INSURANCE MONEYS

Gisborne Herald, Volume LXVI, Issue 20114, 7 December 1939, Page 10

INSURANCE MONEYS

BANKRUPT'S ESTATE CLAIMED FOR CREDITORS SUPREME COURT SUIT (Per Press Association.) CHRISTCHURCH, this day. The disposal of moneys recoverable from the insurance policies of Eric Pryce Newburgh, who, a year after he was declared bankrupt, was killed in a motor accident, was argued in a claim before the Supreme Court yesterday. On the life of Newburgh, it was stated, there had been 11 insurance policies. On all of them loans had been obtained and some of them had lapsed because the premiums had not been paid, but, deducting the value of the loans, the policies, with bonuses which could be cashed after Newburgh’s death, meant a total of £2095 7s 7d. The question for the court to decide was whether the protection ■afforded life insurance policies in debt claims applied in this case.

The administrator of Eric Newburgh’s estate, his brother, R. L. Newburgh, claimed the money on behalf of himself, his two brothers, his .sister and his mother, while the official assignee claimed the money on the grounds that under the legislation it was not protected by the Life Insurance Act and should go to the creditors.

It was argued, too, that if it was protected it was only protected in favour of Newburgh’s mother, as the legislation affected only the man insured and his lineal descendants, which his brothers and sisters were not.

R. L. Newburgh relied on section G 5 of the Life Insurance Act. which set out that if the holder of an insurance policy became bankrupt the policy should not become available for the payment of his debts, and also, if the policy-holder died leaving a will, the insurance moneys should not be used to settle debt claims unless expressly set out in the will. It was claimed that the protection of his policies in Eric Pryce Newburgh’s case arose on his bankruptcy, and were he still alive would be enjoyed still by him. Upon his death his estate acquired a protected asset. It passed as an asset that had survived bankruptcy, and benefited the beneficiaries of the will if he died testate and his next-of-kin if he died intestate, as had happened in this case. It was claimed in rebuttal for the official assignee that if the protection did extend to Newburgh’s mother, and not to his brothers and sister, then she was only entitled to one-fifth of it, her share of the estate.

Much legal argument was also heard on whether the legislation governing protected policies dealt with their face values or their cash surrender values. Decision was reserved.