PAYMENT ORDERED

Ashburton Guardian, Volume 53, Issue 287, 15 September 1933, Page 2

PAYMENT ORDERED

FEES FOR DIRECTORS. UNUSUAL COURT ACTION. (Per Press Association). AUCKLAND,, Septembem 14. The sum of £IOOO voted at an annua] meeting of shareholders to directors for their services, and the subsequent discovery that, instead of a profit, of £SOOO, the company had made a Joss of £3200, led to an unusual action in the Supreme Court. Charles John MacCulloch, company manager, who was one of the five directors, claimed £2OO from the Putaruru Pine and Pulp Co. (N.Z.) Ltd., as his share of the £IOOO which had never been paid. In a counter - claim, the pompany asked the Court to rescint the resolution voting the directors £IOOO on the ground that the balance - sheet showing a profit of £SOOO was incor rect. After legal argument had been heard, Mr Justice Herdman asked: "Can you have a more definite direction than that given by the shareholders to the directors to do a certain thing? It was a definite order to pay, and if the directors did not pay surely they could be sued." In reply to a question, it was stated that the company was carrying on and doing reasonably well. Counsel for the company said it would be a curious position if the company had to pay the sum voted to the directors when it was voted as a result of a balance-sheet that con--, tained a false statement.

The mover and the seconder of the shareholders' resolution gave evidence that they would not have moved the - motion had they known that there was a loss and not a profit. The present secretary of the company said that the dividend declared at the .first meeting had not been paid. • The company's losses since inception totalled £11,827. He believed that the shareholders did not know till recently that the £IOOO had not zeon paid to the directors, and that they were now moving to have the resolution cancelled. The mistake made by the directors was in showing assets 90 per cent, of the amount represented by the sale of bonds, allowing oniy 30 per cent, for forfeitures. Counsel for both parties made it clear that there was no suggestion of fraud against the directors.' His Honor gave judgment for plaintiff, with costs.