SUPREME COURT Submissions On Applications To Wind Up Companies

Press, Volume CVIII, Issue 31858, 10 December 1968, Page 13

SUPREME COURT Submissions On Applications To Wind Up Companies

Addresses by counsel on applications to wind up three Christchurch television companies alleged to owe a group of four finance companies $425,000, began in the Supreme Court before Mr Justice Macarthur yesterday. The television companies are Bateman’s Television, Ltd, Bateman’s TV Hire, Ltd, and Star TV, Ltd (Mr K. A. Gough). The finance companies are the Coleridge Finance Company, Ltd, the Belmont Finance Company, Ltd, the Cambridge Credit Corporation, Ltd, and Kent Credit, Ltd (Mr P. T.. Mahon, with him Mr J. R. Fox). Mr Gough submitted that there was a completed agreement between the finance group and the Bateman’s group on the terms of the debenture to cover the indebtedness. That was evidenced in a document, the heads of agreement, which the parties signed. The agreement could be insisted on by the Bateman’s group. The form of a debenture could be spelt out at the Court’s instruction.

Mr Gough submitted that the condition that Credit Service Investments, Ltd, had to give approval had never been applied or implied in negotiations. Credit Services stood only as a nominee of the finance group for the debenture. The requirements it wanted were in the way of concessions to the heads of agreement. “Contract Binding” The contract between the parties was binding, and if it was accepted that the agreement was binding the Bateman’s group was able to pay its debts as they arose. Mr Gough also submitted the debt between the Bateman’s group and the finance group was not enforceable. However, if the Bateman's group was able and prepared to raise money on debenture to repay the debt there was nothing illegal in that and the Bateman’s group was prepared to do that But direct enforcement of the debt was not attainable.

Under the Chattels Transfer Act there was a provision which allowed a reservation against the title of goods for advances made under customary hire-purchase agreements. However, that reservation did not exist between a wholesaler and a retailer. Within the Bateman’s' group Bateman’s

Television, Ltd, acted as a wholesaler and Bateman's TV Hire, Ltd, acted as the retailer.

When all the statutory requirements were considered the system of advances was not one of customary hirepurchase agreements involving the Bateman’s group and the finance group—it was money-lending. It was apparent that the finance group lent money to Bateman’s Television, Ltd, for that company to purchase stock. The agreements and the assignments were merely notes or memoranda of money advanced. The debit owed to the Belmont Finance Company by Star TV, Ltd. had been paid, Mr Gough said, and he asked that the petition be dismissed. Petitioners’ Submissions

Mr Mahon said it was clear that the television companies could not pay their debts unless all the indebtedness was secured by debenture. The governing factor then arose as to whether the debtor companies could satisfy the Court that they were not liable for the debt at all as it was not legal, or that they had already secured a valid and binding agreement. In respect of Bateman’s Television, Ltd, where the television companies disputed the debt he submitted that the efforts to show the money was not owed had failed. Though Star TV, Ltd, had paid the money owing to the Belmont Finance Company

money was still owing to Kent Credit. Earlier Kent Credit had supported the Belmont Finance Company’s petition, and he asked that Kent Credit now be substituted as the petitioner.

On the issue whether there was a binding agreement, the heading “heads of agreement” meant the principles of agreement, but that admitted there were other terms, either subsidiary or minor. Therefore it was difficult to argue that the heads of agreement could comprise a binding contract, Mr Mahon said. Rather, the pattern was that there had never been complete agreement between the finance grpup and the Bateman’s group.

Alternatively, there was a condition precedent in the negotiations concerning Credit Service Investment Ltd’s approval which had to be met before such an agreement could become operative. A third alternative was that the negotiations were on a tripartite basis—the Bateman's group, the finance group and Credit Service Investments, Ltd—with everything locked in and no debenture being given without a take-over of the finance group. * There was in the correspondence no letter stating that there was an agreed contract at May 9—the date of signing of the heads of agreement.

The hearing will continue today.