BANKRUPT’S INSURANCES

Greymouth Evening Star, 7 December 1939, Page 5

BANKRUPT’S INSURANCES

SUPREME COURT ARGUMENT ’CHRISTCHURCH, December 6. The disposal of moneys recoverable from the insurance policies of Eric Pryce Newburgh, who, a year after he was declared bankrupt, was killed in a motor accident, was argued in a claim before the Supreme Court today, before Mr. Justice Northcroft.

On the life of Newburgh, it was stated, there had been 11 insurance policies. On all of them loans had been obtained, and some of them had lapsed because premiums had not been paid. But, deducting the value of the loans, the policies, with bonuses, which could be cashed after Newburgh’s death meant a total of £2,695/7/7. The Question for the Court to decide was whether the protection afforded life insurance policies in debt claims applied in this case. The administrator of Eric Newburgh’s estate, his brother, R. L. Newburgh, claimed the money on behalf of himself, his two brothers, his sister, and his mother, while the Official Assignee claimed the money on the grounds that under the legislation it was not protected by the Life Insurance Act, and should go to creditors. It was argued, too, that if it was protected, it was only protected in favour of Newburgh’s mother, as the legislation affected only the man insured, or wife or husband, and lineal descendants, which brothers and sisters were not. j R. L. Newburgh, through his counsel, Mr. K. M. Gresson and Mr. R. P. Thompson, relied op section 65 of the Life Insurance Act, which set out that if the holder of an insurance policy became bankrupt the policy should not become available for the payment, of his debts; and also if the policyholder died leaving a will, the insurance moneys should not be used to settle debt claims unless expressly set out in the will. • It was claimed that the protection of his policies in Eric Pryce Newburgh’s case arose on his bankruptcy, and were he still alive would be enjoyed still by him. Upon his death his estate acquired the protected asset. It passed as an asset that had survived the bankruptcy and benefited the beneficiaries of the will if he died testate, and his next of kin if he died intestate —as happened in this case.

It was claimed, in rebuttal, for the Official Assignee that if the protection did extend to Newburgh’s mother (and not to his brothers and sisters), I hen she was only entitled to onelift h of it. her share of the estate. Much legal argument was also heard on whether the legislation governing protected policies dealt with their face values or their cash surrender values.

The Official Assignee was represented in the hearing by Mr. A. W. Brown and Mr. L. W. Gee. Decision was reserved.