£3000 CLAIMED BY COMPANY

Press, Volume LXXIII, Issue 22265, 2 December 1937, Page 9

£3OOO CLAIMED BY COMPANY

BREACH OF CONTRACT

ALLEGED

ROAD PAVING VENTURE IN BRITAIN

SUPREME COURT HEARING

CONTINUED

Roading-paving companies were like goldmining companies, in that failures were commonly attributable to in over-estimate of returns and an underestimate of the capital required, argued Mr A. T. Donnelly in the Supreme Court yesterday, opening th> defence of Archibald Donald Paterson, civil engineer, of Christchurch, against a claim by a Scottish firm for £3OOO. The amount was claimed by the plaintiff company, Honing Road Surfaces, Ltd., of Edinburgh, for alleged breach of contract by Paterson, who, it was stated, had spoiled the company's prospects by returning to New Zealand permanently before a two years' engagement was ended. Begun on Tuesday, the case continued all yesterday, and is expected not to finish till to-morrow. Most of the argument was in the connexion of Paterson with the plaintiff company, which was formed in Scotland as a direct outcome of Paterson's visit to Britain in 1934, to exploit his own method of road-paving. Hopes of a financial success were not realised, and Paterson, it was stated, returned to New Zealand to look after his original company, British Pavements (Canterbury), Ltd. Plaintiffs claimed that if Paterson had returned the Scottish company was in a position to succeed, and that the fulfilment of Paterson's contract to remain as manager for two years was necessary to its success. For Paterson it was claimed that the Scottish firm was legally "dead," having exhausted its capital and having no prospects of raising further capital; and that the contract was first broken by plaintiffs in not paying wages due to Paterson. A counter-claim was put forward for £Bl2 10s, money owing to Paterson.

Mr A. N. Haggilt, of Dunedin, appeared for the plaintiff company, with him Mr J. A. Niblock. The defendant was represented by Mr A. T. Donnelly and Mr T. A. Gresson. His Honour Mr Justice Northcroft presided. Defence Opened Three hours were occupied in further readings, by Mr Niblock, from the file of evidence taken in Scotland. The evidence contained statements that Paterson acted throughout as agent for British Pavements, Ltd., that the directors of the Scottish firm had pleaded for support from the "parent companv," but his was not forthcoming. Colonel G. J. Smith, visiting Britain in 1935, as chairman of directors of British Pavements (Canterbury). Ltd., had not offered any further capital: and through him, it was stated. British Pavements threatened to liquidate the company unless it dis-

charged a debenture held by British Pavements over the company's plant. "It is a commonplace that such companies generally "ail for two reasons —first, because of the optimism of the promoters not being justified by the results; and second, because of lack of capital through an under-estimate of what is required," said Mr Donnelly. "This company failed for both these reasons, chiefly the second." In spite of Paterson's warnings—there would be evidence on these—the directors had begun operations with insufficient capital. Paterson's dominant purpose in returning to New Zealand was to persuade British Pavements, Ltd., to provide more capital. When that hope vanished, there was no chance of carrying on. For all practical purposes the company was dead, and Paterson was therefore justified in regarding himself as free from any liability under the service agreement. If he had returned to Britain he might have been destitute. His Honour: Paterson's trouble was that he had come so far away that it was bad business to go to the other end of the world to investigate the affairs of the company. A meeting with two directors of the Scottish firm, Messrs Scott and Box, at the Liberal Club in London, was described by Paterson when he was called by Mr Donnelly. He had told them that at least £15,000 was needed to begin operations, and they said they could easily raise the amount. Plant was bought for £1000; and witness was to serve as manager for two years at £750 a year. All the £1250 capital actually put up had been expended on plant; the only working capital ever used by the cenpany was supplied by witness.

Paterson was still in the witness box when the Court adjourned till 10.15 a.m. to-day.