DOMINION CEMENT CO.

Dominion, Volume 11, Issue 269, 2 August 1918, Page 7

DOMINION CEMENT CO.

HEARING OF PETITION CONCLUDED

DECISION RESERVED By Telcgrnph-Prcss Association Auckland, August 1. The hearing of I.ho petition of certain shareholders to have tlio Dominion Portland Cement Company, Limited, iu voluntary liquidation, cumpuUorily wound up, was concluded at tho Supremo Court to-day. Mr. C. P. Skerrett, K.C., replied on ueliall of tho petitioners. Dealing with Mr. iiced's argument* against the granting of the contributors' petitiou for tho supoiwssion of voluntary liquidation when fraud was not alleged. Mr. Skerictt contended that tho position was that of creditors, because tho petitioners included a number of holders ot the final issuo of debentures. These peopio had bums in repayment tendered to them by the earlier debenture-holders on July 15, out tho company had not discharged flicir debt, nor had it in law discharged :tts debt to tho bank and other persons ivhu had advanced it money. Ho claimed thnt the tender to the uebenture-nold-i-rs could not prevent them from still ■being treated as the company's creditors. .Dealing with tho facts, Mr. Skerrett said that subsequent to the liquidation no xneehug ot shareholders was called to consider what should bo done with tho assets. Mr. Purdie, in his conference with Ciiiitorbury shareholders, assured them positively that if they took tip new tiobeulures tho earlier debenture-holders would not foreclose. This statement was forwarded to Mr. Gerard, chairman of directors, who never at any time- disEouted from it. In December, Mr. Gerard, as receiver, took possession of tho plant and assets on behalf of the dc-uonture-hoklors, and only four days later, Sunday intervening, tho sale was advertised. The evidence that the negotiations for amalgamation with other two cement companies had leached an advanced stato was, ho submitted, sufficient grounds for investigating tlio circumstances leading up to the subsequent salo of the assets. No explanation had been givcu for the fact that tho directors embarked on a usw scheme, • and incurred liabilities for JiIiOO.OOO with a capital of only JiIOO.COO without consulting the shareholders. Tho contract for tho supply of electric power which Mr. Campbell alleged had bean repudiated by tho Whangarci Borough Council was only an offer under wal. Tho directors 'might have been risking their own capital, but they had no right to risk that of tho ordinary shareholders in.this way. When they embarked on tho new schenio the share issue had failed. Out of 250,000 shares <less 60,000 paid-up shares), only 108,000 had been issued. The only method of fully investigating the management was a compulsory winding-up by tlio Official Assignee as official liquidator. This would bo a long and laborious process, involving an investigation of records and accounts. Thn alternative courses under sections 226 and 251 of the Cornpa uics Act, suggested by Mr. Reed, were entirely inadequate for. (ho purpose, and would bo futile. Referring to tho arguments of Mr. Campbell, Mr. Skerrett said that fear of giving information to rival companies and encouraging pricetutting was no excuse for keeping-back information from the shareholders. If tho directors hud informed the share-' holders fully More embarking on the larger scheme, tho difficulty could never have arisen. Tho negligence with which this petitioners charged the directors was failure to use reasonable rare, and skill ns business men in a plain and cominonsensc proposition, whether they should embark upon a largo schemo with inBiitociont capital, and knowing thnt further sharo c-apital would Iμ unproenr--11',7J, 1 V Bply to llr - fere's claim that the debture-holders had come, out badly, Mr. Skerrett declared that they Jind received shares in the amalgamated company of a nominal value of ,£255,0C0, and that these shares were appreciating. J. nose of tho other two companies had appreciated to tiio extent of .£54,000 siiico the amalgamation—from 6s. Gd. to 10s. 6d. Mr. Reed: They aro not at par yet. Mr. Skerrett added that tfcero was Kill a legal liability by tho company to its creditors. Thn Court was asked to validate the salo, but' he submitted that the Court hud no jurisdiction to do so. J he salo would not bo invalidated or afiected by compulsory winding-jip. This would bo tho only tiling that would do nny good, because tho Official Assi"neo would have full power to investigate «nd would bring tho results to the l.'ourt. Th_e ■ mere supervision of tho present liquidation would be mom expensive, and would bo less satisfactory JJi many other respects. His Honour: Tho main difference would ljo that the liquidator would bo nut a statutory officer, but in a sc-nso ii stranger to the Court. His Honour reserved his decision.