“GROSSLY UNFAIR”

Nelson Evening Mail, Volume LXVI, 5 September 1934, Page 4

“GROSSLY UNFAIR”

WIDOWS AND SMALL INSURANCE POLICIES PREFERENCE ENJOYED BY STATE DEPARTMENTS HOLD ON LIFE INSURANCE MONEYS (By Telegraph) (From “The Mail’s’’ Parliamentary Reporter) . WELLINGTON, This Day. The right of the State Advances Office to require moneys from lite insurance policies to be paid over to the office in cases where an estate over which it lias a mortgage, does not realise (he full liability of that mortgage, was mentioned by Mr W. T. Broadfoot (Government, YVaitomo) in the House of Representatives to-night. Referring to the matter m his speech on the Budget debate Mr Broadfoot said that the preferences enjoyed bv State trading departments were a matter of serious concern and deserved -he - early consideration of the Government. For many years it had been thought that, under Sections 65 and 66 of the Life Insurance Act, life insurance policies up to £2,000, with a few exceptions, were exempt from proceedings by creditors. Two weeks ago, he came across a case in which a man had left ail over mortgaged farm and a life insurance policy of £l5O. The property would not produce tiie amount of the mortgage which was held by the State Advances Office and the department had cold-bloodedly instructed the Insurance Company not to pay cut the amount of the policy to his widow as its claims had not been satisfied. When they set up State trading departin' - -its, added Mr Broadfoot, they should :ee that they enjoyed the same liabilities and privileges *as private traders. The idea that) a life insurance policy was protected had obtained in New Zealand for the last 30 years and no doubt the fact that the Crown, as ’mortgagee, could attach a claim for liability, would come as a rude shock to a large number of people. Such a position was never intended by the Legislature, and it deserved the earnest consideration of the Minister cf Finance. An amending law should be passed immediately, protecting life insurance policies from claims by State Departments Mr Broadfoot said that some years ago the Mayor of Auckland sued' the Government Life Insuran :c Department for unpaid n tes an! the verdict went against him because it was Crown property which was exempt unless otherwise specified. Thus policy holders :n th e Government Life Insurance Office were exempt from just, charges of taxation. The position went a stage further in a case decided in 1922 in re Buckingham. It was held that the Crown was not bound by the Chattels Transfer Act and execution issued by •lie Crown betwcui the act of bankruptcy and the actual hinkruptiv had been held as good. That f act gave the Crown priori’\ over pvv.aii- creditors and again He position was grossly unfair