Counsel Address In Gardner Trial

Press, Volume CVIII, Issue 31678, 14 May 1968, Page 28

Counsel Address In Gardner Trial

(New Zealand Press Association;

AUCKLAND, May 13.

The jury trying Robert John Gardner in the Supreme Court at Auckland today heard the closing addresses of counsel. Mr Justice Moller will sum up tomorrow.

Gardner, aged 39, a company director, faces 19 counts of false pretences involving a total of £11,096.

The counts allege the obtaining in April, May and June, 1966, of cheques in favour of Leidrum and Hartnell, Ltd, by falsely representing that the company was carrying on a bona fide business.

Mr C. M. Nicholson, appears for the Crown and Mr L. W. Brown for Gardner. From evidence brought before the Supreme Court it was quite clear that Gardner was setting up and perpetrating a fraud when the cosmetic company Leidrum and Hartnell, Ltd, was formed in New Zealand, said Mr Nicholson in opening his address to the jury.

Mr Nicholson said the crux of the trial lay with the question of the honesty of Gardner’s actions, and the genuineness of the company. The defence had conceded that representations were made, but challenged their falseness. He agreed with Mr Brown in his statement that if Gardner was guilty of one charge he was guilty of the lot; the opposite also applied. Mr Nicholson gave the jury a summary of the evidence. In November, 1965, Gardner had visited New Zealand, seen manufacturers, and had a company incorporated. In December, he had made arrangements for the manufacture of cosmetic goods. By February, the Unigroup companies had been formed in Australia with press publicity about the Russian contract Gardner Arrived Then Gardner had arrived In New Zealand, opened an account and got offices for the company. By midnight the company had begun advertising for distributors for its products, and by the end of the month distributors’ deposits began arriving. In early April the first major withdrawal (of £3000) had been made, and by the end of April the Australian Leidrum and Hartnell had had a meeting with its creditors. There were further substantial withdrawals in May, and later distributors were asked by letter to complete their payments. Major withdrawals of cash were made in early June. A £2600 cheque was dishonoured, and Mr Ormondy, the company’s bank manager, had refused to have the company's account continued.

In the final week of activity in New Zealand starting on June 10, money was withdrawn from the National Bank and placed in the Commercial Bank—£6s9o was placed in Gardner’s account In the Commercial Bank. Gardner and Miss Keane bought round-the-world tickets and on the Thursday afternoon Gardner, Miss Keane, and Chaplin were seen in the

company offices for the last time.

On Friday morning, Gardner and Chaplin flew to Australia, and the company safe was found locked. A suitcase containing its records was found in the harbour. This was reported to the police, and it was later found in Miss Keane’s car, said Mr Nicholson. Six Months On June 24, Gardner had moved on to the United States and in April, 1967, he went to the United Kingdom. He was arrested there in September. The six months of action in New Zealand showed a period of setting up, deposits, withdrawals and the climax in June with Gardner leaving New Zealand. From evidence, it was quite clear that Gardner was setting up and perpetrating a fraud, he contended. There were a number of main points for the jury to consider from the evidence: The setting rp and the image of the New Zealand company, money movements, double sales of zones, payment of goods delivered, the locators, the company’s advertisements, air tickets bought for overseas, the finding of the company’s records, and the events of June 17. The company was registered in New Zealand with a paidup capita) of £lOO to establish its status. The accountant, Mr Schroder, had expected the capita) to be increased but it was not

Gardner was only a shareholder for a short time. Chaplin was the major shareholder, and for most of the time the director. He had legal control and ownership but Gardner was “the brains to set it up.” No Responsibilities He had called himself the director but in fact had no legal responsibilities and could have been stopped from having access to the profits legally. Mr Nicholson said this showed Gardner’s motives may not have been genuine. as he would not have got the profit from the sale of the company which he had talked of selling. Pamphlets described the company as fully New Zea-land-owned, and Gardner had given the impression that it was just a small sideline of his. The fact that the image of the company given was incorrect could not, however, itself show Gardner's guilt, said Mr Nicholson. Mr Nicholson said evidence had shown that in three instances zones had been sold twice. This indicated that somebody was not concerned about Leidrum and Hartnell's future, and was trying to make “a little extra.” If the company had been honest great care would have been taken with zone sales

Within days of the double sale of two zones distributors had been asked for final payments. If McGurgan, who had arranged these had done it for his personal profit the money would have been paid into his own account—not the company’s. Therefore, he was either doing it at Gardner’s direction or with Gardner’s knowledge —this showed their intentions, he contended. Mr Nicholson said a substantial quantity of goods and display stands appeared to have been delivered to distributors. It was the prosecution’s contention this trouble, had been taken to give the proceedings a realistic appearance.

Though the defence maintained the money expended suggested the business was bona fide, this expense had in fact not been great Partly Paid Most had been borne by the suppliers of the goods, as shown by accounts, with several firms unpaid or only partly paid by Gardner. On the question of the arrival of Gould and the locators, Mr Nicholson said that their business was due to begin on June 27. There was no sign of the locators in New Zealand 10 days earlier. “Surely there would have been demonstrable steps taken preparing for their ar rival.” he said. Also, there was no record kept in Auckland of the dairies in the various areas which had accepted agencies.

“Had the intentions been bona fide, surely some list would have been made so the locators would know how much canvassing they would have to do in their areas to get the required 20 dairies. All these things, Mr Nicholson said, went to show that the company had been part of a carefully set up scheme and that on June 17 Gardner and Chaplin had left New Zealand, leaving McGurgan the means to collect the small remaining portion of the proceeds. Much had been made of the careful organisation and thorough preparation carried out, but the jury should remember that if all 48 zones had been sold, the company would have received £79,000 and it was the Crown’s submission that the scheme would have netted £60,000. Mr Brown in his closing address said that much had been made of the liquidation of the Australian Leidrum and Hartnell and of Gardner being prepared to lie to preserve the credit of the New Zealand company, but though this was highly prejudicial to him, it was in no way evidence of false pretences. The essential issue was whether the company was genuine or whether it never intended to carry on a legitimate business. If the Crown had not shown the latter it had failed to prove the charges. It had been suggested that the company had sought only a three-month lease of offices but in the event the lease had been for three years. Was not the high quality of the cosmetics an indication of a genuine desire to compete? Mr Brown asked. Arrangements had been made for the payment of sales tax, for widespread search for dairy outlets, for a sales bonus, and for a big advertising campaign. Police Theory All these factors went against the police theory that the company had never been intended as a .genuine enterprise. So did the preliminary survey of comparable prices and Gardner’s inquiry about the possibility of selling the company for capital gain. Prospective distributors had been given the opportunity to think it over. The police said this was a subtle part of the scheme, but was it not more likely a genuine way of doing business?

Two suppliers had failed to meet their delivery dates so that the supplier of the cosmetics could not fill the containers, said Mr Brown. The company had made no attempt to collect money—surely, ihe main object of fraud—-until it had ensured the supply of goods. Mr Brown said the evidence showed that 320 cartons of cosmetics and 466 cartons of display stands worth £29,296 wholesale had been delivered.

Mr Brown said the company was owed £23,240 by distributors and owed less than fli.ooo. Gardner had also left more than £5OO in bank accounts. Mr Brown said it had been suggested that McGurgan, either as a dupe or as an accomplice. was to collect this, but he had made no attempt to do so. On the very eve of his supposed final departure from New Zealand, Gardner had put £4420 back into the bank. Members of the jury must ask themselves how this could be fitted into the police theory, said Mr Brown.