TRANSFER OF DEBENTURES CASE

Northern Advocate, 8 December 1936, Page 4

TRANSFER OF DEBENTURES CASE

ALLEGATIONS AGAINST 1 SALESMAN i • ! [Per Press Association. Copyright .] j CHRISTCHURCH, This Day. j Evidence is being continued in the action brought by George Ernest Ar-; gyle, of Ashburton, who is petitioning the Supreme Court for the return of debentures in the Investment Executive Trust to the value of £l7O. as he alleges that he transferred them in consideration of debentures of the same nominal value in the defendant company, the Australian Investment Corporation. Mr Young, for plaintiff, said that O. A. Bridgwater had been connected with McArthur, as would be proved. He was McArthur’s agent for Canterbury, South Canterbury, Marlborough, Nelson and the West Coast. Debenture-holders in the Investment Executive Trust knew Bridgewater was hand-in-glove with McArthur, and consequently, when he came to them in 1935 they were suspicious and pressed him on the point. Bridgewater told them he had been caught in McArthur’s company and had transferred all his shares to the new concern.

“Actually, he had held 40 debentures,” Mr Young said, “and, to show his confidence in the new concern, he had not transferred a single debenture.” The defendant company, counsel continued, had collected debentures in the Investment Executive Trust to the face value of £85,000. It was known then that only 12/6 in . the £ would be paid to the unfortunate investors. In April the Public Trustee paid a dividend of 2/- in the £.

Investment Corporation Balance Sheet.

The annual meeting of the. Australian Investment Corporation had been held some months ago, said Mr Young. The balance sheet revealed that Bridgewater, or his promoting company, O. A. Bridgewater and Company, Ltd., received £IOOO for establishment coSts and over £4OOO commission, this being later deducted from money which had come from the public by way of dividend from liquidated companies. By securing the transfer of debentures in the Investment Executive Trust, the corporation had received about £27,000 in the distribution by the Public Trustee. . The balance sheet also showed that £3,250 had been invested in the Investment Development Corporation of New Zealand, Ltd., a company which | had been formed in Wellington on June 5, 1935, continued counsel Shares in this company were also held by the McArthur Trust, formed by J. W. S. McArthur in Queensland, where no legislation similar to that of New Zealand and New South Wales had yet been enacted. The first proof of a definite connection between Bridgewater and McArthur was obtained on July 15, 1936, when their names were entered with the registrar of companies, Wellington, as directors of the Investment Development Corporation. “Believed He Was a Loser.” The representations complained of had been made to plaintiff by Bridgewater in August, 1935, said counsel. Plaintiff believed that Bridgewater was a loser through - the McArthur transactions. A transfer was effected and it was not until the following April when he found that another de-benture-holder who had not transferred his holding received a dividend from the Public Trustee that plaintiff's suspicions were first roused. Plaintiff’s claim was for cancellation of the contract between plaintiff and the defendant company for the transfer of the debentures and for the return of the debentures.

Evidence on lines indicated by coimsel was given by plaintiff, who said that after he consulted his solicitor, with a view to recovering the shares, he was interviewed by Bridgewater. Bridgewater represented to him that the solicitor, Mr Young, had lost interest in the case and that several other persons who had consulted Mr Young had since withdrawn the matter from his hands. Public Trustee’s Fears.

In evidence this morning, John Gordon Michie, of the Public Trust Office, Wellington, said he had been dealing with the liquidation of the assets of the McArthur combine. There were £507,352 worth of debentures issued in the Investment Executive Trust Co., including £272,000 worth held by a company called N.Z. Shareholders’ Trust, Ltd. Those debentures, having no voting power, had no qualification for a dividend. He gave details of transfers of debentures to defendant’s company most of which came from Canterbury, Nelson and the West Coast districts.

The Public Trustee opposed the reconstruction of the trust company, said witness, because he had information which led him to believe that if a reconstruction were effected the assets might find their way back to McArthur.

(Proceeding.)