VALUE OF SHARES

Evening Star, Issue 21811, 29 August 1934, Page 8

VALUE OF SHARES

ASSESSMENT FOR DEATH DUTY PURPOSES APPEAL AGAINST COMMISSIONER’S VALUATION An appeal against the assessment by tho Commissioner of Stamps of tho value of shares in Messrs Hallenstein Bros. Ltd. for death duty purposes was heard by His Honour Mr Justice Kennedy in the Supreme Court this morning. Tho appellants were the executors of the estate of the late Mr Hyam E. Hart, who was a shareholder in tho company. The appeal was made against the commissioner’s assessment of the value of 45,405 ordinary shares held by the deceased, who died in Sydney on May 6, 1931, in Messrs Hallenstein Bros. Ltd. The executors, for the purpose of tho Death Duties Act of 1921, valued the shares at 12s 6d a share, and the commissioner valued them at 16s a share. The executors thereupon delivered to the commissioner notice in writing under section 62 of tho Death Duties Act requiring him to state a case for the opinion of the Supreme Court in determining the value of the shares.

Mr J. B. Callan, K.C., with him Mr A. N. Haggitt, appeared for the appellants, and Mr F. B. Adams appeared for the Commissioner of Stamps. Mr Callan pointed out at the outset that directors of tho company, which was a family affair, would be called to give evidence and would produce bal-ance-sheets and figures which were very much their private property. He knew that the - general nature of the litigation must be reported, but he suggested that the actual trading circumstances of the company were of no general interest, and might bo sought after by persons otherwise interested. Mr Haggitt, in opening the case for the appellants, said they were the trustees of the estate of the deceased Hyam E. Hart, two of them residing in Sydney and the other in Dunedin. There were two questions for the determination of the court. One' was primarily a question of fact, and the other a pure question of law, the latter involving the interpretation of certain sections of the Act. At the time of his death the deceased held 45,495 fully paid-up shares of £1 each in Hallenstein Bros. The question was: What was the value of the shares at that dais? The other question involved tho consideration of certain life insurance policies, by which the total of £10,690 became payable to tho estate. The question was whether, in the assessment of the estate, certain deductions should be made in respect of those insurance policies. At this stage it was agreed that the point of law in respect to the insurance E elides should be discussed after the earing of the main argument. Mr Haggitt went on to say that tho executors had valued the shares at the date of the death in 1931 of the deceased at 12s 6d each, and the commissioner had valued them at 16s. What had to be done was to find the true value of the, shares at the date of death. The company, which was incorporated in 1906, was more or less a family concern. At the time of Mr Hart’s death there were twenty-seven shareholders of whom eleven were directors. _ Counsel went on to discuss the financial position of the company, and said that balance sheets would bo submitted to tho court covering the year 1925 up to the time of the death of the deceased and subsequently. The company, he said, carried on wholesale and retail business, and for its purposes owned a good many properties throughout New Zealand. fciomo of the figures to be submitted in evidence would no doubt cause surprise to the court and to a great many others who might have thought differently. It would be shown that the affairs of tho company at the time of the death of the deceased were extremely bad and the prospects of the ordinary shareholders were distinctly bleak. It would be shown that the year 1931 and 1932 were the worst years of tho economic depression, and that in those years the prices of shares of practically all limited companies were at their lowest. Trading losses during tho slump were real and tremendous. Counsel went on to discuss the .methods of valuation, and submitted that, when the position of the company was analysed and comparisons made, the true value of the ordinary shares at the time would be found to be 8s or 9s. ,

The first witness called was Percy Lewis Halsted, company director, who produced, balance sheets of Messrs Hallenstein Bros., Ltd. He said that the issued capital of the company at the date of the death of Mr Hart and at present was £335,000, there being 21.000 preference shares of £5 each and 230.000 ordinary shares of £1 each. The deceased held 1;800 preference shares and 45,495 ordinary shares. The deceased did riot have a controlling interest in the company. Witness went on to give evidence at length respecting the affairs of the company. The case was proceeding this afternoon.