COMPANY AFFAIRS

Manawatu Standard, Volume LVII, Issue 9, 9 December 1936, Page 10

COMPANY AFFAIRS

DEBENTURE CASE RESUMED. EVIDENCE FOR DEFENCE. Per Press Association. CHRISTCHURCH, Dec. 8. Further evidence was heard to-day by Mr Justice Northcroft in the case in which George Ernest Argyle, printer, of Ashburton; claimed return l>y defendant, the Australian Investment Corporation, of debentures to a face value of £l7O in the Investment Executive Trust and of dividends paid by tho Public Trustee as liquidator of the Investment Executive Trust. Plaintiff’s allegation was that he had been induced to transfer debentures to the defendant company by misrepresentations of defendant’s agent, Osmond Arthur Bridgewater. John Gordon McGhie, of the Public Trust Office, Wellington, said lie had been dealing with tho liquidation of the assets of the McArthur combine. There were £507,852 worth of debentures issued in the Investment Executive Trust, including £272,000 worth held by a company called New Zealand Shareholders Trust, Ltd., those debentures having no voting power nor qualification for a dividend. He gave details of transfers of debentures to the defendant company, most of them coming from the Canterbury, Nelson, Marlborough and West Coast districts.

“The Public Trustee opposed reconstruction of the trust company,” said witness, “because he had information which led him to believe that if reconstruction were effected assets might find their way back into the hands of McArthur.” At the date of liquidation of the trust Bridgewater held four £lO debentures. He had transferred to the defendant company £l3O worth held by one Kitty S. Levy, but he still held his original £4O worth. The consideration paid by for K. S. Levy’s debentures was £52. The firm of O. A. Bridgewater and Company held £l2O face value in the trust company when it was liquidated and £IOO worth were transferred to the defendant company. CASE FOR DEFENCE. Opening the case for the defence, Mr Gresson said that at the outset it seemed that the debenture-holders in the Investment Executive Trust were faced with a forced realisation of assets. Bridgewater had hit on the excellent idea of forming a holding company to unite the debenture-hold-ers. “From the start,” Mr Gresson said, “the matter to be overcome was the debenture-holders’ distrust of McArthur. Assurance that McArthur had nothing to do with the proposed holding company was readily given. That I admit. That, was the representation of a then existing fact. I say with confidence that it cannot be shown that McArthur had any connection with the formation of the company.”

Proceeding, Mr Gresson said they were now indirectly connected by McArthur through the new development company. That was because McArthur had been working in Australia on similar lines to the defendant company, buying Trust debentures. There arose a position where something had to be done to prevent cut-throat competition for the debentures and a fight for control of the assets. Bridgewater made it clear that he could enter into no agreement with McArthur on account of assurances lie had given, the company was completely free from McArthur’s control.

His Honour: Having regard to the subsequent history of the case, the whole thing hinges on my impression of Bridgewater’s honesty. . “I am prepared to stand on Bridgewater in the witness-box,” replied Mr Gresson-. Bridgewater, in evidence, said his first association with McArthur was m 1931. , . , r , Asked why he had advised McArthur to burn a letter he had written, Bridgewater said: “I thought that if it were shown to everybody it would give rise to the inference that plaintiffs are trying to give it at this stage.” Mr \ T oung: There is no letter on the file to show that you repudiated McArthur’s scheme to obtain control or the assets which the Government had taken special measures to withdraw from his control. Bridgewater: I did not repudiate his schemes straiglitout. I did not want to antagonise McArthur. He might have been useful. His Honour : In other words, you wanted to use McArthur as a tool? Witness: Yes, to a certain extent. RELATIONS WITH McARTHLR. Cross-examined by Mr Voting, Bridgewater said McArthur may have been interested in the defendant company in that lie may have been curious to know what the company was doing regarding Investment Trust debentures and assets. Witness admitted that before the formation of the defendant company in 1935 he had asked McArthur for information and assistance in protecting the interests of shareholders. , Mr Young: Did you tell a single de-benture-holder you had written to McArthur ? Witness: I don’t remember. Nfr Young: Did you ever write McArthur offering your assistance to him in New Zealand? Witness: I don't remember having done so. . Mr Young: Then will you explain this telegram received by you from McArthur on August 2, 1935: ‘ Much appreciate and reciprocate your otter co-operation according documents Webber delivered?” Witness said he had sent reports of a debenture-holders’ committee meeting and circulars. He did not remember having made an offer of eo-opera-tloMr Young: Was McArthur in the habit of cabling you on unimportant matters? Witness: NoMr Young: Then can you not tell us what the cable meant?

Witness: No. . IT is Honour (to witness): This case is goino- to be determined oil the credence I can attach to your word. I am earnestly anxious to believe, but 1 do wish that vou would try to do yourself justice. Here is an important cable and von cannot explain it. Witness said all be could remember was that Webber, an agent of McArthur had called and witness had given him some reports and circulars to take to McArthur at Sydney. His Honour: This cable acknowledges proposals of yours for reciprocal working. Can you tell me what they were ? Witness: I have no recollection of making definite proposals. His Honour: Then that cable is meaningless to you? Witness: Yes, that is what it amounts to. Mr Young: .Is it not true you were the New Zealand counterpart of McArthur? Witness: Certainly not. Mr Young asked witness whether he had told the present plaintiff a.nd others that the issue of a writ against the defendant company would cost them each £IOO. Witness denied this. He said he had told them the writ would cost them £IOO collectively. He had told them he had never been mixed up in Jitigation before and ho hoped the matter would be settled amicably. Mr Young produced copies of sev- 1

eral Supreme Court writs a.nd asked witness whether be would deny he had been involved in several previous writs for fraud. Witness admitted the writs, but said he meant he had not appeared in Court. Mr Young: You mean you escaped because money in settlement was paid by the companies concerned out of Court. The Court adjourned till to-morrow. I