SUPREME COURT.

Dominion, Volume 4, Issue 996, 10 December 1910, Page 14

SUPREME COURT.

A MASTERTON LIQUIDATION. j conflicting' interests. Tho affairs of a Masterton firm of merchants and commission agents were discussed before Mr. Justice Cooper in tho Supremo Court yesterday. The case .originated in a petition by Johnston and Co.j. Ltd., of Wellington, praying that J. D. Cruickshank and Co., Ltd., might be wound lip compulsorily by tho Court. J. D. Cruielcshank and Co., Ltd., was incorporated in tho year 1902, with a nominal capital of £10,000, divided into 2000 shares of £5 each, to take over the business of James Duff Cruickshank, merchant and commission agent, of Masterton.. An agreement for tho voluntary winding up of the company was entered into on October 19, 1910, between : Alfred Head Wrightson, of Masterton, sheep farmer, .acting as agent for the company, oh tho one part, •and George Henry Perry, of Masterton, merchant, of the other part. From the recitals of the memorandum of this agreement it appears that no dividend :has been paid by the company during its last three financial years, and that it made a loss for the year ending June ,30, 1909, of £1334 15s. Bd., and for the year ending June 30, 1910, of £1266 18s. Id., the total loss for the two years being £2601 13s. 9d. It further appears from the same document that the company owes the following debts: —To the Bank of. New' South Wales, a sum exceeding £2200, partly secured by a mortgage on the uncalled capital of the company; to George Henry Perry, £3750, alleged to bo secured by a mortgage debenture covering the whole of the- company's assets,; to . unsecured creditors (June 30, ,1910), 2s. Id. ' At the last annual meeting of the 'com-' pany, on August 24, 1910, the shareholders . present. or represented decidcd to accept an offer by George Henry Ferry to' take over tho company's business as a . going concern. '; The petitioners aro tho holders of • 100 shares, fully paid; up, in the company, and they and some' other fully-paid-up- shareholders , dissent from the proposal to sell"the'assets of the com- . pany to Perry, as set forth in the said agreement. In support of their dissent it was stated. in the petition that the'number of shares in the company actually, allotted and issued was 1161, the uncalled or unpaid capital amounted to £1867, and the paid-up capital to £3938. Ferry, it was further alleged, held 350 partly-paid shares, on which there was a liability, uncalled or unpaid, of £807, and the effect of the proposed agreement would bo that tho uncalled or unpaid liability of £1867 would be .discharged, while the- fully-paid-up shareholders ;would receive nothing, and thus tho holders of shares on' which there- was ■a ■ liability would be preferred to those who' had paid the full amount of their shares.' The last bal-ance-sheet (June 30,. 1910) showed tile following assets:—Stock,- £4623:55". 6d.; stationery, £10;: plant,'•■■ £294 j 1 : book debts, £4015 Is. lid.; ■ cash' in; hand, £5; total, £8917 7s. 5(1- -Liabilities (exclusive of share capital and reserve for bad debts) :.'DepVsit account, £3750; sundry creditors, £1i43-2s. Id..banks, £2346 9s. ' 6d.; .total, £7239 ,11s. 7d. If to the total asset's were'added the £1867 unpaid capital' it'would appear that, assuming the figures of the' bal-ance-sheet to be - realised ill' liquidation, there would .be a b?.lance for distribution among the shareholders of £3574 15s. 10d.,. arrived at- as follows:—Assets, £8947 75.. 5d.; add unpaid capital, £1867-;/total, £10,814. 7s~. 5d.;: deduct liabilities, £7239- llsiftiWijj [balance, £3574'155. lOd. After. making considerable allowance for depreciation of. stock and loss by bad debts and'expen'ses of liquidation, thero should: remain (said the petitioners) a balance for distribution among tho shareholders, if. liquidation were proceeded with in duo'course; but they believed that, if in tho'course; of a voluntary .liquidation) .as proposed ■' by the directors]' the agreement:, .with Perry 'were carried .out, .'the result .would bo ' a the-fully-paid-up shareholders: ' * The petitioners, in conclusion, said that,- -by-reason -of-the .above-facts and circumstances, tho company- was unable, to pay its debts, and should be .wound up by the Court under the provisions of tho Companies-Ast;'l9oß. V ' The petitioners iVere represented by Mr: 'H. D. Bell,' K.C.,;'with, him Mr. H. F." Johnston, the respondent company.by Mr. C. B.'Morison, 43 opposing creditors bv. Mr.-.H.. F, Von.Haast, and several" fully-paid-up' shareholders by Mr. D. K. Logan. . , Mr. Bell argued at some length in support of the petition. Mr. Morison submitted that the company had in perfect good faith and with perfcct justification provided for payment of the debts, which was the first duty of a company in liquidation. Further, the prospect of tho shareholders getting anything was so problematical that, the .creditors certainly should not bo sacrificed for tho shareholders' chance. He asked that tho petition should bo dismissed with costs against the petitioners. Mr. Logan also opposed compulsory liquidation.. He stated that the fully-paid-iip shareholders represented by him were satisfied 'that thero would bo no surplus, and that being so the company, being a quasi-private one, they did not wish to have their names connected with a company that would not pay 20s. in tho pound, to its creditors. .They believed that under compulsory liquidation the creditors would go short. Mr. Von Haast .submitted that tho Court's main duty was to-protect tho creditors. Unless the petitioners could show clearly, that thero was going to be a surplus,, the .Court should not sacrifico the interests of the creditors merely in order that a question ,of principlo between two classes of shareholders might be settled. 1 ' " ' ; .Judgment was reserved.