PAYMENT TO A CREDITOR

Nelson Evening Mail, Volume LVI, 20 April 1923, Page 3

PAYMENT TO A CREDITOR

ARGUMENT BEFORE SUPREME COURT (United Press Association). f CHRISTCTIURCH, April 18 Whether a payment made by a man to a creditor six'weeks before his bankruptcy was valid or nob was discussed in the Supreme Court to-day, when the Official Assignee in the estate of Fred Thomas Smith, builder, sought, that a payment of £B2 lis 9d made by bankrupt to E. Reece, Ltd, be declared void on the ground of fraudulent preference. Mr Justice Adams heard the application. Mr A. T. Donnelly appeared for the 'Official Assignee, and Mr W. J. Sim, for Reece, Ltd., opposed it. Mr Donnelly stated that Smith made the payment'on 12th March, 1922, and on Bth May he became bankrupt. lie had since stated that he had been sued by one creditor, but just before making the payment, to Reece, Ltd., he received £24b. ' lie thought that as he had not enough to go round he would give preference to those creditors who had been considerate to him and had not pressed him for payment. That was his explanation. Six weeks afterwards his debts amounted to £IO7O. He said that lie,' knew lie was in difficulties, but did not think he would have, to file. Counsel clearly showed that he was unable to, pay liis d-ebts, and that, he had granted J fraudulent preference to Reece, Ltd. i Mr Sim, in reply, said that Reece, \ Ltd., had accepted payment in perfect V good faith, and that this was a sufficient answer to the claim. The company was not aware that Smith was in difficulties, as was shown by the fact that it. gave him further credit- after receiving payment. His Honour, after reading the affidavits filed bv the defendant company, said that the statements therein were uncontradicted. The transaction with Smith appeared to be entirely normal. The company had established its own good faith, and had shown'that it re ceived the money for valuable consideration. In dismissing the application, his Honour remarked that it had been necessary for the Official Assignee to bring the matter before the Court. .