CLARITY WANTED

Rotorua Morning Post, Volume 2, Issue 326, 13 September 1932, Page 3

CLARITY WANTED

INTERESTING CASE PAYMENT OF DEBTS OUT OF INSURANCE MONEYS. USE OF EXPRESS WORDS. Wellington, "Wednesday. The view that the pious hopes of former Judges did not appear to have been mueh followed by the Legislature in regard to legislation dealing with the protection otf insurance policy-holders was expressed by Mr. Justice MacGregor in the Supreme Court yesterday during the hearing of an originating summons. The position, as shown by the argument of counsel, was that in 1898 Mr. Justice Edwards, in a case of Cookson v. Peterkin, said that the recurrence of the question raised in the case so soon after the decision of the Court of Appeal in Ruddenklau v. Ruddenklau and Samuel v. Downes accentuated the necessity pointed out by Mr. Justice Williams in those cases for legislation dealing with the matter in an exhaustive and intelligible manner. Five years later the Life Insurance Amendment Act was passed, and the words of this Act are precisely the same as the words of the present Act, which was passed in 1908. The point made, however, was that, notwithstanding the efforts made in the'past to achieve clarity, it was still necessary to seek the assistance of the Court in the matter of interpretation. £2400 Involved. The case before the Court to-day concerned- the estate of the late Joseph Dwyer, hotel proprietor. The executors and trustees of his will asked for answers to a number of questions, the principal one of which was whether, having regard to the effect of sub-section 3 of section 65 of the Life Insurance Act, 1908, the testator, by his will, had or had not used express words especially referring to life poliey moneys and declared that they should be applied in payment of his debts. In other words, as explained by counsel for the trustees, the question was whether £2400 of the late Mr. Dwyer's life insurance is protected from his creditors and goes to his widow and son, or whether it is available for the creditors. Mr. Justice MacGregor said that the point was an interesting one, and he would reserve his decision. Counsel for the plantiff trustees said that the legislation appeared to be peculiar to Australia and New Zealand. It was submitted that if paragraph 2 of section 65" stood alone, the testator in the present case had expressed a clear intention in his will that the moneys were to be used for paying his debts. It appeared that the words of sub-section 3 should be construed in the light of tho decision in the old case of Ruddenklau and Ruddenklau. The effect of the decision in that case was that a general bequest of all the policyholder's personal estate followed by a general direction to pay his debts out of that fund was a special direction within the meaning of the Act. His contention was that the moneys were not protected. | Widow's Views Counsel for the testator's widow and ninteen-year-old son said that in most cases of the kind that testator's widow contended that the policy moneys were protected, but in this case the widow's contention was that the policy moneys were not protected, notwithstanding that she and her advisers realised that if the moneys became available for the payment of debts they would go to the general body of creditors. The position was that everybody concerned was agreed that her late husband's business , should be carried on. Counsel sub- ' mitted that the words of the will made it clear that the testator must have formed the intention that the policy moneys should pass for the payment of debts, and presumably he had discussed the matter with his legal adviser. Third counsel in the case represented the seven children of Richard Dwyer, brother of the testator. Counsel said that one of the children had just attained 21 year of age, the six others were between the ages of 11 and 19. The seven children were contingently entitled under the will, the contingency being the death of the testator's son before the age of 27. Their mother, who was herself a hotelkeeper, had instrueted that she would not care to place any difficulbies in the way of the utilisation of I the moneys for the purpose of car1 rying on the Midland Hotel if that : could be avoided. At the same time., counsel said he had a duty to the children, and subject to what he already had said, his submission was that the moneys were protected. He conte.nded that the bequest of the policy moneys fell within sub-section 3 of section 65, and the moneys consequently were protected. His view was that the use of words, as in the testator's will, whereby moneys were made to form part of a conglomerate ' fund, did not, in view of the latter j'part of sub-section 3, make the policy , moneys liable for the payment of ; debts. He could only add that if the S Court held otherwise the beneficiaries j he represented would certainly not be displeased at the result. I His Honour: I am afraid I cannot allow that to influence me. It is purely a matter of interpret'ation. Counsel : That is so, sir. As I have said, I felt bound to make my submissions in the interest of my clients.