McARTHUR TRUST FINANCES

Northern Advocate, 1 December 1936, Page 5

McARTHUR TRUST FINANCES

S.M. FINDS FOR PLAINTIFFS IN CIVIL CLAIM

[Per Press Association. Copyright .] INVERCARGILL, This Day.

The financial position of the MacArthur Trust, Ltd., was discussed in the Magistrate’s Court yesterday, when a civil case was heard concerning debentures which had been transferred to the trust. The application before the Court was for an order on behalf of Jaimes Fleck, Mary Fleck, Margaret Bain and James Alan Thomson, all of Southland, to have cancelled and declared void a transfer by them to the MacArthur Trust of debentures owned by them in the Investment Executive Trust.

The case was a sequel to the recent conviction on a charge of sharehawking of a man who arranged the transfer of the debentures! Mr W. H. Freeman, S.M. was on the bench. Mr A. C; Hanlon. K.C., and with him Mr C. M. Barnett, of Dunedin, represented the MacArthur Trust, opposing the making of an order, and Mr K. J. Allister supported the application. Court’s Jurisdiction. There was a long discussion on whether the Court had jurisdiction to hear the application. Mr Hanlon claimed that the New Zealand Courts had not the power. He submitted that, as the company did not reside in New Zealand it was not amenable to the jurisdiction of the Court. Mr Mac Allister contended that the Court had power to deal with the case whether or not the company had actually commenced business in New Zealand.

The magistrate held that the Court had jurisdiction. In evidence. Fleetwood Douglas Graham. of Sydney, secretary of the Trust, Ltd., said that people who had transferred their debentures for shares in the MacArthur Trust now had the security of the same debentures, with the extra security of the ordinary share capital of the trust. On figures they were better off. Mr Mac Allister: Are you serious when you say that these people are £1,686 better off from the mere conversion of their money, notwithstanding that the company had an expenditure of £12,000 or £13,000? Where did the added value come from? Certain Assets.

Witness said that half the debentures had been exchanged for preference shares of the MacArthur Truk, which was fully covered, and the other halt exchanged for ordinary shares, but £‘ > '\O'M) of debentures of the National Investment Co. had been exchanged

vo” -rdirrry shares and this benefitted other shareholders. Mr Mac Allister: For this £30,000 what did the National Investment Co. get?

Witness: It got certain assets. Mr Mac Allister: But what did it get from the MacArthur Trust? Witness: Nothing. The debentures belonged to J. W. S. MacArthur and he tru - l ’-'rrrd them to the trust for or* chnrrv shares.

Mr MaeAUlster: Was this asset wo’-'h £3O 000?

Witness- Considerably more, 1 should think.

Mr Mac Allister; And yet MacArtiu’v was willing to change an asset

'h mm- than £20,000 for ordinary shams worth 2 10 in the £. Rather a had deal, don’t you think? Witness: Yes, it was. Magistrate’s Comment. C

Aft-r further questioning by Mr MacAlli.Ter; witness said he would refuse to admit the trust was in a hope--1 ■ss position.

The magistrate said he did not propose to reserve his decision. The other case (the charge of share-hawking) had gone to appeal, he understood, and he was only concerned with the present order. He agreed with Mr MacAllister that the Court had jurisdiction. The Companies Act would be useless if the previsions were to be inter-

preted as not meaning what they said. “In my opinion,” continued the magistrate, “although it may not be a flection of this Court to say it, the legislation did not go far enough. It should have provided, when it was decided to clean up the Investment ExecutiveTrust debentures and go into liquidation, that transfers of debentures for shares should have been prevented, so that the Public Trustee should have paid debenture-holders their money.

Then, if they liked, they could have parted with cash, but the trust got in ahead of the legislation, and now we have trouble. “I think this Court has jurisdiction, but. as the matter will go to the Supreme Court, I won’t waste time in summing up fully. My decision is that the transfers be declared void.” “There might be difficulty in enforcing the declaring void of the contracts because the company was incorporated in Queensland.” said the magistrate, “but that was not the Court’s business.” He would allow £5 5/- costs and fix security for appeal at £ls 15/-.