DOMINION CEMENT CASE.

Taranaki Daily News, 5 August 1918, Page 8

DOMINION CEMENT CASE.

REABDfG OF PETITION OOXCTjUDED DECISION RESERVED. Auckland, August 1. The hearing of the petition of certain shareholders to have the Dominion Portland Cement Company, Limited, in voluntary liquidation, eompulsorily wouud-up, ivas concluded at the 'Supreme Court today. Mr. C. P. Skerrett, K.C, replied on hehalf of tiie petitioners. Pealing with Mr. Reed's arguments against the granting of the contributors' petition for the supersession of voluntary liquidation when fraud was not alleged, Mr Skerrett contended that the position was 1 that of creditors, because the petitioners included a number of holders of the iinal issue of debentures. These people had gums in repayment tendered to them by earlier debenture-holders on July 15, but the company had not discharged their defot, nor had it in law discharged its debt to the bank- and other persons who had advanced it money. He claimed that the tender to the debenture holders could not prevent them from still being treated fcs the company's creditors. Dealing ivitli the facts, Mr. Skerrett said that subsequent to the liquidation no meeting of shareholders was called to consider what should be done with the assets. Mr. Purdie, in his conference with Canterbury shareholders, assured them positively that if they took up new debentures the earlier debenture-holders 'would not foreclose' This statement was forwarded to Mr. Gerard, chairman of directors, who never at any time dissented from it. In December Mr. Gerard, as receiver, took possession of the plant and assets .on behalf of the dobentnre-holdcrs, and only four days later (Sunday intervening) the sale was advertised. The evidence that the negotiations *or amalgamation with other two cement companies had reached an advanced stage was, 'he submitted, sufficient grounds for investigating the circumstances leading up to the subsequent sale of the assets. Xo explanation had been given for the fact that the directors embarked on a new scheme, and incurred liabilities for £200,000 with, a capital of only £IOO,OOO without consulting the shareholders. The contract for the supply oi electric power, which Mr. Campbell alleged had been repudiated by tho Whangarei Borough Council, was only an offer under real. The directors might have been risking their own capital, but they had no right to risk that of the ordinary shareholders in tlits way. When they embarked on the new ?clicino the share issued had failed. Out of 250,000 shares (less CO,OOO paid-up share-), only 108.000 had been issued. The only method of fully investigating the management was a compulsory winding up by the Official Assignee as official liquidator. Tllir, would be a long and laborious process, involving nn investigation of records and accounts The alternative courses under sections 236 and 254 of the Companies Act. suggested by Mr "Reed, were entirely inadequate fcr the purpose, and would be futile. Referring to the arguments of Mr. Campbell, Mr. Skerrott said that fear of giving information to rival companies and encouraging price-cutting was no excuse for keeping back information from the shareholders. If the directors had informed the shareholders fully be-

fore embarking on the larger scheme, the diflietilty could never have arisen. The negligence with which llio petitioners charged the directors wis failure to use reasonable on re and '.skill as businessmen in a plain and common-sense proposition, whetner thev s'lvould embark upon a large scheme with insufficient capital, and knowing thai, fiirllier share capital would be unprocurable. In reply to Jrfr. Myers' claim that the debentureholders had come out 'badly, Mr. Skerrett declared that' they had received share? in the amalgamated company of a nominal vnlue of £-2S.">,eCO, and that these shares were appreciating Those or the other two companies bad appreciated to the extent of £54,000 since the amalgamation—from '(is Od to 10s Gd. Mr. Reed: Tiiey are not at par jet, Mr- SKerrett added that thcTe was still a legal liability by the company to its creditors. The Court was asked to validate the sale, but he submitted dial the Court had no jurisdiction to do so. The sale would not be invalidated or affeoteil by compulsory winditig-'Ap. This would be the only thing that would do any good, bccauso the Official Assignee would have full power to investigate, and would bring the results to the Court. The mere supervision ol the present liquidation would be more expensive, and would be less satisfactory in many other respectsHis Honor: Tiie main difference would !>e that the liquidator would Ire not a statutory officer, but in a sense a stranger to the Court. His Honor reserved liis decision.