DOCTOR'S BANKRUPTCY.

New Zealand Herald, Volume LXI, Issue 18890, 12 December 1924, Page 13

DOCTOR'S BANKRUPTCY.

DUNDAS MACKENZIE CASE.

NONPAYMENT OF DAMAGES.

DEFICIT OF £3345 SHOWN.

[THE TRANSFER OF PROPERTIES.

The first meeting of creditors in the bankrupt estate of Henry Dundas Mackenzie, medical practitioner, Auckland. was held yesterday before the official assignee, Mr. W. S. Fisher. Bankrupt wag mulcted in £2(300 damages recently by the Supreme Court in an action brought by a patient, Mr?. Lawrence, of Hamilton. Mr. J. F. W. Dickson appeared for the bankrupt. miiJ Mr. Strang (Hamilton) represented the only proved creditor, Mrs. Lawrence. Mr. Fisher explained that as thero was only one proved creditor present tho meeting consequently could not make any resolution and would have to lapse for want of a quorum, but there was no reason why the bankrupt should not Lo examined.

Bankrupt's filed statement showed that bis total debts amounted to £3494 15s, while his assets totalled £149 12s, leaving a deficiency of £3345 3s. The liabilities consisted of £2273 15s, owing t> nnBecured creditors and £1221. representing the difference between the amount due to secured creditors, £3290, and the estimated value of the securities, £1969. The assets comprised! book debts, £54 12s, end unsecured property. £95. The principal unsecured creditor was Mrs. Lawrence, tho sum involved being £2200.

" Persecution by the 8.M.A., Limited."

fn a filed statement the bankrupt attributed his bankruptcy to attacks on him by the Auckland branch of the B.M.A. These attacks caused him to spend some JD7SO in settling a case in addition to rosls and expenses. The " B.M.A.J Limited," then launched another attack on him, this being part of its system cf persecution. Bankrupt traversed the course of this alleged persecution by the British Medical Association, and what he characterised as a method of legal blackmail by the issue of a summons for £2000 for alleged neglect. He claimed that no negligence had been proved against him, that the 'jury were ignorant of the facts, and that the Judge's summoning-up was unfair. For two or three years past bankrupt's office had been picketed and patients interviewed with the object of diverting them from his consulting rooms. He also declared a conspiracy had been launched against him by the members of a limited liability company registered in England and,doing business in New Zealand, namely, the British Medical Association, and persistently persevered with for the purpose of discrediting him in the eyes of the public. As a result his practice had been very badly affected financially. He was unable to pay the damages of " a speculative action " against him.

Books Lost in Bemoval. Bankrupt, on oath, declared that his scheduled statement was true in every particular.

Mr. Fisher: You have not included your 6ank pass book among the filed papers. Have you any hanking account ?—I have an account in the Bank of New Zealand, and also in the Post Office Savings Banki Mr. Dickson said the bank pass book would be produced. Mr. Fisher said the book did not go back very far, only to February, 1923. Were there any other books ?—Unfortunately, said the bankrupt, a large number of my books were lost when I removed from Symonds Street to Heme Bay about 18 months ago. Did you have a complete set of books up till then ?—No. I kept two cash books, one for cash received and' the other for cash paid out. \Vere you in the habit at that time of paying all moneys received into the bank? --No, I have never paid it all in. The bank book would naturally show the major portion. Were all your receipts lost at the same time as the books? —Some were lost, .and tome were not.

Bankrupt, in reply to further questions hy Mr. Fisher, said he was not living in the Symonds Street property, and that the furniture in it belonged to his wife, as also did the furniture in his private house at Heme Bay. Mrs. Mackenzie had had some of the furniture when the}were married.

Mr. Dickson explained that the bankrupt had executed a deed of trust to his first wife.

Bankrupt said he married his present N,yift in 1920. She had -money of her own, and it was with that money she bought the household furniture. He knew nhe paid for some of tho furniture with her own money. Have the receipts /or flic furniture been lost ?—I suppose so. Mr. Dickson interpolated that as far as the lost books were concerned the whole matter had been canvassed by a Government official for the purposes of taxation, and an estimate of bis position then could !>•*, supplied later. " That will be verv valuable," said Mr. Fisher.

Mr. Dickson added that as a result of that examination bankrupt was called upon to pay £190 income tax in 1921-22.

' Entries in the Cash Books. Mr. Strang: This cash book, Doctor, represent:! all tlie moneys you received from your practice during the period that it covers ?—I cannot tell you. The book was kept by my clerk. * lu reply to Ml*. Strang bankrupt said there had been clerks employed at different times during the period, two young ladies and his wife. He did not think that there were any payments made to him in addition lo those disclosed in the cash book. lif did not know who had gummed down several of its pages, apparently dealing with the April period in 1924. He had no objection to counsel parting the leaves. Mr. Strang quoted several items from tho April entries, and asked if the Mjms had been pa.id into the bank.—Bankrupt replied: Not necessarily. Bankrupt stated in answer to further questions that he married his present wife in December, 1920. By agreement lie was paying his former wife £182 a yea r. Do you know how much money your wife possessed when she married you in December. 1920?— I do not know.

Have you any idea at all '. — No. Did site have at 111 at time any property outside the furniturv ?—Yes. What was the nature of it ?—I do noi know. > Payment for Symonds Street Property. Had she any interest in land <>r buildings?—l cannot say. I do not really know. You have never found out':- It was lip interest ot mice in f'md out.

You acquired a property in Svmonds Street?— Yes.

How much did vou give fur it'—l paid £1500 i;i cash 'and gave a rtga K c to tho vendor ..f il 1000 r ,i 6 per cent. The property was in 'my i,wn name. Whvn did y.>u bin it ' About. March 3925.

Is that property :.:i!l in your own r-anie '.'-—No.

In whose name is it now':—ln u.y v. lie's nam".

When you took the title, was the prop, city registered in your name ?—Yes. On what date did you execute the transfer ?—March, 1924. " What consideration was given by vour wife for that transfer?— There were two properties, but tho value of property. bad i decreased very much, There was » cash consideration of £800. About ■three months after (he purchase of the Symonds Street property I acquired a property in Heine Bay. Did you purchase, that property a'sn ? •••-Yes.

Was tho title registered in vour name, too .'—Yes.

What were the terms '—£1500 in cash n-j rnort K a £ e frr the balance, £2.500. Did you further ore-umber the.<,c prop Arties ?-- Yes.

To whom did you mortgage them ?—To Mr. J. F. W. Dickson.

What was the amount ?—£2ooo and further advance!;.

What was the purpose of that advance? —Legal expenses. What! £2000 for legal expenses ?—Yes. Hud these expenses already been inclined when 'he executed this mortgage. Do you know how much ?—No. Will you tell us in what connection this £2000 for legal expenses was incuwed ?—For legal services rendered. Have you got accounts showing how that amount was incurred ?—I havo had uo accounts up to the present. What legal services were rendered ?—I ha v o no accounts.

What was tho subject, matter of these services which Mr. Dickson rendered as your legal adviser and counsel'/—He interviewed many people for me in connection with tin's persecution of me bv the B.M.A.

Who .was the persecuting party ?—-J have no direct evidence of that. Wai it persecution in fact ?—Tn the form in which f was attacked. I have explained that, in my statement to the official assignee. May I take it that the first persecution, as you call it, was the action brought, against you by Mrs. Lornax ?—No. What form did it tako and who instituted it ''-—Tho local president of the British Medical Association by causing an inquiry to be held. Was any part of this C2OOO employed in any way in improving your properties ?—No.

Mr. Dickson explained that his account would be rendered in due time, and it couid be taxed in the usual May. As ii matter of fact, there was a pavment of between £400 and £500 to Mr. Myers. K.C., and a payment of £125 to Mr. John stone. Property Transfer: ;d to Wife. Did you expend any money on improing the Symonds Street, property ? —Yes, about £3000. I do not know exactly.

Was that amount expanded in cash ? — It was paid by me, partly out uf the proceeds of my practice. To what extent ?—I cannot tell vou.

Bankrupt replied to numerous questions concerning items of expenditure on improving the Symonds Street property. Mr. Strang returned to the subject of bankrupt's transfer of his Symonds Street property to Mrs. Mackenzie, and asked how the £800 was paid.—Bankrupt replied that some of the money wiiii paid in cash for advances she had made to him from time to time, and some of it was owed to her for work done. He had a right to pay her. How much of the £800 was in repayment of Mrs. Mackenzie's advances to you?— About £560, while the remainder was for wages. She learnt the work in America and was the only person in New Zealand who could then do the particular work required. Whatwwats t her remuneration ?—£B a week. She was earning this £8 at the. present time, and had been paid that amount since 1921.

In March, 1924, you were 30 weeks in arrear with wages?— Much more than that.

Were you in arrear with any other wages ?—No. When was the period of the first advances of this £560 made to Mrs. Mackenzie ?—About November, 1920. That was prior to your marriage ? — Yes.

There was no document, no 1.0. U., or anything like that given ?■•_ Oh, no. Was any record kept of thy advances given to you by Mrs. Mackenzie —I do not know of any record. She may have a record ?--•] do not kno-w.

So that, I gather, in March, li>24, your wife made a proposition to yoa about transferring your properties ',' —On the contrary . I made the proposition. Did you suggest, a figure '—No. Who suggested the figure ?—There was no suggestion of any amount at all. Transfer Made Alter Issue of Writ.

Replying to further questions, the bankrupt said he did not keep a wages book prior to 1923. He did not know in what form his books were kept. He was no bookkeeper. He only looked at his books once in 12 months, after they had been bah,need.

Mr. Strang: At the time you transferred this property to your' wife you had been served with Mrs. Lawrence's writ ?— That is so.

You received it in February, 1924, a month before the transfer was executed. Will you sw.jar that the transfer of that property had ao association with Mrs. Lawrence's writ ?—No, I will not sweatto that.

I suggest that if the writ had not been issued the transfer would not have been executed ?—lt would have been executed in any event. Had your wife at this time brought any pressure to bear for payment of the money due to her by you ?—What do yon mean? Did she ask you for the money'—i think that is a matter entirely for me I do not think so. Was there any suggestion about payment ?--It had been suggested by my wife that I should fix up the money due to her. I take it there was fio threat of proceedings ?—Certainly not. Was any of the money advanced by your wife borrowed in connection with your practice?— Partly, yes,.and partly for housekeeping expenses. Was not the practice in Symonds Street, earning enough money to pay ex penses ?— Xo. Do you swear to that '!— Yes. Bankrupt also admitted he had obtained a loan from a married sister at Ngaruawahia. He could not say how much it was. hat it had been repaid a Few months later. Payments and Receipts.

Replying to questions concerning the extent of the Symonds Street practice, bankrupt, stated* he usually had employed four or five assistants, and six .it one period only. The wages bill ran to about £25 or £27 a week. The rent tor the Ahrarns treatment apparatus ran to 15 dollars a month, then equalling about £3 15:>. now £3 2s. Mr. Strang: Do you pay rent for your consulting rooms ?—Since March last I paid my wife £50 a week for rent of the Symonds Street property. Up could not say to what extent his rent was in arrears.

Counsel promulgated a calculation in simple arithmetic, and mentioned that, on a generous basis, the bankrupt.' when owner of the property, only had to pay in intersst and expenses about £7 a week for it. Was that right?— Bankrupt said he had not worked it out.

.\fr. Dickson explained there wis a clause in the lease which provided for its termfnation in llio event, of bankruptcy. Mr. Strang, to bankrupt: Have vmi ever told anyone thai, in 1922 your net income was £30,000?— I have not men. tioned my income to anyone. Would it be right to Jay v<->u were earning £100 a week, and ihat vour expenses were £50?— It would not" be cor-' rect.

How ..lid it come about that you had t" borrow from your wife for the pur- ' |mi>ps of your practice?—lt was not fori my professional business.

Counsel reminded bankrupt that a previous statement bad been made to the contrary. Mr. Strang quoted from the bankrupt's cash look entries showthat some, weeks the receipts had ranged from £158 to £21] a week...- , Bankrupt said it was unfair to take ' isolated periods. His expenditure would ■ average about £50 a. week in his prac tice, and there were other expenses. Thousand Pounds to Wife. Asked about: certain properties he had at Pieton, bankrupt said lie had bought two or three sections on the outskirts of tin; town. He bad banded the deeds to a certain firm six or eight ; years ago 10 aucure money he owed for work done. \s to another grazing property, it was let at £75 a year, but the rent did not cover the outgoings. Bankrupt said thero were two sub mortgages to Mr. Dickson on .Auckland properties. Mr. Strang : Do you own any other land > in New Zealand, or any interest in land j except those enumerated in the schedules? No.

Have you at any time transferred anv property to yon \,jf e other than the two properties discussed this morning ?- -It. de

pends on the definition of "property." Some time back I gave my wife £1000, which was money owed to her. Thafc would be about December last. It was paid in cash.

In notes I —l don't know. You are not handing people £1000 every day of the week ?—I am not dealing with my wife every day of the week in .:ash transactions. It was not a gift. It was owing for wages. i ou have been paving her £8 a week ? —Trying it. Have you paid anything beyond this £1-1001— Yes. *

f 'an you furnish particulars ?— Of some, but not all.

'Yill you bank pass book show what yt : i drew to pay your wife wages?— No. Dealing with his Hprne Bav property, bankrupt said he. did not think it was now worth the £4000 paid for it. Its value today would be about £2200, something less than the amount of the first mortgage. Did you consider £30 a week a fair rental for the Symonds Street property when the lease was executed in March last ?—Yes.

Tf it were- your own would vou expect to lease nat that figure ?—No"; all prop. erty has depreciated in Auckland since March.

Mr. Strang examined bankrupt as to his receipts, as shown by the books put in. 1 tako it, he said, this book is a true statement of the minimum you received ?— Lhat is a true statement of the amountnot the minimum amount. You said it. was "at least this and might be more."—No, I did not. You said that:

The Official Assignee: I gathered from what you said that that was what vou meant.—l did not sav it. He put 'the words into my mouth. Wearly £6000 in Eleven Months. Mr. Strang: We. may take it that from hebruary 10, 1923, to the end of December, 1923, you took in fees £5988 Is 4d ? —Why not take the financial year? Bar.V.rupt said there, was a memo bv the official assignee that £886 had to be deducted from the 1923-1924 account. Mr. Dickson paid the books had been audited by tiovernment officials. _ Mr. Strang: What fees did vou collect trom February 10 to Decern her" 31. 1923? —I don't know.

The hook says £5988 Is 4d, and you say it is a true record ?—I expect it is.' is that the amount you received in tees for that period ?—Apparently. The liuvernment auditor apparentlv 'said it was right, less £886. You consider the expenses at. £50 a week ?—Yes.

If so, I suggest that over that period you had a clear profit in cash of £3500 ? --You are Wrong, for. the reason that many expenses did nut appear. Mr. Dickson: Where do you get £3500 from '!

Mr. Strang: I have deducted the running expenses. Mr. Dickson: That does not include the incidental expenses of the business. _ Bankrupt said it did not take, into consideration running his motor-car, travelling, or anything else. Mr. Strang: Is this a true record of money expended on every account whatsoever ?—No ;- it. is purely money spent in the production of that 'income. Purchase of Furniture.

You say the furniture is all owned by your wife ? —That is true. That applies both to the Symonds Street property and that at Heme Bay?— That is so.

I take it she paid for it ?—My wife paid for it. No money has been taken out of your business to pay for furniture ?—-Not as far as I know.

Asked if a certain furniture firm had been paid £500 between May, 1923. and April, 1924, bankrupt replied: ",I don't know what it is for. I will swear nothing about it because I don't know."

Did you pay these accounts yourself ?— Sometimes.

Are you aware you made payments practically every month over a certain period for furniture or some other purpose ? —I cannot tell you a bit what was paid. J do not know if the furniture is insured.

j Questioner! as to accounts and receipts ] for the amounts shown in the expenditure journal, bankrupt said he had not deliberately destroyed them. " The trouble I have had is that I have lost quite a lot of my things and I have no means of finding where they went to. They were either stolen from the vans or have been lost by the men in handling I the stuff. That is the only way 1 can j account for it. They were packed in Symonds Street, and sent to my place, and when I wanted them they were not ! there." The documents not now available were | lost in transit from Symonds Street to j Heme Bay ?—Yes. j Bankrupt said there wpre items and expenses not included, which might relate to housekeeping and half-a-dozen things. Ke did not keep the books. His clerk received the fees paid in regard to the practice. If he personally collected fees | he handed them to his clerk, who would 1 enter them in the book. Amount of Legal Expenses. Mr. Strang: You paid in cash £750 in connection with Mrs. Lomax's case ?— ! That is so.

None of that was provided by Mr. Dickson ?—No.

You have some accounts for lejral expenses. There is aij amount of £65. What was that for?—l do not know what it. was.

Mr. Dickson : I can supply you with all those particulars. My ledger account is always open to the official assignee. Continuing, Mr. Dickson said that in regard to the £65, £40 was sent to Wellington. Bankrupt and he went to Wellington in connection with tho Lomax case and he consulted Mr. Myers. Of the £65 another £6 was for Mr. Skerrett.

Mr. Strang; In July, 1923. you paid £192 for salaries in one sum. To whom? Mr. Dickson: That represented an accumulation of salaries.

about two items. £98 and £60. bankrupt sard the, former whs a payment, for work done and tho other for interest. As to receipts supplied iiinco tie had shifted, he said some were in Lis possession. Ho kept no accounts but he kept the receipts. Have you any money now invested in America on your account?—No; not a dollar.

Any interest, in any property outside New Zealand?— None.

Bankrupt said that when he visited America in December. 1922, lie took £500 and spent it. Ho took about £65 in cash besides. Statement by Solicitor. Mr. Strang; 1 would like to know if it is possible for Mrs. Mackenzie to give evidence this afternoon. bankrupt said it was not possible, lis wife not being in a fit state. .Mr. Dickson, dealing with the submortgages, said that when bankrupt first consulted him in connection with proceedings taken by the Medical Hoard to have Mackenzie) struck off the. roll some 10 months or two years ago, lie (M r . Dickson) appeared ' before the board iri connection with Ihe preliminary inquiry, Later he acted for Mackenzie in the Momnx case, in respect, of which lie had received payment. Mackenzie, also instructed him to appear in the Lawrence case, which was a claim for £2000 damages. He had received no fees for Ihe previous medical inquiry, and he (old Mackenzie that he wanted to bo secured. He sent Mackenzie to an independent solicitor, and a mortgage was drawn up for him over the two properties. Later Mrs. Ma/kenzie g avo |,j m scrur jt v . He was not sure whether it was then that he cot collateral security over the two mortgages As to the fi'rsl mortgage on the Hawke « Bay property for £2500, lie was of opinion that that was tho maximum the property was worth. The Svmonds Street, property was only good from the land point of view. The house had been up 5o years. A land agent whom he took to the property said the only thing it was good for was the land. A rental of £30 a week was ridiculous. His account 'had riot been rendered to Mackenzie, and the latter did not know his fees. Bankrupt, replying to Mr. Dickson, referred again to the British Medical Association, which, he said, had combed the Auckland Province to get, every possible, case they could against him. After further questioning the meeting was adjourned i»ine die.