SALE OF BUTCHERY

Otago Daily Times, Issue 23516, 2 June 1938, Page 2

SALE OF BUTCHERY

A DEAL AT LAWRENCE MISREPRESENTATION ALLEGED REOPENING OF CASE A close examination of the balance sheets and the methods of compiling the balance sheets of the Lawrence Meat Company took place in the Supreme Court before his Honor Mr Justice Kennedy yesterday in the case, opened last November, in which Nicholas Ouwejan, a retired farmer, proceeded against the company on an action to have declared void the sale to him by the company of a butchery business at Lawrence. The plaintiff sought to recover a deposit of £SOO paid by him under the contract and any interest accruing. He also made an alternative claim for an order to have the contract rescinded on tire grounds that he had entered into it on the strength of representations made by the defendant company which, to the knowledge of the defendant, were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 his Honor at the original hearing, but the case was reopened for the purpose of hearing evidence from Bertram Spi'oull 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, No Proper Audit Fulton, in evidence, said that for some years he had 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 in 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 check on items disappearing from the customers’ ledger during the year because only caish 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 be 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 t6-day that the balance sheets were not accurate.

During Mr Neill’s cross-examina-tion, further reference was made to the witness’s private ledger, and in reply to a question by his Honor, Mr Neill said that until that day he had never heard of it. Discovery of Ledger His Honor said that Donald Munro. 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 Honor: 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 private ledger. Mr Sinclair: The present witness himself said Munro was unaware of its existence. His Honor: 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 is no private ledger.” Discrepancy Revealed 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 it?” His Honor: 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 up 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 bnded 1937. They had intended to go into liquidation, but in view of the court proceedings they could not go on with that. He had no method of obtaining the true gross profit in any month. At Mr Neill’s request he checked his balance sheet for 1936 with the figures given as correct by Munro, and admitted that there was a discrepancy of £214 11s Id. The court adjourned at that stage until 2.15 p.m. to-day.