SPEEDWELL OIL CASE

Northern Advocate, 7 June 1933, Page 6

SPEEDWELL OIL CASE

I'IiOr.OXOKD I'IiOCKKDIXfiS

NINTH DAY OF UFA TUNG

CASE FOR DEFENCE

(Special to "Northern Advocate.") AU OK LAND, Tuesday

A Tier eight days, evidence Tor the plaintiffs in the Speedwell oil ease was completed yesterday afternoon,'and today the ease for the defendant was opened. During the hearing of: the case for (lie plaintiffs, twelve witnesses wore enlled to give evidence, and no less Ilian 101 exhibits comprising some 200 documents were put in. The method ol marking exhibits in Court actions is to begin at A and go through the alphabet. I.n the present case the alphabet has been exhausted four times. The action is a. claim hy 10 shareholders in Speedwell Oil Company (N.Z.), Limited, against Harry Clinton McElwain, company promoter, for the sum of £-1,633, plaintiffs alleging amongst other things that statements contained in the prospectus issued by the company were untrue.

Mr Gould and Air Dyson represent Hie plaintiffs, and Mr Weston and Mr Goldstine appear for the defendant, McElwain.

The first witness called for the defence was Francis W. Cave. Mr Gould raised objections to the defendant McElwain being allowed to remain in Court unless he was to be called as the first witness.

Mr Weston said he had no objection to McElwain leaving the Court. He was only calling the other first as a

matter of convenience,

His Honour thought the defendant should leave, and McElwain did so.

Cave said he was the original founder and managing director of the Speedwell Oil Company (N'.Z.), Ltd. This was the Newmarket business, and a big interest was held in it by the British Oil and Turpentine Corporation. The corporation had 1000 shares, and had as a director in the company a representative, a (Miss Clark. When she left New Zealand she appointed (Mr Patrick, manager of the Newmarket branch of the National Bank of New Zealand, as her attorney, and as such lie attended meetings of the directors., The Newmarket company had a sub-agency in Christchurch, hot it went into liquidation before the- Newmarket business was taken over by Hie second Speedwell Company. The Newmarket company was not able, tc undertake big contracts, because its capital would not allow it to do so. To his Honour: Miss Clark signed cheques on behalf of the British Oil an 1 Turpentine Corporation.

Witness mentioned numerous contracts the Newmarket company" had secured, many" of them from local bodies. The oil was supplied by" the Loudon company-, some of the oil coming from Pennsylvania at the order of tiro British company. The Newmarket company" was entirely- dependent upon Hie British company' for its sources of supply" ami advice. If Hie Newmarket company had gone into liquidation, the rights ol Hie blending of the oil and the name “Speedwell” would have reverted to the British company". Insufficient Capital.

The Newmarket company, in witness’ opinion, was well established at the date of its sale to the new concern. The business would have been a profitable one had there been sufficient capital. Prior to the purchase of the Xewmavket. company by the new company, McElwain made a thorough investigation of its affairs. ITe had no interest in the old firm. Mr Ooldstine: “From McElwain’a investigations, did you form any opinion as to his honesty of purpose?” IFis Honour: “That, is a question 1 have to decide, isn’t it?” Witness said that, in the light of subsequent events, he wished the old company had had sufficient money to carry on and recoup its initial oxpendit are. Mr Ooldstine: “What' was the cause of the failure of the new company ? ’ ’ —‘ ‘ Probably friction among the directors.” To His Honour, witness said he had been told there was friction among the directors. He had no personal knowledge whatever of any friction, as he had no reason to make any investigations himself. Mr Gould: “Were you a shareholder in the new compayn?” Witness: “ Ves and no. I was given i’OO shares in the new .company. They were offered to me by 'McElwain as a consideration for my technical advice, but I told him distinctly that I would not accept anything that could not be shared equally among the members of the old company.” Southern Inertia. Further examined by Mr Gould, witness said that at the time McElwain was negotiating with the Xewmarkei company the South Island subsidiary was almost moribund. Witness would not care to say whether McElwain was told of this fact. The. first olfer of McElwain for the Xewrnarket company was 7/G a share on the paid-up capital, but the shareholders were not prepared to accept this, as they conj sidered they were entitled to HI/. Some of the directors were prepared

to accept. 7/<i. Mr Gould: “Is not tins Hie position? If your company had not sold out to MeKlwaiii it would have gone into lifjiiidal ion. 7 7 “No. If we had not sold out to .Me 111 wain I have every reason to believe we could have soil out to someone else. 77

Witness said In; may have infernal to .MeKhvain that the mid company had an increasing business. No relining - was done by the company, only blending - .

A public accountant, George Charles Wad ley .Morris, gave evidence of having investigated Ihe position of the Newmarket company shortly lie fore sts sale. Witness said the company had been losing, but then appeared to Im ‘‘around the corner. ’’ Shortage of chpilal and large establishment expenses were responsible for the losses. The company had many good clients. As Ihe result of his investigations, witness issued a true eerl i lica te widen was made use of in the company 's new prospectus. Witness considered that, with good management and direction, the business would lie a sound investment. The healing was adjourned until this morning.