FOUND GUILTY

Timaru Herald, Volume CXLIII, Issue 20829, 10 September 1937, Page 13

FOUND GUILTY

BREACHES OF TRUST JUDGMENT IN McARTHUR CASE By Telegraph—Press Association WELLLINGTON, September 9. A finding that John William Shaw McArthur, company director, of Wellington, had been guilty of breaches of trust, or misfeasance, while a director of Investment Executive Trust of New Zealand, Ltd., now in liquidation, and was therefore liable to account for £19,340 to the assets of the company, was reached by the Chief Justice (Sir Michael Myers) in a reserved judgment delivered in the Supreme Court to-day. The judgment, however, was deferred to allow counsel for McArthur to raise further contentions if desired. On one of the breaches Of trust alleged, his Honour found for McArthur. The following declarations were sought by the Public Trustee:— (1) That McArthur, having obtained an allotment to himself of 16,750 ordinary shares of 2/- each in the capital of the company on February 25, 1931, was a party to procuring the issue to himself of 16,250 of the shares as fully paid for consideration, purporting to be money paid to him out of the funds of the company for service rendered by him to the company, but being in fact an invalid and improper consideration designed to conceal the true nature of the transaction which, in the circumstances, represented a gift of 16,250 shares from the company to him. (2) That McArthur, having obtained an allotment to himself of 193,400 ordinary shares of 2/- each in the capital of the company on or before May 26, 1933, was a party to procuring the issue of the shares to himself as fully paid and in a breach of his duty in accepting on behalf of the company, as the ostensible consideration therefor, certain debentures held by him In British National Trust, Ltd., the circumstances of the issue of which either rendered such debentures an improper and illusory consideration for the directors to accept for the shares, Instead of cash, or constituted such debentures an asset acquired by him through the misuse and by the utilisation of the funds of Investment Executive Trust, a breach of trust that made him accountable to the company for the debentures. (3) That McArthur was liable to contribute £20,965 to the assets of the company as compensation for a breach of trust, and the Court was asked to order McArthur to pay that sum or whatever the Court directed to the Public Trustee as liquidator of the company.

Alternatively the Court was asked to declare that 38,080 shares in the company (the balance of a parcel of 193,400 shares still remaining in McArthur’s name) credited in the company’s books as fully paid up, were contributing shares, on which no part of the capital represented by them had been paid, and that McArthur was liable to be placed on the “A” list of contributories of the company in respect of them.