TRUST FUND DISPOSAL

Otago Witness, Issue 4029, 2 June 1931, Page 70

TRUST FUND DISPOSAL

REDWOOD FORESTS CASE COMPANY’S APPEAL SUCCEEDS. Judgment has been given by the Court of Appeal in the appeal by the New Zealand Redwood Forests, Limited, against a judgment delivered by Mr Justice Smith last December in an action in which the company was defendant. In November the New Zealand Insurance Company, Limited, issued an originating summons stating that it was trustee for the debenture holders of Neu Zealand Redwood Forests, Ltd.; that as such trustee it had in its possession the trust fund of £42,000, held on behalf of the debenture holders; that at a meeting of debenture holders held at Auckland on September 11, 1930, certain resolutions were declared to be passed by the majority in favour of the debenture holders; that, of the voting in favour of the proposals, the amount of £53,787 10s was represented by the value of debentures assigned to K. S. Cox, of Putaruru, sheepfarmer, and W. L. Wiseman, of Auckland, solicitor; that doubts arose whether such resolutions could be validly passed by debenture holders; whether they were, in fact, validly passed, and if so, whether the New Zealand Insurance Company, Limited, should hand over the trust fund in the manner directed by such resolution. The Supreme Court was then asked for an opinion on the validity of the resolutions, and Mr Justice Smith held, inter alia, that the resolutions could not be validly passed and that the trustee should hold the trust fund upon the terms of the trust deed. From these portions of the judgment, New Zealand Redwood Forests appealed on the ground that they were wrong both in law and fact. Delivering the judgment of the Appeal Court, the Chief Justice (Mr Justice Myers) said the proceedings to his mind had been Wrongly conceived and questions which the court was required to answer could not be suitably dealt with on the originating summons, which was the form of procedure adopted by the parties before the court. The court below should have refused to have dealt with the matter and should have required the issues to be decided in an ordinary action, for those issues raised mixed questions of law and fact. In his opinion the court should vacate and set aside the order made in the court below, leaving the parties to their remedies in an ordinary action. Mr Justice Reed and Mr Justice Ostler agreed with his Honor’s decision. The order’ of the court below was accordingly set aside, no order being made as to costs.