Creditors Told Of Affairs Of Company In Liquidation

Press, Volume CI, Issue 29956, 18 October 1962, Page 9

Creditors Told Of Affairs Of Company In Liquidation

A meeting of creditors of M. C. Bower Construction Company, Ltd. (in liquidation), yesterday carried a resolution that no application be made to the Supreme Court to appoint a person in place of the Official Assignee (Mr 0. T. Grattan) as official, liquidator of the company. The meeting also carried a resolution that an application be made to the Supreme Court for its approval of the appointment of a committee of inspection of three.

Mr D. Malcolm, agent for the Official Assignee (Mr O. T. Grattan), was chairman of the meeting. “As the persons we consider officers of the company were asked to furnish a statement of affairs and have not done so it will be necessary to send a report to the Supreme Court. The Court may make such order as it thinks fit or may refer the matter to the Attorney-General,” said Mr Malcolm, before adjourning the meeting. Mr Malcolm said the company was incorporated with a capital of £2OOO. M. C. Bower held 1999 shares and his wife, C. M. Bower, held one. On September 19, 1982, an order was made in the Supreme Court that the company be wound up and that the Official Assignee be appointed provisional liquidator.

One annual return had been filed and it was signed by Mr M. G. Teague. Mr Eric Harvey was apparently the secretary of the company to April, 1960. In a letter dated November 1, 1961, Mr Teague advised the Registrar of Companies that annual returns for 1950 and 1960 would be furnished “in a day or so.” No statement of affairs had been lodged on behalf of the company as was required by law. Mr Teague denied that he was an officer of the company. “I built five houses in the first year, that is between 1957 and 1958, with a staff of four including myself, and Mr Eric Harvey kept the bookkeeping well up to date,” said Melville Charles Bower in a statement giving details of the M. C. Bower Construction Company, Limited. The profit amounted to about £220 a job. he said. Teague and Teague, accountants, were to prepare tax returns and balance sheets and Mr Teague would have done the balance sheets for 1959-60. “In all I had built 38 houses up to the beginning of 1960 and from the figures which were given me I understood I was then averaging about £250 profit per house. Mr Teague said we were doing very well,” said the statement. New Company “Late in 1959 I found the demand for portable houses seemed to be falling off. I mentioned this to my brother who was building houses for 'Jones for Homes' and my brother told me Jones wanted builders so I went to see him at the beginning of 1960. Mr Jones told me that they had the building game 'sewn up,’ and would have all the builders in Christchurch working for them soon,” said the statement. “He then took me round to see Mr J. G. Rutherford and he explained to me that they were buying up land all round Christchurch and that they had about 200 houses to build. “Mr Rutherford said that

if I came in with them as a third partner they would give me plenty at. work and it would be a good thing for me. Mr Rutherford said he would form a company called M. C. Bower, Ltd. with a capital of £750 in which Mr Rutherford, Mr Jones and myself would hold equal shares. They also told me that they did not intend to pay up their shares in the meantime and when I asked them how the wages and so on would be paid they told me Mr Teague would look after it

Wages by Cheque “I then went to see Mr Teague and he said it would be all because we had £3OOO in M. C. Bower Construction Company, Ltd., and that would be lent to Mel Bower, Ltd., who would pay it back over three years. All the plant and gear that was in the construction company, was to be hired to Mel Bower. Ltd. For the ftret year the men employed wy Mel Bower, Ltd. were paid their wages by cheques drawn oti M. C. Bower Construction Company, Ltd., said Bower's statement. • “I built 48 houses for Mel Bower, Ltd., and saw one balance sheet on which a dividend which I think was £175 was paid to each of us-'—Ruth-erford, Jones and me. I asked Mr Teague if that was aU right as the capital of £750 in Mel Bower, Ltd., had been paid out of the construction company and he said it would be paid back later. When Mel Bower, Ltd-, had completed its first three houses ho moneys at all had been paid out by the State Advances but I was told the money was not my concern and that Jones sold the houses, Mr Rutherford looked after the money and all I had to do was build them.” The statement then referred to Mr Teague doing the accountancy for the company and Mr Teague agreeing to Mr Harvey looking after the payment of wages, Mr Teague to look after everything else as well as being secretary.

Accounts “Pretty High” “By the end of 1960 I was worried about accounts owing as creditors seemed to me to be pretty high but Mr Teague told me not to worry as we were then making about £3OO per house. All my joinery came from Madras Joinery on instructions from Mr Rutherford and I was told I would get back a discount of 2| per cent, for myself. I complained about Madras Joinery’s prices but Mr Teague told me I was better off getting the 24 per cent, discount. “At Christmas, 1961, when I was in Mr Teague’s office he signed some cheques and when I questioned whether a cheque should be made out to Madras Joinery ahead of some of the other creditors, Mr Teague gave me £250 made out on a Teague and Teague cheque which he told me represented discount due on the Madras Joinery, account. I bought a mink stole for my wife with this cheque. “Later in 1961 Fletcher Hardware asked me to go and see them as they were worried about their account. I asked Mr Rutherford and Mr Teague to go with .me. Mr Teague had figures with him and when I was asked to sign a guarantee of the Fletcher account he said it would be all right as Mel Bower, Ltd., had about £lO.OOO in assets- Mr Rutherford after some talk with Mr Teague agreed it would ba. all right to sign the guarantee. Overdrawn “In the same year my bank manager asked me to go and see hhn as both the Mel Bower, Ltd., and my personal account were overdrawn. I spoke to Mr Rutherford on toe teiephooe and after talk-, ing to him gave toe bank a guarantee of up to £3OOO for wages for 30 days. “About this time Fletchers asked if they could put to an accountant to look into things and after Mr Jensen had made an investigation he told me it looked ah if we were in trouble and I went then to see Mr Rutherford and Mr Jones who both agreed. **Mr Rutherford said just

after that if I sold my house and gave them £2OOO they would be able to pull me out. I refused to do this as I could not see how we could have lost so much money in such a short time. “As the result of the liquidation of Mel Bower. Ltd., and the calls on me under guarantees I have filed in bankruptcy,” said Bower’s statement.

Mr Teague told the meeting that at no stage was he given to understand he was secretary of M. C. Bower Construction Company, Ltd. When the matter was first brought to light about 18 months ago he wrote to Mr Bower telling him he was not secretary. If he signed an annual return of the company as secretary it must have been an oversight. Mr W. K. L. Dougall, who appeared for Bower, asked Mr Teague if he assisted in the accounts for building companies run by Mr Jones and Mr Rutherford and if Mel Bower, Ltd., was one of that group. Mr Teague answered “Yes” to both questions. Mr Malcolm said apparently there were no assets of M. C. Bower Construction Company left. The meeting was adjourned sine die.