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9. What are the debenture-holders having done, as against the company ?—When it became known in England that the arbitration was against them, under the trust deed they took formal possession of everything of the company's in London. 10. What did that consist of ? —Books, offices, cash, and so on—not very much cash. 11. Then, do the debenture-holders consider themselves as occupying the position of the company now ? —lt is such a very complicated case that I cannot understand it. I sometimes think that they do, and sometimes that they do not. 12. Would the debenture-holders be willing to take up the company's contract ? —I do not think they consider that their business. They are people who have invested money in debentures for an investment, without any idea of carrying on a great work like that. I should think not. I have no instructions on the matter. 13. You have been over the line. Would you tell me if you think it would be worth the debenture-holders' while to take up the contract ? Cutting out the part from Reefton to Nelson, would it be worth their while to take up the contract?—l really cannot give an opinion on that. 14. Then, I understand that the debenture-holders have no intention of taking the position of the Midland Railway Company so far as carrying on the work is concerned? —Not to my knowledge. 15. You have no power to negotiate on this basis? —No. 16. But only that you want the Government to pay what money they will ?—Yes ; in return for the work that has been executed, and which is very good work. 17. And they would not be content with taking the work?—We do not want the work; we would rather have the money. 18. You say it is very good work, and that is what you wish to take the money in return for. Why would not the work do ? —Speaking individually, for I have no instructions on this subject, it seems to me it is hardly debenture-holders' business to carry on a railway. 19. So the debentures are mostly held by the directors ?—No; only a portion. Possibly, out of the £740,000 odd perhaps £100,000, or £120,000, may be held by them, and the balance by various other public bodies, and by the ordinary people who invest in debentures. 20.- The- Chairman.] Had you no negotiations whatever with the debenture-holders, whom you represent, before coming out as to making any proposal to the colony?— No. You must remember that Ido not represent the debenture-holders directly. I represent the trustees for the debentureholders. My instructions came from them, and, as servant of the trustees, lam under the direction of the Court of Chancery in England, who have tied me down very tightly indeed as to what I am to do. lamto do nothing without consulting the Court. 21. True, but was it not considered in any way that some alternative proposal might be made to the colony—l do not wish you to answer this if it is in any way giving away a secret?— Not to my knowledge. 22. Mr. Montgomery.] What has been the cost of the construction of the line ?■—Roughly speaking, about £760,000, actual money spent. Frederick Hubert Labatt examined. 23. Witness (in reply to Mr. Chapman) : I am accountant to the Receiver for the trustees on behalf of the debenture-holders of the Midland Railway Company. 24. Mr. Chapman.] You have made up a statement showing the Construction Account, also the Land Account, and the balance-sheet [Exhibit C]. These are approximate, are they not ?—Yes, these are approximate. 25. These are the accounts that were handed in yesterday. Speaking of the Construction Account, what, speaking generally, does that include ?—That includes the amount paid to contractors for the construction of the line, the amount of rolling-stock, administration, engineering charges, the sundry expenditure on behalf of the line and construction. 26. It does not go outside what is properly chargeable as construction account, such things, for instance, as land-tax pending construction ?—No, it is purely construction account. It does not include land-tax on the construction works. 27. Then the Land Account that was handed in. How are the values taken ? —The values are taken by contract valuation. That is the B 1 values under the contract. 28. Is the amount of valuation on the part of the contract attached to the map that was prepared by the Government ?—Yes. 29. And the balance-sheet that was handed in. That cannot be an absolutely accurate balancesheet. I suppose it could not at this stage be constructed? —No, it could not very well. It is as near as possible approximate. But there are certain other amounts in the company's books, and which it has not been quite decided to take as liabilities. 30. But, for the purpose of arriving at the position, it is an approximately correct balancesheet ?—Yes. 31. Mr. Tanner.] Will you please give us the amount expended in construction ? —The amount expended in construction is £760,669 Bs. 7d. 32. And the value of the land-grants received on the Bl valuation?— The value of the landgrants received on the B 1 valuation is £245,845 3s. 2d. 33. And the balance of land-grants owing or claimed?—£2l,o66, according to the award. 34. Now, will you tell the Committee what was the original capital of the company ?—The original capital of the company was £250,000. 35. And the amount received by floating debentures ?—£745,000. 36. That is to say, exclusive of land grants, that the company have had some £995,000 for the purpose of constructing the railway ?—Yes. 37. How do you account for the discrepancy between £760,000 actually spent and £995,000 received —about 25 per cent, of the, money unaccounted for ?—There were certain charges outside. •A—l. 7.