PREFERENTIAL CLAIM

Gisborne Times, Volume LXVIII, Issue 10752, 24 November 1928, Page 7

PREFERENTIAL CLAIM

NEAT LEGAL POINT

IN BANKRUPT'S ESTATE

AYhother or not claims by creditors for goods supplied between an act of bankruptcy and tho actual filing of the petition should be treated as preferential in the winding up of a bankrupt estate, was the point at issue in an application heard by M Justice Ostler in the Supreme Court yesterday .

The Deputy Official Assignee (Mr C,. Blackburn), applied for directions as to whether he should make preference payments to certain creditors in tho estate of Thomas Stephens, a bankrupt, under similar circumstances. Mr F. AY. Nolan appeared for tho ..Assignee, Air D. E. Chrisp for Mrs Martin and Air E, T. Brosnahan for creditors claiming preference. It, was announced that all the c' editors were prepared to agree to the payment of tho claims preferentially with the exception of Mrs Martin, but His Honor declared that he could not make an order except with the consent of all creditors.

Mr R. T. Brosnahan pointed out that although Stephens had not been adjudicated a bankrupt until March this year, the act of bankruptcy took place in November 1927. Any act of bankruptcy committed between November 1927 and March 1928 must. on included in tho bankruptcy. During the period'that Bull and Edwards acted trade assignees, they performed certain work and he submitted that when the Official Assignee took over he was entitled to treat Bull and Edwards as his agents or as trespassers. The Official Assignee by ratifying any contracts made by the trade assignees made them his agents, and therefore reasonable expenses or costs incurred bv Bull and Edwards were payable by tho Official Assignee. In this estate there seemed to bo two periods, that in which E. M. Harper was supervisor, and that i:. which Bull and Edwards were trade assignees. The act of bankruptcy was committed ' when Harper was supervisor. The only creditor objecting to the. preferential payments, Mrs Martin, was party to the deed appointing Bull and Ed-' wards ae trade assignees arid that deed provided for preferential payments for goods supplied largely during Harper’s supervision. Those goods were supplied largely for the- benefit of the creditors. He pointed out that if the contracts entered into by the trade assignees, Bull and Edwards, did not bind tho Official Assignee, Mrs Martin was nevertheless bound by tho deed under which the Dieferential payments were agreed to. He contended that any expenses 'ucurired between November and March' were therefore payable as preferential claims.

“A very neat argument put very clearly and in few words” commented His Honor. ' .'.

Mr F. AV. Nolan pointed out that Mr Brosnahan had referred to the debts that bad been incurred by the trade assignees, Bull and Edwards, but this was not the cate. Tho debts were incurred in Stephens’ busr mess during the throe months that tho business was under the supervision of Harper, Tho assignment ‘o the trustees did not take place until December 15 and the debts were incurred by the business of Stephens and not by the trade assignees. The de-i sire of the creditors was to protect the creditors who supplied the goods during the period mentioned. If the estate had been wound up on a private assignment the resolution of tho creditors would have been effective;' but as soon as the estate was thrown into bankruptcy different provisions applied.. ■ • Decision was reserved. *'