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The Pamphlet Collection of Sir Robert Stout: Volume 74

Mr Cook's Evidence

Mr Cook's Evidence.

William Richard Cook, who was frequently quite inaudible, examined by Mr Young, said : I inspected the Ward Association assets for the liquidators. I had no instructions at any time from the Bank of New Zealand in respect to them, or from any official of the Bank of New Zealand. I have seen the balance sheet of June 1895. I cannot tell if that is a true account of the position given at the time. I have not gone through the balance sheets. I did not see the balance sheet until I was through my work, and had prepared my statement. Mine is not a balance sheet, but a statement. The capital of the company is gone. I had no asset of capital to show. In my opinion, and I think in the general opinion, the balance sheet should not have been prepared in the manner in which it was. I inspected the share list, and dealt with it in the same way that I did with the book debts. The whole of the shareholders, with the exception of Mr Ward and five or six more, are customers and debtors to the association. In valuing the book debts I made four columns, and showed new and current bills, bills under discount, and past due bills. Having ascertained the indebtedness, I made what inquiries I could as to the value of the accounts, and valued them according to the result of my inquiries into the assets of each individual. After I had done with the book debts I had the share list and went through with the same names. I wrote to everybody who was owing over £50 to come in and see me, and took their signed statement as to what they were worth, and my estimate was formed upon that. Regarding the Hokonui Company, I got a statement of its position and of its past working. I did not have a list of its shareholders or make any detailed valuation of its assets.

Mr Young : Wherein do you suggest that it is more beneficial to accept the proposed sale than to realise on the assets ?—My memo, respecting it was made on the 30th of March, and I valued the assets as highly as I could on a liquidation basis. From past experience I think if you can get nearly the amount of cash it is far better, to take that than to go into liquidation, because you have contingent expenses of all kinds creeping up.

You mean nearly the amount that would be realised on liquidation ?—Yes. I was asked by the liquidators whether I would consider that offer a fair one, and I said undoubtedly I would.

You suggest that by liquidation you would probably get a greater amount than that offered ?—I do not know about that. I put down what I considered a fair valuation on a liquidation basis, bringing the knowledge I had to bear upon the inquiries. I think that valuation was as fair and true as one could possibly get.

Do you think there had been reckless trading ?—That is the only word for it.

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To a very large extent ?—Yes. That is, advances were made that prudent men would have taken security over the crops for, and no security was taken.

Can you say from the books over what period that reckless trading was going on ?—No; I would not like to say. When I got there I had the books balanced to the 19th March, and worked from that date. I think you can say that probably nearly for two years I found no securities after 1894.

Your investigation was in November ?—No, in March, and I finished my work on the 2nd April.

Would it surprise you to learn that they had made provision for bad and doubtful debts ? Yes. I do not think a sufficient sum was written off for bad and doubtful debts.

Mr MacGregor : You say you were aware of the offer made by Messrs Smith and Reid ?—I knew an offer was made, but not the terms of it until Monday.

When did you first know of negotiations, before or after you went down to value ?—After my statement was in. It was during the Easter holidays I knew an offer was going to be made.

When you were instructed to value, were you told for what purpose the valuation was required ?—No. I was merely told to go down and ascertain the true position.

And nothing further?—Nothing further. I knew Messrs Reid and Smith were down there. They were there before I got there.

In what capacity ?—I understand they were there on behalf of Mr Ward. The first I saw was a statement in the papers that they were going down.

Are you aware whether they were authorised to go down by the Bank of New Zealand ?—I knew of a correspondence between the Bank of New Zealand and the Colonial Bank, and of a suggestion made that the position should be arrived at by Messrs Smith and Reid.

On behalf of the Bank of New Zealand ?—I do not know, but I presume it would be for the Bank of New Zealand, because the liquidators said they would agree to that provided I was associated with them. Everything I did they were checking.

You did not understand they were present as probable purchasers ?—No, not till afterwards. However, if I had I do not think it would have made the slightest difference.

Was Mr Ward about at this time?—No, I did not see Mr Ward in the place at all.

You have told us that you were aware of the offer, and you considered it reasonable to accept it ?—I think so.

Mr Haggitt: Do you understand the details of the proposed contract ?—Yes.

Do you know whether Messrs Reid and Smith are buying the assets of the company, or are they merely taking the bank's place as creditors with the others ?—I understand they are buying the bank's debt.

Prior to making up the statement, you did not examine the previous balance sheet ?—No; I did not have the opportunity of seeing the balance sheet until a little time afterwards. I would rather not see the balance sheet, for I like to make my statement without it.

To Mr Woodhouse: As far as the bank is concerned, they are getting £4600 more, as probably saving the cost of liquidation ?—advised the liquidators to accept because believed my figures to be as nearly correct as possible, and at the same time expenses may come up—law costs, and so on—which it is wiser to avoid.