SUPREME COURT

Dominion, Volume 8, Issue 2508, 8 July 1915, Page 9

SUPREME COURT

—— .v MORTGAGES EXTENSION ACT NOVEL POINT OF LAW , . There were - some important features attaching to a reserved judgment <lelivered 111 the Supreme Court yesterday afternoon by His Honour Mr. Justice Chapman. -The -point to be decided was - iVhether John Connell and William Kingston Coimell, hotel-keep-ers, of Wellington, should be adjudicated bankrupts on the application of :tho Phoenix Aerated/Water Company, Ltd. Mr. TV Young appeared in support of the/application, which was' opposed bv Mis 1). G; Jellicoe. ' . The - adjudication was opposed on the ground t/hilt the petitioning creditor's debt was part of the principal sum secured by. mortgage and that .no leavo to, present the petition had been applied for pursuant to tho Mortgages Extension Act, 1914, Section 3. Tho debt was proved 1 and also the act of bankruptcy consisting of the 'putting in of an execution on a judgment uig with the requirements of the Bankruptcy Act, 1908. The petitioning creditor and.other creditors hold a secur- % over the leasehold comprising the : debtors' licensed premises in the form ordinarily taken by merchants and traders who supply goods to public houses, iromissory notes were given for instalments of principal,., some of : which were, renewed and there were accounts for supplies in request, of which cheques , were given. A, promissory note and "a cheqtifc had been dishonoured and judgment was recovered in the Magistrate s Court in respect of botK In the course of his judgment. His Honour said: r-- I 'Tho more important question is whether this petition and 4 proceeding with it by the'petitioner provided against by the Mortgages Extension Act, 1914. It may be conceded that to bring an action is to call up or demand payment of a sum of money and that a defendant would have tne right to have tho action stayed or dismissed unless th e plaintiff had tho leave or tho, Court to resort to that means or recovery. It is to be observ- . . oW6Ver i that the Act does not explicitly require the leave to be obtained before ,the issuo of tho writ, -nor ■does it indicate an originating summons as the exclusive means of obtaining the leave. No doubt tho Court would in every ordinary case and especially whore it was sought to exercise tho power of sale insist on tliat prooedure being followed before any step was_.taken, biit in the caso of a petition in bankruptcy to resort to it in a case, say, against an abseuteo defaulter, tlio delay involved might prove, disastrous. I havo not, however, to decido these questions. Ido not think that the- Mortgages Extension Act affords an answer to this petition. A petition in bankruptcy is not a process by which the potitioner calls up or demands payment of a debt. It is a proceedinc; which is brought on - account of all the creditors. It cannot by force of Section 30 of tho Bankruptcy Act, 1908, bo withdrawn without leave of tho Court and tho petitioner has no choice but to proceed with' it or to havo anothor petitioning oreditor substituted for him. .It is difficult to see how a petitioning creditor could, under tho present law, lawfully accent payment of a debt if tendered. Even under _ the English Act of 1869. which contained no such provision the creditor could rofuno a tenif he

cepts it with knowledge ■of the act of bankruptcy. "Properly regarded, bankruptcy is a proceeding having in view the distribution of the debtor's estate among all the creditors; so regarded, it is a negation of a demand of payment of a particular creditor's debt. For this reason. if the leave of the Court was required to satisfv the terms of the Mortgages Extension Act, 1914, and that leave could bo given on motion after tho presentation of the petition, or at the hearing, the Court ought to grant it, unless it can see.something personal or oppressive in tho proceedings. Tlio petition in this ease is irregular in that it does not explicitly state what the petitioner oifers to do, but says that it "is willing to give up its' said security or to estimate its 'value.' " Mr. Young formally offered to value the security at £400, and asked for an amendment of the petition making this clear. Such an amendment the Court undoubtedly has power to grant. Mr. Jellicoo does not dispute this, but argues that _it ought not to bo granted where granting it will produce inequitable results so far as regards tho interests of the general . body of creditors. This may be conceded. The evidence here_ shows however that the lessors' rent is in arrear. and that not only the security, but tho estate is thereby imperilled, that several creditors who have issued execution aroi unpaid, and that their writs' of oxecution are in the hands of the bailiff. <At the kmo tiiiio the lease is . wasting from day to day. The debtors have been asked to sell tho lease and business, but have refused. These facts appear to me to show that it is to the interest of the general body of creditors that the administration of tho' debtors' affairs sfionld be in other bands.' I accordingly make the amendment asked for. As there does not appear to me to be any answer to the petition, adjudication .must follow." Mr. Jellicoe gave notice to appeal from tho decision, and His Honour remarked. that perhaps the Court of Appeal might seo its way to take tho case at the present sittings. TO PREVENT DEPRECIATION. An interesting question in regard to tho estate of the late William Mitchell, of Mitchelltown, was decided in a reserved judgment delivered in, the Supreme Court yesterday afternoon by His Honour Mr,-Justice.Chapman. Mrs. Annie, Henrietta O'Neill, one of deceased's children, recently sought an. order directing the Public Trustee upon a principle' of salvage to pay out of tho capital of the estate the expenditure, which she had been compelled to incur to prevent the destruction or depreciation of the settled property. At the hearing, Mr.- E. G. Jellicoe appeared for Mrs. O'Neill, while Mr. J. W. Macdonald, solicitor for the Public Trust Office, appeared for the Public Trustee. . , _ / _ His Honour, after reviewing tho law on the question, made an order for tho payment of carpentering and plumbing expenses, and a sum of £20 as an allowance for timber. Mrs. O'Neill was awarded a further sum for costs (£6 6s.V and disbursements.