CLUTHA LEADER

Southland Times, Issue 20949, 5 December 1929, Page 6

CLUTHA LEADER

SALE OF BUSINESS SUPREME COURT ACTION RESUMED ’ CASE FOR THE DEFENCE (Special to the Times.) Dunedin, December 4. The hearing was resumed this morning in the Supreme Court before Mr Justice Kennedy of the case in which a claim was made for the specific performance of an agreement to sell and for damages in respect to the sale of the newspaper and printing business at Balclutha known as the Clutha Leader Proprietary. Plaintiff was William Twaddell, stock agent, of Balclutha, and the defendants were Albert Eden Russell, journalist, of Balclutha, Robert James Millis, linotype operator, of Balclutha, and Robert Radcliffe McNaughton, a printer, of Balclutha. The claim made by the plaintiff was for the specific performance of an agreement to sell, and for £5OO damages, in the alternative the return of the deposit of £6BO and £l5OO damages, in further alternative that the agreement be rectified so as to express the true agreement between the plaintiff and the defendants. Mr A. T. Donnelly (Christchurch), and Mr F. B. Adams appeared for the plaintiff, Mr W. G. Hay for the defendant Russell, Mr R. S. Bremner for the defendant Millis and Mr C. L. Calvert for the defendant McNaughton. In opening for the defence this morning, Mr Calvert submitted that the plaintiff must be non-suited. The case, he said, came under the class where a professed agent was acting for a non-existing principal. A company subsequently formed could not rectify a contract professed to be made before its incorporation. The plaintiff, it was submitted, entered into the contract. as agent for a non-existent principal, and all the dealings of all the parties were on the basis of dealing with a non-existent principal. If there was any rectification of the contract, it was a rectification impossible at law. Plaintiff did not come into the proceedings as plaintiff. His name was never mentioned until the alleged contract had been repudiated.

His Honour said he would reserve his decision on the question of a non-suit.

Mr Calvert continuing his address said the whole of the plaintiff’s case was based on an entire misconception of what took place at the auction sale. The supposed condition on which his pleadings were based was that McNaughton objected to sign the restrictive covenant, the covenant which stipulated that the partners were not to enter into business within a certain radius of Balclutha for a certain number of years. The position was that McNaughton objected to a clause of the conditions of sale. In its entirety it was a joint and several covenant and McNaughton had all along said he would not sign the clause of the agreement. The keynote of the whole position was that Russell, Mr Walter (his solicitor) and Mr Kelly (solicitor) were convinced that the objection made by McNaughton to the clause on the day of the sale was too late to be effective. They were convinced that McNaughton could be compelled to sign. Accordingly, the sale was carried on without McNaughton’s authority. It was positively forbidden. Evidence would be tendered to show that McNaughton had never at any time agreed to sign the deed of covenant, but on the contrary expressly forbade his solicitor to have anything to do with any transaction that would prevent him from carrying on business afterwards in Balclutha.

Touching on the subject of the farewell article written by Russell to his readers, Mr Calvert said it was suggested that when Russell wrote in those terms he knew all along that the transaction was to be repudiated. Learned' counsel submitted that no editor would make himself a public laughing stock by writing such an article when he knew that in a day or two the sale of the paper would be repudiated, and that for months afterwards he would still be in the same chair. When Russell wrote the article, he believed, and so did his solicitor, that the paper would change hands before the next issue. Then it was found that McNaughton could not be compelled to sign the covenant. When Russell found that McNaughton had escaped, he himself declined to sign it. The present position was the same as it was on August 31 when repudiation was made. If the documents and cheque were now tendered without any deed of covenant, Mr Russell would sign and complete the transaction.

Mr Adams: That is the first we have heard of it.

Mr Calvert went on to say that the defence was that there was not, and never had been, any completed contract. The parties had muddled through in the hope that somehow the tangle would straighten itself out and that an agreement would be reached. That however had never come about. He had indicated the terms on which the defendants were still prepared to settle.

Evidence was then called for the defence and the Court rose at 5.30 p.m.