A BUSINESS DEAL.

Otago Daily Times, Issue 19107, 28 February 1924, Page 8

A BUSINESS DEAL.

ALLEGED MISREPRESENTATION. i CLAIM FOR RECOVERY OF £2500. flhlß DnITKO PaBSB Arbociatton.) AUCKLAND, February 27. The action arising out of the formation of a company known as Wairakei (Ltd.) was heard before Mr Justice Herdman and a jury of 12 at the Supreme Court, when the Hon. George Roy William McDonald, M.L.C., of Sydney, sought to recover the sum of £2500 from Arthur Cleave, publisher, of Auckland, plaintiff alleging the misrepresentation by Cleave alleging misrepresentation by Cleave in regard to 3000 £1 shares in Wairakei (Ltd.) The allegations by Mr M’Donald were that in 1918 Cleave, who was engaged in promoting the company, induced him to apply for 0000 shares by falsely representing (1) that the only remuneration the defendant was receiving in connection with the promotion was commission on the shares; (2) that defendant had no financial interest in the sale of the property; (3) that the Graham family, the then owners of the property had intimated that they would take shares to an amount representing the. greater proportion of the purchase -price ; (4) that the price of £50,000, at which the property was being sold, was the proper market price, and that no addition had been made thereto by way of “loading”; (5) that £50,000 represented such a value as would be accepted by a bank for the purpose of advances; (6) that James Rolleston, the then manager of the Grand Hotel, Auckland, had agreed to become the manager of the Wairakei Hotel.

The defence was a complete denial of the misrepresentation alleged. _ Opening the case for the plaintiff, Mr Northcroft said that instead of giving out that he was the vendor of tire property at £50,000, the defendant got a special partnership agreement between himself and Mrs Grierson. Under that document he was able to say that,, the Company was buying the property at £50,000 from the Craham family. Had he said he was forming a company to buy the Wairakei from himself there would have been some close inquiry as to ms property. The plaintiff’s contention was that the scheme was designed deliberately by entering into a deed of partnersiup with Mrs Grierson, which was really an option, and one cunningly devised to conceal the fact that he was buying the property and reselling it. The plaintiff was in the box for several hours giving lengthy evidence in support of, his claim. Mrs Jane/Stevenson Grierson also gave evidence.

.Ur Towle, opening for the defence, said they had had Cleave painted in the darkest colours, and it had been stated that he made £26,000 out of the transaction. What were the facts? He obtained the option during the war when company promotion was a matter of utmoslffdifficulty. The actual profit he made was £2464. The difference between the purchase price from Mrs Grierson and the sale price to the company was admittedly £26,000, but the expenses' had been very heavy indeed. In many cases to help the flotation he had given shares as a bonus. The jury must find whether there was representation that be was making no profit. The plaintiff, he contended, had all the'information before him. Cleave would deny that he stated that Rolleston would take the management of the hotel. The plaintiff had had manv letters showing how things were going, but he did nothing. Evidence would be given to show that many shares had been transferred from December, 1919, to May, 1922, and none was sold below £1 during that time. Plaintiff could have sold his shares at full value. The case was adjourned.