ALLEGED MISREPRESENTATION

Evening Star, Issue 22973, 2 June 1938, Page 7

ALLEGED MISREPRESENTATION

LAWRENCE MEAT COMPANY EXAMINATION OF BALANCE SHEETS For the purpose of hearing the evidence of a witness who drew up the oaiance sheets of the company, the case in which Nicholas Ouwejan, a retired farmer, proceeded against the Lawrence Meat Company, was reopened in ■ the Supreme Court yesterday afternoon. The action was brought by the plaintiff to recover a deposit of £SOU paid by him under a contract selling the business to him and any interest accruing. He also made an alternative claim for an order to have the contract rescinded on the grounds that he had entered into it on the strength of representations made by the defendant company which, to the knowledge of the defendant, were false. On the alternative claim he also sought to recover the- deposit of £SOO with interest. Judgment was reserved by Mr Justice at the original hearing in November, but the case was reopened for the purpose of hearing evidence fr'om Bertram Sjiroull Fulton, town clerk of Lawrence, who made up the balance sheets of the company. Mr A. G. Neill, with him Mr W. J. Meade, appeared for the plaintiff, and the defendant company was represented, by Mr J. S. Sinclair and Mr J. C. Mowat. Fulton, in evidence, said that for some years he hadi prepared the annual statements, accounts, and balance sheets of the company, having commenced originally at the request of the late Mr J. K. Simpson, who had asked him to devise some means of keeping a check on the cash. Witness outlined the way in which he dealt with the financial affairs of the company, and said that apart from certain checking carried out by him there was no proper audit. He kept a private ledger. The method adopted m calculating the cash and credit sales was not in accordance with ordinary commercial practice, which was to take the .total cash and credit sales from records kept specifically for that purpose. Witness ascertained that figure by accepting the total of sundry debtors as correct. He said he would not have a chedk on items disappearing from the customers’ ledger during the vear, because only cash items in that ledger would appear in the cash book. Sometimes services performed by customers would be credited to their accounts in the ledger, but the transactions would not oe shown elsewhere unless receipts were made out. Witness received no list of such transactions. He admitted that certain items brought out in examination rendered his trading account to some degree inaccurate To Mr Neill, witness said he would not say he had any reason to believe that any data of importance was withheld from him. Year by year he believed that the figures given to him were correct, as he was supplied with everything for which he asked. He had no reason to suspect to-day that the balance sheets were not accurate.

During Mr Neill’s cross-examination; further reference was-made to the witness’s private ledger, and in reply to _a question by His. Honour, Mr Neill said that until that day he had never heard of it. His Honour said that Donald Munrq, manager of the company, whose evidence had been heard previously, had sworn in effect that there was no private ledger, and if Mr Neill was embarrassed he had only to ask for _an adjournment to be granted further time to consider the ledger. Mr Neill: I may later have to ask for an adjournment for that purpose. Mr Sinclair said his recollection was that Munro had sworn that he was unaware of the existence of a private ledger. His Honour; He swore, in effect, that there was no such ledger. _ If his evidence is accepted Mr Neill would be well entitled to believe there was no privat ledger. Mr Sinclair: The present /witness himself said Munro was unaware of it* existence. His Honour: I am aware of what he said, but when the impression is created that there is no private ledger and then it is found that there is one, if there is any possibility of embarrassment to the other side I feel it right at once to intimate that an adjournment, if asked for, will be granted. Mr Neill referred to Munro’s evidence in which he had said: “There i* no private ledger.” Witness was then questioned at length by Mr Neill on the methods he employed in making up the balance sheets of the company, and with reference to one particular process he said; “It all comes out right in the end, doesn’t itP ” His Honour: Do you do this work yourself, or do you delegate part of it to someone? , _ Witness: I do it myself, but it is two years since I made pp that particular balance sheet. ‘. Witness, in reply to Mr Neill, said he had not been asked to make up a balance sheet since 1936. He understood some of the books had been stolen. To his knowledge the shareholders had not had a meeting for the year ended 1937. They had intended to go into liquidation, but in view of the court proceed* ings they could not go on with that. He had no method of obtaining the true gross profits in any month. At Mr Neill’s request he checked his balance sheet for 1936 with the figure* given as correct by Munro, and admitted that there was a discrepancy of £214 11s Id. x The court then adjourned until this afternoon.