Matai hearing ends; ruling reserved

Press, 30 August 1978, Page 3

Matai hearing ends; ruling reserved

Wellington The Labour Government had made it clear that it was pursuing regional development under the guise of receivership of Matai Industries, Ltd, the Supreme Court in Wellington was told yesterday.

Mr W. J. Gough, junior* counsel representing Matai shareholders, was making submissions on commercial law in an action in which the shareholders are suing the Government for SIM, alleging breach of agreement in establishing a plastics industry on the West Coast. Judgment was reserved by the Chief Justice (Sir Ronald Davison). The hearing occupied 11 days. Referring to the Labour Government’s participation in Matai’s activities, Mr Gough said that the Government regarded the receiver as the only way in which it could put money into the company, and this was made clear at the meetings in February. The Government did inject substantial amounts of funds into the company through the use of the receiver’s .guarantee, and Mr Jensen, the receiver-man-ager, at one point made it clear he needed $250,000 "just to get off the ground.” Mr Gough referred to the request by Mr Freer, the Kirk Government’s Minister of Trade and Industry, for directors to continue to act in an advisory capacity. In my submission that emphasises the point that this was the Government taking charge; directors were merely advisory,” he said. "The Government made it clear at the meetings they were pursuing regional devel-

opment under the guise of the receivership.” Referring to what he described as the "extraordinary receivership,” Mr Gough submitted this was also strong evidence that the Government was "taking over adopting the undertaking” on the basis — the common assumption — that ; the plaintiffs would be recompensed. “Perhaps I should make the comment that, the Government having determined that it was to carry on its enterprise for social or national purposes, there is no legislative machinery by which it could take over a private company,” Mr Gough said. He argued there was very strong evidence that the Government had, in effect, taken “the undertaking” over wholly tor its own benefit. So it regarded the undertaking as something it could dispose of according to its own will. “The receiver regarded himself as bound by the direction of the Government as to selling on the West Coast,” Mr Gough said. “I think he indicated, with tenders from other parties, that one of the factors in declining them was that thev weren’t tied to the Wes't Coast.” Replying on behalf of the Attorney-General, who is being sued on behalf of the Government, Mr D. L. Mathieson said it was assumed that shareholders would receive profits distributed in the future as dividends, not a reward by way of payment for services. “If, in the event, the company continued to make losses any additional mode of remuneration was still excluded. The possibility of profits carried with it, as usual, the risk of losses.”