SUPREME COURT

Dominion, Volume 9, Issue 2726, 22 March 1916, Page 9

SUPREME COURT

TAUPO TOTARA TIMBER COMPANY, LTD;

A scheme of nrrnugcniont, proposed under Section 2GO of tho Companies Act, tflOS, in connection with tho Taupo Totnra Timber Company, Ltd., and tho Wellington Industrial Development, Company, Ltd. (both in liquidation), which was objected to by certain deben-ture-holders, brought' under tho notice oN.ho Supremo Court, in tho form of a petition, formed tho subject or a reserved .judgment delivered by His Honour Mr. Justico Hnsking yesterday. Tho potifionor was Thomas Richard Moore, of Palmereton North, who held 25 debentures (nominal value £100 each), and who believed that the holders of G9 other debentures dissented from tho scheme of arrangement and approved of his petition. Mr. A. Gray, K.C., with him Mr. 11. Kennedy, appeared for tho petitioner, while Mr. C. P. Skerrett, K.C., with him Mr. C. H. Howard, appeared for the companies. From tho facts laid before tho Court, it appeared that in 1907 tho two companies issued a sorios of debentures oF £25 each, totalling £100,000, of which £88,81.5 is outstanding. They wero to bo redeemable in 1917. Tho debentures wero (secured over tho whole of tho assets of the company, except stock and uncalled capital. The cbiof assot of tho two companies was tho PutaruruMokai tramway, which, with rolling stock, was valued at £130,000. Tho assets of tho Taupo Totnra Company also included standing timber on Native lauds which wero vested in a separate company for the purpose of complying with the provisions of the Native Land Act in regard to aggregation. The other company had tho same shareholders as the Taupo Totara Timber Company, the officers and director.? wore tho same, and the assets (tho railway) wero the same, together with a largo tract of freehold land, of about 43,000 acres, containing standing bush. For somo time past the two companies wero engaged in endeavouring to get passed legislation giving them power to extend tho railway to Taupo, in tho belief that their profits would be increased by tho consequent extra traffic. That legislation was passed in 1914. Sinco then a resolution had been passed at a meeting of shareholders approving qf a scheme of arrangement under which a now -Taifpo Totara Timber Company was formed., The dissenting debentureholders did not attend the meeting at which the scheme was .agreed to, and the proceedings wero taken under Section 26 of the Companies Act, which gave power to appeal to the Court, and gave 1 the Court power to amend, vary, or confirm the scheme. In this instance, the Court was asked not to allow the scheme of arrangement to proceed unless tho dissenting debenture-holders were first paid off. In giving judgment His Honour held that appellants were entitled to somo modification. "Tho shareholders," hesaid, "see in it (the scheme) tho chance, if tho extension '(of tho tramway) proves a- success, of enhancing the valuo of their shares and recouping some of their lost capital. Those who are also deben-ture-holders would naturally support the I scheme. Tlioy have an inducement, but for the debonture-holders who are not also shareholders thero is none, not oven the Tumoral of an apprehension of default. I think, therefore, that this is a case where the interests of tho two classes of debenture-holders are not identical, and that the 'vote of tbo majority cannot be taken as indicative that tho soheme is for the advantage, or.is not to the disadvantage, of the minority, or is equally applicable to tho interests of all. ... In such circumstances, and in view of the continuous depletion of the timber, I think the debenture-holders who are not shareholders ought not to be subjected • to such a scheme. In their opposition to tho scheme there is nothing to show that the minority have acted otherwise than bona fide. I think, therefore, the 6cheme must bo amended to meet their case. I do not now order what tho amendment shall bo. beoause I think the parties should have an opportunity of considering whether they can agreo and of submitting their respective views. • I therefore adjourn the petition'for appeal for one month, so as to give the parties this opportunity, '* DISPUTE OVER A LAND SALE. In the aotion, S. Law and E. S. Law v. F. Staples and G. Lambert corn-

meiiced in ttio. Supreme Court on Friday last, Hte Honour the Chief Justice (Sir Robert Stout) delivered a reserved judg. mcnt yesterday morning. The, nntlon was one arising out o* tho purcliaao of a block of land near Shannon. The plaintiffs purchased the land from Staples (through an agent), Lambert being associated in the defence merely as the original owner. It was claimed by plaintiffs that the amount of land in grass was not as represented, and that the land would not' carry tho number of sheep represented. Plaintiffs sought rescission of the contract or in tho alternative £1000 The etc, fence claimed that any misrepresentation which may have occurred was innocent ?f intent, to mislead, and in fact' was not acted upon bv plaintiffs in making the purchase. His Honour w&s of opinion that misrepresentation had been made, tliat it was material, and that it induced tho 30utract. As to whether there was a warranty, His Honour deferred decision >n this point to allow legal argument to be heard. Decision was also deferred m the question as to whether there vas fraudulent misrepresentation en;itlmg the plaintiff to damages for de:eit,

At the hearing. Mr. H. B. Cooper, of Palmerston North, appeared on behalf of tho plaintiffs, Mr. T, Neave appeared foi; Lambert, and Mr. 0. 13. Morison, K..C, with him Mr. F. J. Courtney,. for Staples.