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The Pamphlet Collection of Sir Robert Stout: Volume 73

Tuesday, November 19, 1895

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Tuesday, November 19, 1895.

The case of the Southland Frozen Meat and [unclear: produce] Company (Limited) v. Nelson Bros, [unclear: Limited]) was commenced at the Supreme [unclear: ort] on Tuesday, November 19, before his [unclear: nor] Mr Justice Williams and a special jury [unclear: 12].

The plaintiff company claim £30,000 [unclear: ges].

Sir Robert Stout and Mr W. Y. H. Hall (of [unclear: cargill]) appeared for the plaintiff company and Mr H. D. Bell and Mr Hosking for defendant company.

The special jurors are Charles H. Tucker [unclear: man]), David Scoular, John C. Seelye, [unclear: John] Blakeley, James M'Gill, James Barr, [unclear: mes] A. Law, David Baxter, John Burt, [unclear: niel] Paterson, W. Wood, and John [unclear: ble].

The pleadings may be thus summarised:—

Plaintiffs allege that by an agreement of the [unclear: th] June 1891, made at Invercargill, plaintiffs [unclear: ned] to sell and supply to defendants and [unclear: de] agreed to take the whole of the [unclear: out] of frozen meat from the freezing works of [unclear: n] plaintiffs for a period of three years from [unclear: a] 1st January 1891. The agreement [unclear: con-] this clause (8): "Nelson Bros. (Limited) [unclear: ll] not during the said term of three years [unclear: st] or assist, or be in any way concerned or [unclear: ted] in the erection or use of freezing [unclear: ks] on land or water at the Bluff [unclear: t] within the limits of the Southland or [unclear: ce] Counties, without making special [unclear: gement] with the company, nor do anything of the like nature which may in any [unclear: y] interfere with or restrict the output, [unclear: ces] trade, or profits of the company." [unclear: es] defendants, without having made any [unclear: ial] arrangements with the plaintiffs, in the [unclear: or] 1891 erected, or assisted, and were [unclear: con-] in the erection of freezing works e at the [unclear: off] known as the Ocean Beach Freezing [unclear: rks], and were thenceforth interested during [unclear: n] reminder of the term of three years. By [unclear: oon] of this action the plaintiffs have suffered [unclear: st] loss of trade and profit, and their property [unclear: l] connection have been greatly depreciated, [unclear: of] their shares have been depreciated, and their output, business, trade, and profits have been interfered with and restricted. The plaintiffs claim £15,000 for general damages, and £15,000 for special damage arising from the competition in the plaintiffs' trade and business caused by the defendants' action.

The defendants reply in effect that they had no concern or interest whatever, direct or indirect, in the erection of the Ocean Beach Freezing Works, nor did they have any interest or concern in the use of the said works during the term of three years covered by the agreement. And for a further defence defendants say that on the 6th May 1892 they entered into an agreement with the Hon. J. G. Ward, the then owner of the Ocean Beach Freezing Works, for the purchase of all the sheep frozen by the said J. G. Ward at these works. The plaintiffs were well aware of the existence of this agreement, and never expressed any objection to the same. The defendants deny that entering into this agreement amounted to a breach of the agreement of June 26, 1891, and the defendants say that during the period covered by the last-mentioned agreement (from the 1st January 1891 to 1st January 1894) the defendants had no interest or concern whatever in the erection or use of the Ocean Beach or any other freezing works within the limits mentioned in the said agreement. And the defendants deny that they did any act which interfered with or restricted the output, business, trade, or profits of the plaintiff company.

Mr Hall having read the pleadings,

Sir Robert Stout said: Gentlemen of the Jury,—You have heard from the pleadings that have been read that the plaintiff is a frozen meat and produce export company (limited), which carries on its business in the Southland district, and the defendants are Nelson Bros. (Limited), who carry on business in different parts of the colony, and also in London. The point in dispute in this case is really whether this part of the agreement, made between the plaintiffs and the defendants, has been broken or not by the defendants I shall read the clause to you: "That Nelson Bros. (Limited) shall not during the said term of three years page 2 [that is, 1891, 1892, and 1893] erect, or assist, or be in any way concerned or interested in the erection or use of freezing works on land or water at the Bluff, or within the limits of the Southland and Wallace Counties, without making special arrangements with the company, nor do anything of the like nature which may in any way interfere with, or restrict, the output, business, trade, or profits of the company." We intend to show you that Nelson Bros. (Limited) have broken that clause of the agreement, and in order that you might fully understand the position we take up, I must ask your attention to considerable correspondence that passed between Nelson Bros. (Limited) and the Hon. Mr Ward. Of course I have to warn you now that you have really nothing whatever to do in this case with Mr Ward's position. We have only to deal with Nelson Bros., and I shall only read those parts of the letters that have a bearing on my case. It is not my intention to deal with Mr Ward's conduct. We have only to deal with Nelson Bros.' conduct, in what they did in reference to this contract. The company's business was to freeze meat and export frozen mutton. The shareholders were, and are, mainly farmers. At the time that this agreement was made—that is, the agreement for three years—there had been a prior agreement, but I shall try to keep away from you all side issues that have really no bearing on this action. They made a new agreement with Nelson Bros, early in 1891. At that time Mr Ward was one of their directors, and he remained a director down to the end of June or the beginning of July 1891. At that time it was seen by the Southland Company that as the number of sheep were increasing in Southland, and the Southland people were taking more to the production of freezers, that it would be necessary to extend their works, and a committee of the directors was appointed to see how that could best be done. I think Mr Ward was one of that committee. However, before that committee reported or any steps were taken Mr Ward resigned his position as a director of the Southland Frozen Meat Company. This took place, as I told you, somewhere in the end of June or the beginning of July 1891. Thus there are practically, as you will see from the correspondence, three parties whose conduct you have in seme respects to consider. We have first the Southland Meat Company, who were determined to erect new works somewhere at Mataura—anxious to maintain their own business,—anxious not only to give their shareholders, who were mainly farmers, a good bonus, but in addition to maintain for the farmers the position of a company able to export and have control of the export in frozen meat in the Southland district. We have also to consider Nelson Bros., who were buyers of frozen mutton, and were anxious to get all the frozen mutton as cheap as they could. We have [unclear: E] Ward also, who wished apparently to begin [unclear: th] work of freezing sheep. Now, all this time [unclear: ht] company had been doing exceedingly well. [unclear: l] you take the balances from their own [unclear: balance] sheets you will see that in 1888 they [unclear: made] profit of £2000. I am giving you now [unclear: simply] the balances that were practically to [unclear: credit] the profit and loss account of these [unclear: different] years:—In 1888, £2000; in 1889, £3394; [unclear: a] 1890, £3824; in 1891, £3969. The profits [unclear: na] in some of these years were greater than [unclear: the] balances to profit and loss account [unclear: shown] because in one year they paid £1500 [unclear: a] bonuses out of their profits to people [unclear: vi] dealt with them; and also wrote [unclear: n] to depreciation account another sum [unclear: of] £1500. You will see that these were very [unclear: ha] profits, considering that the total amount [unclear: t] paid-up capital was £14,000, the [unclear: compact] making about 20 or 30 per cent, in [unclear: vay] years on their capital by these freezing [unclear: ment]. It was, therefore, no wonder that [unclear: the] Ward, as a business man, wished to enter [unclear: in] this profitable business; and, so far as we [unclear: ar] concerned, we have no quarrel with Mr [unclear: Wi] for entering on this business. Our only [unclear: qua] said is that we had a contract with Nelson [unclear: bra] who have not only made a contract with [unclear: t] Ward, such as is admitted in the defence, [unclear: ha] have given a concession, and have [unclear: rue] Ward—to use a popular phrase—all [unclear: through] from the commencement of these freezing [unclear: wro] and have been interested in and concerned [unclear: in] the use of the Ocean Beach Freezing [unclear: wro] What you must keep in mind is that [unclear: Neh] Bros, are an exceedingly large firm, and [unclear: they] wished to keep the control of as much [unclear: fran] mutton as they could, in order to have [unclear: of] big a business as they could. They [unclear: vs] also interested in the Tyser line of [unclear: stea] and wished to get as much trade for that [unclear: is] as possible; and when they heard that Mr [unclear: Wi] was about to start works they did not wish [unclear: t] to go outside of them and to sell his [unclear: mutton] make arrangements with other dealers is [unclear: la] don or other people interested in any other [unclear: li] of steamers. In the first transaction you [unclear: wi] see that Nelson Bros, thought Mr Ward [unclear: would] unable to proceed with these works, and [unclear: the] really leant towards the Southland [unclear: Company] and you will see, as I shall show you [unclear: from] first correspondence, that there is on the [unclear: part] Mr J. B. Reid, the agent for the [unclear: company] strong anxiety to keep not only to the [unclear: letter] his contract, but also to what might be [unclear: tes] the spirit of the contract that had been [unclear: sa] between the Southland Company and [unclear: Nels] You will see from the later [unclear: correspondent] that Mr Reid, whether acting under [unclear: advice] from correspondence, or whatever it was [unclear: be] his principals, weakened considerably [unclear: toward] the company as did the Nelsons, and [unclear: as] shall show they were not content with the [unclear: to] contract to purchase the output, bat stood [unclear: at] page 3 Ward's back all the time. The first correspondence on this subject took place, strange to say, on July 4, 1891, a sort of anniversary of the American Independence. Mr Reid was exceedingly active on that day. Everybody was in a terrible stir because of the rumour of opposition works, and the Nelsons were anxious to know what would happen in the case of their getting all the output from the Southland works interfered with. On July 4, 1891, the number of [unclear: grams] and letters was exceedingly [unclear: numer-] and most of the telegrams were marked [unclear: urgent."] There seems to have been a terrible [unclear: ver] in Mr Reid's office on July 4. The [unclear: 1st] telegram was from Mr Reid to Mr Cuthbertson:

Confidential. If any truth in report we must [unclear: act] promptly.

The report being that works were to be started by Mr Ward. The information Mr Cuthbertson [unclear: had] was that he had heard that another Napier [unclear: fm] was acting with Mr Ward, and they were prepared to erect new works. Another telegram [unclear: from] Mr Reid to Mr Cuthbertson was:

Confidential. Advise you calling directors together by telegram at once. I can attend, or two directors can be empowered to arrange here, whichever most desirable. Must act promptly, and have Mataura works going before 1st January.

These were the new works the Southland Company were going to erect at Mataura. Previously their slaughtering had been done at wallacetown, and their freezing at the Bluff, The next was from Mr Cuthbertson to Mr Reid:—

Confirm letter. Do not know principals. Advise Napier confidentially. Writing further by express.

Mr Reid does not wait for the letter. He says:

Private. It is imperative that I should wire Nelson reply prompt. Do you think your [unclear: direct] would give us authority build [unclear: Mataura,] we work in with you? If so, would [unclear: advise] on at once rather than Milton. [unclear: This is] confidential. I only want your private [unclear: lnion].

Then came a letter on the same day from Mr Reid to Mr Cuthbertson. He says:

There is evidently no doubt about the opposition works, and I presume Ward was clever enough to tell Mr Turnbull in confidence so as to keep [unclear: him] We must push on with Mataura [unclear: scheme] once, and I will strongly advise your [unclear: directors] meet and appoint two of their number [unclear: to] the matter at once. I would prefer to [unclear: build] Mataura opposition rather than go on with Milton works, and it will end in a terrible loss to pour company if your directors allow this outside company to get possession of the field and prevent our helping them. I agree with you [unclear: that] must work together; if we do not we will be is trouble. I hope you will act promptly, for if a hold front be displayed I fancy the opposition will retire.

Now I ask your attention to that because it may have some bearing on the question of damages later on. Mr Reid, as early as July 1891 predicted that if a strong opposition company were started in Southland it would have a calamitous effect on the profits of the Southland Company.

Mr Bell: No. "If your directors allow this outside company to get possession of the field and prevent our helping them."

Sir R. Stout: We'll see about that. Mr Reid wires to Mr Nelson:

Confidential. Cuthbertson writes that he has it on best authority that opposition works are to be started at Bluff under Ward's local management, and that Williams and Kettle are mixed up in it. Strictly confidential.

Then comes a telegram from Mr Reid to Mr Dobson, who is really the agent for the Tyser Company, and is mixed up with Nelson Bros. (Limited). He says:

Confidential. There is no doubt about opposition I wired about yesterday. Our friend has resigned from directory of company,—

That is Mr Ward.

—and Greenstreet, engineer from Wellington, was down inspecting site on Thursday. We must act promptly and in conjunction with company. See Nelson to-day and wire to-night.

Then comes a letter on the 6th, also from Mr Reid to Mr Cuthbertson:

I have just received your telegram giving me permission see Mr Ward. I feel sure that if your directors stick to their grounds and go on with the works at once that Mr Ward and party will retire. I expect Ward told your chairman of his scheme in confidence, simply to keep him quiet, and it is absurd to suggest working together, as you say, while more sheep are offering than both works can freeze. My only fear is that your directors will not act promptly. I will go south to-morrow morning if you will delay meeting until 5 p.m.

Then comes a telegram from Mr Cuthbertson on the same day, saying:

They ordered machinery first week January. Site selected for works is a few miles this side of Bluff.

Then Mr Cuthbertson says on the same day:

Your seeing him useless. Absolutely hopeless your getting any reliable information. More likely mislead you. Their sole object making money. No compromise possible, though co-operation for a time possible. Arranged meeting to-morrow, 11; expect you there.

There is a telegram again from Mr Reid on the 6th asking authority to see Mr Ward. He sends an urgent telegram on the 6th and another urgent telegram:

It is imperative that I should see our friend. Delay meeting until arrival express to-morrow, and I will attend.

The next is a telegram from Mr Reid to Mr Nelson on the same day:

Leave to-night for Invercargill. Wire me fully to Southland Club Hotel what number of shares you will take in company, provided they increase Bluff or go on with Mataura at once.

page 4

Then the next is a letter from Mr Reid to Nelson Bros, on the 8th July, telling them about the Southland Freezing Company, and saying this:

I had no end of trouble to get the directors of this company to sign the contract.—That is the contract for three years. I need not got into that question.—

I am a lad to say everything is now settled, and I am able to send you a copy of the agreement by same post. I have been very anxious for some time past for the directors of this company to increase their power, for sheep are increasing very much in Southland, but they would never move in the matter, and it now turns out that the Hon. J. G. Ward, who was a director of the company, is going to build works. The secretary and directors of the company are very much excited about the matter, and I am going to Invercargill to morrow afternoon to hear what they have to say. I have in view at present a splendid site at Mataura Falls, a few miles from Gore, and will try to get the company to build there, for all the freezing can be carried on by water power at very little cost. I had a long talk with Mr Ward the evening before last about his scheme and now know the position. Mr Cuthbertson is of opinion that Messrs Roberts, Brydone, and Co. are interested; but I know privately that such is not the case. The fact is Ward has a very large business at the Bluff, and he finds that it does not suit him to allow all the meat to go away without getting anything out of it in the shape of commission, and he intends to build the works entirely on his own account. I am confident that, had the directors of the company acted promptly, Ward would not have gone so far with his scheme, and even now it may not be too late to fix matters up, for I do not think he is so far on with his scheme as he is trying to make out. The only difficulty I fear is getting the directors of the Southland Company to act promptly. I fancy,—I ask your attention to this—whatever the result is, we will be all right, for 1 know Ward is very anxious to work in with us.

You will see that this letter was written by Mr Reid to Nelson Brothers (Limited) after a private interview with Mr Ward, and if you will keep this letter of July 8 in mind, and compare it with two letters from Nelson to Reid, you will see that "we will be all right" is practically the key of the position, and they cared nothing so long as they were all right:—

I am going to Invercargill to-morrow, and will write you fully on my return. We have started killing at Milton.

The next thing of importance is this: that the directors of the Southland Company decided to build—at this meeting which Reid went down for in the beginning of July; and then comes a letter to Ward, written by Reid:

I thank you for your telegram of Saturday, which has just reached me.—It is not dated, but it must have been about the 11th or 12th July—

The directors of the Southland Company have decided to build at Mataura, and will slaughter there as well as at some station near Gore [unclear: I] thought it only right to advise you promptly, [unclear: for] it is better that we both should be free to act [unclear: a] we think best. I would very much like if you could come to some arrangement with the company—

I suppose that means the Southland company—

for I am confident that, with two works going the result will be a serious loss to both of us-

That means Ward and Nelson, I presume The New Zealand Refrigerating Company as paying railage on all sheep from [unclear: Balclutha] Burnside to try and prevent our getting [unclear: then] Milton. Freezing charges have been [unclear: reduced] 3/8 d, so you well easily see that growers getting all the cream. It is not Messrs Nelson Bros.' wish that sheep should be purchase under their value, but for the past few month competition has been far too keen, [unclear: and] have been making heavy losses. I will be very glad if you can suggest any way out of the difficulty before it is too late, for I dread [unclear: having] purchase at extreme prices simply to [unclear: keep] going.

The next letter from Mr Cuthbertson to then I do not think is of any importance. [unclear: Then] Ward writes—and this is of importance on the 16th July, showing what took place at [unclear: the] between Nelson and Ward:—

I am obliged to you for your letter [unclear: dated] inst., as also for your telegram apprising [unclear: me] the directors of Southland Company had decided to build at Mataura, so that we might both before to act as we think best, and in this I quite concur as I stated to you in Dunedin. I [unclear: would,] matter of what I believe to be best for [unclear: myself] Nelson's people, have preferred to work [unclear: with] and I had, prior to leaving Invercargill, [unclear: told] Turnbull that my desire was to work with then But since I left their decision to spread themselves (and I, of course, assume with Nelson's concurrence and co-operation) leads me to infer that they have no serious desire to reciprocate my wishes in the matter, and I may add that my express [unclear: desire] work with both was quite bona fide. However it is to be a matter of fighting each [unclear: other] make myself quite safe, both so far as the [unclear: cost] erection of works and plant and risk [unclear: of] sheep, and then with a diminished chance personal gain from the sheep freezing business have any other advantage that such a connection may give to my own business. I am at [unclear: preset] to discuss any fair and reasonable arrangement But you can quite understand that unless [unclear: we] agree to something that is mutually satisfactory soon that I must, as a matter of self-precaution fall back on other arrangements that [unclear: I can] fix up. Though I readily and frankly [unclear: say] that as a matter of preference, all [unclear: other] being equal, I would prefer to work with Nelson but if the latter cannot be done I will [unclear: not in] way be put out, and will follow the course believe to be the next best, and your [unclear: friends] do the same. If yourself or Nelsons are [unclear: free] discuss matters with me here kindly let me know so that we may finally determine [unclear: whether] work together.

Well, then, the next letter I have is dated the 23rd July. I may say it is perfectly apparent perhaps it is inevitable in a business a such large dimensions—that there are [unclear: hiat] in page 5 the correspondence with reference to something which has not been disclosed.

Mr Bell: My learned friend is surely not complaining that there has not been ample discovery.

Sir R. Stout: I admit that the discovery is ample. Some things are discovered which do not strictly come within the rule, though within the spirit; but there are gaps in the correspondence. The next letter is on the 23rd from Reid to Ward. It will be seen there is a gap.

Mr Hosking: They are your own gaps. You have not supplied them.

Sir R. Stout: No; they are yours,

I thank you for your letter of 16th inst., which has just reached me, also for your assurance that you are anxious to work amicably with my principals in connection with your future freezing operations at the Bluff. I of course reciprocate your wishes in the matter, but must confess that much as I have considered the question I cannot see how it will be possible for all three to work together when the struggle for sheep commences,

I wish your attention to this, gentlemen, for this is Mr Reid's letter of the 23rd July 1891. You will find that after August the attitude of Reid to the Southland Freezing Company and to Ward underwent a complete change. After August 1891 it is perfectly plain that Reid's sole desire was to keep the company to the contract, and see also that no harm came to Ward. The reason is perfectly obvious, that Nelson Bros, believed they could get command of both works. This is what Reid said on the 23rd July before the change of attitude:

I cannot see how it will be possible for all three to work together.

Gentlemen, if Mr Reid's statements in that letter had been carried out by Nelson Bros. (Limited) you would not have been in that box to-day. As I shall show you later on, this letter was entirely departed from in the next month (August):

I can quite see, however, if you are prepared to consider the question of handing over your machinery, &c. to the Southland Company, or better still, that you could stop the order by cable, how certain business arrangements can be made which will be satisfactory to all parties interested. It is also possible arrangements can be made for the directors of the present company to reserve for you a certain amount of freezing power a little over actual cost of working, and this would undoubtedly be a more profitable way of working than any other. It is not for me to make any further suggestion, but if you think, after reading this, that there is any prospect of coming to any satisfactory arrangement, I can run up to Wellington and have a talk with you. I am confident, if anything is to be done, it should be soon for after buildings are commenced and the money spent the power is concentrated in the holders of sheep. I will be glad to hear from you at your earliest convenience.—Yours faithfully, J. B. Reid.

Well, this letter, I presume, was the letter referred to in the letter to London of the 23rd of July. I shall read that letter, but you must remember, gentlemen, I repeat that up to this time Mr Reid was working with the Southland Company and was not favouring Mr Ward, because he considered it the duty of Nelson Bros. (Limited) to work with the company with whom they had made a contract and not to favour the opposition; but, as I again repeat, later on you will see quite a change in the scene:—

I mentioned in my last letter that there was a prospect of Southland Freezing Company having opposition from Mr Ward, and am now able to give you full particulars. Mr Ward is building the works entirely on his own account, simply as a business transaction, and expects to make a large profit out of freeing operations. He says that his engines are within a few weeks of landing, but as I wanted to make quite sure upon this point, I asked Mr William Nelson to ask you to cable if any engines were ordered for New Zealand within the last few months. I hope soon to get a reply, as the information will be of great service to me in negotiating with Ward. I attended a meeting of directors of Southland Company a few days after writing you, and as I was able to assure them that Messrs Shaw, Savill, and company were not any way connected with Mr Wards scheme, they mustered up their courage to decide to build at Mataura Falls. I wrote to Mr Ward on my return to Dunedin advising him of the directors' intentions, and asking him if there was any prospect of our being able to work in with him before it was too late. I enclose a copy of that gentleman's reply. It reads as if there was a prospect of our being able to some arrangement I have authority from Mr Dobson to offer Ward a joint agency Tyser line of steamers with the present agent (Mr Carswell), and if this will please him I can get the directors of Southland Company to take over his engine, if it has been ordered, which I very much doubt Of course if Ward has quit a made up his mind to build, he must just do so, and we can please ourselves later on whether we purchase his meat or not. But our duty at present is clearly to protect the present company so far as possible Mr William Nelson has offered to supply a small engine, fitted for water power, for £1500, from Napier, and no doubt the Southland Company will buy this if Ward goes on with his works and we will take payment in shares (fully paid up) in the company. I have also offered, with Mr William Nelson's permission, to take £1000 in shares in the company—should directors not buy our engine, and also provided directors agree to take back such shares at the expiration of our agreement, provided we do not agree to purchase the output of the works. I have also suggested to the directors that now our interests are so nearly the that same we should be represented on the directory.

Now the next is a letter from Mr Reid to Mr Ward, and it says:—

I was all ready to start for Wellington this morning and was detained at the last moment and could not get away.

I may tell you, however, that before then a letter was written on the 8th of August 1891 by Mr Reid to Mr Ward. Mr Ward had had a personal interview with Mr Nelson, and when I page 6 come to read a short letter about it you will see that a letter written in August 1891 furnishes you with the key to the whole position. That letter was carried out to a "t," so to speak. All the arrangements made in this agreement as to output was a mere nothing. I shall now read you this letter to Mr Ward from Mr Reid:—

I was all ready to start for Wellington this morning, but was detained at the last moment and cannot possibly get away today. I will therefore explain my ideas as clearly as possible by letter. You are no doubt aware that there are now no commissions attached to the meat business, and strictly between ourselves, the producer and purchaser will in my opinion very soon deal direct with each other. The sheep business is therefore now the most profitable to agents, and the proposal I have to make will therefore refer more to this branch of the business than to the other. It is as follows:—(1) That you give up all idea of building works at Bluff or elsewhere and give all your support to Nelson Bros, and to Southland Frozen Meat Company: (2) that in return for this and in consideration of your giving up any rights or privileges you may have secured, you shall be appointed joint agent for Tyser Line (Limited) with Messrs H. Cars well and Co., Invercargill; also, that you get a discount of 2½ per cent, on freezing charges on any of your clients sheep that you may influence through the works. I presume you are aware that loading agents get a commission of 2½ per cent, on meat freight and 5 per cent, on general cargo, besides agency fee for entering and clearing each steamer, so that this is real good business. You could not hope for many years to come, even if you built works, to get half the output of Southland, and I think when last we met you were quite satisfied that there was no profit to be made out of freezing operations, so that if this proposal is carried out it would clearly be a direct gain to you, betides being a certainty. You will understand that I have no authority for saying that the directors of the Southland Company will allow you a discount on freezing charges, for they know nothing of this proposal; but, if you fall in with my ideas, I will suggest that you give me authority to negotiate for you. There is no doubt that as long as Messrs Nelson Bros, purchase sheep in Southland that Tyler's steamers will carry them, and, with Mataura in full operation, the output should be greatly increased. I may say, in strict confidence, that I told Mr Carswell that I would probably make you this offer, for it would not do to go behind him in any way. He, of course, does not like the idea of losing the business, but is satisfied to leave the matter in our hands to make the best arrangements possible for all parties interested, and I have explained to him that in the event of your accepting, probably the joint agency in the future, with increase of business, will be as good for him as the whole business has been in the past. I may say, in conclusion, that I frankly admit that I should prefer to work with them against you, and outside of this business altogether there are many ways in which we could work together if thorough confidence existed.

Now I say we come to the key of the position; it is the next letter of August 9, 1891. You will see that as far as we know the circumstances and correspondence that takes place have been up to then between Mr Reid [unclear: and] Ward, but now Mr Nelson comes [unclear: personally] the scene, who writes to Mr Ward on [unclear: August] 1891, as follows:—

Dear Ward,—I have deferred answering you letter on 4th inst.

We have not that letter of the 4th inst suppose it has been lost.

Mr Bell: We have not got it.

Sir R. Stout:

But you know the fix I am in. [unclear: I am] bound by the Southland Company, [unclear: and am] less for two years. All my views have [unclear: been] before them with no avail.

Then listen to this.

You know my wishes on the [unclear: subject,] remain the same as expressed when [unclear: you] here. Dobson will see you on Friday, [unclear: and I] you will fix up matters with him as far [unclear: as be] concerned. Our connection must [unclear: follow in] course. I only regret I can say no more at per sent.

Gentlemen, you can see how [unclear: pregnant] letter is. What does Mr Nelson [unclear: say to] Ward by this letter? be practically says-

While we have a contract I am [unclear: in a] cannot put in writing all I can do [unclear: for you] might be a breach of my contract, but [unclear: you] my views.

His view of course is that he is to work with Ward. He says—

Our connection must follow in due course.

Gentlemen, that was prophetic; the connection did follow in due course. The next thing that happened is that Mr Ward [unclear: writes] Reid on the 10th of August, and as [unclear: far] can remember he does not mention [unclear: this] view with Mr Nelson at all. He puts [unclear: that] one side. There is no mention in this [unclear: letter] his having bad a meeting with Mr [unclear: Nelson,] you can see the object of it. Mr Reid, as have already stated to you, told Mr [unclear: Ward] he must remain loyal to the Southland company, and so Ward does not tell Reid [unclear: that] has had any communication with [unclear: Nelson] ever; he does not tell him that Mr [unclear: Nelson] told him practically, "Go on, [unclear: Mr Ward;] have a contract, it is true, with the company but I am at your back." That is [unclear: really] the letter of the 19th of August means. The Mr Ward writes a letter. I do not [unclear: know] it is necessary to read it, but this is [unclear: what] says:

I am willing and ready to come to terms [unclear: and] negotiate for a reasonable time to try to [unclear: do] I believe it is worth an effort on both [unclear: sides] arrange to work together rather than [unclear: against] other.

Then Mr Reid writes on the 11th of [unclear: August] Mr Nelson saying that negotiations [unclear: have] progressed further, and that he intends [unclear: to] to Wellington to see Mr Ward. Then [unclear: Mr] writes on the 14th August to Mr Nelson, it is addressed apparently from Napier:

page 7

Correspondence has been going on between Mr Reid and myself re freezing operations Southland. He telegraphed me on Wednesday, stating he had forwarded a letter of mine to you, and suggesting that I might see you in the matter. Could you make it convenient to come here for a night after (receipt of letter referred to, or shall I come and see you tomorrow (Saturday). It is somewhat inconvenient to do so, but in order to have the negotiations finally settled one way or another, I fill come unless you come here.

We have net that telegram.

Mr Bell: It was the letter of the 10th August that was replied to in that telegram.

Mr Hosking: The letter quotes what the telegram says.

Sir R. Stout; There must also have been a telegram sent to Mr Nelson by Mr Reid, because Reid replies next day. Apparently having received Mr Ward's letter of the 14th he sent a wire to Reid to say what he is to do, and this is what Mr Reid advises:

Ask him for a copy of letter and his reply. Suggest you hearing all he has to say, and then take time to consider. Do not think Southland directors would entertain his proposal, and we must be loyal to the company. The offer I made was a very good one.

That means the offer about the sheep. Then fee wrote also:

I received a letter from Mr Ward before I left for Christchurch, and wired him in reply that there was no necessity for him to go to Tomoana at present, as all South Island business would be arranged from here. I received a further wire at Christchurch and replied that there was no harm in his going to see you if he wished to do so. I think Ward's offer a fair one, but I am sure the directors of the Southland Company would never agree to stop operations at Mataura and hand the site over to Ward. I will be glad to have your views on the subject. I may say that I prefer to stick to the company. Mr Ward will probably call on you, and you will find him a very clever man of business, but I would advise you not to give him any more information than is absolutely necessary.

Then comes another letter, which practically explains why Mr Nelson acted in favour of Mr Ward and against the company. The explanation appears in this letter of the 18th August. The first important thing was on the 9th of August, in which Mr Nelson wrote to Mr Ward telling him what I have already read—that section would follow in due course. The next important letter is the 18th of August, from Mr Nelson to Mr Reid. It says:—

Dear Jim,—I have your copy of Ward's letter, I have not yours referring to it; but I may as well at once give you the result of my interview, This is the second interview; the first interview mast have taken place before the 9th, and then there must have been another interview on the 15th, 16th, or 17th of August, and these few things are the result:—

(1) I am satisfied he means to build; (2) the machinery has left or is about to leave England; (3) must work with him; (4) I think a Cabinet Minister a useful addition to the firm; (5) I like Ward.

Gentlemen, that is the key to the whole position. You will see that Mr Nelson thought a Cabinet Minister would be useful. Perhaps he has thought since that two Cabinet Ministers would be useful to the firm; and, thinking that, he is determined they must work with him. And, gentlemen, you will see that after getting this letter from Mr Reid I think I am correct in saying—if I am incorrect it is by inadvertence—after this letter was received by "Dear Jim," saying we "must work with him"; that "he likes Ward"; a Cabinet Minister will be useful to the firm"—after the receipt of that letter Mr Reid drops out of correspondence all reference to his attitude to the Southland Frozen Meat Company; he is obeying his principal. Then he says:

I think Ward's suggestion to take over Mataura a good thing for all concerned, but it must be in conjunction with Nelson Bros. (Limited), for our own safety and the good of the trade. I understand that we are pledged to Bluff Company not to take any interest in freezing works in the district during the currency of our contract, so that we cannot join Ward without their consent. Then comes the question. Will they give that consent? They will have to settle the question, whether it is better for them that Ward should start alone or in conjunction with us? I am quite clear it would be better for them if we were in it. This is really the first point that must be settled, as we cannot move without it, and I should strongly advise them to consent. Taken as a whole, I agree with the sentiments contained in Ward's letter to you, so that I need say no more to you on that head. I have told Ward that my feeling is decidedly to work with him, but that I shall do nothing without the consent of the Bluff Company. I should add that one of my reasons for leaning towards Ward is that I cannot forget the slippery nature of the Bluff Company in the past; and, although they are supporting us loyally at the present moment, there is no telling how soon the change may come. At present it suits them—by-and-bye perhaps it won't. I can enter further into details when the question is settled as to whether Bluff agree for us to go in with Ward or no, so set this ball rolling.

That means simply this: You can ask the Bluff Company if you please to consent to make arrangements with Ward, but if they do not, we have a recourse behind. That is what it means, and that I will show is what it did mean. The next thing is a letter from Mr Reid in answer to this letter by Mr Nelson:

Dear Nelson,—I have your letter of 18th inst., and note that you are anxious to work in with Ward. I met the gentleman yesterday, and had a long talk with him over the proposed arrangement. I am going to Invercargill to-morrow to meet the directors of the company on Wednesday morning at 11 a.m. The general meeting of shareholders, called for the purpose of confirming the action of the directors, is to be held same afternoon. I do not agree with you that Ward has made up his mind to build. Nevertheless, I will, of course, carry out your instructions in the page 8 matter and, if possible, get the directors to hand over their Mataura site to Ward and agree to allow him, say, to have an interest in the works. I have also rather a fancy for Ward, but knowing him to be very deep and very clever, I don't pay much attention to what he says about machinery being on the way, site secured, &c. I Can quite see, however, that after present contract expires it will pay us to work with Ward. My only fear is that, now that the directors have got a sufficient number of shares taken up to make them independent, they will not agree to give up the position they hold. I understand the farmers around Mataura have taken up a lot of shares in the company, and there is every prospect of the works being well supported. I will write you fully after my return from Invercargill, and presume, if directors are favourable, it will be better for Ward and I to go to Napier.

Then comes another letter from Mr Reid of the 1st of September, and he says he could not get them to agree to handing over the Mataura works to Ward, and he gives as a reason that MacGibbons and others are opposed to it; he attended a meeting of shareholders, and they were all in favour excepting Mr Buxton, apparently, of building. He says, I do not think Ward will go on with the works, Then there is another letter from Mr Ward to Nelson, of 4th September 1891, in which he said it would be better if they allowed him to go to Mataura:—

I should like exceedingly to sell. I should like exceedingly to have worked with your firm in Southland, and I would still, were it possible within a reasonable time, be very glad to arrange to work with you. Mr Reid, when I saw him last, expressed his intention of coming to Wellington and having a further discussion upon this point with me. I can't, however, do more than indicate as I have all along done, my willingness to work with your people and the Tyser line. However, if an arrangement can't be come to, I must do the best I can elsewhere. This I can do, but I will still hold myself free for a reasonable time in the hope that we may be able to make an arrangement mutually advantageous. As far as works are concerned they, however, go on now at the site I mentioned to you. Whether the Mataura people go on or not I am satisfied that the site I have is the very best one in many respects in Southland, and I am not the slightest afraid that even with the advantage of water at Mataura which the other concern will have that I cannot more than hold my own as far as economy of working is concerned. What they save in water I can more than make up in other ways. With kind regards, and trusting that the continuation of earthquakes may be less frequent than when I was with you.

There is also a letter from Reid to Nelson Bros, in London, but I do not think there is anything in that.

Mr Hosking: In that he says he is trying to bring about arrangements with the Southland Company. It is in the last paragraph.

Sir R. Stout: If there is anything I omit to read and you think I should read it, I will read it. Then comes a letter from Mr Nelson to Mr Reid. That is in answer to the letter the 1st of September.

Dear Jim,—I am sorry we have not got Cabinet Minister in our arms, but you can do more, and I feel for you in your awkward positive I have just wired you no good coming [unclear: to] Ward writes me that he cannot work [unclear: with] Southland Company, and shall go on [unclear: by]. He is willing to spend reasonable time [unclear: in] negotiations. I have replied that, as he known I am in the hands of the parent company and do nothing without their consent. [unclear: Dobson] up to Wellington in Tyser's interest, [unclear: but I] suppose will do much. My object in [unclear: asking] to write shipping company asking them [unclear: if] wanted meat was to directly identify them.

That is in reference to a different [unclear: matter,] me say that this letter of the 9th of September was a hint, and a strong hint to Mr [unclear: Reid] he was not to allow Mr Ward, if he [unclear: could] it, to escape, in fact Mr Nelson was exceeding anxious to embrace a Cabinet Minister possible, and he wished to see Mr Ward said landed in "dear Jim's" arms. Now [unclear: the] letter was from Mr Reid to [unclear: Nelson] (Limited) in which it is said:—

I suggested to the directors of [unclear: this] that in the interests of the trade [unclear: generally] should agree to close the works for a month or two to limit the supply of meat [unclear: going] but they could not see their way to do face of Mr Ward's opposition There [unclear: will] ever, only be three more shipments [unclear: from] Bluff this year—Bayley, 13,700, 7th [unclear: inst,] Victoria, end of October or early in November 12,000; and Nairnshire, in December, 9000—that supplies from this quarter will excessive I was quite unable to bring [unclear: about] arrangement between the directors of [unclear: this]pany and Mr Ward, for the former would [unclear: not] up their Mataura scheme, and the latter and not entertain the proposal to freeze his sheep the company's works. It remains to what the result will be, but probably [unclear: Mr] go on with his works, and if he can [unclear: get] one to buy his meat competition will be [unclear: keen] not, he will probably be glad to sell [unclear: out] working for a year or two.

You will see from Mr Reid's [unclear: own] that he believed keen competition [unclear: with] Southland Company would [unclear: mean] ing their profits to the injury [unclear: of] Then the next telegram we get is [unclear: a] upon the 3rd November from Reid to Ward.

If you have not ordered boilers, have [unclear: two] would suit you. Reply Wellington Club.:

Why should Reid send to Ward? You think the whole thing was off. Why Ward? This was sent from Wellington in consequence of his seeing Nelson [unclear: or] got letters from him, and this [unclear: was] attempt of "dear Jim's" to [unclear: get a] Minister in his arms. The next thing is in January 1892. You will see [unclear: that] there has been no correspondence [unclear: there] been negotiations going on the whole [unclear: time,] what happens? A letter on the [unclear: 23rd] 1892 from Reid to Nelson says:

page 9

Dear Mr Nelson,—I had a long yarn with J. G. Ward this morning, and think we should now make him an offer for the output of his works, for if we don't get the sheep from Ward we will get them from the company, and it is just as well to keep him sweet. I think 2½d (f.o.b.) for 65lb to sheep would fix him for two years same as Southland Frozen Meat Company, or, if you would prefer it, I could probably make a contract for one year at 2[unclear: 3]d (f.o.b.). It seems to me that cannot lose anything by making the offer, [unclear: nd] while Ward is sending circulars all [unclear: nd] the country things are bound to be [unclear: ettled]. Ward told me yesterday that [unclear: at]ent he was free to arrange, but he might [unclear: not] the same position within the next few weeks. Of course we can take this statement for what it is worth. But my own opinion is that he is very anxious now to make terms; but if prices improve and he is not in a position to give Better price than the Southland Company, the tables will be turned, and we will be out of it on both sides. Mr Ritchie told me in confidence that Ward told him that he had been offered freight from Australia, but I fancy this would necessitate giving the firm a guarantee of a fixed Entity, which he could not possibly give. I have promised Ward to make him an offer on Saturday next, so please telegraph the best, you can do on receipt of this.

Well, then comes a letter written on the same day by Reid to Ward, and he says:

I beg to hand you herewith particulars of the new system of grading that Messrs Nelson Bros. (Limited) wish to be used with their meal [unclear: all] the colony. Under this system it is necessary that each carcase shall be weighed separately and directly after it is dressed, an allowance of 6 per cent from this hot weight being made to arrive at freezing weight.

Mr Bell: It is admitted that this is a statement from Reid to Ward of the terms on which Nelson Bros, will make the contract for the output.

Sir R Stout: The point is this: The letter or the 23rd January 1892 is the result, no doubt, of a yarn with Ward, and written to him. He has a yarn with Ward. We can only know what is the result of the yarn from what follows immediately after. No sooner is the yarn over than he writes to Nelson:

Let us make a contract with him: we must keep him sweet.

Mr Bell: He does not say he must keep him sweet.

Sir R. Stout: "It is just as well to keep him sweet.

Mr Bell: I beg your pardon. I was looking at the wrong letter.

Sir R. Stout: To keep Ward sweet he tells Ward of a system of grading frozen meat for the purpose of sale, and this letter of the 23rd January 1892, written by Reid, explains what is to be done, and encloses a specimen of the forms to be used by the New Zealand Refrigerating Company. In fact, he tries to initiate Ward into the freezing business.

Mr Bell: No, the purchase of the output.

Sir R. Stout: I repeat he tries to initiate Ward into the way that sheep should be frozen, so as to get them sold profitably on the London market. This is before there was any contract between Nelson and Ward. The key is as far back as August 1891:—

I must have the Cabinet Minister. I like Ward; we must work with him.

Reid has nothing to do with the Southland Company after that, he falls into the same attitude to it, and, to keep Ward sweet, gives him details of how the output should be arranged to secure the best price in London. Then there is a telegram—five days later, on the receipt of this letter of the 23rd January—from Nelson to Reid:—

Make arrangements you propose in letter of 23rd for two years, with farthing less under and over within our limit. We to make freight arrangements. This is imperative.

Well, on receipt of that Reid wrote this letter to Ward:

Referring to the offer for the output of your works and the conversation I had with you some few days ago, you will of course understand that in the event of your accepting the offer of freight, arrangements will be made by Messrs Nelson Brothers (Limited), and you will be free from all trouble and responsibility as far as that part of the business is concerned.

What offer? There is no offer here, except it has been a private offer made privately between them.

I can also manage to secure you a loading concession of per cent, on net amount of freight on all meat supplied by you to Messrs Nelson Brothers (Limited).

That is of importance, because the Southland Company did not get this 2½ per cent, commission. He thereby not only takes Ward's output, but gives him 2½ per cent, commission on the freight, which he did not give the Southland Company, though Nelson was the purchaser of their output for a term of three years.

Mr Bell: Reid was agent for the Tyser line. Nelson Bothers were not.

Sir R. Stout: It is practically the same thing, because the freight arrangements are left to Nelson and Company, who are large holders of Tyser Company stock, and this is a mode of backing Ward and saving him from trouble or loss.

I presume it is not your intention to consign mutton on growers' account, indeed my experience is that very few case to risk the London market, and prefer to accept the best price going. Should you, however, wish to consign—

Here is practically another concession which was not given to the Southland Company—

No doubt I could arrange for a further 5 per cent, on such shipments to be returned to you, part of which you could return to shippers in the ordinary way. As you are aware 10 per cent, primage is always charged, 5 per cent, of which is returned, and no doubt you would receive the same concessions as others. As far as general cargo is concerned, I page 10 regret that I am unable to-day to say exactly what return will be made to you, but you have my assurance that you will be secured and placed on the very best footing possible. I need hardly ask you to treat all our negotiations as strictly confidential, and remain, yours faithfully, J. B. Reid.

His Honor: Is that the 23rd of January?

Sir R. Stout: The 29th, your Honor. Then comes another letter on the same date about the offer:

According to promise made by the writer, we have now the pleasure of making you an offer for the output of your works, which we feel sure you will consider satisfactory. We will give 2½d per lb f.o.b. Bluff (bags included), for all prime wethers and maiden ewes weighing from 55lb to 65lb, and 2¼d (bags included) for prime wethers and maiden ewes weighing from 50lb to 55lb, and from 65lb to 75lb respectively, net weights in both cases. The carcases would require to be weighed as soon as slaughtered, and 6 per cent, deducted from lot weights. It is a fairer way of arriving at the correct weight than the old system of deducting 1½ per cent, from carcases of all sizes. We would not bind you to supply any fixed quantity of mutton, and the agreement would simply be for the output of your works Terms—Cash in exchange for bills of lading. It is possible that you will be freezing some aged crossbred ewes and a price can be arranged for these also. Freight—We would ask you to give us an estimate of your probable output for six or 12 months, and notice of your actual requirements, say six weeks in advance. We would then secure freight or arrange storage, but we would at all times undertake to keep your works clear.

That is another very important thing, another advantage which was not given to the Southland Company. I ask your attention to this:

We may say that this offer is beyond present market value, but we are anxious to work with you in every way we can.

And to show it was beyond the "present market value" I can produce some of their own returns of mutton sold in London in December, the previous month, which, after deducting charges, freight, and insurance, only fetched 2¼d. So they were giving 2½d when mutton in London was only fetching 2¼d, besides not getting any profit for themselves. The object of this is perfectly apparent. Here is what Reid himself says:

We may say that this offer is beyond present market value, but we are anxious to work with you in every way we can.

Then in a private letter on the 31st January, two days later:

Prime lambs, 35lb to 40lb, 3½d f.o.b., bags included. Contract for two years from 1st February.

Yes; will undertake not to give higher f.o.b. prices south of Gore without offering you same terms. I may have at times to give a little more at Burnside for small numbers to fill the freight engaged hurriedly, but will also agree not to give higher prices here for output works without giving you the same terms. Please reply as early tomorrow as possible.

This must have been in answer to a letter or telegram from Ward. We have not got that letter or telegram, but this was in [unclear: ane] some inquiry from Ward. That was on 31st of January. The next thing that [unclear: co] on the 1st of February, and is from [unclear: Bei] Nelson:

Our friend has accepted subject some [unclear: de] He comes here to-morrow to arrange, and can possibly leave here at present.

We have not this acceptance in writing. I do not know what took place Again l say make no charge, or even suggest that any [unclear: h] or correspondence is kept back— is a [unclear: large]ness like this it is very possible that [unclear: these]grams were lost, but we have not got them you must fill in the gaps for yourselves. I was on the 1st of February 1892. Then Nelson says—there is no date given:

Strongly urge Ward to start slowly. He can freeze 800 and store in a new building [unclear: with] machine. His sheep must be absolutely [unclear: her] thick of leg before storing. If out of shape cannot accept them.

Then the 2nd of February is, I suppose, [unclear: f] making of the contract.

Referring to the conversation the writer with you this afternoon we [unclear: have] pleasure of confirming some modifications [unclear: of] agreement entered into with you for [unclear: the] of the output of your works for two years 1st inst.

We have not got the contract in writing needs not read to you the terms. That the 2nd of February. Then Ward confirms agreement, and writing on the 3rd February says:

I now have the pleasure to confirm the [unclear: ar] ments entered into between us, and which briefly recapitulate as under:—You [unclear: to] following pricts for various qualities [unclear: of] we hers and maiden ewes weighing from [unclear: si] 65lb, 2½d per lb; maiden ewes weighing 50lb to 55lb and from 65lb to 75lb, 2¼d prime lambs weighing from 32lb to lb; prime aged ewes, quantity up 0[unclear: to 10] annum, 23 16d per lb, weights to be from55lb, 70lb. Payments: All payments [unclear: to be] weights subject to a reduction of [unclear: either] cent, or 1½lb per carcase, to be hereafter arrangements it being understood that the system [unclear: of] is to be the same as is carried on for [unclear: you by] Southland Freezing Com nany. [unclear: Terms of] ments: Cash in exchange for B.L. Period of tract: Two years from the 1st inn, whole output of the works to be taken by you; the works to be kept clear of by you from time to time as [unclear: required.] is very important. Prices: You undertake not to give a higher f.o b. [unclear: price] of Gore than is given to me without offerings the same terms. Nor you to give [unclear: higher] the output of any works anywhere in Otago out putting me on the same terms, it [unclear: being] stood, however, as per your telegram of [unclear: 31st] that you have the right to give a [unclear: little] Burnside for small numbers of sheep to [unclear: fill] engagements should you require sheep [unclear: for] purpose. Consignments: In the [unclear: event of] my clients desiring to consign [unclear: through the] on their own account, it is understood page 11 is permitted, providing they declare either to [unclear: consign] or to sell right through the season. Generally it is understood that in every respect I am to be placed on a footing equal to that of the Southland Frozen Meat Company. Freight: One month's notice to be given by me of actual steamer requirements, and an estimate of probable output for six or twelve months be furnished to you at early date. All freight to be provided by you, and the matter of commissions on freight of sheep and goods shipped by me to be adjusted between us after consultation between you and [unclear: mer] representatives. It is, however, understand that in this respect I am to be placed on [unclear: ty] most favourable terms.

[unclear: The] comes the letter of the 9th [unclear: February,] which Reid says ho has made some slight alteration. There is nothing in that—it is simply making out the agreement. Then the next thing is a telegram on the 9th February, when the thing was completed, and this shows that Nelson has at last got everything to [unclear: his]. In fact, to use his own words, the Cabinet Minister is safe in "dear Jim's" arms.

Tell Ward, with my love, he had better start quietly. Must not expect to freeze 10,000 first 10 says (Signed) W. Nelson.

Then there is another letter from Reid to Kelson, only showing a slight change. Then comes a letter from Reid to Nelson Bros. (Limited), London, and I direct your attention to the latter part of that to show the change of attitude on Reid's part from August 1891 to February 1892:

We have just entered into a contract for the purchase of the output of the Hon. J. G. Ward's works at Bluff for two years, and enclose copy of agreement, which will explain all terms of the agreement. As you are, of course, aware, we have Extract with the Southland. Frozen Meat Company for the same term, and the arrangement [unclear: we] just made with Ward will not [unclear: greatly in] the number of sheep or lambs shipped at Bluff

But is of importance.

[unclear: if we] get them from him we cannot get [unclear: them] the company. It will, however, assist [unclear: us], for had he been free at present with Eton selling at 4¾d and lambs at 6¼d he could paid growers higher prices than they could get from the company,—

Therefore Reid admits that would mean lowering the output of the company—

[unclear: in all] probability work at the Southland Frozen Meat Company's works would have been stopped. As the matter now stands we have [unclear: ured] the total output of Southland at a fair price, and need not trouble ourselves where the sheep are frozen.

Mr Bell: Would you mind reading the first paragraph of that letter?

Sir R. Stout: We have only got the extract. You see the entire change of attitude. There is not not a single word of duty, of maintaining the Southland Company, and of seeing that the output is not lowered. On the contrary, Reid joyfully says:

We have secured the whole output of Southland at a fair price, and need not trouble ourselves where the sheep are frozen. He also says:

I have agreed to hold the meat in Mr Ward's works covered against all risks from the time meat is put into the works. Will be glad if you will advise Lloyd's Association if necessary.

Then the next thing that comes in is that they begin to ship meat in the beginning of March, and Reid instructed Ward to send full invoices.

In reply to yours of the 4th inst. Mr Ward says:—"Re privacy of meat sale, I still think it is better both in the interests of Messrs Nelson Bros, and myself that no publicity be given to our relationship. It would for a certainty render the buying of sheep more difficult for me and Nelson's opponents would feel that a large monopoly of Southland was in his hands. And this might create further opposition—at any rate, it would not do any good, and I do not see why either of us should satisfy the curiosity of inquisitive opponents. I fully recognise it is only a matter of time when others will know, and I do not think there is any need to hasten knowledge.

Then he agrees on to say that he wishes the bills of lading made in his own name, and he will endorse them. Then, I may mention, that there comes a thing that I am not going to deal with. I will only tell you briefly, because it will take too long to read all the correspondence between Mr Cuthbertson (the secretary of the company) and Mr Reid. In March 1892, no sooner is the thing started than the Southland Company were at once injured and they complain.

Mr Bell: I cannot presume to prevent my friend from reading correspondance, but I propose to object to this as quite irrelevant. The question whether we did or did not carry out our contract with the Southland Company in other respects is not in issue in this action.

His Honor: I do not suppose it is suggested.

Mr Bell: My learned friend is waning correspondence to show that the company complained of not being provided with freight at the time they required it. Now there is a "most favoured nation" clause in the agreement. There is another clause in the agreement between the Southland Company and Nelsons, which is not set out in the claim, enabling the Nelsons to purchase the output of other works, but requiring the Nelsons, if they do so, to give the Southland Company the same terms as they give the other works. A breach of that clause is not set out, nor is any breach of it alleged. Your Honor will understand that it will immensely prolong the case, and the evidence we would give to show we have not given Mr Ward at y advantage over the Southland Company we are hardly fully prepared with. I object to my learned friend bringing in as relevant evidence correspondence showing complaints by the Southland Company that they did not page 12 get the same terms as Mr Ward. The Southland Company never complained of anything else. They relied on the clause I have referred to in the agreement—viz, that they are to be on as good terms as other persons whose output was bought That clause not being set out, and no breach of it being alleged, my learned friend proposes to read this correspondence. If it is any part of the res gestae on another issue, I presume he may read it, but I make the objection now so that my friend may claim an amendment

His Honor: I think it will be best to take a note of the objection; but until one knows what is in the letters one cannot say they are not admissible.

Mr Bell: I quite understand. But I know what is in the letters.

His Honor: I quite understand your position, but, you see, I cannot very well stop Sir Robert.

Sir R. Stout: I am not reading the correspondence for the purpose of claiming damages under clause 7.

Mr Bell: May I ask whether my friend alleges that the agreement we have set out in the statement of defence is a breach?

Sir R. Stout: Of course, and it is not the only breach. Every step they take is a step to help Ward against the Southland Company. Whenever Ward is in a hole they rush to his assistance, agreement or no agreement, ever since that interview between Nelson and Ward. I may summarise this letter without reading it. When the first ship comes to ship goods from the Bluff, the Southland Company are told, "Though there is room for 12,000 carcases on the steamer, you can only put on 8000; you are not going to be allowed to clear your works; we have made a contract with Mr Ward to clear his works, and you now stand practically in a second position." This letter of the 12th March 1892 is a letter from Cuthbertson to Reid complaining of the treatment the company met with. He says:

That steamer reached Bluff on the 10th, and we commenced loading her within an hour or so of her arrival this morning. When we had about 8000 on board Captain Todd stopped us loading, saying that he could not take any more from us, although the Star has room for 12,000, and we can, if necessary, supply that number. I have just wired you asking what the meaning of this is in the face of the above arrangement. Our agreement is that you are to supply us with freight as required, and we trust that you will kindly bear this in mind. As far back as the date of the Indramayo loading we intimated the amount of space required in the next Star, and on the 26th ult., in answer to your own inquiry, we wired you to the above effect. But this is not all. On the arrival of the Star, on being asked by Mr Gray how many sheep he wanted, Captain Todd replied that he did not know how many the Star required to till her up, but he had received definite instructions that he was to take 6000 sheep from Mr Ward and [unclear: fro] whatever balance was required to fill [unclear: up] steamer. I may as well say once for all [unclear: tha] must decline to be made a convenience [unclear: to] this manner, and be made subservient. Mr Ward's requirements. If the [unclear: sta] could not take the number [unclear: applied] by both Mr Ward and ourselves, it clearly the proper course to make a proportion division of the total available space, and [unclear: to] we would have had no objection. [unclear: But we] protest in the most emphatic manner against preference being granted to Mr [unclear: Ward as] ourselves. While at the same time we regret any occasion should have arisen to force make such strong representations. But to return the purport of our telegram, we wish to point that while it may be perfectly true that 8000 fair proportion for us to get out of the available space in the Star of [unclear: England,] consider that we are justly entitled to much space as we could fill, that Mr Ward was unable to do so him. The condition of the sheep that he presented shipment, as well as those he had in [unclear: his] were such that the ship refused to take the and under these circumstances we consider we have been badly treated by being [unclear: sta] loading at 8000 when the steamer [unclear: was not] full Finally, we are informed on the authority that many of the sheep and offered by Mr Ward for shipment ([unclear: and of] some 900 were actually taken on [unclear: board)] soft as to be misshapen. Now, no amongst freezing will ever bring these sheep back their proper shape, and we think we are within our rights in calling your attention and requesting that you refuse to accepting land, or from the Bluff, any sheep which any way damaged or of inferior quality. So a procedure will certainly tend to injure the high reputation that Southland meat has attained in the London market on [unclear: account] extreme care bestowed by us on its selection preparation."

So he goes on. I only cite that to show changed attitude. In the letters [unclear: and] from August 1891 till the end of December you can see it written in plain characters cannot be mistaken that the Nelsons were the side of Ward against the company, and everything they could against the [unclear: comp] Whenever Ward was in any difficulty they at once to his assistance, though by their tract it was not necessary they [unclear: should]. The first thing in March 1892 is from Nelson: "Lot of Ward's sheep out [unclear: of] Think should reject shipment and [unclear: take] signment. Reply." A letter to Ward says

I do not see how anything can be [unclear: done] circumstances but send the [unclear: shipment on]ment. I have secured unconditional penny for the mutton and 1[unclear: 3]d for lambs, plus [unclear: 5 per] primage, which are the very best terms obtained I will write to our London people and explained position, and you can rest [unclear: assured they] tect your interest. Trusting the result satisfactory to all of us.

Then there is a reference in a telegram 15th:

page 13

I suppose you gave Ward my message that we should not accept sheep in bad condition. Then comes a report from Reid to Nelson Bros., London, on the 22nd March. He says:

Mr Ward commenced operations some two weeks ago at his works at the Bluff, and Mr William Nelson advised him not to try to freeze many sheep at first, until the timber was thoroughly frozen, but he paid no attention to this and commenced at the rate of 800 sheep [unclear: per], the result being that when the Star of England commenced to load a great many [unclear: of the]es were found to be soft and [unclear: some mis-]. They were then sent back to the works frozen up bard. The captain afterwards refused to give Ward a clean bill of [unclear: lading, and] you will observe marked on it, "A great many carcases misshapen." I told Ward at first that he should have to send the shipment on [unclear: consignment,] the freight would have to be paid on [unclear: con]ments at this end, I afterwards decided to [unclear: pay] invoice, less 10 per cent., on Mr Ward [unclear: agree] to leave the matter entirely in your [unclear: hands]. again you will see that if they had [unclear: not] to keep sweet with Ward they would have said that his sheep were not up to [unclear: the]ect;. No, "dear Jim" won't allow that. That he says is that he gives the invoice [unclear: price] 10 per cent. That means that Ward gets the price for his sheep, though they were not according to the contract terms, less 10 per cent to cover any loss.

I do not think many of the carcases are out of shape but please ask your store manager to [unclear: have] carefully classed and reported on fully. [unclear: I] hardly ask you to do your very best for Mr Ward, for he has the greatest confidence in our company and in Mr William Nelson, and he is being all in his power to work with us. I think the only mistake he made was to start freezing separations before he was ready, and, being rather green at the business, he did not know how necessary it is to thoroughly freeze every [unclear: carcase] sending it to the storeroom. There are a [unclear: r] more misshapen carcases left in the works, which will go forward by Hawke's Bay and which all have to be treated in the same way, but I [unclear: nt] anticipate having any further trouble.

You will observe now that there are [unclear: two] establishments at the Bluff how [unclear: neces] was for us to enter into this contract with Ward, for our contract with the [unclear: Southland] Meat Company provides that we take [unclear: the] output of the works without stipulating [unclear: any] quantity, so that we could only expect [unclear: to] meat from the company when it was low [unclear: in] for when high, growers would all sell to Ward. However, the matter is now settled [unclear: for] next two years, and I think the result will be satisfactory.

[unclear: In] next is the 12th of April 1892, and [unclear: here] a thing which leads up as you will see [unclear: n] the purchase of the works by Nelsons [unclear: them]. The rumbling of distant thunder Eed, as it were, to indicate that the time [unclear: was] for the Ocean Beach works were ready to fall into Nelsons' hands. What they no doubt from the beginning was about to happen. They said if they did not get people to buy the output in a year or two they will only be too glad to sell the works, and Nelson Bros, would get full command of the works, just as Mr Reid predicted. This appears in Mr Reid's letter of 12th April 1892:

I have just received yours of the 7th inst, contents of which are noted. Mr Ward has certainly had buyers out in all directions buying sheep, and no doubt they have bought a great many sheep not fit for freezing, but most of these have been resold as stores. Ward has started sales of stock at Wyndham, Gore, Wallacetown, and various other places, and if his men buy in sheep that are not far enough for export they are sold by auction at the nearest yards. I think it is just possible that he is sailing too close to the wind. But all the sheep are graded and each carcase weighed separately, so I don't see how he can get much the best of us. As far as the Southland Company is concerned, I am satisfied that the quality turned out of their works is the best in the colony. At times there may be a few heavy or light carcases, but very few, and I don't think it would be easy to get the inspector. It would pay farmers better to sell their sheep as stores just now than to send them to the works, and having no guarantees to fulfil, there is no encouragement to send inferior sheep. I must say that I do not think that there is any necessity for keeping a man to inspect the company's meat, and I will get Mr Ward to buy with more judgment. I don't see how he can be making the works pay, for he is paying 13s 6d to 14s 6d for sheep and selling again at 2s; but he says it is quite satisfactory. But we will know better shortly. I will not do anything further in this matter till I see you next month. New Zealand Refrigerating Company.—The old contracts made with Turnbull, Martin, and Co. are not completed, and since J. G. Ward started it has taken Mr Smith all his time to keep Martin's steamers going. Formerly, their Tapanui sheep used to go to Burnside, but now Ward's buyers pick them up and send them south. I don't think, outside of this, that Smith has taken up with Martin against the liners.

Then there is a letter of the 25th of April. I do not know that there is anything in that except this:

J. G. Ward: This gentleman is buying sheep and turnips, &c. in all directions, and says he is doing well. I can't understand how this can be, for it is impossible to buy sheep at present at anything under 2[unclear: 3]d (if you buy at per head). I am quite satisfied that he could do far better by making a contract for mutton, as we have done with Ward, than by sending men to buy. I tried this the other day for a few small lots, and it turned out very badly. I have sent Ward a first-class man from Burnside to attend to storerooms, and think for the future his meat will be properly frozen.

Here, again, you will see he is going outside. He is not merely the buyer of the output: he goes out of his way to find men for Mr Ward, and practically to help him.

Mr Hosking: They were to buy the frozen meat.

Sir R. Stout: That does not matter. It was Mr Ward's duty to do that. Why should Nelson Bros., having made a contract, go out of their way to find men to perform the work. page 14 again repeat, gentlemen, there is hardly a letter that comes up in the correspondence till the completion of the purchase of the works but shows that always soma assistance is being given to Mr Ward. I need not trouble you with further complaints from Mr Cuthbertson. Mr Cuthbertson explains continually that he is not getting the same terms as Mr Ward in reference to frozen sheep. Mr Ward's works are continually being cleared, and I ask you as commercial men to say what this means. As soon as the works are cleared Mr Ward gets a bill of lading, and he gets cash for that at once; he never need have any capital lying locked up for any length of time. Mr Ward has his sheep works kept clear and he gets cash at once, while the Southland Company's works are not kept clear. Then Mr Ward is getting the percent, commission on the freight, while the Southland Company is getting no commission on freight. Why? Then the next letter is 16th May, 1892—Reid to Nelson Bros. (Limited):

You will notice the output at the Bluff is increasing very fast, the reason being the keen competition going on between Mr Ward and the Southland Frozen Meat Company. Mr Ward has been buying sheep in all directions for immediate and forward delivery, and many of the sheep which formerly came to Burnside now go to the Bluff. I may say that I can't understand how he can pay the large prices he is giving, for I have had two of the best men in the district buying small lots for us and had to stop them as the prices were excessive. Of course it is not our business what Mr Ward pays as long as we get good sheep, but I merely mention this to explain how the output from the Bluff is increasing so fast, while Port Chalmers is falling off. I am very anxious to hear how Ward's sheep are turning out. You should do well out of this contract if we can only keep up the standard of quality.

Then I may mention here the complaints made by Mr Cuthbertson. Knowing that as Mr Ward was buying sheep at per head and was buying all kinds of sheep and was lowering the quality of Southland mutton, he knew that he was doing a great injury to the Southland Frozen Meat Company. You have heard what Mr Reid said. It was said the Southland Frozen Meat Company was turning out the best mutton in New Zealand, and to have Mr Ward come in and buy all kinds of sheep at per head, careless of what they were so long as he got his sheep frozen and the bill of lading, as Nelson and Company took them from him whether the quality was first-class or not. There again is another way in which the plaintiff company was injured. Mr Ward had an enormous advantage, because inferior mutton was taken from him at practically full price, and of this Mr Cuthbertson complains. It is very amusing when Mr Reid writes to say he has silenced the grumbling of Mr Cuthbertson, as secretary for the company. Then I come to June 1892 to show you what was going on. It is a letter from Mr Reid to Nelson Bros. (Limited):

Our contract with Mr Ward will, [unclear: as] give us control of the output of [unclear: Southland,] at present a keen contest is being [unclear: fought] between that gentleman and the Southland Frozen Meat Company, and I feel it will [unclear: be] difficult for us to hold the balance. Mr [unclear: Ward] men going all round the country buying sheep immediate and forward delivery at prices which cannot leave much if any margin for freeing the prices we are paying here. His action had course restricted the operations of the [unclear: other] panies very considerably, and it is difficult for to convince Mr Cuthbertson and his direct that we are not paying Ward a higher [unclear: price] 2½d f.o.b. I am also expecting every day [unclear: to]ceive a complaint from Mr Ward that [unclear: the] now being paid in the north—viz., 2¾d [unclear: f.o.b.] vents his buying. But of course we have right to give higher prices at other [unclear: porta] "freight purposes," and we are only purchase now for mail steamers and to complete [unclear: our] tracts with the Nairnshire, so we [unclear: are,] speaking, within the four corners of [unclear: our]ment.

Mr Bell: Would you mind stating that Mr Ward at the same time was complaining they were giving concessions to the Southlake Company. You have it in the letters.

Sir R. Stout: If it is there I have no objection to stating it. The next [unclear: letter is] Mr Reid to Nelson Bros.:—

At present the competition is keen between Ward and the Southland Frozen Meat Company. The former is buying sheep all over his district immediate and forward delivery. He is also chasing paddocks of turnips for holding through the winter. I am quite satisfied at the price he is paying very little margin is left cover frozen charges, but this, of course, is not business. Mr Cuthbertson and his direction very much concerned at the turn things taken, for growers prefer to sell their sheep to Ward at per head rather than run the risk their sheep not weighing out so well as they expected. Further trouble arises when we instructions to purchase for the combination higher limit than 2½d f.o.b., for if it is known the south that a better price is going at [unclear: th] Chalmers than at the Bluff growers natural wish to take advantage of it. If, on [unclear: the] hand. I sit quietly down and allow all the to go south, the Shaw-Savill and Shipping Companies' agents think we want the meat for Tyser line at the Bluff.

The form in which the Frozen Meat Company bought sheep was by weight. [unclear: Twopeace] lb was given to the growers. Afterwards raised the price when they could not [unclear: get] in consequence of Ward having raised the to 2[unclear: 1]d. Ward on the contrary bought sheep per head, no matter what the weight was, act that is what they complain of. I need not the letters between Mr Reid and [unclear: Mr] son as to complaints. On the 17th of August Mr Fisher, Mr Ward's manager writes:—

As you are no doubt aware, the Southland Frozen Meat Company have within week advanced their price for prime number to 2[unclear: 1]d per lb at their works. This, can understand, is a serious matter as it at once jumps the value of freezers [unclear: by] page 15 [unclear: per] head. Did my contract place me on the be footing as the company, the advance would not have caused me any concern, as I could always more than hold my own among the farmers here when I have an equal start. Is it not possible you give me an equal all-round price with the company? Or if not, can you not under your agreement with them, insist that their price remain as before? Of course you can readily see that did [unclear: I] the company were at liberty to increase their purchasing rate it would never have paid me [unclear: to] entered into a contract such as I did [unclear: at] lower than they were receiving. I fully Estood I would be protecte i in the matter, [unclear: as] to me the present move has exactly the same effect that your increasing the contract to the company subseqent to my [unclear: contract] have done.

Who led him to believe he was to be protected?

Mr Bell: It was a clause in the contract.

Sir R. Stout: Pardon me, they were not afterwards to give any extra price. What was the meaning of "to be protected?" This must have referred to a private conversation between himself, Nelson, and Reid. Then, how did he get hold of the largest buyer? I will explain. The position was this. A Mr Price was a large dealer in sheep, and there was an arrangement made in Southland that if a person made a five years' engagement with Welson Bros, they would give a certain price. Mr Cuthbertson wanted Mr Reid to allow him to make this arrangement, but Mr Reid [unclear: declined] allow him to do this, and why?—in order lathis man might go to Mr Ward. I [unclear: have] Mr Cuthbertson's evidence to show you what took place and how it was arranged. Then the next thing that deals with that is a letter dated the 19th August 1892, in which Mr Reid says:

I am in receipt of your favour of the 17th [unclear: inst.] strange to say, a letter is also before me [unclear: from] secretary the Southland Frozen Meat [unclear: Com] requesting me to put the company on [unclear: the] footing as yourself-by increasing the [unclear: price] by per cent, on the net amount [unclear: of]. I don't think, taking all things into consideration, there is much, if any, difference between you; and you are both getting a splendid price for your meat. I have no control over [unclear: the]and Company as far as their charges [unclear: are], and if the directors like to give [unclear: away] by increasing the price to producers I can't Object. I quite understand how difficult it is [unclear: for] to purchase sheep just now and make [unclear: your] charges out of them at contract [unclear: price,] this is all the result of unhealthy compet in Christchurch, and I venture to hope [unclear: that] will shortly settle down to their proper [unclear: level.] will, I am sure, admit that at present London prices there is less in the business for Nelson brothers than for you. The growers get all [unclear: the].

This is another letter from Reid to Nelson:

I enclose copies of letters received from Cuthbertson, Ward, and Cuningham, all of which may be of interest to you. Cuthbertson I [unclear: have] to in one letter stating that we get the output of Mr Ward's works as previously advised. No. 2 letter is simply a growl, and I have merely acknowledged receipt and noted contents, and again informed Mr Cuthbertson that the 2½ per cent, loading commission is a concession made by the Tyser Line (Limited), and quite outside of Nelson Brothers. I don't see that we can do anything more at present, for if we give way on this point the directors will very soon want further concessions. All the nonsense Cuthbertson writes about our treating Ward better than his company is simply bosh, and he knows it. I tried for hours to make him see that as long as he got all the freight he wanted, and when he wanted it, he had no cause to complain, but he must have his little growl, and brought up the question of the Mamari taking Ward's meat over and over again.

Re J. G. Ward. I enclose copy of my reply to letter enclosed. There is no doubt that the Southland Company are far more particular about the quality of the meat they freeze, and I doubt if there is much difference, if any, between the two arrangements, with the exception of course of the grading. I cannot see that anything we can do will mend matters, for if you raise Ward's price he will simply go on to the growers, and there will be more trouble from the other side.

Then comes the letter of the 24th of August 1892. You must remember, gentlemen, in order to understand this letter, that Mr Ward has complained that the Southland Company has raised their price 1/8d, and this prevents him getting sheep and prevents him making a profit. The Southland Company is also grumbling because Mr Ward gets per cent, commission on freight they do not get, and that more attention is paid to his requirements in keeping his place clear than to the Southland Company. The company's letter of the 24th August, you will see, is exactly on the same lines as the first letter Mr Nelson wrote after the first interview with Mr Ward:—

Dear Jim,—Ward spent Saturday and Monday last with me. He is much exercised about an advertisement of the Southland Frozen Meat Company, offering 2[unclear: 2]d for meat delivered at their yard. He also states that he knows that they are lowering their standard of weights to us, thus giving them a great, advantage over him and pre-venting the possibility of his buying. The above are his statements, which, true or untrue, are worth noting. The offer of 2[unclear: 3]d, of course, is true, as I have the advertisement. I will just give a few of my ideas, and you must make what you can of them. I think that 2[unclear: 1]d offer is a declaration of war. Is this wise, and do you think it worth your while to point out to them the un-wisdom of it, and recommend them not to spoil their own business on the chance of injuring Ward. You should compare their weights carefully with the past and see if there is no difference, as Cuthbertson replies that his weights are all first-class.

Now listen to this; "I feel that it will be to our interest to 4 keep Ward alongside of them,' which he is not when their sheep are all first-class weights." What does that mean? I believe it is a racing term. "Keep Ward page 16 alongside of them"—you are not to allow anything to the Southland Company. Why should net Nelson Bros, have said: "We have a contract with Ward, keep him to his contract; we have a contract with the Southland Company, keep them to it. What have we to do with the fight between them? "But, no. "Dear Jim" is to keep Ward alongside of them. He is not to allow the Southland Company to get any advantage whatever. Those were Nelson's instructions to his agent. Again, I say, carrying out the exact policy that was laid down a year before—in August 1891—that they are to help Ward and to look forward to Ward as being their partner. Then he goes on to add:

I want to give Ward no advantage, but he should be as nearly equal as we can make him, and would rather give him an extra 1/8d per lb on his second-class than let him go to the wall. Of course I would rather not do this (though, if we do, it would be cheaper mutton than we have been getting from Christchurch), but Cuthbertson's letter, which you sent me, makes it clear to my mind that Ward will in future be a more comfortable man to deal with. I fancy Ward is uneasy about the result of his business, and I told him, and was not surprised, as he had no doubt given too much for his sheep on Thursday evening. I have been looking into the weights of the shipment of mutton and lamb from your works and find that there is a much larger percentage of inferior sheep than I anticipated. Out of 37,155 carcases shipped 10,303 were under 50lb weight, or, say, three-tenths of the total. Then comes another letter of Mr Reid's to Ward, after his receipt no doubt of the letter of his principal, Mr Nelson:—

Since our conversation on Thursday evening I have been looking into the weights of the shipments of mutton and lamb from your works, and find that there is a much larger percentage of inferior sheep than I anticipated. Out of the 37,155 carcases shipped 10,303 were under 50lb weight, or say 3-10ths of the total. There were only 14,721 first-class carcases, or, roughly speaking, 2-5ths of the total.

You can see therefore how they treat Ward as compared with the Southland Company, as he is to get two-fifths of first-class carcases.

Mr Bell: It was only a question of weight.

Sir R. Stout: I know; but the Southland Company were not allowed to have lower or higher weights, or if they did they were told to put it on consignment. The correspondence will show they asked to be allowed even a variation of 5 per cent., and that was refused.

Mr Bell: The Southland Company were not graded at all.

Sir R. Stout: I know they were not; but if their sheep were not first-class, or were below or were above a certain weight, they were not allowed for them on their terms. Then comes Mr Fisher's letter. He says: "I am myself a bit astonished at the very light weights that have gone through, at the same time the quality is up to the mark. Many of the sheep were halfbreds and small in frame, though prime." You [unclear: will] then, that Mr Ward is down south at [unclear: the] of August, and is told that no profits [unclear: can] made on what he is now doing. There [unclear: is] telegram from Nelson replying to [unclear: Reid] whether he should not make further terms:

Yours of September 3, I should not [unclear: alter] terms, so far as you propose. Better take thing. The only question is whether [unclear: you] increase the second-class rate for a [unclear: time.] this requires consideration.

"Better take everything" means take a weights and heavy weights. Mr [unclear: Nelson] this concession should be made to Mr Ward. Then there comes a long letter from Mr Ward dictated, I understand, on the railway beta Invercargill and Dunedin, in which [unclear: he] plains that the company are allowed [unclear: to] under-weights. That they are only measure by eye, and that, however careful they [unclear: may] they will be out. Then he offers to [unclear: make] terms. This is a letter dated sometime in September, and it must have been after the 6th before the 20th. He says:

That in our new arrangement the second for under 50's and over 80's be [unclear: abolished] and that when quality of A or F is prime, per cent, of each be allowed to pass, but less than 45lb. These two grades kept [unclear: it] desire, or the 5 per cent, to be graded in with and G, whichever you direct.

Then he goes on to ask for [unclear: further] in his contract. Mr Reid next writes:

We have not written to you confirming arrangements made in connection with [unclear: your] tract with us for the output of the [unclear: Ocean] Freezing Works. They are as follows:-price of all prime, first-class sheep weighing 50lb to 75lb, net weight, to be 2½d per [unclear: lb] prime carcases up to 80lb net to be taken up per cent, of shipment at the same price sheep under 30lb and from 75lb to 80lb, excepting 5 per cent, already mentioned, to be paid 2d per lb f.o.b. In reply to your [unclear: favour] on the instant, proposing amendments these arrangements, we have to inform the matters contained therein are [unclear: receiving] ful consideration, and as soon as we have mined what course should be followed [unclear: we] write you further. In the meantime, it will better to abide by the new arrangements as stand, so please invoice the Star of [unclear: England] ment in accordance therewith and oblige.

Now, gentlemen, you will again see here alteration of the contract made between and the company—made, to [unclear: use] words, to keep Ward alongside [unclear: the] Company. Then there is a letter on the of September from Nelson Bros. (Limited) it is not of any importance. The next [unclear: is th] Reid to Nelson Bros. (Limited), and this [unclear: is] importance:

You will notice from the memo, [unclear: enclosed] change has been made in Mr Ward's prices was done after Mr Nelson, with Mr Ward and self, had gone into the matter fully. [unclear: The] will, I trust, enable the contract to be complete without further trouble. It was found [unclear: in] page 17 that Mr Ward could not compete with the Southland Frozen Meat Company, and we were anxious to make their prices as nearly equal as possible. On the other hand, I wish to stop Ward from sending so many light sheep, and think the reduced price for light and heavy weights should have the desired effect.

You will see there that the reason of the change of Ward's contract was simply because he thought Ward could not compete with the Southland Company unless they altered the contact, and in September 1892 they altered his contract in order to enable him to compete. That is a letter of the 1st October. Then comes a letter, and a most important letter, and this brings us into a new branch of the case. It is dated the 14th October 1892. Ward has been running in competition with the Southland Frozen Meat Company, and he finds that he cannot make his way in what he is doing, According to Reid's letter he is losing money, In order to prevent him going to the wall they after the contract so that it may be beneficial to him Nelson's instructions to Reid are, "Lay Ward alongside them; do not allow the Southland Company any advantage; it is our interest to make a friend of Ward, to keep Ward with us; and in order to do so, alter the contract and give Ward the assistance he requires." The freezing [unclear: arn] is nearly up. He had been freezing since March 1, and I suppose that freezing stops in the end of October or in the beginning of November. He sees the result of his operations for the first year. He has made complaints that he is in an unfair position through the Southland Company offering an eighth of a penny more; and then, on October 14, he writes this private letter to Nelson. Before this letter was written he had a [unclear: pri] talk with Nelson. What took place [unclear: we] know, we can only gather from [unclear: the]pondence, but to suggest what took place is that Ward said: "Why not come in and [unclear: be] in these works? "And here is [unclear: the] written from Wellington:

I go home on Monday, and I will be glad if [unclear: you] consider whether your firm would come [unclear: I] the concern independently of all other people. If we can agree upon fair and reasonable conditions I am favourably disposed [unclear: in] direction. I would be quite willing [unclear: to] you the controlling of the whole [unclear: concern.] you could not come in during [unclear: the cur] of the existing contract—

[unclear: did not] know the resources of Mr [unclear: Nelson—] Southland Frozen Meat [unclear: Company;] if we can come to any [unclear: understanding] I quite willing to wait. I feel [unclear: it] be to my interest likewise to join [unclear: you] this venture, and I am also of opinion [unclear: it] be to your interest likewise. I want [unclear: to] entirely clear of farmers in the concern, [unclear: as] associated with them as shareholders and the works become a lever to enable them [unclear: to] down the profits of the works to [unclear: assure] additional value to their stock. From the time [unclear: I] started up to the end of the year I will have put through 120,000 sheep, and can with some confidence anticipate next season doing over 200,000. I will need to double the storage capacity of the works and to put in another engine, and I think with this a large portion of the work of Southland can be overtaken. In considering the matter I also can see that if we are together the Southland Company at the end of the existing contract must be amenable to reasonable prices. As far as you are concerned, and as far as the works at Ocean Beach are concerned, the less independent they are—

Which, of course, means the farmers—

The better it will be for the works and for you. My own idea, roughly, is thai I should accompany the concern, you taking an interest to be agreed upon, and that we should work for our joint interest. I will, if you are agreeable, discuss the matter with Mr Reid and further developments may result therefrom. Nelson then writes:

Dear Ward,—I have your letter of the 14th inst., but you don't say very much in it, so I have written Reid and given him a few heads for discussion with you, which I hope will lead to business. The prospects of the meat trade at the moment are not very brilliant.

The next paragraph, about a cable guarantee, I need not read.

Mr Bell: It shows that Nelson and Ward are not associated in politics.

Sir R. Stout: I do not know. It does not show that Nelson had any politics. All he wanted was a Cabinet Minister to himself.—(Laughter.) The next is a letter to Reid on the 18th October:—

Dear Jim. . . . J. G. W.: I have had a long letter from Ward with absolutely nothing in it except that he will be glad to go into partnership with us, and suggests a talk with you. You need not put yourself out of the way to get a little talk, but first time you meet you might have a go at it as a preliminary on the following basis: (1) We must buy right out, but would like to give some of the N. B. (Limited) shares as part payment. (2) Should not give money for goodwill, as I consider sheep have been bought so dear that we shall start on a worse bottom than if the business had never commenced, as we shall have to work prices down to such an extent. (3) I don't look with favour on the "large amount of business" Ward has done, as I am sure a lot of it must have been bad; and although Ward may have numerous off-sets against losses of sheep, we should not have. (4) We should no doubt be able to do a large business through Mr Ward, so long as he bought at our prices, and after the farmers had become accustomed to the altered condition of things. Probably we can buy from him at per lb as at present, only we should do the freezing. (5) Price of work must be reasonable. (6) If we bought before this time next year, we should want to consign to the S. R. Company. This is just a rough and hurried outline, and I think you cannot do better than read them straight out to Ward, with as many of your ideas as you can produce.

At that time a year's freezing was about over, and Ward, having seen no doubt the result of a year's operations, was anxious to conclude a page 18 partnership with Nelson. In a letter sent by Reid to Nelson on the 23rd October:

I had a long yarn with this gentleman on his way south-

That is, Ward—

And he seems very anxious to work in with us. It will be better, however, to delay discussing the partnership business until after I have had a talk with you. When do you propose coming south? I have a long letter from Ward's head man re "light sheep," further concessions, &c., but I will not trouble you further on this matter, as I know your views on the subject, and will decline to give way any further. What about purchasing fat lambs this season? There will be a large number offering.

Then Reid writes to Ward, and this letter is of importance, as showing what the result of the new variation of the contract is so far as Ward is concerned. It is dated the 27th October 1892, and he says:

You will also observe in looking into the figures [about the Star of England shipment] that the last concession made you resulted in your getting £361 0s 7d more for the cargo above referred to than you would have done under the original arrangement.

That is a further clinching testimony of what was meant by Nelson practically telling Reid to "lay Ward alongside the company." He made this concession to Ward of what was practically a gift of £361 on one cargo alone. Then he says about the Southland Company:

It is just possible that the Southland Company pass a few light sheep, but, as I previously advised you, I can't compel directors to weigh each sheep separately, and suppose much as we dislike the old system of weighing five or ten carcases at once we must put up with it until the expiration of the contract. I feel confident that if you give your buyers instructions to be very particular when buying only to take prime sheep, the number under 50lb will be very small indeed and easily disposed of to the local butchers. I trust you will fall in with my views in this matter, for, as you are aware, both Mr Nelson and myself are most anxious that you should do well and be satisfied with the arrangement.

Gentlemen, you will see at once that all these letters are not the letters of an ordinary buyei of goods, a merchant, who has made a firm contract for two years with a customer. They are not that at all. Then comes a letter from Fisher to Reid:-

The concessions on the old agreement resulting in my receiving £361 0s 7d more for my last shipment than under the original arrangement I thoroughly appreciate and feel grateful for.

Then he goes for a further concession.

Mr Bell: He refused to adopt the same style of weighing as the company.

Sir R. Stout: The next we hear is a communication from Reid to Nelson on the 27th October.

Mr Bell: Would you mind reading the last two paragraphs of that (Fisher's) letter?

Sir R. Stout: I have not the slighest objection.

In considering this matter I trust [unclear: you] recognise that upon the meat I [unclear: have] shipped I have done it cheaper to you by [unclear: less] £2000 compared with the company's price.

As to whether that is so or not, we [unclear: have] Nelson's letter that his [unclear: company] made an enormous loss on [unclear: this] through having to pay Ward more [unclear: than] got.

This is a tremendous handicap, and I [unclear: have] doubt that notwithstanding this my [unclear: quality] been quite up to theirs. The whole thing turns on quality—it was never up to the Southland Company's.

And I think you will agree it was not intended between us when the arrangement was originally made that I was to be in a worse position that the company. I do not like pressing for consideration, but I am confident that if you go into you will find that I have some grounds for you consideration.

Well, gentlemen, I'll show you by-and-bye what Nelson thinks of that.

The next thing apparently, is that Ward wants the Elginshire's machinery, and Reid writes to Nelson:—

I enclose copy of letter just received from Ward which is a reply to a letter I wrote him pointing out how the last concession made him had results in his favour. I don't think we should [unclear: way] further unless you have any special reason doing so. I did not intend to give you any further trouble in this matter, but on second though decided to send in this letter. When do [unclear: you] pose coming south? . . . . I wired you [unclear: to] asking if I should sell the two boilers [unclear: lying] to Ward at first cost, giving him 12 months with out interest, on the understanding if we join they go as part payment. Ward has [unclear: seen] and likes the look of them very much, though of course he only professes to view them with eyes of a layman. The offer made is not a particularly good one, but there doesn't [unclear: seem] chance of selling these boilers to better advantage and if you are satisfied with Ward's proposal may as well be out of the interest on their one way as the other. Kindly let me know views on this matter and oblige.

In reference to that you will find, as [unclear: the] respondence goes on, that Ward got the boilers and they were not paid for up to the end [unclear: of] contract. Then, after a letter from Rail Nelson speaking about these boilers, there is letter on the 1st December showing what Nelson thought of the profit of £2000. It is dated the 1st December 1892:-

Dear Jim,—Enclosed report from our London store manager is a complete answer to [unclear: your] of November 2 enclosing copy of Ward's [unclear: last] dicating conclusively that no [unclear: further] can be made, and that those already [unclear: made] not have been. The consignment as a whole been most disastrous, and unless Ward [unclear: means] ruin himself and his trade entirely, [unclear: some] sale alteration must be made. It does [unclear: not] prise me that it should be so, as [unclear: Ward] cannot possibly know how good a [unclear: sheep] be. It has taken us years to learn business, and I have felt certain [unclear: all] page 19 that Ward was falling into the error indicated by our store report. As I have mentoined before, Ward is very proud of the number of sheep he has put through, but it has always teemed to me that he has acquired these sheep by giving more for them than they were worth. This class of business is better let alone, See Ward if you can, and go through this matter with him, and show him this letter as expounding my views.

So you will see, gentlemen, the statement about £2000 is simply ridiculous and absurd. It was a dead loss to Nelson, and disastrous, The next letter from Ward to Nelson asks—

Would you oblige me by getting one of your clerks to send me a list of all rates of wages that you pay to the men in the various departments at your works. It would be of service to me as I am framing the rules and regulations to be put up in the works. I hope it is not troubling you too much, but I shall esteem it. With kind regards.

Then the next is a letter from Ward, on December 31, to Reid:—

If Mr Nelson still thinks seriously of entertaining the idea discussed between us of taking an Brest in the Ocean Beach Freezing Works, I should be glad to have the matter further discussed and a definite point arrived at. I refer, of course, to the time when present contracts expire. I am still willing and desirous of giving a strong preference to Nelsons, but if there is any likelihood of our not agreeing I want to know as early as possible, as overtures have been made to me without solicitation on my part which I have not and do not intend (until I know finally whether we are likely to agree) to in any way encourage, But I am frank with you in saying that if we are not going to do anything it would then, in my opinion, be in my interest to entertain the proposal made to me. I want a reply as early as convenient, and I am prepared to meet you, and discuss the matter with you, with a view to ascertaining and fixing, if necessary, a prospective arangement; and, as this letter indicates, this is in confidence.

Then, on 16th January Reid writes to Ward:

I have been from home, or would have replied earlier to yours of the 31st December. I feel sure that Mr Nelson is still prepared to entertain the ideas of taking an interest in your works provided everything is satisfactory; but I fear if you still expect to get goodwill, there is little chance of anything being done, for you will, I am sure, agree with me that the future of the trade, as far as New Zealand is concerned, does not look very bright at present.

This shows there must have been a private conference between Ward and Reid at which the paying of money for goodwill was mentioned.

I think to bring the matter to a head it will be better for you to state fully what your views are on the subject, and I will communicate with Mr Nelson, or, if necessary, go up to Napier and talk the matter over with him. You would require to take us into your confidence and state what works have cost, storage capacity, freezing power, &c., &c.; I feel sure you will find it to your advantage to work in with Messrs Nelson Bros., and trust some satisfactory arrangement will be arrived at, but whatever the result of the negotiations may be, you can rest assured that any information you may supply me with may be treated as strictly confidential.

And so on. Then comes a letter from Mr Ward to Mr Reid, in which he says:

I will place in your hands in writing fully what my views are. It-will then be for Mr Nelson to consider. The day after I wrote the wire to you of 31st ult, the chairman and banker of the Southland Frozen Meat Company interviewed me and suggested our working together. I heard all they had to say. They wanted me to amalgamate our respective works. I declined to entertain the idea of amalgamation, though I expressed my willingness to work with them on the basis of each of us doing half the business of Southland. They have interviewed me again, and I expect to hear something further from them this week. If they like to agree to a fair and equitable basis to work upon I am on, but it must be bona fide, or, as far as I am concerned, I will not agree to anything that means their having the thick end of the stick.

You will see what Mr Reid thinks of that letter and what he says of the general working of the Ocean Beach Company. On the 11th of January Mr Reid says this:

I think the time is now at hand for making a satisfactory arrangement with Ward for taking over his works, provided you have any idea of doing so. When I last discussed the question with Ward he was so strongly of the opinion that he should receive goodwill that I thought it better not to push the matter further. Your letter that followed gave Ward clearly to understand that you had no intention of paying him any goodwill. There the affair was allowed to rest until the 31st of last month, when I received a private note from Ward asking if you were still prepared to consider the matter. I now enclose copies of the letters which have passed between us, and which will, I think, explain themselves. I think Ward has found out at last that he has not been making money, and that it would pay him better to take your advice and put through half the number of sheep. I doubt, however, if he will ever come to an arrangement with Cuthbertson, for he (Ward) will want all the best of the bargain. I have several times suggested to Cuthbertson that he should try and work with Ward, but he always said it was impossible. Now I fancy that the directors of the company find that they are short of capital, and they cannot afford to carry on business at a loss. It is just possible that the present is a most opportune time for us to step in and get control of both works. As matters now stand we hold the key of the situation. If we refuse to purchase the output of either works after expiration of present contract neither Ward nor the Southland Frozen Meat Company can carry on, for they have not the necessary capital to enable them to buy and ship on their own account. Of course there is the possibility of Dawes and Martin having a cut in, for the Bluff would just suit their cargo steamers, but you will have a very good idea if there is any probability of opposition from that direction. To come to the point, if you wish to join Ward, and either lease the Southland frozen Meat Company's works or again purchase their output for a term of years. I feel confident that the present is a very good to work. You will Observe that Ward mentions in his letter that page 20 he has had an inquiry from London, but I doubt if there is much if anything in this unless, as I stated before, Dawes and Martin are trying to get behind us. I talked the matter over with Dobson this morning, and he seems to think there may be something in this. Should you wish to write to London on the subject I would suggest that you do so as soon as possible, for we could then act promptly should it be advisable to do so.

Then Mr Reid writes on the same day to Mr Ward:

I am glad to learn from yours of the 8th inst. that there is a prospect of your making a satisfactory arrangement with the directors of the Southland Frozen Meat Company. I several times suggested to Mr Cuthbertson that he should discuss a proposal with you which would prevent absurd prices being paid for sheep, but had almost given up hopes of anything being done. I presume you will write me before you definitely fix the matter and I will be pleased to give you every assistance in my power. I will be glad if you will write me as soon as possible stating what you are prepared to offer Messrs Nelson Bros., for it will take a little time to discuss the matter with Mr William Nelson after your letter reaches me.

On the 23rd of January there came a letter from Mr Nelson:

Dear Jim,—I have been on my back for some weeks, so have been unable to write you, and I am not now very fit. I still think we shall have no difficulty in coming to terms with Ward, and I like the idea of taking up the Southland Company as well. I suppose they would take their money out in shares in Nelson Bros. (Limited), which would give them an assured dividend. Could you sound them quietly on this point? I have received no proposal from Ward; please hurry him up with them. What proportion would he be prepared to take in shares? We must have the district interested in us, or I would not care to have anything to do with it, and the farmers may be assured of fair treatment from us, as we could not afford to court opposition. I have wired Dobson to come up at once.

And so on.

In any case prevent Ward or the Southland Company from doing anything with anybody else till we have had our show.

The next letter is from Mr Reid at Dunedin to Mr Nelson:

Ward has at last put in writing his offer in connection with the freezing works, and I now enclose copy of his letter. He assures me that his reason for wanting to get the matter settled one way or the other is that he has had a cable from Weddel asking whether he is prepared to sell his works. You will probably know that there is likely to be nothing in this. Mr Ward has given me some private information which he has no objection to my passing on to you in strict confidence. It is about the Southland Frozen Meat Company. He says he got it from one of the directors. The directors of the company have had to give a joint and several guarantee for £2000 each. Four of them guaranteed. One, Mr Carawell, has refused to do so. Mr Ward states that [unclear: the] tors were called upon either [unclear: to] or resign. Carewell refused to [unclear: do] Ward also says that there is no doubt if [unclear: we] to get the Southland Company's works, [unclear: or] any arrangement with the company, we [unclear: shall] able to [unclear: do] on a very early date, as there [unclear: is] to be trouble soon amongst the [unclear: guarantors.] tened to all he had to say, but made [unclear: no] It seems to me that at the present we are [unclear: in] position of being able to buy any of [unclear: the] The question is whether it is worth buying one at all. If it is your wish we should buy Ward out, possibly arrangements could be made to lease [unclear: the] works for a term of years [unclear: by]ing the shareholders a certain rate of [unclear: in] covering the dividend and depreciation. As I have already mentioned, this information about Southland Company is simply what Ward has me, but I am sure that they have not suffice capital for their works to carry on decently.

Then he goes on to refer to the output [unclear: of] works and to oleomargarine. I need not into that. Then (and this is still in January Mr Ward in his letter says that he is prepared to sell the lot for half cash—say £14,000, the balance in fully paid-up shares in Nelson Bros. (Limited), and all the terms are given the whole of the management [unclear: of] freezing works in future to [unclear: be] under the control of Nelson [unclear: Bros.] next is a letter from Mr Nelson [unclear: to] Nelson in London stating the terms of [unclear: the] and reiterating the offer thai has [unclear: been] to you—namely, the offer that Mr [unclear: Ward] made to Nelson. He says, "His propose are much more reasonable than I anticipate and I strongly recommend their acceptance. Briefly he wants him to give him power [unclear: to] chase Ward's works. That is [unclear: on]ruary 2, and he writes on February 4 Reid that he wants to have a [unclear: discussion,] he would be down to [unclear: take] in a conference, and that [unclear: he] business may result. Then on the February Mr Reid fancies that [unclear: be] try to get the business of the [unclear: Southland]pany before making anything known that is likely to be done with Ward. Because [unclear: if] ducers thought they were going to [unclear: get] of both businesses they might form [unclear: a] and decline to sell. Then, on the February there was a letter from Mr Ward but this was not important. On the [unclear: same] there was a contract made between Nelson Bros. (Limited) and Mr Ward.

Mr Bell: No; a proposal.

Sir R. Stout: No; it is a contract, because prevented Ward selling the works [unclear: to] else. It says:—

In consideration of the sum of 5s, the nd of which is acknowledged, I hereby [unclear: place] offer to Nelson Bros, and Co. the [unclear: whole] Ocean Beach Freezing Works, including [unclear: the] of my freehold land, buildings, [unclear: machinery,] and fittings of every description set [unclear: forth] page 21 schedule marked "A" and attached hereto, together with all other appurtenances in, about, or upon the permises. The items set down in the said schedule marked "A," under the head of contingent expenditure, to be completed in a workman like manner. The price to be paid to me for the foregoing to be £32,000, £16,000 of which shall be paid in cash, and £16,000 in fully paid-up shares in Nelson Bros. (Limited). This offer to remain open until Monday, 15th May, 1893, and if accepted the £16,000 cash shall be paid to me not later than 1st January, 1894, and dividend upon the shares transferred to me shall be calculated, and shall be at the same rate as paid to other shareholders for the year ending 5th September 1894. The business management of Messrs Nelson Bros. (Limited) to be entrusted to me in Southland at a salary of £650 per annum as long as I fill requirements to Messrs Nelson Bros.'s (Limited) satisfaction. The business to be conducted in the name of the Ocean Beach Breezing Works so long as I retain the business management.

You will see here is an offer, a contract made on the 20th October 1893, which will prevent Mr Ward selling to anybody else until May 1894. The next letter of importance is the letter of the 7th of April. This is a letter from Mr Nelson to Mr Reid. It says:

Talked to Roberts and the other day he told me that Ward was buying "anything." many sheep being only stores. Possibly his remark had nothing in it, but it put the idea in my head that possibly a good deal of supervision would be necessary, and I think it might be wise, as our interests in that quarter are now large, that you should have a man of your own (or rather that should) to overlook the sheep at both works every day, as the Southland Company are by no means too careful in our interests. Has Smith's Company taken up entirely as against the Liners, or is he snipping by both?—

That remark is rather pregnant, "as our interests in that quarter are large." Then on 14th of April Mr Nelson wrote from London:—

Mr Sunderland arrived last week, and the proposals brought by him with regard to the purchase of Ward's works were laid before the board last Wednesday, when it was decided to accept them. It is understood that the annual payment to Mr Ward is to be made only so long as he is useful to us.

And the offer was accepted in New Zealand from a cablegram of the 18th of April 1893:—"We have received a cablegram from our London office intimating that they are prepared to accept your offer for the Ocean Beach Works to us as per proposal, and the terms Sunderland took Home with him. We will, however, send you an official acceptance of your terms in a few days." Mr Ward writes:

Dear Reid, Mr Nelson handed me acceptance of the freezer offer the day he arrived here en to England. He and I spent a day at the freezer, and as we were measuring and sketching for Mr Nelson's information it is not to be wondered at that the busy tongues of some who [unclear: saw] have been at work. I have since been asked twice if it was true that Nelson had bought the works. I, of course, emphatically denied it, and said it was not true, as it may not suit Mr Nelson to have it known. Of course the sale does not date until January, and essentially it is quite true to deny any idle rumours of busybodies, who want to know more of other people's business than there is any necessity for. I think it only right to let you know this in case any inquiry may be made of you as you can absolutely depend that no one will be satisfied by inquiring of me or anyone connected with me. I am not quite sure of oats yet for Dunedin, but will not fail to avail myself of your good offices should I finally decide to speculate there as well as here, and upon which I will make up my mind definitely in the course of a few days.

That must have been on the same day, perhaps on April 18. He says on April 24: "I have your private letter of the 18th inst., and for which I thank you. Mr Nelson kindly handed me your telegram to him, repeating London's acceptance, the day he left the Bluff for Melbourne. I wait the further letter you refer to."

Mr Bell: He sends a telegram asking for an official letter.

Sir R. Stout: Yes; I think it was posted on the 4th of May. They had sent the letter before the telegram. "I have much pleasure in notifying you that I have received advice from our London board of directors to the effect that they have accepted your offer of the Ocean Beach Freezing Works in terms of your proposal dated 20th February 1893, and the schedule marked A attached thereto. The arrangement to take effect from the 1st January 1894." On receipt of this letter you will see, without any knowledge or without any request being made to the Southland Freezing Company, Nelson and Co. practically became the sole owners of the works in May 1893.

Mr Bell: The arrangements to take effect from the 1st January following.

Sir R. Stout: I know that, but practically they became the sole owners of the works then, and you will see that what Mr Nelson predicted in 1891 then came about. The whole thing had been worked up to from that time. Every step had been taken with that object in view, and now it was accomplished. Does my learned friend really mean to say that because the del very of the works was not to take place until 1894 that Nelson Bros, were not interested in them in May 1893, when they had bought them? Certainly they were, and what the effect of that was any commercial man can see, and I will show later on. I will refer to the correspondence, which again throws light upon the matter. The next thing that happens is the acceptance by Mr Ward, saying that details will be arranged. The next letter from Mr Ward suggests that Mr Reid should try and arrange terms with the Southland Company. He suggests that they should try to fix terms with the Southland Company, but if the Southland Company would not agree then that they should give an extra one-eighth of page 22 a penny for the balance of the year 1893, that that would stop any sheep going to the Southland Company, and then enable Nelson Bros, to make any terms they pleased with the Southland Company. They did not accept that because before anything happened concerning it on the 2nd of November, there is still further correspondence. Then comes the telegram from Mr Ward:—

I will esteem it an extraordinary favour if you will allow me to draw at three months for £20,000 against sale Ocean Beach Freezing Works. I will deposit all titles to your order, also insurance cover for full amount. Heavy payments going out for wool (scour) season, and with extreme lightness prevalent this would suit me first-class. Colonial Bank of New Zealand will discount my bills on you, and as it would not in any way interfere with you will agree Southland Company. Do try your utmost to oblige. If combined company completed I will retire bills. If combined company not completed my sale to you will be completed before due date. Reply paid.

The reply was from Mr Nelson himself, and was as follows:—

My arrangement with our head office for payment on 1st January is by draft on London at three months' sight. I will give you a draft on London at five days' sight for £20,000 if Colonial Bank of New Zealand wire me that they will hold all securities on my behalf and deliver them over when demanded. Above payment includes your liability on store. I assume you will send copy of this telegram to the Colonial Bank of New Zealand.

Then came a telegram to Reid:

Strictly confidential. Tell Colonial Bank of New Zealand I have offered Ward draft on London at five months' sight for £20,000 if they will hold all securities on my behalf. They should ask Ward for a copy of my telegram to him.

Then Mr Reid telegraphed to Nelson:

Mackenzie approves. I will have documents hypothecated against bill, and see that everything is in proper form.

Then Mr Ward writes:

I would esteem it an everlasting favour if you will allow me to draw at three months for £20,000 against sale Ocean Beach Freezing Works. I will deposit all titles to your order, also insurance cover for total amount. Heavy payments going out for wool season and with extreme tightness prevalent, this would suit me first class. The Colonial Bank of New Zealand will discount my bills on you, and as it would not in any way interfere with you, will agree Southland Company. Do try your utmost to oblige. If combined company completed I will retire bills; if combined company not completed, my sale to you will be completed before due date.

Then Mr Nelson wired to Mr Reid:

Ward wishes to give me two months' bill on Colonial Bank to be retired by our three months' sight draft on London. I see no objection to this. You can do it if Mackenzie approves. If the Southland scheme comes off Ward will retire the bill. Colonial must hold securities for us. Reply.

Then the bill was given on November 7—a bill on demand:

We promise to pay to the order of the Hon. G. Ward the sum of £20,000 for value received This was payable on the Colonial Bank of New Zealand. This was afterwards endorsed on the back:

Pay to the Colonial Bank of New Zealand order.


J. G. Ward.

Four bills of £5000 each at 90 days' sight on London, substituted for this promissory note in terms of letter from general manager of the Colonial Bank of New Zealand.

Then Mackenzie writes:

Replying to my letter of 12th [unclear: November] and to the letter from the Hon. J. G. Ward [unclear: to] dated 11th of January 1894, a copy of which attached to this, I understand that while four bills of £5000 at 90 days' sight on London now given me in substitution for the [unclear: promissing] note for £20,000 dated 7th November 1893, current, this bill is to hold the securities [unclear: for] Ocean Beach Freezing Works against payment and when these bills are duly paid said security are as stated in my letter of the 14th [unclear: of] to be handed over to you.

Then there is a long talk about a proposal amalgamate the two companies. Nothing came of that, so that I need not refer to it. On the 20th of December there was a long letter Mr Ward to Mr Nelson about the amalgamation, and showing him that if the amalgamation was carried out that they would have practically the whole control and managed of all sheep in Southland—absolute control the Southland frozen meat market, and that would mean that Nelson Brothers could fix almost any prices they pleased. The thing is another arrangement about the same matter. Then came an advertisement the Ocean Beach Freezing Works will] opened on or about January. Then came an attempt—no doubt by Nelson [unclear: Bros.;] they got Mr Ward's assistance [unclear: to] amalgamation about in order that price might be forced down, because [unclear: Nelson] thought apparently that the farmers, was mentioned in one of Reid's letters were to get all the cream of the profits. As the draft, that was held over apparently. I was not met by Mr Ward on the due [unclear: date,] was afterwards arranged for with them, the then proposal was only to back them up £32,000. They were to float a [unclear: company] £50,000, and an alteration was made in reference to that, but I don't know that it is necessary for me to deal with that. There are other letters that I might mention, but I don't think it is necessary to trouble you with them at present. To sum up, I must now tell you what the position is. So far as we are concerned we made a form of contract with Nelson Bros. (Limited. for three years. That contract contained condition that Nelson Bros. "[unclear: should] during the said term of three [unclear: years] or assist, or be in any way concerned interested in the erection or use of freezing page 23 works on land or water at the Bluff, or within the limits of Southland or Wallace counties, without making special arrangements with the company, nor do anything of the like nature which would in any way interfere with or restrict the output, business trade, or profits of the company." Now, gentlemen, to sum up, what is the position? There may be other letters, I may mention, that it may be necessary to read, but I do not think it needful to trouble you with them present. You will see them when the evidence comes up. I will tell you what the position far as we are concerned. We made a firm contract with Nelson Bros. (Limited) for three years. That contract contained a condition that Nelson Bros, should not during the said term of "three years erect, or assist, or be in any way concerned or interested in the erection or use of freezing works on land or water at the Bluff, or within the limits of the Southland or Wallace Counties, without making special arrangement with the company, nor do anything of the like nature which may in any way interfere with or restrict the output, business, trade, or profits of the company." They have pleaded in their plea than they had no concern or interest whatever, direct or indirect, in the faction of the Ocean Beach Freezing Works nor any interest or concern in the use of the said works during a term of three years covered by the agreement. They also plead that they have not done anything which interfered with, or restricted the output of the Southland Frozen Meat and Produce Export Company as alleged in the statement of claim. I submit to you, gentlemen, that after having heard these letters you must come to the conclusion that the whole action of Nelson Bros, was in direct violation of this agreement they had made. First of all they entered into an agreement to purchase the output of the Ocean Beach Freezing Works. I do not need to rest in that agreement. My learned friend asked me when speaking before did I mean to contend that entering into the agreement set out in the statement of defence was a breach of the conditions of the agreement made with the plaintiffs. Gentlemen, I could say that it was a breach of those conditions, but I am not bound in rest upon that in this case. I say that the whole attitude of Mr Nelson from the first interview of Mr Nelson with Mr Ward was this: instead to have Mr Ward, a Cabinet Minister, in my arms. I will not allow him to fail. I do not care what happens to the Southland Freezing Company. I am determined to make him concession after concession as I intend to get hold of Mr Ward and of the Ocean Beach Freezing Works. His whole action right through has been that as you will see. What does he do? He first enters into a contract, and as soon as that contract proves to be a losing contract to Mr Ward he alters it, and alters it to such an extent that on one shipment that goes Home he makes Mr Ward a present of £300, and he does everything he can to help him, and tells his manager that he is to keep Mr Ward alongside with them. I believe that is a racing phrase, and perhaps you may be able to appreciate its full significance. I understand it means You are not to allow the Southland Freezing Company to crush Ward out of this competitive race. Well, what happens then? Mr Ward has one year's trial, and after that he finds the thing has not paid him, and possibly, like every other merchant, he may have required accommodation. We do not know anything about that, but we do know that what happened was that in October 1892 they again have fresh negotiations with Mr Ward, and that he gives a prior offer to Nelson in February 1893, and enters into a specific agreement that he will not sell the works to anybody else before May, giving the Nelsons the power to take the offer Home. No doubt, he could then, as any commercial man can see, go to any bank or any other financial institution and say: "Gentlemen, you see the position I am in. I have a firm contract that they are bound to buy all my frozen meat from me, and to give me cash as soon as ever I have placed it on board the steamer. I am to get per cent, commission on freight." You will also see that he could say to another financial institution: "If I require it—if I am in a hole—they will come to my assistance, for you see they wish to buy my works; they only want time to get the offer to London; there is no doubt the terms are going to be accepted, because the New Zealand people are going to urge the London people to accept the offer." As in fact they did. The offer was accepted in April, just as the season began, and he got what was just the same as cash—he got a firm offer from the Nelsons to pay the full value of the works (£32,000), to be paid on the 1st January. It was equal to cash. Would it be said, then, that Nelson Bros., who agreed to pay £32,000, were not interested in the works It was the fame as if they had given a bill of exchange on the works, because they had given a firm contract to purchase.

Mr Bell: Surely that is a question for his Honor?

His Honor: Probably it will turn out to be a question of law whether this portion of the transaction was a breach of the agreement.

Sir R. Stout: I submit the jury is to look at the whole of the transactions as one series of transactions from 1891 down to the present, and I am using this as only one step in the transactions. They make a further contract, and before this agreement you have that contract and you have a letter from Mr Nelson saying "Our interest now is large." How was it large? It was large because practically they had agreed to buy the works, and page 24 bought them with a written agreement equivalent to a bill of exchange. What next happens? Mr Ward says in November the end of the season has come, and very likely he had not made any profit. That I do not know, but it may be that at the end of the season he wanted accommodation, and he fays to Nelson one day, "Will you give me £20,000?" and Nelson replies, without any negotiations, without any question, "Yes, £20,000, certainly," and down comes a telegram, and on receipt of that telegram £20,000 is given by the form of a bill.

Mr Bell: No; the deeds were held by the bank.

Sir R. Stout: Yes, of course, the deeds were held by the Colonial Bank for Nelson. But why should he have to give this £20,000 bill at once when asked without any negotiations or haggling. But simply a telegram comes up, "£20,000 will be an agreeable thing to give me; will you give it?"—"Certainly; there is the £20,000." What does that all mean? Does it not prove conclusively that from the first interview Mr Ward had with Mr Nelson there was this understanding come to between them. This is disclosed in the third letter I read to you of the 9th of August: "You know my wishes on the subject. They remain the same as I expressed when you were here. Our connection must follow in due course." What does it mean? There is no doubt there would have been an out-and-out partnership there and then but that Nelson saw this paragraph in the agreement staring him in the face and did not see how to get rid of it, and, as often happens, he got rid of it by going round it, and it is for you to say whether you are to permit that going round it. I say that the agreement made has been entirely violated, and if you come to that conclusion the only question you will have to consider will be, what damages have we sustained. And, first, as to that I will submit that you should take our published balance sheets—published, some of them, even before this contract was made—and you will see that our profits were, in the first year of this running, the year ending the 31st of December 1891, about £5000. The profit on freezing was £5485, but there were general expenses amounting to £1300 outside, and there was carried over from the previous year £2721. but this balance was disposed of in this way: £1500 written off machinery, £1535 given as a bonus to shippers, and £3969 carried forward, and that was on a small capital, remember, of £1000. And then in 1892 we find the profit from the freezing fallen from £5900 to £2900, and practically when you take the expenses and depreciation—£722 was written off—the net profit is less than £1. That is in 1892. That was when there was his competition. Then coming to 1893, yon will find there is a net loss, if you strike off the balance carried forward from the previous year, on the whole working of the concerned nearly £6000. And then when we come to the loss is still greater. The loss on [unclear: the] ing account is £10,000.

Mr Bell: £17,000 altogether.

Sir R. Stout: £16,506. Of course against us this: we had not a [unclear: firm]tract made for the sale of our production and we had Nelson and Co. running Tyser line and buying up—carrying out, doubt, the policy Mr Ward advised-name that Nelson should pay a higher price for sheep than they were worth, and so force Southland Company to sell to them, and that manner get a monopoly of the district, and then they could fix price to the farmers as [unclear: they] That is the policy no doubt carried out [unclear: is] present time. That is the policy of Mr—to force the Southland Company to practically give him control of the [unclear: works.] men, he is to have the profit, we to [unclear: have] loss.

Mr Bell: Is the profit of 1894 claimed?

Sir R. Stout: I am not claiming [unclear: the] for 1894. I am quite content if we profits for 1892 and 1893. Then I submit you there is another test. You can look our shares fell in value because of the attitude and actions. That is a [unclear: test] how great were our losses. I submit that cannot say that Nelson ever showed [unclear: in] position he wishes to take up that [unclear: he] simply a mere buyer of the output [unclear: like] other buyer. Gentlemen, you cannot that. From this correspondence it [unclear: is]fectly apparent that Nelson Brothers (Limited.) were simply standing behind Ward, a second in a duel. They were standing him, seeing that he was supported whenever needed support. They were standing [unclear: by] determined to see that he should not go to wall whatever happened. They [unclear: were] mined, whatever happened, they should [unclear: so] their lines and work their plans as [unclear: to] the company in the end to sell to Nelson Brothers or to come to terras with Nelson Brothers, and they thought [unclear: it] to take up Mr Ward, no [unclear: doubt] the five reasons Mr Nelson gave [unclear: in] They wanted Mr Ward, and the whole [unclear: of] policy has had this goal continually [unclear: is] and they have gone on to it without deviate either to the right or to the left. They concession after concession. They have been mere buyers of frozen meat from but interested in his works, interested [unclear: is] and have done things that in the terms contract have injured our output, have [unclear: it] our profits, and have ruined this [unclear: company,] submit to you, that if we can prove suffered that loss, we are entitled to succeed this action, and to recover [unclear: heavy] against Nelson and Co.

page 25

Counsel then proceeded to call evidence.

Robert Ferguson Cuthbertson, formerly secretary of the plaintiff company, said: I was secretary for about 11 years, and ceased to [unclear: be]etary early in July 1894. I have no further interest in the company than that I hold 10 or 11 paid-up shares, and that at the present time I [unclear: am] as the auditor. In 1889 the [unclear: company] in a very good position. The balance pete and reports produced were the [unclear: balance] of the company.

Mr Bell objected to the production of [unclear: any]ments prior to 1890, and

Sir Robert Stout put in the reports [unclear: and] sheets from that year.

Witness, proceeding, said: The company [unclear: had] agreement with Nelson Bros, in 1889. That the original agreement Mr Ward was director of the company up till July 1891, I knew the terms of the contract. In July 1891 there was some talk about opposition, and telegrams passed between the company and Mr Reid on the matter. In 1891 the company was doing a very good business. In that year the net profit was £4300. In 1892 th net profit was about £722. In 1893 [unclear: there] a total loss of about £6000. There was no dividend paid in 1892 or 1893, but the company said 8 per cent, in previous years. In 1892 a member of improvements were made in the works. We commenced to slaughter [unclear: at], in addition to slaughtering at Vallacetown, and we hired a hulk to freeze [unclear: the]rings at Mataura. The works [unclear: at] were not completed till the [unclear: beginning] April 1893. The freezing generally began in January in Southland and ended in October—sometimes running into November, but [unclear: very]. Some works were erected in 1892 the Ocean Beach, near the Bluff, [unclear: and] opened for work either at the end of January or the beginning of February 1892. opening of these works diminished [unclear: our] very materially. In 1891 our total [unclear: out] was 100,515 sheep and lambs. In 1892 [unclear: it]pounted to 85,833 sheep and lambs.

Mr Bell asked if witness was giving the the from his own knowledge.

Witness replied that he was not. The figures are taken from a return made by someone fee. He could not get at the figures [unclear: without] at the books of the company. [unclear: Proceeding] with his evidence, witness said: In 1892 [unclear: the] was lessened because buyers of Mr Ward's company were going round the [unclear: country] higher prices for sheep than we were He to give under our contract with Mr Nelson. The price of sheep in the district was [unclear: certainly], but we did not run up the price. Mr Ward first raised the price, and we had [unclear: to] the prices afterwards in self-defence. Our output was also affected by the fact that Mr Ward accepted from growers inferior sheep which we felt ourselves under our contract bound to reject. Our output was further affected by the shipping arrangements made between Mr Ward and Nelson Bros, being more favourable than those made with us.

Mr Bell objected to the evidence as not being relevant. He submitted that it could not be relevant to the question whether Nelson Bros, were concerned in the erection or use of frozen meat works, to inquire whether they gave shipping facilities to one client better than they gave to the Southland Meat Company. In fact he might put it in this way: Nelson Bros, were entitled to grant any facilities they pleased to any client in respect of the shipping without a breach of agreement with the Southland Company.

Sir Robert Stout said his friend read clause 8 as if the agreement only referred to the erection of works; but there was no such limitation. The Southland Company were not seeking any damages for a breach of clause 7. They were only dealing with clause 8. The terms of that clause were sufficiently wide. It said: "In any way concerned or interested in the use of the works," and this evidence he wished to adduce was to prove that Nelson Bros, were concerned in the use of the works.

After some further argument, his Honor decided to admit the evidence, and took a note of Mr Bell's objection.

Witness, proceeding with his evidence, said: We had trouble in getting our frozen mutton away by steamer. We could not get the amount of space in the steamers that we applied for after Mr Ward started his works. It was a distinct advantage to keep works clear. If the works were not kept clear we should lose business—we should not be able to accept our clients' sheep. Then the works became full sometimes, and we had to stop Our sheep that were ready to be shipped were sometimes rejected by Nelson.

Mr Bell said if his learned friend wanted to show that Nelson Bros, rejected some of the Southland Frozen Meat Company's sheep that surely was not a breach of the covenant which he alleged, but a breach of another covenant.

Sir Robert Stout submitted that it was a breach of the covenant to which he had referred because it showed other works were being used which damaged the Southland Company's out-put. Nelson Bros, were concerned in the use of other works, and assisting in the use of other works.

His Honor said he thought on the whole he should admit the evidence subject to Mr Bell's objection, even if this giving of a preference to Mr Ward's company was not a breach of the eighth clause of the agreement.

Witness went on to say: Up to the time of the starting of Mr Ward's works the company and the Nelsons had worked together most page 26 amicably in every way. There was most distinctly a change in their attitude towards one another after that. I remember a man named Price. He was one of the largest suppliers of the Southland Company. We lost his custom in July 1892, I think. I had a conversation with Mr Reid in connection with allowing Mr Price the advantage of the five years' scheme. It was a scheme by which Nelson Bros, offered to growers of Southland the highest price we were giving, provided that they guaranteed to give the whole of the output of their sheep to Nelson Bros, for that period of time—five years. Mr Price became aware of the existence of this agreement, and asked that we should use our influence with Nelson Bros to allow him to avail himself of it. I did so, and after some negotiation Mr Price accepted the terms of the contract. He at first refused them, and finally accepted them. On announcing it to Mr Reid, he replied that that scheme was for growers of stock only and not for dealers. He also asked it Mr Price was a dealer, to which I replied that he was, strictly speaking, a dealer, although an owner of stock on leasehold. Mr Reid refused to grant the concession.

Mr Bell asked if his learned friend had done with this matter of price?

Sir Robert: Yes.

Mr Bell desired to know what the evidence had been adduced for?

His Honor: If the matter stops here the evidence might as well not have been adduced.

Mr Bell: That is what I meant.

Sir Robert Stout said he would show what bearing it had on the case.

His Honor said he could not see what bearing it had.

Mr Bell said that was what he was objecting to. He did not know how many matters his friend was going to adduce in the same way. One did not know where there was to be an end of the evidence if matters of this kind were to be allowed.

Sir Robert Stout said he had a right to look at the whole dealings of the parties.

Mr Bell said his objection was this: that evidence as to acts done by Nelson or his agents in relation to Mr Ward or Mr Ward's works was wholly irrelevant to prove a breach of contract not to be concerned in the use of frozen works if the output agreement itself was not a breach.

His Honor took a note of the objection.

Sir Robert Stout: Nelson Bros, have never asked your consent to any arrangement with Mr Ward?

Witness: They did not.

Did they ever furnish you with copies of the contracts?—No.

Did you ever see them?—I [unclear: once] document in Mr Reid's hand which [unclear: he] me was a contract with Mr Ward.

Did you read it?—I read one or [unclear: two] in it—that is, the words referring to the I never saw it in full until I saw it pleadings.

Were you or your directors [unclear: ever] quainted with these terms in it as to [unclear: the]—No.

You heard, I believe, that Mr [unclear: Ward] get 2½ per cent, for freight?—Yes.

And you applied for that on behalf [unclear: of] company?—Yes, and were refused.

In carrying out your contract did you ask for any concessions?—No concessions any importance. I once or twice asked allowed to send in a hundred or two [unclear: of] sheep, and on one occasion I [unclear: asked] allowed to consign a few heavy sheep, received permission to do so.

Did you not ask some concession about weights being taken?—I once [unclear: asked] allowed to consign at 1 per cent, [unclear: for] weights, but was refused.

In reply to further questions witness I have seen Mr Ward's contract since, know how his contract was carried [unclear: out.] at the contract, I can say that Mr had the best of the contract. [unclear: The] output was increasing till Mr Ward's were started. The capacity of the couple works in 1893 was about 1100 a day. We have very nearly frozen all the sheep that actually frozen in Southland in that year we had not met with Mr [unclear: Ward's] our profits in 1893 would have [unclear: been] more than in 1891. The [unclear: Mataura] very suitable for freezing. We had power, and made a large saving in coal averaged a profit of nearly 1s 3d pel prior to Mr Ward's works g[unclear: being] Mr Ward bought live sheep at so [unclear: much] from the owners.

Mr Bell asked how that evidence relevant.

Sir Robert Stout said his [unclear: contention] anything that Nelson Bros, [unclear: did to] the Southland Company's output [unclear: was a] of contract.

Witness proceeding with his evidence In 1893, about 275,000 sheep [unclear: were] from Southland. The shares of [unclear: the] fell from 1892 to 1893 from £4 to £1 15s was the £4 shares. The £3 shares fell into same proportion.

Cross-examined: The loss which the land Company suffered was suffered in sequence of the way in which Mr Ward enabled to carry on his [unclear: company by] Brothers. Mr Reid and Mr [unclear: Nelson] loyally with me up to a certain point in page 27 [unclear: Mr Ward] from starting works at the a Beach.

Mr Bell: Did Mr Reid press upon the tors the necessity of starting works at laura?

Witness: Yes; the correspondence shows it.

[unclear: it not] in consequence of Mr Reid's representations to the directors that the laura site was acquired and the [unclear: Mataura] founded?—I cannot say that it [unclear: was ab] in consequence thereof. I have not [unclear: the] doubt that Mr Reid's [unclear: representations] with the directors.

[unclear: not that] just at the time when it [unclear: was] that Mr Ward was about to start [unclear: in]?—Certainly.

[unclear: you suggest] that Mr Ward started his with Mr Nelson's money, or assisted by Nelson's support in any way?—I [unclear: make no] of the kind.

You have been giving a number of answers to Robert that led my mind to make [unclear: that]. Did you make any suggestion of kind—that Mr Ward founded his works Mr Nelson's money or with Mr [unclear: Nelson's]?—I did not.

Were you party to the interrogatories [unclear: that] administered to Mr Nelson?—No.

[unclear: you] consulted about those interrogations—No. So far as I remember I [unclear: certainly] not.

Were you consulted by either the directors Mr Cuningham Smith with regard to [unclear: the] which were to be put to Mr Nelson interrogatory?—I don't believe I was.

[unclear: by] the directors?—Most certainly not quite possible that Mr Smith and I [unclear: con] over the matter, but I was not a party [unclear: to] the interrogatories.

[unclear: you] suggest to Mr Smith or the directors Mr Nelson was practically the owner of works—that it was his money with which had been erected?—No.

[unclear: Mr Cuningham] Smith make any [unclear: state] the point I am now speaking about? be tell you or ask you whether it [unclear: was] Bros', money that built the [unclear: Ocean] works?—Yes; Mr Smith holds that Union.

Did he tell you so?—Yes; he told me he might so.

Sir Robert Stout: What Mr [unclear: Cuningham] says cannot bind us. What is [unclear: the]

Mr Bell: It is with regard to this action.

Mr Robert Stout: How does it affect us?

Mr Bell: It is a very important question [unclear: to]. I want to get Mr Smith's correspondence isolation to this action. Any decision [unclear: given] your Honor upon this question would govern my right to get out how this action has been started.

Sir Robert Stout: What has that got to do with this question?

Mr Bell: I am entitled to ask this question, and I am prepared with an authority on that point.

His Honor: I think the question is admissible. Mr Smith was general manager of the company at the time of the action at law, and the question is not as to the statement made by Mr Smith with respect to the contract, but with respect to bringing the action.

Sir Robert Stout: Will your Honor kindly take a note of my objection?

His Honor intimated that he would.

Mr Bell (to witness): Did Mr Cuningham Smith make any statement to you with refer-ence to the action?

Witness: Yes; he had several conversations with me with reference to the action.

What did he say with regard to Nelson's connection with Mr Ward?—He said he did not know absolutely whether they were interested or not, but from an inspection of their balance-sheets he suspected that they were financially interested.

At what period?—During the term of our contract.

Did he say anything more?—Very likely; but I cannot remember the whole conversation.

The opposition came into existence notwithstanding the strenuous opposition of yourself, Mr Reid, and Nelson?—It came into existence as you say.

Then the opposition was carried on by Ward. Was it not the existence of the opposition works that led to the competition from which your company suffered?—That is to say, if they had not been there we should not have suffered that loss.

And if Nelson had nothing to do with the purchase of the output you would have suffered' in the same way?—That does not follow.

Don't you think it would have followed?—I most distinctly think it would not have followed.

Did you ever consider this question: Whether if at that time Nelson did not purchase Ward's output, Ward would not have' been able to give much better terms to the grower than he was able to give under Nelson's contract?—He would not.

Is it not a fact that you and the directors of the company pressed upon Mr Ward the desirability of entering into a contract with Mr Ward for the output?—I say most distinctly they did not.

Are you clear that you did not in any way suggest it?—Most distinctly.

Did you not refer to the existence of a contract frequently in your correspondence?—Yes.

page 28

Did it ever enter into your mind while you were secretary of the company that you could complain of the output agreement?—No; I don't think it did.

Did you ever hear from any of the directors any suggestion of an objection to the existence of that output contract?—I think I did. I can't exactly recall the precise time, but at one of the meetings I believe that point was raised and discussed.

After such a discussion, if the board had come to a resolution that the contract was objectionable, would you have written a letter attempting to lead Nelson Bros, to make a contract?—They did not come to any absolute conclusion in the matter. I was secretary, and my business was to carry out instructions from the directors. I had no right to interfere with matters of policy. I simply had to attend to details of management. Under these circumstances, I certainly would not have written unless I had been instructed.

May we not take it that any letters written were authorised by the company?—In matters of policy, certainly.

Mr Bell asked if the following letter, dated 23rd May 1892 was written by witness as secretary to Nelson Bros. (Limited):—

We are in receipt of yours of the 18th inst., and regret to find that you are not prepared to meet us even in regard to the request contained in our letter of 13th inst. seeing that you had previously declined to allow us any space on the Mamari. The reason that we asked to be paid for 6000 odd carcases waiting shipment when you sent the Mamari into the Bluff was very plain—namely, that for the second time within a month or two you had made shipping arrangements favouring Mr Ward at our expense. We don't ask any favours at Mr Ward's expense, and we have a right to expect to be treated with precisely as such consideration as you extend to him, and from our previous relations with your firm, which were of the most satisfactory nature, we more than regret being forced in self-defence to write in such a strain.

We cannot allow the last clause in your letter under reply to pass unnoticed. It is not the arrangement for carrying our meat this season that we have complained of, but the fact that you have granted facilities to Mr Ward that you have denied to ourselves

Witness replied to the question in the affirmative.

Mr Bell: In the letter that you wrote on the 6th of June 1892, addressed to Nelson Bros. (Limited), and signed as secretary of the company, you used these words:

We have been informed on excellent authority that Mr J. G. Ward received a rebate or return commission on the freight of all meat frozen by him and shipped by the Tyser Line steamers. If such is the case as we believe it to be, we must ask to be placed on exactly the same footing as Mr Ward in this respect. We undent and that you have purchased Mr Ward's output on the same terms as our own—namely, f.o.b. steamer in Bluff Harbour, As therefore the [unclear: freight] able by you and not by Mr Ward or ourselves must apply to you to place us on the [unclear: same] as Mr Ward in this matter.

That is not only admitting the right Nelson Bros, to make a contract, [unclear: but] founds a claim upon the existence [unclear: of a]

Witness: I don't admit their right to a contract at all.

Mr Bell: On the 11th of June you wrote:—

I would also beg leave to point out the have been definitely assured that Mr Ward sold his output (f.o.b. Bluff) to your good at the same price and on the same [unclear: terms] selves. Such being the case, the shipment not his, as you put it, but yours, and it them follows that he receives commission from on meat sold by him to you f.o.b. and shipped ourselves, or, in other words, on your shipped So you had been definitely assured by him.

Witness: If I had been informed definitely should have used the expression [unclear: "you] admitted."

Mr Bell: On the 15th August 1892 you to Nelson Bros.:

We are advised that Mr Ward recently a to freeze sheep for one of our clients, and him to dispose of them either in [unclear: the] elsewhere as he chose. We are also advised he has not only offered but has actually beef for one of our clients on the [unclear: distinct] standing that the latter is [unclear: to be] dispose of it anywhere he thinks fit. [unclear: We] glad to know if Mr Ward's contract with permits him to do so, and if not we have request that you will take such steps [unclear: is] necessary to put a stop to the practice.

Now, is this not the case: that [unclear: you a] of your board recognise the existence [unclear: of] tract between Ward and Nelson Bros, required Nelson Bros, to coerce Mr Ward the company had the power to do so under particular contract?—We admit that we heard there is a contract.

You say we shall be glad to [unclear: know] Ward's contract permits him to do [unclear: so,] you write that by instruction of the be really cannot tell, but I think it most that I did.

Then you wrote officially [unclear: requiring] Bros, in August 1892 to put in force the of the contract with Ward in [unclear: the] which you required them to [unclear: exercise] simply wrote that letter. You can [unclear: make] you like of it.

I ask you whether you did not know [unclear: of] existence of a contract between Ward Nelsons for the purchase of the output did not know absolutely of its existence wise those letters never would have couched in the language in which they have written.

You knew that a contract existed knew that it was stated that a [unclear: contract] page 29 [unclear: His] Honor: I understand that Mr Cuthbertson [unclear: knew] that there was a contract, but did not [unclear: know] its exact terms.

[unclear: Witness:] That is so, your Honor.

[unclear: Mr] Bell said that on the 5th of May 1892 the [unclear: witness] wrote the following letter:—

[unclear: It] is admitted that you have bought the output [unclear: Mr] Ward's works as well as all our own, and [unclear: our] agreement he is not entitled to receive [unclear: terms] than ourselves. Our present contends [unclear: is] that the practical effect of Mr Ward [unclear: ing] and shipping inferior sheep is to place [unclear: in] a better position than we occupy, and we [unclear: is] that in common fairness we are entitled to [unclear: that] you should take steps to see that a [unclear: ret] standard of quality is applied to both.

[unclear: is] your admission.

[unclear: Witness]: I don't know that it is. It is our [unclear: r.]

[unclear: Why] do you say it is not your admission?

[unclear: It] is not I who admits it. The whole force [unclear: the] paragraph leads one to understand that. [unclear: is] not my admission but an admission that [unclear: is] been made to the company or to myself.

[unclear: Mr.] Bell then cross-examined the witness at [unclear: a] length further on the same point, and [unclear: witness] most emphatically in the course of the [unclear: in]-examination that in using the words in [unclear: th] letter there was no admission on his part [unclear: is] the contract existed.

[unclear: Mr] Bell: You assume its existence, then.

[unclear: a] tell Mr Reid on the 9th of May that such [unclear: contract] did exist?

[unclear: Witness]: The admission came from an out-[unclear: a] source.

[unclear: Do] you remember if you had any difficulty [unclear: a] Ocean Beach works started with [unclear: rd] to freights?—As a rule we had not. In [unclear: a] months of March and April, which were [unclear: i] busiest months of the year, there might [unclear: th] been a little difficulty, but Nelson Bros. [unclear: a] always most willing to meet us in every [unclear: ble] way they could.

[unclear: a] was there any difference afterwards?—[unclear: t] there was a distinct alteration in the [unclear: bl] relations.

[unclear: Don't] you think there was a distinct altera [unclear: ing] in the tone of your directors towards, [unclear: b] before there was an alteration in the [unclear: a] of Nelson Bros.? Would you be very much [unclear: ished] to find it was that way?—I should [unclear: ve] very much astonished.

[unclear: Mr] Bell then proceeded to examine the wit[unclear: ness] with regard to the losses made by the [unclear: Southland] Company, and asked why was it the [unclear: ws] of the loss of £30,000 in three years was [unclear: t] mentioned in the report to the shareholders [unclear: i] in the balance sheet.

[unclear: Witness] said he could not give any satis [unclear: ry] reason why it was not.

[unclear: Mr] Bell: Why did they give a series of [unclear: cs] in the report which were not true. If [unclear: as] was attributable to Nelson Bros., why did other reasons appear in the balance sheet of 1893?

Witness: I say those reasons are true. They would not have existed but for the manner in which the contract with Mr Ward was carried out.

The witness was under cross-examination when the the court rose at 6 o'clock.

The court adjourned till 10.30 next morning.