ROAD PAVING PROCESS

Otago Daily Times, Issue 23364, 2 December 1937, Page 18

ROAD PAVING PROCESS

SCOTTISH COMPANY’S CLAIM

SUIT TO RECOVER £3OOO

EVIDENCE OF THE DEFENDANT

(Per United Press Association) >

CHRISTCHURCH, Dec. 1. Road-paving companies were like gold mining companies, in that failures were commonly attributable to an over-estimate of the returns and an under-estimate of the, capital required, said Mr A. T. Donnelly in the Supreme Court to-day, when opening the defence of Archibald Donald Paterson, a civil engineer, of Christchurch, against a claim by a Scottish firm for £ 3000. The amount was claimed by the plaintiff company, Honing Road Surfaces, Ltd., of Edinburgh, for an alleged breach of contract by Paterson, who, it was stated, had ruined the company’s prospects by returning to New Zealand permanently before his two years’ engagement was ended. “It is a commonplace that such companies generally fail for two reasons: First, because of the optimism of the promoters not being justified by results; and secondly, because of a lack of capital through an under-estimate of what is .required," Mr Donnelly said. “ This company failed for both of these reasons, chiefly the second.” There would be evidence, Mr Donnelly continued, that the directors had begun operations with insufficient capital. Paterson’s dominant purpose in returning to New Zealand was to persuade British Pavements, Ltd., to provide more capital. When that hope vanished there was no chance of carrying on. For all practical purposes the company was dead, and Paterson was therefore justified in regarding himself as free from any liability under the service agreement. If he had returned to Britain he might have been destitute.

Mr Justice Northcroft: Paterson’s trouble was that he had come so far away that it was bad business to go to the other end of the world to investigate the affairs of the company. A meeting with two directors of • the Scottish firm, Messrs Scott, and Box, at the Liberal Club in London, was described by Paterson when he was called as a witness by Mr Donnelly. He had told them that at least £15,000 was needed to begin operations, and they said they could easily raise the amount. Plant was bought for £IOOO and witness was to serve as manager for two years at £750 a year. All the £1250 capital actually put up had been expended on plant and the only working capital ever used by the company was supplied by witness. Paterson was still in the witness box when the court adjourned till to-morrow.