COMPANY INQUIRY

Nelson Evening Mail, Volume LXVI, 19 April 1934, Page 5

COMPANY INQUIRY

STATUS OF COMMISSION WRIT APPLIED FOR FULL COURT HEARING (By Telegraph—Press Association) WELLINGTON, 18th April. The Full Court commenced the hearing of what has come to he known throughout the Dominion as the company commission ease.” Plaint ills, Timherlamls Woodpulp Ltd., Maurice Vincent Rates, and the 1 ung Oil Securities (New Zealand) Ltd, in the statement of claim detail the appointment of the Commissioners, John Saxon Barton, Horace Belshaw, and Frank Edward Graham, by the Governor-General acting under the powers conferred by the Commissions of Enquiry Act, 1908. They describe plaintiif company the Timberlands Wood)mlp Ltd., to be a company incorporated in New South Wales haying its principal place of business in New Zealand at Auckland; Maurice Vincent Bates to be a public accountant and licensed sharebroker of Auckland, and a member and secretary of the Stock Exchange Corporation of New Zealand; and the Tung Oil Securities Ltd., as a New Zealand company having its registered office at Auckland. They .allege that at the date of the appointment of the Commission no legislation had’been proposed or contemplated by the Government ill respect of matters set out in the appointment of the Commission, and that consequently the Governor-General had no power or authority under the Act to issue a commission. The appointment of Professor Belshaw is objected to on the ground that lie bas in the course of a statements publieally made in Writing prior to the date of llte Commission shown bias or prev'dgment in bis criticisms concerning the promotion of financial methods of control and operation of companies and other corporations which seek to raise capital in this country. The defendant Francis Edward Graham is alleged to have a pecuniary interest in the operation of the present statute governing stock exchanges in New Zealand and is likely to be biassed against the Stock Exchange Corporation of New Zealand because lie is a member and a shareholder of the Christchurch Stock Exchange, anil for many years until February, 1984, was president and a director thereof. For those reasons the defendants Belshaw ilml Graham are said to be iiot lit and proper persons to act, and prayer is made that the,Commissioners appointed, or alternatively one or both of defendants Belshaw and Graham, may be prohibited by writ from enquiring into the taking of evidence or reporting upon matters set out in the Commission in support of the allegations so contained in the statement of claim. Various affidavits have been filed dealing with the alleged pre-judgment or Idas of the two Commissioners and the absence of any intention on the part of the Government to introduce legislation dealing with matters to ho considered by the Commissioners. Defendants by a statement of defence deny the allegations of plaintiffs concerning the lack of intention on the part of the Government to introduce legislation in question; and whilst admitting that Professor Belslmw has published an article dealing with the matters stated, deny that he lias shown bias or pre-judgment. They admit furthermore Graham’s connection with the Christchurch Stock Exchange, hut deny the other allegations made against him. Affirmatively they contend the Commission was validly constituted and consequently has full power and authority to act. In addition to affidavits filed by Belshaw and Graham defining their positions, affidavit have been made by J. G. Coates stating that the matters to be considered by the Commissioners have been- receiving the attention of the Government for some time and that it was intended that suitable provisions dealing with the evils thought to exist should he incorporated in the Companies Act of last year. This was not done, as it was considered the form of the proposed provisions would depend upon the detailed examination of the structure abd methods of the companies then under review, and it was decided to defer the introduction oi proposed legislation. The matter, nevertheless, was being kept actively in view.

Messrs IT. P. Richmond and M. IT. ITampson (Auckland) are appearing for the plaintiffs and Messrs J. B. Calhui, K.C.. and IT. Rose (Wellington) for the Commissioners. ■

ilr Richmond, who is leading for the plaintiffs, dealing at length with the allegations contained in the statement of claim commented on the extreme width of the field into which the Commission was empowered to enquire. He contended it was empowered to enquire into any possible thing that came within the scope of the company’s operation. In reply to Mr Justice Blair he stated that the Stock Exchange Corporation of New Zealand wad a new stock exchange in vital competition with old stockbrokers. It had been refused registration as a company whereas the Christchurch Stock Exchange had been so registered, and plaintiffs contended that that was one thing which showed why Graham was vitally interested in matters into which" the Commission was directed to enquire. Dealing with the article by Professor Belshaw published in the “N.Z. Financial Times,” in November, 1032, lie suggested that the whole of the recommendations made by the professor had been substantially covered by recent company legislation. lie bad expressly pro-determined Hie question of bond selling from door to door, and yet that was one of the questions which in part was to be considered by the Commission. Mr Richmond described Professor Belshaw as “The recognised propagandist” of a certain school of opinion with reference to many questions to be dealt with by the commission. The word “propagandist” was, he explained, used in the best sense of the word. Mr Richmond criticised the powers given by the Commissions of Enquiry Act, 1!)0H. By that Act powers of a. most inquisitorial character were put into hands of a Minister of the Crown. He was given the widest powers known to our law. He was empowered to order a commission of inquiry for any reason he thought (it. and then bis commissions were entitled to call before them ;iiy individual, to order any document's whatever to be produced, and to inflict, tines and commit for contempt any person who disolieved their authority., Moreover they could cite nnv person or company as a party to an inquiry and inflict on any person or company so cited the costs of the whole inquiry.. Trade and business secrets were mat safe from them, and

for all those reasons it was essential that the Commission should be constituted to impure only into definite proposals. Otherwise, be asked, vvliat limit could there be to inquiries which a Minister might direct? Making bis main submissions concerning the validity of the Appointment of the Commission, Mr Richmond contended that so' far as the whole of Nos. I and 2 of the special subjects of the inquiry set out in the order-iii-coiineil were concerned, there was no “proposed legislation” within the meaning of section 2 of the Commissions of Inquiry Act, 1908, and that No. 3 (dealing with stock exchanges) was so interlocked with other ""iieral subjects of inquiry that it must perforce fall with them. In order to satisfy the requirements of the ‘'proposed legislation." The proposals of the Government must he, sufficiently defined to be a check or guide to the Commission. There could have been no proposals before the Government relative to general matters yf inquiry now under review, for all of the matters of the inquiry with the. exception of those relating to stock exchanges had already been dealt with in some manner by the Companies Act, 1933, which onlv came into operation during the present month. Passing on to the question of alleged bias on the part of Belshaw and Graham, Mr Richardson submitted that the Commission was a body required to act judicially, and therfore all the rules governing the conduct of judicial offices in respect of the administration of justice applied to it. 'Those rules wore shortly known as the “rules of natural justice,” and those rules deprived from jurisdiction all persons who had any interest financial or in a. matter which might give reasonable apprehension of bias to any person.

The Court adjourned until tomorrow