COMPANY’S AFFAIRS

Greymouth Evening Star, 30 November 1940, Page 10

COMPANY’S AFFAIRS

NO BREACH OF TRUST. [per press association.] WELLINGTON, November 29. An action containing allegations of misfeasance and breach of trust in connection with the firm of J. E. Hurdley and Son, Ltd., brought in the Supreme Court by John Francis Pym Yeatman, accountant, of Wellington, liquidator, was dismissed in a reserved judgment given by Mr. Justice Johnston. Defendants were Alfred Llewellyn Hurdley, company director, of Wellington, William Andrew Hurdley, salesman, of Auckland, and Frederick George Dunn, accountant, of Christchurch, the •company’s auditor. The claims-, excluding an alternative claim, amounted to £10,091/0/9.

The case was divided into the following: (1) A claim for £1356/6/8 against the three defendants, and for £975/10/1 against A. L. and W. A. Hurdley, being moneys allegedly wrongfully paid out of the funds of the company to the estate of the late John Edward Hurdley; (2) a claim for £7759/4/- against the three defendants for loss allegedly suffered by their continuing after the company had become insolvent, and an alternate claim against A. L. and W. A. Hurdley for £5015/13/11 for prejudice allegedly suffered by the creditors by the incurring of debts without reasonable expectation of being able to pay; (3) a claim against A. L. Hurdley for accounts of moneys and assets of the company allegedly received; (4) a claim against F. G. Dunn for accounts in connection with the liquidation, and (5) a. claim for an order for the delivery of the books. The company went into liquidation on March 14, 1933.

NO IMPROPER MOTIVE. Mr. Justice Johnston said that remembering that the members of the family had a reversionary interest in the estate of their father, and that theii’ capital in the company, as well as the capital of the estate in the company had been lost, he thought it idle to contend that any improper motive influenced the directors in making the advances and payments they did to the Hurdley estate. Their direct interest was to protect the estate and the company, whose interests were identical and interdependent, and no step was taken without the knowledge of all parties concerned.

Referring to the claims made against Dunn, his Honor said that any claim made against him as auditor was barred by statute limitations, though he was entitled to the conclusions reached in favour of the other defendants. All that remained were the charges against him as liquidator (he was appointed in 1933) and they could not, so far as the Court could see, be raised against him on misfeasance summons. The only claim that could be made against him was that for moneys received by him inthe course of liquidation and not accounted for. Dunn admitted receiving £25/8/10 after the. accounts had been closed, and that, he said,- lie ap r propriated towards fiis fees, he riot having taken them* in full beforehand. The Court did not feel justified in these proceedings in concluding that he misappropriated those funds.

“Although I think the two Hurdleys who looked after the business were not sufficiently educated in business methods or sufficiently awake to possible retrospective repercussions to be in charge of a company, I came to the conclusion after seeing them, that they had not en-

tered into the transactions complained of knowing that they were offending against the provisions of the Bankruptcy Act or committing breaches of trust, and it appears to me clear so far as they were concerned they made no book entries and prepared no statements intended to cover up any of their transactions or to mislead the creditors,” said Mr. Justice Johnston.

He added that he thought, however, that the creditors were entitled in the circumstances to ask for the appointment of a second liquidator and that the Court investigation, though unsuccessful, had been justified. Each party would therefore pay their own costs.