SHARES IN TRUST

Evening Post, Volume CXXVI, Issue 59, 7 September 1938, Page 13

SHARES IN TRUST

CLAIM BY WOMAN

capital refund Sought

Repayment of £1000 she had invest- \ ed in £10 shares in the New Zealand Investment Trust,. Ltd., and an order deleting her name from the register of shareholders, were sought i'the Supreme Court .today before Mr. Justice Blair, by Miss Ethel Best, of Upper Moutere, Nelson, allegations being made that tbe: shares had been bought on the misrepresentations^ Cecil Henry Noble/Campbell, of Mahana' a salesman employed by^the Securities Corporation of New Zealand, Ltd., a sharebroking firm engaged by the Investment Trust, An alternative claim was for £1000 damages. \ /Mr: J. H.: Dunn appeared for the plaintiff, Mr. H. J. V. James f ot the Securities Corporation, and Mr. T. f. Gleary .for the Investment Trust. In each claim interest at 6 per cent. : a year from September 20, 1935, was .■'■ The "statement of,claim said that on SeptanbeOff;; plaintiff applied to the directors of the Investment Trust for 100 £10 shares in the' capital of the company, and pn October' 2 the shares were allotted, the plaintiff giving £1000 in full payment at the time of the application. -She contended that the application was made upon the express representations of Noble-Campbell that the Investment Trust was as safe as a bank or post office;:it was in a position to pay 10 per cent, a year on the capital of the company; if- anything happened to the trust it could pay out the whole '• of its capital within twenty-four hours; all the investments of the trust were in gilt-edged securities; shares in the trtist were a more profitable invest-, merit than the debentures issued by thertrust; the plaintiff would run no risk by investing her money; it was intended that all subsequent sales . of shares, should be at a premium of 11 per cent., and the plaintiff would have no further- opportunity of purchasing the shares at par; and that in the event ■ of anything happening to the.trust the plaintiff Would be the first to receive repayment of her capital. It was alleged that each of the representations was false to the know- . ledge of Noble-Campbell, and that the • were of no value. , STATEMENT? OP DEFENCE. The statement of defence of the Investment Trust said that the application for shares was expressed to be made sbiely on the terms of the prospectus, and that the plaintiff thereby agreed that the trust was not bound by any representation not contained in the prospectus or in the application; alternatively, it was claimed that the plaintiff had been guilty of delay and acquiescence disentitling her to rescission or repayment. The Securities Corporation made a general denial of the allegations. Noble-Campbell denied the allegations of. misrepresentation, but admitted that he stated to the plaintiff that the Investment Trust was as safe as a bank, that it was a safe company, and that Jthe plaintiff would run no risk by investing her money.Mr. Dunn, opening his case, said that Miss Best had no experience of business, the transaction having been her first investment. She had invested all heir savings, and was now practically penniless. ' , . ~ His Honour said it was stated in the : statement of defence that the shares had been sold upon -the prospectus and that the trust was not responsible for representations made by agents. Application to amend the statement of claim to provide for allegations, that the prospectus of the trust was false in certain' respects, to the knowledge of the directors, was made by Mr. . Dunn. At the date of the allotment of the shares, he submitted, the directors knew that the capital of the trust was ' im jeopardy; the attention of the directors had been drawn by the auditors in 1935 to the unsatisfactory nature of many of the investments made by the trust; '. , ■, . Reports of the auditors in September, 1935, and the report by the chairman of directors, Mr. J. S. Barton, after the , trust had* been reconstituted in 1937, j were put in by' Mr. Dunn, who contended that in the light of those reports the allotment of the shares in j 1935 upon the prospectus of .the com-, pany was fraudulent. ! Mr. Cleary, opposing the amendment, .. said .that it raised the question of I fraud against persons who were not :: before the Court. There had been a complete change in the directors of the trust, and the present directors were in no way responsible, for what had occurred in 1935. Further, the amendment was' no use to the plaintiff, who "admitted that she had-not seen, the ' prospectus. '-■•. His Honour said he would consider '■„. the matter in the adjournment. -"■ (Proceeding.)