ONEKAKA IRON INDUSTRY

Dominion, Volume 34, Issue 260, 30 July 1941, Page 8

ONEKAKA IRON INDUSTRY

Crown Brings Action Against Companies . SEEKS FORFEITURE OF PRIVILEGES Dominion Special Service. NELSON, July 29. A preliminary action in connexion with the Onekaka iron industry, which may be followed by a case for compensation in the Compensation Court, began in the Warden’s Court before Mr. Maunsell, warden, today, the Crown bringing an action for forfeiture of mining privileges against the Onekaka Iron and Steel Co., Ltd., Golden Bay Proprietary, Ltd., and Pacific Steel, Ltd. The Grown alleged that defendant, companies defaulted, by not complying with the terms of mining licences. The companies are seeking a ruling on whether the mining privileges were liable to forfeit and whether they are entitled to proceed for compensation under the Iron and Steel Industry Act, 1937, which provides for the payment of compensation for certain mining privileges taken over by the Government, but with a condition that no compensation is to be paid for privileges if the warden, in appropriate proceedings, would make a decree of forfeiture of those privileges in March, 1938. Mr. H. H. Cornish, K.C., SolicitorGeneral, with Mr. 0. R. Fell, appeared for the Crown, Mr. P. B. Cooke, K.C., and Mr. M. C. Cheek for the Onekaka Iron and Steel Company, Ltd. (in liquidation), Mr. C. H. Weston, K.C., with Mr. E. P. Kelly for Golden Bay Proprietary Ltd., and Mr. W. J. Sim, K.C., and Mr. A. L. Hudson.for Pacific Steel Ltd. Air. Cornish explained that the argument revolved round three properties at Onekaka, Tukurua and Parapara. It was not the warden’s task to decide whether a case -for compensation to be heard later by the Compensation Court had been made out by the parties seeking to retain mining privileges. Had default been established for the period set out in the Statute, and. if eo, should there be forfeiture or should there be, in view of the special circumstances, a fine inflicted on the parties in default? The Golden Bay Proprietary had a lease of the Onekaka asset, the Onekaka company had a sub-lease and also two mineral licences. Pacific Steel was a company established to endeavour to bring about the sale of the assets of the Onekaka company to outside capital with a view to reviving the industry in the district. The Onekaka company went into liquidation in 1931 because it could not pay its debts. This was no discredit on a highly creditable undertaking. There was an agreement in September, 1931. between the Crown and the debenture holders and the company then ceased to carry on business. The debenture-holders stepped in and took over the ass ®J s ’ desiring to get back some of the £llO,OOO advanced, and carried on nJ May, 1935, when they stopped. With the exception of a little work done, in 1937, there had been a complete suspension'of mining activity on the lease til! March, 1938. By that suspension the Crown, claimed that the lease and licence must be forfeited. Witnesses For Crown, . The Crown called the evidence of two miners, a Government mining engineer who inspected Onekaka in April, 1938, and an accountant, Joseph Evans, appointed, for the receivers, to support the contention that there had been no mining since May, 1935. ‘ Evans admitted there were complaints from some range-makers about the quality of pig-iron and that a pipe venture was not a financial success. Mr. Fell: To the tune of £BO,OOO. Witness: I am not in a position to Sa He admitted it would be fair to say that the pipe venture was not unconnected with the liquidation and was a contributing factor in the liquidation. Mr. Cooke applied for judgment for defendant, or, alternatively, a non-suit. The forfeiture suit must fail, he submitted, in respect of the whole of the water race, dam and tramway licences. There was no evidence of. non-use or any of these in the statutory period. The next matter, continued counsel, turned on section 138 of the Act, which stated that “the Court shall not take into consideration any act or thing done or omitted to be done by or on behalf of the Crown in relation to any of these privileges.” . Acts and omissions with reference to Onekaka consisted of those done or omitted through the receivers. The Crown was elevated to the position of first debenture-holder .in the agreement of September, 1931. The actions of the receiver were ratified by the Minister and the receiver was in future deemed to be acting for the Crown. He submitted that any of the acts or; omissions alleged .were done or. omitted on behalf of the Crown and therefore could not be taken into consideration. . Mr. Cooke said he would describe it as a confiscatory statute —not using the word offensively—directly involving interference with vested rights. Mr. Weston said that Golden Bay Proprietary was concerned only with the mineral lease. The point dealt with by Mr. Cooke went to the root or the whole'case. These proceedings were only a prelude to proceedings in the Compensation Court, explained Mr. Weston. Omissions by the receivers were omissions by the Crown and inadmissible in this case. 'Mr. Weston did not think there could be much sympathy with the Government in the Mr. Sim moved for a non-suit and judgment for defendant. ’The whole hearing was artificial and unreal, he said, but highly penal as far as defendants were concerned. The warden was asked to forfeit privileges ot great value. A sum of £250.000 had been spent on or in relation to this industry. Pacific Steel had the status of purchasers three weeks before the operation of the Act. He submitted that bona fide purchasers of values rwewed certain protection. The Act said they were not liable in proceedings for default. Pacific Steel purchased an indefeasible title and went on the London market with it. The hearing was adjourned.