BARRED BY COURT

Gisborne Herald, Volume LXVIII, Issue 20572, 4 June 1941, Page 2

BARRED BY COURT

COMPANY DIRECTORS DISQUALIFICATION TERMS ALLEGATION OF FRAUD (Per Press Association.) • CHRISTCHURCH, this day. A company director, Stanley Reginald Burns, was disqualified in the Supreme Court yesterday for five years from taking part in the management of any company without leave of the court. Leslie Francis Foote, a fellow director with Burns in the liquidated firm of Avon Motors Limited, \yas disqualified similarly for two years.

This was the first action taken by a court in New Zealand under section 216 of the Companies Act, 1933. This section provides that where an order has been made for the winding up of a company by the court and the official assignee has made a report stating that, in his opinion, fraud has been committed by a person in the promotion or formation of the company or by any director or other officei* of the company in relation to the company since its formation', the court may, on the application of the official assignee, order that that person shall not, without leave of the court, be director of, or in any way directly or indirectly be concerned in, or take part in the management of a company for a period not exceeding five years. “Utterly Irresponsible” Mr Justice Northcroft, in giving his decision on an application brought by the official assignee against Burns and Foote under this section of the Act, said that the formation of companies and the juggling of companies could be a vehicle of frauds and loss to in■vestors, and no doubt it was this fact that had provoked ‘the legislation in England and the legislation that followed in New Zealand under which these proceedings were taken.

His Honour, after reviewing the facts of the case, said that Burns had shown himself utterly irresponsible as a commercial man and was not to be trusted with the duties of a director or an officer of a company. It was therefore without the slightest hesitation, His Honour said, that he now disqualified Burns for the full period'~6T~’five years. Foote’s case was different, but only in the matter of degree. He became involved with Burns innocently. He sold his own business to the firm and his concern was for the maintenance of the firm. Foote would have been well advised to go to an experineced man for advice, but it was understandable that he wished to see the business continue and though he acted improperly, His Honour said he was not disposed to. condemn him. Element of Doubt An advance made to Foote to which the assignee took exception, was possibly reprehensible, but there was an element of doubt which justified passing it over. Similarly, with regard to certain bills of sale, there was an impropriety, but probably through lack of experience rather than fraud. He was not, however, prepared to overlook Foote’s association with Burns in the declaration that the company was solvent. There was not the slightest doubt that he knew the position was desperate and that the company was hopelessly involved.