SPEEDWELL OIL CASE

Northern Advocate, 9 June 1933, Page 6

SPEEDWELL OIL CASE

WEARILY DRAGGING ALONG. DEFEND A XT' S EVIDENCE. (Special tn “Northern Advocate.’’) AFCKLAND, This Day. Tli o Speedwell oil case had its eleventh day of hearing; at the Supreme Court yesterday, Vie fore Mr Justice Smith. The case for the -til shareholder plaintiffs has been completed, and it is expected the hearing of the defence tv ill occupy some days. The action is one in which a claim is made by the shareholders for the sum of CJfIJJ from Harry Clinton McElwain, a former promoter of the company. The defendant, in answer to further questions, said that although he had given a total of FIDO shares away to the directors, they did not express thanks. They were his own shares, and the directors, Charles Adams Parkes, Cave and Millikin, had no reason to expect they would be given shares for nothing - . He had been a. vendor to two companies previously, but not a promoter. He had nothing to do with the formation of the China, Clay and Pottery Company. He believed it had £(15,000 in capital, and he knew nothing of its trading life history except hearsay. The Speedwell Oil prospectus was the first prospectus he had ever signed or prepared. Witness said he did not initiate tho nogotiations with any of the prospective directors except Mr Millikin, but he came into touch with them as a result of Mr’H. J, Gilmore 's efforts. He would not deny that he had told Gilmore he would give him shares, but he did out think Gilmore could have got the idea that he would give shares to the others. The company, had no shares to give away and the understanding was that if he made a distribution from his shares among the directors they would make it up to him in some way later. The witness said- that reports about the financial difficulties of the Newmarket company did not cause them concern and disappointment, because the reports gave an opportunity of investigating the position and probably of making better terms. Air Gould: “Do you recognise now that the prospectus was misleading when it said that the Newmarket business was returning a satisfactory profit?" ; Witness: "No. I.cannot say that it was. The position was cleared up afterwards, ’ ’ The witness explained this by saying that several meetings with officers of the Newmarket company were | held at‘the office of his solicitor, and they won the day. Air Gould: "How did that clear up the matter?" Witness: "I think it proved to us that we were barking up the wrong j tree. We understood that the company was getting on cpiite well." His Honour: "What about the trading Joss?" The witness said it was a question of writing off bad debts incurred over a period of two years. When this had been settled his side was sure that the company was in a good, healthy position, during a recent period under review and that there was a profit for that period. The company had been in liquidation for a long time and was at a disadvantage on that account, ft was not intended to convey in the prospectus that the company was making a profit, but that it was prosperous, although in a small way. The hearing was adjourned until today. i To-day’s Proceedings. When the hearing was resumed today, witness, dealing with the receipt of a cheque from Burleigh, said that on March 2S, IDJO, the company could not go to allotment as a minimum of

(1000 shares had not -boon sold, am the application money received. Tie provisional directors held a meeting and Burleigh gave a cheque to over the amount of application money for shares unsold by Stocker, the underwriter. Witness then regarded Burleigh as a salesman only and did not think ho was behind Stocker. However, Mr Massey advised that nnpresented cheques for application money could not be accepted. Witness then knew Stocker did not have the money required and that was why witness asked Charles Adams to lend the £587 required to Stocker. Until March 28 witness did not doubt Stocker would be able to find the money. Witness said that although he knew on March 28 that Stocker could not find the money, 2515 shares were allotted to' him on April l(i. The directors had no option but to allot them, as Stocker had by then paid the money which had been borrowed from Leslie Adams. Witness said that, he was to receive £IOOO in cash from the company in addition to 2500 shares. The £IOOO was in the bank and he could have taken it out, but took only £4OO.