Charges laid over failed magazine

Press, 1 May 1984, Page 6

Charges laid over failed magazine

A letter signed by the Mayor of Christchurch, Sir Hamish Hay, the DeputyMayor, Mr R. Lester, and two other city councillors, recording the council’s support for a planned free monthly magazine, “Lifestyle,” was submitted in evidence at the District Court yesterday in a fraud trial relating to the magazine’s publication.

A husband and wife faced two joint charges alleging false pretences involving a total of $26,896 from Caxton Press, Ltd. Alan David Hammond, aged 28, unemployed, and Dian Joan Hammond, aged 25, a housewife, denied the joint charges that on or about January 14 last year, in incurring a debt of $15,000 with Caxton Press, they obtained credit by false pretences by representing that they were in a position to make an agreed payment of $14,000 before production of 106,000 copies of a magazine entitled “Lifestyle”; and that on or about March 25 last year, in incurring a debt for $11,896 with Caxton Press, they obtained credit by false pretences, ,by falsely representing that they had completed contracts with various persons for advertising in the magazine, which were sufficient to provide revenue from which the cost of publication could be met. The trial before Judge Pain and a jury, will continue today. Mr B. M. Stahaway appears for the Crown and Miss E. H. B. Thompson for the defendants.

Edwin Bruce Bascand, managing director of the Caxton Press company, gave evidence of being approached by the Hammonds in October, 1982, to quote a price for the production of a planned “Lifestyle” magazine.

He and his sales manager were told that the magazine would give details of activities of sports clubs and community organisations, and would be delivered free to Christchurch households.

“We thought it had a future, especially as we were led to understand that the City Council was very much involved,” Mr Bascand said.

Subsequently, in December, 1982, he was advised that Caxton Press had been awarded the contract. He advised the Hammonds that, before printing, a payment of. $14,000 would be required. At that meeting the Hammonds told him that the City Council was guaranteeing payment for the magazine and that the money was in the bank.

Mr Hammond then showed him a letter from the City Council, dated November 10, 1982, signed by the Mayor, Deputy Mayor, and councillors V. S. Buck and D. J. Rowlands. The letter acknowledged receipt of information on the proposed “Lifestyle” maga-

zine venture and said that the council was fully committed to a policy of community involvement in support of all local clubs, groups and organisations, whether hobby, sporting, art or cultural.

The letter said that the proposal was recommended to prospective advertisers and was fully supported by council members, who believed that a magazine of this nature would establish itself quickly as a regular and well-used household reference. Mr Bascand said printing of the content and cover was contracted out to other firms. The cheque for $14,000 was not paid by the agreed day but production of the magazine went ahead because of the involvement of sub-contractors. His firm took a commercial risk, deciding to go ahead with the job and wait a further day for payment. Mrs Hammond telephoned him and said the City Council was not paying, and that they had no money. When asked why they had proceeded with the contract, Mrs Hammond said that if Mr Bascand had known that they were not able to pay, he would not have gone ahead with printing the magazine. His firm had been forced into a position of deciding to go ahead and produce the magazine, said Mr Bascand. A meeting was held with parties concerned, and with Mr Rowan Gibson representing the City Council. Mr Bascand said that it transpired that the council had very seriously looked at the possibility of financially backing the magazine, but had rejected this proposal, about December 22, 1982. Mr Gibson had told them to advise the contractors immediately that the Council was not financially backing the publication. This was not conveyed to his firm, Mr Bascand said. He said a deed of debt was drawn up in which the Hammonds acknowledged a debt of $15,000 to Caxton Press and agreed to abide by certain conditions. Earlier towards the end of March, last year, Mr Hammond advised the witness that he had sold $22,000 worth of advertising. Mr Bascand later became 'concerned about the legitimacy of the advertisements, after being told by a city businessman that something was amiss. Mr Hammond showed him duplicate invoices for about $20,000 worth of advertising. Mr Bascand said he learned of businesses having complained to the police about invoices being sent to them for advertising in the magazine which they had not contracted for. Mr Bascand said his firm had been involved purely as a printer. It undertook the printing of the magazine

solely because of representations made over two months by the Hammonds that legitimate advertising totalling about $22,000 had been obtained progressively. Cross-examined, Mr Bascand said he did not know the nature of liaison between the Hammonds and the City Council. He knew there was an “enthusiastic” link between them. Asked if he had made several assumptions, he said his firm was led to believe that the City Council was a financial backer of the project Asked if the term that “the money was in the bank” could have been a slang expression, Mr Bascand said his interpretation was that it was as rock solid as any local body could be. Mr Hammond had not told him which bank. He had not questioned the Hammonds. Mr Bascand agreed that the letter from the council made no reference to financial backing from the council. He said the letter was obviously a strong endorsement for advertising purposes. “We thought, and were led to believe enthusiastically, that the City Council was the guarantor behind this project,” Mr Bascand said. He accepted that he should have investigated further. It would have been prudent to have done so, he said. Mr Bascand said his firm instigated bankruptcy proceedings against the Hammonds, claiming a debt of $26,896 from them. Rowan Alfred Gibson, an administration officer with the City Council, gave evidence of the Hammonds approaching him with the magazine proposal. He referred them to the council’s small business advisers. Later, the Hammonds asked if the council would act as guarantor. A motion to the effect that the council act as guarantor of the magazine was rejected by the full council at a meeting on December 20, 1982. Mr Gibson said he notified the Hammonds of the council’s decision and advised them that they should inform their bank, solicitor, and printers of the outcome immediately and that they did not have a guarantor. The Hammonds were diappointed, but still hoped to find a guarantor. A meeting was called in January because he learned that Mr Bascand appeared unaware that the council had declined the request to act as guarantor. The Hammonds said they believed that if they had told Mr Bascand that a guarantor was not available he would not have printed the first issue. Mr Gibson said he felt that the Hammonds perhaps had misled Mr Bascand by not informing him.