COMPANY PLAN

New Zealand Herald, Volume LXXIII, Issue 22434, 2 June 1936, Page 13

COMPANY PLAN

PUKCHASE OF SHAKES CLAIM AGAINST AGENT RECOVERY OF MONEY SOUGHT McARTHUR GROUP CONCERN A dispute over the terms on which ;i Dunedin agent had been employed by a company associated with tho McArthur group, to purchase shares in certain other companies, residted in an action for the recovery of amounts totalling £lß9l, with interest, being commenced before Mr. Justice Ostler in the Supreme Court yesterday. Plaintiff was the Transport, Mutual and General Insurance Company, Limited, in liquidation*(Mr. Hubble and Mr. Wallace), and defendant Cyril Ernie Richard Webber, agent, of Dunedin (Mr. Hampson). Mr. Hubblo said that the Public Trustee was the liquidator of the plaintiff company. The action was really a claim for the balance of moneys received by defendant, for which, plaintiff said, he had to account. The plaintiff company was one of those associated with the Investment Executive Trust of New Zealand, Limited, now under the control of the Public Trustee by virtue of two Acts of Parliament. Defendant admitted receiving the moneys. Ho said in fact that lie had accounted for them, that there was no balance owing by him, but that there was a balance owing to him. Formation of Company It was not disputed, said Mr. Hubble, that defendant rendered services to the company, but there was a dispute as to the terms of his engagement. It was this that the Court was asked to decide. The plaintiff company was incorporated on November 13, 1933, and was briefly an insurance company, with a capital of £IOO,OOO, continued counsel. The signatories to the memorandum of association in the first instance were seven, and the first three were the first three directors. They were a Miss Margaret M. Dunn, a Miss Margery Hawlev, and a Mr. Henry D. Williamson, agent, all employees of the Investment Executive Trust of New Zealand. Records showed that the first meeting of directors was held on December 8, 1933 and at this meeting some 60,000 shares of £1 each wore allotted to the Investment Executive Trust of New Zealand, Limited, and one share each to the seven signatories. A call of 10s was immediately made, and a little later £30,000 was paid in by the Investment Executive Trust. On the same day £29,455 was paid back to the Investment Executive Trust in payment of tho purchase price of various investments.

" One Real Activity "

" While this company was incor-

porated in the ordinary way, it was obviously controlled by the Investment Executive Trust of New Zealand," Mr. Hubble continued. Its only real activity was the acquiring of shares, principally in a Dunedin concern, the Trustees, Executors and Agency Company of New Zealand, Limited, and apparently the plan had been devised by the group of companies known as the McArthur group, to acquire control of the Dunedin company. It was in connection with that activity that the defendant rendered services to the plaintiff company. In 1933, prior to the incorporation of the plaintiff company, defendant was employed by the Dunedin concern and apparently at that time, when he was drawing his salary from that company, he was in touch with McArthur relative to a plan to acquire control of the company.

Early in 1934, after the incorporation of the plaintiff company and after he had severed his connection with the Dunedin concern, defendant was active in going about shareholders and persuading them to transfer their shares, said Mr. Hubble. The most intense period of activity was during Easter. The fact that the Storl Exchanges closed for 10 da 3's no doubt had something to do with the choice of that period. About November, 1934, the Public Trustee was appointed receiver, and ho sent a representative to Auckland to look into the books and records of the plaintiff company. It was obvious that large sums of money had been paid to defendant, some direct and some through a Christchurch solicitor. There were indications that defendant received £4OO a year as salary. Statement oI Position In July, 19.34, defendant owed the plaintiff £484, according to his own statement, said Mr. Hubble. Subsequently he was advanced sums totalling £I3OO under a deed, to purchase shares. A representative of the Public Trust office communicated with defendant, who held that these advances were not repayable for six months, and that the end of that period would be time enough to account for the money. Later, however, defendant rendered a statement which showed him owing the company £2OO. There was an error in addition, however, and the statement really showed him owing £9O. In that statement for the very first time a claim for extra salary was made, Mr. Hubble continued. The claim was ; for an increase from £4OO a year to £IOOO a vear, which, defendant said, was to date from the time they acquired 1000 shares in the Dunedin ! company. Subsequently, defendant | claimed the company owed him another £SOO for preliminary work. His Honor: Is there anything in the minutes of the company about an increase from £4OO P Mr. Hubble: Nothing anywhere, sir In reply to a further question by His Honor, Mr Hubble said Mr. McArthur was never a director or a shareholder in the Transport Insurance Company. The original defence filed said that arrangements for one of the large amounts in dispute I.ad been made with the Christchurch solicitor, Mr Hubble added. An amended statement of defence, however, filed yesterday morning, gnv» an entirely different story, to the effect that the arrange ment had been made with the Investment Executive Trust as agent for the plaintiff company Evidence of Investigations

Arthur Kric John Anderson, an accountant in the Public Trustee's office, and John Gordon McGhie, estates administration officer in the Public Trust office at Wellington, Rave evidence concerning their investigations into the plaintiff company's activities. Mr. Hampson said there had never been any desire on defendant's part to avoid giving the fullest account of money be had received, nor was his honestv questioned. Thomas Hugh Macky, managmgilirector of the Cambridge Clothing Factory, mi id he was appointed chairman of directors of the plaintiff company in 19.'i4. He was fully aware of tho acquisition of the shares in the Dunedin company. Defendant had been buying shares for the plaintiff company and the point was reached whiTro

I they had almost got control of the Dunedin concern. A discussion defendant resulted in a decision that it would be better for him to buy straight out, the company to supply the money Witness continued that they were about to get the necessary security when defendant made certain stipulations, the payment of money ho said was owing both for back pay and a bonus. These arrangements he mentioned had been made before witness became a director, so witness and another director, Mr. Clarke, wanted to know how lie claimed the company was bound to do this. Defendant said he had made these arrangements with Messrs. McArthur and Alcorn, witness added. Witness told defendant that if the arrangement had been made, cither before or after the incorporation of the company, it woidd be kept, as he considered there was a moral obligation. Cross-examined, Mr. Macky said that prior to the meeting he had heard of a bonus for defendant, but not of an increase to £IOOO a year. He repeated that he would pay a claim if he felt it was morally right. His Honor: Jt is a line attitude, but it might get you into trouble. It would be better to stick to paying every claim that is legal. _ , Archibald Henry Anthony, solicitor, of ChristcJiurch, gave evidence concerniiirr defendant's salary and expenses, which ho paid for some time. Cyril Ernie Richard Webber, defendant, said that in January, 1934, lie saw Messrs. McArthur and Alcorn and agreed to acquire shares in two companies for a salary of £4OO a year. This was to be raised to £IOOO a year when 10 per cent of the Dunedin shares had been obtained. He had done considerable preparatory work for which he understood he was to receive £SOO. Subsequently lie went to Sydnoy, where it was agreed to pay him £IOOO a year. The hearing was adjourned until this morning.