Former JBL lawyer gives syndicate, partnership details

Press, Volume CXVI, Issue 34089, 28 February 1976, Page 3

Former JBL lawyer gives syndicate, partnership details

■ - •• (Seio Zealand Press Association) . . AUCKLAND. February 27. Details of group syndicates and of a trading partnership were given today h\ a solicitor formerly employed by JBL when he appeared at the lower court hearing.

Gavin Hector Morpeth, a barrister and solicitor, said today that he joined the legal stall' of JBL in 1971 and remained with the firm for one year, finishing shortly after it went into receivership. His duties included preparing syndicate documents , <>nce a syndicate had been filled. Asked by Mr Baragwa.nath. for the Crown, if he knew anything of- the disj patch of brochures contaiuling references to material that had not received j confirmation of accuracy from the legal department, the witness said he could, 'not remembei any specific discussions among the legal staff. His feeling was. however, i that at various times there I was general discussion when ■that appeared to be the case. ; Mr Morpeth said one of ithe defendents. Mr Thomson, I was head of the legal deipartment, but he, witness, I was not aware of the work the defendant did. He

thought, however, that; Thomson in the last few! months was involved with management, from the legal; point of view, with re°ard to the raising of money. Referring to ;< property at, Anzac Road, Mr Morpeth) said the original agreement j for sale and purchase from I the vendor, Alan Associates, showed a price of $160,800. The* purchaser was JBL Pro-: perjies. It appeared, said the witness. that JBL Properties was to' sell the property to a; syndicate for $160,500 — $3OO less than the purchase price. Documents, he said, showed a mortgage of. $60,000 was to be arranged by JBL Consolidated, so lhe cash equity subscribed by: the public would be $100,500. He said there was an agreement, after a request from . the. vendor, that JBL Consolidated arrange a syndicate of investors for 1 the property for a fee of’ $24,800. This was not disclosed to investors in the; brochure. 1

The brochure did state,, isaid Mr Morpeth, that: ‘The ;syndicate will purchase the property for $160,500.' It ; did not say who the registered proprietor was. ' Two agreenienis He said that as far as he: could remember there were difficulties obtaining the sec.mid deposit for this transaction. and further negotiations were carried out with, ■ Alan Associates by other :members of the organisation Referring to documents ion a terminating syndicate al 85 Huia Road, Mi Mor peth said ii was stated that the legal department was most concerned about the . position with respect to this property. ■ It had been in a position: to settle the syndicate lot three months, and lhe delay was because funds had not been available to buy the property. ' Referipg to a property at George Street, Mr Morpeth said there were two agreeI ments for sale and purchase. 'The purchase price appeared

~to have oeen $24,000. This ‘had been amended, to ■ $26,000. The purchase price on a ‘: later document was shown ; at $29,300. i The witness said the purlchaser tn me first agreement i was shown as . JBL-Sargent.; j! Ltd, or nominee. He could ; not remember the purpose • of having two agreements - instead of one, but the effect was that J 81.-Sargent paid i .$26,000 and the syndicate r $29,300. By having two agree- > ments. JBI 'food to mike a j, profit of $3OOO, apart from ■ the stamp duty. Mr Morpeth said that on t March 23 1972. he received :? a memorandum from Thom- ; son asking him to take over The documentation of trading i:partnership two. t • Looking at the rile, the witness said there were t; three certified searches of .‘ the titles showing the-land, ;the name of JBL Develt .ipment, l td. a mortgage to rM.L.C. Assurance, and a -■mortgage to Her Majesty the .'Queen. I Mr Baragwan.it h: “There will be evidence given that there was money owing ; under both mortgages, and under a -hattel security over stock and plant, including livestock, .n favour of the National Bank and an instrument by way of security in favour of the North Auckland farmers' Co oper-’ alive, dated April 6. 1965. “If evidence is given that | sums were due under all I these securities at all mat- : | erial times, what would have t had to be done before you i; could settle t.p. (trading > partnership)?'’ i The witness: “Off hand, a I'release of the mortgages if I the partnership was to take title to the land; obtain a re- , lease of 1 he chattel security : over the livestock if the livestock was also to be . cleared by the partnership: • and obtain a release, of lhe • debenture, if it was over any assets belonging tu the II farming business which the 11 partnership was to pur- . I chase.” ti The witness said that to secure , such releases nors malty the principal sum and e all outstanding interest d would be required to be d paid ■ i ft might also be possible to .. obtain a release il the particusi lai losses were also secured by other properties and the t lenders were happy with the 3, remaining security ;{ Mr Morpeth said that in 11972 he was asked, inter aha,

lhe JBL hearing is before an Otahuhu magistrate, Mr T. G. Maxwell, S.M. James Edward Jeffs and Vaughan Joseph Jeffs, .181 Consolidated. ltd. and : nine Auckland men, face a number of charges alleging conspiracy to defraud and fraudulently promoting. lhe Jells brothers are not present for the hearing. The other defendants are Barrie Phelps Hopkins and Michael Bruce Gurney Thomson, solicitors: Rex Evans, Hugh Stephen fanning, Hugh Buchanan Jones, and Erie Walter Ihompson, chartered accountants: 1 raiicis William Ralph and Phillip Paul Sargent, company directors; and Peter Kenneth Le Neuve Arnold, company executive. lhe Crown is represented by Mr 1). W. Baragwanath, Mr D. S. Morris, and Mr A. B. Lawson. Air C. S. Ennor. and Mr G, Al. toy appear for Sargent, Mr \L I). Robinson and Mr R. .1. Collis lor Ralph, Mr I. W. Brown Q.C.. and Air G. N. Jenkins tor Hopkins, Mr S, G. Lockhart for fanning, Mr .1. S. Alexander for Evans and Thompson, Air .1. S. Henry and Mr C. B. Littlewood lor Arnold, Air R. R, Davison. Q.C., and Mr N. .1. Carter lor I homson. Jones is not represented.

1 whether the members of the Tadvisorv board were entitled "to be called directors. As best as he could re member he conveyed the opinion that there was no j definite definition under tlm Cmnpanies Act of what a I ' director" was and that the use of the w.ud was not legally restricted to the officer* ,uf a company. , Consultant: directors', he I said, should be careful not to i be involved in normal drrecj tor-type decisions. e Mr Morneth told Mr Jen kins (for Honkins) that m_ a o memo of febiuaiy' 2. 19.2 - the retiring professional di d rectors offered their services e to*.the company as consult e ants and agreed to be called a board of Consulta'njs. They a were to be called consultants ..land not consultant directors.