ALLEGED LAND FRAUD.

New Zealand Herald, Volume LXII, Issue 19125, 17 September 1925, Page 12

ALLEGED LAND FRAUD.

CLAIM FOR £15,150 DAMAGES. MORTGAGE QN TIMBER BLOCK DETAILS OF TRANSACTIONS. EFFORTS TO SELL TO CROWN. [by telegraph.—own correspondent.] HAMILTON. "Wednesday. The claim of William Allen Paterson ana Jane Paterson (Mr. Blair and Mr. Adams) for the recovery of £15,150 from Frederick Charles Hand, land agenfe (Mr. Finlay), as damages for alleged misrepresentation and breach of duty, was con-, tinued before Mr. Justice Herdman in the Supreme Court to-day. One of the plaintiffs, Jane Paterson, a retired school teacher, said that when her brother told her of Hand's proposition she made inquiries concerning the financial position of those wanting to dispose of the block. Th§ solicitor told them that the security was quite safe and they would get their interest all right. Witness detailed her efforts to dispose of the Mangahao property after she and her brother had acquired it. She tried to Bell to four Government departments. She was on the point of selling the place to a Wellington resident, when the advertisement of the proposed sale by Hand as mortgagee appeared, and all prospects of selling privately disappeared. The Plaintiff's Attitude. In opening foij. the defence, Mr. Finlay said Mr. Blair's address resolved itself into a denunciation of Hand's conduct as agent, based on plaintiff's charges of fraud and neglect. It was grossly unfair for Paterson to make charges of fraud which were based on conversations four and a-half years ago. It was remarkable that since that time until the writ was issued, no reference to the charges of fraud and neglect was made. A most important feature of the case was that even Paterson believed the Mangahao block was valuable. His Honor: One has not noticed any competition for it. Mr. Finlay said that was duo to the unprecendented slump during the last few years. Counsel submitted that the Patersons were looking for a document, which would secure for Chem the certain payment of interest. His Honor said the question was whether Paterson was induced to buy the mortgage on the representation of Hand that the block had been sold for £40,000, Continuing, counsel asserted that Slater was a man of means, and not a man of straw as was suggested. He explained how Hand's character changed from that of agent to that of owner of the submortgage on the Mangahao block. It was idle to suggest that Hand's action in pressing for interest was harsh, for he had givon substantial value for the sub-mort-gage he had acquired. If there had been fraud, it would have been competent for the Patersons to move for the setting aside of the whole transaction. The fact that they did not move in this direction indicated that they did not realise: that any fraud existed. Dtfence Denies Harshness. Referring to the £6OO paid to Hand, Mr. Finlay said the sale of the property by Paterson was imminent, and when injunction proceedings started by Paterson had failed Paterson sought for delay from Hand. No more advertisement of Hand's sale took place as the result of the delay, 1 and no detriment to Paterson ensupd. The sale, in fact, did not, take, place until a considerable time after the expiry date. A great measure of consideration had been extended to Paterson by Hand.' Hand had not been harsh, and he had believed in the solvency of Slater. He believed the mortgage on the Mangahao Sroperty was good security, and would t ave been mad to lend money to Slater if lie did not believe Slater was solvent and the property wins valuable. ' His Honor: The only person who seems to have done well out of th& transaction was Htind. How long did it take Slater to lose £40,000? Mr. Finlay: One night. His Honor: Slater lost £40,000, and Patersons lost £12,000. Hand got his commission and becomes the proprietor of what you say is an extremely valuable property. [ Mr. Finlay: Paterson can have the place to-day for what we paid, £5400., Mr. Blair: We would not give you £SOO for it. " An Extraordinary Transaction." Andrew Hanna, solicitor, Auckland, said he had known Slater for years, and in 1920 had been asked by him to arrange, for the exchange of some property for hiro. Acting for Slater, witness inquired about the Mangahao mortgage, and after investigating the matter thoroughly, decided the security was good. Slater acquired the mortgage from a, Hamilton solicitor who valued.the property at £4Q,000, The Patersons took over the mortgage subject to a sub-mort-gage of £6OOO to Slater, who executed a sub-mortgage in witness' favour for £6OOO. Witness did not advance Slater £6OOO. Patersons knew about this, and knew they had to pay the money. His Honor: So this'.was a bogus transaction ? Witness: No, sir. I held the sub-mort-gage in trust for Slater. Paterson knew they had to pay the £6OOO, whether it was to be to Slater, or to mo did not matter. His Honor: It seems to me to be a most extraordinary way of doing business. Witness: I don't, agree with you, sir. ; His Honor: Well, that's the view I take of it. . Government Declines to Buy. Witness said he endeavoured to sell the Mangahao block to thei State Forestry Department for £25,000. Witness was then acting for the Patersons. After prolonged negotiations, the Government declined to liuy. A conference of those interested in the block was held and it was decided to surrender the agreement the Waiopehu-Leviri Land Company had with Mark Bird for the purchase of some 800 acres adjoining the Mangahao block. This area was included in the .security the Patersons bought. The Hamilton solicitor was pressed to pay £llOO back interest and on doing this, he was relieved of all responsibility. As the result of the slump Slater's income from has farms and business was reduced and he was unable to pay interest on his mortgage on the Te Poi property he had taken over from Paterson. Witness' sub-mortgage in Mangahao was dropped, and the Patersons became the owners of the land and they gave a straight-out mortgage |p Slater. Hand lent Slater £3000; to meet some pressing claims, and as Slater owed Hand other moneys Slater ' gave Hand his mortgage of £6OOO in the Mangahao property. Evidence By Defendant. The defendant, Frederick Charles Hand,' said he sold the Mangahao property to Slater and the latter put the mortgage back in his hands for resale. Whittaker, defendant's partner, inserted the advertisement concerning the mortgage. It was untrue that he told Paterson he had put. £200,000 worth of property deals through for Slater, nor did he say Slater was a wealthy man. He mentioned that he was comfortably off. He did not say he had "sold the property to Slater for £40,000. He might ha'Ve told Peterson that the property belonged to a Hamilton solicitor who would not take a penny less than £40,000 for. it. Witness related his dealwith Slatej, which resulted in witness becoming the proprietor of the mortgage on the Mangahao block. Cross-examined by Mr. Blair, defendant said it was not true he had sold property to the value of £200,000 for Slater. It was not true that the mortgage represented the balance due' on a sale of the property for £40,000. Witness said his solicitor, Mr. JMville, had worked with

him in arranging the payment oi £6OO by the Patersons before he agreed to delay the forced sale. He denied thai he had seen a chance of robbing the Patersons' and had, taken it. There was no hurry about the sale. He bought the place in at the upset price. Hand said he (lid not know the transaction had rnined the Pattersons, although he knew they were not getting interest from the mortgage. Slater owed him £I3OO on previous deals and £2OO as his commission on the exchange of the Mangahao mortgage. To Mr. Finlay: AH the parties regarded Mangahao as a valuable asset. tVhittaker arranged the deal with the Patersons. Witness was in hospital at the time. He had advanced money to Slater on the sub-mortgage of £6OOO, without inspecting Mangahao. The Opinion of Biird Brothers. Edward Austin Whittaker, land salesman, Auckland, said he was in partnership with Hand as a laud agent in Hamilton. In 1920 witness arranged the deal between Slater and the Patersons. He did not tell Paterson the mortgage was as good as gold. It was true he had taken Griffin to see Bird Brothers and that as the result of what the Birds said about the Mangahao block, Griffin refused to buy. Ho was not much impressed with what the Birds said, for they seemed to be actuated by malice against the Waiopchu Land Company. From the valuations he had seen of the Mangahao block, witness certainly thought the security was good. Paterson had made a number of friendly calls on witness since the deal, and mentioned that he was not satisfied with the mortgage, but that he did not blame witness.. Cross-examined, witness stated that Slater placed the Mangahao mortgage in witness' hands three weeks after asquiring it. Hand arranged the sale of the mortgage,, to Slater. The dissolution of partnership between Hand and himself was amicably arranged. Witness was the salesman who arranged a deal arising out of which a case was heard in the Auckland Supreme Court. The jury found the land agent concerned guilty of fraud. ' Witness informed Paterson that he did not know anything personally about the Mangahao block. Witness had forgotten the Birds' condemnation of the property at the time of the deal. Witness denied that Griffin had told him that the security was no good. If Griffin had told him that and witness had not informed Paterson, "he would certainly have been guilty of fraud. To His Honor: He swore that he had forgotten what the Birds had said. Value of Te Poi Farm. Ebenezer Henry Slater, picture show proprietor, Petone, said. he purchased the Mangahao mortgage in exchange for his equity in buildings at Lower Hutt. The exchange was effected on the basis of £17,650 as the value of .the equity in each property. Immediately on acquiring the mortgage he authorised Hand to sell it. He did not consider he had been "stung" over the mortgage. The Hamilton solicitor, who was the mortgagor, had, asked him to go into partnership with him and take the timber out of the block. He had no reason to suspect the mortgagor's financial position. Witness considered he was worth £35,000 prior to the slump. When he went into occupation of the Te Poi property ha found the land would not carry the number of stock Paterson said it would carry, for there was a shortage of 300 acres in the quantity of grass stated by Paterson. \By reason of this misrepresentation he paid £9OOO for an equity which did not exist. He accepted a mortgage of £6OOO from Paterson over the Mangahao property, and subsequently lie gave this mortgage to Hand in consideration of £3OOO he had borrowed, £ISOO commission he owed and for other amounts due to Hand. He had had difficulty;in meeting his interest account on the Te Poi property. Paterson had complained to him that he had not been fairly treated over the - transaction. ■ In answer to Mr. Blair, Slater said he had issued, a writ against Paterson for misrepresentation of the value of the Te Ppi property. He denied that this action was a joke. He had written to Paterson stating that he would have to proceed against him in order to bring pressure on the man who sold the Te Poi land to Paterson. Valuation ot Mangahao Slock. A Matangi farmer, Harold Grevilh, said he had had 20 years' experience of farming and bush surveying. He knetf' the Mangahao block well and went over it with Slater, Paterson, George Mace, a valuer and, representative j of the Forestry Department. Some 900 acres had been felled and laid in good grass. If the timber were felled and the area grassed , the block could carry one aud a-half sheep to the acre. On 8000 acres there was from 5000 ft. to 6000 ft. of millable timber per acre. It was 'quite possible to move the timber off the block. The cost of putting a, tramway into the bush would not be more than £IOOO. A land valuer, George William Mace, Auckland, said he did valuing work for most of the lending institutions and legal firms in Nefr Zealand. H® inspected the Mangahao property and valued it for mortgage purposes at £18,185 and for marketing purposes at £20,000. It was fair sheep country, which would carry grass. In his valuation he did take into account the vrlup of the timber. Mr. Blair: In view of your valuation, how do you account for the fact that the property could not be sold for three years at any price and had to, bo bought in. at a mortgagee's sale for £5400? Witness: I regard the state of the money market as the reason. Rife Honor: Surely the slump did 'not affect the Wellington Province to that (ixtent ? John Morrison Melville, solicitor, Auckland, said he acted for Hand in the negotiations between Hand and Paterson, after Hand had acquired the £6OOO mortgage in the Mangahao property. When Hand pressed for the payment of interest, Paterson offered, to pay £6OO for a delay in action for two months/ It was true the advertisement of the sale appeared before the two months passed; but the sale date did not fall until after' the expiry of the period. It was his business to gel the best bargain he could for his client This concluded the evidence and the case was adjourned until to-morrow. Throughout the two days of the hearing the Court has been crowded, the majority present being solicitors.