SUPREME COURT Cross-Examination In Contract Case

Press, Volume CIX, Issue 32120, 16 October 1969, Page 10

SUPREME COURT Cross-Examination In Contract Case

Evidence for the plaintiff in a Supreme Court claim for specific performance of contract was still being given whi

len the Court adjourned yesterday after the seventh day of hearing, with the plaintiffs’ accountant, James Preston Davies—who had been all day in the witnessbox—still under crossexamination.

The plaintiffs, Robin Leslie Edwards and Beulah Lillian Edwards, seek a writ of summons against Thomas Wilfred Perry, a Christchurch company director, for specific performance of a contract to buy a 51 per cent interest in their Sumner textile company, Clifton Knitwear Properties, Ltd, and to increase its capital to enable it to purchase the net assets of Beulah Textiles, Ltd, another of their companies. The plaintiffs say that Mr Perry made such an agreement, verbally, at a meeting in his own office on August 5, 1968. Their case is conducted byMr J. G. Leggat, with him Mr S. G. Erber. Mr Perry, whose case is conducted by Mr R. A. Young, with him Mr E. J. Somers and Mr P. G. S. Penlington—denies that any agreement as alleged by the plaintiffs was ever made. Evidence in the plaintiffs’ case has now reached 220 closely-typed foolscap pages. Forty-three documentary exhibits have so far been produced—l 9 by the plaintiffs and 24 by the defence. "Word Was His Bond” Mr Young, cross-examining Mr Davies yesterday afternoon, said: "There has been some evidence that Mr Perry said *his word was his bond.’ In respect to what?” Witness: With respect to proceeding with the agreement

Did that arise when Mr Perry was pressed to enter something in writing?—At that time, yes. The meeting had combed a pretty wide ambit?—Yes. There was concern by Mr and Mrs Edwards as to the future of their company and the problems which faced them?—Yes. You wanted an assurance from Mr Perry that he would go on looking into the proposition?—l did not seek the assurance. Mr Stock raised the matter of committing the agreement to writing. “You would not agree that Mr Perry merely gave his word that he would go on investigating the proposition?” asked Mr Young.

Witness: No, no. Because ' Mr Edwards had also ques- i tioned Mr Perry’s intention, ■ and had accepted Mr Perry’s ! word. Accountant Cross-examined In cross-examination yester- 1 day morning Mr Davies denied that by August 2 or 3 the week-end before the alleged agreement—matters for Mr and Mrs Edwards were getting “desperate,” but later conceded that, because of falling sales, they were “serious.” Mr Young: You knew that the debt to U.E.B. in excess of $lOO,OOO had to be paid in under a month?—Yes. What possible source of finance did your clients’ company have available on August 2 to meet that?—That was the idea of this sale of an interest, to bring Mr Perry into it. Where were you to get the $lOO,OOO from?—At that point Mr Perry made it clear that he would arrange to fix it. Having had that settled, and knowing the arrangements were so far forward on the whole transaction, I could see no cause for concern, “Fairy Godfather" Mr Young put it to witness that had it not been that Mr Perry had been contemplated as “a sort of fairy godfather” the company’s future was as bleak as could be. Witness: There was no question of anybody being a fairy godfather. This was a reasoned business transaction. Mr Davies was crossexamined at length as to whether, if the proposed transaction had resulted, Mr and Mrs Edwards could have met a 49 per cent contribution in a new company. “As I recall, there was discussion on a capital figure of $150,000,” he said. Mr Young: There was discussion about their contributing 49 per cent of all the capital required in the venture? —No, not at all. The figure of $150,000 appeared to me to be the figure of increased capital. ... We only had $16,000 of paid capital. It would be increased capital of $150,000. You had in mind Mr and Mrs Edwards would have to find 49 per cent of $150,000? — Yes . . . there was discussion about a bank overdraft, I recall $40,000, with a view to having sufficient' to operate this concern. Interest in Three Companies Mr Davies had earlier agreed that it would be “a fair assessment” that in July, 1968, Mr Edwards had been prepared to sell a 51 per cent interest to Mr Perry in each of the three companies—Clifton Knitwear Properties, Beulah Textiles and R. L. Ed-

wards Knitwear—but with some “clear reservations” concerning R. L. Edwards Knitwear.

“At all times in the preparation of my figures, the two companies, Beulah Textiles and Clifton Knitwear Properties were the only ones referred to,” Mr Davies said. “When you say Mr Perry desired a meeting to settle the matter, what did you mean?” asked Mr Young. Witness said: “I understood it to mean simply this—that there were three companies in prospect. Clearly,' two were envisaged, and the effect of the purchase was set out. The reductions appeared to be acceptable. Mr Perry rightly wanted somebody to check the accuracy of what was presented to him. When the matter of whether another company was to buy the assets or whether one of the existing ones was to be used, when these ancillary matters had been settled, it was then quite clear what assets were being purchased, what companies were involved, and that the reduction proposed was acceptable. Having discussed these matters through the; course of the meeting on August 5, it was then perfectly clear to me how I should draw the accounts to show the effect of the agreement which I honestly be-! lieved was there.” Mr Davies later said that! from 12.15 p.m. at the meet-! ing on August 5, R. L. Ed-' wards Knitwear, Ltd, had "gone completely from the picture” from a contract point of view. Indebtedness To U.E.B. Asked about the indebtedness to the United Empire Box group, Mr Davies said that Mr Perry had said he would “fix it” Witness said he did not exactly understand what Mr Perry meant by that —to pay it or have it deferred —but accepted his word about it. Asked if Mr Perry were not to receive something for meeting the indebtedness—shares, a debenture, or some security—witness said: “He couldn’t expect anything. Arrangements concerning that subject hadn’t been discussed at that stage.” Mr Young: If “fixing it” meant Mr Perry to find $lOO,OOO, would Mr and Mrs Edwards contribute 49 per cent of that too?—No, no. Mr Perry would have to stand that by himself?—Oh, no. That could - conceivably have come out of some of the increased capital, so that to that extent it would have come out of Mr and Mrs Edwards' proportion.