BANKRUPT'S DILEMMA

New Zealand Times, Volume L, Issue 11650, 15 October 1923, Page 8

BANKRUPT'S DILEMMA

SALE OF DEBTOR'S ASSET ALLEGATION OF UNDER-VALUE MAD®. “PUBOATJTIONS NOT TAKEN.” When an application was made at the Bankruptcy Court some time ago to have Lawnenceaffohnstone adjudicated a bankrupt, the motion was opposed on the ground that the debtor was bringing an action against the purchasers and vendor or one of his assets (a farm at Mokau, which he said had a potential wealth of £IOO,OOO in tbe nature of coal deposits), on .the grounds that it had been sold at a figure much below its value. However, he was declared bankrupt, and at the meeting of his creditors be repeated that he had good legal claims for upsetting the sale. It was suggested that the Official Assignee should be indemnified for the cost of the action. A motion to this effect was lost, and the matter was left in the hands of the Official Assignee to wind up the estate in whatever manner he best thought fit At the Auckland Supreme Court-, before Mr Justice Stringer, an application then was made by Mr V. R. Meredith, representing the two purchasers of the property, Messrs C. Melndoe and E. G. White, to have tlie bankrupt’s action dismissed. Mr McVeogh appeared on behalf of the vendor of the property, R. D. Campbell, while Mr West represented the Official Assignee. INTEREST LONG OVERDUE. Mr Meredith in supporting his motion said that the property was bought by the two purchasers from Campbell, wlio was the holder of a second mortgage of £2BOO. For two years that mortgagee had received no interest, which amounted to about £3OO. The Public Trustee was the holder of the fiist mortgage, on which the interest was also overdue. Campbell was an old man, and this mortgage, and a further third of £6lO, were his only possessions, and he depended for his livelihood on the interest therefrom. In February last Campbell had exercised his right and sold the property The plaintiff in this action (the bankrupt) had placed a caveat on the sale and prevented the transfer, and filed an action to maintain the caveat. "FRAUD BY EVERYONE.” His Honour: That is the present action p—Yes. Counsel added that the action was based on an allegation of fraud. VI is Honour: On the part, of Campibell ? Mr Meredith : On the part of everybody ! It is suggested that there is coal on the property to the value of £IOO,OOO. Counsel went on to explain that particulars of the alleged fraud had been sought but were not forthcoming. If tlie Official Assignee was satisfied that he should take up the bankrupt’s case there was no reason for the delay that

had taken place. This delay was serious to his clients, as the interest waa aocruing at the rate of £l5O annually in addition to the rates. PRECAUTIONS NOT TAKEN. His Honour emphasised that the statement of claim was simply an allegation of a sale at gross undervalue ana that proper precautions were not taken to see what was tlie value. What further particulars could Air Meredith want? It was not customary in his Honor's experience to make an order for dismissal without giving the plaintiff a reeon.rblo opportunity of contesting his action. More particularly did this apply when the plaintiff was a bankrupt, and when the Official Assignee was deciding whether he should take action. He did not sec any reason to take the steps suggested by Mr McVeagh. Campbell would not be prejudiced very much by an adjournment. 'His Honor finally decided that the action stand dismissed unless the Official Assignee applies for permission to bring an action within 21 days. leave was given for the action to be hoard at the present session in tho case of the application being made.