STATUS OF D.O.A.

Wanganui Chronicle, Volume 80, Issue 135, 9 June 1937, Page 9

STATUS OF D.O.A.

ISSUE BEFORE COURT DECEASED PERSON’S WILL , HUNTERVILLE FARM PROPERTY DISPOSAL OF SURPLUS His Honour, Sir John Reed, has delivered his reserved judgment in respect to the estate of the late Frederick Loveridge. The case came before the Supreme Court at the recent sittings in Wanganui in the form of an ! originating summons, the Deputy 01Ificial Assignee in Bankruptcy at Waniganui (Edwin Martel Silk) seeking 'directions from the Court as to the disposal of the sum of £lOOO, profits accrued in the estate of the deceased testator. His Honour, after reviewing the legal argument raised, found that it was the duty of the Deputy Official Assignee to pay the sum in question in reduction of liability to an unsecured creditor in the estate or otherwise in reduction of liabilities.

Six counsel appeared at the hearing representing conflicting interests. The plaintiff (the D.0.A.) sought directions as to whether the £lOOO be paid to the first-named defendant (the Public Trustee as administrator of the estate of Hannah Loveridge, late of Wanganui, widow, deceased) or to the other named defendants (Elizabeth Loveridge, of Wanganui, widow, as executrix of Frederick George Loveridge, deceased; Francis Louis Loveridge,’ of Aramoho, labourer; Albert Lawrence Loveridge, of Taihape, labourer; Arthur Franklin Loveridge, of Pohunui, farmer; Alan Hector Basil Loveridge, of Wanganui East, labourer; Alice Jane Humphrey, Marton, married woman; Eleanor Susanna Hillgrove, of Wanganui, married woman; Edith Evelyn Goldsack, of Turakina, married woman; Beatrice Isabel Campbell, of Pohunui, married 'woman; Iris Wilson, of Hunterville, married woman). Mr. W. A. Izard appeared on behalf of the plaintiff (the D.0.A.) and agreed to submit to the ruling of the Court; Mr. R. S. Withers represented the Public Trustee in its administration of the estate of Hannah Loveridge, deceased; Mr. A. D. Brodie appeared for Elizabeth Loveridge, widow of Frederick George Loveridge, deceased, eldest son of the deceased testator and who was an unsecured creditor in the estate, and also for Alan Hector Basil Loveridge. Mr. G. W. Currie represented Francis Louis Loveridge, son of the testator; Mr. J. Craigmyle appeared for Albert Lawrence Loveridge and Arthur Franklin Loveridge, two sons of the testator and Mr. B, C. Haggitt represented the daughters and and granddaughter of the testator, Alice Jane Humphrey, Eleanor Susanna Hillgrove, Edith Evelyn Goldsack, Beatrice Isobel Campbell and Iris Wilson, the last-named being the granddaughter. A statement setting forth the facts in the case was filed by Mr. Izard and accepted by the parties. (This was published in the “Chronicle” of May 25, last.)

It was shown that the estate, which included a farm of some 2000 odd acres at Hunterville, owing to the economic position, met with difficulty in meeting financial engagements, ana on the application T a .reditor an order was made by the Supreme Court on July 26. 1922, under Part IV of the Adminis’ration Act, 1908, that

the executors under the will cease to administer the estate and that it be administered by the D.0.A., Wanganui.

“The question as to what effect ad- ’ ministration of an estate under Part. IV of the Administration Act has upon i the disposition of property under ai will is, so far as the industry of court- ‘ . sei has been unable to discover, prac-! ' tically barren of authority,” slated I ‘ His Honour in his judgment. j “It will be noted,” he continued j c with reference to the points at issue, : * “that it is no part of the duty of an j 3 appointee (under Part IV of the ■: Administration Act) to divide any sur-| j plus in accordance with the trusts of! , the will. The duty of the Deputy | , Official Assignee in the present case,!. as appointee, is to realise the assets! and pay the creditors regardless of the I * provisions of the will, and then to j apply the surplus as directed by the J £ Court. The order appointing the De-/ puty Official Assignee as administrator was made on July 26, 1922, and, as 1 . have already staled, it is at that date ( that the debts in the estate must be s ascertained. Benefits to arise in the “ future by virtue of the provisions of . the testator's will, cannot be taken f into consideration, and they can never J become debts in the estate. As the c appointee is required to pay debts, all ( all debts must be assumed to have , been paid when, upon realisation, the , amount of the surplus is reported to , the Court. The Court, therefore, can- '< not deal with the surplus as if the ( benefits under the will were enfcrcs- j able debts, but only as a guide in con- . sidering ‘the interests of the persons ( entitled thereto.’ A will speaks from j the date of death of the testator, but j its operation is, of necessity, suspended . during the period that the estate is j being administered under the Bank- j ruptcy Act. Payment of legacies pay- ( able under a will is suspended, and th’ j date for payment is postponed by , virtue of the provisions of the Statute | until there is money to distribute. In , the circumstances, in ascertaining the ; interests of the persons entitled to j share in the surplus legacies must , deemed to be payable as at the date . when the surplus is ascertained and < ready for distribution. It follows that j the legacies carry no interest. His Honour next addressed himselt ■ to the claim of the Public Trustee in the estate of Hannah Loveridge (de- ; ceased) for unpaid income. “Unless ( there was some small sum due in re- ; spect of the profits up to the date of ' the order, there never was a debt owing by the estate to her,” His Honour held. “Any profits in the estate during her lifetime were assets in the hands of the appointee for the payment of debts. Further, I think that, for another reason, the beneficiaries under the will have no claim. The ap- ’ pointee is a statutory officer whoso ' duties are clearly defined in the ‘ Statute and do nnot include the duties - of a trustee. He is an administrator 1 solely, whose only concern is“ to pay the debts and transfer the surplus as he may be directed by the Court." His Honour quoted the attitude of 'in decisions made nrior to this case the Court with regard to the D.0.A.. and held that in none of these matters had it treated him as a trustee. "If any of his acts can be said to be more in the nature of the acts of a trustee rather than an administrator that does no constitute him one,” His Honour stated. “I am of opinion that he must be treated as an administrator only. Being an administrator his duty, after I realising the assets and paying the I debts, is to report the surplus to tile i Court. That is the accounting point, | and the whole time during which he i •has been administering must be j treated as one period tor the purpose of ascertaining the amount of the net i income ot the estate, and it is only the I net income to which the life tenant I would be entitled if she had lived until j the period of distribution of the assets.! The same principle applies to a consideration of the position as at the 1 date when she died. She had at tin’ date received more than the net in- ' come, calculated upon the same prin- ■ ciple, and her estate has no claim ; upon any surplus there may be.” | His Honour quoted an authority to bear that contention out. He ruled' that Court costs should be charged ■ against the corpus of the estate. “Thei issues raised in this case have heen : caused by the various beneficiaries be- - ing unable to agree as to the distribu- i tion of the £lOOO that the unsecured ■ creditor and the mortgagee and stockcompany are willing that the D.O.A. ‘ should distribute amongst them,” the ! judgment proceeded. “I have no diffi- . culty with regard to this. In my i opinion the D.O.A. is not legally just/ : tied, even with these consents, in dis- ' trlbuting any part of the expected surplus. The payment of this money would deJay the final winding up,which it is his duty to expedite in every way. His duty is to pay that money in reduction of the liability of the unsecured creditor, or otherwise in reduction of the liabilities of the estate.” His Honour made an order that the I costs of all parties, as between solid- : tor and client, be taxed and paid out! of the corpus of the estate. “With re ■ gard to the costs in the present case i six counsel appeared,” His Honour stated, “each representing a different interest. Apparently, owing to dissension in the family, this cannot be obviated, but some attempt should be made, if there are any future applications, to avoid what would appear to be unnecessary expense.”