A LOST CHANCE

Evening Post, Volume CXII, Issue 53, 31 August 1926, Page 2

A LOST CHANCE

FAILED TO ASSERT RIGHTS

RATIFICATION EQUAL TO ACQUIESCENCE

SYBIAN MANUFACTURER'S

POSITION.

Failure to assert his rights at the proper time resulted in J. B. Akel, •'!6 years a resident of Now Zealand, an educated Syrian, losing recourso against partners who, as he found on his A returning from a business trip to Europe, had turned the business in which he had a large interest into a private company, which subsequently offered to go into voluntary liquidation. The facts were brought out in the hearing of a summons by the liquidator, with the object of elucidating Akel's eligibility to prove in respect of his claim. Judgment in the case was given by his Honour Mr. Justice Ostler in the Supreme Court yesterday.

The facts, as reviewed by hi* Honour, showed that Akel owned almost a half share in a manufacturing business in partnership with his nephews, K. Alexander and S. Alexander. In April, 1923, he went abroad, and remained away from New Zealand for over two years. ■He took with him £2225, which ho subsequently claimed had been drawn by him out of his share of partnership capital, but it was held by the Supreme Court in a subsequent action that this sum had been entrusted to him by the firm for the purpose of purchasing partnership goods. In the following August K. Alexander, who had been left in charge, turned the partnership into a private company under the name of K. Alexander and Co., Ltd. Akel spent £1063 of the moneys taken with him in the purchase of goods which he sent out to his partners. He returned to find that the new firm had taken new premises, largely increased its staff, borrowed £3000, and incurred debts to the extent of £4610. WOULD HAVE HAD REMEDY. "Had the defendant," says his Honour's judgment, "taken prompt steps upon the discovery of these facts to assert his rights there is no doubt he would have had a remedy. The company had converted his share of the partnership assets. The real question for decision in these proceedings is whether the defendant has, in the circumstances which happened, by his conduct lost his ■ rights against the company." TRESPASS SUMMONS COMPROMISED. His Honour dealt at length with subsequent events, and, having alluded to other civil procedure in which Akel had taken part, says that after the hearing of the action the defendant again entered the company's premises and endeavoured to take possession, and a summons for trespass was issued against him by the liquidator. This summons was compromised by an agreement between the liquidator and the defendant that the liquidator should take out a summons under section 226 of the Companies Act, 1908, for the determination by the Court of the question as to whether the defendant was entitled to any part of the assets of the company or to prove in the liquidation in respect of his claim. AXEL'S CONDUCT ANALYSED. "In my opinion the conduct of the defendant can only be explained on the assumption that he intended to" ratify the contract. It may be that he declined when he first returned to accept the shares held in. trust for him, but after that he acted for six months as manager of the company, he drew his salary, he signed cheqc.es on its behalf, he never mentioned the subject of his complaint to the directors qua directors, he made a claim against the company for goods supplied and services rendered. He got one firm of solicitors ,to write the receiver, he got another firm of solicitors to issue a writ against the company for his claim for goods supplied and services rendered, he saw the representatives of the principal creditors from time to time, he accepted goods on behalf of the company, and all the time, and until | the expiration of seven months after his return, he never took any steps to assert his claim. EVIDENCE OF RATIFICATION. "I can come to no other conclusion than that he had agreed to acquiesce in the sale to the company and make the best of it, and it was only afterwards, when the affairs of the company were going badly and it began to look as though his shares would prove valueless, that he raised the objection. In my opinion there could be no clearer evidence of ratification by conduct than the facts established in this case. I therefore hold that, the defendant having ratified the sale of the partnership assets to the company is in, the same' position in law as if he authorised it. He has no interest in the assets of the company save as a shareholder, and he is not enttiled to prove in the liquidation in respect of his claim. . . The liquidator is entitled to the costs of the summons, which I fix at 20 guineas, witnesses' expenses and disbursements."