CLAIM FOR SALARY

Hawera Star, Volume XLVII, 24 September 1928, Page 2

CLAIM FOR SALARY

GANE v. ZEAL A COMPANY. COURT REFUSES ORDER. In the Supreme Court at New Plymouth on Friday afternoon the hearing was commenced of a motion on behalf of the liquidator of the Zeal a Products, Ltd., for whom Air. A. K. North appeared, asking for an order of the court as to whether -he should admit- a claim for £640 18s od made by George Wm. Gane, farmer, of Normanby (Mr. R. H. Quilliam), as managing director of the company. The claim was made up of £442 as salary, £l7B travelling expenses, and £2O in disbursements. . After a somewhat lengthy hearing, his Honour allowed the claim, for travelling expenses and; disbursements, but ruled that -Gane was not entitled to salary. Evidence was given by -Percy it. Stainton, chairman of directors- of the company. He stated that Gane was appointed, in December, 1926,. managing director at £SOO per annum and travelling expenses, and it had; been suggested that remuneration should take the form- of shares. Gane went ahead, as witness- would expect any man to do who was in charge of) the job. Gane retired about June of July", up to which time he had re-; ceived no money. , j In answer to Mr. Quilliam, the wit-, ness said' Gane gave up. the major portion of his time to this- work, hut; the reason the company was not able to carry on was that their appliances were not perfected. W. G. Walklev, public accountant and secretary of the company, said Gane’s duties were never '"defined m words. It was understood he would take control of the company’s affairs and perfect the machinery. In reply to Mr. Quilliam, he said he did not think Gane put in the whole of his -time for the- company. The term “managing director” was- used from the start, when it was decided to put someone in charge. On resuming on Saturday morning, Mr. North intimated that the item for salary should be £375. The other amounts were not denied. Evidence was then .given by George W. Gane, who said- that the term “managing director” was used from the start. He was a director, but did not vote on the motion for his appointment and the fixing of salary. The company bad never made any produce ior marketing. To his Honour: The company had money, but was never able to pay its way. His Honour: It would have been better if you had drawn your salary monthly, and then we should never have had this case. Witness: It would -have been, but they could never do it. To Mr. North: Most of his tiations as -t-o patents for perfecting the machinery was done in conjunction with Mr. Walkley and Mr. Spratt as solicitor.

Mr. North then argued the legal aspects of the case as to whether the managing director was entitled to remuneration. He said that Mr. Gane was appointed managing director by ■.resolution of the directors at a special meeting. In the articles there was no power to appoint, and the directors could ,not do so unless specially authorised. The articles did not give power to -fcjh-e directors to contract with the company. The managing director was not, he said, a servant of the company, and he quoted authorities in support of his contention. Mr. Gane was appointed because he was the one practical man on the -board of directors. It was Stated there was a sum of £20,000 involved as subscribed capital from many parts of Tarafiaki, and especially New Plymouth and the shareholders were somewhat naturally feeling sore over -the loss of their money. He submitted the position of managing director was iiiot an appointment of a servant, but a mere delegation of certain duties by the directors to one of their number.

Air. Quilliam suggested that the term “managing director” was merely a term which had grown up in commercial circles, and he submitted in this case there had been an appointment which was enforceable under the articles. He said Gane was appointed to carry out special work on behalf of the directors, and it was a mere accident that he was one of . the directors. Counsel also submitted that' Mr. Gane never carried out what are commonly regarded as the duties of a managing director. His Honour said the case was quite clear to him. The appointment of Gane as managing director was intended by the directors to be such, and Gane intended that he should accept that position. He was appointed because of liis special knowledge and qualifications to perfect machinery that would make the company’s product a commercial success. They did not contract with him as a servant. His duties were to manage as a director, and the only work at that time was the perfecting of machinery for the carrying out of their process. If the company had succeeded in commercialising- their product and Mr. Gane had been appointed manager, then the position might have become quite different. But that was not the case. He therefore made an order that Gane was not entitled to payment of salary as managing director, as the directors had no power to .make suchappointment. He was, however, entitled to receive his travelling expenses and disbursements. The liquidator was allowed seven guineas costs, to be paid out of the assets in his hands.