TUNG OIL TREES

New Zealand Herald, Volume LXXIII, Issue 22518, 8 September 1936, Page 11

TUNG OIL TREES

A VENTURE FAILS DIVIDEND PARTICIPATION RULING OF COURT SOUGHT [BY TELEGRAPH —PRESS ASSOCIATION] WELLINGTON, Monday The success that attended one of the curly efforts to establish the tung oil industry in the northern Auckland district and the subsequent failure of the venture through the destruction of the plantation almost overnight by a cokl southerly wind were described in the Supreme Court to-day when the opinio a of the Court on matters affecting the debenture-holders of Northern Tung Oil, Limited, was sought by an originating summons. The plaintiffs were the Northern Tung Oil, Limited, and John Howard Barnett, public accountant, of Wellington, and Gilbert G'onboy Beckett, secretary, secretary of the Wellington receivers for the Gebentureholdcrs of the company, and the defendants were Leo Blake, manufacturer, Wellington, and Robert Steven Johnson, company director, Wellington, representatives as a class of the applicants for the debentures who had not at November 15, 1934, completed their payments of the purchase money.

Mr. Justice Smith was on the Bench. Mr. M. O. Barnett appeared for the plaintiffs, Mr. J. T. Cleary for the firstnamed defendant, and Mr. E. P. Hay for the second-named defendant.

Mr. Barnett said the company had j not deliberately evaded its obligations j in any way. The growth in the early stages was quite amazing. Everything went quite well. There was no complaint with the company or the trustees in the way they carried on, but ultimately a cold southerly wind wiped the whole plantation out practically in one night. Company Could Not Go On The company in that stage was in a position where it could not go on to the market and sell more debentures, because it could not represent that it would be a success, and there were insufficient funds to start afresh. The j trustees for the debenture-holders then appointed receivers At the time the receivers were appointed the debenture-holders fell into three classes: (a) Those who had paid up in full: (b) those who had paid up in instalments so as not to be in default at the time the receivers were appointed; (c) those who were in arrears. It was not yet known exactly what would be available for distribution, as so far the land had not been sold. The problem was whether the fully-paid de-benture-holders only were to participate. If that was the case, the dividends would be much greater. Some holders had paid so much that if they knew the dividend it might pay them to pay the balance and get more back in dividends, but others had paid so little that if they paid up they would lose.

Counsel's general submission was that only those who had paid up fully should participate in the dividends. An alternative submission was that tho debenture-holder who had paid up his instalments in full until the "receivers tvere appointed should be entitled to participate. Eventual Winding-up In reply to a question by His Honor Mr. Barnett said the company had not been wound up. Receivers had been appointed, but nothing was being done at present. His Honor: It could be struck off the register then ? Mr. Barnett: It could and eventually will be, of course. It was contended by Mr. Cleary that there was a contract between the company and the applicants as a body. He claimed there was a total failure of consideration, thus making the contract unenforceable by the company against the applicants" for the debentures. Mr. Hay's argument was based on the contention that the documents of agreement constituted a debenture on the express wording of the trust deed All moneys in the hands of the receivers after the payment of the prior charges provided for became distributable among the debenture-holders in proportion to the moneys paid up on each debenture. The Court reserved its decision.