SECRET COMMISSION

Rotorua Morning Post, Volume 1, Issue 19, 15 September 1931, Page 3

SECRET COMMISSION

newspaper deal PAYMENT TO BROKERS ON SALE OF ROTORUA "CHRONICLE" . JUDGMENT FOR PURCHASERS HAMILTON, Monday.' An action for the recovery of the sum of £250 alleged to have been received as a secret commission by a firm of Wellington sharebrokers from Rotorua Chronicle Ltd., in connection with the sale of the company's business to The Rotorua and Bay of Plenty Publishing Company Ltd., was he'ard in the Supreme Court to-day. Plaintiffs were the Rotorua and Bay of Plenty Publishing Company, proprietors of the "Rotorua Morning Post," Edward Grase Guy, muUager of the compatiy and Lyonel George Ashton editor of the "Post," and defendants Thomas Lawson and Sidney James Sawell, trading as Lawson and Sawell, sharebrokers; Wellington.

Mr J. D. Davys (Rotorua) appeared for plaintiffs," defendants being represented by Mr Evan Parry (Wellington) . The statement of claim set out that Edward Grace Guy and Lyonel George Ashton, were promoters of plaintiff company. In or about August, 1930, Guy engaged defendants to act as agents for the promoterS and defendants agreed on the payment of £50 to send their Mr Sawell to Rotorua first to endeavour to obtain an option for the purchase of the business from the Rotorua Chronicle Ltd., and if successful to oceed in the flotation of a company . for the purpose of completing the said purchase. The brokerage pay* able to defendants on flotation waB to be at the rate of 5 per cent., the fee of £50 to he an off set on the total brokerage. An option was seeured in favour of Ashton as one of the promoters to purchase the com* pany's business at the price of £10,* 000. The arrangements were finalised and in November and December, 1930 defendants as agents for the promoters, disposed of sufficient shar* es to enable the company to he in* corporated and proceed to allotjnent. Plaintiff stated that on or about Sep* tember 24, 1930, Sawell, acting as agent in the employ of plaintiffs) without the knowledge or consent of plaintiffs, obtained on behalf of his firm from the Rotorua Chronicle Ltd/, an undertaking in writing that in the event of a sale of the business, the Rotorua Chronicle Ltd., would pay. defendants £250 commission. This money was nltimately paid to plaintiffs by the Rotorua Chronicle Ltd. Plaintiffs contended that this commission was a secret one and immediately upon becoming aware of this, they demanded from defendant payment of the money. This was refused and plaintiffs now claimed the benefit of the said commission.

Receipt Admitted The defence was that defendants were unaware that Ashton was one of the promoters. They believed the promoters were Guy and Dr. J. D. 6. Duncan. They admitted the receipt of £250 commission from the Rotorfia Chronicle Ltd., but said that this was with the knowledge and consent of Guy and Dr. Duncan. At an intetview with Guy and Dr. Duncan, defendants agreed to accept brokerage on the flotation of the company- at 5 per cent. instead of the usual 75 per cent. on the undertaking that they were to be allowed, if possible, to obtain commission upon the sale of the business from the vendors. They were unaware whether plaintiffs were aware of the amount received by them in this way, but it was certainly within the konwledge and contemplation of Guy and Dr. Duncan.

In opening for the plaintiffs Mr. Davys said the plaintiff company was composed mainly of Rotorua shar 4holders. Guy was the present maiiager of the company and Ashtofi editor of the Rotorua "Morning Post." Defendants were Wellington brokers. A discussion took place ih Wellington between Sawell and Guy and Duncan as a result of which n letter was written by Sawell to Guy embodying the terms on which h,e was to try and obtain an option of the Rotorua business. The price "qf the business at which the option was to be obtained was left entirely to Sawell, who was to be paid £50, in accordance with the written arrangement. Defendant was, therefore, definitely in plaintiffs employ. Dr. Duilcan, who was in the Government employ, was later advised by the PuJ)lic Service Commissioner that ne could not engage actively in the pr'omotion of a public company of this nature and it was agreed that Ashton should take over Dr. Duncan's interest. Subsequently Ashton, in company with Guy discussed the whole position with Sawell.,, , Mr. Davys read correspondence that passed between Ashton and Guy and Lawson and Sawell, in which the whole position between them was definitely set out. In.none of this correspondence was there mention of any commission to be accepted from the Rotorua Chronicle Ltd. Sawell went to Rotorua and did very good work in selling shares and the new company was duly registered. Later, Mr. Gardner, proprietoi1 -of the old company and Ashton were off ering each other mutual congratulations, when Gardner casually . mentioned that he had paid Sawell £250 commission. This fell as a bopibshell on the plaintiffs, who demanded the return of this money.'-

Commission Not Mentioned Dr. J. D. C. Duncan, Government Baliieologist at Rotorua, s?tid he held a discussion in Wellington, with Guy on the possibility of commencing an opposition paper in Rotorua or buying out the existing". company. Later in the day they discussed the question of securing an option over the existing business, with Sawell. It was decided that Sawell should proceed to Rotorua, try and obtain an" option and if successful 'to proceed with the flotation of a new company. Sawell asked for £50 expenses and this sum was fixed. Sawell said the usual brokerage fee was 7| per cent. but Guy pointed out that they could not agree to such a high commission, as the shares could be easily -sold in the Rotorua district. It was 'finally agreed that 5 per cent. commission would be paid on ordinary and 25 per cent. on promoters' shares. Sa(Continued on Page 4.)