CLAIM AGAINST AUDITORS.

Putaruru Press, Volume IV, Issue 127, 8 April 1926, Page 4

CLAIM AGAINST AUDITORS.

BY N.Z.C.D.C. CHAIRMAN. J P £IOOO x in Dispute. ] An action for alleged breach of 1 contract was heard at the Supreme Court at Hamilton on Tuesday of last 1 week before Mr. Justice Ostler, when Dynes Fulton, chairman of directors 1 of the N.Z.C.D.C., Ltd., claimed £IOOO - damages against English and Lux- 1 ford, former auditors of the company, j Mr. R. McVeag-h appeared for plaintiff ’ and Mr. A. H. Johnston (Auckland), j and with him Mr. F. Swarbriek, for j defendants, who counter-claimed £IOOO damages for alleged breach of the • same contract. After a lengthy hearing- decision was reserved. 1 The statement of claim set out that defendants instituted an action against plaintiff in the Supreme Court, for damages for £2OOO for alleged defamtion. On November 12 the action was settled by agreement, which required Fulton to publish at his own expense in certain newspapers nominated by English and Luxford a letter approved by them, but beyond this the terms of the agreement were to be treated as confidential. Fulton held that he had fulfilled his part of the agreement but that English and Luxford published an advertisement in the Waikato Times stating that £6OO had been paid for costs, £IOO of which had been paid by them to their solicitors as expenses. CASE FOR PLAINTIFF. Mr. McVeagh, in outlining the case for plaintiff, referred to a statement which Mr. Fulton made at a meeting of suppliers at Matangi, which was accepted by English and Luxford. as a reflection upon their integrity as auditors to the New Zealand Co-opera-tive Dairy Company. An action for damages was commenced by English and Luxford, hut was finally settled by agreement, when a term of the settlement was that there must be publication only of a letter in terms agreed upon. Imagine the indignation of Fulton and his solicitors when the following day they saw a paragraph in the Auckland Star, in which it was stated tha’t the action had been settled, Mr. Fulton agreeing .to .publish a full retraction and to pay plaintiffs a substantial sum in damages. Here was a distinct violation of the sanctity of a solemn agreement. Fulton, by bis solicitors, immediately published a correction in the same journal. This correction stated that there was no retraction by Mr. Fulton, and. no admission that he had used any of the words complained of, but on the contrary an emphatic denial of the use of the words alleged, or intention to impute to plaintiffs what had been alleged. In the next issue of the Dairy Farmer there appeared a general article on the Dairy Company litigation, in which the following reference was made:— The case brought against Mr. Dynes Fulton, the chairman of directors, by Messrs. English and Luxford, auditors, has been settled out of court. The conditions of the settlement was that Mr. Fulton would publish the following statement in this and other newspapei-s. Tire agreed upon letter followed. Mr. Fulton, said counsel, took the stand that he had never uttered the slander which had been alleged of him all along-, and he would not consent to the payment of any damages, which might be regarded as something- cf a bribe to the auditors to withdraw their action. It would thus be seen how important it was that the terms of the settlement should be kept private. It was the intention of the contract that nothing should he published that was likely to reflect on Mr. Fulton, who was a well-known public man holding a number of public positions. His Honour said he could understand the claim for damages beingbrought on an action for libel, but this was an action for breach of contract. Mr. McVeagh said the breach was of a contract not to affect a man’s reputation. Plaintiff, in evidence, agreed that the notes that had appeared in the Dairy Farmer should not have read as they did and agreed to have the matter rectified in the next issue of that ; paper, but would like time to confer with Mr. Goodfellow, or Mr. Hames. Before he was able to do this defend- ■ ants had published the advertisement in the Waikato Times. In answer to his Honour, plaintiff i said he was indemnified by .the company against the action by English and Luxford, but the present action ' was his own. 1 During cross-examination plaintiff ' declared emphatically that no sum for damages was. paid, and the publica-

tion, that there was, was incorrect. 1 He did not consider he had caused a breach of confidence by publishing his correction. His Honour: I suppose tills sum will be shown in the balance-sheet of the company ? Mr. Johnstone: Your Honour has not seen the balance-sheet of the company. (Laughter). Plaintiff said the item would be shown in the legal expenses. Charles Edward Cuming, editor of the Dairy Farmer, said he was entirely responsible for the introduction to the article referred to in the journal. He copied the letter from the Waikato Times, but made the error of inserting “ the ” condition of ' settlement instead of “ a ” condition of settlement. He received a message from the head office of the Dairy Company telling him of the letter in the Waikato Times and asking him to republish it. He would swear that Mr. Gc-odfellow never saw the article before it appeared, neither did Mr. Fulton. This closed plaintiff’s case. THE DEFENCE. Mr. Johnston, in opening for the defence, considered that if either side had seen matters in their true proportion that action would never have resulted. In England an auditor’s report was open to inspection but in New Zealand the only opportunity of knowing the contents of ani auditor’s report was to hear it read at the annual meeting. It was quite .time that the law was altered in this respect. Dealing with the circumstances that lead up to the present action, counsel stated that defendants received the information regarding the settlement over the telephone and before the confirmation was received they gave a statement regarding- the settlement to the press. When confirmation was received they were able to correct the paragraph given to the Waikato Times, but not to the Auckland Star, as .they were unaware that the information had gone to the Star. * Frank William Luxford, in evidence, said that the article in the Dairy Farmer must have done his firm harm. Mr. McVeagh : What did you suggest by reference in that letter to your legal expenses being only £IOO ? —That we got £SOO. Mr. McVeagh : Did you not know that at the time of this settlement the money paid was to he for law costs ? —Sir John Findlay described them as generous costs. (Laughter.) DECISION RESERVED. Mr. Johnson concluded his address by stating that he was quite content for His Honor to decide that neither side had suffered any damage. His Honor : That would mean that both parties pay their own costs and ■ ' go home —-(laughter)—or pay each other’s costs, wtiich amounts to the , same'tiling. ' (Laughter.) i After hearing argument by Mr. McVeagh, His Honor reserved his decision.