VACCINE FORMULAE

Taranaki Daily News, 17 August 1935, Page 22 (Supplement)

VACCINE FORMULAE

WAS THERE AGREEMENT?

COMPANY’S QUICK LIQUIDATION.

CASE HEARD AT SUPREME COURT.

Whether or not money was due under an agreement signed on behalf of a company before incorporation and subsequently recognised, it was alleged, by the circumstances and conduct displayed, was argued in the Supreme Court at New Plymouth yesterday before His Honour the Chief Justice, Sir Michael Myers. The official assignee in bankruptcy of the property of James Hill Motion, represented by Mr. R. H. Quilliam, claimed £467 9s allegedly due under an agreement with New Zealand Sero-Vaccines Limited (in liquidation), for which Mr. W. Middleton appeared. The case was adjourned till this morning, when Mr. Quilliam will conclude his argument. The company contended that it had been acting under a misapprehension thsCf the preliminary contract made between P. S. Carroll, the secretary, and Hill Motion was binding on the company. The company, which was formed on July 25, 1934, and went into liquidation on October 26, 1934, had as its principal object the acquiring from Hill Motion of the technique of certain sera and vaccines developed by him. There was an agreement, it was alleged, for the payment of £5OO for the rights and processes and for Hill Motion to be managing director at £3OO a year. It was denied by the defendant company that there was any contract, the preliminary agreement having been made before incorporation, but it was submitted that the contract was to be inferred from certain circumstances and conduct. The claim of £467 9s was made up by three causes of action. A sum of £lOO and later another sum of £5O had been paid by the company and it was the remaining £350 that was sued for. Hill Motion had been paid his wages for two months, ’July and August, and £5O was claimed for wages for September and October. The further £69 7s was claimed under a debtor and creditor account. •

The preliminary business of the company was done before incorporation, but at the meeting at which the company was wound up a resolution was passed and sealed with the seal of the company, which it was submitted recognised the preliminary agreement. James Hill Motion, veterinary surgeon, gave evidence that he was paid salary for July and August and received payments of £lOO and £5O under the agreement. He also explained the charge he had made for the care of 30 small dogs purchased by the company. He had kept the dogs till November, when under instructions from the liquidator he had destroyed them. Relying on the agreement he had negotiated for a farm property with a compulsory purchase clause. To Mr. Middleton Hill Motion said the technique and formulae were' not delivered to the company. He could not remember being asked for them by the secretary of the company, although the chairman of directors had inquired. He had explained that the details of the methods of the preparation of the vaccine and sera had to be adjusted to New Zealand conditions and to the facilities the company could provide. If he had died, Hill Motion told His Honour, there was no one else in New Z-aland who could have adopted the processes of manufacture. v

There had also been a discussion on the payment foi* the upkeep of the dogs bought for distemper experiments, said Hill Motion to Mr. Middleton. He had asked the directors to fix the price and they had refused point blank to pay anything. ' His care of the dogs was as an individual and was not covered by the £25 a ‘nionth paid for his bacteriological services. He admitted saying on one occasion he was finished with the company.

The defence submitted the preliminary agreement had never been adopted by the company in that no new agreement had been made, said Mr. Middleton. The matter devolved mainly on questions of’ law.

Patrick Stephen Carroll, public accountant and company secretary, New Plymouth, interim secretary of the defendant company, said the minutes were correct records of what took place at the meeting. He had made payments of £lOO and £5O to Hill Motion under the instructions of the executive committee as part of his consideration of £5OO for the formulae. For the October 26 meeting Hill Motion was not asked to be present. The common seal was by resolution attached to the preliminary agreement. Carroll was cross-examined by Mr. Quilliam and said he did not consider it necessary for the company to adopt the agreement. The resolution of October 26 adopting the agreement between Hill Motion and himself and releasing him from responsibility was passed under a misapprehension. There had been a change in the solicitors, and although the company should have been registered by June 22 it was not. He could not give any reason why the resolution should have been passed. His Honour: So you did not understand what you were doing?—lt would appear so, sir.

Why did you do this work, which was the work of a lawyer • rather than an accountant? —I understand it is done by accountants.

His Honour: It was not in my day. Mr. Quilliam: Nor to-day. Did you understand the importance of the company assuming it was bound by the preliminary agreement?—Yes.

To His Honour Carroll said he did not appreciate the importance of the position on June 22.

Arthur Squire Allen, company secretary, New Plymouth, chairman of directors of the liquidated company, said he thought the resolution of June 22 was in order. On September 28 it was established to the satisfaction of the directors, excluding Hill Motion, that it would be impossible for the company to carry on, as absolute trust and confidence in Hill Motion was essential.

To Mr. Quilliam Allen said he considered Hill Motion was bound by the contract to supply the formulae and to work for the company as its bacteriologist. An attempt was made in June to vary the term of the contract from three years to five, said Allen, it being thought that would be beneficial. He had thought any steps regarding incorporation had been taken by June 22. His Honour: Whose brilliant idea was it on October 26 to affix the common seal?—l proposed it, but I don’t know whose suggestion it was. Everything was up in the air. His Honour: It seemed to be up in the air on June 22.

William Victor Mclntyre, farmer, Inglewood, giying evidence as an expert on dogs, said he had 15 dogs which cost him Is each a month to feed. They required half an hour a day to feed and keep clean and this cost was to keep them in the best of order. The charge of £7l for looking after 30 young dogs for two months was unreasonable .

By the agreement of July 16 Hill Motion was required to deliver the formula, said Mr. Middleton; it was not to be kept till demanded. The formulae had never been handed over.

Two questions arose: (1) Did the company ever become validly bound to Hill Motion by agreement, and (2) if the company did become so bound was it an answer for the company to say it had never received the formulae? Mr. Middleton referred to the payments totalling £l5O to Hill Motion and suggested that should Mr. Quilliam fail it might be that the liquidator should take steps to recover the £l5O from the directors who authorised its payment. There were several specific acts by which he was forced, said Mr. Middleton, to admit the company was contractually bound.

His Honour: By what contract? —The preliminary agreement as varied. ® He would submit later, however, said Mr. Middleton, that the affixing of the seal in the absence of Hill Motion did not constitute a contract. He quoted several authorities to support his submission that there was no new contract. Later Mr. Middleton made the point that Hill Motion had been given time to produce the formulae, which had not finally been offered to the liquidator till March of this year. It was also noticeable that there was no claim for wrongful dismissal, which would have had to have been based on some contract or other. So far as the third course of action was concerned there was only one item in dispute. A sum of £7l was the claim; the company suggested 30s was sufficient.