TWO CHARGED.

Auckland Star, Volume LXVII, Issue 102, 1 May 1936, Page 8

TWO CHARGED.

UNUSUAL COUNTS.

DEBT COLLECTING.

ALLEGATIONS BY POLICE.

OFFICIALS BEFORE COURT.

Alleging that the managing director and Auckland manager of the Dominion Mercantile Agency, Limited, had been making concealed charges to their clients and also obtaining a substantial secret commission, which, in fact, amounted to theft, the police prosecuted them on summons in the Police Court to-day 011 30 charges.

The two defendants were Percy Fraser Hodgson, managing director, and Frederick William Packer, Auckland manager. Both were charged on 30 informations that, having received sums totalling £8 19/, requiring them to account to various clients, they fraudulently omitted to pay part thereof, thereby committing theft. The offences were alleged to have been committed between May 21, 1934, and November 14, 1935. Senior Detective Hall prosecuted and Mr. Spencer Mason represented both defendants, who pleaded not guilty. Before evidence was called Mr. Mason made application for suppression of defendant's names in the meantime, submitting that the firm's business had been built up over a quarter of a century on integrity and that if publication of their names was made before the conclusion of the case, it would be extremely damaging to the firm. "Oh, no, I won't suppress the names," said Mr. F. K. Hunt. "There's nothing in that. If there is nothing in these cases and the charges are dismissed their integrity will not be damaged." Solicitor Seizes Books.

"The agency referred to is a limited liability company trading as inquiry agents, trade assignees, trade reporters and debt collectors," said Senior Detective Hall. "For some two and a half years prior to January 22, 1936, the Auckland office employed as solicitor Mr. R. Sanderson, who will give evidence today."

Sanderson's office was a room in the agency's suite of rooms, said Mr. Hall. Because Sanderson considered certain illegal charges were being made by the agency to its clients, he seized certain papers and books when he left there, and he handed these to the police. In connection with the collection of debts, the agency had a large number of clients, some of whom were subscribers who placed outstanding accounts with the agency for collection. Legal action was taken by the agency for the recovery of these debts. Cou v i costs incurred in the issuing of the legal processes were charged to the various clients on monthly statements rendered to them by the agency. As a result of information supplied by Mr. Sanderson, the matter of Court costs disbursed by the agency, compared with those charged to certain clients, was investigated by the police, when it was shown that in certain cases, clients were charged with Court costs that were never disbursed to the Court.

As a result of this, Mr. Hall continued, the present charges had been preferred. In some cases clients were subscribers to the agency, paying an annual subscription of £1 1/ or £2 2/ and a commission of 5 or 10 per cent on all moneys collected by the agem-y or paid to the client as a result of the agency's efforts, according to whatever arrangement was entered into. The agency was empowered to take legal action for the recovery of debts, but in most cases before suah was done the matter would "be referred to the client for authority to take action in the case of each debtor. Various clients would be called to give evidence to show that amounts were debited to them on the monthly statements sent to them by the agency. Evidence would also be given of the actual disbursements made by the Dominion Mercantile Agency and it would he seen that amounts had been charged to the clients as Court costs which were in excess of the actual disbursements. It would be shown that what was known to members of the agency as "summons fees" had been charged, on the issue of summonses.

Issuing Summonses. Mr. Hall'said it was the practice of the agency to add a sum of 5/ to the cost of issuing summonses where the amount sued for was over £3, and a sum of 3/ where the debt sued for was £3 or less. Evidence would be given to show that both accused were parties to these systematic thefts. It would be seen, by comparing statements - rendered to the clients with the plaints in the cases, that overcharges had been made and concealed, under the heading of Court costs. It was the custom of the agency to charge the solicitors' fees for entering the plaint and entering the judgment where something substantial was recovered from the debtor.

_ It was further alleged by Senior Detective Hall that because of the form under which the charges were concealed, it was impossible for a client to become aware that such were being charged without referring the matter to the Court and perusing the Court flies. As the various Court costs were not shown under the proper headings of issuing fee, mileage fee, judgment fee, etc., even a solicitor would not be able to detect the improper charge without perusing the Court file. i

Court Procedure. "By making these charges the company was certain of obtaining a substantial commission," added Mr. Hall. "The company, therefore, had a direct incentive to take or advise Court proceedings on every possible occasion, whether there was any likelihod or not of being able to collect anything from the debtor. In all cases the Court costs were debited to the clients who will give evidence and the amounts were deducted from moneys collected cn their behalf. In support of the contention that the company had a strong incentive to issue summonses and other processes indiscriminately, I will lead evidence J .hat on o«e occasion Hodgson told Packer in Sanderson's presence that he, Packer, was not issuing enough summonses. The indiscriminate issue of summonses, whether there was a possibility of recovering the debt or not, is not in the public interest and it is an abuse of Court procedure, as a motive was provided for issuing illegal processes, not for legitimate purposes, but to provide revenue for the company without regard to the interest of its clients or to the effect of increasing the Court costs against debtors." (Proceeding.)