LOSS ALLOCATION

Northern Advocate, 18 July 1933, Page 5

LOSS ALLOCATION

UNUSUAL PROBLEM BEFORE SUPREME COURT, BAY OF ISLANDS ESTATE. FARMS NOT PAYING. (Special to "Northern Advocate.”) AUCKLAND, This Day. An unusual problem was brought forward in the Supreme Court, before Mr Justice Smith, yesterday, by way of an originating summons on behalf of the Public Trustee in the estate of Walter Clapham Mountain, of Purerua, Bay of Islands, who died on March 20, 1930, leaving his property to his wife and children for life and thereafter to the grandchildren. The estate was valued for probate at £67,000. The proceedings were takeji to determine how the losses now arising from the working of the estate are to be distributed among those interested in it. The Public Trustee, who was appointed trustee, was given leave to carry on the farm, and he has done so during the last two years at a Ipss. An Originating summons to determine the interpretation of clauses in the will was brought by the Public Trustee (Mr Blomfield). He asked whether the loss on the working of the property-should bo borne by a capital or income, or by both. There was the further question, whether, if the loss was to be borne by capital, it should be the capital of the farming venture only, or the whole capital of the estate. There was the further question whether the Public Trustee had power to use and occupy the Omapero estate, and if so, upon what terras. The Public Trustee considered it essential to use that land while he was carrying on on the main farm, Mr Blomfield said, Mr Bagnall appeared for the children of the testator’s first marriage; Mr A. H. Johnstone, and Mr H. A. Butler for the widow and the issue of the testator’s second marriage; Mr Meredith and Mr McCarthy for the grandchildren of both first and second marriages, born and unborn. Position Summarised.

Mr Blomfiold said Mr Mountain’s estate consisted of approximately £25,000 in war bonds, £12,000 in mortgages, £2.1,4/55 realty, and £8,550 live and dead stock. Duty reduced the value of the estate by £l2*ooo, Tac beneficiaries consisted of the testator ’s first family, all of whom were adults, and married, some, if not all, of those having children. The testator divorced his first wife and married again, and there were by that marriage four daughters and one son, ranging in ago from ten to seventeen years. Counsel said the realty consisted principally of a farm which the testator had virtually bifflt up to a very big area. The farm was carried on with great financial success up to the time of his death, but the slump had produced loss of profit and that was why these proceedings were being taken.

The will set aside for the son .for Ms,:r life two separate properties; one of which was called the Omapere estate, of rich volcanic land/ about 20 miles from the main estate. The other was 800 acres of the main Purerua estate. All the beneficiaries took a life interest _ in the residuary estate. The will provided that the income should be divid*' ed so as to give 24-45ths to the widow and young children, and 21-45ths to tbcF' grown-up family. A small grazing run of 3,900 acres had" been bought jointly by the daughters of the first family. ' The main farm was of poor land, suitable only for a sheep farm, and there was no fattening land at Purerua; • Sale Undesirable. * His Honour said he presumed all- " parties were agreed tFat it jlesirable to sell the property or a part of it at present, and. he. received affirmative answers. ,

On the question of the Public'Trustee ’s rights, Mr Blomfield submitted, the Public Trustee was not leasing the.vOmapere farm, but was using it and paying a. rental. Many of the life ten-- ■' ants were in poor circumstances and. it was essential to them that there should bo some income. ’ Mr Bagnall said the position of members of the first and second families was the same; except that there was some conflict between the interests of;,the boy Walter and of the others. ; It was only in the event of the Public Trustee leasing Omapere that he had any power to carry the rent to a reserve,; • fund for the benefit of the boy Walter. It was quite wrong for the trustee to fix the rent himself, and he .should apply to the Court for direction. ... The Boy’s Interests. Mr .Johnstone said he was as rhuclt* concerned with the interests of the sisters as of the boy. ; His Honour: “The boy is entitled to ‘ the undivided attention of someone,-is.-ho not?” - Mr .Johnstone: “I am inclined do * think he is.” - Mr Meredith submitted it was in the' boy’s interest to have the Omapere property let, and he was prepared toargue that. . Mr Blomfield submitted the: Public'. jS Trustee could yarn much more "'from the property than could be obtained by leasing it. His Honour said the case had better •>; stop, so that someone could be appoint;ed to represent this boy and give him ;i • his undivided attention. Mr Blomfield could take such steps as he thought fit.- :':|i The ease was accordingly adjourned- 'M sine die. '