CLAIMS AGAINST COMPANY

Press, Volume LXXIII, Issue 22073, 22 April 1937, Page 13

CLAIMS AGAINST COMPANY

MISREPRESENTATION ALLEGED MORE THAN £14,000 INVOLVED RESCISION OF SHARE TRANSFER . SOUGHT : The first of a series of 18 claims against the Australasian Investment Corporation, Ltd., a Christchurch company, was brought in the Supreme Court yesterday before the Hon. Mr Justice Kennedy, the claims being based on share transfers involving £ 14,420. This is the second such series of claims within five months. The claims arise from the transfer of shares in the Investment Executive Trust Company of New Zealand, Ltd.—one of the J. W. S. McArthur companies—and concern shares of a nominal value of £14,420 transferred to the Australasian Investment Corporation. The plaintiff in the first claim is George Herbert Elliott, a retired art master, of Palmerston North, who claimed the return of shares of a nominal value of £6OO, which he had transferred from the Investment Executive Trust to the Australasian' Investment Corporation. He Also claimed £240 in I dividends on those shares received by the defendant company from the Public Trustee, and £6O paid in cash at the time of the transfer. The plaintiff was represented by Mr R. A. Young, with him Mr K. J. McMenamin, and the defendant company by Mr H. F. O'Leary, K.C., with him Mr R. E. Tripe. Plaintiff's Allegations In his statement of claim, the plaintiff set out that he was originally the holder of debentures of a nominal value of £6OO in the Investment Executive Trust Company of New Zealand, Ltd., the assets of which had been vested by Act of Parliament in the Public Trustee. In May, 1936, the plaintiff agreed to transfer to the de-i fendant company his debentures together with £6O in cash for the issue to him of £6OO worth of shares in the Australasian Investment Corporation. This transfer, the statement of claim continued, had been made on the representations of Osmond „ Arthur Bridgewater, managing director of the corporation. In persuading him to transfer, Bridgewater said (1) that no commission would be charged for the transfer; (2) that he (Bridgewater) had himself possessed a large holding | in the Investment Executive Trust and had transferred to the defendant company; and (3) that neither J. W. S. McArthur nor any person Or firm or company associated with him was in any way connected or associated with the Australasian Investment Corporation. Since making the transfer on those assurances the plaintiff said he had discovered (1) that a commission had been charged, of at least 5 per cent., by Bridgewater or a company controlled by him; (2) that at the time of the transfer of the plaintiff's shares Bridgewater was the holder of only one share in the defendant company and had not at any time before heen the-holder of other shares; and (3) that McArthur and certain *Onipanie"s " and' committees under his control had been actively associated with Bridgewater and the defendant company. v and Reckless" It was alleged that representations had been made fraudulently and recklessly and without there being care whether they were true or false. As soon as the untruths were discovered he sought to rescind his transactions with Bridgewater, but the defendant company refused to return the debentures. Elaborating upon the statement of claim, Mr Young said proof would be brought that "McArthur was directly interested in the company, and it would also be shown that Bridgewater was influenced, if not controlled, by McArthur. Elliott had been asked by a man named Webber, on behalf of McArthur, to transfer his debentures, but this he had steadfastly refused to do because of the association with McArthur. „ j ; „ ~, . Mr Young traced the activities of the various trust companies and alleged that Bridgewater played on the feelings of those who had lost heavily in the previous liquidations. Bridgewater had also represented that he himself had transferred substantial holdings to the new trust, but at the date of liquidation he held debentures in the Investment Executive Trust of a face value of only £4O. He had invested only £1 in the new company, while others, on his representations, had subscribed for shares of a nominal value of £85,000. He had subscribed only £1 to the company when he interviewed the plaintiff and he held other debentures of a face value of £l7O. . Correspondence Produced A sheaf of corresnondence which passed between McArthur and Bridgewater was produced by Mr Young, and on individual letters he claimed that Bridcewater was definitely influenced by McArthur. References in the letters to it being necessary for the two companies to appear to act independently, Mr Young claimed as evidence of deceit. For some time McArthur and Bridgewater had been negotiating for an amalgamating company, Mr Young said, before the latter apnroached Elliott. Circulars issued by Bridgewater stated that the company could not be controlled by McArthur or the McArthur Trust. Giving evidence, Elliott said he withdrew money from several companies and bought 600 shares in the Investment Executive Trust. At first he received a little interest, but it dwindled away. When he read of McArthur being accused of misappropriation he realised that there was something wrong. After the company had been forced into liquidation, the debentures were placed in the hands of the Public Trustee. Plaintiff next received a visit from a young man, Webber, in April, 1936, but when he heard McArthur was connected with the transaction Webber wanted made, he'refused to deal any further. After a meeting called by the Public Trustee in Wellington, plaintiff gained the opinion that McArthur was wholly untrustworthy. His first knowledge of the existence of the defendant company was when Bridgewater called on him. the latter at the time taking £6O which plaintiff had just received from the Public Trustee. At the same time Bridgewater explained that he was not being paid for his work in gathering the assets of the Investment Executive Trust into the new company, as he would probably be the company's broker and would be repaid that way Payment of Commission He had also said he personally was a big debenture holder in the Investment Executive Trust, debentures which he said he had transferred to the new company. When the plaintiff told Bridgewater very distinctly that he would have nothing to do with McArthur, Bridgewater gave an assurance that McArthur would never have anything to do with the corporation. The transfer had been made becausa of Bridgewater's guarantee that 5 per cent, interest would be paid on the debentures. This had since proved to be incorrect. ■-• The plaintiff first became suspicious 6Z the" statements" of Bridgewater when l