A WEST COAST MILL.

Hokitika Guardian, 14 November 1922, Page 1

A WEST COAST MILL.

LITIGATION OVISR SALE. (“ Lyttelton Times.”) The sale of a sawmill about five miles east of Hokitika, and'the affairs of a small company, were lire subject of a case in the Supreme; fcourt before his Honour Mr Justice Adams, at Christchurch on Thursday. ,’.The plaintiff was Thomas John Vincent Stopforth, of Hokitika,- carrier, arid the defendants

were the Kanieri Salymilling Company and David Patrick Stuart, of Hokitika, and John Chapman arid George Herbert Chapman, of Ross, sawmillers. The statement of claim set out that the company was a private one with only four shareholder), plaintiff and the three defendants,Call of whom were directors. It was incorporated with a

capital of £2OOO in \£l shares, fully paid up, plaintiff holding a quarter of them and defendants the rest in equal proportion. When all four were pre-

sent, it was decided to sell the ■company’s property at Ivanieri at auction and divide the proceeds with a view to

liquidation. No decision was come to as to the reserve on fee property. Later plaintiff proposed a reserve of £28,000, but defendants rejected that proposal. The property was offered at public auction in three lots, and was purported to be sold to D. T. IV. Heighten,’ Christchurch, accountant, for £15,100. Plaintiff claimed that the prices were very considerably below the real value. Heighten, the statementset out, was the. nominee or dummy or agent of the defendants, who were the real purchasers, and they used their position as directors and trustees of the company to sell the property to themselves at a gross undervalue. As the

property was worth £28,000, the share-

holders L the sale was completed, would Iqsc £12,000. The contract of sale to 1 Heighten was ultra vires. Plaintiff asked for an injunction to restrain the ■

company from carrying the sale to Heighten into effect, and to restrain • defendants from further steps in respect to a sale. Plaintiff also asked for a declaration that defendants were ■ no longer directors, ns they had vacated their offices hv theiy conduct.

Defendants argued that the price at which the property was sold was its full value, and that all the directors approved of the sale. In an amended statement they said that in consequence of plaintiff’s objections to the legality and propriety of the sale, a meeting of the shareholders on .September 30 last decided that it should he annulled, and it was annulled. In a counter-claim, defendants asked that a contract between plaintiff and the company, by which the company agreed to sell timber at Maeklev’s and Joy’s for £1,500 should he rescinded, as plaintiff had not completed that contract. Tl© counter-! claim later was withdrawn. j

Mr O. T. ,T. Alpers appeared for plaintiff and Mr M. .T. Gresson for defendants.

Mr Alpers said that plaintiff obtained the forest areas belonging to the company as the company’s truster’. Tts assets had increased largely. One division of profits, amounting to £4OOO, had bee nmas) y but larger profits had been used in developing the business. The prospective value of the areas controlled by the company were not loss than from £20,000 to £25,000, largely due to the profits going into the capital account. Plaintiff objected to the sale. He tried to get capital to protect his interests, hut although the mill was doing good business, it was hard to get capital for anything, especially by a man of small means. He failed, and was unable to buy the property when it was put up for sale. Lot 3, sold to Deighton for £II.OOO, in addition to timber, had tram rails and plant-worth thousands of pounds. Plaintiff went to Stuart and asked if the other directors were trying to freeze plaintiff out. Stuart denied it, saving that the sale was a genuine one. Deighton’s cheque for the deposit of £lslO was handed by the auctioneer to Stuart. Tt was drawn on the National Bank at Hokitika, but if the auctioneer had presented it, it would have been returned with the words 11 no account,” as Deighton had no account at that hank. Tt was held by Stuart, and a few days later £1,500 was paid into the company’s account by somebody. Mr Gresson said that there was no desire on the defendants’ part to freeze out'the plaintiff. They were willing to offer the. property to plaintiff for the sum obtained at the sale.

The Court adjourned for an hour to enable the parties to confer. On resuming, Mr Alpers said that it had been agreed that the shareholders should pass a motion to go into voluntary liquidation and to appoint Mr B. Wild, Hokitika, who was the company’s auditor, and Mr W. Will, Deputy Registrar of the Supreme Court at Hokitika, joint liquidators. His Honour agreed to that course. The question of costs was the subject of legal argument. As defendants had annulled the sale complained of by plaintiff, judgment was given for plaintiff for costs £3O and disbursements.