SUPREME COURT Crown Evidence Continued In Companies Act Case

Press, Volume CIX, Issue 32219, 11 February 1970, Page 7

SUPREME COURT Crown Evidence Continued In Companies Act Case

Crown evidence continued I in the Supreme Court yesterday in the trial of Sydney Raymond Forsyth, a cable machinist—and formerly general manager of the Credit Union of Canterbury Society,; Ltd (now wound up)—on three charges under the Companies Act: knowingly being a party to fraudulent trading, failing to keep proper books of account, and destroying i papers relating to the society’s affairs. Forsyth, who is conducting his own defence—in a trial before Mr Justice Macarthur : and a jury—pleads not guilty on all three counts. Mr N. W. Williamson, with him Mr W. S. Smith, appears for the Crown. Eight of the Crown’s 14 witnesses had been heard by the end of yesterday’s hearing— ! one of. whom, John Mark Maich, a cook, and formerly, the chairman of directors of the Credit Union Society, was I in the witness-box most of j the day Details Of Charges Evidence has been given that the Credit Union of[ Canterbun' Society, Ltd, on its winding up, has a defl-| ciency of about $27,000, and i that a dividend of only 1c or 2c in the $ will be payable! to its creditors. Forsyth is charged that between August 11, 1965, andj June 24, 1966, he was general! manager of the Credit Union < Society—registered under the Industrial and Provident Societies Act, 1908—in respect of which proper books of account were not kept: that in or about April, May, and June. 1966, he was knowingly a party to the carrying on of' its business with intent to defraud its creditors: and that on June 20, 1966, being general manager, he destroyed papers relating to its affairs within 12 months of the commencement of its wind-ing-up. The Crown says that the accused continually increased his power and control over the society to the extent that he “managed" the directors themselves, many of whom were full-time employees of the society. Former Chairman’s Evidence Mr Maich gave evidence that he had attended the inaugural meeting of the society in February, 1965, and became a director. At that time, the day-to-day running of the society was in the hands of a Mr Wahrlich and a Mr Beeby. Mr F. R. Best was secretary. In May, 1965, a Mr Camielo came to work for the society, ■ as “agency manager," and became a director of it. The I accused was brought in as a I director by Mr Beeby—being ! elected so on July 28—but witness knew accused before I this, as a client of the service ■ station where witness worked as a tyre-centre manager. The accused, however, had resigned as a director only a few weeks after his appointment, but continued on with the society as general manager. Accused . had said he re-: . signed as a director because[ the firm he was then em-. I ployed with —an insurance ! company—objected to his; being a director. Accused, said witness, was! appointed manager of the so-j ciety on August 11, to be paid ! £5 a week. “Nothing to Worry About”! The society’s accounts to j March 31. 1965. prepared by Mr Best, showed a deficiency of about £2200. witness said. “But according to Mr Forsyth, the affairs of the society were not in such a state as Mr Best had suggested, and : that there was really nothing to worry about, as the society was quite solvent.” witness said. On this basis, the directors had asked for a further set of accounts, which Mr Best prepared, but these also showed a deficiency, of some £1250. “The directors did not ! accept that second set of ac-[ counts,” witness said. “It 1 was decided to carry on with the Credit Union on the basis I that Mr Forsyth said that: everything would be all! right.” On October 12, said witness, the directors minuted “dis- , satisfaction” at Mr Best’s fi- ; nancial accounts and resolved : to write to him. Mr Williamson: Were the , directors dissatisfied with Mr ‘ Best? Witness: He didn’t appear to be “with it” all the time. I I don’t mean disrespect to Mr Best, but he did not seem to be able to cope with a lot of things. Witness said he had signed the letter sent to Mr Best—but it had been composed by ! the accused. Witness agreed , that Mr Best had resigned in [ September. ! After that, witness thought

it the accused’s responsibility to keep the books of account. Accused in Control The accused, from the date of his appointment as general manager, had controlled the day-to-day affairs of the society. Witness himself, during 1965, had no such day-to-day control, but merely attended meetings as a director. tn February, 1966. said! witness, he went to work full-1 time for the society, at a sal- 1 ary of £2O a week. Early in 1966. witness said, the society' had moved to much bigger premises. More furniture was bought, and a book-keeping machine. They were not bought for cash, but were being paid for. At this time, the society’s staff—office I staff and field agents—was close to 20. Mr Williamson: • How did you understand all this was being paid for? Witness: Mainly through the changes made to members, and the sales of goods. [ That is where the main revenue was coming from. I “General Overseer” In February. 1966, there; was a directors’ minute re-; garding the installation of a private, unlisted telephone i for the general manager, the ! accused—and an instruction was given out that all tele-: phone calls were first to be re-i ferred to the accused, includ-' ing telephone calls for wit-! : ness himself and other direc-: [tors (who were also employees of the society). [ The accused, said witness, ! was “the general overseer of everything.” He had once; said to witness. Mr Bielski.: and Mr Harris, in the Dornin-; ion Hotel, that he did not! trust any one of them, and that he “checked up” on; them. From what witness was told by the accused, and other directors, it was not necessary to have an audit done until an annual general meeting! w-as called, provided the; books and statements were made up and in order—but in fact, no annual meeting was! held. , Towards the end of May, 1966, a firm of public accountants “began work” at the society’s office-. M G. E. Purchas was there. As a result, a meeting was held on June 16. The directors were told that the society was a financial loss, and were advised to' stop trading. “We did stop trading. We! stopped immediately,", wit-! ness said. The accused, stopped working a few days later. Witness said he himself appeared in the Magistrate’s Court in July, 1969, on a charge of being an officer of the society and failing to keep! proper books of account, and, was “dealt with.” Cross-examination In cross-examination, the accused put to Mr Maich that there had been an auditor appointed to the society. Witness said: “He must have been, but he didn’t do any books.” The accused referred witness to a minute of February 2, 1966. Witness read out: i “That confirmation of Mr | James Olds being appointed I auditor by the board be sent i to him.” Witness, questioned fur- ! ther. said he recalled the resignation of the first chairman ; of the society’s board of di- | rectors, Mr D. V. Smith, about [ August 18, 1965, and also recalled a loan being made to ; him. Asked if he remembered i a dishonoured cheque being received from Mr Smith, witness said: “I think there was. about the approximate time you came into the society.” Do you recall that that loan has ever been repaid?—Not to my knowledge has It ever been paid. ... Witness agreed that there could have been a loan of £3O, in June, 1965, to Mrs Beeby, the wife of the then manager of the society. Witness agreed that Mr Carnielo had been appointed “Christchurch branch man- ! ager” of the society at a sal- : ary of £l6. and that a Mr ; Sands was drawing a salary of £l5 a week. Witness further [ agreed that a directors’ minute showed that a commission [ of £2OO owing to Mr Carnielb be placed with the society .as a fixed deposit. * At this st ge, an adjournment was taken, during which his Honour advised the 5 accused to reread the iadict- ! ment against him, and to consider the relevancy of bis . cross-examination. During cross-examination . after the adjournment, his , Honour again warned the accused of the need for relevance in cross-examination-saying that he had been al- ; lowed considerable latitude—- . and at one stage threatened I to stop a particular line of i questioning, for irrelevance', “Screwing Up Papers” In earlier evidence, Richard

MacNeilage Booth, a public; servant, said that after first being a member he became a salesman for the Credit Union Society and enrolled some 80 members. By June 16, 1966, be was getting constant inquiries from those whom he had enrolled as to' why certain of their accounts had not been paid. On June 2(k Witness said, he called at i the society's office about 12.45 I p.m. The accused and a Mr I Hanis, another salesman, were there. The accused was going through a portable filing cabinet, sorting papers out, and screwing some up and throwing them in the wastepaper basket. Witness hacf,asked the accused if the -papers were ; letters to or from the society. The accused had said: “They are just replies and don’t matter.” The accused, after working at this for about half an hour, walked otti. of the office without furttHfV conversation. He had deemed 1 “very much within himself.” ( Under cross-examination, [witness agreed he baa not ’ ssen close at hand the packers accused had “destroyed.’ Did you discuss this matfvr :of the destroyed document with Mr Bielski?—l don*/. ;think so at the time. Lateral [yes. ' , Car Repossessed Frederick Raymond Gold-

ing, a costing clerk, in further; cross-examination yesterday morning, said that the so-i ciety’s blue Ford Prefect car; which he had had for a few months had one day been re-i | possessed by “two gentlemen” who told him that the car had not been paid for. Mr Golding said that he himself had resigned from the society because of pressure of work and because his employer had asked him to. There were other persona) reasons, he said. Appeal Won By Gore Firm An appeal by a Gore firm lof fruit and produce merchants, Cockerill and Campbell, Ltd (Mr D. M. Palmer), against a magistrate's judgment against it for ss3l—arising from a transaction over 400 bags of potatoes—was allowed by Mr Justice Wilson in the Supreme Court yesterday. Judgment had originally ! been entered by a magistrate at Nelson in favour of P. Hall and Sons, Ltd (Mr K N. Hampton) respondent io yesterday's action—after an action had been brought against Cockerill and Campbell in July last. His Honour ordered that ,\the magistrate's judgment be vacated, and, in lieu of this, n, at judgment be entered for ■ tly- appellant.