McARTHUR CASE

Evening Post, Volume CXXIII, Issue 136, 10 June 1937, Page 11

McARTHUR CASE

PUBLIC TRUSTEE ACTS

BREACH OF TRUST ALLEGED

CLAIM FOR £20,965

Breaches of trust while a director of the Investment Executive Trust of New Zealand, Ltd., now in liquidation, were alleged against John William Shaw McArthur, company director, of Wellington, in the Supreme Court today by the Public Trustee, who sought a declaration of misfeasance or breach of trust, and a declaration that McArthur was liable to contribute £20,965 to the assets of the company as compensation for the misfeasance.

The summons was heard by the Chief Justice (Sir Michael Myers).

Mr. E. P. Hay appeared for the Public Trustee, and Mr. P. B. Cooke, K.C., with him Mr. R. E. Tripe, for McArthur. ' '■ -

The evidence was by way of affidavits. . - .

The Public Trustee asked for a declaration that McArthur had .been guilty of the following two breaches of trust: —

That McArthur having obtained, an allotment to himself of 16,750 ordinary shares of 2s 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 a consideration purporting to be money paid to him out of the funds of the company, for services 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.

That McArthur, having obtained an allotment to himself of 193,400 ordinary shares of 2s 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 breach of his duty, accepting on behalf of the company as the ostensible consideration, therefore certain debentures held by him in the 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 the. Investment Executive Trust, a breach of trust-that made him accountable to the company for the debentures. A. further . declaration, was sought that McArthur was liable to contribute £20,965 to the assets of the company as compensation for. the breach of tryst, and the Court was asked to order .him. 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 the 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, arid that 'McArthur was liable to be placed on the "A" list of contributories of the company, in respect of them.

Argument is proceeding.