COAL COMPANY’S AFFAIRS

Press, Volume LXXVIII, Issue 23812, 4 December 1942, Page 6

COAL COMPANY’S AFFAIRS

EXAMINATION OF DIRECTORS

EVIDENCE CONCLUDED

YESTERDAY

The public examination of Albert Adam Wilson and Andrew Hunter, directors of the Brighton Coal Mines, Ltd., m accordance with the special procedure under the Companies Act, 1933, was concluded yesterday before Mr Justice Northcroft in the Supreme Court at Christchurch. Mr A. W. Brown appeared for the Official Assignee (Mr G. W. Brown), who, on November 5, had obtained an order from Mr Justice Northcroft for the public examination of these directors as to the promotion or formation of the company, and as to their conduct and dealings as directors and officials. An order for' the winding-up of the company was obtained on November 15, 1941. Mr E. S, Bowie appeared tor A. A. Wilson. solicitor, of Westpcrt. former chaiiman of directors of Brighton Coal Mines, Ltd., and Mr H, M. S. Dawson for Andrew Hunter, a co-director until the company went into liquidation. The examination cf A. A. Wilson was continued by Mr Brown. Counsel; You were a director of the company until December, 1935? Yes. How long were you chairman?— Until December, 1935.

You knew then that the output had been restricted by the Mines Department to 3500 tons per annum?—l knew that the Minister had proposed to restrict the output. Did you not receive some notification? —I went to Wellington over it in July, 1934.

A year before you resigned the chairmanship you knew of the intention to restrict the output?— Yes. Shares were still being sold after you knew?— Yes. And the prospectus was still in circulation?— Yes. Output of Mine Mr Brown then referred to the prospectus. which stated: "The coal here is 14 feet in thickness, which means that there are about 140,000 tons in this area. In the freehold area (Price's) it is estimated that 50 out of the 150 acres are coal bearing. The coal here, which is six feet thick, has been prospected by a tunnel 200 feet long. This gives a tonnage of 300,000 tons, or a total of 440,000 tons In the two areas. Assuming a 60 per cent, extraction ... an output of 100 tons a day would give ... an annual output qf 22,000 for 12 years. . . “But you knew that that statement was Incorrect?" inquired Mr Brown. “I would not say that," replied the witness. “We could still have got that output from our freehold area." Counsel: There was no mention In your annual report lr December. 1935, of this restriction?— No. Why did you not Inform the shareholders?— Apparently the directors did not think it necessary. Don’t you think it would have been fair, proper, and honest to have informed them of the restriction? —The directors did not think that it would interfere with the working of the company. At any rate, no notification of the restriction was given to the shareholders up until the time you left the chairmanship?— No. Yet this was a serious matter for the company?—We did not think so at the time. . . . We did not like it. You were solicitor to the company? —Yes. Is it not a fact that the large proportion of the items in the bill that you presented to the company was for work of a non-legal character?—l did not think so. Witness added that he subsequently stated he was “prepared to meet" the company. His Honour: That is not the point. The matter under discussion is whether or not you as both chairman of directors and solicitor did an injustice to the company. Counsel: There were many Items? — Well, they were all small. Are they not for work done as promoter rather than as solicitor?— Well, I think that view could be taken. Your bill of costs has been paid?— Yes. Counsel (referring to the Official Assignee’s report): Do you know as a fact, as stated here, that Andrew Hunter took coal from the company’s mine and sold it on his own benefit?— Yes, he did that before the company was incorporated and until I left. Do you know of any agreement after the incorporation of the company that permitted it?—No, I do not think there was one. His Honour: The moment the company owned it, Mr Hunter would have to stop taking It, would he not?— That Is so. w Counsel: Mr Hunter was then'a-paid employee of the company?— Yes. Examination Queried

At this juncture his Honour raised the question, as there had been allegations of peculation, deceit, and misfeasance, would It be fair to continue the examination on those lines. Such charges, he added, could or might be brought before the Court by another procedure. Counsel said he wished to be scrupulously fair. There was no suggestion that Wilson had had anything to do with taking the coal. To Mr Brown, he said that in October, 1935, a circular was sent to shareholders by Andrew Hunter, which had the effect that he (Wilson) was put off the board. As Hunter had obtained the proxies of two of the largest shareholders he could do what he liked. Therefore, he (witness) did not stand again, but after hearing his explanation, the shareholders passed a resolution thanking him for his services. With reference to a verbal agreement with his brother to sell £6OOO worth of shares, witness said he expected his brother to take up those that he did not

: sell. i Counsel: Otto J. Wilson’s name was j on the prospectus as organising broker? — i That is so. i Was it usual to have a restriction of ,! output (of coal)? —I had never heard j of one before. His Honour: I am curious to know what

I excuse was given by the Minister for 1 this restriction?—l do not remember one. 'j Did not the Minister give you any ex--1 planation?—lf he did, Ido not remember ) one.

| Questioned by Mr Bowie as to his bill of costs, witness said he had visited the mine on numerous occasions for the com-

pany, and had also travelled to Wellingj ton: he had paid his own expenses on the j former occasions, but had charged the , syndicate expenses for the latter. There I was still an account owing to him for i about £IOO. i His Honour: Why did you not sue for i 11? I have an idea that I did. I believe i that I obtained judgment. I His Honour: I do not understand you—

( either you did or did not?— Yes, I obtained i judgment, but I did not press for payI ment. I wanted the company to go on. . Witness added that he was still the ! owner of 2000 contributing shilling shares, and his wife held 3000. 1 The Court then adjourned for counsel to consider the point raised by the Judge. ' On resuming, Mr Brown said his Honour had raised the question as to whether the questions put to Wilson, and likely to be put to Andrew Hunter, might not result in answers being given whereby the Official Assignee or the company could. In certain circumstances, take action. The public examination was one, he submitted, of wide inquiry, and might result in proceedings against the directors to prevent them from taking part in company proceedings for a number of years. It was possible that they might be required to answer questions that might involve them either In criminal or civil proceedings. However, no misfeasance proceedings had been instituted, nor any proceedings in regard to any other matter. At the same time he admitted that the present examination was "heavily loaded” ; against the person being examined. But It was within the power of the Court to 1 permit the questions being put. I Mr Dawson held that questions could I not be obtained from a witness that were 1 likely to prejudice him. His Honour: Is there any Indication that any other action is being taken? Mr Dawson: No other action has been filed, sir. . The allegations, counsel submitted, were moie than a charge of fraud. His Honour said that such a public examination might even have the effect of completely exonerating the people being examined. He would leave the matter to the discretion of the Official Assignee or bis counsel not to limit the examination. ! The Prospectus

Andrew Hunter, farmer, of Tirimoana, West Coast, said he had' been a director of the company since its formation, and he bad seen the report of the Official Assignee. The witness said he had not been through the prospectus with Wilson, but had signed It. "It was my first experience,” he added, “and I took it for granted that It was 0.K." Mr Brown: Do you seriously say that you did not read it through?— Only the part that concerned me. I did not go through the legal part. You know that a prospectus Is an invl-

;• tatlon to shareholders to Invest?—Oh, yes. 1 You remained a director of the com1. pany right until it went into liquida-

i ( tion?—Yes. it You were superintendent of works from Vi: June. 1934, at a salary of £7 10s weekly jjj until the company was liquidated?— Yes. jji but my salary ceased two years and a half before that. £) Witness denied that Otto J. Wilson had 3|l fold the first 50,000 shares. The majority, jjl said witness, had been sold by himself.

He had objected to the payment of £275 brokerage to Otto J. Wilson. Why?— Chiefly because we were short of money, and I did not see why he should be receiving proceeds for work done by me. Witness said he knew of no agreement with Otto J. Wilson as organising broker for the company. At the time that the vendor shares were sold, he added, the company was in need of money. Is it true that you have been selling coal from the company’s mine on your own behalf for a number of years?— Yes. You received the proceeds of about 2000 tons for yourself?— Yes, Since the incorporation of the company have you had an agreement permitting you to take coal from the company’s property?— No. Not a straight-out agreement.

What had you then?—l had discussions from time to time with the directors.

His Honour; Did you tell them that you had a right to do this?— Yes. I told them that I had a right from A. A. Wilson and Alexander Hunter.

His Honour; Did you ever exhibit any agreement to the directors?—l don’t think so. Mr Brown: Did you tell the Official Assignee that you had taken 4000 tons?— Between 3000 to 4000 tons. Witness said that none of the directors had ever told him not to take any coal. He told them that he had an agreement to do so before the inception of the company.

You made a good bit of money out of it?—No, sir, unfortunately I did not.

You were asked on several occasions to produce that agreement and never did so?—I will not deny that. But you never had an agreement with the company?— No. I was only told to carry on. Sale of Rails Witness admitted that he had sold certain rails belonging to the company after it had gone into liquidation. Yet you had been warned by the Official Assignee not to dispose of them?—l paid the money into the company’s funds.

As witness proceeded to elaborate his replies, he was instructed on several occasions by the Judge to answer the questions of counsel. “Your own counsel will look after your interests,” said his Honour. "Was it a fact that you were told by the assignee not to dispose of the rails?”

"Yes,” replied witness, who said that portion of the money so obtained had been paid to four men at the mine as wages. His Honour said: "It would help the Court’s opinion of your candour, Mr Hunter, if you listened to counsel’s questions and aswered them, rather than attempt to justify yourself. To Mr Brown, witness admitted paying £231 into his private banking account, and said it was to "reimburse the men.” His Honour: You mean to reimburse yourself. . . A moment ago you told us that you had paid no money into your own account, but that you paid it into the company’s account.

Witness: I can honestly say that I have not benefited from this transaction. His Honour: Never mind about honesty. Let us have the facts. To Mr Bowie, witness said he had "a faint recollection” that a resolution had been passed appointing Otto J. Wilson as organising broker. You were present at the meeting that passed the £275 to him?—l am not too sure of that.

Mr Dawson: This Is your first company experience?— Yes, unfortunately. Questioned as to the value of Seal Island to the company, witness said it would have been impossible for it to have operated if the island had been in the possession of another company. Can you think of any reason why you were not stopped from selling coal?—I was doing development work for the company. His Honour; In taking out this coal?— Yes.

The examination of this witness having been concluded, the Court adjourned.