“Truth” Loses Appeal On Preference Dividend Rate

Press, Volume CII, Issue 30126, 9 May 1963, Page 16

“Truth” Loses Appeal On Preference Dividend Rate

(N.ZP.A.-Reuter— Copyright)

LONDON, May 7.

The Judicial Committee of the Privy Council today dismissed with costs an appeal by Truth (N.Z.), Ltd., of Wellington, against a New Zealand Court of Appeal judgment on the company’s cumulative preference shares.

The New Zealand Court of Appeal restored the rate of dividend payable on the shares to 7 per cent, from April 1, 1961. The dividend had been reduced L 5.8 per cent, by the operation of the National Expenditure Adjustment Act. 1932.

The case arose out of an application made under the Act to the New Zealand Supreme Court by Miss Gledys Valentine Howey, of Auckland, representing the holders of not less than 15 per cent, of the issued preference shares. i She asked for the restoration of the original dividend, having regard to the changes in New Zealand's economic position since the Act was passed, and the prosperity of the company. Viscount Radcliffe delivering their Lordships’ reserved judgment, said that nothing in the situation of the company itself or in the situation of the other classes of its shareholders suggested that it would be anything out just and equitable to restore to the 7 per cent, cumulative preference shareholders the

dividend, rights which wefe taken away from them by Statute to meet the exceptional conditions of economic distress that prevailed 30 years ago. Rejecting arguments advanced on behalf of the company, which had been treated throughout as representing the ordinary shareholders and as opposing Miss Howey’s application in their interest. Lord Radcliffe said that in their Lordships' view it was not even a relevant consideration, when measuring what was just and equitable, that applicants might have bought their shares in the market after the Act came into force There could be no sound general assumption that such purchasers would have paid

only tor the right to receive in perpetuity the reduced dividend.

A second contention was tliat the Court had no power to make an order in favour of applicants unless it had before it relevant information as to their present circumstances.

“It is difficult to say what such an argument would lead to in practice, if it were attempted to give effect to it,” Lord Radcliffe commented. The shareholders represented by Mias Howey had a wholly proper Case under the Act, which must not be read as requiring an investigation of personal circumstances as a condition of granting their claim.