Return of share money sought

Press, Volume CXIII, Issue 33360, 19 October 1973, Page 7

Return of share money sought

The hearing of a writ of summons seeking the return of $lO,OOO paid for shares in a Rakaia engineering and boat-building company, plus interest, because of alleged misrepresentation, began in the Supreme Court yesterday before Mr Justice Roper. Mr N. W. Williamson appears for the plaintiffs, Peter John Foster, a company secretary, and Dugal Lamont Harcourt, a real estate salesman.

Mr D. H. Hicks appears for the defendant, Allan Stanley Alexander Thomson, an engineer of Rakaia, who denies any misrepresentation. Opening his case Mr Williamson said the plaintiffs

claimed that defendant misrepresented to them the financial position of Allan Thomson, Ltd. As a result of those misrepresentations they each agreed to buy 500 shares at $lO a share and each paid defendant $5OOO. They now sought to recover this money, together with interest from the date it was paid. The plaintiffs alleged that defendent made fraudulent misrepresentations in that he knew they were false or made them recklessly, without investigation and was careless as to whether they were true or false. Alternatively the plaintiffs alleged innocent misrepresentation which they said was fundamental to the contract between the parties. They also alleged negligent misrepresentation which entitled them to damages. The plaintiffs and a third man, George Logan, became

involved with the defendant because of work done on Mr Harcourt’s boat. Defendant carried on business as an engineer at Rakaia under the name of Allan Thomson, Ltd. He held 1800 shares and his wife 200. The four men discussed the business and its potential for the manufacture of jet boats with light alloy hulls. At a meeting in August, 1970, defendant showed plaintiffs orders received by the company and plans for expansion. Defendant said that he had an offer from Dalgetys but he was not interested because it involved a complete take-over of the company. There was a discussion about plaintiffs buying shares and providing additional money. Defendant was expanding his premises at Rakaia at the time. At a picnic on Labour Week-end, 1970, defendant

demonstrated three boats on the Rakaia River. He gave the impression that the three boats and the motors were his. One of the boats was the Gay Spray, which had a Corvette motor. Mr Logan decided not to invest in the company. Defendant did not deny that the meetings were held but he did deny that he wanted to obtain additional finance, Mr Williamson said. In June, 1971, plaintiffs agreed to buy the shares and paid over the $lO,OOO. By March-April, 1972, it was clear that the company was in financial difficulties and had no cash to pay its debts. There were some indications that the stock had been over-valued but it was not until the company went into liquidation that plaintiffs discovered that certain facts they had relied on when buying the shares were false, Mr Williamson said.