INSURANCE LEVY

Wairarapa Times-Age, 15 December 1938, Page 7

INSURANCE LEVY

PUBLIC MUTUAL COMPANY CASE

POLICY-HOLDER HELD

LIABLE.

MR JUSTICE FAIR'S DECISION.

(By Telegraph—Press Association.) AUCKLAND. December 14

As a result of a test case heard in the Supreme Court at the beginning of this month, before Mr Justice Fair, one of the policy-holders in the Public Mutual Insurance Company has been neid liable for the levy made upon him oy the company. Reserved judgment in the case was. delivered by his Honour. The liquidator of the company,

3 Joyce William Hyland, sought to re- ’ | cover from defendant, Walter Harold H Hunter, taxi proprietor, £25 ss. the ‘ amount of the levy made upon him. ’ and. costs. His Honour said that the i rosy great majority of persons claimed oy the liquidator to be members of the 1 company and so liable as contributories ! were in the same position as defendant, and it was sought to recover from them a total sum approximating £90,000. The company was incorporated in 1934 with no shares and no fixed capital. On June 7, 1937, defendant signed a proposal io the company for a policy of insurance over a motor-car owned by him and delivered it to plaintiff with a premium payment of £lO 10s. On August 11 last, the company made a levy | on all members amounting to 2i times t he amount of the current annual contribution. Defendant admitted that if he was a member of the company he was liable for the amount claimed, but contended that he could not become a member till his name was entered in the register of members and that his name was never entered in such a register. After examining authorities, his Honour said, he was of opinion that Section 38 (2) of the Companies Act, 1933, did not. make entry in a register of members an essential condition of membership and that in the circumstances the compilation of a register of members was not necessary to constitute defendant a member of the company or to make him liable for payment of the levy. Defendant, his Honour said, after applying for membership, had acted as a member by accepting a policy, renewing it and paying a second premium. He must be taken to have had knowledge of the memorandum and articles of association. Tne company, its directors and the signatories to memorandum had carried on business in reliance on the application made for membership, and no doubt on the assumption that defendant and other persons in similar positions were members and liable to the payment of levies. It seemed beyond question that the company would not have carried on except on the assumption that policyholders had agreed to become members, nor would liabilities have’ been incurred to the extent, as he was informed, of £40,000, except on this basis. .

A “In these circumstances,” concluded his Honour, “it would be most inequitable if persons in similar position were allowed to igpore their applications for membership,' the memorandum and articles, and repudiate their status as members. To allow them to.do so would mean the destruction of the whole financial basis of the company, would enormously increase the liability of the few persons held to be members, and would deprive creditors of the main source to which they were justified from the terms of the memorandum and articles of association in believing they could look.”

His Honour said it would be unnecessary for him to decide whether, in fact, the books kept by the company did constitute a register. Judgment would be against defendant for the amount claimed with costs.