The Pamphlet Collection of Sir Robert Stout: Volume 74

Mr Haggitt's Opening

Mr Haggitt's Opening.

Mr Haggitt, opening in support of the summons, said that though the agreement was dated the 1st June the terms of the agreement were actually arrived at on the 19th March.

His Honor: There was no binding agreement till the 1st June.

Mr Haggitt said that there was no formal agreement until that date, but it was founded on negotiations which commenced on the 19th March. That was the starting point, the date of the balance sheet which was prepared. The terms of the agreement were as follows :—

Whereas the J. G. Ward Farmers' Association of New Zealand, Limited (hereinafter referred to as the "said association") were customers of the Colonial Bank of New Zealand (hereinafter called the "said bank"), and kept an account current with the said bank at its Invercargill branch and also at its Gore branch, and the said account was one of the accounts appearing in the "C" list referred to in clause 18 of the agreement dated the 18th October 1895, made and entered into between the said bank and the Bank of New Zealand, and approved by the Parliament of New Zealand, as mentioned and contained in "The Bank of New Zealand and Banking Act Amendment Act 1895." And whereas the Bank of New Zealand has refused to take over the said account of the said association, and the said liquidators have, pursuant to said clause 18 of the said agreement, required the Bank of New Zealand to realise or liquidate the said account, and whereas the said liquidators lately employed Mr William Richard Cook, of the firm of Cook and Gray, Dunedin, accountants, &c., to investigate the affairs of the association, and Mr W. R. Cook has investigated the said affairs accordingly, and has prepared and submitted a statement showing the result of his investigations and the state of the liabilities and assets of the association as at March 20, 1896. (Copy of statement annexed.) And whereas the Colonial Bank guaranteed the Bank of New Zealand payment of the debentures amounting to £20,000, firstly mentioned in the statement of liabilities and assets, which bear interest at the rate of 6 per cent., and the association on March 20, 1896. were indebted to the bank (inclusive of the page 2

£20,000) in the sum of £92,170 9s 2d, which also includes the liability of the association in respect to bills under discount with the bank. And whereas the Colonial Bank, having paid the £20,000 to the Bank of New Zealand, holds as security for the said indebtedness debentures amounting to £20,000 (so guaranteed as aforesaid), discharged from the said guarantee further debentures of the association amounting to £30,000, and the guarantee of the Hon. J. G. Ward for payment of the account of the association in the Colonial Bank to the extent of £20,000. And whereas the Colonial Bank holds the promissory note of the Hon. J. G. Ward, payable on demand, for £55,150, being the amount written off the account of the association in terms of clause 18 of the agreement of October 18, 1895, And whereas the Hon. J G Ward is also indebted to the Colonial Bank in the sum of £16,000, or thereabouts, in respect to a draft on London for that amount, which was in transitu on the date of the agreement of October 1895, and is guaranteed to the Bank of New Zealand underclause 25 of the said agreement, and the Colonial Bank holds as against this draft and as security for the same 1600 shares in Nelson Bros, and Company (Limited). And whereas the Hokonui Railway and Coal Company (Limited) are indebted to the Colonial Bank in the sum of £4900 or thereabouts on the foot of the account current of said company with the Colonial Bank, and the Colonial Bank holds as security for such indebtedness the joint and several guarantees of the Hon. J. G. Ward, Frederick William Thompson (of Christchurch, dentist), the late Arthur Sedgley Hanan (of Invercargill, surgeon, deceased), and John Hayes (of Hokonui, mine manager). And whereas Alfred Lee Smith and James Bennie Reid have proposed to the liquidators the purchase of the debt of the association to the Colonial Bank as on March 20, 1896, and all securities for same, or any part thereof, held by or on behalf of the said bank, and also the promissory note of the Hon J. G. Ward and the said debt or sum of £16,000, or thereabouts, due by the Hon. J. G. Ward to the bank, and all securities for the same respectively, or any part thereof, held by or on behalf of the Colonial Bank, and also the debt of the Hokonui Railway and Coal Company, and all securities for the same, or any part thereof, held by or on behalf of the bank at the sum of £62,750. And whereas the liquidators, having investigated the affairs of the association, and being satisfied that it will be beneficial to the bank that the offer of A. L. Smith and J. B. Reid should be accepted, have, in pursuance of all powers and authorities vested in them as official liquidators, agreed to accept the same, subject to the sanction of the judge of the Supreme Court at Dunedin, and to the conditions and agreements hereinafter contained. Now it is hereby agreed by and between the parties hereto as follows:—

1.	The said liquidators shall, so soon as practicable, but in any event before June 30, 1896, apply to the judge in Chambers to sanction this agreement.
2.	Subject to such sanction being obtained, the liquidators shall sell to A. L. Smith and J. B. Reid, and the latter shall purchase from the liquidators for £62,750 (1) the debt due by the association to the Colonial Bank on March 20, 1896, and all securities and guarantees for the same, or any part thereof, held by the bank, or the liquidators, or by any corporation or person whomsoever on behalf of the bank. (2) The promissory note of the Hon. J. G. Ward for £55,150, payable on demand, and also the debt of £16,000 due by him to the bank, and all securities for the same respectively, or for any part thereof, held by the bank or the liquidators, or by any corporation or person whomsoever on behalf of [unclear: this] bank. (3) The debt due by the Hokonui Railways and Coal Company (Limited) to the bank, and [unclear: the] securities and guarantees for the same, or any [unclear: part] thereof, held by the bank or the liquidators, or by any corporation or person whomsoever on behalf of the bank. (4) All claims of the bank against the association, the Hon. J. G. Ward, and the Hokonui Railway and Coal Company.
3.	Upon this agreement being sanctioned by the judge, the said A, L. Smith and J. B. Reid shall within fourteen days after such sanction [unclear: part] to the liquidators the sum of £62,750 in cash.
4.	In the meantime, as from March 20 last, the business of the association has been, and until payment is made of the purchase money, in [unclear: ca] this agreement shall be sanctioned by the judge, and shall be carried on under the join supervision of W. R. Cook on behalf of the liquidators, and of A. L. Smith and J. B. Reid or some person appointed by them in that behalf in their interests. And any moneys which the liquidators may have advanced, or authorised the Bank of New Zealand to advance, for the purpose of the business after March 20, 1896, or may [unclear: her] after advance, or authorise the Bank of New Zealand to advance, for the same purposes until this agreement shall be sanctioned by the judge, [unclear: shall] if the said sanction be obtained, but not otherwise, be refunded by A. L. Smith and J. B. Reid at the time of the payment of the purchace money, and any reduction made in the amount the account of the association after the [unclear: da] aforesaid shall be deducted from the amount of the purchase money
5.	On payment of the purchase money the liquidators shall do and execute and cause to [unclear: be] done and executed at the cost and charges in [unclear: all] things of A. L. Smith and J. B Reid (including the costs of and incident to perusal and obtaining execution by the liquidators and all other parties all such acts and deeds as may be necessary [unclear: for] transferring to and vesting in A. L. Smith and J. B. Reid, or as they shall direct, the debts, securities, and premises herein before mentioned [unclear: that] agreed to be sold.
6.	In case this agreement shall not [unclear: be] sanctioned by the judge it shall cease and determine.
7.	The said A. L. Smith and J. B. Reid [unclear: shall] on or before the day of the date of this agreement deposit with the liquidators £500, which, in [unclear: from] event of the sanction of the judge to this agreement being refused, shall be repaid to them, [unclear: but] in the event of the completion of the purchase shall be accepted as part payment of the purchase money.
8.	In case this agreement shall be sanctioned [unclear: from] the judge, and the said A. L. Smith and J. B. Reid shall fail to pay the £62,750 in cash within [unclear: from] time limited for that purpose, or within [unclear: said] further time not exceeding 24 days after [unclear: sal] sanction as the parties here to may agree [unclear: upon] this agreement shall cease and determine, and [unclear: the] £500 shall be absolutely forfeited to the liquidators as and for liquidated damages, and stall [unclear: be] accepted by them in full satisfaction of and [unclear: the] compensation for all damages in respect [unclear: sh] determination.
9.	The liquidators shall in their own or in the name of the bank, as the case may require, [unclear: endorse] to A. L. Smith and J. B. Reid the promissory note of the Hon. J. G. Ward for £55,150, [unclear: and] any other promissory notes or negotiable [unclear: instant payments] which the bank may now or at the time payment of the purchase money hold in [unclear: respect] page 3 to or as representing the said debts hereby agreed to be sold, or any of them or any part or parts thereof respectively; but every such endorsement shall be without recourse to or against the bank or the liquidators.
10.	If this agreement be sanctioned by the judge, the liquidators shall be bound to pay off the amount due by them to the Bank of New Zealand in respect to the debt of the association, so as to put themselves in a position to assign the same to A. L Smith and J. B. Reid, but they shall not be required in such assignment or otherwise to enter into any covenant for title with A. L. Smith and J. B. Reid, nor shall the bank be so required.
11.	At the time of the completion of the purchase A. L Smith and J. B. Reid, their executors, administrators, or assigns will procure from the association and hand to the liquidators a deed of covenant by the association for themselves, successors, and assigns with the liquidators that the association, their successors, or assigns shall and will, at all reasonable times, until the liquidation of the Colonial Bank shall be closed, upon the request of the liquidators, and also shall and will, in the course of any proceeding against any director, manager, official, or other officer, or any member or shareholder of the Colonial Bank, under section 226 or 228 of "The Companies Act 1882," produce and cause to be produced to the liquidatoia or to such person or persons as they shall direct and at such places as they shall direct, all the books, papers, and documents of the association containing any entry, memorandum, or minute relating to or concerning the dealings and transactions between the association and the Colonial Bank, and between the association and the Hon. J. G. Ward from the time of the opening of the account current kept by the association with the bank down to the date of this agreement, and shall allow the liquidators or such person or persons as they shall direct, at all reasonable times, to inspect and make copies of or extracts from all or any of the books, papers, and documents.
12.	In case this agreement shall be sanctioned by the judge, the said A. L. Smith and J. B. Reid shall take upon themselves all the liability (if any) of the Colonial Bank to John Connell and Co. (Limited), and to Messrs Robert Brooks and Co. in respect to and arising out of all and every or any of the transactions and business affairs between the association and John Connell and Co. (Limited) and between the association and Robert Brooks and Co., in which the Colonial Bank has been concerned or implicated, and will indemnify and save harmless the bank and the liquidators therefrom, and of and from all actions, suits, damages, claims, and demands whatsoever arising therefrom or thereout, but so that any moneys which the bank or the liquidators may have to pay under any guarantee or other arrangement made between the Colonial Bank and the Bank of New Zealand arising out of a certain transaction in oats on account of Robert Brooks and Co. shall be repaid without interest to the bank or the liquidators within 18 months from the date on which this agreement shall be sanctioned by the judge.
13.	Nothing in this agreement is to prejudice the right of the liquidators to dispute, as between the Colonial Bank and the Bank of New Zealand, the liability of the last-mentioned bank to the liquidators in respect to a sum of £5052 ls 4d debited by the Bank of New Zealand to the account of the association on December 31, 1895, without the authority or consent of the liquidators, and if this sum of £5052 ls 4d shall be found to have been improperly charged to the account of the association, so far as the Colonial Bank and the liquidators are concerned, the liquidators shall not be bound to assign that portion of the debt of the association to A. L. Smith and J. B. Reid until the question between the said banks has been settled and determined. And notwithstanding anything in this agreement contained, the liquidators shall be at liberty to deduct this £5032 ls 4d or so much thereof as shall be found not to be properly chargeable to the Colonial Bank as between that bank and the Bank of New Zealand, from the claim of the Bank of New Zealand and against the Colonial Bank in any settlement of accounts between the said banks. And if the amount of the debt due by the association to the Colonial Bank, agreed to be hereby assigned, shall be reduced by reason of this clause, the liquidators shall pay to A. L. Smith and J. B. Reid a sum equal to 11s in the pound on the amount by which the said debt shall be so reduced.

Mr Haggitt next quoted clause 18 of the agreement between the two banks, which is as follows :—

With respect to the accounts appearing in the said "C" list, the selling bank shall indemnify and protect the purchasing bank against any loss or deficiency on the realisation of such accounts respectively, provided that the purchasing bank shall, immediately on this contract taking effect, write off the amounts standing in the right-hand column of the " C " list, and credit the respective accounts in such list with the amounts so written off. The purchasing bank shall have the option, within three months from the date of this contract taking effect, to take over all or any of the said accounts in the said " C " list, and in the event of the purchasing bank deciding to take over any such account the selling bank shall stand released from its agreement to indemnify and protect as aforesaid. The selling bank may at any time require the purchasing bank to elect whether such bank will take over all or any of the accounts in the "C" list or reject the same, and in the event of the purchasing bank refusing to take over all or any of such accounts the selling bank shall be entitled to take over the accounts so rejected, with all securities in respect thereof, on payment of the amount owing on such accounts or account respectively, or require the purchasing bank to realise or liquidate the account or accounts which the purchasing bank refuses to take over, and any deficiency arising on such liquidation shall be made good by the selling bank.

Under that clause the Colonial Bank had the whole risk of the J. G. Ward Farmers' Association, it being one of the accounts in the " C " list. In order to obtain possession of the account and be in a position to transfer it to the purchasers, they would require to pay to the Bank of New Zealand the whole amount of the account, some £92,000 odd.

His Honor : Yes, but they have not to absolutely pay it over, because the Bank of New Zealand retains.

Mr Haggitt said it was just the same thing, because the difference between the amount of the account which was taken over and the amount received from the purchasers had to be made up.

His Honor asked what was the point in the first part of writing off the amount standing in page 4 the right-hand column of the "C" list? Why was not the whole liability put in the right-hand column ?

Mr Haggitt said that was one of the mysteries of liquidation which would be explained when he read the affidavit.

Mr Young said the amount of indebtedness in the left-hand column was considered good, that in the right-hand column bad.

His Honor : That is the case with the " B " list certainly. I wondered if the whole amount in the " C " list was considered bad.

Mr Haggitt said no. The £55,000 was written off altogether as a condition to the Colonial Bank guaranteeing. The only explanation that was offered was in Mr Ward's affidavit. There was an amount written off, and there was a promissory note given, and that was all they knew of the matter. The rest of the account was guaranteed by the Colonial Bank, so that the Colonial Bank was liable for the whole. Then the Bank of New Zealand had the option during three months of taking over the account. If it did not, the Colonial Bank had the right to require the Bank of New Zealand to elect whether they would take it over or not, and if it refused, the Colonial Bank was entitled to take over the account itself or call upon the Bank of New Zealand to liquidate it. The recitals of the agreement showed that the Bank of New Zealand had positively declined to take over the account, and that the liquidators had called upon the Bank of New Zealand to liquidate the account when these negotiations commenced.

His Honor : The Colonial Bank is now liable to pay to the Bank of New Zealand the difference between the amount which is treated as good and the total amount of the indebtedness.

Mr Haggitt: Yes, £92,000 odd; and there is a sum of £5000 besides in connection with the Hokonui Railway and Coal Company.

Mr MacGregor : That makes up £98,000.

Mr Haggitt next drew his Honor's attention to the affidavit made by the liquidators, which was as follows :—

"We, William Brown Vigers, of Dunedin, in the provincial district of Otago, in the colony of New Zealand, bank inspector, Keith Ramsay, of Dunedin aforesaid, chipping agent, and William Lawrence Simpson, of Dunedin aforesaid, accountant, the official liquidators of the above-named bank, severally make oath and say as follows :—

1. The J. G. Ward Farmers' Association of New Zealand (Limited) was a customer of the Colonial Bank of New Zealand, and kept an account current with the said bank at its Invercargill branch, and also at its Gore branch, and the said account was one of the accounts appearing in the 'C' list, referred to in clause 18 of the agreement, dated October 18, 1895, made and entered into between the said bank and the Bank of New Zealand, and approved by the Parliament of New Zealand, as mentioned and contained in ' The Bank of New Zealand and Banking Act Amendment Act 1895.'

2. Immediately on the said agreement taking effect the Bank of New Zealand wrote of the amount standing in the right-hand column of the said 'C' list against the account of the said association, and credited the account of the said association with the sum of £55,150 being the amount so written off.

3. The Colonial Bank of New Zealand is bound by the terms of the said agreement to indemnify and protect the Bank of New Zealand against any loss or deficiency in the realisation of the account of the said association.

4. The Bank of New Zealand did not within three months from the date of the said contract taking effect take over the account of the said association.

5. We, as such official liquidators as afore-said, after the expiration of the said three months from the date of the said contract taking effect, required the said Bank of New Zealand to take over the said account of the said association or to reject the same, and the Bank of New Zealand refused to take over the said account, and we thereupon requested the Bank of New Zealand to realise or liquidate the said account.

6. Afterwards and on or about the 6th day of March last past we employed [unclear: Messier] Cook and Gray, of Dunedin, accountants, trade assignees and financial agents, to investigate the affairs of the said association on our behalf and Mr William Richard Cook, one of the [unclear: sail] firm, made such investigation, and reported to us that the accounts of the said association, as valued by him at the 20th day of March last past, showed a deficiency of assets to [unclear: meet] liabilities amounting to £48,456 16s 4d. A copy of the statement of the assets and liabilities of the said association, as prepared and submitted to us by the said William Richard Cook, is hereto annexed and marked with the letter 'A.'

7. We have ourselves investigated the affairs of the said association, and we believe that the result arrived at by the said William Richard Cook as to the amount of the liabilities and the value of the assets of the said association, including his estimate of the value of the uncalled capital of the said association, is virtually correct, although we are of opinion that his estimate of the value of the book debts would not be realised if the said association were to be put into liquidation.

8. The Colonial Bank of New Zealand guaranteed to the Bank of New Zealand payment of the sum of £20,000 advanced by the Bank of New Zealand to the said associate upon its debentures, and also the interest thereon, which amounts to £600 every half year. The currency of the said debentures [unclear: is] 10 years. The liability of the said association to the Colonial Bank of New Zealand, including the amount of these debentures, was on the 20th day of March last past £92,179 9s 2d.

9. The securities held by the Colonial Bank of New Zealand for the said indebtedness are the said debentures to the amount of £20,000 page 5 presently held by the Bank of New Zealand, further debentures to the amount of £30,000 held by the Colonial Bank of New Zealand, and the guarantee of the Honourable Joseph George Ward for payment of the overdraft of the said association up to the amount of £20,000.

10. The Colonial Bank of New Zealand also holds the promissory note of the Honourable Joseph George Ward, dated 19th October 1895, for the sum of £55,150, payable on demand. This promissory note represents the amount written off the account of the said association, and credited to it as stated in paragraph 2 of this our affidavit.

11. Toe Honourable Joseph George Ward is indebted to the Colonial Bank of New Zealand in the sum of £16,000 or thereabouts in respect of a draft on London for that amount, which was in transitu on the day of the date of the said agreement of the 18th day of October 1895.

12. The payment of this draft is guaranteed by the Colonial Bank of New Zealand to the Bank of New Zealand under clause 25 of the said agreement, and the only security held as against the said draft is 1600 shares in the company called Nelson Bros. (Limited). These shares were paid-up to the amount £10 each, and were, we are informed and believe, estimated to be of the value of £9 each at the time of the negotiation of the said draft, but at the time of the arrival of the said draft in London their value was considerably less, and the said shares at the present time are practically unsaleable.

13. The Hokonui Railway and Coal Company (Limited) is one of the clients or customers of the said association, and is largely indebted to the said association; the said company is also indebted to the Colonial Bank of New Zealand in the sum of £4900 or thereabouts on its account current with the said bank. The only security the said bank has for the said indebtedness is a guarantee of the said Joseph George Ward, Frederick William Thompson (of Christchurch, dentist), the late Dr Hanan (of Invercargill, surgeon, deceased), and John Hayes (of Hokonui, mine manager). We understand that the executors of the late Dr Hanan dispute any liability under the said guarantee on the ground that the account of the said company was continued to be carried on after the death of the said Dr Hanan, and that the amount owing at the time of the death of the said Dr Hanan has been discharged by payments since made to the credit of the account, and the present liability has all arisen since the death of the said Dr Hanan. We have ascertained that such is the fact, and we are advised by our solicitors that, although the other guarantors are still liable on their guarantee, it is very doubtful whether the executors of the late Dr Hanan can be held liable under the circumstances. As the result of our inquiries and investigations into this account we verily believe that, even if we have a good legal claim against the guarantors other than Dr Hanan, and were to proceed to exhaust them, we should not be able to obtain from the estates of the whole of them the sum of £1000; whilst if we were to take steps to wind up the said company we should not get even ls in the pound from its available assets.

14. It is of the utmost importance to the successful liquidation of the Colonial Bank of New Zealand to be rid of the account of the said association and the liability to the Bank of New Zealand, arising out of the liquidation thereof under clause 18 of the said agreement of the 18th day of October 1895.

15. We are satisfied that the said Joseph George Ward is not in a position to pay any appreciable sum in respect of the amount of his liabilities to the Colonial Bank of New Zealand, and that in point of fact his promissory note and his guarantee are both valueless to the said bank as securities. We have procured from the said Joseph George Ward an affidavit as to his means, and a statement setting forth his financial position

16. We are satisfied that the sum of £62,750 in cash, with their guarantee of £5000 in respect of a parcel of oats which should have been shipped to Messrs R. Brooks and Co., made to us by Messieurs Alfred Lee Smith and James Bennie Reid, for the purchase of the debt due by The J. G. Ward Farmers' Association of New Zealand (Limited) to the said bank, and the securities for the same and the other debts and securities mentioned in the agreement bearing date the first day of June 1896, made and entered into by us with the said Alfred Lee Smith and James Bennie Reid, which agreement is now produced and shown to us and marked with the letter 'B,' is more than we can by any other means realise for the same, and we believe that it will be beneficial to the said bank that the offer of the said Alfred Lee Smith and James Bennie Reid be accepted, and the said agreeement given effect to and carried out.

"A"

Statement of Liabilities and Assets of the J. G. Ward Farmers' Association of New Zealand (Limited), Invercargill, as at 20th March 1896:—

Liabilities.
Bank of New Zealand debentures	£20,000	0	0
Colonial Bank of New Zealand	£20,000	0	0
Grain and rail account	9,605	0	0
Local bills	8,312	4	0
Inland bills	951	1	7
Colonial bills	425	0	0
Past due bills	32,856	3	7
	72,179	9	1
Sundry creditors	18,970	5	12
Trade accounts (local)	1,099	6	7
Wages	186	0	0
Bank of New Zealand unpresented cheques	362	5	6
	£112,797	7	2
Contingent liabilities, as per list	£5,198	16	3page 6
Assets.
Book debts	£47,696	12	10
Stocks	12,680	0	0
Plants	1,151	1	3
Shares in saleyards	50	7	6
Waddel's property	2,500	0	0
New Zealand Land Company's scrip	233	9	3
Bank New Zealand, special account, credit	£17	0	0
Bank New Zealand, ordinary account, credit	12	0	0
	29	0	0
Deficiency	48,456	16	4
	£112,797	7	2
Memo.—Estimated value of uncalled capital, exclusive of J. G. Ward's share, as per list	£8,457	0	0

Wm. R. Cook.

His Honor said that one of the recitals of the agreement spoke of the association as owing £20,000 to the Bank of New Zealand on debentures and £30,000 to the Colonial Bank. Why did not they include the £50,000 in the liabilities ? The statement of assets and liabilities showed only £40,000.

Mr Haggitt said that £10,000 did not appear, because the bank held them and had a lien upon them in respect to the account.

His Honor: That does not account for the other £10,000.

Mr Haggitt said the indebtedness appeared in respect of them in the Colonial Bank's account. They had never been issued, except the £20,000 which the Bank of New Zealand got—the £20,000 which the Colonial Bank guaranteed under this agreement. Then they got another £20,000, which they bought, and there were the £10,000 held against the general indebtedness.

His Honor : The general indebtedness does not appear in the balance sheet.

Mr Woodhouse : The general indebtedness was shown at £72,000.

Mr MacGregor said that nobody reading the balance sheet would imagine the £50,000 worth of debentures had been issued. Then they had the affidavit of William Richard Cook, which was as follows :—

"I, William Richard Cook, of Dunedin, in the provincial district of Otago, in the colony of New Zealand, accountant, make oath and say :

1. I and William Gray, of Wellington, in the colony of New Zealand, accountant, carry on business in co-partnership at Dunedin aforesaid, and also at Wellington aforesaid, and also at Auckland and Christchurch, in the colony of New Zealand, as accountants, trade assignees, and financial agents, under the style and firm of ' Cook and Gray.'

2. I was employed by the official liquidators of the Colonial Bank of New Zealand to investigate the affairs of the J. G. Ward Farmers' Association of New Zealand (Limited), and to make a full and searching inquiry as to the assets and liabilities of the said company, and the value of the same, and also into the value of certain securities held by the Colonial Bank of New Zealand as against the account current kept by the said company with the said bank.

3. I investigated the affairs of the said company accordingly, and made up a statement of the assets and liabilities of the said company as at the 20th day of March 1896, and the paper writing hereunto annexed marked ' A ' is a true copy of the statement so prepared by me, and contains to the best of my knowledge, information, and belief a full and correct account of all the property and effects (real and personal) of which the said company was possessed or in which the said company had any share or interest in possession, reversion, or expectancy on the said 20th day of March 1896.

4. The greater part of the deficiency, amounting to £48,456 16s 4d, shown in and by the said statement is caused through losses made in book debts, which amount in all to £85,070 16[unclear: *] 6d, of which amount, after making searching inquiries, I deem necessary to write off £37,374 3s 8d as absolutely bad and worthless, leaving a balance of £47,696 12s 10d estimated as good. I found that indiscriminate credit had been given and little or no security taken, and I felt positive that in writing off the amount above stated I have written off no more than I should have done in order to arrive at a true and just value of the book debts of the company as on that date.

5. In a memorandum at foot of the said statement, I have estimated the value of the uncalled capital of the company at £8457. I arrived at this estimate after making searching inquiries as to the position of the present holders of the shares in the company, and I feel certain that my estimate of the value of the uncalled capital is as nearly correct as possible.

6. In valuing the stocks at £12,680, I have taken the oats, seeds, and guanos at their then market prices, and the rest of the stock at cost, with the exception of binder twine, oils, and separators, on which, as the result of inquiries made by me, I have put a just and fair value. I have written off £666 for old and depreciated goods, and have valued the stocks as a whole at what I verily believed to be their true and correct value.

7. The plant and office furniture stand in the books at £2302, but the same are not fairly worth more than one-half of that amount, and I have taken them in accordingly at £1151 ls 3d, which I verily believe to be their true and correct value.

8. I ascertained that the last year's operations of the Hokonui Railway and Coal Company (Limited) resulted in a loss of £1100, The bank overdraft amounts to £4900 or thereabouts, for which the bank holds the guarantee of the Honourable Joseph George Ward, the late Dr Hanan, Mr Frederick William Thompson (of Christchurch, dentist), and one John Hayes (of Hokonui, mine manager), the liability under which is, as I am informed, disputed on legal grounds. Beyond what (if anything) may be recoverable on their guarantee the debt is of little value.page 7

9. I am aware of the offer made by Messieurs Alfred Lee Smith and James Bennie Reid to the official liquidators of the Colonial Bank of New Zealand for the purchase of the debts of the J. G. Ward Farmers' Association of New Zealand (Limited) and the securities for the same on the 20th day of March last past, and I have read the agreement for sale and purchase, dated the 1st day of June 1896, entered into and made between the said liquidators and the said Alfred Lee Smith and James Bennie Reid, and I am certain, as the result of my investigations on behalf of the said official liquidators, that amount offered by the said Alfred Lee Smith and James Bennie Reid for the several debts and securities mentioned in the said agreement, as on the said 20th day of March last, is more than could have been realised for the same had the said company been then forced into liquidation."

Then there was the affidavit of Robert A. Anderson, manager of the J. G. Ward Farmers' Association, which was as follows :—

"I, Robert Albert Anderson, of Invercargill, in the provincial district of Otago, in the colony of New Zealand, manager of the J. G Ward Farmers' Association of New Zealand (Limited), at Invercargill aforesaid, make oath and say:—

1. I was in the month of February 1896 appointed manager of the J. G. Ward Farmers' Association of New Zealand (Limited) in the place of John Fisher, the former manager of the said company, who had held that office from the time the said company was incorporated and commenced business up to shortly before the time of my appointment.

2. I have read the statement of the assets and liabilities of the J. G. Ward Farmers' Association of New Zealand (Limited) as at the 20th day of March 1896 prepared by Mr William Richard Cook, of the firm of Cook and Gray, and also the copy of the said statement annexed to the affidavit of the said William Richard Cook sworn herein on the second day of June 1896.

3. The said statement contains a full and true account of all the liabilities of the said company as on the said 20th day of March 1896, and also a full and true account as on that day of all the property and effects, real and personal, of which the said company was possessed, or in which the said company had any share or interest in possession, reversion, or expectancy.

4. I know of no property whatsoever, real or personal, of any description belonging to the said company, or in which the said company has any interest whatsoever, which is not included in the said statement.

5. The said company has not to my knowledge made away with, encumbered, or charged or in any manner parted with any part of its property or effects, real or personal, since the month of December 1895, when the said above-mentioned bank went into liquidation, save in the ordinary way of business and in the course of carrying on its business in the usual manner in which businesses of a like character or description are carried on."

Then there were the affidavits of Messrs Thompson and Hayes. Mr Thompson's affidavit was as follows :—

"I, Frederick William Thompson, of Christchurch, in the provincial district of Canterbury and colony of New Zealand, dentist, make oa h and say :

1. In connection with Dr Hanan (of Invercargill, surgeon, now deceased), the Honourable Joseph George Ward (of Invercargill, aforesaid), and John Hayes (of Hokonui, mine manager), I signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the Hokonui Railway and Coal Company (Limited) with the said bank to the extent of £5000.

2. The said Dr Hanan died on or about the 17th day of April 1894, and the said account so guaranteed as aforesaid was, I am informed and believe, carried on by the said bank alter his death, and I have been informed that by reason thereof, or by some other means, the said guarantee is no longer enforceable against the representatives of the said Dr Hanan or against the remaining guarantors.

3. The total value of the property possessed by me, after deducting the encumbrances thereon, does not exceed the sum of £250, and the debts and liabilities owing by me, exclusive of any liability in respect of the said guarantee, amount to the sum of £250.

4. If I am liable on the said guarantee to pay the sum of £4900 I am utterly unable to pay that amount, or any part thereof, in excess of the sum of £250.

The affidavit of John Hayes, the other guarantor of the account of the Hokonui Railway and Coal Company, was as follows :—

"I, John Hayes, of Hokonui, in the provincial district of Otago, in the colony of New Zealand, mine manager, make oath and say :

1. In conjunction with Dr Hanan (of Invercargill, surgeon, now deceased), the Honourable Joseph George Ward (of Invercargill, aforesaid), and Frederick William Thompson (of Christchurch, dentist), I signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the Hokonui Railway and Coal Company (Limited) with the said bank to the extent of £5000.

2. The said Dr Hanan died on or about the 17th day of April 1894, and the said account so guaranteed as aforesaid was, I am informed and believe, carried on by the said bank after his death, and I have been informed that by reason thereof, or by some other means, the said guarantee is no longer enforceable against the representatives of the said Dr Hanan or against the remaining guarantors.

3. The total value of the property of all kinds possessed by me does not exceed the sum of £200, and the debts and liabilities owing by me exclusive, of any liability in respect of the said guarantee amount to the sum of £230.page 8

4. If I am liable on the said guarantee to pay the sum of £4900 I am utterly unable to pay that amount or any part thereof."

Mr Hayes, continued Mr Haggitt, was one of the directors of the Ward Farmers' Association.

His Honor : Who are the directors of the Ward Farmers' Association ?

Mr Haggitt said he could not tell.

One of the gentlemen at the table handed his Honor a circular containing the names.

Mr Haggitt: I have heard incidentally that the only man of any means among them at all is Mr Thomas Green, of Gore

Mr Haggitt said they next came to the affidavit of the Hon. J. G. Ward, which was as follows:—

I, the Honourable Joseph George Ward, of Invercargill, in the provincial district of Otago, in the colony of New Zealand, managing director of the J. G. Ward Farmers' Association of New Zealand (Limited), make oath and say:

1. The Colonial Bank of New Zealand holds my promissory note for the sum of £55,150, which amount was credited to the account of the J. G. Ward Farmers' Association of New Zealand (Limited) in the books of the said bank.

2. I was personally debited in the books of the said association with certain losses incurred in carrying on the business of the said association and of the Ocean Beach Freezing Works, and the said promissory note represents the amount standing to my debit in the books of the said association at the time I signed the said promissory note; and I signed the said promissory note at the request of the general manager of the said bank, and the amount of the said promissory note has been credited to me in the books of the said association.

3. Previously to giving the said promissory note I had signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the said association with the said bank to the extent of £20,000.

4. In conjunction with Dr Hanan, of Invercargill, and others I signed a guarantee to the said bank guaranteeing the account of the Hokonui Railway and Coal Company (Limited) to the extent of £5000 The said Dr Hanan died in the month of April 1894, and the said bank continued to carry on the said account of the said company after his death, and I have been informed that the guarantee given by the said Dr Hanan and myself and others has in consequence thereof, or for some other reason, become legally unenforceable, and that no one is any longer legally liable in respect thereof.

5. I am indebted to the Colonial Bank of New Zealand in the sum of £16,000 or thereabouts, in respect of a draft on London for that amount which was in transit at the time when the agreement for sale and purchase, dated 18th October 1895, between the Colonial Bank of New Zealand and the Bank of New Zealand, was made and entered into. At the time when the Colonial Bank of New Zealand negotiated the said draft for me they had as security 1600 shares of Nelson Brothers (Limited), which were then of the value of £10 each. The said shares are still held by the said bank, but have now fallen in value to £2 10s per share, and, so far as I can see, without any prospect of rising again, and I am informed that the said share are now unsaleable.

6. Since the formation of the J. G. Ward Farmers' Association of New Zealand (Limited) all the moneys which I have received from all sources have been paid into the said association.

7. The paper writing now shown to me, and marked with the letter ' A ' contains a full and true account of all the property and effects, real and personal, which I possessed, or in which I had any share or interest in possession, reversion, or expectancy, at the time the Colonial Bank of New Zealand went into liquidation in the month of December 1895, and as nearly as I can ascertain the full and true value thereof and the encumbrances thereon. And the said paper writing also contains a correct statement of my liabilities at the date of the said liquidation and at the present time.

8. I have no property whatsoever real or personal of any description, nor am I entitled either in possession or reversion to any share or interest in any property whatsoever which is not included in the said statement, and I have not parted with or agreed to sell any part of my property or effects real or personal since the Colonial Bank of New Zealand went into liquidation as aforesaid.

9. I have used my best efforts and all my influence with my friends to bring about the offer made by Messieurs Alfred Lee Smith and James Bennie Reid to the official liquidators of the Colonial Bank of New Zealand for the purchase of the debt and securities for the same of the J. G Ward Farmers' Association of New Zealand (Limited), and the several other debts and securities mentioned in the agreement entered into between the said Alfred Lee Smith and James Bennie Reid and the said liquidators."

Mr Haggitt said the statement of property of the Hon. Mr Ward, referred to in his affidavit, showed that the value of all his properties, after deducting the direct encumbrance upon them, was £4250 The statement of liabilities showed direct liabilities £87,490 and contingent liabilities amounting to £38,513 more, or £126,000 altogether. Attached to this was a statement of various properties showing a total value of £18,000 subject to encumbrances amounting to £14 150, leaving a surplus of £3850 odd, and all these properties were subject to the further encumbrance contained in a letter given by Mr Ward to the general manager of the Colonial Bank, dated the 19th October 1895, by which Mr Ward agreed to give the bank security over all his properties for the amount owing by him or by the Ward Farmers' Association to the bank. He (Mr Haggitt) did not know that it would serve [unclear: the] slightest purpose to go into the details of that page 9 statement. A1I that his Honor would want would be the totals, but the details were all set out; each property being valued separately. That was the position of matters. The official liquidators, who were officers of the court, had investigated this matter personally, and had employed a person whom they believed to be the most competent person they could get to investigate the affairs of this association on their behalf, with the view of enabling them to make such arrangements as they ought to make in the interests of the bank. They had come to the conclusion that they ought to accept the proposal as it was better than they were likely to do for themselves if they forced the company into liquidation. Therefore they recommended the count in the affidavits, which he thought were pretty strong, to sanction them carrying out the agreement which they produced. There was one thing he would like to mention, and that was that this matter was not one to be judged simply by the statement of the accounts of the association. There were people connected with those accounts who were also debtors to the bank, and if the association were to go into liquidation it would bring down a lot of people who otherwise, if the association continued to exist, would be able to carry on, and the liquidators would by that means be paid in full certain debts on which they feared considerable losses would be sustained if through the Ward farmers' Association going into liquidation, the persons indebted to them were brought into difficulties. The matter should be considered not only in its aspect as between the association and the Colonial Bank, but also as to what the result would be to other persons if the association was brought to a stop.

His Honor: Yes; the indirect result to the Colonial Bank. You say that persons who are shareholders in this company are debtors of the Colonial Bank, and that if pressed at once to pay up on their shares they will not be able to meet their liabilities to the Colonial Bank ?

Mr Haggitt said : It will cause a universal smash. One failure would lead to another, and it is not only those persons who are directly indebted to the bank who would be affected, but others who are creditors of those persons who are connected with the association. It would also affect the prices of produce to a considerable extent.

His Honor: One has only to look at the matter in the interests of the liquidation.

Mr Haggitt: It would affect those interests very much. Every man who fails generally brings down or cripples half a dozen others as well, and the result of this association coming to grief would be to cripple half Southland. Besides, it would affect the prices of produce all over Otago. The liquidators personally were quite indifferent as to what the result of this application might be. They were quite satisfied that no other mode of dealing with this question would produce anything like such good results as the acceptance of this offer. It would at once relieve them of one of their greatest difficulties, inasmuch as the whole question of the liability under clause 18 would be put a stop to. They would know exactly what that liability was—there would be no further liability; nothing to be provided for beyond that. The dividend already paid would be absolutely safe, and the "D" list and the surplus of the "B" list accounts would be distributed amongst the shareholders. That would be the result of getting rid of this debt of the Ward Farmers' Association. They had the liquidators present, and Mr Cook and the Hon. J. G. Ward in attendance, ready to be cross-examined if the other side desired. He had had an intimation from Mr Young that he did desire that. As to Mr Young's affidavits filed that morning, they could not be read, as they were wrongly entitled, and perjury could not be assigned on them, and as they apparently contained some it was just as well to take the objection.

His Honor : If there is any objection they can be amended and resworn.

Mr Young : It is not our fault.

His Honor: There is no blame to anybody. They had to be sworn in a hurry.

Mr Haggitt said that he did not impute blame at all, but he maintained that they were wrongly entitled. How Mr Braund could state that in his opinion the interests of of the shareholders of the bank would be served by forcing the Hokonui Company into liquidation, and that the liquidators should exhaust their remedy against Mr Ward—how Mr Braund could swear that on the information at his disposal passed his (Mr Haggitt's) comprehension. By looking at the results of the work performed by Mr Cook and the liquidators, Mr Braund had come to a diametrically opposite conclusion to that which they had come to, and without having the means of forming a correct opinion as to what the ultimate consequence of putting these various companies into liquidation would mean.

His Honor: The real point of Mr Braund's affidavit seems to be this, apart from his expressions of opinion : that the Ward Farmers' Association in 1895 issued a balance sheet which showed them to be not only in a solvent, but in a prosperous, position, and they declared a dividend; and then that a few months after the result is as stated in the affidavit. That is a matter which possibly may require an explanation, and that explanation would be sought naturally in the course of the examination of the persons who made the affidavits.

Mr Haggitt was very much disposed to believe with Mr Braund that these balance sheets were not correct, and the liquidators, he understood, held the same opinion.

Mr MacGregor : They are signed by Mr Ward and Mr Anderson, who have sworn affidavits.

Mr Haggitt: That does not affect the present case.

His Honor : No; but the point now is that the assets of the association are worth next to nothing.

Mr Haggitt: Not quite that.

page 10

Mr MacGregor : They are worth on paper the full value of the consideration given for them.

Mr Haggitt: They are worth £67,650 to us. They are very little compared with what they would have been if the balance sheets had been correct, but the fact that the balance sheets are known to be incorrect renders it more desirable that we should get rid of the assets.

His Honor: It is quite natural that, looking at the facts set out in Mr Braund's affidavit, apart from the expressions of opinion, the shareholders or some of them would like to have not only the affidavits but a cross-examination of the persons who make the affidavits. (To Mr Haggitt) : You tender them here ?

Mr Haggitt: We are not bound to have them here, but they are here for that purpose. I apprehend that all that we have to do in this matter is simply to lay it before the court and ask the sanction of the court. If my learned friend or anybody else can satisfy the court that the liquidators are all wrong, and that the property is worth considerably more than they think it ought to be sold for, then the summons will be dismissed. The liquidators recognise that they are officers of the court, and after the investigation of the accounts to the best of their ability in the performance of their duties they honestly advise the court that the offer made is a good one and a fair one, and that to accept it is the best thing to be done in the interests of the shareholders. They consider that, having had such an offer made to them, they would certainly not be doing their duty if they did not act upon it. They might accept the offer without coming to the court, but they would not do that. Their powers are sufficient to enable them to accept the offer without coming to the court, but they would not think of that for a moment. From the first they made it clear that any result tbat was arrived at would have to be referred to the court.

Mr MacGregor: All that my people want is for the court to be satisfied that this would be the best bargain for the shareholders.

Mr Young : That is my position. We want all the matters to be put before your Honor.

His Honor asked if counsel wished to cross-examine any of the persons who had made affidavits. Even if no one had appeared he would probably have called some of the persons to clear up certain matters which it occurred to him might want clearing up. In winding-up proceedings it was not unusual to have persons in attendance for cross-examination.

Mr MacGregor : This is a case of such magnitude.

His Honor : Of course, in the present case it is perfectly reasonable.

Mr Young said he proposed, if it should be necessary, to cite authorities to his Honor to show that the count might inquire into all the circumstances, such as questions of reckless trading and matters of that kind. The authorities showed that the court could refuse to sanction the application if there was anything of that kind or any suspicion of anything of the kind having happened.

His Honor: Suppose this, that the association has been trading recklessly, and by [unclear: it] reckless trading has reduced itself to its present position, it would hardly be in the interests of the shareholders, would it, not to accept a compromise ?

Mr Young: The authorities show that your Honor will take that into consideration.

His Honor said that might be an element but if the alternative was that by liquidation they got about ls in the pound it would be rather hard to sacrifice the shareholders for the sake of an abstract principle.

Mr MacGregor observed that it was only in the case of the Hokonui Coal Company that [unclear: i] dividend of 1s in the pound was spoken of.

His Honor: If you put the company into liquidation.

Mr Young expressed a desire to cross-examine the Hon. Mr Ward.

The examination of witnesses was then takes.

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The Pamphlet Collection of Sir Robert Stout: Volume 74

Mr Haggitt's Opening

Mr Haggitt's Opening.

1.	The J. G. Ward Farmers' Association of New Zealand (Limited) was a customer of the Colonial Bank of New Zealand, and kept an account current with the said bank at its Invercargill branch, and also at its Gore branch, and the said account was one of the accounts appearing in the 'C' list, referred to in clause 18 of the agreement, dated October 18, 1895, made and entered into between the said bank and the Bank of New Zealand, and approved by the Parliament of New Zealand, as mentioned and contained in ' The Bank of New Zealand and Banking Act Amendment Act 1895.'
2.	Immediately on the said agreement taking effect the Bank of New Zealand wrote of the amount standing in the right-hand column of the said 'C' list against the account of the said association, and credited the account of the said association with the sum of £55,150 being the amount so written off.
3.	The Colonial Bank of New Zealand is bound by the terms of the said agreement to indemnify and protect the Bank of New Zealand against any loss or deficiency in the realisation of the account of the said association.
4.	The Bank of New Zealand did not within three months from the date of the said contract taking effect take over the account of the said association.
5.	We, as such official liquidators as afore-said, after the expiration of the said three months from the date of the said contract taking effect, required the said Bank of New Zealand to take over the said account of the said association or to reject the same, and the Bank of New Zealand refused to take over the said account, and we thereupon requested the Bank of New Zealand to realise or liquidate the said account.
6.	Afterwards and on or about the 6th day of March last past we employed [unclear: Messier] Cook and Gray, of Dunedin, accountants, trade assignees and financial agents, to investigate the affairs of the said association on our behalf and Mr William Richard Cook, one of the [unclear: sail] firm, made such investigation, and reported to us that the accounts of the said association, as valued by him at the 20th day of March last past, showed a deficiency of assets to [unclear: meet] liabilities amounting to £48,456 16s 4d. A copy of the statement of the assets and liabilities of the said association, as prepared and submitted to us by the said William Richard Cook, is hereto annexed and marked with the letter 'A.'
7.	We have ourselves investigated the affairs of the said association, and we believe that the result arrived at by the said William Richard Cook as to the amount of the liabilities and the value of the assets of the said association, including his estimate of the value of the uncalled capital of the said association, is virtually correct, although we are of opinion that his estimate of the value of the book debts would not be realised if the said association were to be put into liquidation.
8.	The Colonial Bank of New Zealand guaranteed to the Bank of New Zealand payment of the sum of £20,000 advanced by the Bank of New Zealand to the said associate upon its debentures, and also the interest thereon, which amounts to £600 every half year. The currency of the said debentures [unclear: is] 10 years. The liability of the said association to the Colonial Bank of New Zealand, including the amount of these debentures, was on the 20th day of March last past £92,179 9s 2d.
9.	The securities held by the Colonial Bank of New Zealand for the said indebtedness are the said debentures to the amount of £20,000 page 5 presently held by the Bank of New Zealand, further debentures to the amount of £30,000 held by the Colonial Bank of New Zealand, and the guarantee of the Honourable Joseph George Ward for payment of the overdraft of the said association up to the amount of £20,000.
10.	The Colonial Bank of New Zealand also holds the promissory note of the Honourable Joseph George Ward, dated 19th October 1895, for the sum of £55,150, payable on demand. This promissory note represents the amount written off the account of the said association, and credited to it as stated in paragraph 2 of this our affidavit.
11.	Toe Honourable Joseph George Ward is indebted to the Colonial Bank of New Zealand in the sum of £16,000 or thereabouts in respect of a draft on London for that amount, which was in transitu on the day of the date of the said agreement of the 18th day of October 1895.
12.	The payment of this draft is guaranteed by the Colonial Bank of New Zealand to the Bank of New Zealand under clause 25 of the said agreement, and the only security held as against the said draft is 1600 shares in the company called Nelson Bros. (Limited). These shares were paid-up to the amount £10 each, and were, we are informed and believe, estimated to be of the value of £9 each at the time of the negotiation of the said draft, but at the time of the arrival of the said draft in London their value was considerably less, and the said shares at the present time are practically unsaleable.
13.	The Hokonui Railway and Coal Company (Limited) is one of the clients or customers of the said association, and is largely indebted to the said association; the said company is also indebted to the Colonial Bank of New Zealand in the sum of £4900 or thereabouts on its account current with the said bank. The only security the said bank has for the said indebtedness is a guarantee of the said Joseph George Ward, Frederick William Thompson (of Christchurch, dentist), the late Dr Hanan (of Invercargill, surgeon, deceased), and John Hayes (of Hokonui, mine manager). We understand that the executors of the late Dr Hanan dispute any liability under the said guarantee on the ground that the account of the said company was continued to be carried on after the death of the said Dr Hanan, and that the amount owing at the time of the death of the said Dr Hanan has been discharged by payments since made to the credit of the account, and the present liability has all arisen since the death of the said Dr Hanan. We have ascertained that such is the fact, and we are advised by our solicitors that, although the other guarantors are still liable on their guarantee, it is very doubtful whether the executors of the late Dr Hanan can be held liable under the circumstances. As the result of our inquiries and investigations into this account we verily believe that, even if we have a good legal claim against the guarantors other than Dr Hanan, and were to proceed to exhaust them, we should not be able to obtain from the estates of the whole of them the sum of £1000; whilst if we were to take steps to wind up the said company we should not get even ls in the pound from its available assets.
14.	It is of the utmost importance to the successful liquidation of the Colonial Bank of New Zealand to be rid of the account of the said association and the liability to the Bank of New Zealand, arising out of the liquidation thereof under clause 18 of the said agreement of the 18th day of October 1895.
15.	We are satisfied that the said Joseph George Ward is not in a position to pay any appreciable sum in respect of the amount of his liabilities to the Colonial Bank of New Zealand, and that in point of fact his promissory note and his guarantee are both valueless to the said bank as securities. We have procured from the said Joseph George Ward an affidavit as to his means, and a statement setting forth his financial position
16.	We are satisfied that the sum of £62,750 in cash, with their guarantee of £5000 in respect of a parcel of oats which should have been shipped to Messrs R. Brooks and Co., made to us by Messieurs Alfred Lee Smith and James Bennie Reid, for the purchase of the debt due by The J. G. Ward Farmers' Association of New Zealand (Limited) to the said bank, and the securities for the same and the other debts and securities mentioned in the agreement bearing date the first day of June 1896, made and entered into by us with the said Alfred Lee Smith and James Bennie Reid, which agreement is now produced and shown to us and marked with the letter 'B,' is more than we can by any other means realise for the same, and we believe that it will be beneficial to the said bank that the offer of the said Alfred Lee Smith and James Bennie Reid be accepted, and the said agreeement given effect to and carried out.

1.	I and William Gray, of Wellington, in the colony of New Zealand, accountant, carry on business in co-partnership at Dunedin aforesaid, and also at Wellington aforesaid, and also at Auckland and Christchurch, in the colony of New Zealand, as accountants, trade assignees, and financial agents, under the style and firm of ' Cook and Gray.'
2.	I was employed by the official liquidators of the Colonial Bank of New Zealand to investigate the affairs of the J. G. Ward Farmers' Association of New Zealand (Limited), and to make a full and searching inquiry as to the assets and liabilities of the said company, and the value of the same, and also into the value of certain securities held by the Colonial Bank of New Zealand as against the account current kept by the said company with the said bank.
3.	I investigated the affairs of the said company accordingly, and made up a statement of the assets and liabilities of the said company as at the 20th day of March 1896, and the paper writing hereunto annexed marked ' A ' is a true copy of the statement so prepared by me, and contains to the best of my knowledge, information, and belief a full and correct account of all the property and effects (real and personal) of which the said company was possessed or in which the said company had any share or interest in possession, reversion, or expectancy on the said 20th day of March 1896.
4.	The greater part of the deficiency, amounting to £48,456 16s 4d, shown in and by the said statement is caused through losses made in book debts, which amount in all to £85,070 16[unclear: *] 6d, of which amount, after making searching inquiries, I deem necessary to write off £37,374 3s 8d as absolutely bad and worthless, leaving a balance of £47,696 12s 10d estimated as good. I found that indiscriminate credit had been given and little or no security taken, and I felt positive that in writing off the amount above stated I have written off no more than I should have done in order to arrive at a true and just value of the book debts of the company as on that date.
5.	In a memorandum at foot of the said statement, I have estimated the value of the uncalled capital of the company at £8457. I arrived at this estimate after making searching inquiries as to the position of the present holders of the shares in the company, and I feel certain that my estimate of the value of the uncalled capital is as nearly correct as possible.
6.	In valuing the stocks at £12,680, I have taken the oats, seeds, and guanos at their then market prices, and the rest of the stock at cost, with the exception of binder twine, oils, and separators, on which, as the result of inquiries made by me, I have put a just and fair value. I have written off £666 for old and depreciated goods, and have valued the stocks as a whole at what I verily believed to be their true and correct value.
7.	The plant and office furniture stand in the books at £2302, but the same are not fairly worth more than one-half of that amount, and I have taken them in accordingly at £1151 ls 3d, which I verily believe to be their true and correct value.
8.	I ascertained that the last year's operations of the Hokonui Railway and Coal Company (Limited) resulted in a loss of £1100, The bank overdraft amounts to £4900 or thereabouts, for which the bank holds the guarantee of the Honourable Joseph George Ward, the late Dr Hanan, Mr Frederick William Thompson (of Christchurch, dentist), and one John Hayes (of Hokonui, mine manager), the liability under which is, as I am informed, disputed on legal grounds. Beyond what (if anything) may be recoverable on their guarantee the debt is of little value.page 7
9.	I am aware of the offer made by Messieurs Alfred Lee Smith and James Bennie Reid to the official liquidators of the Colonial Bank of New Zealand for the purchase of the debts of the J. G. Ward Farmers' Association of New Zealand (Limited) and the securities for the same on the 20th day of March last past, and I have read the agreement for sale and purchase, dated the 1st day of June 1896, entered into and made between the said liquidators and the said Alfred Lee Smith and James Bennie Reid, and I am certain, as the result of my investigations on behalf of the said official liquidators, that amount offered by the said Alfred Lee Smith and James Bennie Reid for the several debts and securities mentioned in the said agreement, as on the said 20th day of March last, is more than could have been realised for the same had the said company been then forced into liquidation."

1.	I was in the month of February 1896 appointed manager of the J. G. Ward Farmers' Association of New Zealand (Limited) in the place of John Fisher, the former manager of the said company, who had held that office from the time the said company was incorporated and commenced business up to shortly before the time of my appointment.
2.	I have read the statement of the assets and liabilities of the J. G. Ward Farmers' Association of New Zealand (Limited) as at the 20th day of March 1896 prepared by Mr William Richard Cook, of the firm of Cook and Gray, and also the copy of the said statement annexed to the affidavit of the said William Richard Cook sworn herein on the second day of June 1896.
3.	The said statement contains a full and true account of all the liabilities of the said company as on the said 20th day of March 1896, and also a full and true account as on that day of all the property and effects, real and personal, of which the said company was possessed, or in which the said company had any share or interest in possession, reversion, or expectancy.
4.	I know of no property whatsoever, real or personal, of any description belonging to the said company, or in which the said company has any interest whatsoever, which is not included in the said statement.
5.	The said company has not to my knowledge made away with, encumbered, or charged or in any manner parted with any part of its property or effects, real or personal, since the month of December 1895, when the said above-mentioned bank went into liquidation, save in the ordinary way of business and in the course of carrying on its business in the usual manner in which businesses of a like character or description are carried on."

1.	In connection with Dr Hanan (of Invercargill, surgeon, now deceased), the Honourable Joseph George Ward (of Invercargill, aforesaid), and John Hayes (of Hokonui, mine manager), I signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the Hokonui Railway and Coal Company (Limited) with the said bank to the extent of £5000.
2.	The said Dr Hanan died on or about the 17th day of April 1894, and the said account so guaranteed as aforesaid was, I am informed and believe, carried on by the said bank alter his death, and I have been informed that by reason thereof, or by some other means, the said guarantee is no longer enforceable against the representatives of the said Dr Hanan or against the remaining guarantors.
3.	The total value of the property possessed by me, after deducting the encumbrances thereon, does not exceed the sum of £250, and the debts and liabilities owing by me, exclusive of any liability in respect of the said guarantee, amount to the sum of £250.
4.	If I am liable on the said guarantee to pay the sum of £4900 I am utterly unable to pay that amount, or any part thereof, in excess of the sum of £250.

1.	In conjunction with Dr Hanan (of Invercargill, surgeon, now deceased), the Honourable Joseph George Ward (of Invercargill, aforesaid), and Frederick William Thompson (of Christchurch, dentist), I signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the Hokonui Railway and Coal Company (Limited) with the said bank to the extent of £5000.
2.	The said Dr Hanan died on or about the 17th day of April 1894, and the said account so guaranteed as aforesaid was, I am informed and believe, carried on by the said bank after his death, and I have been informed that by reason thereof, or by some other means, the said guarantee is no longer enforceable against the representatives of the said Dr Hanan or against the remaining guarantors.
3.	The total value of the property of all kinds possessed by me does not exceed the sum of £200, and the debts and liabilities owing by me exclusive, of any liability in respect of the said guarantee amount to the sum of £230.page 8
4.	If I am liable on the said guarantee to pay the sum of £4900 I am utterly unable to pay that amount or any part thereof."

1.	The Colonial Bank of New Zealand holds my promissory note for the sum of £55,150, which amount was credited to the account of the J. G. Ward Farmers' Association of New Zealand (Limited) in the books of the said bank.
2.	I was personally debited in the books of the said association with certain losses incurred in carrying on the business of the said association and of the Ocean Beach Freezing Works, and the said promissory note represents the amount standing to my debit in the books of the said association at the time I signed the said promissory note; and I signed the said promissory note at the request of the general manager of the said bank, and the amount of the said promissory note has been credited to me in the books of the said association.
3.	Previously to giving the said promissory note I had signed a guarantee to the Colonial Bank of New Zealand guaranteeing the account of the said association with the said bank to the extent of £20,000.
4.	In conjunction with Dr Hanan, of Invercargill, and others I signed a guarantee to the said bank guaranteeing the account of the Hokonui Railway and Coal Company (Limited) to the extent of £5000 The said Dr Hanan died in the month of April 1894, and the said bank continued to carry on the said account of the said company after his death, and I have been informed that the guarantee given by the said Dr Hanan and myself and others has in consequence thereof, or for some other reason, become legally unenforceable, and that no one is any longer legally liable in respect thereof.
5.	I am indebted to the Colonial Bank of New Zealand in the sum of £16,000 or thereabouts, in respect of a draft on London for that amount which was in transit at the time when the agreement for sale and purchase, dated 18th October 1895, between the Colonial Bank of New Zealand and the Bank of New Zealand, was made and entered into. At the time when the Colonial Bank of New Zealand negotiated the said draft for me they had as security 1600 shares of Nelson Brothers (Limited), which were then of the value of £10 each. The said shares are still held by the said bank, but have now fallen in value to £2 10s per share, and, so far as I can see, without any prospect of rising again, and I am informed that the said share are now unsaleable.
6.	Since the formation of the J. G. Ward Farmers' Association of New Zealand (Limited) all the moneys which I have received from all sources have been paid into the said association.
7.	The paper writing now shown to me, and marked with the letter ' A ' contains a full and true account of all the property and effects, real and personal, which I possessed, or in which I had any share or interest in possession, reversion, or expectancy, at the time the Colonial Bank of New Zealand went into liquidation in the month of December 1895, and as nearly as I can ascertain the full and true value thereof and the encumbrances thereon. And the said paper writing also contains a correct statement of my liabilities at the date of the said liquidation and at the present time.
8.	I have no property whatsoever real or personal of any description, nor am I entitled either in possession or reversion to any share or interest in any property whatsoever which is not included in the said statement, and I have not parted with or agreed to sell any part of my property or effects real or personal since the Colonial Bank of New Zealand went into liquidation as aforesaid.
9.	I have used my best efforts and all my influence with my friends to bring about the offer made by Messieurs Alfred Lee Smith and James Bennie Reid to the official liquidators of the Colonial Bank of New Zealand for the purchase of the debt and securities for the same of the J. G Ward Farmers' Association of New Zealand (Limited), and the several other debts and securities mentioned in the agreement entered into between the said Alfred Lee Smith and James Bennie Reid and the said liquidators."