BUILDING FIRM’S AFFAIRS

Press, Volume LXXXVII, Issue 26441, 7 June 1951, Page 3

BUILDING FIRM’S AFFAIRS

ALLEGATIONS OF FRAUD DIRECTOR EXAMINED IN COURT (New Zealand Press Association) WELLINGTON, June 8. How a number of people lost money they had paid to a Wellington architectural and building firm as deposits on houses they hoped to have built, was told in the Supreme Court in Wellington to-day. The proceedings were the public examination of Furey and Associates, Ltd., in liquidation. Allegations of fraud have been made against two officers of the company by the official liquidator, in a report which is before < the Court. Mr Justice Fell was on the Bench. Mr W. H. Cunningham appeared for ' the official liquidator, and Mr P. H. Smyth for Henry Francis Furey, man- i aging director of the company. Under examination by Mr Cunningham, Furey said he was a draughtsman ~" in business as H. F. Furey and Associates until June, 1947, when the firm > was turned into a private company, on * the suggestion of Norbet Gerard Foley, a public accountant, who was acting for him. The company had £6 19s id when it started. Advances Accepted Furey said the first contract the company made was signed in January, 1948, with a woman who made an advance payment of £1033 to pay for labour and material for a house to cost £2067. The company agreed with a firm of builders to do the work for £32 a week, plus 10 per cent, builders' profit.

The business had been draughting, and he decided to enter building when a client for whom he had prepared plans desired further assistance, Furey said. On each contract the company received a substantial advance before materials were bought or work done. The reason given was that the money was needed to cover the expenses of the particular job. Furey said he thought that a trust account should be opened in each case, but the secretary said it was not necessary, and the money was paid into the company’s account. Upon the company’s liquidation at the end of October. 1948. no job had been actually finished, and no material had been bougfft for the last three contracts, and no work done.

These contracts were signed in September, and the deposits totalled £ 10W. That money had been spent by the date of liquidation for other purposes, and except for a small dividend on liquidation, was lost.

Mr Cunningham: Do you think that was honest dealing with those three? • Furey: So far as I was concerned, yes.

Mr Cunningham: Did you know that the money was being spent for other purposes?

Furey: Not precisely. Mr Cunningham: At the time, you were managing director? Furey: Yes. Mr Cunningham: Who spent the money? ( Furey: The company secretary. Claims of £6OM On October 19, 1948, an additional £5OO was received from a depositor, and presumably none of it was spent on that depositor’s job, though it was all spent by the end of October. The day after it was received a notice was sent to all depositors calling a meeting to discuss the position. The meeting of depositors was called after a discussion with one of them. Depositors’ claims amounted to £6OOO. Furey was examined about a woman from whom the company accepted a second deposit of £350, though the company owed her money on her first deposit of £1165. The value of the work done was £3OO to £4OO. Furey said he thought from the secretary’s assurances that separate records were being kept of depositors’ payments and the expenses of each job, and he did not realise that it was not so till the end of October, 1948. Furey was examined also on three sums of money for which receipts had been given but which had not been paid into the bank to their full amounts. In one case, in which the difference was £lOO, he said the money was held in the office for future purchases, but he could not show how it was spent. In a second case £4O was held in a similar manner. The third receipt, for £l7 17s Furey said he did not recollect.

To Mr Smyth, Furey said he had no real experience of accounting costing and the Companies Act, and had left the financial affairs to the secretary. He now knew that the company's operations were uneconomic, but had thought at the time that a profit wan being made. Be was dismayed to fine at one stage that £1339 had been lost in five months, but Foley had allayed his doubts and worries. Mr Smyth applied for his client to be exculpated of the charges contained in the liquidator’s report. Nine of them were of fraudulently diverting money paid for the building of particular houses to other purposes. One was of accepting £5OO when it was known that the company could not carry on, and three were of falling to account for £lOO. £4O. and £l7 l?s. Mr Smyth submitted that the evidence was of mismanagement and foolishness, but not of fraud. His Honour said a separate fixture would be made for Mr Smyth’s application to be heard. The examination of officers of the company will continue to-morrow.