DAIRY AMENDMENT BILL

Matamata Record, Volume VII, Issue 580, 10 November 1924, Page 1

DAIRY AMENDMENT BILL

MR. GOODFELLOW REPLIES TO MR. McGREGOR.

Mr. Goodfellow writes: In reply to Mr. McGregor's criticism of October 31, Mr. McGregor is a bad; loser. I wish to state further that my previous statements would remain unaltered. If Mr. McGregor had made out half as good a case for his clients in Wellington as he had done in the press, he would undoubtedly have been more successful. The fact is, that he failed in his objective.

There is just one subject in his statement worthy of reply. Mr. McGregor is reported to have said: — ' There is one other very serious statement in Mr. Sinclair's speech which calls for comment. He states that Mr. Goodfellow had promised certain concessions, to three co-opera-tive concerns which he mentioned, but that I could not accept the offer. He then goes on to state that this offer has now been withdrawn. I can but think Mr. Sinclair has not been informed o.fl the iposition, or he would not have made the statement which he did. The position was that the offer could not be accepted by me without sacrificing principle for expediency. Sir John Findlay, who ■ appeared for the N.Z. Dairy Co., Ltd., advised the committee that he realised and appreciated, the attitude that I adopted, and he , gave his assurance to the committee and said that he had Mr. Goodfellow's written authority for giving the assurance that even if the 81l was passed in its present form the Dairy Co. would not enforce any legal rights they may acquire against the members of these three companies. The N.Z. Dairy Co. therefore cannot repudiate the undertaking given to the committee, however much Mr. Sinclair might like to do so.' i This to me is an astounding [ statement. He now demands a con- \ cession which was twice offered and twice rejected. On the first occasion, shortly after our arrival in Wellington, the Dah'y Co.'s offer was promptly turned down, and we were led to believe that the objectors, principally the proprietary companies, , would require a great deal more to effect a settlement. On the second occasion, over a week later, the approach came from Mr. McGregor, when we again made our offer, which after consultation with Mr. Phillips (Te Aroha Dairy Co.), who represented the Auckland Provincial Dairy Companies' Association, was rejected, because we refused absolutely and finally to make any concession what-1 ever to the proprietary companies and their suppliers. I was only present for half an hour during the final addresses by counsel, and in order to i make quite sure no further commitment had been made, have taken the precaution to wire both Sir John j Findlay and Mr. Kennedy, solicitors { for the National Dairy Association:— j

" Sir John Findlay, Wellington.— McGregor, Morrinsville, claims to have accepted our offer re shares which he rejected on Friday morning 23rd October, because we would not include proprietary suppliers. I understand you again made offer in your final address same day. McGregor's press statement reads as follows: 'Sir John Findlay, who appeared for Dairy Co., advised the committee that lie realised and appreciated the attitude that he (McGregor) had adopted and he gave his assurance to the committee and said that he had Mr. Goodfellow's written authority for giving the assurance that even if the Bill was passed in its present form, the Dairy I Co. would not enforce any legal i rights they may acquire against members of these three companies. N.Z. Dairy Co. therefore cannot repudiate the undertaking- given to committee, however much Mr. Sinclair might like to do so.' Would you please inform me whether or not McGregor accepted after I left, or is his statement untrue. I desire reply Morrinsville press Tuesday. Goodfellow.

The telegraph reply received is. —" Re Dairy Industry Amendment Bill. You ask me to state in substance what I said as coun-

sel for your company before the

Agricultural and Stock Committee regarding shares held by shareholders in your company who had since become suppliers to Morrinsville and other companies represented by Mr. McGregor. (1) I submitted these shareholders were (quite irrespective of whether the Bill was passed or not) estopped by acquiesence and delay from denying that they were still shareholders in your company, and they could be sued like other shai-eholders for calls due and to become due. (2) No bargain or compromise of any kind was at any time arrived at between McGregor and j myself and right up to the time he I and I left the committee he opposed ' the Bill on principle. (3) I did offer McGregor with your authority that if he would withdraw his opposition to a favourable recommendation by committee that Bill be passed in its finally amended shape your company would give a binding undertaking not to enforce payment of calls by cooperative shareholders he represented. He refused offer. I stated with your authority this concession would be absolutely refused to shareholders represented by McGregor who had abandoned co-operative principles and had left your company to become suppliers to proprietary companies. Under your instructions I then intimated to committee as stated in first paragraph hereof.—Findlay." " Goodfellow, Hamilton.—At no meeting at which I was present did j you undertake absolutely and uncon-1 ditionally to release Morrinsville j shareholders irrespective of the opposition of co-operative factories to j Bill.—Kennedy." J (The originals of telegrams have been handed to us for perusal and are as stated.—Ed).

These replies make my position clear. The Morrinsville suppliers were obviously legally liable for this share capital whether or not the amending legislation was passed by Parliament. The sole object in making the offer was to remove all the opposition of co-operative companies, when the Bill came before the House. It is surely extraordinary reasoning to suggest that notwithstanding the repeated rejection of the Dairy Co.'s offer, Mr. McGregor now claims relief for his clients. . When in Wellington he had to decide Whether he would accept this offer for his cooperative clients, or whether he would take a risk and continue the fight for the proprietary interests. He decided on the latter course, with the result that he obtained no concession, and might just as well have stayed at home, and thereby saved all concerned a great deal of time and expense. In conclusion, I wish to make it quite clear to the suppliers (and this had been made clear to the committee in Wellington) that the N.Z. Cooperative Dairy Co. had never been vindictive, and had intentionally neither acted harshly nor unfairly with any misguided suppliers. It now rested with the directors of the N.Z. Co-op. Dairy Co. to decide what should be done regarding the uncalled share capital. In order that the issue may not be confused, let me again state that this share validation question is not a local argument. Shares have been allotted by directors all over New Zealand for the past twenty or thirty years, and until recently such alloti ments were never open to serious \ question. It has been for many j years customary, where a co-opera-j tive dairy company desired to increase I its subscribed capital, to ask all sh upholders to take their pro rata shire of the additional capital by ! adoring the quota of shares according jto Jbutter-fat supplied. It was generja'•'•• considered that this procedure \\v.i effective and binding on all the r -imbers of the company by reason j cf: (1) Section 24 of the Companies j Act, 1908, sub-section 4 of which provides: ' When registered the articles shall bind the company and members thereof to the same extent as if each member had duly executed the same as a deed and there were in

such articles a convenant with the

company on the part of himself, his executors and administrators, to conform to all the regulations contained in such articles.' (2) Section 122 of The Companies Act, 1908, which enables the articles of association of a company to be altered by special resolution. This section provides that any alterations so made by special resolution shall be deemed to be the regulations of the company and of the same effect as if they had been originally contained in the articles of association.

Dealing with the powers of cooperative dairy companies provided by articles of association. Re shares and supply: Sir Eobert Stout states: ' Further, our Supreme Court has declared such covenants or agreements as appear in article 17 to be valid. It is not, therefore, what may be termed an ordinary question of law. The validation of the article must be determined after full Consideration of the requirements of the dairy industry and of what made it successful—the co-operative dairy companies. Who is most likely to know these requirements—the men engaged in the industry or lawyers who may know nothing of the industry? The fact that all the dairy companies consider ■ such an article as 17 necessary for ] the efficient carrying on of the busi- I ness ought surely to be deemed

proof of the reasonableness of tha provision.' Over two years ago the National. Dairy Association on behalf of the dairy industry of New Zealand decided, at an annual conference (when a large number of representative dairy people were present from all over the North Island) to endeavour to obtain not only retrospective but also amending legislation. The meeting also agreed, seeing that the decision was of national interest, to pay the Normanby Dairy Co. the sum of £2OO towards their expenses. The N.Z. Dairy Co. has actively supported the National Dairy Association in this matter. The draft bill submitted by the National Dairy Association relating to share validation was rejected by the Government, and the dairy people did not in conse- | quence have an opportunity of read- j ing the bill before it came before ' the House. The objecting co-operative factories concerned have only recent-; ly come into existence, and it is not i surprising that the directors were not au fait with what was being clone, but j to claim that this legislation was sprung on the dairy industry by the N.Z. Co-op. Dairy Co., Ltd., is quite incorrect.

We have been able to render very material help to the National Dairy Association, and we believe our combined efforts successfully blocked the proprietary companies' efforts to prevent the passage of the bill. The members of the Auckland Provincial Dairy Companies' Association only represent about three per cent of the dairy produce of New Zealand, and its co-operative members less than half that amount. As usual, the small co-operative companies have been used by the proprietary con- j cerns as a screen. The co-operative ' representatives did the talking while , the proprietary people got to work ' on the individual members of the House. The local association succes-1 fully held up the bill in committee until the proprietary companies had completed their plans. They failed, and the result is another victory ) for the farmers of New Zealand, j largely due, of course, to the sound | judgment of our members of Parlia- 1 ment, who accepted the report of the i Agricultural and Stock Committee | without alterations. 1 have it on j good authority that the forces be- j hind the scene are now at work or- j ganising to defeat the successful \ working of the Dairy Control Board. ' It will be interesting to see whet V-v j or not they can successfully use the , Auckland Provincial Dairy Companies' j Association to further their ends in { I future.

It is suggested that special and unusual powers are contained in the articles of association of the New Zealand Co-operative Dairy Co., Ltd. It is true that the shareholding provisions in the articles of association of co-operative dairy companies differ in form, but the object in all cases is the same. Taking the companies in this locality we find the position to be as follows: " (1) The Morrinsville Co-opera-tive Dairy Co.: Under article 102 each supplier is bound to hold two shares in respect of each cow. Un-

der article 104 the directors can require any member to take up additional shares, so that each member shall hold one share for every 701 b of butter-fat. (The same butter share basis as the N.Z. Co-op. Dairy Co.). " (2) Norfolk Dairy Co.: Article 104 vests a similar power in the directors to that given to the Morrinsville directors by their article 104. " (3) Sunny Park Dairy Co.: The provisions are similar to those of the Norfolk Co.

" (4) Tatua Dairy Co.: The provisions are similar to those of the Norfolk Co.

"(5) Hinuera Dairy Co.: The articles in this case are practically on all fours with those of your corncompany, ai-ticle 13 reading as follows: ' The directors may require shareholders to take up further shares in the company to provide that each shareholder shall take up one share for every 1001 b of butterfat, or such higher or lower standard as may be required by the directors in respect of any particular group or class of shai*es.'

" (6) East Tamaki Dairy Co.: We have not a copy of these articles before us, but think they are identic-)! with those of the Hinuera Dairy Co. We could verify this if necessary from the registrar of companies."

It is therefore obvious that it. is

quite incorrect to say that the N.Z. Co-op. Dairy Co. has articles of a special nature so far as the shareholding pi-ovisions are concerned.