SUPREME COURT

Manawatu Standard, Volume LVI, Issue 64, 13 February 1936, Page 7

SUPREME COURT

CLAIM FOR DAMAGES. VENTURE AT TOKOMARU. Claiming £4OO in connection with a gold-mining venture at Tokomaru, and also the dissolution of a contract of partnership, Oswald Frank Foddy, salesman, of Hastings, took action before His Honour Mr Justice Blair in the Supreme Court at Palmerston North, to-day, against Edward Ralph Martin, mining prospector, of Tokomaru. Mr T. F. RelJing appeared for plaintiff, and defendant conducted liis own case.

Plaintiff, in his statement of claim, said that, on or about June 6, 1935, lie was induced by defendant to enter into a partnership with defendant in a gold-mining venture at Tokomaru through fraud and misrepresentation by deiendaiit, who was alleged to have stated (a) that he had discovered a gold-bearing reef near Tokomaru, and that a reliable assay of rock from the reef showed from 15dwt to loz 12dwt of gold to the ton, as well as some silver and platinum; \(b) that defendant was an experienced prospector and geologist; (c) that lie had spent over £2OOO of his own money in opening up the reef at Tokomaru; (d) that by the expenditure of £3OO lie could get and erect a battery and plant that would prove the mine payable, and that a larger company could be floated to work it; (e) that an honest assay could not be obtained from the Government Mines Department, and plaintiff should not attempt to get an assay there; (f) that lie himself had taken a certain amount of gold., by hand-crusliing, from the reef, but had been obliged to sell it to keep his wife and family; (g) that the officers of the Mines Department were prejudiced against him on account of his colour, and that was the reason why he had not already been able to float a company to work the mine; (h) that an assay would cost £2O. Plaintiff added that he had been induced to enter into the partnership contract on these grounds, and had paid £337, besides spending much time and incurring personal expense. He added that, notwithstanding the expenditure of this money, there was no possibility of testing the reef or proving the existence of gold there in payable -quantities. He alleged that the reef was worthless, and that there was no gold in payable quantities there, or on the laud over which defendant had mining rights ; that the business of the partnership could not be carried on without loss; and that it was just and equitable that the partnership be dissolved. Plaintiff sought judgment for £4OO damages for alleged fraudulent misrepresentation, also an order rescinding the contract of partnership under the provisions of section 44 of the Partnership Act, 1908, and an order for the sale of the partnership assets, including mining rights over the land, and the payment to him of the net proceeds to the extent of £337, with costs. An alternative claim was for an order dissolving the partnership and for the sale of the partnership assets, including the mining rights, and the payment of all money due to plaintiff. THE DEFENCE. Defendant, in a statement of defence which lie had filed, admitted the partnership, but denied that ho induced plaintiff to enter, into it, saying that it was at the request and suggestion of plaintiff himself. lie had informed plaintiff that he had rights-over the reef at Tokomaru and that he iiad assays of 12dwt to the ton and of loz lOdwt to the ton. The statement that he was an experienced prospector was true. He denied saying fie was an experienced geologist, but bad said be had a working knowledge of geology. Ke denied telling plaintiff that he had spent over £2OOO of liis own money m opening up the reef, but said he and his mate had expended £2OOO there. He denied telling plaintiff that for the expenditure of £3OO lie could get and erect a battery and plant' to make the mine payable so that a large company could be floated. Defendant said he had suggested to plaintiff that the best way to commence operations would be to purchase a small battery to try out the mine. Plaintiff had himself suggested the flotation of, and undertaken to float, a company to take over the proposition. Defendant denied stating that an honest assay could not be obtained from the- Gov-

eminent Mines Department but said be liad told plaintiff be could not obtain a satisfactory assay. Defendant said he had taken gold from the mine, but denied stating that he had sold it. He had told plaintiff that a bulk assay from Australia would cost £2O. STATEMENT OBJECTED TO. Outlining the case for plaintiff, Mr Belling said that the matter of the Tokomaru goldmine had been bclore the Court on two previous occasions. Deienuam oDiected to this state/nunc, savin'* it had nothing to do with the present matter, and said counsel should not “dig up” old cases which defendant had won in Court. His Honour: That comment is harmless enough. Wait till we get to the fireworks.

Mr Belling said that five to six years ago defendant had gone prospecting round the Tokomaru Creek and had later convinced several persons that lie had discovered a goldbearing reef. Defendant again objected to tins, but His Honour said be would forget all about it if be found it to be irrelevant. Counsel said Martin claimed to have located the reef on what was lreehold property owned by Mr Kelly, and had obtained from tbe latter a license to occupy certain land there and prospect for minerals for ten years, tbe license being renewable. Defendant got certain men to put money into the venture as a small syndicate; they made a little bole in tbe ground and took out rock which contained mainly iron pyrites. . .. His Honour: That is what they call “new chums’ gold.” Mr Belling added that Government assays at that time failed to disclose gold in commercial quantities, lhe first syndicate “fizzled out, and there was a Court case. Next Mi Kelly found that, having granted defendant a license, lie could not remove him from the property. From time to tiine the mine had come beloro small investors, said counsel, who outlined the representations allegedly made by defendant to plaintiff. Counsel sum it would be contended that there was ty no gold whatever in the mine, but •*1 that defendant was fluent and con\inning, suggesting that there were hungry people ready to grab what lie had found.” Evidence would be adduced to show that, alter obtaining money from plaintiff, defendant bought pieces of a derelict battery which were of no earthly use and were merely scrap iron, some of the main parts being missing. It would bo said that deletidant knew nothing whatcier about, the assembling of a battery. Plaintiff eventually went to Tokomaru, had sam-

ples of stone tested and found that they contained nothing. Government analyses had all shown the same result.’ The venture had been a “goldmine” only for defendant, who had done little work himself there.

HEARING OF EVIDENCE. Evidence was given by plaintiff of his negotiations with defendant, who, lie said, had pointed out values which he said had been shown in assays bv reliable geologists. Defendant said lie had spent practically all liis life prospecting in Alaska, Australia and New Zealand, and had more experience than anyone in the Mines Department, anil from documents in his possession, knew all the mineral deposits in this country. He had said, in inducing plaintiff to advance money, that the need tor action was urgent, or he would forfeit his mining rights. Defendant said he could not secure an honest assay from the Mines Department, and produced a letter purporting to substantiate this. He produced the assays mentioned, but made .no reference to others showing a negative result. Plaintiff had been shown the two assavs made by Dr. Bender, and also several others relating to ground round the mine. Plaintiff entereu into an agreement with defendant whereby he (Eoddy) was to receive one-fourth share in the mine on payment of £3OO. Subsequently plant was bought in Wellington, plaintiff being responsible for payments of £34 and several similar amounts. Plaintiff, in advances to defendant, and other expenses, paid out £337. Obtained from AVestport, the remains of a very ancient battery were now lying rusting in a paddock at Tokomaru. It was supposed to be a five-stamp plant, and no attempt had been made to erect it since it arrived in July last. Defendant made two trips to Westport, plaintiff accompanying him on the second occasion, defendant having obtained another mining option there when viewing plant. Defendant had sought money for the purchase of gold, stating that it would be wise to have it by them, as if they bad gold at the bank when crushing operations started, they would have no difficulty in selling the claim at a profit. Plaintiff refused Vi continue a partnership on those principles, asking why they needed to buy gold when they had a gold-nrvs. From then on plaintiff lost P/th and practically decided to withdraw. Proceedings at this stage were adjourned for lunch.