CHALLENGE TO MORTGAGE

Poverty Bay Herald, Volume LXIII, Issue 19126, 22 September 1936, Page 5

CHALLENGE TO MORTGAGE

REDWOOD FORESTS CO I

TRANSFER OF LANDS

DIRECTOR’S OPPOSITION

(Per Press Association.) AUCKLAND, this day

Evidence in the proceedings taken by the trustees for debenture holders o» New Zealand' Redwood Forests Limited, was completed in the Supreme Court yesterday when the principal evidence for the defence was given by Martin 11. Hampson. solicitor, of Rotorua. The plaintiffs are T. 11. Dawson and L. Knight, as trustees for the deben-ture-holders of New Zealand Redwood Forests, Limited, and T. E. .lones, ol Dargaville, one of the debenture-holders. The defendants are Sterling Investments Company (New Zealand), Limited, m liquidation, and Wynwood Investments, Limited, and the National Investment Company of Queensland Proprietary, Limited. The action was brought by the plaintiffs for the purpose of having declared invalid a mortgage of £7500, which was given in. April, 1931, by New Zealand Redwood Forests, Limited, to Kotahi Lands. Limited, and on subsequent dates was transferred to various other companies. CONTROL OF 22,000 ACRES The witness Hampson described events leading to the formation of the Edgecumbe Company and its control of 22,000 acres of land. He said that negotiations began in 1919, and up till 1925 they cost, him about £2OOO. J- W. S. McArthur joined him in 1922. The witness proceeded to outline tinaffairs of the Redwood company, of which he became a director at McArthur’s request in 1929. In September of 1930, lie said, the financial position was one of extreme gravity, and the debenture holders scattered throughout the world had only the directors on whom to rely. If the trees were not planted out, they would become a total loss, and the company would have to go into liquidation. A substantial number of debenture holders would have got back a small portion of their money, but the majority would have lost il all. The only solution was to find money to plant trees. The Edgecumbe company agreed to the transfer of 20C0 acres to the Redwood Company, taking no security, and a deed was executed by both companies. 'That was concerning the 2000 acres in respect of which the £7500 mortgage was: now registered. The witness said that he protested against the sale of the Matahina block at £1 15s an acre, but was over-ruled by McArthur and Wiseman. SALE BELOW VALUE Mr. Barrowclougli, counsel for the plaintiffs, said that it Hampson had protested in. this matter, involving the loss of £44,000, he would certainly have expected his dissent to bo reeoitlcd somewhere in the minutes. Answering Mr. Burrowclough, the witness tkiid he believed the land was worth £3 15s, but his co-directors sold it for £1 15s against his wishes. . “I was responsible for forming the Queensland Investment Coinpany, said the witness. Mr. Barrowclougli: Was it formed to prevent the New Zealand Government from obtaining possession of the assets? The witness: Definitely. It was, in my opinion, the only manner in which the question of the ownership of the Wynwood assets could be tested by the court I '. Mr. Barrowclougli: Am I right in my assumption that the Queensland company is McArthur* The witness; You are entirely wrong. What did McArthur put into the company?—Not a match.

I know he was not a shareholder, but what did ho give to the company? Of course the company was formed for the express purpose of taking over his assets. What did it take over from him? I am not sure. I never attended- the directors’ meetings.

The court adjourned to hear legal argument on September 30.