BANKRUPTCY CASE.

Otago Daily Times, Issue 20448, 30 June 1928, Page 24

BANKRUPTCY CASE.

SUPREME COURT JUDGMENT. The following is the judgment of his Honor Mr Justice Sim in the bankruptcy case in which the official assignee asked for an order against George Strong, a bankrupt farmer of Clarksville. At the original hearing of the case, Mr P. S. Anderson appeared for the official assignee and Mr H. Brasch for the Otago Farmers’ Co-operative Association. In delivering judgment, bis Honor said: On September 13, 1927, the Otago Farmers’ Co-operative Association of Hew Zealand, Ltd., obtained a judgment in the Magistrate’s Court at Dunedin against the above-named George Strong for £ll9 2s Od. On September 22, 1927, a distress warrant in the prescribed form was issued to the bailiff of the Magistrate’s Court at Clinton directing him to levy the amount of the said judgment. The bailiff made a seizure of the debtor’s goods and chattels, and employed the association to sell them by auction. The sale took place on October 19, and on October 27, £lO6 18s 8d being the net proceeds of the sale after deducting all expenses, was paid direct by the association into the office of the Magistrate’s Court at Dunedin. This was done by the direction of the bailiff at Clinton, who was also clerk of the Magistrate’s Court at Clinton. In the mean- • time a petition to have Strong adjudged bankrupt had been presented by one of his other creditors, and on October 28 the solicitor for this creditor gave a notice in writing to the clerk of the Magistrate’s Court at Dunedin that a creditor’s petition having been presented against the debtor the provisions of section 81 of the Bankruptcy Act, 1908, applied to all and any moneys held by the clerk on behalf of any execution creditor of the debtor. Strong was adjudged bankrupt on February 13, 1928, and the official assignee had now moved for an order for payment to him of the said sum of £lO6 18s Bd. The application is opposed by the association, which claims to be entitled to the said sum. If the notice given to the clerk of the Magistrate’s Court at Dunedin can be treated as a good notice within the meaning of sub-section 2 of section 81 of the Bankruptcy Act, 1908, the official assignee is entitled to the sum in question, but if it is not a good notice, then the association is entitled to it. It was contended, on behalf of the association, that the notice ought to have been given to the bailiff of the Magistrate’s Court at Clinton, and not to the clerk of the court at Dunedin. Section 80 of the Bankruptcy Act enacts (sub-section 2) that, for the purposes of the Act, an execution against goods is completed by seizure and sale, and sub-section 3 of section. 81 enacts that an execution levied on the goods of a debtor shall not be invalid by reason merely of its being an act of bankruptcy. Subsection 2 of section 81 enacts that where the goods of a debtor are sold under an execution in respect of a judgment for a sum exceeding £2O the sheriff shall deduct the costs of the execution from the proceeds of the sale and retain the balance for 10 days; if within that time notice is served on him of a bankruptcy petition being presented against or by the debtor and the debtor is adjudged a bankrupt thereon or on any other petition of which the sheriff had notice, the sheriff shall pay the balance to the assignee, who should be entitled to retain the same as against the execution creditor, but otherwise he shall deal with it as if no notice of the presentation of a bankruptcy petition had been served on him. After dealing with the argument of Mr Anderson, his Honor continued:—The provisions of the Magistrate’s Courts’ Act are general, and must be read, I think, subject to the special provisions of the Bankruptcy Act. Where the judgment is for a sum not exceeding £2O sub-section 2 of section 81 of the Bankruptcy Act would not apply, but in every case where the judgment is for a sum exceeding £2O the bailiff executing the distress warrant must retain the proceeds of sale for 10 days after the date of the sale. It was the duty, therefore, of the bailiff at Clinton to obtain payment of the proceeds, and to retain such proceeds until the expiration of the 10 days. That was his duty, and for the purposes of applying subsection 2 of section 81 the proceeds ought to be treated as having been in his hands until after October 29. The result is that the official assignee is not entitled to the money in question, and the motion is dismissed.