NO PREFERENCE

Waikato Times, Volume 117, Issue 19599, 11 June 1935, Page 6

NO PREFERENCE

CLAIM BY CROWN.

UNEMPLOYMENT TAXES.

“ NOT TRUST MONEY.”

An Important test case involving the point whether the Unemployment Board has a right to unpaid unemployment taxation in a bankrupt estate was decided by Mr Justice Reed in the Supreme Court, Hamilton, this afternoon in a reserved judgment. Mr H. T. Gillies appeared for the Crown and Mr N. S. Johnson for the Official Assignee. His Honour said the circumstances were that bankrupt before his bankruptcy was in business as a cabinetmaker and employed three workers. He had committed irregularities in compliance with the provisions of the Unemployment Amendment Act, 1931, and failed in some cases to affix unemployment relief stamps in his wages book although he had deducted the prescribed amount from the workers’ wages; in other oases he had put stamps on in excess of the amount required the net result being that £4 19s 9d was unsatisfied by cancellation of unemployment relief stamps or otherwise. The bankrupt had a bank account which at the date of bankruptcy was in credit to the amount of £6B 18s sd. Out of this amount the Crown claimed to be paid in full. This was contested by the Official Assignee who had however accepted a proof of debt for the amount as an ordinary unsecured creditor. His Honour held that the Crown was hound by the provisions of the Bankruptcy Act, 1908 (Section 148). The assets in a .bankrupt-estate when realised were applied as provided by Section 120 of that Act which did not provide for any preferential payment to the Crown. This was not disputed but it was claimed that the £4 19s 9d was trust money yor at least money held in a fiduciary capacity and did not pass as property to the Official Assignee. Money Not In Bank.

After quoting authorities on the matter His Honour said even assuming that the money when deducted was deemed to be held In a fiduciary capacity by the bankrupt it oould not be followed as part of the money in the bank. In no oase would the amount of the deduction actually reach the bank; it would only mean that the wages were short-paid by the amount of the deduction. He concluded, therefore, that the bankrupt received no money in a fiduciary character; moreover ■ there was no evidence that the money deduction by him ever reached the bank. A statutory duty was imposed, on the bankrupt to deduct the appropriate unemployment charge and to affix and cancel stamps representing the sum with sanctions imposed for its non-performance- The statute imposed no trust but specifically imposed the relationship of debtor and creditor by providing that the amount of money involved should he a debt due to the Crown recoverable by action. In dismissing the motion His Honour said he understood it was a test case'and the matter should not be decided at the expense of the creditors. The Official Assignee would therefore be allowed costs.