BANKRUPTCY PETITION

New Zealand Herald, Volume LXV, Issue 20088, 27 October 1928, Page 14

BANKRUPTCY PETITION

PRACTICE OF A* COMPANY.

" CLEANING UP AUCKLAND."'

ACTION AGAINST BUILDER.

COMMENTS BY THE JUDGE

Romnrkablo zeal on (lie part of a trading firm to "clean up" tho commercial condition of Auckland was expressed in tho course of a case dealt with by Mr. Justico Smith in the bankruptcy jurisdiction of tho Supreme Court yesterday. Tho caso was ono in which Builders' Supplies, Ltd., petitioned for tho adjudication of ,T. A. Mason, buildor, as a bankrupt. Mr. Purser appeared for the petitioning company and Mr. Quartley for the respondent. Evidence was given by Charles Booth, accountant to tho petitioning creditor, proving tho existenco of an unsatisfied judgment of £35 5s against respondent in tho Magistrate's Court. In cross-examina-tion witness said it was tho usual practice of his firm, in its recovery of debts, to petition for the bankruptcy of the debtor when judgments wero not met promptly and no security was available. His Honor: How long has tho debtor been dealing with tho petitioning creditor?— Witness: About seven years. And do yoa say that when anybody owes you money and you aro not paid promptly you proceed to have that person rnado bankrupt ?—Only when a judgment has not been satisfied and there is no security. Vindictiveness Suggested. Mr. Quartley suggested thero was a vindictive motivo behind the petition. His Honor: Is tho man ablo to pay ? Mr. Quartley: He is not unfinancial, and he owes only £ll2 altogether. Mr. Quartley advanced as one of tho grounds for the suggestion of viudictiveiiess that the bankruptcy proceedings were begun within about seven days of tho recording of tho judgment. Respondent, in evidence, said ho had Deen iu business in Auckland for tho last eight yeais, and had always paid his debts. His chief ground of grievance was that tho petitioning company had caused him unnecessary expense by taking lien proceedings for an amount beyond what was duo. * "How many peoplo havo your clients made bankrupt lately?" asked His Honor of counsel for tho petitioner. "Thero is another petition beforo tho Court now," answered Mr. Purser, "and I think thero are two others in my office."

Eight Petitions in Two Years.

His Honor: When did they start this system ? Mr Purser; It lias been a practice of their 3 for many years, They found that to a largo cxcent proceedings by way of distress warrant were unsatisfactory when the judgment was for more than £3O, and their practice has been to instruct mo to issuo bankruptcy notices. In the last two years how many bankruptcy petitions have you issued for lliem ?—lt is difficult to say off-hand, but I should say auytliing from eight to ten. And how many adjudications have you had ?—I can call to mind one, but it is quite possible there have been more than that. The eight or ten petitions include the present one and the three others that we have in hand at the present moment. Hi 3 Honor: I do not know that you are acting against' the bankruptcy law, Nmt the matter wagts to be considered. Your clients may bo using bankruptcy proceedings simply as a means of putting pressure upon debtors in a way that is not justified. I do not say that that is so.

" On Lines of Commissioner Hay." Mr. Purser said most of the dealings of his clients were with builders. The experience with builders for some years past was that they often came alotg and put before their creditors paper equities which were unsaleable, in the endeavour to obtain further credit. His clients' solo idea was that such people, were a nienaco to the hardware merchants and timber millers. They went on getting deeper and deeper into the mire, and finally they "suged 0110 magnificent crash." Wero they put out of business earlier a lot of money would bo saved to the general merchants of tho city. His Honor: You are acting, so to speak, in a sanitary way?— Mr. Purser: Yes, something on tho lines of Commissioner Hay. In that ho meant to clean up Auckland 1 —Yes. Ho in doing it morally; wo aro doing it commercially. Hugh H. BrickelJ, a director of Builders' Supplies, Ltd., said that in the Case of a number of builders bankruptcy proceedings had been taken because experience showed that when too much latitude was gi T 'cn they got deeper and deeper into their difficulties.

His Honor: How many have you really put out of business in tho last two years by making them actually bankrupt?—l cannot recollect very many. I do not think there aire more than two or threo

Against how many havo you issued petitions ?—About ten —probably. His Honor reserved judgment upon tho petition.