Mr Freer denies giving Matai indemnification

Press, 23 August 1978, Page 3

Mr Freer denies giving Matai indemnification

Wellington Mr W. W. Freer, the Kirk Labour Government’s Minister of Trade and Industry, said in the Supreme Court in Wellington yesterday that he had no recollection of discussing with Henry Arthur Bourne, a director of Matai Industries, Ltd, any indemnifying of Matai shareholders. He denied that he had given to Mr Bourne or any other Matai director a guarantee indemnifying the equity of shareholders. Matai shareholders are suing the Government for SIM. alleging breach of agreement in establishing a plastics industry on the West Coast.

The hearing, by the Chief Justice (Sir Ronald Davison) will continue today. Mr D. L. Mathieson, opening the defence case, said it was admitted that the Government acted through the three named Ministers and departments as agents. But there was an agreement between counsel as to the scope of that admission. Counsel for both parties were agreed that the defendant was not prevented from arguing that Mr Kirk, the late Prime Minister, if he made any promise of a contractual kind, had no authority as an agent to make a contract binding on the Crown.

A remarkable aspect of the action was that the alleged contract was between the Crown and the plaintiffs. But the terms of that alleged contract were said to be that the Crown subsidies and regional grants were to Matai, not to the plaintiffs. “The plaintiffs must prove not only the contract, but that loss to them was caused by the non-fulfilment of any contractual promise,” Mr Mathieson said.

“It is for the plaintiffs to prove on the balance of probabilities that non-per-formance did in fact cause loss to them in contradistinction to loss to the company.” Mr Mathieson said Mr Kirk did not have the legal powers of the Minister of Trade and Industry, who at all material times was Mr Freer.

The Crown admitted only that there was a non-con-tractual assurance to give an undertaking to the Commercial Bank of Australia and to give a firm guarantee

of Matai’s overdraft and term-loan borrowing for the C.B.A.

“And the Crown says that, on the evidence, both these assurances were fully honoured.” The Crown said that no firm promises were made by the Government on any point except the granting of a guarantee to the Commercial Bank of Australia guaranteeing Matai’s term loan and fluctuating overdraft borrowing to a total of SI.2M, Mr Mathieson said. Other forms of assistance were indeed talked about in the numerous discussions between the parties and in the letters that passed, but other forms of assistance were merely held out as possibilities. The Crown submitted in regard to Mr Kirk’s alleged promise to pay $500,000 as a once-only grant, plus a 25 per cent subsidy on outward freight for a 10-year period from April 1, 1973, that no such promise had been proved by reliable evidence. Alternatively, that if it was given, it did not bind the Crown.

Mr Freer would deny making any such promise. In evidence, Mr Freer, a member of Parliament, said that he had been Minister of Trade and Industry throughout the term of the Labour Government from 1972 until 1975.

Mr Freer was referred by Mr Mathieson to part of the statement of claim which said that on January 11 1974, he advised Mr Kevin Meates that in consideration of there being no retrenchment of Matai, and the shareholders refraining from putting the company into liquidation, the Government would inject money to make the company solvent and indemnify the shareholders. Asked by Mr Mathieson if he had said that to Mr Meates, Mr Freer replied: “No; at no stage did I say that.” Mr Mathieson: We have heard a lot about Mr Kirk in this trial. Did Mr Kirk give you any firm instructions about your dealings with Mr Kevin Meates?

Mr Freer: No; no direct instructions. Mr Kirk asked me to see Mr Meates and to co-operate with him. There was only one particular occasion on which Mr Kirk had a firm point which he had committed to me in this regard. This was when he

advised me by phone from his office one day that he had had a discussion with Mr Meates and had committed me to agreeing to the appointment of outside directors for Matai.

Mr Freer was asked by Mr Mathieson if there was some agreement between him and Mr Kirk as to the allocation of responsibility for the details of negotiations with Mr Meates.

He replied: “Yes; it was entirely my responsibility as Minister of Trade and Industry at that time to finalise details. At no stage did Mr Kirk give any indication to me as to what those details should be.” Mr Mathieson: Did he ever talk to you about a once-only grant to Matai? Mr Freer: No; that was never discussed. Did he ever talk to you about a subsidy being granted of 25 per cent on outward freight from Matai? — No; I repeat again that no detailed discussions took place between Mr Kirk and me along those lines. If Mr Kirk had told you something significant about his dealings with Matai what would have been your practice as regards administering or furthering it? — Had such discussion taken place it would have been recorded by my secretary, and the departmental officers handling the particular file would be advised.

Asked by Mr Mathieson if immediately after the meeting formally closed he had had any discussions with people who were at the meeting, Mr Freer replied: “There would be very little opportunity for discussion after the meeting on the 18th because we were under a time bind to get away from Christchurch.” Mr Mathieson: Did you speak to anyone, in such time as you had, on the specific q estion of giving an indemnity to shareholders? Mr Freer: I am quite certain there was no such discussion.

On February 15, which is the earlier of the two meetings, did you make a promise of indemnity to shareholders to anyone at the meeting after the meeting formally closed? — No; I did not. Nor did I have authority to do so. Did any of the shareholders'of Matai say to you, on or after either of the meetings: “We will appoint

a liquidator unless you do something?” — No; they never said that.

Mr Freer was referred by Mr Mathieson to evidence in which Mr Bourne said that Mr Freer asked him to stay on the Matai board and that he x would indemnify the equity of the shareholders and safeguard the jobs of people on the West Coast. “I have no recollection of such a discussion at all,” Mr Freer said. “The discussions on the points which you have mentioned took place during the meeting on the 18th and were included in the transcription. It was during that meeting that the first discussion took place about members of the board continuing on the board.” Mr Mathieson: What comment do you make, if any, on what Mr Bourne said you said to him about in= damnifying the equity of shareholders? Mr Freer: At no stage did I give to Mr Bourne or any other of the shareholders or directors any such guarantee.

Suppose, for the sake of argument, that you did give an indemnity to shareholders at this meeting on February 18, what role, if any, would Treasury and the Cabinet then have to play? — First of all I had no authority to give such an indemnity. And I could not imagine having any discussion along such lines without consultation with the then Minister of Finance and senior officials from Trade and Industry and Treasury.