EMBARRASSED ESTATE.

New Zealand Herald, Volume LXVII, Issue 20626, 26 July 1930, Page 14

EMBARRASSED ESTATE.

VALUATION OF £116,000.

CONTROL BY CREDITORS.

BANKRUPTCY PETITION HEARD _ r

LIABILITIES ABOUT £BO,OOO

A petition to render bankrupt an estate valued at €116.000, against which 39 creditors claimed an aggregate of £BO,OOO, was argued before Mr. Justice Smith in the Supreme Court yesterday. The debtors \vero Ewen William Alison, the younger, of Auckland, solicitor, and Winnie Alison, his wife (Mr. Northcroft), and the petitioning creditor was Mrs. Agnes Boyd, of Tauranga (Mr. Grant). It was stated that the estate consisted largely of property at Takapuna, which had depreciated in value, and that it had been placed undei the control of a manager in the interests of creditors.

Mr. Grant said the petition was founded upon a notice of bankruptcy served on June 19, 1930. He understood that subsequent to the servico of the bankruptcy petition the debtors had both assigned their estate. The document signed by them was undated and had the signatures of four or five creditors. Tn all negotiations with counsel the word assignment had never been mentioned until that minute.

Prospects of Creditors

Mr. Northcroft said that with the single exception of Mrs. Boyd, till tho creditors, with claims totalling £BO,OOO, we iv. much concerned I hat the control of the estate should be carried on as it had been for some considerable time past,. The estate virtually passed into the control of creditors about April, 1928, when tho Bank of New Zealand appointed Mr. I!. A. Spiriloy to have control. Mr. Grant had known all along what was the real controversy between Mrs. Boyd on the one hand and tho other body of creditors on the other.

Mr. Grant said be claimed that the deed of assignment was not executed prior to this act of bankruptcy. Mr. Northcroft outlined the recent history of tlie debtors' estate, and said that iii round figures the indebtedness to secured creditors was about £66,000 and to unsecured about £14,000. Ho submilted that the Court should not destroy the prospects of ctedilors by granting the petition, and asked tho Court to say that the broader interests of all the creditors would be best served by a continuation of the present arrangement.

Evidence that both debtors were still owing her £528 on a judgment summons was given by the petitioning creditor, Mrs. Agnes Royd, of Tauranga. Income Below Outgoings.

Robert Arthur Spinley, public accountant, said he had been intimately associated with debtors' affairs since April, 1928. At that time they had become embarrassed through a building scheme at Takapuna, under which they sold to purchasers, who made applications for Government loans. The houses had cost at that time £IB,OOO, and when the Government failed to advance loans separate mortgages were arranged up to £13,000. A further arrangement was made with the Rank of New Zealand on condition that witness supervised the property. A number of purchasers left the property, so that in December last the income was not sufficient to meet the outgoings. On December 4 tho creditors were called together, there being 37 present, representing debts of £67.000. It. was decided to carry on with the existing arrangement. The assets of the estate were £116.000 and the liabilities £79,000 at this time, continued witness. A detailed report and balance-sheet was presented at a second meeting of creditors, and a committee of four business men was appointed to act with witness. The committee reeom-

mended on January 23 that tho estate should be nursed and time given to the debtors, and that the estate should be assigned to witness. A resolution in favour of assignment was lost because creditors feared that might nrcjudiee their assets. The debtors agreed to assign their estate at any time within six months if called upon.

Loss of Over £2OOO Last Year.

The revenue from the estate had been received by him and his committee, said witness, and tho receipts applied to the properties from which they came. When definite arrangements had been made for the lease of the North Auckland property creditors decided that an assignment could then safely take place, and on July 11 tho debtors were called on to assign. Tho properties mortgaged were not selfsupporting, and there was nothing over and above them available for unsecured creditors. There was over £14,000 owing to unsecured creditors. In cross examination, witness said tho

working account of the estate showed a loss of over £2OOO last year, lie could not. say whether the position would be better or worse this year. It was not to avoid '..ho unpleasantness of bankruptcy that the assignment was arranged. Mr (Irani: Mr. Alison gave you a lot of trouble over this assignment—-breaking promises and so on—didn't he ?

Witness: There, was a certain amount of trouble and unpleasantness, for the simple reason he thought I was delving into matters that did not concern me.

Because of your ingenuity you found that he had an asset in another man's name ?—lt was not ingenuity. Bv close,

attention to tho affairs of i_he estate found that be was acquiring an intercs in another property.

lie did not tell you about it?—[ asked him about it, and he supplied me with the informal ion.

Did not Mr. Dyson threaten that lie would make Alison bankrupt if ho did not assign '! —There was some pressure of that kind.

r believe Mr. Dyson was jockeyed off (lie committee after thai?—.l don't think you could say that.

Gum Deposits in North.

James <)sbu>ne-Lilly, solicitor, who had acted on behalf of a number of the creditors, including the petitioning creditor, described negotiations for realising part o! the estate, a North Auckland property at, Mount Cnnnel, containing the richest deposits of gum in New Zealand. 'I lie gum was line, and could not bo won by the ordinary process of mining, and it was intended to sluice it. On behalf of a group of Australian business men live engineers had examined the property and submitted highly optimistic reports on it. A lease had actually been granted to these business men on terms highly favourable to the cniru-j.

The cr.nipany had actually been formed and arranged for, and the capital was being raised, continued witness. He carried on these negotiations in (lie interests of the creditors. Ihe lease required that the company start operations not later than .June 00. 1931

Answering Mr. Crant, witness said the capital of the company formed to work tile projxrty was £IOO,OOO.

His Honor: Von admit it. is a pretty nebulous assignment at the present, don't you, Mr. Northcioft ?

Mr. Northcioft: I submit it is a complete assignment, because tho debtors have both signed. Tho creditors throughout have unanimously, with the exception of the petitioning cieditor, desired this very Mate of affairs

His Honor remarked thai, whatever the true legal position might, be, on the face <>f it the petitioning creditor would be neither better nor worse off if the pet it ion u ero granted. Mr. Northcioft submitted that she would tie substantially worse off. After hearing legal argument His Honor reserved his decision.