CHATTEL SECURITY

Southland Times, Issue 19346, 11 September 1924, Page 8

CHATTEL SECURITY

AMENDING LEGISLATION STOCK AND WOOL LIENS GOVERNMENT PROPOSALS. (Our Parliamentary Reporter.) WELLINGTON, September 10. Since the passing of the Chattels Consolidation Act of 1908 the attention of the Government has from time to time been directed to difficulties in the working of the Act, especially with regard to mortgages of stock and wool liens, which are the common security for mercantile advances to farmers. Difficulties have lately arisen with regard to securities for advances to persons engaged in the dairying industry and machinery supplied on the hire purchase terms in that industry. Some such defects have been dealt with by amending Acts in the years 1919, 1922 and 1923, but others exist and have been the subject of suggestions to the Government from merchants and others. •

In February last the Government issued a circular letter to the leading merchants, houses and stock agents affected and also to the banks, stating the Government’s intention to consolidate and amend the law relating to chattel securities and inviting their suggestions and assistance. INTERESTED PARTIES CONSULTED. The bodies so circularised united in appointing Mr C. P. Skerrett, K.C. and Mr E. D. Beil, who have each had large experience in the matter, to go carefully through the Acts and provisionally draft amendments approved by the Special Committee appointed by the merchants and bankers to deal with the subject. The Government received recently a memoranda setting forth the conclusion of the Special Committee with regard to desired amendments and from .Messrs Skerrett and Bell the drafts of such amendments and of some new provisions in a form giving effect to the views of the Special Committee. The amendments have been considered by the law officers of the Crown and have been in part and with some variations accepted in the form of the Bill now presented to Parliament. THE PROPOSALS IN A BILL.

A Bill embodying these suggestions was read a first time to-day in the Legislative Council.

Compulsory hire purchase agreements are excepted from “instruments,” which include Bills of Sale, mortgages, lien or other documents that transfer chattels. To meet a doubt which has arisen as to whether registration is “public notice,” a new clause has been inserted making it clear.

There is a new sub-clause to the section dealing with the assignment of book or other debts which obviate the contention that other sub-clauses exclude book debts from a floating security. To enable valid assignments of moneys to become payable to milk suppliers and to exclude arrangements of that nature from the necessity of registration, a new clause has been inserted.

Another provision ensures that security for current account will not be discounted. If the grantor’s accounts is in credit at any time, security may be given over crops but only over such crops as may be harvested within 12 months. New Zealand flax is excepted from the provision limiting the security to one crop. Security comprising sheep shall include a covenant to deliver to the grantee the wool shorn from the sheep each year during the continuance of the instrument.

A new clause has been inserted to meet a difficulty created by a recent judgment of Mr Justice Hosking, in which the question was raised whether mortgages by companies (which are excluded by the Act from the definition of “instrument”) have the benefit of the provisions relating to other acquired stock conferred on mortgagees by registered instruments. An attempt to defraud the grantee by defeating, invalidating or impairing his instrument is liable to two years’ imprisonment and a fine not exceeding £lOO. There is another new clause to enable the security of business carried on under the hire purchase system to be mortgaged. There are also technical amendments and alterations which were proposed by the solicitors at the business conference. ,