SALE OF OIL SHARES.

New Zealand Herald, Volume LXV, Issue 20112, 24 November 1928, Page 15

SALE OF OIL SHARES.

POSITION UNDER A WILL.

POWERS OF THE TRUSTEES. PROCEEDS TO LIQUIDATE DEBT. The legality of tlio disposal of 1240 shares in Taranaki Oilfields, Limited, by the trustees appointed under the will of the late Mr. Herbert Thompson, merchant, of Auckland, formed the chief point of contention in a reserved judgment given by Mr. Justice Frazer in tho Supreme Court yesterday. At the original hearing tho direction of the Court was sought by E. R. N. Russell, solicitor, and Lieutenant-Colonel R. C. Allen, of Piako, Morrinsville, whether they, as trustees under the will, were entitled to dispose of tho shares held by the testator as security for a debt owing to him by Percy Arthur Hadley, company promoter.

His Honor said tho material facts were that testator, in December, 1924, became entitled, as tho result of a Supremo Court action to which he and tho official assignee in tho bankrupt estate of Hadley wero two of tho parties, to hold 12 shares in the Taranaki Oil Development Company (New Zealand), Limited, as security for a debt owing to him by defendant. The 12 shares wero later converted in 4140 shares in Taranaki Oilfields, Limited, a new company, which took over tho assets of the former com-

pany. With the consent of the testator, Messrs. A. H. Johnstone and E. R. N. Russell resigned their office as advisers, and Mr. J. 11. Frater was appointed in their stead to advise and negotiate the sale of the shares. Ho sold 2900, realising £1349, and this was applied in reducing Iladley's indebtedness to testator, the total debt being ascertained to be £5764. In May, 1926, Mr. Frater declined to act further, and Messrs. John-, stone and Russell also refused to be reappointed as advisers. The question, therefore, arose whether plaintiffs were entitled to sell the remaining shares without the consent' of the persons appointed to advise regarding their sale. After referring to various legal authorities His Honor said that if the original advisers and Mr. Frater, who was later appointed in their stead, refused to exercise the power given them, Hadley's indebtedness to testator might never be liquidated. He concluded tho power given to Messrs. Johnstone and Russell, and later to Mr. Frater, was in tho nature of a power coupled with a trust, and having regard to the nature of the case these persons must bo regarded as advisory trustees, whose function. it was to decide how and when the shares were to bo disposed of, and without whoso sanction the testator could not dispose of them except by the aid of the Court. It was held that plaintiffs should have leave to sell the shares without the coni sent or the advisory trustees, but subject to the direction of the Court. His Honor directed that the registrar should inquire and report whether occasion had arisen for the sale of the shares, and, if so, as to the time and manner of their disposal. Leave was reserved for plaintiffs to apply for further direction of the Court after the registrar had reported. Plaintiffs were allowed £9 9s costs, with disbursements to be settled by tho registrar.