CLAIM BY CROWN

Waikato Times, Volume 117, Issue 19597, 8 June 1935, Page 8

CLAIM BY CROWN

UNEMPLOYMENT TAXATION

HELD IN BANKRUPTCY. IMPORTANT TEST CASE. ASSIGNEE’S ACTION UPHELD. The action of the Official Assignee at Hamilton, Mr V. R. Crowhurst, in. holding in a bankrupt estate certain moneys allegedly due for unemployment taxation was challenged in the Supreme Court, Hamilton, before Mr Justice Re.ed, this morning. The Crown Solicitor, Mr H. T. Gillies, brought a motion to reverse the Official Assignee’s decision, the case being the first of its kind to erma -before the New Zealand Courts. Mr N. S. Johnson appeared for the Official Assignee. Summarising the circumstances Mr Gillies said the simple facts were that a cabinetmaker at 'Rotorua, Charles ■Lidwell Beamish, was in business and employed labour. He kept a wages book respecting an employee and in some instances affixed the necessary unemployment stamps and on other occasions omitted to do so, but he always deducted the amount from the employee’s wages- _ Beamish filed his petition in bankruptcy and it was found that a sum of £4 19s 9d had been deducted from the employee’s wages, but it had not been accounted for to the Unemployment Board. Failed to Account. It was alleged that the bankrupt, after deducting from the employee’s wages the amount of taxation, failed to affix the proper stamps and retained ■the amount. This practice was followed spasmodically. The question for the Court to decide was the position of the money so deducted and not accounted for for unemployment purposes. Counsel quoted authorities to show ■that the money was not the property of bankrupt nor the employee but of the Crown. Bankrupt had a sum of £6B in his bank. Though the sum Involved was trivial counsel pointed out that in the case of large firms and contractors who failed to affix stamps to wages books before going bankrupt large sums of money might be involved to which the Crown was entitled.

His Honour asked what the position would be in the case of a man failing to pay Income-tax and then going bankrupt. Would the Crown be in a position to recover. Mr Gillies replied that it depended whether the proceeds were distinguishable. In tlie present case there was the wageq book in the bankrupt’s own writing which showed that the amount had been retained. His Honour: It is.a very wide question. The Government could seize the whole of a bankrupt estate in the case of default. Mr Gillies: That is so, sir. Ilis'Honour: I wish a few thousand pounds were involved instead of £4 19s 9d. The Solicitor-General must think we have not enough work to do. (Laughter.)

Other Cases Affeoted.

Mr Johnson said the amount ln« volved was small but the principle ws important. The official assignee had informed him that at least two cases would be affected by the present one while he knew of another case in the King Country where £lB5 was involved. In fact, the case affected every official assignee and branch of the Labour Department in the Dominion.

Mr Johnson submitted that tho Crown was in 'the position of an ordinary creditor in the estate, that the money was not identifiable and therefore neither the bankrupt nor the official assignees were trustees. Mr Gillies contended that it was unnecessary to set up that Beamish was a trustee. The money was definitely earmarked and it did not matter what happened to it afterwards. “ I have no doubt what my decision will be,” said -His Honour. “I think the official assignee was right in rejecting the Crown’s claim for preferential treatment but I will put -my reasons in writing.”