JUDGMENT REDUCED

Press, Volume C, Issue 29635, 4 October 1961, Page 10

JUDGMENT REDUCED

Sequel To Bid For Shares

A judgment by Mr N. M. Izard, S.M., of £199 3s against John Ainger, a comptoy director (Mr A. B. Harman), in. favour of the Riccarton Finance Corporation, Ltd. (Mr J. E. Miller) was reduced by Mr Justice Richmond in the Supreme Court yesterday to £145 6s 3d.

The claim arose out of a take-over bid by the Riccarton Finance Corporation for shares in Riccarton Credits, Ltd., and concerned’ unstamped hire-purchase assignments.

John Ainger, who appealed against the judgment, was a director, with three others, of the Riccarton Finance Corporation but not a shareholder.

In his decision, Mr Justice Richmond said written offers to the majority of shareholders in Riccarton Credits, Ltd. to purchase their shares at 21s 6d a share were based on a trial balance-sheet as at May 31, 1959. But Riccarton Finance Corporation reserved the right to vary or withdraw the offer in the event of the trial balance-sheet not being substantiated by audited accounts.

Ainger, who was secretary of Riccarton Credits, Ltd., had supplied the trial balance to a public accountant who had been instructed to carry out the audit. A deed of idemnity had been signed by Ainger and the other directors of Riccarton Credits, Ltd., before the audit was competed. Riccarton Finance Corporation had elected to complete the purchase of shares after the deed had beep., signed and before the audit was completed. His'Honour said the auditor subsequehtly found Certain liabilities on the part of Riccarton Credits, Ltd.. which had not been disclosed in the trial balance-sheet. It also transpired that a sum of £145 6b 3d not provided for in the accounts, was payable to the Inland Revenue Department for stamp duty and ,penalties in connexion with a number of customary hire ~ purchase agreements which formed a substantial part of the assets of Riccarton Credits, Ltd. The Riccarton Finance Corporation then issued a summons against Ainger claiming indemnity in respect of those items. The Magistrate had found in favour of the corporation in respect oti three items—£42 6s 9d for printing, £ll 10s for refunds on insurance commissions, and £145 6s 3d for stamp duty. i-

His Honour said the Magistrate’s decision could not be sustained in respect to* the first two items, and he allowed the appeal. “As the purchaser elected to complete the transaction without the audited balancesheet, that destroyed fee whole basis on which the indemnity was given and brought about a state of affairs where the language of

the indemnity can have no application,” he said. Hia Honour said the indemnity did extend to cover stamp duty and penalties on the contracts and assignments. He agreed with the Magistrate on that matter and the appeal in that respect failed.