THE BRUNNER LITIGATION.

New Zealand Times, Volume LXVII, Issue 3443, 26 May 1898, Page 4

THE BRUNNER LITIGATION.

appeal court decides in favour OF DEBENPURE HOLDERS. PROBABLE APPEAL TO THE PRIVY COUNCIL. Judgment was given by the Court of Appeal yesterday in the special case stated for decision in the case Geoghegan and others versus the Greymontb-Point Elizabeth Coal Company and the Hon Arthur G. Brand and John McDonald (added by order of the Court, the facts of which have already appeared in The Tiaies, as trustees of the debenture-holders, as defendants).

The judgment, which was of considerable length, and took Mr Justice Edwards about 85 minutes to read, recorded inter alia teat t i.e Court v-'as of opinion that the contention of the plaintiffs that they had a paramount charge over tho mine and mining plant could not be sustained. It was the contention of the plaintiffs that a. provision in the Coal Mines Act laado a lien tipon the mine and plant similar to a maritime lion, paramount to all other claims on the mine, even to the right of a freeholder or losseo to whom a lease had been granted prior to the coming into operation of the Act; but in the opinion of the Court, if the Legislature had intended to charge the debts and liabilities of one person upon the property of another, it was necessary that the intention should have been expressed in dear and unequivocal language. In the opinion of the Court, there was no analogy between a coal mines lien and a maritime lion, because to enforce a maritime lien all persons interested might come in and defend their interests; but in tho other case, neither freeholder nor mortgagee could claim to defend an action, and might have their properties swept away by actions to which they could not claim. to be made parties, and which, if properly defended, might have a very different issue. The charge created was a charge only upon the particular interest of the person against whom damages were recovered, and it was naturally subject to all encumbrances created by him before the charge arose. The effect of the charge under the statute was that tho persons in whose favour that charge was created had a preference, so far as the mine and plant were concerned, over the general creditors of the company, and that such charge was not liable to be defeated by the winding-up of the company. It was, however, subject to all charges already created by the company. It was fully realised by the House of Lord that whenever the authority of the company to deal with its property in the course of business has been properly determined, the floating security becomes a forced and binding'* charge. The authority of the defendant company in the present case to use the mortgaged property in carrying on its business was beyond all question finally determined on the 18th April, when the defendant trustees entered into possession of the mortgaged property. The Court did not think it necessary to base its judgment upon the fact that the seizure by the defendant trustees on the 18th April put an end to the company’s business, but there could be no doubt that that was so, and if the stoppage of the business were a condition precedent to turning the floating security into a fixed one, then that condition precedent had been fulfilled. The result which the Court had arrived at in reference to the questions placed before it was:—

(1) That the defendant trustees, as trustees for tho debenture-holders, had priority over the charge created by the Coal Minos Act, 1891, in favour of the plaintiffs. (2) That the defendant trustees are entitled as against the plaintiffs, as execution creditors, to the proceeds of the sale of coal mentioned in the statement of case, Costs were ordered to be costs in the cause as provided for. Mr Jellicoe asked for a stay which would protect the property until the decision of the Privy Council (which he asked leave to appeal to) had been invoked in the matter. The Court allowed the appeal, after discussion, but refused the stay.