ROAD-PAVING PROCESS

Evening Post, Volume CXXIV, Issue 133, 2 December 1937, Page 8

ROAD-PAVING PROCESS

COMPANY'S CLAIM

EVIDENCE FOR DEFENCE

(By Telegraph—Press Association.)

CHRISTCHURCH, December 1.

Road-paving' companies were like gold-mining companies in that failures were commonly attributable to an overestimate of returns and an underestimate of capital required, said Mr. A. T. Donnelly in the Supreme Court today when opening the defence of Archibald Donald Paterson, civil engineer, Christchurch, against a claim by a Scottish firm for £3000. The amount was claimed by the plaintiff company, Honing" Road Surfaces, Ltd., Edinburgh, for alleged breach of contract by Paterson, who, n was stated, had ruined the company's prospects by returning to New Zealand permanently before a two-year engagement was ended. -

"It is a commonplace that such companies generally fail for two reasons: first, because of the optimism of the promoters not being justified by results, and, secondly, because of lack of capital through an under-estimate of what is required;" said Mr. Donnelly. "This company failed for both these reasons, chiefly the second." In spite of Paterson's warnings, and there would be evidence on these, the directors had begun operations with insufficient capital. Paterson's dominant purpose in returning to New Zealand was to persuade British Pavements, Ltd., to provide more capital. When that hope vanished there was no chance of carrying on. For all practical purposes the company was dead and Paterson was therefore justified in regarding himself as free from any liability under the service agreement. If he had returned to Britain he might have been destitute.

Mr.' Justice Northcroft: Paterson's trouble was that he had come so far away that it was bad business to go to the other end of the world to investigate the affairs of the company.

A meeting with two directors of the Scottish firm, Messrs. Scott and Box, at the Liberal Club in London was described by Paterson when he was called as a witness by Mr. Donnelly. He had told them that at least £15,000 was needed to begin operations, and they said they could easily raise the amount. Plant was bought for £1000, and witness was to serve as manager for two years at £750 a year. All the £1250 capital actually put up had been expended on plant. The only working capital ever used by the company was supplied by witness.

Paterson was still in the witness box when the Court adjourned till tomorrow.