BANKRUPTCY CHARGE.

Sun (Christchurch), Volume VII, Issue 2030, 17 August 1920, Page 11

BANKRUPTCY CHARGE.

CASE OF WILLIAM SHAW. EXTEAVAGANCE ALLEGED. In the. Supreme Court this morning, before his Honour Mr Justice Herdman, William Shaw (Mr J. I?. Cuningham) was charged with a series of breaches of the Bankruptcy Act, the Crown alleging that ho brought about his bankruptcy by unjustifiable extravagance in living, by rash and hazardous speculation, and by drunkenness; and that, being adjudicated a bankrupt on April 20, 1920, he did, within three years prior to the adjudication, make payments out of the regular course of his business, such payments not being for ordinary requirements of himself and his family. Mr A. T. Donnelly, for the Crown, stated that the accused went into partnership with a man named North, at Christehurch, in September, 1919. They went into business as vulcanisers, under the name of the "North-Shaw Eubber Company." North put in £SOO capital and Shaw nothing. In the following January differences arose between them, and North retired from the business, receiving back his £SOO, and £69, other moneys due to him. At this date, January 19, the assets of the business were £1630, and the liabilities £1324. Thus, after North had been paid off, Shaw was faced with a deficit of £260. On April 20, when gnaw became bankrupt, proved claims amounted to £2500, and the assets were found to be £IO2O, leaving a deficit of £I4BO. Tims, in three months, Shaw had gone to the bad to the extent of from £I2OO to £I3OO. The books had been well kept by a book-keeper. They showed that, after January 19, and before April 20, Shaw drew £6l as wages and £300" for other purposes not specified. In his statement to the Official Assignee, Shaw stated that he had paid a sum of £2OO to a brother in England, in return for a loan made in 1912. He was unable, however, produce any evidence of this. He also said that, in December, 1919, he lost between £3OO and £4OO in a speculation. The speculation, he stated, consisted in financing a bookmaker named Neal. Shaw was unable to give any information about this man, . and the police stated that they did not know of any bookmaker named Neal in Chris'tchurch, nor had they known of any such man in a period of several years past. As a further explanation of the large deficit, Shaw said that, in the three weeks prior to his bankruptcy, he spent £6O iii drink, owing to financial worry. It was also found that he had an account with a faxl-driver, who took him to the races on one occasion, and lent him £l2 on the course, apparently for betting. It would also be shown that he borrowed £340 from a moneylender, named Kesteven —putting the money into a separate account, not into his trading account. The accused, said counsel, accounted for his large deficit by saying that he paid an unspecified debt, lost £3OO odd by financing an unknown bookmaker, jind spent £6O in liquor. Whatever further explanation he might make, it was clear that he came within the scope of the sections of the Bankruptcy Act set out in the indictment. The sections were framed for the protection of honest traders, and, if it were : found that the accused had behaved as the Crown aUeged, he should be convicted. ASSIGNEE'S EVIDENCE. i Augustus W. Eames, Official Assignee at Christehurch, produced the written statement made by the accused after his adjudication. At the meeting of creditors, the witness Stated, Shaw was questioned about a certain sum of £3OO, and explained that he had used it to finance a bookmaker, whose name ho believed to be Ted Neal; He could not give any definite date for this transaction, nor could he say where Neal was to be found.. When asked why he had not included this debt by Neal amongst his assets, he said that he had left it o,ut because he understood that transactions with bookmakers were illegal. The witness stated that it was found at first that a sum of £1479 had to bo accounted for. After certain deductions, there was still a deficit of £1156. and, even after the accused had offered all his explanations, there? still remained between £IOO and £2OO unaccounted for. The witness thought that •this might possibly be attributed to unrecorded sales from, stock.

To Mr Cuningham: So far as he was aware these books showed no entries relating to betting transactions, or to dealings with moneylenders. / REASON FOR DEFICIT. Mr Cuningham stated to ihe Court that the defence would be /that the large deficiency would be accounted for in the main by the fact tliatj the stock was sold under the hammer, and at very much below its proper value. He wished also, however, to show that a number of entries relating to Shaw's drawings were entirely misleading. The witness remarked that the valuation placed on the stock when Shaw became bankrupt was £7OO. At auction it realised £651 12/ C. In answer to further questions, the Assignee stated that the estate would pay between 6/- and 7/- in the £ — possibly the higher figure. FINANCIAL WIZARDRY. James Mawson Stewart, accountant, gave some of the results of his investigation of the accused 's books for the period between January 19 and April 20. On February 24, Shaw owed £l4O to a man named Balkind. He wished to pay this off, and so drew a series of post-dated cheques in favour of someone with (no initials "H. K." (which were found on the cheque butts). These cheques lie persuaded various people to cash, thus obtaining enough, with other moneys ho ■had, to pay off Balkind. The latter, on the strength of the repayment, lent him £2BO, with which he was able to meet the cheques when they fell due. "He was another wizard of finance," remarked the witness amidst general laughter. Cross-examined, the witness said that he saw no reason why the bookkeeper should not have entered' Shaw"s drawings as expenses, ii' they were really intended to meet the legitimate' expenses of the business. The hooks, in general, were well kept, lie •!i• I not think it necessary lo follow up the various items hi ihe drawing account, because the accused was responsible for accounting for lhem, and Ihe drawing account did not affect any determination of I lie a-sct- and liabilities of the business. Mr Ciiuiiiglmm cited a number .•!' entries from the books, and claimed thai ilum: were satisfactorily accounted for as sum- drawn for the needs of Shaw 's business or family requirements. A HAD siliX, In answer to a question, the witness, said he saw no record in the books of any felling or gambling transact ions, or of speculations in land or anything else. His Honour: Did you find anything else to accounl for the dcliciency of £ll.ui between January and April. The witness: ' I noticed one very bad thing. The bookkeeper had passed credits for amounts supposed to have been paid to Shaw by people owing money to the business. If amounts were taken by him in this waj% it; might suggest that cash sales might also be taken by him—which would account for pari of the deficiency.

Cross-examined further, tlie witness said that the sales made by the business in three months amounted to £2OOO. The working expenses were not high—about £OO a month. lie would agree that, given sufficient capital, it had the makings of a sound and profitable business. He saw nothing in the books to indicate fraud of any kind. To Mr Donnelly: It was possible that the deficiency might be accounted for by goods being sold and the money not passing through the books.

His Honour: I take it that the money might be applied in one of two ways. It might .go into the accused's pocket, or it might be used to pay ac counts which do not appear in the books.

In reply fo his Honour, the witness said that, apart from wages and drawings, he found nothing in the books to account definitely for the deficiency of £1156.

Detective-Sergeant T. Gibson gave evidence that, so far as his knowledge went, no bookmaker named Ted Neal had been in Christehurch in recent years.

Charles Everett, a taxi-driver, stated that the accused employed him on various occasions. The amounts due to him for this were offset by a debt of £26 due by him to the estate. On January 31 he drove Shaw ami some friends to the races, and Shaw borrowed £l2 from him, giving an 1.0. U. To Mr Cuningham: He had seen Shaw at the races, and once or twice elsewhere, with a man whose name was stated by Shaw to be Ted Neal. Ho understood that the man was a bookmaker. He could not describe the man. This closed the case for the Crown. ACCUSED IN THE BOX.

Mr Cuningham, in opening his case, said that Shaw was not bound to account for his looses. The onus was on the Crown to show malpractice. Ifo proposed to show that the accused's personal losses were quite apart from the business of the North-Shaw Rubber Co., and that most of them were due to betting. As regards extravagance, however, not a tittle of evidence had, been submitted by the Crown. . The accused, giving evidence, said that he was a rubber-worker by trado. Before, entering into partnership with North, \he was manager for the Para Eubber Co., receiving salary and a share ill the profits. For some years lie had followed racing, but when the partnership was set up he kept his betting accounts entirely separate from those of the business. This he continued to do right through. The £340 mentioned as having been borrowed by him from Kesteven went for betting, and was lost. At various times he paid moneys from his private account to help the business. (Proceeding.)