NEWSPAPER RUN

Otago Daily Times, Issue 26176, 12 June 1946, Page 7

NEWSPAPER RUN

QUESTION OF GOODWILL CASE BEFORE COMMITTEE

The value to be placed on a newspaper and periodical delivery run was the question at issue : in a case which came before the Otago Land Sales Committee—Messrs W. M. Taylor (deputy chairman), D. J. Ross and E. Sincock—at its sitting yesterday. The case concerned an application by Frank Orwin Hilgendorf for the transfer to Charles Owen Stanley Stratton of a shop and dwelling, part allotment 12, township of West Mosgiel, at a price of £2400 (land and buildings £1175 and goodwill £1225). Mr H. P. Hartstonge appeared for both parties and Mr J. R. Hampton for the Crown. At the outset Mr Hampton explained that the vendor had agreed to the valuation of the land and buildings at £1025 in lieu of £1175. This, he said, left only the question of goodwill to be considered. Applicant’s Evidence The applicant, in evidence, said he had purchased the property, together with the goodwill of the newspaper and periodical delivery run for a total sum of £IBSO in August, 1933. There had been a substantial increase in the number of papers sold since that time. Witness based the goodwill of the Daily Times run at 25s a paper, which at 716 papers amounted to £895. He had effected improvements to the freehold property amounting to approximately £270. “Since I purchased the business in 1933,” witness continued, “ the paper deliveries have shown an almost continuous upward trend in all the main lines, the Daily Times increasing from 519 copies a day to 716.” Witness considered that the run was more valuable than a similar run in the city because it was compact and level, and fewer boys were required. In addition to the paper deliveries there was a small shop trade, and this should improve materially when supplies became available. ~ „ . . Francis Adam Hunter said that in March last he sold a Daily Times run of 820 papers for £950, which amounted to £1 3s 2d a paper. The run was situated in the St. Kilda. Musselburgh, and South Dunedin areas and comprised the Daily Times only. He had employed eight boys. Crown’s Contentions

Mr Hampton said it was obvious that the goodwill for the shop would be negligible, and he contended that the goodwill asked in respect to the newspaper run was excessive. It had been advanced on behalf of the applicant that the large amount asked for goodwill was justified because Mosgiel was a growing district, but the purchaser should not be asked to pay for future goodwill on the assumption that Mosgiel was likely to expand still further. Mr Hartstonge submitted that a newspaper run was more valuable in Mosgiel than one of a similar size in the city as the latter would be more scattered, and in the circumstances 25s a paper could hardly be considered excessive. Since the property was last sold in 1933 values had increased considerably, and that price would give some idea of what must have been allowed for goodwill then. Reductions in Price The committee granted the application on condition that the purchase price was fixed at £2050 (land and buildings £1025 and goodwill £1025) in lieu of the contract price.