EAST COAST PETROLEUM CO.

Dominion, Volume 5, Issue 1427, 30 April 1912, Page 3

EAST COAST PETROLEUM CO.

ITS EARLY HISTORY.

UNFOLDED IN APPEAL COURT,

TRUST AGREEMENT,

A lengthy case that seems likely to occupy the attention of tho CouTt of Appeal for two or 'three days was commenced late yesterday afternoon, before the Chief Justico (Sir liobert Stout), Mr. Justice Williams, and Mr. Justice Cooper. The parties were William Lissaut Clayton, land agent, of Gisborne (appellant),* and William Knox Chambers, sheepfarmer, of Gisborne, and Geo. Hutchison, barrister, of Wanganui, liquidator for tho East Coast Petroleum Company, Ltd. (respondents).

Sir John Findlny. K.C., with Mr. A. K. Jloek, appeared for the appelant; Mr. C. 1". Skorrett, K.C., with Mr. (.. B. Jlorison, appeared for the respondents; while Mr. Geo. Hutchison appeared in person, but stated that lie did uot propose to take part in the argument. In the original action, Chambers, on behalf of himself and all other shareholders, proceeded against Clayton and Hutchison, asking the Court to declare that a trust agreement made between Clayton, Chambers, Hutchison, and 11. J. Finn (who had since retired) had not been rescinded. The action was heard in ,tho Supreme Court at Gisborne before Mr. Justice Chapman. In tho statement of claim it was set out that in 1900, Chambers, Clayton, Hutchison, and Finn formed a syndicate to acquire certain concessions and rights to bore for petroleum oil and other minerals. 'On June 10, 100G, these four persons entered into an agreement by which it was mutually arranged that 'all concessions, obtained in the name of any of them, should be held jointly in trust for lire four of them, and in proportion to the funds respectively advanced. Finn withdrew from the syndicate on January 23, 1907, as he did not v;isli to advance any money. About June 1, 190", the three remaining members of the syndicate formed the East Coast Petroleum Company, with a capital of £20,000,. divided into 20,000 shares of .£1 each. It was agreed that Hutchison should act as managing director of the company and Clayton mid Chambers as directors, all being considered to have a certain number of fully paid-up shares, while the balance were to bo issued to the public. In ISOB or 1009, Hutchison (so tho claim alleged) purported to give to Clayton an option to purchase the concessions! and rights and other property of the company in consideration of onefifth of the consideration (less brokerage), which' Clayton might receivo upon the resale by him of these concessions and of other rights and property. The option expired without having been accepted, and Hutchison purported to extend it. Subsequently Clayton entered into a contract for the sale of the concessions, etc., to certain persons in England. As consideration ho received some ,£50,000, payable in 500,000 fully paid-up shares of the New Zealand Oilfields, Ltd., which company has a capital of =£200,000 divided into 2,000,000 ordinary shares of 2s. each. In April, 1910, Clayton claimed that the trust agreement had been rescinded, and that therefore he had been entitled to acquire, and had acquired for his own use and benefit, certain concessions apart from those held by the East Coast Petroleum Company, and which he hnd disposed of along with those of the company, lie therefore declared that the company was only entitled to receive £9000, or about 96,000 shares of the New Zealand Oilfields, Ltd. Chambers alleged that the trust agreement of June, 1906, had never been rescinded or determined, but always subsisted, and that Clayton had, in fraud of the East Coast Petroleum Company, and in bronch of his duty as director, sold and transferred, the - property'of the company, and, having received consideration therefor, must account to the company for the proceeds. Chambers asked the Court to declare that Clayton held the £50,000 in shares in trust for Chambers, Hutchison and Clayton, that he must transfer to them, and that the partnership must bo wound up and accounts taken.

in defence, Clayton contended that the trust agreement had been determined upon the withdrawal of Finn in January, 1907. Hutchison spent considerable time and money on behalf of the company in an endeavour to place in London 10,000 shares set apart for that purpose, but, owing to the unsatisfactory state of the money market at the time, no arrangement such as was contemplated could l>e made. In the meantime, Clayton had acquired concessions for his own use and benefit, and opened negotiations with a companypromoter, then about to proceed' to England, with a view to Moating a company to purchase these concessions. Clayton thereupon suggested to Hutchison that, the opportunity-might prove a desirable one for disposing also of the East Const Petroleum Company's concessions. Hence it came about that Clayton received the option over tho company's property, and the final result was thebaic of tho combined concessions to the New Zealand Oilfields, Ltd. Clayton denied that ho had acted in fraud of the company, or in breach of his duty as director. Mr. Justice Chapman, in the course of his judgment, said the most important question was whether the agreement had been rescinded. He hold that it had not been set aside, and must stand, and that the judgment must follow in favour of Chambers. His Honour, however, remarked that he could not help thinking that at some time Clayton, had formed the opinion that he was working for himself, and that ho had done more than his share of work, as ho was not really bound to work for the company. "If, 1 ' added his Honour, "any suggestion can bo made by him to the effect that ho ought to receive some remuneration, it may be considered." From this decision, Clayton now appealed, on the grounds that it was erroneous in law, and that tho decision on the. facts was wrong, and against the weight of evidence. Legal argument had not proceeded far when the Court adjourned until this morning. INSURANCE. AN IMPORTANT APPEAL. Argument was concluded in the Court of Appeal yesterday in the case of Dalgety and Co., Ltd. v. the Solicitor-Gene-ral. The Court comprised tho Chief Justice (Sir Robert Stout), Mr. Justice Williams, Mr. Justice Denniston, and Mr. Justice Cooper. Particulars of tho case were published on Saturday. The appeal was from a decision of Mr. Justice Sim, who held that Lloyds Underwriters were carrying on tho business of insurance in New Zealand (through the agency of Dalgety and Co., Ltd.), in such manner as to bring them within the scope of Part Til of the Foreign Insurance Companies' Deposits Act, 1008, and wore, therefore, liable to- mako a deposit of ,£IO,OOO. Mr. C. P. Skcrrctt, K.C., with Mr. C. 15. Morison, appeared for Ihc appellants, and the Solicitor-General (Mr. ,1. AV. Snlmond) appeared in person. Legal argument did not conclude until nearly i p.m., when tho Court reserved decision.

CORLEY AND CORLEY. At 10 o'clock this morning the Court of Appeal will deliver reserved judgment in the case of C'orlcy and others' v. C'orlcy and another—an originating summons removed from tho Supreme Court, Auckland, into the Court of Appeal for the purpose of obtaining interpretation of a clause in tho will of James Corlcy, deceased.