case; and in doing so, I do not want it to be suggested that Mr. M'Kay was not trying' .to tell the truth. It was just purely a question of memory."

"NO WILFUL DISTOETION OF TRUTH." ,

Mr. Myers: "It is pleasant in this ease that witnesses on the one side do not. charge the witnesses on the other with any wilful distortion of the.truth. No such suggestion came from Mr. Sunimerell, Mr. Gill, or Mr. Gawith; and none was made by Mr. M'Kay."

His Honour: "It is purely a question of memory; and it is obvious that, in sonic respects, the memory of Mr. M'Kay was faulty, because under cross-examination he admitted facts and circumstances not mentioned in his examination-in-chief, and which were inconsistent with statements made in his cvideiice-in-chicf."

Mr. Myers .argued, citing a number of crises, that in view of the facts sworn to by Mr. Sunimerell, and accepted by his Honour, Levin and Co. were- completely protected under section 82 of the Bankruptcy Act.

Sir John Pjiullay, addressing tlie Court, said: "I rely with great confidence upon the statement made by Mr. Sunimerell to my friend Mr. Myers— not to myself—that 'without the £3000 under his fathers-will, M'Kiiy would have been insolvent in 192-I.' "

■ His Honour: "That is what I have found'as a fact. But for that £3000, Levin and Co. must have known that he was Mr. „Summerell said he knew that."

Sir John Fincllay: "Then, if M'Kay assigned the £3000, tho balance of his assets were insufficient to pay his creditors." Sir John argued that, on Mr. Summoroll's own admission, he must be taken to have known that M'Kay had other debts, and that apart from,tho £3000 there were no assets to pay these debts., That was sufficient, ho contended, on the cases to withdraw tho protection given by section S2. : "NO MATTER HOW GOOD THE MOTIVE."

The cases were unanimous that in such eases motive was not an important element. It did not matter how good the motive might be, or how complete the absence of moral fraud might be; if the result of an assignment was to delay or defeat the rights of other creditors, that was sufficient to constitute it a fraudulent preference. But Mr. Summcrell had said that .without the £3000 M'Kay. was insolvent. They, had a complete confession that he knew of other debts, and of M'Kay's . insolvency without tlio £3000. "That is all wo require," ho added. "A person who knows that a man has other debts and yet .secured an . assignment of the whole, or substantially the;whole, of the debtor's property, cannot be held to bo acting in good faith (within the meaning of Lliq Act), and to be protected by section 52." Mr. Myers: "That is not putting it quite fairly. The position was quite different after the £3000 came in, «ml; the previous mortgages were released."

Sir John Fiudlay maintained that even if it should be found that the £3000 bequest realised sufficient to pay Levin and Co., and leave a surplus for the other creditors, Levin and Co., under the facts' as stated by Mr. Sninmerell, wcro not entitled to the protection of section-82; and the assignment should not stand. Ills Honour reserved judgment. The Court adjourned to 10.30 tomorrow morning.