WARD FAMRERS' ASSOCIATION.

Star (Christchurch), Issue 6123, 9 March 1898, Page 1

WARD FAMRERS' ASSOCIATION.

[Per Press Association. I DUxNEDIN, March S. . At a sitting of tho Supreme Court in Chambers before Mr Justice Williams, the ■matter of the petition of certain shareholders asking the Court to direct the liquidator to prosecute the Hon J.G. Ward .and Mr John Fisher,* was called on. By leave, a telegraphic copy of the . affidavit sworn at Wellington by the Hou j J. Gr. Ward was treated as if the affidavit had arrived. The affidavit . was, in substance, after explaining how he came "to be absent from Dunedin last Friday,- that having been informed of the statements in Mr Fleming's affidavit,, he (Mr Ward) denied that he ever directly or indirectly, authorised or requested Mr M'Caughan to interview on Ms behalf, or as agent, Mr Thomas Fleming or any other person in connection with the present application. Having ; telegraphed to Mr M'Caughanj who is in Melbourne, that Mr Fleming said that the memorandum was obtained by trickery, Mr M'Caughan sent a reply in which lie denies that he had in- any way acted as Mr Ward's agent, or that he obtained Mr Fleming's memorandum by any improper means. Further, the affidavit proceeded • — " I deny that I have ever threatened, or " authorised any other person to threaten, any of the petitioners with an action for damages for having made or authorised the present application. I have not personally solicited, nor have I authorised any other person to solicit any of the petitioners to withdraw from the present proceedings. I have given instructions, upon information only recently acquired, to pr,ceed against Messrs Fleming and Gilkison for fraudulent misrepresentations made by them to me in connection with the sale of the Hokonui Coal Company (which I had originally purchased from them) ; but I was advised that I should refrain, from so doing at the present time, in order to prevent even the suggestion that I was bringing pressure to bear upon them to withdraw from the proceedings. I telegraphed to my solicitors to procure an adjournment to enable me either to attend personally or file this affidavit, and I am informed that Mr Macgregor refused to consent to any adjournment." Mr M'Caughan's cablegram is asfollows : — "If, Fleming asserts I obtained letter by any unfair or unworthy means, or that I acted as your agent or in any way represented. you, I must pronounce both as absolutely without foundation. la fact, I •will publish details; of the whole matter. You can make any use of this. 1 ' Mr W. C. Macgregor appeared for the petitioners^ Thomas Fleming andothers, Mr Woodhouae for the official liquidator of the Ward Association, :Mr "Brent for the official liquidators, of. the Colonial Bank.^and Mr Fraser to watch P. K'.-,M'Caug[han's intbrests. : ' ■ ... •/ Mi' Macgregor in opening read the petition of Mr Fleming and other contributories, in which it was alleged that it appeared in the course of winding up that' the Hon J. G. Ward, director of the Association, and Mr Jobja Fisher, manager, had done certain things in relation to the Ward; Association for which they were criminally responsible; to wit (a) they made, circulated, published and concurred in making, circulating and publishing statements and accounts whioh they knew to be fabe in material particulars, with intent to induce persons to become shareholders and with intent to deceive or defraud the memrbers, shareholders and creditors of the said Association j (b) and they also, with intent to defraud, falsified certain books belonging to the said Association; (c) and they also, with intent to defraud, made, or concurred in making, false entries, and omitted, or concurred in omitting, to enter material particulars in the books of account and balance-sheets of the said Association; (d) and they also falsified the books of the said Association, and were privy to the making of false and fraudulent entries in the books of accountpf the said Association, with intent to- deceive. The petitioners therefore prayed the Court to direct the official liquidator of the Association to conduct prosecutions, and that the costs and expenses thereof and of this application, should be paid out of the assets of the Association. • ' Mr Macgregor went on to allege that certain affidavits filed, in effect went to show that there had been an organised attempt to induce the persons f whq signed the petition to withdraw, but, even if >uccessful, it would not have altered the legal position. He quoted Section 228 : of the Companies Act, and cited English cases in sixpport of his contention. This was a petition by shareholders, who said, "We have been deceived by the criminal acts on the part of persons who professed to represent us, and we ask the Court to direct its officer to prosecute. If there are free assets we ask the Court to order the costs to be paid out of such free assets ,• if not, we wish an opportunity to indemnify the liquidator against such costs within a reasonable time." His Honor-explained what he took to be the position under the regulations as to the conduct of prosecutions which had been gazetted. The Crown Prosecutor ■might take up the matter at a preliminary stage, but unless this was done the party who instituted the proceedings had to pay costs up to the committal by a magistrate. After that, in certain classes of cases, the prosecution was carried on by the Crown, but it was open to the representative of the Crown to notify the parties anytime after committal that the Crown would not conduct a prosecution, but leave the parties to bear the costs. Mr Macgregor laid stress on the fact that m England there was a public prosecutor. Here there was no such official. Counsel then went on to argue that the liquidator should be ordered to prosecute, and referred to his Honor's judgment in the application to purchase the assets. He then dealt with the Association's balance-shepts, quoting from the liquidator's report and evidence given in examination in support of the contention that the company had published falsified balance-Bheets. The company had three balance-sheets, and he contended that Mr Ward and Mr Fisher had first falsified the books, and then published balance-sheets, to correspond with the books sb falsified. As regarded the * third balance-sheet, it might be sufgested that Mr Ward was out of the colony when it was prepared, but the facts showed that he returned to the colony- before it was presented to the shareholders, and before the report was prepared, and that he was ; made cognisant of the balance-sheet before the report and balance-sheets were issued to the shareholders. This matter waa dealt with in the examination. As to Mr Fisher there could be equally no doubt as to his position. He eventually admitted in examination the process which was going on. Then there was the matter of coriceaunent of Mr Ward's account of .£54,000. So far as the public were concerned they were in. vited on Sept. 7, 1895, by the report to purchase debentures which were recommended to shareholders and clients as according a first-class investment, while the person or persons who issued that report must have known that they were very doubtful investments indeed, so that it was not only intended to deceive the shareholders but also tho public. Events had proved that it was doubtful whether the debentures issued would realise their face value or not. There was nothing at all for the unfortunato shaveholders. Counsel submitted that it was impossible to conceive a clearer prima fade

case. As to the question of costs all that was required was, presumably, up to cony miltftl. If there was no 'committal then the matter came to an end. If the Court was satisfied that no assets were available for the purpose of the present summons, then he submitted that an order should be made directing the liquidator to prosecute, provided he received. a satisfactory indemnity against his costs. Mr Woodhouse said that the liquidator was an officer of the Court, and was in the hands of the Court. As to costs, the Court might be asked to decide whether there were some assets which might be considered free, but the amount of these assets the liquidator estimated would not be sufficient to pay for the costs of liquidation, realisation, &c, already incurred. If the Court ordered the liquidator to prosecute he would do so, but he submitted that there should not only be an indemnity, but security for all costs and expenses, including the costs and expenses of the liquidator and staff. W. R. Cook, official liquidator, gave evidence that assuming there were free assets, he should think they would realise ■fully ' JJIOOO. The profits of carrying on the business were about J>lsoo. Mr Brent said that so far as the Colonial Bank liquidators were concerned, all they wanted was to guard against debenture money being called upon to pay the costs of a prosecution. Mr Macgregor, in reply, said that it was hopeless to contend that* the costs should be paid out of debenture money. Perhaps the prosecution might be taken up by the Crown, but here difficulties arose. Mr Chapman, who was acting for Mr Ward, was Crown Prosecutor. [Mr Chapman explained that he was not.] Mr Fraser also was Crown Prosecutor, and he was watching M'Caughan's interests. Mr Fraser denied this. His duties ended with the criminal sittings. Mr Macgregor said that the position was that there was no one but a private person to take up the prosecution. * Mr Fraser as amicus curise said that the solicitor for the liquidator at Invercargill was also solicitor for the Crown. Mr Cook, for two of the largest creditors, said it was very hard ' that, if anything was coming to the creditors, the money was to be used for prosecuting these gentlemen. The people asking for the prosecution represented only a small portion of the contributories j about ,£250 represented their total losses. Mr Macgregor having replied, his Honor reserved judgment. Mr Justice Williams gave judgment today in the matter of the payment of the eoßts of the liquidator of the J. G. Ward Association in , conducting the examination Of officers, &c. His Honor said that the order of the Court did not compel Ihe liquidator to examine the officers! but simply directed that he should be at liberty to issue a summons. The .liquidator could, therefore, have stayed his hand until costs weroprovidedfor,evenafter the ord#r was made. If the liquidator. had represented to the Court at the time th c order was applied for that there were no free assets out of which the costs of the examination could be paid, the Court would not have made an order except upon terms that the persons who asked for it should pay the costs. The Court would have had no jurisdiction to apply the property of the debenture-holders towards paying the costs, and there was no other fund available. The summons was dismissed -without prejudice to any application regarding free costs.