RESCISSION OF CONTRACT.

Press, Volume LXVIII, Issue 20499, 18 March 1932, Page 3

RESCISSION OF CONTRACT.

DISSENT FROM JUDGMENT,

CASE BEFORE APPEAL COUNT. i irRSSS ASSOCIATION TEI.EORAM.) WELLINGTON, Manli 17. The Court, of Appeal to-day hud before it three appeals from Xelson. In each case, the General "Mortage Corporation, Ltd., is the appellant. The respondents are Sidney Alfred Gibbs, of Nelson, medical practitioner, Harold Leon Ilarlev, of Xelson, solicitor, and Charles Robert Duke, of Nelson, architect. The appeals are being heard together. Gibbs. Hurley, and Duke each filed in the Supreme Court, Xelson, last year, writs against the appellant, claiming that they each applied l'or and had been allotted 100U £1 shares in the appellant company, relying on the representations of one Mackissaek, whom they alleged to be the agent of the company, which representations were false and known to Mackissaek to be so; that they applied to the company to have their names removed t'rom the share register and the. moneys paid by thorn on application or allotment. repaid them; and claiming a rescission of the contract to take shares, the rectification of the share register, and a refund of the moneys paid. Various grounds of defence were pleaded by the company. By the time the cases came for trial at Wellington before Mr Justice MacGrcgor in September last, two affirmative defences only remained open to the company:—(l) That the present respondents ill view of the fact that they had been appointed members of the company's local advisory board in Xelson at no time had any right of rescission; (2) if that right ever existed it had been lost in each case by failure to repudiate within a reasonable time. Ilis Honour ruled against the company on both defences and gave judgment in each case for the respondents in the relief clainiwl. The appeals were brought from ilecisions. Argument by Counsel. Counsel for appellant said that his company had gone into liquidation but the action by the present, respondents had been commenced prior to it going into liquidation. Fraudulent misrepresentations on the part of Mackissaek were admitted by the company, but it denied that for that reason respondents were entitled to have their contracts to take shares set aside because (1) there had been undue delay before action was taken; (2) the rights of third parties had intervened so as to preclude respondents from claiming to be struck off the share register. Each of the respondents had been made a local advisory director for the district of Nelson, with a result that other people knowing or being informed of this fact had been induced to purchase shares, consequently now that the lights of these third persons had intervened it was impossible for the respondents to rescind their share contracts. On behalf of the respondents, counsel contended that Gibbs, Harloy, and Duke were not local directors, but were only members of the advisory board without executive powers, and were not more responsible for anything appearing iu the prospectus of the company than any ordinary shareholder. Although two of the respondents may have had notice of misrepresentation regarding the amount of the share capital they had up knowledge of the falsity of two subsequent misstatements until the day preceding the trial in the Lower Court. Regarding the contention that respondents should not be allowed to rescind because the rights of third parties had intervened, counsel submitted that no ordinary shareholder would ever be allowed to have his name struck off the register of any company if such was the law as the rights of third parties, either creditors or new shareholders, must inevitably intervene. Argument was proceeding when the Court adjourned till to-morrow.