198.
Wing Shing, sworn, said first defendant had gone to the country. He signed the promissory note produced, as secu∙ity, but told the plaintiff | not to advance the money.
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His Lordship-Next time you are about to sign anything you had better take that lady with you; you are too old to conduct your own affairs. Judgment for plaintiff and costs.
DEBT TOO OLD.
Did you supply goods to the defendant?— Yes. Why not?
(To
His Lordship-I don't know why not. defendant)-What have you got to say?
Defendant said the goods were supplied to his father who died when he (defendant) was six years old.
THE HONGKONG WEEKLY PRESS AND
| In_considering these schemes, they had to put forward a scheme which while acceptable to the shareholders of the old company would also be acceptable to Mr. Smith, and last of all to the Gorirnment, whose decision would really govern the whole matter. They then communicated wi h the Government on 15th April, stating that the scheme would likely be advantageous to all.
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[March 19, 1908.
There is no re-construction unless the share- holders participate in the management of the new one? -No.
Witness-Shareholders should possibly have some means of taking shares,
Mr. Sharp-They always have. His Lordship-You think a re-construction should begin with a compulsory sale of old shares ?
Witness—Yes.
His Lordsbip-You think it can be called a re-construction if thera is a compulsory sale of shareholders' shares ?
Witness-I think it would be re-construction in that sense.
Mr. Sharp-I shall submit later there is no difference between selling for a lump sum and so much per share. Continuing, be referred to the communication from the Government and said there had been no actual consent given.
His Lordship-Quite so. Counsels may
Mr. Sharp-What did you consider would be the effect of the new company on your company? Chung Loi sued Hui Lau to recover $17.43 —I am very doubtful if it would then pay ita due for groceries supplied.
expenses. When you consider the present Defendant denied liability.
line the great majority of passengers are mili- His Lordship (to plaintiff).-Have you any tary who travel at half price, and the new line witnesses P-My book is my witness.
would be a larger line, having double care of a Are you a grocer ?—Yes.
larger make and more frequent starting, so that it would be most difficult, or almost impossible to work at a profit. It would only leave us Barker Road and the military to cater for, and we might retain them as in thos8 08385 alone our line would be convenient. The new line was to run through Caine Road, Robin-chauge and Governments may change.
Road and Queen's Gardens, a very populous district. The working on those levels would yield them a very good profit, and hardly any company would risk such an opposition if there was any possibility of coming to terms, These points were then considered by the consulting committee, who held 932 shares out of a total of 1,250. After consideration, the consulting committee came to the conclusion that the best way to meet the difficulty was to re-construct, or to sell the old undertaking to
Plaintiff, on being recalled, said the goods were supplied five years ago.
His Lordship (to the interpreter)-Tell him the bill is too old; he had better sue the father. I expect the defendant told the truth when he says the goods were supplied when he was about six. Tell the plaintiff he had better wipe the amount off the books as a bad debt. The case is dismissed.
Monday, March 12th.
IN ORIGINAL JURISDICTION.
BEFORE SIE FRANCIS PIGGOTT (CHIEF JUSTICE).
THE PEAK TRAMWAY LITIGATION. The hearing of the action at the instance of D. E. Brown and others against the Hongkong High Level Tramway Company and Messrs. J. D. Humphreys and Son was resumed. Mr. H. E. Pollook, K.C., app ared for the plaintiffs. He was instructed by Mr. Geo. Hastings (of the office of Mr. John Hastings) in the interests of plaintiff and by Mr. C. D. Wilkinson on behalf of the other dissentients. Mr. E. H. Sharp, K.C., and Mr. M. W. Slade, instructed by Mr. Harston (of Messrs. Ewens, Harston and Harding), appeared for the defendants.
Mr. C. Ewens, of Messrs. Ewens, Harston and Harding, solicitors to the defendant company, said he became a member of the consulting committee in 1900, a position which he held continuously since, except for a few months in 1904 when he was absent in England. The line was opened in 1888 and paid, as he subsequently thought improperly, a dividend of 2 per cent. From the time when the first proper dividend of 2 per cent. was paid the dividend steadily increased to 20 per cent. in 19 3. In 1904, in view of meeting probable opposition, the dividend was 15 per cent, this being with a view of enabling the Company to accumulate funds. When he returned in 1904 Mr. Smith's Bill had passed its second reading and defendants were oppos- ing the Bill. They were in correspondence with the Government explaining that if the new company were allowed to place their Peak station alongside theirs it would be ruinous. They prayed to be heard by counsel before the Legislative Council. Their attitude of opposi- tion continued until on March 2nd, 1905, they received a letter from the Government to the effect that they would not compel Mr. Smith to adopt a different sit for his station at the Peak, He considered that as very import- ant and believed their railway would only be worth scrap iron. They considered several schemes for meeting the opposition. One
was to, olose the old line after the new one had been completed and ran it only for goods, but it was doubtful whether that would pay working expenses. The next suggestion was to stop dividends and build up funds to fight the how company by running their cars free. The third plan was to come to terms with Mr. Findlay Smith and either prevent the new tramway being made or make it them. selves. There we:e two ways in which this might be done. One was to acquire the conces- sion and build the line themselves, or to sell out to a new company who would find fresh capital and run both lines. This was re-construction.
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son
the new company,
With regard to the price you considered proper - We gave very great consideration to the price.
Mr. Pollook-I don't suppose your Lordship goes into price as an arbitrator. We have not gone into any price.
His Lordship-No, no. Mr. Sharp-I think a little is essential in considering the bora files of the whole thing. The bona fides is a very important factor.
His Lordship That might be assumed. Mr. Sharp-I will only ask one question. I quite understand my friend's position. (To witness) You considered the question of price ? Yes.
On what grounds was your decision based broadly ?-There had been a sale before and having regard to the fact that our shares would depreciate below par if there was any opposition, the consulting committee con- sidered that $200 was the best price we could get.
And you took steps to carry that into operation P-Yes, we communicated with the Government and instructed Mesars. Benjamin, Kely and Potts to negotiate for the sale of the shares.
Was the circumstance of this combination kept secret or was it generally koown?- Directly we bad completed the agreement we made it known as widely as possible. I think on 12th May Mr. Findlay Smith notified Messrs. Benjamin, Kelly and Potts bis acceptance of Mr. Kadoorie's offer of $25,000..
On the same day you informed Mr. Smith's solicitor that the actual purchasers were the China Commercial Company, Ltd. ?—Yes.
You drafted the resolutions and the notice convening the first meeting —Yes. And the circular letter ?—Yes.
Mr. Sharp-I wish it clearly to be understood that we don't suggest that approval has been given.
His Lordship Or that it must be given ?
Mr. Sharp-The attitude of the Government has been such that we may ressonably expect that approval. The agreements we entered into are executary and they are good until that approval is refused.
Mr. Sharp-About the prios again. Do you consider that a higher prios could possibly have been obtained from any company?
Witness-No.
A company could not have been formed if the price were higher ?—That is so,
Tha is your opinion P-It is the opinion of the consulting committee.
Cross-examined by Mr. Pollock, witness stated that he held about a one-tenth share of
the China Commercial Company, the capital of which was three and a half millions. Mr. Kadoorie, of Benjamin, Kelly and Potts, was the largest shareholder, holding about one-third. There were many other shareholders, but Mr. Henry Humphrey's was not one of them so far aa he remembered. That company was brought in, as the consulting committee did not wish to bring in the old company because they thought Mr. Fiudlay Smith would not sell the concession to the old company. He understood that the Governor in Council had approved the scheme prior to October, and for that reasor the third meeting was bald back. There were important alterations made in the Bill which he took it would not have been made unless such sanotion was either given or contemplated.
Mr. Pollock-You said in your examination that the Government threatened to close the Barker Road Station. Did the Government actually threaten to do that P-Yes, unless we practically re-built it.
Suppose the new line were built from Battery Path to Victoria Gap, and only worked up to Queen's Gardens level, would it pay you to run the old line carrying goods and such passengers free as you have room for ?--That is impossible to say definitely, but if they worked the upper part it would pay handsomely.
Witness stated that the extension of the old line to Queen's Road would cost about $70,000 or $80,000 but the engineering difficulties made The word re-construction occurs in that letter that soheme impracticable. four times ?—Yes.
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What is the meaning of the word re-con- struction" as understood by ordinary business men ?
Mr. Pollock objected.
His Lordship said he did not object to hearing Mr. Ewens' opinion.
Mr. Sharp-What is your definition ?-It is the sale by a company of all its undertaking to a new company (which may or may not have another undertaking).
His Lordship-You say the acceptance of shares by the new company is not in essential agreement P-No, my Lord.
His Lordship-The sale of the undertaking is not the point ?—Yes.
Not the shares !--- Not necessarily.
It does not convey anything to my mind except as a sale. How do you differentiate between a sale and a re-construction ?—If the new _o«m« pany carries on the undertaking I should say then it is construction.
That is a new company ?—Yes.
His Lordship-Was any prospectus of the new company issued ?
Witness-No.
Mr. Sharp-Was the old company at any time under any obligation to Mr. Kadoorie, or Mr. Smith, or anybody else to purchase this concession ?—No.
Who were the promoters of the new com- pany -The old company.
I understood you to say that the extension to Queen's Road scheme was abandoned ?—Yes, we saw no possible way of overcoming the difficulties,
His Lordship-Before you begin to argus, I should tell you what is in my mind. The first point is that a compulsory sale of shares in this case is inconsistent with re construction, and that I should be disposed to hold in the way as Mr. Chitty did in be Western Counties Telephone Company that the substance of transaction between the two companies wa sale and not re-construction.
Mr. Sharp-That is very much what we pressed upon your Lordship,
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