Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  


    mail icontwitter iconBlogspot iconrss icon

The Pamphlet Collection of Sir Robert Stout: Volume 73

Thursday, November 21

Thursday, November 21.

On the court resuming,

Mr Bell said there was a misprint [unclear: in] report of his Honor's judgment in the [unclear: men] paper which might mislead the [unclear: jury.] Honor was made to say that it could [unclear: be] saw that Nelsons gave the commission of 2 [unclear: ½] per cent, to Mr Ward. It should have [unclear: been]"? could be said," &c.

His Honor: What I said was whether [unclear: or] the commission was given by Nelson [unclear: Bros]. by Mr Reid, as agent for the Tyser line, [unclear: it] was really immaterial if the sale of the [unclear: output] not a breach of the covenant

Mr Bell, resuming his address to the [unclear: pu] said: I must ask your attention to the [unclear: correspondence] which I am forced to read to [unclear: you] to morning. Though it may appear to [unclear: you] part of it might be omitted and your [unclear: a] saved, I appeal to you to give me your [unclear: attention] because you will remember that my [unclear: le] friend, quite naturally, summarised the [unclear: correspondence] and made selections from it [unclear: a] naturally, and not at all unfairly, for [unclear: the] pose of maintaining the case of [unclear: prejudice] he submitted to you. If you [unclear: remember,] learned friend did not rely upon this [unclear: c] contract as a breach of the covenant [unclear: with] plaintiffs. What he wanted to bring [unclear: before] were the other matters, such as the [unclear: comm] of 2½ per cent. and the shipping [unclear: arrangement] which he relied upon as showing that [unclear: Nelson] Co. had an actual interest in Ward's [unclear: works] that they had unfairly assisted Mr [unclear: Ward] you are of course aware by this time [unclear: that] clients find themselves in this [unclear: unfor] position for the moment, because for the [unclear: ment] you and I are bound to accept the [unclear: positive] in making the agreement with Mr Ward for [unclear: the] page 43 [unclear: purchase] of the output Nelson Bros. did [unclear: commit] a technical breach of the agreement they [unclear: had] made previously with the Southland [unclear: Company]. I say unfortunate, because you will [unclear: remember] that nobody ever thought until [unclear: yesterday] that it was a breach of contract.

Sir R. Stout: Pardon me.

Mr Bell: I do not know, of course, what my [unclear: learned] friend thought before, and I am not [unclear: going] to ask you to assume that my [unclear: learned] did not think so; but what I want [unclear: you] to bear in mind is this, that from first to [unclear: a] the Southland Company never pretended [unclear: for] a single moment that Nelson and Co. were [unclear: prevented] by anything from entering into the [unclear: output] agreement with Mr Ward. On the [unclear: contrary], they admitted that to be the position. [unclear: They] never complained of it, and they continued their relations with Nelson, and actually [unclear: claimed] that Mr Nelson should take a certain [unclear: course] with regard to Mr Ward in respect of [unclear: this] very output contract; relying upon their [unclear: rights] under the seventh clause of the contract. [unclear: It] appears, therefore, that the Southland [unclear: Company] was equally wrong with the defendants in [unclear: the] construction of the contract. Technically [unclear: it] seems we committed a breach of contract, [unclear: and] the Southland Company find they have a [unclear: technical] breach upon which they can rely. But [unclear: you] will remember that this action was launched [unclear: upon] the suggestion of dishonourable conduct on [unclear: the] part of the company which I represent. [unclear: They] were charged with dishonourable conduct. [unclear: They] were charged with secretly having a [unclear: direct] financial interest in Mr Ward's works. It [unclear: was] charged that Mr Ward's finance had been [unclear: found] by Nelson, and that practically the works [unclear: had] been erected by their money and the [unclear: business] carried on by their money. [unclear: There] was any foundation for that suggestion; [unclear: but] you will observe that the statement [unclear: of] was founded upon that. In the [unclear: statement] of claim the plaintiffs allege—they did [unclear: set] out the whole agreement, but they set out [unclear: a] particular clause of the agreement which [unclear: had] been made between the Southland Company [unclear: and] Nelson Bros. in these words:—"That [unclear: Nelson] Bros. (Limited) shall not during the [unclear: d] term of three years erect or assist in the [unclear: tion] or use of freezing works on [unclear: d] or water at the Bluff or within [unclear: s] limits of the Southland or Wallace [unclear: ties] without making special arrangements [unclear: with] the company, nor do anything of the like [unclear: ure] which may in any way interfere with or [unclear: rict] the output of the business, trade, or [unclear: its] of the company." They set out that and [unclear: when] they came to allege what we had done [unclear: they] said we had erected in the year 1891—[unclear: remember] the output contract was made in [unclear: 1892]—in the year 1891 the Ocean Beach [unclear: ing] Works. They say that in 1891 the [unclear: dants] erected or assisted and were [unclear: concerned] and interested in the erection of certain [unclear: freezing] works at the Bluff, in the County of Southland, known as the Ocean Beach Freezing Works, and were thenceforth, during the remainder of the said term of three years, concerned and interested in the use of the freezing works. Their allegation, you will observe, therefore, was this—an accusation of dishonourable conduct on the part of my clients. Now, it is of very great importance to my case, and I am sure you will feel it to be of very great importance to the questions which you have to consider, to ascertain whether Nelson Bros. were guilty of dishonourable conduct in this matter. That for the moment they find, and I may even assume that finally they will find, themselves to have committed a technical breach of agreement by entering into the output contract, yet you will remember that the output contract was entered into with the full assent of the Southland Company, and that at the time we entered into it it was tor the benefit of the Southland Company, prices being high, that such a contract should be made; otherwise Mr Ward would be able to drive them out of the market, and that from first to last they never complained that Nelsons could not in fairness and honour make that contract with Ward. On the contrary, from first to last they admitted that such contract existed. The Southland Company claimed that they were entitled to equal benefits with Mr Ward, and to be placed in the same position, and insisted from time to time that Nelson Bros. should take certain action under their contract with Mr Ward for the purchase of his output, in order to put the Southland Company on the same basis as Mr Ward. If it did appear that the Southland Company had received worse terms from Nelson Bros. than the Nelson Bros. granted to Mr Ward, it might be a matter which would affect your judgment, and accordingly ray learned friend, Sir R. Stout, has introduced this evidence and made a suggestion for the purpose of endeavouring to convince you that we did more than act fairly as between the Southland Company and Mr Ward—that, in fact, Mr Nelson, the managing director of the company in New Zealand, through Mr Reid, the agent for the defendant company, favoured Mr Ward at the expense of the Southland Company. It will therefore be my duty to prove to you, as it happens that I can prove quite conclusively, that so far from the Southland Company having had the worst of the two contracts, they had a long way the best of it. That can be proved in several ways. You must bear in mind that Mr Ward, through Mr Fisher, vigorously complained of the terms which he had as not putting him upon a level basis with the Southland Company. And he had the right to complain in that respect. As appears, and as you know, a concession was made to him because they were bound under the contract with him to put him upon no worse terms than the Southland Company was page 44 placed, and you remember the Southland Company over and over again say that is all they want: that they want no advantage, only to be placed on the same terms Now Mr Ward had a real grievance as it turns out, and if this action had been brought by Mr Ward, founded upon the contract under which they are bound to place him on the same terms as the Southland Company——

Sir R. Stout: There is no such clause.

Mr Bell: My friend says there is no such clause. I will proceed to correct him. In the contract with Mr Ward there is this clause: "In all other respects save those mentioned in this agreement the said Joseph George Ward is to be placed on the same footing and to have the same terms as the Southland Frozen Meat and Export Company (Limited)."

Sir R. Stout: Exactly.

Mr Bell: I shall endeavour to keep entirely within what the evidence proves. I am a stranger here, and my learned friend is known to you all, but I do hope you will not believe I would misrepresent any matter to you.

Sir R Stout: I am not suggesting that; but you may be mistaken.

Mr Bell: I have a very difficult duty to perform, and I am endeavouring to perform it in such a way as that I shall not strain a single point of the evidence, and that I may without waste of your time bring the case before you as clearly as possible, and unless it is absolutely necessary I hope my learned friend will be able to refrain from interruptions. What I was saying was this, that if Mr Ward had brought an action instead of the present plaintiff, we should have had a more difficult case, we should have been forced to admit that we had not put him upon a level with the Southland Frozen Meat Company. We should have been able to show, as the correspondence itself shows, that we legally endeavoured to do so. That is to say, Mr Nelson gave instructions to put him alongside but to give him no advantage, nor the Southland Company any advantage, but by reason of the contract he was placed originally in a worse position, and although we endeavoured to place him alongside the Southland Frozen Meat Company we were not able to do so. As I say that can be proved in several ways, and first of all by a comparison of the contracts. Indeed as you are aware the plaintiffs' had to prove this 2½ per cent, commission and the shipping arrangements in order to make even the semblance of a case that Mr Ward got better terms. I say that what I have asserted can be proved by a comparison of the prices. The way to test it is this: What did Nelson pay Ward for meat and what did they pay the Southland Company? We can take the whole of the meat; we will lay before you the accounts and we will show you what meat was bought from Mr Ward and what from the Southland Company. He will show you the prices we paid, and you will [unclear: see] we paid the Southland and other [unclear: companies] every shipment, more than we paid to Mr [unclear: W] That, I think, will be conclusive [unclear: evidenced] to that, though we were endeavouring to [unclear: th] duty by both parties, it happens that the [unclear: per] plaintiff has got the best of the balance, [unclear: w] we endeavoured to hold fairly. Again I [unclear: say] were holding that balance with the [unclear: eq] assent of the Southland Company, [unclear: though] law it appears that assent is not [unclear: sufficient] amount to a consent by them, so as to [unclear: p] us from liability for having entered into [unclear: the] put contract with Ward. Before I [unclear: end] to show you what was the position at [unclear: the] and before I enter upon the [unclear: correspondence] would point out to you that you have [unclear: to] whether you are going to accept the [unclear: sugg] made by Sir R. Stout, that if we had not [unclear: emt] into a contract with Mr Ward, Mr [unclear: Ward] would have collapsed, and there would have [unclear: been] monopoly secured to the Southland [unclear: Company]. Now you will doubtless have to assume [unclear: that] order to find for the plaintiffs, for I [unclear: feel] dent the directions to you will be that damage does not necessarily follow [unclear: from] the put contract. If you think that but [unclear: for] making of the output contract, there [unclear: m] have been a collapse of Mr [unclear: Ward's] in ness then that may be. I am admitting that it is, but I am [unclear: assuming] a moment that may be a proper for your consideration, and you are asked [unclear: t] that because the market happened to [unclear: fall] wards that Mr Ward would have thrown [unclear: up] sponge, and there would have been [unclear: no] of the works, notwithstanding [unclear: that] engines were on their way and that the [unclear: i] to hold them were actually erected. [unclear: First] this was a fight in Southland, and you can [unclear: j] from the way in which it has been [unclear: conduct] whether it is at all likely in this [unclear: Southland] test that Mr Ward would have thrown [unclear: up] sponge. But you have another matter [unclear: to] What happened at the end [unclear: of] Prices were low then, and the [unclear: Southland] Company were absolutely at the end of their [unclear: for] they were absolutely insolvent; they [unclear: could] nothing. What then happened? In [unclear: order] keep them going, and to prevent the becoming a Tyser port again, the other shipping companies came in and [unclear: each] £10,000 into the Southland Company's [unclear: was] Very well; now you will be able to [unclear: judge] that. It would be idle for my learned [unclear: friend] contend that the opposition [unclear: would] collapsed. The shipping companies, as [unclear: I] had said, in the end of 1893, with a [unclear: discu] market, came in and each put in [unclear: £10,000] order to keep the Southland Company, [unclear: a] must have collapsed, upon its feet, and [unclear: to] the company to compete in a [unclear: disastrous] Very well; you have to consider [unclear: wh] it is at all probable that these [unclear: companies] which step in immediately [unclear: to] page 45 [unclear: the] collapse of the Southland Company would [unclear: not] have stepped in to prevent the collapse of [unclear: Ward] if it had been necessary. You are asked [unclear: to] assume that Mr Ward had no resource, and [unclear: no] finance to begin with. There are other [unclear: considerations] of the same kind, of which you will [unclear: be] able to judge. When you have to come to [unclear: a] judgment upon the point which is now before [unclear: you] will be able to discount—it seems to [unclear: the] facts compel you to discount—the [unclear: statements] made by Sir R. Stout. He calculates the [unclear: sheep] by millions, and says that but for [unclear: the] contract they would have been able to [unclear: make] certain profits. Now, I ask you to bring [unclear: your] minds to the consideration of what were [unclear: the] circumstances at the time when the [unclear: contract] of 1891 was entered into. The circumstances are these: The defendant [unclear: company], Nelson Bros. (Limited), is a London company, [unclear: the] principal branch of which is at Napier, and [unclear: it] has freezing works in one or two other places. [unclear: Besides] carrying on the business of freezing it [unclear: purchased] the output of frozen meat from other freezing works. You have had before [unclear: you] the commercial result of that. Nelson Bros. (Limited) took [unclear: the] risk of the London market—the chance of profit and [unclear: the] risk of loss. Any freezing company [unclear: which] happened to sell its output to Nelson [unclear: ained] this benefit: that it knew precisely, [unclear: subject] to any any fluctuations in the tallow and [unclear: pelt] market, what it could afford to pay for the [unclear: sheep], and where, as in the case of the South[unclear: land] Company, the grower got back the skins, there was really no fluctuation, and the comp[unclear: any] to Nelson Bros. knew precisely [unclear: what] they could afford to give the grower. [unclear: As] it happened, and as everybody practically is [unclear: aware], so far from Nelsons having had the [unclear: advantage] they had a considerable disadvantage. [unclear: Of] course they might have had the advantage; [unclear: they] could not pretend, and never had [unclear: preded] that they were public benefactors. [unclear: All] that kind of thing is humbug. They were a company naturally doing the best they could [unclear: for] themselves, but interested in the welfare of [unclear: the] colony in which they have so much money [unclear: invested], and interested in doing well for the [unclear: growers] who provided them with material. They were, of course, interested in making a [unclear: profit] for themselves, but they were interested [unclear: above] all, as I think every public company is, [unclear: and] notwithstanding what is said about banks [unclear: and] companies my experience of them is that [unclear: they] are, interested above all in trying honestly [unclear: to] perform their contracts. What other [unclear: interts] officers of a company—managers, [unclear: directors], and so forth—have other than to their contracts?—and as a rule you will [unclear: find] it. That is my experience. We are [unclear: accustomed] to hear public companies spoken [unclear: of]—I think it was my learned friend who began a famous address to the jury with—"Gentle[unclear: men] of the jury, this is not an ordinary case: [unclear: this] is a case against a bank !"

Sir R. Stout: No.

Mr Bell: My learned friend has the credit of it.

Sir R. Stout: I am afraid my friend is drawing on his imagination, as others have done.

Mr Bell: It is not my imagination. The story is told against my learned friend.

Sir R. Stout: I never heard of it before.

Mr Bell: If I am wronging my learned friend I regret it, but you must know that this kind of thing is always suggested: this is a public company, and—

Sir R. Stout: We are a public company.

Mr Bell: Yes, the Southland Frozen Meat Company is a public company too, and I think you will observe, gentlemen, that nothing has been suggested to the discredit of those managing that company. As I have said, the plaintiff company find themselves astonished at the wonderful chance which has fallen to them—namely, that they never suspected there had been any breach; that they themselves always acted upon the lines that the whole thing was proper and fair, yet they find themselves suddenly in the Supreme Court with a breach. The company for whom I am speaking I think I shall be able to establish to your satisfaction has endeavoured to perform its duties honestly, loyally, and consistently. I do not want to say anything more about that, I prefer, if the correspondence speaks for itself as I apprehend it does, to leave it to the jury, who after all have it to consider. Undoubtedly if the jury thought that we had behaved dishonestly or unfairly to the plaintiff company, if we have deliberately deceived them and been parties to a swindle upon them that would naturally affect any question of damage that is submitted to you. It has been strenuously suggested that Nelson Bros.' firm is identical with the Tyser line of steamers. That point, as you are aware, has been insisted upon for the purpose of alleging that Nelsons paid Mr Ward the 2½ per cent, commission on freight. I must state to you the position as between Nelsons and the Tyser line, because it is of importance with regard to that question of commission. Messrs Nelson Bros. are no more identified with the Tyser line than I am. Their position in regard to the Tyser line was this: The Tyser line of steamers was introduced to this country by Nelson Bros.—that is to say, that the steamers came here to take Nelsons' produce, just as any other line of steamers might have done. Later on, as you may be aware, some shares were taken up by Nelsons in the Tyser Company, just as Nelsons bought shares in the Southland Frozen Meat Company; and, as we shall see later on, Nelsons had no control over the Tyser line. The connection between them arose in this way: Mr Dobson, the manager of the company, who had nothing to do with Nelson Bros, at Napier, was agent tor the Tyser line. Mr Dobson made the page 46 arrangements for the company, and naturally Mr Nelson, being by far the largest shipper and being a personal friend, Mr Dobson and he conferred together about the agencies for the Tyser line. There was no relation of any sort or kind except that they were personal friends, and their business relations being close and that they met together frequently. But it happened that Mr J. B. Reid was the agent for both companies at Dunedin, and it was because Mr Reid was agent for both companies in Dunedin that this error in the minds of my learned friend and his clients has arisen. Mr J. B. Reid received commission from the Tyser Company, and he also received remuneration from Nelson Bros. (Limited); but the remuneration Mr Reid received from the Tyser Company he put in his own pocket; it did not belong to Nelson and Co. Nelson and Co. had nothing to do with it. Now Mr Ward was, as you are aware, the head of the Ward Farmers' Association in Southland. He was a very large importer and a very large exporter, or rather his association was, quite irrespective of this frozen meat business. Mr Carswell was the agent at the Bluff for the Tyser line, and he received a commission upon all meat shipped of 5 per cent. from the Tyser Company. That was the way he was remunerated. As you have heard from Mr Nichol, Mr Carswell was a director of the Southland Frozen Meat Company, and in that capacity had something to do with the meat going by the Tyser line. Nevertheless the Southland Company never claimed from him, nor could they claim, the 5 per cent. which he got for the meat of the Southland Company which went through the Tyser line. Now of that 5 percent. Mr Reid, who was agent at Dunedin, got 2½ per cent, from Mr Carswell on the meat shipped by the Tyser line at the Bluff, that being the meat at that time of the Southland Company. Mr Reid received that 2½ per cent, not as agent for Nelsons, but as agent for the Tyser Company, and, as I told you, it went into his own pocket. Nor was any interest Mr Reid had in the shipping of the Southland Company's meat by the Tyser steamers any concern of Nelsons whatever. Mr Carswell did it, and shared the commission with Mr Reid. But it came to be of importance to Mr Dobson that Mr Ward, the head of the Ward Farmers' Association, should be connected with the Tyser line, and that you will see was actually before Ward's Frozen Meat Company started. After conferring with Mr Dobson, Mr Reid, as one of the inducements to Mr Ward not to start competition—for you will see shortly, if you are not aware of it already, that Mr Reid and Mr Nelson loyally co-operated with the Southland Company in endeavouring to prevent Mr Ward starting and one of the inducements Mr Reid was able to offer was this: He said to Mr Ward, "I can get you the agency with Carswell, of the Tyser line, at the Bluff?"

Sir R. Stout: When?

Mr Bell: I will read it in a moment will find that offer was made to Mr [unclear: W] one of the inducements to prevent him [unclear: s] —that Mr Ward was to be appointed [unclear: against] the Tyser line with Mr Carswell at the [unclear: b] and in that capacity Mr Ward was to [unclear: get] 2½ per cent. from Mr Carswell which [unclear: pre] Mr Reid had got as agent for the Tyser Nelsons never got it; it was no [unclear: concession] them. Mr Reid had the 2½ per cent., [unclear: and] sequently Mr Ward got it. But he [unclear: did] get it from Nelsons. Though he got [unclear: 2] cent. on his own meat, Nelsons had [unclear: no] to offer that at all, but Mr Reid, [unclear: who] to be the agent of Nelson Bros. and [unclear: the] for the Tyser line, appointed Mr [unclear: Ward] agent with Mr Carswell at the Bluff, and that capacity Mr Ward got the 2½ [unclear: per] commission. There never was any [unclear: hocus] about it at all. I wish my learned friend

Sir Robert Stout: I never said a word.

His Honor: I did not notice anything.

Mr Hosking: It was only one of Sir Robe laughs.

Sir Robert: I have the right to [unclear: laugh] please, but I did not do so.

Mr Bell: It has an effect to a [unclear: certain] in putting me out, and I am sure Sir [unclear: r] Stout did not want to put me out. It [unclear: has] a general effect and brings into court [unclear: the] he has brought against Mr Seddon [unclear: and] Ward in another place, and the fact [unclear: is] inclined to feel it more now than I did [unclear: in] place to which I had referred. I hope [unclear: it] not seem so ridiculous to you, [unclear: gentlemen] does to Sir Robert Stout. I repeat [unclear: it] and emphatically, because I know it [unclear: is] that there was no hocus-pocus about matter at all. There is no pretence [unclear: for] that Nelsons got, or could have got, [unclear: from] the commission. They did not get [unclear: it.] paid it to Mr Carswell and he divided [unclear: it] Mr Reid, and subsequently with [unclear: Mr] when Mr Ward became the agent for [unclear: the] Company. As I have said, it was not only frozen meat; the Tyser Company [unclear: were] to have the influence of Mr Ward. [unclear: Mr.] was a large shipper and a large [unclear: importer] respect to the Ward Association, [unclear: quite] from this; and further, Mr Ward had the pleasant habit of bringing in outside shipped and you will remember at that time [unclear: the] Company were very anxious to make [unclear: the] the Tyser port, and they not only [unclear: got] business of the Ward Association [unclear: but] Ward on their side, and he was troublesome man to have against the I have devoted some time to that because was made a great deal of by Sir R. [unclear: Stout] it is made a good deal of in the correspondence, which I will come to, by [unclear: the] Company. They insist that they [unclear: should] that 2½ per cent., and Sir R. [unclear: Stout] page 47 [unclear: it] was most unfair that we should give it Mr Ward. We did not give it to Mr Ward: [unclear: a] had nothing to do with giving it to [unclear: Mr]. Mr Reid never consulted Mr Nelson or [unclear: nelson] Bros. (Limited) whether that appoint[unclear: ment] was to be made. Mr Reid made it as for the Tyser Company, and without [unclear: ting] the Nelson Bros. That explains that Nelson Bros. never had anything to do [unclear: t] it, and I hope I shall successfully find [unclear: ter] a complete answer to the whole case [unclear: n] this claim and other claims that the South[unclear: land] Company made. Then, the claim for 2½ [unclear: per] cent. is obviously inconsistent with the [unclear: tion] that we were not entitled to enter [unclear: to] the contract with [unclear: Mr] Ward. If we were entitled to enter into the contract with Ward, what earthly right had they [unclear: claim] the 2½ per cent. No two things can be [unclear: be] absolutely inconsistent. There is no [unclear: thy] pretence on the other side, nor do I [unclear: think] it can be suggested, that there is any [unclear: method] of making the two points consistent. [unclear: It] is an unfortunate thing that the incon[unclear: sistency] of the plaintiff company at the [unclear: present] is not a legal answer to the claim they [unclear: a] making on us; but it is very necessary that should bring out the question of the 2½ per [unclear: cent.] in order to show, first, that we were right [unclear: opposing] the claim for the 2½ per cent., [unclear: and], for the purpose of putting before his [unclear: the] fact that throughout the correspond[unclear: ence] this emphatic claim for 2½ per cent, was [unclear: ded] on the existence of the output contract and that the rights which the Southland [unclear: Com] claimed were in consequence of that out[unclear: let] contract. The next point I want to call [unclear: tion] to—and again I appeal to you to bear [unclear: is] in mind, and without accepting what I say, [unclear: judge] between myself and my learned friend [unclear: in] the clients we represent—is the [unclear: persistent] to give this action a local and political [unclear: ur.]

[unclear: M]R. Stout: Who has done so?

[unclear: Mr] Bell: There has been a persistent sugge[unclear: stion] in some way or other Mr Ward—

[unclear: Sir] R. Stout: Surely my learned friend has not a right to say this.

[unclear: His] Honor: Let Mr Bell say what the suggestion is.

[unclear: Mr] Bell: There has been a persistent suggestion that Mr Ward is in some way interested [unclear: in] action. Letters of Mr Ward have been [unclear: obviously] only for one purpose. At least [unclear: you] will have to judge how it comes that letters [unclear: of] Mr Ward, which have nothing to do with the [unclear: subject]-matter of the action, except as indica[unclear: ting] the negotiations for an agreement, which are [unclear: obviously] not evidence against the defendant [unclear: company]—or which, I submit to your Honor, [unclear: a] not evidence against the defendant [unclear: company]—have been read to you and published [unclear: in] the local papers. I am not going to waste [unclear: your] time or mine by any comment on that. Fair or unfair, it has been done. The point that I am upon, and I am begging your careful attention to it, is that in no way or other is Mr Ward interested in the result of the action.

Sir R. Stout: I never suggested it.

Mr Bell: This action is an action brought against the Nelson Bros. (Limited), and whatever Mr Ward may have said or done would have no bearing prejudicial to my clients, and should have no bearing, and I am appealing to you not to allow it to have any effect on my clients. But to say this positively and emphatically that there has been some suggestion that there is something in the correspondence—the letter is not disclosed, and the only thing I know of that should not have been disclosed has been read by Sir Robert Stout,—and I say that not a single word can be read to you of which any man need be ashamed.

Sir R. Stout: Not the letter of January?

Mr Bell: I'll come to it in a moment. You see, gentlemen, what efforts are going to be still made to bring Mr Ward——

Sir R. Stout: It is not Ward's letter, but Nelson's.

Mr Bell: We'll see what is there a man need be ashamed of. I say that because, while I appeal to you not to allow the prejudices that are introduced into the case by reason of Mr Ward to affect you, I must not be understood as suggesting, admitting, or thinking anything which I ought to condemn, and I appeal to you to leave that matter out of your consideration. I do not advocate Mr Ward in any sense whatever, here or outside, but it is only fair that, when I ask you not to consider against my clients any connection with Mr Ward, I should say there is no reason that I can see why I should make that appeal, but it appears the other side is desirous of making a lever with the jury of Mr Ward's words and Mr Ward's action.

Sir R. Stout: I never attempted to do so. I purposely did not make any reference to Mr Ward or attack his conduct. If my friend does not want it done he had better not press me to do so. I only read the letters—and I stated so in my opening—that were absolutely necessary to show the relations between the Nelsons' and Ward, and I was bound to do so.

Mr Bell: I cannot think that is so, though I accept what my friend has said as absolutely correct, and I admit that disposes of the matter, but I appeal to your minds, gentlemen, whether it did not reach your minds in the same way as mine—namely, that there was an attempt to bring into this matter a political prejudice. As my friend discards it I hope you will accept it from him as I do, and that you will look at it as discarded.

His Honor: I understood Sir Robert Stout, in opening, to say that Mr Ward's conduct was not called in question. That is so obviously.

page 48

Mr Bell: Your Honor has. I think, not grasped the position. Certain letters were read and published—

His Honor: You suggest that they have no bearing on the present action except as a matter of prejudice.

Mr Bell: I do not think I could explain to your Honor without emphasising more than I care to do.

His Honor: Sir Robert Stout has repudiated any attempt to attack Mr Ward, and any such attempt would be entirely relevant. The jury will clearly understand that Mr Ward's conduct is not called in question.

Mr Bell: I hope the jury will understand that I do not say that for the purpose of making a complaint, but I impress upon you the fact that in to sense has there been a verdict against Mr Ward, and the verdict will have to be paid by my clients, and whatever Mr Ward may have said or done they alone are responsible; and I feel bound to add, having said that, because otherwise I might seem to cast an unworthy reflection on Mr Ward, which between both of us might be misunderstood, that I very emphatically assert that so far as I know there is nothing I need, if I were entitled to explain it, have avoided an explanation of. Again I point out to you this, gentlemen, that whether Mr Ward's action was right or wrong in Southland in starting his opposition, we are net responsible for it, and that must be conceded to me in the beginning, for it is quite obvious that Mr Reid and Nelson Bros, loyally attempted to prevent Mr Ward from entering upon that opposition, nor had we any negotiations with him at all until it was absolutely certain that there was going to be an output there immediately, and that somebody would have to have that output, and then, as they say, in the interests of everybody—of the Southland Company as well as of themselves—the Nelson Bros, entered into the agreement, and they made it coincident with the terms of the Southland Company, this being evidence that throughout they were acting in the interests of the Southland Company as well as of themselves; and I do not see how any body of business men can come to any other conclusion than that the Nelson Bros., in entering into the contract, entered into it in the belief that they were acting in the interests of the Southland Company, for the market then was high, and, had Mr Ward not been bound and had the market continued high, the Southland Company's works must have been stopped. They believed—and everybody believed—that the trade that went to Mr Ward would be a continuing trade, that all that trade would come away from the Southland Company, that the Southland Company would, in the event of prices remaining high, lose all their trade, and that the Nelson Bros, would lose their output at the port. But up to the time they entered into the output agreement they had loyally co-operated [unclear: w] Southland Company to prevent Mr [unclear: Wa] starting. That is proved beyond all[unclear: d] the correspondence that is produced, [unclear: and] correspondence is a genuine [unclear: correspond] passing not only between the Southland [unclear: company] and Nelson Bros., but [unclear: correspond] written between the two heads—Mr [unclear: Nel] Tomoana and Mr Reid at Dunedin—[unclear: which] not possibly be otherwise than [unclear: absolutely] and this is another point I [unclear: as] to bear in mind. Mr Nichol and Mr [unclear: C] son both speak of the value to the [unclear: Se] Company of the Mataura site, and [unclear: both] of the advantage that site would have [unclear: given] Southland Company had it not been [unclear: fr] fact that Mr Ward had a firm [unclear: agreement] the Nelsons. How did the Southland [unclear: Company] become possessed of the Mataura site? Mataura site belonged to Nelson [unclear: Both] they had the option of the purchase of [unclear: it] was, as the other side insisted, the key [unclear: of] situation,—and at the time that Mr [unclear: Ward] position was threatened, and in order to [unclear: a] the Southland Company to present a [unclear: bold] to Mr Ward, the Nelsons transferred, [unclear: was] any consideration, without a shilling of [unclear: was] this valuable site to the company, [unclear: This] which according to the other side was [unclear: they] of the situation, was given up by the [unclear: N] to the Southland Company when they [unclear: are] being threatened with the opposition [unclear: of] Ward and for the purpose of enabling [unclear: the] start the Mataura works and of [unclear: preventing] Ward from starting. That act alone, if [unclear: it] a alone, would be sufficient to destroy the [unclear: suggest] that we had acted otherwise than [unclear: with] loyalty to the Southland Company, but [unclear: I] from that to ask you to consider [unclear: some] which I have to say to you about the [unclear: cores] pondence itself. There is a great [unclear: deal] of respondence which has been produced [unclear: asked] and published—there appears to be [unclear: a] exceptional interest taken in it,[unclear: —corresponded] which is marked private and [unclear: confection] dare say you are not aware that, [unclear: when] action of this kind discovery is [unclear: much] person who has to make the affidavit [unclear: be] swear that he has no papers in his [unclear: poem] other than the papers in a certain list, [unclear: and] the list is given the other side is [unclear: entitled] the documents. I ask you to consider [unclear: of] private and confidential correspondence [unclear: is] to be. In the first place, I put it as an [unclear: end] if there was some moderate profanity [unclear: is] might be used with great force here, and [unclear: you] would not be wholly unintelligible [unclear: correspond] ence. Men writing in these terms, [unclear: writing] friendly way to one another, write very [unclear: out] and very frankly, and, for my part, I sure that if my private correspondence [unclear: was] be used against me, I should be very [unclear: sorry] it should fall into the hands of Sir [unclear: Be] Stout and have it read, and very likely I [unclear: was] be subject to actions for libel. The fact [unclear: is] page 49 [unclear: the] writes in a correspondence of that kind the [unclear: truth] in a very frank way. Now my learned [unclear: friend] emphasised this "Dear Jim" corres[unclear: pondence], and I daresay that was assumed to [unclear: the] a most improper way of addressing Mr [unclear: Sid]

Sir R. Stout: I never suggested it. I never [unclear: inted] at it.

Mr Bell: Sir Robert Stout spoke of it in a [unclear: ffing] way, and said "Nelson Bros, never [unclear: te] to 'Dear Jim' again in that way." Mr [unclear: Bell] is a much younger man than Mr Nelson, [unclear: and] is a personal and intimate friend, and there [unclear: in] a great many gentlemen in New Zealand, I [unclear: resay,] who in writing to Mr Reid would be [unclear: address] him by name. He is personally [unclear: popular,] and it is not unusual that he should be [unclear: a] addressed; but that is what Sir Robert Stout [unclear: would] make out, as if he would suggest there was "Dear Joe" correspondence going on also.—(Laughter.)

Sir R. Stout: I never said so.

Mr Bell: The fact is, and this is what I [unclear: riously] press upon you, that you have before [unclear: from] the bare confidence of these gentlemen, [unclear: written] in strict confidence one to another, and ask you if there is anything to be ashamed Mr Nelson was giving the reasons that [unclear: ected] him, and as Sir Robert Stout has [unclear: ggested] that two Cabinet Ministers were [unclear: ced] on the advisory board, it is well to [unclear: erve] that the whole of it is perfectly [unclear: athful,] and it is an observation that anyone [unclear: and] a right to make to his friend and agent. [unclear: All] coarse, all that can be used in a court of [unclear: notice] in an unfair way, but I put it to you [unclear: whether] in the whole of this correspondence. [unclear: Where] you have the bare confidence of both [unclear: rties] laid open, there is anything that any [unclear: an] need be ashamed of. It is obvious that in [unclear: be] way or other the private and confidential respondence which has been produced has [unclear: in] divulged broadcast all over the colony, [unclear: and] when Sir Robert Stout began to read it was better it should be read, having regard [unclear: a] the fact that in some way or other this had [unclear: been] divulged. The correspondence which was [unclear: asked] "Private and confidential" and which [unclear: was] produced under order of the court to the [unclear: for] side had been—I do not say published, [unclear: of] scattered broadcast.

Sir R. Stout: Will you prove that?

Mr Bell: Yes. I should like to ask my [unclear: and] himself.

Sir. Stout: I did not see it all till I came [unclear: own] the case.

Mr Bell: I am not commenting on the taste [unclear: a] the reference to "Dear Jim" and to the use [unclear: of] the correspondence in that way. I am only [unclear: gging] of you to remember that the corres[unclear: pondence] is marked and intended to be private, [unclear: and] it is only by an accident that it comes [unclear: before] you, and you are not to treat it as if [unclear: these] people had been playing ducks and drakes with other people's money in that way. And that correspondence I propose to treat in another way. That correspondence shows that the Nelson Bros, and Mr Reid were most absolutely honest and loyal in the performance of their duty to the Southland Company. This correspondence recognises not only the legal but the honest and loyal duty to preserve the obligation to the Southland Company, and that part of the correspondence I'll ask you to listen to with as much attention as you can give. As you know, the Southland Company had with the Messrs Nelson a contract existing before the year 1891—a contract the term of which had not expired and which was cancelled and replaced by the contract of 1891. That you heard from Mr Nichol, who told you he was anxious that the contract should not be cancelled and that the existing contract should be kept on foot. The price was raised from 2[unclear: 4]d to 2½d, the contract was cancelled, and the Nelsons took a three years' agreement in 1891. Now, I want you to remember that, because I ask you who were the better able to judge than the Nelson Bros, of the chance of a high market. You observe that in order to get a three years' contract with the Southland Company they actually gave 1/8d more per lb. They then—they, the very best judges, the men who purchased practically the greater part of the output of the colony—believed that the market was going to be so good that they voluntarily, in order to get a three years' contract, gave an extra 1/8d for the expiring term of the existing contract. If that was their opinion, emphasised in that way, you will have to consider whether they were not equally honest in their belief, when they entered into the contract with Mr Ward for two years, that the market was going to continue to be high, and that in the interests of everybody they had to make an output agreement with Mr Ward. Remember that the three years' agreement would be ruinous to them in a low market because they were paying a fixed price. That judgment of theirs you have in 1891 as a perfectly disinterested piece of evidence, determining for you, absolutely and conclusively, the fact that in the early part of 1891 the Nelsons believed that for three years there was going to be a high market. Was there anything which would induce them to alter that opinion in February 1892? Were they not in the same position then as in February 1891?—believing that they were going to have a high market and anxious to secure the output. And if the market had continued high the output agreement was the only thing that would have saved the Southland Company. The fact that the market was low is the only thing that enables the Southland Company to say that the output agreement with Mr Ward was a damage to the company. Had the market remained high, so far from the Southland Company having a cause of complaint against page 50 the Nelson Company, the Southland Company would have had to admit that was the only thing that saved them from ruin; and I want to show you that was what the Nelson Bros, honestly held to be the position in 1892 as in 1891. If the market had been high it must have saved the Southland Company, and the evidence of that is the letters of Mr Reid to London, which emphatically disclose the belief of the Nelson Bros, at the time. Mr Reid, in the letters written to his principals, shows conclusively that the opinion of the Nelson Bros, at that time, equally as in 1891, was that if they did not make the agreement the Southland Company's works must stop, and that it was the accident of the London market which has entitled the other side to make even the pretence of a grievance; and subsequently we shall ask for a direction that the accident of the London market is not a damage which the other side can claim for in respect to the output agreement. I'll not trouble you with the correspondence which took place immediately prior to the agreement of 1891, though I shall probably put it in, for I am anxious in what I shall now read to you—I shall endeavour to keep to the correspondence which is in my opinion necessary—that you should have it before you in sequence, in order of date and in order of event, and before I go to it I ask again for your attention, though I am asking for a great deal, I know. I candidly admit that. I assure you I shall do my best not to waste your time, and if you will endeavour to follow the correspondence, as I have it brought before you in sequence, I am satisfied that you will have that which will enable you to judge fairly between us, but if you do not grant me that I am satisfied you will not be able to do your duty fairly, having regard to the fact that excerpts were made from the correspondence, and that it was not brought before you in the sequence of events. Now, the position that the Nelson Bros, took up was a position of persistent and consistent loyalty to the Southland Company. I do not claim credit for it. They were bound to do it in accordance with the contract, but they went beyond that, and not only openly but between themselves they always recognised their honest duty to the Southland Company. They were not in any sense under an obligation to the company. On the contrary, the Southland Company are at the present moment under an enormous obligation to them. That you can see, for as soon as the Nelson Bros, left them they lost £17,000, whereas while the Nelson Bros, were with them their losses were practically nothing. Something has been said about the extension of the works having been forced upon the Southland Company by Mr Ward's opposition. That was not the case. You will find that a committee was appointed by the company to consider the question of an extension of works before the opposition, and that evidence [unclear: of] that they could only freeze 500 a day, [unclear: a] without an extension of the works this [unclear: would] be limited to 500 day at the outside [unclear: the] season. The evidence is upon [unclear: of] own minutes that they could only [unclear: freeaper] day. Therefore the expenditure [unclear: works], which caused a great increase [unclear: bank] interest and a heavy capital [unclear: expend] was not compelled by the opposition [unclear: of] Ward, but by the exigencies of the [unclear: a] Mr Nichol and others were vehemently [unclear: op] to any construction of works at [unclear: Matan] if they had not extended the works they [unclear: not] have done an output in Southland [unclear: of] 500 a day, and they suffered no injury [unclear: in] sequence. The agreement which was [unclear: into] in 1891, and which was dated the June, but in respect of which the [unclear: negoti] were entered into before the 26th June practically the agreement was carried out [unclear: of] these terms—I am not going to read the [unclear: way] of it, but it is not set out in the case: it [unclear: be] by saying—

The agreement between the parties [unclear: heretz] ing date the 8th day of April 1889, is hereby [unclear: of] mined and cancelled.

That is to say, the existiug agreement cancelled, and that was an agreement at [unclear: the]

Nelson Bros. (Limited) shall purchase [unclear: said] from the company all mutton and lamb [unclear: of] shall during the term of three years, [unclear: coon] from the 1st day of January 1891, be [unclear: frozen] company, and shall pay for the same the [unclear: following] prices—viz., for prime crossbred wether maiden ewes, 2½d per lb; for prime [unclear: and] wethers and aged ewes. 2¼d per lb, with a [unclear: tion] to 2 3-16d per lb for each year in which total number of sheep frozen by the [unclear: came] shall exceed 60,000; for prime lambs, 3½d [unclear: be] the said prices to be for the meat free [unclear: on] at the Bluff, frozen (bags included), and to [unclear: be] net cash in Invercargill within 24 hours of [unclear: fu] ture and on delivery of the bill of [unclear: lading] weights to be taken from the company's [unclear: said]

I need not read the whole of that [unclear: parp] It goes on to say:

If at the end of any one year the company [unclear: of] have a surplus of net profit, after paying [unclear: a] dend of 8 per cent, on the company's [unclear: a] the shareholders and providing a sura of [unclear: the] that year for depreciation of [unclear: machinery] buildings and for a reserve fund, then [unclear: such] plus, or so much thereof as shall be [unclear: requ] shall be applied by the company in paying [unclear: a] pro rata to shippers of mutton through the [unclear: com] pany, such bonus not to exceed 1-16th of [unclear: a] per lb of the meat frozen, and of such [unclear: to] Nelson Brothers (Limited) shall be [unclear: entitled] much thereof as is payable in regard to [unclear: next] plied by them.


The company shall not freeze any [unclear: she] lambs in their said works excepting for [unclear: and] by the company to Nelson Brothers [unclear: (Limited)] such as shall be supplied by Nelson [unclear: Brothers] (Limited) to the company for freezing.

page 51

[unclear: So] Nelson Bros, might have themselves [unclear: rchased] the whole of the sheep to supply to [unclear: the] company for freezing. In fact they had to [unclear: lve] a guarantee to supply a certain number.

Nelson Bros. (Limited) shall take over and [unclear: believe] and indemnify the company from and [unclear: against] all contracts at present existing between [unclear: the] company and any other company, body, or [unclear: son] with regard to freight, and shall at their [unclear: from] expense provide freight for the whole of the [unclear: company's] output during the said term of three [unclear: rs] at regular intervals of not less than two [unclear: mers] every three months with an interval of [unclear: the] less than 21 days between the departure of one [unclear: mer] and the arrival of the next.

[unclear: that] under the contract the Nelson Bros. [unclear: re] entitled to an interval, certainly, of 21 [unclear: days] between the steamers, and they were only [unclear: required] to supply two steamers in three [unclear: months]. In fact, they supplied a great many [unclear: are], and the company was only once blocked—[unclear: the] one short period in 1892. when all over the [unclear: lony] every port was blocked, the supply of [unclear: pping] being little and the supply of frozen [unclear: eat] large. There was a guarantee to the com[unclear: pany] that at least 40,000 sheep should be sup[unclear: ed] by the Nelsons, and the Nelson Bros, (Limited) if they did not perform the gua[unclear: rantee] would have to pay. Then I go to the [unclear: venth] clause, which is the one which is the [unclear: subject] of consideration:—

That in the event of Nelson Bros. (Limited) [unclear: aring] the said term of three years making a con[unclear: ct] for a period of one year or more with any [unclear: company], body, or person carrying on within New [unclear: land] the business of freezing for owners or [unclear: fven] of stock by which f.o.b. prices on better [unclear: some] than those named herein shall be offered or [unclear: ven] by Nelson Bros. (Limited), then Nelson [unclear: Bros.] (Limited) shall either give the same terms the company, or, in the event of their declining do so, shall allow the company, if it so desires, terminate this agreement on the company [unclear: ing] one month's notice in writing to Nelson [unclear: Bros.] (Limited) of their intention to do so.

[unclear: course] had the contract stopped there it [unclear: did] not have been open to question that the [unclear: tpat] agreement with Mr Ward was authorised [unclear: of] the seventh clause, and nobody, I suppose, [unclear: nies] that, for Mr Ward was a person in New [unclear: land] carrying on the business of freezing,[unclear: and] they are entitled under clause 7 to enter [unclear: to] any contract for the purchase of output [unclear: viding] they ran the risk of the Southland [unclear: company] cancelling the three years' agreement [unclear: the] Nelson Bros, refused to give the South[unclear: land] Company the same terms as to Mr Ward.[unclear: Ask] was the position at the time of the agree-[unclear: ment] with Mr Ward. The Nelson Bros, un[unclear: derstood] and unhappily for them the South[unclear: land] Company also understood, that was not [unclear: affected] by clause 8 which I now proceed to said:

[unclear: Nelson] Bros. (Limited) shall not during the [unclear: some] term of three years erect, or assist, [unclear: to] be in any way concerned or interested [unclear: of] the erection or use of freezing works [unclear: in] land or water at the Bluff or within the limits of the Southland or 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. Obviously the agreement under clause 7 would obstruct the output of the company, and so the words "of a like nature" were put into clause 8. I am only endeavouring to show the honesty of the proposal. I am not for a moment pretending to say that the legal interpretation put on the contract is not the correct one; but, I ask you whether it is not the construction which business men would put on a contract of the kind that there who no prohibition against the purchase of meat What was prohibited was being concerned in the erection, or in the use after erection, of freezing works at the Bluff, but that they had a right to buy the output of anybody in New Zealand applied. What did it matter to the Southland Company whether the Nelson Bros, paid in Auckland or elsewhere than in the Southland and Wallace counties for sheep? What possible difference could it make to them? If was no concern of theirs. Take this: The Nelson Bros, are making terms with a company at Wellington for the purchase of output—what earthly concern was that of the Southland Company? Why should they bother themselves as to the arrangements made by the Nelsons at other ports? They were concerned to see that in Southland the Nelsons should not offer better terms to another company than themselves, but neither they nor the Nelson Bros, cared two straws what might be done outside the district of Southland and Port of Bluff. The Southland Company were only really concerned with the question of the terms Nelson Bros, might make with any other company in their own district. In fact, there was Burnside; that might compete. There was possible and probable competition even then in Southland. Somebody was bound to step in even if Mr Ward did not. Then followed a clause that inasmuch as there was certainly going to be opposition from somebody—everybody anticipated opposition—from whomsoever it was it should not be from the Nelsons. The Nelsons were the most dangerous people; they had works in Tomoana; they had started works elsewhere, and they had assisted in the erection of works elsewhere; they had the advantage of the Mataura site—they were the owners of it. And the Southland Company said, "Well, if there is going to be competition—there is sure to be competition, but do not you come in; if you do not come in and erect works it is possible for us to carry on; there is the Mataura site, we may extend our works." That was the meaning of the contract, and I press that on you because it is said we have been disloyal. Whatever the legal meaning—no one suggested such a meaning until Sir Robert Stout suggested it the other morning—the balance sheets and the correspondence show that not only did the page 52 Southland Company not pretend that what I have stated was not the meaning, but they insisted that it was the meaning, and they claimed in consequence of that meaning that they were entitled to certain rights. Nobody denies that that does not put us in a very strong position. He was not contending now as to the strength of his legal position. He was contending as to the position of people honestly carrying out what they conceived to be their legal position; and however wrong they might be in the interpretation of a legal contract, the other people interpreted it in the same way, and if any injury had been done, it had been an injury done by a mutual mistake as to the meaning of a legal document that both parties had drawn up so that there could be no mistake about it. And here his clients were in the unfortunate position of an interpretation being put upon this contract which the parties themselves never dreamt was the legal interpretation of it. He was able to answer Sir Robert Stout's suggestion that there was a complete change of front on the part of Nelson Bros. Sir Robert had said they were fair up to a certain point, but suddenly changed. Now there were two distinct phases of the action under the contract between the Southland Company and Nelson Bros. There was the point of time at which it became clear to Nelson Bros.' Company that Ward could not be prevented from erecting his works. Up to the time that they found that Ward had actually ordered his machinery they did their best with the Southland Company to try and "bluff" Ward from starting opposition. Then came the time when—it being clear that there was going to be an output in Southland—they had to consider what was the best thing for them to do. That was what Sir Robert Stout called a change of front. It was a necessary change of their position. Up to the point when it was certain that sheep were going to be put out they acted loyally to the Southland Company, and when they believed the output was going to be made they believed that the output was going to be disastrous to the Southland Company and themselves, and they entered into a contract for the purchase of the output. It was for their benefit that they did that, because they believed that there was going to be a high market. Why did they enter into a contract? They were not bound to enter into a contract in May 1892 for purchasing Ward's output. What did that show? It showed conclusively that they thought there was going to be a high market. Surely as business men they were not going to do what was not to their own interests and the interests of the Southland Company. They thought for two years it was to their benefit to purchase Ward's output at a fixed price, and it would have been a most disloyal act if they had refused to purchase the output. The Southland Company would have been in a worse position than they were [unclear: to] because they would have had to find[unclear: me] keep up the fight against the opposition their financial position was so weak[unclear: the] would have led to their ruin. Mr [unclear: Reid] the reason which influenced them in his[unclear: the] dated February 23, 1892. He said:

I am in receipt of your favour of [unclear: December] and am very glad indeed that things have [unclear: to] out very much as you anticipated, and a [unclear: cap] tial rise in value of both mutton and [unclear: be] advised by press cablegram. It was rather [unclear: of] tunate, however, that all buying [unclear: operations] delayed so long, for otherwise you [unclear: would] had all the December and January [unclear: shipme] your own hands. However, you will [unclear: re] few thousand good sheep and lambs [unclear: from] Bluff and Port Chalmers which should[unclear: have] fair profit, and you will be able to clear heavy stocks without loss. I have just [unclear: e] into a contract for the purchase of the [unclear: on] the Hon. J. G. Ward's works at the Bluff [unclear: for] years, and enclose copy of agreement, [unclear: which] explain the terms of the agreement. As you of course, aware, we have a contract [unclear: with] Southland Frozen Meat Company for the [unclear: of] term, and the arrangement I have just [unclear: made] Ward will not greatly increase the [unclear: number] sheep or lambs shipped at the Bluff, for [unclear: if] them from him we cannot get them [unclear: from] company. It will, however, assist us [unclear: greatly] had he been free at present with mutton [unclear: of] at 4¾d and lambs at 6¼d he could [unclear: been] growers higher prices than they could get [unclear: the] the company, and in all probability work [unclear: on] Southland Frozen Meat Company's works [unclear: a] have been stopped. As the matter now [unclear: on] we have secured the total output of [unclear: Southland] a fair price, and need not trouble [unclear: ourselves] the sheep are frozen.

Mr Reid, again writing to London on [unclear: the] 22, 1892, said:

You will observe, now that there [unclear: are] freezing establishments at the Bluff, how [unclear: a] sary it was for us to enter into this [unclear: contract] Mr Ward, for our contract with the [unclear: Southland] Frozen Meat Company provides that we [unclear: have] total output of the works without [unclear: stipulat] fixed quantity, so that we could only [unclear: exp] get meat from the company when it [unclear: was] London, for when high growers would [unclear: of] Ward. However, the matter is now [unclear: settled] the next two years, and I trust the result [unclear: of] satisfactory.

What he would point out was the [unclear: p] honesty of these transactions, because letters to London gave as a reason the that it was necessary in the interests of [unclear: Nelson] Bros, and the Southland Company such a contract should be entered He said: "You will observe how [unclear: are] tial it is that this contract should entered into." There was a third [unclear: consider] arose during the course of this contact had spoken of two phases. The first [unclear: phase] that during the first part of Ward's [unclear: thret] opposition the Nelsons joined the [unclear: Southland] Company in endeavouring to prevent [unclear: and] When opposition was absolutely [unclear: the] mined on, Nelson Bros, then, in the [unclear: inters] page 53 [unclear: themselves] and the Southland Company, [unclear: tered] into a contract for the purchase of [unclear: Ward's] output. There was the third phase: [unclear: at] it became necessary for Nelson Bros, to [unclear: insider] with whom they would do business for [unclear: three] years. They were not going to lose their [unclear: ade,] and so they eventually determined that [unclear: of] the end of three years they would do busi[unclear: ness] with Ward. That they were entitled to do. [unclear: sides] that, it must be manifest that Nelsons [unclear: ald] never have thought they were entering [unclear: to] an agreement which compelled them to [unclear: ad] out of the output altogether. At the end [unclear: of] the three years the Southland Company had [unclear: tactically] sold out to rival shipping com[unclear: panies]. There was no doubt that that was [unclear: the] declaration of war by the Southland Com[unclear: pany] against Nelson Bros. It was suggested [unclear: that] there was something improper in Nelson [unclear: Bros] having agreed to buy the works erected [unclear: by] Ward. The works were not completed till [unclear: the] end of 1893, and they were all erected by [unclear: Ward] out of his own money. Not one shilling [unclear: over] passed from Nelson Bros, to Ward in [unclear: inspect] to these works. They purchased his [unclear: output] and never gave him a shilling for works [unclear: all] November 1893, when they lent him [unclear: £20,000] against a security of £32,000, which he [unclear: has] to pay on January 1, 1894. He (Mr Bell) [unclear: did] not think any reasonable man could refuse [unclear: to] put his name to a bill under those terms. It [unclear: would] have been most unneighbourly and un[unclear: easiness] like if he had refused to endorse that [unclear: romissory] note. Learned counsel [unclear: proceeded] say that in the minutes of the company on [unclear: day] 8 the following words would be found:—

An informal discussion arose as to the fact that [unclear: the] present capacity of the works (500 per day) is [unclear: had] equate to freeze the number of sheep now [unclear: offering], after which it was moved by Mr Ward, [unclear: conded] by Mr Beaven—"That a committee con[unclear: ting] of the chairman and Messrs Basstian, [unclear: well,] Nichol, and the mover be appointed to [unclear: asider] whether any necessity exists for in[unclear: asing] the works, and, if so, to make a recom[unclear: endation] as to what should be done at the next [unclear: meeting] of the board."

[unclear: On] the same day Mr Reid came in to the [unclear: setting] and Nelsons' contract, the terms of [unclear: which] had been drawn up, was discussed. [unclear: Then] on May 14 Reid wrote to Cuthbertson, [unclear: closing] a draft of an agreement. He said:

We have your favour of the 12th inst.; also [unclear: ft] agreement, which we now return. The [unclear: seems] to be in order, but we have a few [unclear: eight] alterations which we think will improve [unclear: the] wording of the agreement. . . . We will [unclear: to] glad to sign an agreement with slight alter[unclear: ations,] and if you will get it prepared at once the [unclear: writer] can get Mr William Nelson to sign it next [unclear: week], as he is going to Napier.

[unclear: Then] came a letter in reply on May 18 from Mr [unclear: Cuthbertson] as follows:

[unclear: Referring] to yours of 14th inst., I have had [unclear: clean] copies (two) of the agreement made out, [unclear: and] forwarded them by this opportunity. Your [unclear: suggestions] have been embodied, and I shall be glad if you will obtain Mr W. Nelson's signature to the same at your early convenience, and return both copies for completion. Then on June 3 Mr Ward wrote to the chairman of directors of the Southland Company:

Owing to my continued absence from Invercargill, and consequently my inability to attend the meetings of directors, I beg to place in your hands my resignation as a director of the company. On July 12, 1891, the following appeared on the minutes of a meeting of the company:—

Leave of absence was granted to Mr Ward during the session of Parliament. Then on the same day it was resolved to postpone signing the contract with Nelson until Mr Reid came down. Then on June 17, 1891, Mr Cuthbertson wrote as follows to Mr Reid:—

Your letter re Mataura site was received last night. I do not know if any of the directors will go up, but I will, and return with you to town same evening. I presume the site is the one in which Mr Carswell is interested. The directors have had the matter of erecting works in that district under their consideration, and are pretty well of opinion that slaughteryards would meet all present requirements, the freezing being concentrated at Bluflf. The difficulty is that we cannot see our way to spend any large sum of money on additions or new works so long as the whole of our output is sealed down to the Nelsons at a fixed price, with the provision that they are not bound to find us more than 40,000 sheep per annum in event of growers not accepting the price for the meat named in the contract. Already the reduction in freight will soon enable growers to get higher prices than you give. Our output may seriously suffer in consequence Such an event would be bad enough with our present outlay on buildings and plant, but it would be folly on our part to spend more money on these, with a possible minimum output of 40,000 per annum, caused by our having sealed up our total output to you at a fixed price for a term of years. Now he wanted to read an extract from the minutes of a meeting of the company on June 26, 1891:—

The report from the engineer, dated 25th inst., was read re the proposal to erect works at the Mataura to be run by water power, the cost of which he estimated at £8400. Moved by Mr Basstian, seconded by Mr Nichol—"That the secretary and engineer go into figures to show the comparative cost of freezing at the Bluff only, and at the Bluff and Mataura conjointly."

His point was that that work was done to prevent Ward from starting in opposition. Therefore his clients were not responsible for any damage that was suffered in consequence of the excessive expenditure at Mataura. That work was done for the benefit of the Southland Company—done, not in consequence of any improper act on the part of his clients, but in consequence of action which the Southland Company deemed to be wise—acting on the advice of Nelson Brothers. No doubt the Mataura works and the hulk might have been better arranged. Then came the flutter in the camp caused by Ward. There were six telegrams on July 4 from Reid to Cuthbertson, and page 54 these showed what steps Reid took to press upon Cuthbertson the absolute necessity to start at Mataura for the purpose of preventing Ward from starting. Then on July 6 Cuthbertson telegraphed to Reid:—

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

Then there were the extracts of a meeting of the company held on July 7, 1891:—

The chairman explained that he had called the directors together to consult them in connection with a matter that had led to Mr Ward's resignation as a director of this company—namely, the fact that Mr Ward had called upon him a few days ago in order to resign, in consequence, he stated, of his having accepted the management of a new freezing company that was about to commence operation? in Southland. The chairman further stated that Mr J. B. Reid was desirous to consult with the directors as to what steps, if any, should be taken at this juncture. After an informal discussion, it was resolved to adjourn till the 10th inst., and to ask Mr Reid to be present.

Mr Reid went on July 10 in answer to that request, and on July 8 he wrote to London, and here was his candid statement of what took place at the meeting:—

I have had no end of trouble to get the directors of this company to sign the contract. After having had it prepared by their own solicitors they refused to sign, and wanted to reopen the whole question. I refused point blank to discuss any other business until the contract was completed, and the result was that the meeting ended without any business being put through. I am glad to say everything is now settled, and I am able to send you a copy of the agreement. 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 tomorrow afternoon to hear what they have to say. I have under offer 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 that Mr 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 his 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 don't think he is so far on with the 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 whatever the result is we will be all right, for I know Ward is very [unclear: and] to work in with us. I am going to [unclear: Invercarg] morrow, and will write you fully on my return have started killing at Milton, and [unclear: everything] going on well; 350 per day are now [unclear: in] slaughtered.

Then on July 11,1891, Mr Reid wrote the [unclear: s] lowing letter to Mr Cuthbertson:—

I have your telegram of this day, and [unclear: halviously] noticed telegram in paper re [unclear: the] works. I telegraphed Mr Ward this [unclear: more] informing him that your directors had [unclear: decid] build at once, and that I must, therefore,[unclear: be] to act as I think proper. I think if you [unclear: will] communicate with Ward it will be better [unclear: to] through me, for I know he will feel very [unclear: a] hurt at your directors when he hears they [unclear: are] decided to fight.

Then Mr Cuthbertson telegraphed to Reid:

Have publicly announced our intention to [unclear: be] at Mataura. Presume you will advise Ward?

Reid then in pursuance of that [unclear: telegraph] Ward on July 11:

Directors Southland Company have [unclear: decide] build at once, so we had better both consider [unclear: to] selves free to act as we please.

On July 13 Mr Reid wrote to Mr Ward[unclear: :—]

I thank you for your telegram of [unclear: Sat] which has just reached me. The directors [unclear: of] Southland Company have decided to [unclear: brief] Mataura, and will slaughter there as well [unclear: as] some station near Gore. I thought it only [unclear: be] to advise you promptly, for it is better [unclear: the] that both should be free to act as we think [unclear: be] I would very much like if we could come to [unclear: go] arrangement with the company, for I am [unclear: con] fident that with two works going the result [unclear: were] a serious loss to both of us. The New [unclear: Zealand] frigerating Company are paying railage on [unclear: all] from Balclutha to Burnside, to try and [unclear: per] our getting them at Milton. Freezing [unclear: close] have been reduced to 3d, so you will [unclear: easily] that growers are getting all the cream. It [unclear: is] Messrs Nelson Bros.' wish that sheep [unclear: should] purchased under their value, but for the [unclear: post] months competition has been far too [unclear: keep] buyers have been making heavy losses. I [unclear: will] glad if you can suggest any way out of the [unclear: culty] before it is too late, for I dread [unclear: having] purchase at extreme prices simply to keep [unclear: the] going.

Then on July 13, 1891, there was a [unclear: meeting] the Southland Company, and the [unclear: following] record appeared on the minutes:—

Moved by Mr Nichol, seconded by Mr[unclear: N] "That the secretary write to Messrs[unclear: Nelson] Brothers asking them what amount of [unclear: say] they would be prepared to give to the [unclear: propo] establish works at the Mataura in the [unclear: way] taking up shares in this company, and [unclear: of] whether, in the event of such works [unclear: be] erected they would increase the minimum [unclear: out] put guaranteed by them, and to what [unclear: extent] Nelson Bros., in view of the opposition. [unclear: The] not do either of these things. Then on [unclear: July] Mr Ward wrote to Mr Reid:—

I am obliged to you for your letter dated [unclear: of] inst., as also for your telegram apprising [unclear: me] the directors of Southland Company had[unclear: been] to build at Mataura, so that we might both[unclear: side] page 55 [unclear: act] as we think best; and in this I quite con[unclear: ar] as I stated to you in Dunedin. I would, as a [unclear: atter] of what I believe to be best for myself and [unclear: Nelson's] people, have preferred to work with you, [unclear: had] I had prior to leaving Invercargill, told Mr [unclear: Turnbull] that my desire was to work with them. [unclear: But] since I left their decision to spread themselves [unclear: and] I, of course, assume with Nelsons' concur[unclear: rence] and co-operation) leads me to infer that they [unclear: have] no serious desire to reciprocate my wishes in [unclear: the] matter, and I may add that my express desire [unclear: in] work with both was quite bona fide. Howere, It is to be a matter of fighting each other, I can [unclear: take] myself quite safe, both so far as the cost of [unclear: section] of works and plant and risk of purchasing [unclear: deep], and then with a diminished chance of [unclear: personal] gain from the sheep freezing business [unclear: have] any other advantage that such a connection [unclear: my] give to my own business. I am at present free to discuss any fair and reasonable arrangement. But you can quite understand that unless we can [unclear: agree] to something that is mutually satisfactory [unclear: soon] that I must, as a matter of self-precaution, [unclear: fall] back on other arrangements that I can readily [unclear: fix] up. Though I readily and frankly say again [unclear: that], as a matter of preference, all other things [unclear: being] equal. I would prefer to work with Nelsons, [unclear: but] if the latter cannot be done I will not in any [unclear: way] be put out, and will follow the course I [unclear: believe] to be the next best, and your friends can [unclear: to] the same. If yourself or Nelsons are free to [unclear: discuss] matters with me here kindly let me know, [unclear: so] that we may finally determine whether we [unclear: work] together.

The material he was opening now was essential [unclear: to] the establishing of a point put before them— [unclear: vis], that the defendant company was perfectly [unclear: loyal] to the Southland Frozen Meat Company. [unclear: He] wanted to show that they had been perfectly [unclear: consistent] in their efforts to prevent Ward [unclear: starting]. In the letter of the 23rd July 1891, [unclear: Mr] Reid in writing to London after telling them [unclear: that] Ward was building on his own account, [unclear: paid]:

I have authority from Mr Dobson to offer Ward [unclear: joint] agency Tyser line of steamers with the [unclear: sent] agent (Mr Carswell), and if this will please [unclear: to] I can get the directors of the Southland Com[unclear: pany] to take over his engine, if it has been ordered, [unclear: which] I very much doubt. Of course if Ward [unclear: has] quite made up his mind to build, he must just [unclear: do] so, and we can please ourselves later on whether [unclear: we] purchase his meat or not. But our duty at [unclear: present] is clearly to protect the present company [unclear: so] far as possible.

That was Mr Reid's understanding, and it was [unclear: everybody's] understanding. Then on the 6th [unclear: August] 1891, writing to Mr Cuthbertson, Mr [unclear: Reid] says:

I have just received your telegram giving me [unclear: permission] to have a talk with Mr Ward. I feel [unclear: sure] that if your directors stick to their ground [unclear: and] go on with the works at once that Mr Ward [unclear: and] party will retire. I expect Ward told your [unclear: chairman] of his scheme in consequence simply to [unclear: keep] him quiet, and it is absurd to suggest work[unclear: ing] together when, as you say, more sheep are [unclear: suffering] than both works will freeze. My only fear it that your directors will not act promptly. I will come south to-morrow morning.

On the 8th August 1891 Mr Reid wrote:—

I was all ready to start for Wellington this morning, but was detained at the last moment and cannot possibly get away to-day. 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:—(I) 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. Carswell and Co., Invercargill; also, that you get a discount of 2½ per cent, on freezing changes 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, besides 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, it 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 J yser'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.

Here Mr Reid simply endeavoured to get Mr Ward to give up all idea of freezing at the Bluff. On the 9th Mr Nelson wrote to Mr Ward in answer to the letter of the 4th. They had not that letter. Mr Reid said:

Dear Ward,—I have deferred answering your letter in the hope of some daylight appearing. But you know the fix I am in. I am absolutely bound by the Southland Company, and am helpless for two years. All my views have been put before them with no avail.

page 56

You know my wishes on the subject. They remain the same as I expressed when you were here. Dobson will see you on Friday, and I hope you will fix up matters with him as far as he is concerned Our connection must follow in due course.

Now, Dobson was the agent for the Tyser line, and whether they were connected or not there was to be some fixing up between Dobson and Ward in connection with this per cent, commission.

Sir Robert Stout: Dobson was agent for Nelson.

Mr Bell said that Dobson probably did act as Nelsons' attorney when Nelson was out of the colony. Nelsons' works were at Tomoana, and Tomoana was some distance from Napier. There was a shipping department at Napier, and possibly Mr Dobson was the Napier agent for Nelson Bros. He was instructed that his friend was wrong in his assertion that Mr Dobson was Nelsons' agent in this connection.

Sir Robert Stout said that what he had stated was that Mr Dobson sometimes acted for Nelson.

Mr Bell said his learned friend's statement was that Mr Dobson was agent for the Nelsons'. Mr Dobson was agent for several companies, and for all he knew he might have acted as shipping agent for Nelson and Co., but in no other relation. Mr Ward wrote on the 10th in reply to Mr Reid's letter of the 8th. Mr Ward expressed his willingness to come to terms, and he said:

Now you have made a proposal dealing principally with shipping; I will make you a proposal which I think is worth considering, and would clear the whole ground for all parties. It is—1. That the Southland Frozen Meat Company (and yourself) abandon the intention of erecting works at Mataura and let me erect mine there instead, so as to ensure what you are aiming at—a central works,—and I to give Nelsons and Tysers each a third share of the works. This would ensure the following:—(a) Get rid of an opposition company; (b) ensure a monopoly of the whole district for Nelson and Tyser; (c) a prosperous future for the Southland Company without overweighting themselves with additional capital; (d) the certainty of no other works being erected in the district; (e) the division of the output of the district into two instead of three; (f) prevent an inflation (through competition) in the value of sheep; (g) it would ensure a uniformity of freezing charges at all works—Bluff, Mataura, Burnside; (h) it would allay the dissatisfaction that now exists among small sheep farmers (who are and have been for the last three years dissatisfied with the present company); (i) it would be the best safeguard against the antagonism that always underlies a large monopoly; (j) it would cause Nelsons' Home agency getting the whole business of Southland. 2. A manager's salary to be paid to me and to have the division of the shipping proposed by you. The above I believe to be the right direction to fix the business up for all parties. If you think it worth discussion telegraph me and I will, if you desire it, go on to Napier (as I can get there and back easily and quickly) and discuss it with [unclear: Nelson] Dobson. In the above proposal the [unclear: Frozen] Company lose nothing at all, they [unclear: retain] own business. They gain by not having [unclear: com] conception. You lose nothing at all. You gain by [unclear: m] ing all the district office without [unclear: competition] gain by preventing competition and the [unclear: was] fighting. I believe it is worth considering.

On the 11th August, Mr Reid, [unclear: writing] London, speaking of these negotiations of Ward, said:—

Mr Ward is a very clever business [unclear: man] would be a valuable man with us so [unclear: long] does not cost us anything to get him.

The jury would see, the learned counsel [unclear: was] because Tyser was paying the commission [unclear: by] of all there was a proposal to Ward to [unclear: give] the freezing works and to have the [unclear: Tyser] mission, and on the other hand to [unclear: give] Mataura, and all combine and avoid [unclear: fighter] Sir Robert Stout had referred to that [unclear: let] as being evidence of a desire to act [unclear: in] underhand way against the Southland [unclear: Company] but the jury would see what the relation [unclear: was] between Mr Ward, the Southland [unclear: Company] and Nelson, at the time the letter was [unclear: written] Sir Robert Stout did not understand, [unclear: he] posed, the position of the parties when the [unclear: to] was written. In a telegram to Nelson [unclear: on] 15th August, Mr Reid said:—

Ask him for a copy of letter and his reply, [unclear: to] gest you hearing all he has to say, and then [unclear: to] time to consider. Do not think Southland [unclear: dist] tors would entertain his proposal, and we [unclear: must] loyal to the company. The offer I made [unclear: was] very good one.

Mr Nelson then said to Ward in the [unclear: letter] 19th August 1891 that was read with so [unclear: any] unction on the 'dear Jim,' and so on:—

Dear Jim,—I have your copy of Ward's [unclear: letter] but I have not yours referring to it; but I [unclear: was] well at once give you the result of my [unclear: re] view.

(1) I am satisfied he means to build; [unclear: the] machinery has left or is about to leave [unclear: England] (3) we must work with him; (4) I think a [unclear: Cabi] Minister a useful addition to the firm; (5) [unclear: I] Ward.

Mr Nelson was satisfied on these three [unclear: point] and if they were true, as they were, he was [unclear: of] right in saying they must work with him [unclear: Mr]. Ward had erected the works at that time, [unclear: o] they had not worked with him by [unclear: purcha] his stock, what would have become of the [unclear: t] of both Nelson and the Southland [unclear: Company] Having regard to the anticipated [unclear: market] shown by the letters of Mr Reid to London [unclear: was] of Mr Cuthbertson's own letter, it was quite [unclear: d] that Mr Nelson was justified in his [unclear: concl] though his surmise as to what would [unclear: happ] in 1893 proved incorrect. The letter [unclear: was] the kind that anyone would write upon [unclear: the] subject, it was logical, quite [unclear: seq] and writing to a friend it was [unclear: se] and true. It was not pleasant [unclear: when] became public that a man should have [unclear: write] page 57 [unclear: "] A Cabinet Minister will be a useful addition to [unclear: the] firm"; but that was what was running [unclear: in] his mind, and there was no reason why he [unclear: should] not say it to Mr Reid. What it [unclear: amounted] to was this: If we are going to carry [unclear: on] business in Southland and there is going to [unclear: be] a row, if we can by any possibility keep on [unclear: good] terms with a Cabinet Minister it will be [unclear: better] for us. Besides that, they would pro[unclear: bably] gather from some of the other corre[unclear: spondence] that it was a very natural observa[unclear: nce] Anyone opposed to the present Govern[unclear: ment] might have said so. It was a very [unclear: natural] thing. One would not suppose that a[unclear: cabinet] Minister on one's own side would do [unclear: anything] to help one, but a Cabinet [unclear: Minister] on the other side of politics [unclear: would] do all kinds of things, for as soon as a [unclear: on] became prominent in politics he was [unclear: pable] of any villianies or any virtues accord[unclear: ing] to whether he was regarded by a [unclear: supporter] or an opponent. Then it went on to say:

I think Ward a suggestion to take over Mataura [unclear: a] good thing for all concerned, but it must be in [unclear: conjunction] with Nelson Bros. (Limited), for our [unclear: own] safety and the good of the trade. I under[unclear: stand] that we are pledged to Bluff Company not [unclear: to] take any interest in freezing works in the [unclear: district] during the currency of our contract, so [unclear: That] we cannot join Ward without their consent. [unclear: Then] comes the question, will they give that [unclear: sent?] They will have to settle the question, [unclear: whether] it is better for them that Ward should [unclear: start] alone or in conjunction with us? I am quite [unclear: clear] it would be better for them if we were in it. [unclear: This] really the first point that must be settled, [unclear: I] we cannot move without it, and I should [unclear: strongly] advise them to consent. Taken as a [unclear: whole]. I agree with the sentiments contained in [unclear: Ward's] letter to you, so that I need say no more [unclear: to] you on that head. I have told Ward that my [unclear: feeling] is decidedly to work with him, but that I [unclear: shall] do nothing without the consent of the Bluff [unclear: Company.]

[unclear: And] nothing had been done without their [unclear: ent,]

[unclear: Sir] Robert Stout: What consent was ever [unclear: given]

[unclear: Mr.] Bell would repeat that nothing was ever [unclear: done] without their consent.

[unclear: I] Should add that one of my reasons for leaning [unclear: towards] Ward is that I cannot forget the slippery [unclear: nature] of the Bluff Company in the past; and, [unclear: although] they are supporting us loyally at the [unclear: sent] moment, there is no telling how soon the [unclear: change] may come. At present it suits them—by [unclear: -bye] perhaps it won't. I can enter further [unclear: into] details when the question is settled as to [unclear: whether] Bluff Company agree for us to go in with [unclear: Ward] or no, so set this ball rolling.

[unclear: Then], in the letter of the 24th of August 1891, [unclear: Mr]. Reid wrote to Nelson saying he noted that [unclear: Mr]. Nelson was anxious to work in with Mr [unclear: Ward] and, referring to the proposal to [unclear: give] him the Mataura Works and so [unclear: avoid] fighting, and added, "I do not [unclear: agree] with you that Ward has made up [unclear: his] mind to build." Then on the 1st Sep[unclear: tember] Mr Reid wrote to Nelson: "I have not so far been able to do anything. I fear unless Ward agrees to fall in with the proposal of the company nothing will be done." They would see that at that time there was not the slightest idea of the output question. The question was that there was going to be competition in freezing works which would be disastrous to all concerned, and the question was what could be done to prevent it. And Mr Reid stepped in and endeavoured to prevent it. Mr Nelson took a different view from Mr Reid. Mr Reid was convinced that Ward was not going to build; Mr Nelson was convinced that he would. Mr Nelson thought it was better to give Mr Ward Mataura. On the other hand, Mr Reid preferred the alternative of making Ward the shipping agent. Then Mr Ward wrote on the 4th September to Mr Nelson telling him that practically the whole thing was over. In this letter Mr Ward said:

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.

Then Mr Reid, writing to London on the 7th September, says: "Ward stems determined to go on with the works at the Bluff. I am trying to bring about an arrangement which, if successful, will do away with the necessity for having so many works." Then there was the other letter about the Cabinet Minister—the letter of September 9:—

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

Then Mr Cuthbertson telegraphed to Mr Reid on the 14th September:—

Directors regret they cannot see their way to adopt the suggestions of your firm, which under existing circumstances they think would be fatal to the company's prospects.

page 58

That phase of the question was thus terminated by the failure of the negotiations The directors of the Southland Company refuted to give up Mataura, and Ward refused to stop going on. Mr Nelson was then convinced that the machinery had been ordered, as in fact it had, and was on its way. And then Mr Dobson, the agent of the Tyser line, wrote this letter to Mr Nelson on the 19th September 1891:

Dear Nelson,—Is it possible for you to say that you will buy from Mr Ward upon equal terms with Southland. Possibly when he gets underway he will want to sell his mutton to you. Send me an answer. I want to write him on Monday.

Mr Nelson answered that on the same day:

Dear Bob,—I do not think I would care to say just now that we would buy Ward's mutton on the same terms as the existing company's, though no doubt we shall buy from him on the best terms he can obtain.

As a matter of fact they bought on terms better for themselves than the terms they had with the Southland Company. That was the first reference to—the beginning of—the meat question, and the jury would see that it began by a letter from the agent of the Tyser line to Mr Nelson, asking whether he could say that he would buy Ward's mutton, and Mr Nelson wrote back saying that he did not care to say just now, &c. Then, on the 5th October, Mr Reid, writing to London, says:

I was quite unable to bring about any arrangement between the directors of the company and Mr Ward. The former would not give up the Mataura scheme and the latter would not entertain a proposal to freeze his sheep at the company's works. It remains to be seen what the result will be. Probably Mr Ward will go on with his works, and if he can get anyone to buy his meat competition will be keen; if not, he will probably be glad to sell out after working for a year or two.

Then there came a telegram from Mr Reid to Mr Ward of 3rd November 1891 saying: "If you have not ordered boilers, have two that would suit you. Reply Wellington Club." Now, respecting those boilers, it was suggested that Mr Ward had some advantage. As a matter of fact Mr Ward had some little cause of complaint in respect to this. Their history was this: There were a couple of old boilers belonging to Nelsons which they could not get rid of. They had been on hand for some time, having been imported for use on a hulk in Dunedin and not used. They were lying of no use; here was a chance to get rid of them, and accordingly Mr Reid telegraphed to Mr Ward.

Sir Robert Stout: Were they their own.

Mr Bell: They had been on their hands for some time, and they could not get rid of them. There had been attempts to sell them, but there was only an offer for one. Mr Ward was starting, and Mr Reid eventually got him to buy them, and sold them to him on a year's terms, writing respecting the sale that [unclear: o] could not sell them otherwise there [unclear: waa] no more loss in selling them in that [unclear: was] in keeping them. It was an ordinary [unclear: be] transaction. The boilers were for [unclear: sale] had been sold to the first person who [unclear: a] found to take them. On the 23rd January there was a letter signed by Reid and [unclear: add] to Ward which had been read and [unclear: refe] in scathing terms as evidence of a [unclear: de] guide Ward in the conduct of his [unclear: be] Would they believe it that this was [unclear: a] which was sent by Nelson Company [unclear: the] freezers of meat in the colony?

Sir R. Stout: It was not sent [unclear: to] circular.

Mr Bell said it had not been sent [unclear: to] Southland Company at all, because [unclear: they] under a contract which did not [unclear: including]. This was what Nelson required [unclear: is] of grading, and the Southland Company contract which exempted them from [unclear: p] and which was very much in their [unclear: of] Prime sheep covered from 50lb to 75[unclear: lb,] some cases the Southland Company [unclear: fast] allowed to go as far as 80lb, though [unclear: she] that size of course were not prime [unclear: sheep] the 23rd of January the meat [unclear: arrays] began. On that day Mr Reid wrote to [unclear: Ne]

Dear Mr Nelson,—I had a long [unclear: yarn with] Ward this morning, and think we [unclear: should] make him an offer for the output of his [unclear: wo] if we don't get the sheep from Ward [unclear: we] them from the company, and it is just [unclear: a] keep him sweet. I think 2½d (f o.b.) [unclear: for] 65lb sheep would fix him for two years, [unclear: the] Southland Frozen Meat Company, [unclear: or,] would prefer it, I could probably make [unclear: a] for one year at 2 3/8d (f.o.b.). It seems [unclear: to] we cannot lose anything by making [unclear: the] and while Ward is sending [unclear: circal] round the country things are [unclear: bound] unsettled. Ward told me yesterday [unclear: to] present he was free to arrange, but he [unclear: was] be in the same position within the [unclear: n] weeks. Of course we can take this [unclear: state] what it is worth. But my own opinion [unclear: is] is very anxious now to make terms; [unclear: If] prices improve and he is not in a [unclear: position] a better price than the Southland [unclear: Company] tables will be turned, and we will be [unclear: out] both fides. Mr Ritchie told me in [unclear: our] that Ward told him that he had been [unclear: of] freight from Australia, but I fancy [unclear: this] necessitate giving the firm a [unclear: guarantee] quantity, which he could not possibly [unclear: be] have promised Ward to make him [unclear: an] Saturday next, so please telegraph the [unclear: be] can do on receipt of this.

They would see from this that Mr. [unclear: B] anxious to make arrangements, not [unclear: at] Ward's interest, but because he [unclear: fes] both he and the Southland Company [unclear: was] out of it if Ward wis not fixed and [unclear: p] proved—and as a matter of fact [unclear: pr] short time did improve. On the 28[unclear: th] Nelson telegraphed to Reid to [unclear: m] arrangements proposed, and on [unclear: the] page 59 [unclear: January] Mr Reid wrote to Ward offering him [unclear: e] terms, and on the same day, writing con[unclear: Mentially], he said:

Referring to the offer for the output of your works, and the conversation I had with you some [unclear: w] days ago, you will of course understand [unclear: that] the event of accepting the offer all freight [unclear: rangements] will be made by Nelson Bros. (Limited), and you will be free of responsibility so far as that is concerned. I can also [unclear: eure] you the loading commission on all [unclear: t] supplied by you. I presume it is [unclear: not] intention to consign on growers' account; [unclear: eed] my experience is that very few care to [unclear: risk] London market, and prefer to accept the best [unclear: rice] going. Should you, however, wish to [unclear: con-n] doubt I could arrange tor a further 5 per cent. on such shipments to be returned to you, [unclear: rt] of which you could return to shippers in the [unclear: dinary] way. As you are aware 10 per [unclear: cent.] is always charged, 5 per cent, of which is [unclear: turned], and no doubt you would receive the [unclear: ne] concessions as others. As far as general [unclear: rgo] is concerned, I regret that I am unable to-day to say exactly what return will be made to [unclear: u] but you have my assurance that you will be [unclear: cured] and placed on the very best footing [unclear: posble]. I need hardly ask you to treat all our [unclear: gotiations] as strictly confidential.

[unclear: Then] followed the letter of the 23rd February 1892, which he had already read at the commencement of his address. This was from Mr Reid to London, advising as to entering into the contract in relation to the frozen meat, and saying that if Ward "bad been free at present, with mutton selling at 4¾d and lambs at 6¼d he would have paid growers higher prices than they would get from the company, and in all probability work at the Southland Frozen Meat Company's works would have been stopped. As the [unclear: batter] now stands we have secured the total [unclear: output] of Southland at a fair price, and need [unclear: t] trouble ourselves where the sheep are [unclear: xen"] That was the position they took, and [unclear: gre] entitled to take, as they understood. If they had not made that contract the Southland Company would have been out of it. The contract was made, and they had now to find [unclear: out] what date Mr Ward actually commenced. It would be seen that Mr Ward had sent out [unclear: cir-lars] in all directions, but he was not in active [unclear: perations] then, and the Southland Company [unclear: ere] still freezing; and it was idle for the Southland Company to claim that at the time the contract was made they suffered any immediate loss. The Southland Company were the only [unclear: eezing] company then subject to competition from Burnside, and Mr Ward could no longer [unclear: ay] at the extravagant prices which he could [unclear: therwise] have given, regard being had to the [unclear: rices] that were current in London. Mr Ward [unclear: ranted] the matter kept private, and Mr Reid [unclear: ranted] it not kept private. Mr Reid and Messrs Nelson Bros, never wanted any privacy—they were doing what they were entitled [unclear: to] and they wanted no secrecy. Mr Ward [unclear: tas] anxious at that time that he should not appear to be associated with the Nelson's—for the purpose that he might still be able to put himself forward as the benefactor of the human race in starting an opposition. Mr Reid wrote to Mr Ward on the 4th March that he found it impossible to keep their connection private; and Mr Ward replied:

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 monoply 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. The reason that was put was this: "On my (Mr Ward's) part I do not want it disclosed; on your (Nelson Bros') part your opponents will begin talking about the monopoly of Nelsons in Southland." But it was never suggested that there was the slightest necessity for secrecy in this matter, and secrecy was never kept. Now on the 12th March 1892 Mr Cuthbertson wrote to Mr Reid the first of some letters he (Mr Bell) wished to call special attention to:

You will doubtless remember that we arranged to supply you with somewhat over 10,000 sheep for the Star of England by the 7th inst 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 t 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 fill her up, but he had received definite instructions that he was to take 6000 sheep from Mr Ward and from us whatever balance was required to fill up the steamer I may as well say once for all that we must decline to be made a convenience of in this manner and be made subservient to Mr Ward's requirements. If the steamer could not take the number applied for by both Mr Ward and ourselves, it was clearly the proper course.

To do what?—

to make a proportionate division of the total available space, and to that we would have had no objection. But we must protest in the most emphatic manner against any preference being granted to Mr Ward as against ourselves. While at the same time we regret that any occasion should have arisen to force us to make such strong representations. But to return to the purport of page 60 our telegram, we wish to point out that while it may be perfectly true that 8000 is a fair proportion for us to get out of the total available space in the Star of England, yet we consider that we are justly entitled to as much space as we could fill, seeing that Mr Ward was unable to do so himself. The condition of the sheep that he presented for shipment, as well as those he had in his works, were such that the ship refused to take them, and under these circumstances we consider that we have been badly treated by being stopped loading at 8000 when the steamer was not nearly full. Finally, we are informed on the best authority that many of the sheep and lambs offered by Mr Ward for shipment (and of which some 900 were actually taken on board) were so soft as to be misshapen. Now, no amount of freezing will ever bring these sheep back into their proper shape.

It would be seen that what the company demanded from the Nelsons was a proportionate division of the available space, and they protested against a preference being given to Mr Ward as against themselves.

His Honor: What date is that?

Mr Bell: March 12, 1892.

Sir R. Stout: It is not from Cuthbertson to the Nelsons.

Mr Bell: It is written to Tyser's agent and to Nelsons' agent.

His Honor: There is nothing in that letter to lead one to infer that Mr Cuthbertson was aware of the Nelsons' purchase of the output. They only knew that Mr Ward was shipping.

Mr Bell: Possibly that may be so; possibly it may be taken as a letter written to Tyser's agent, but coupled with the other correspondence it is important.

Sir R. Stout: There is no suggestion in that letter that it was Nelsons' sheep. That came a good deal later.

Mr Bell said the next letter was on the 22nd March, and he had already read it as evidencing the necessity that existed in the interests of all parties that the output agreement should be entered into. Then came a letter of the 5th May 1892, part of which he read to Mr Cuthbertson in the witness box—it was a letter from Mr Cuthbertson to Nelson Bros. (Limited)—and he wished to read it again:—

We are in receipt of your favour of 3rd inst., and regret to find that you have given away all the meat space in the Mamari without reference to the requirements of this company. This is now the second time, within a couple of months or so, that our interests have been sacrificed to meet Mr Ward's convenience, and we must beg firmly and respectfully to protest against any advantage being withheld from ourselves that is granted to Mr Ward. We have never asked that you should avour us at Mr Ward's expense, nor do we desire it and we consider that in insisting that we should be placed on the same footing as Mr Ward we are only asking what is fair and just, and further we think that on reference to our agreement with yourselves you will find it expressly mentioned that nothing is to be done by your firm that will injure our business think you, too, will see that it is very [unclear: import] now that we have to compete with Mr [unclear: Ward] you should protect the interests of this [unclear: c] in every way in your power without [unclear: doing] injustice to Mr Ward. And in this [unclear: com] we are forced to call your attention [unclear: special] the fact that while we are bound down [unclear: to] high standard of quality Mr Ward is [unclear: not,] is, he does not adhere to it. It is a [unclear: well-] fact that at the Ocean Beach works [unclear: there] as rejections—everything is frozen, [unclear: whether] or inferior, whether up to weight or [unclear: very] a below it. It is admitted that you [unclear: have] the output of Mr Ward's works as well as [unclear: all] own, and under our agreement he is not [unclear: e] to receive better terms than ourselves. [unclear: Our] sent contention is that the practical [unclear: effect] Ward freezing and shipping inferior [unclear: sheep] place him in a better position than [unclear: we] and we think that in common [unclear: fairness] entitled to ask that you should take [unclear: steps] that a uniform standard of quality is [unclear: applied] both.

Now, he (Mr Bell) would remind [unclear: them-] was no question about it—that was [unclear: a] ment, an admission, of the whole [unclear: position] defendants occupied. Mr Cuthbertson [unclear: saib] behalf of the company, "You [unclear: purchased] Ward's output. That is all right, but [unclear: you] not give him better terms; and we ask [unclear: you] see that the same standard of quality [unclear: is] to him as to us." Learned counsel [unclear: broke] to remind them of what there was [unclear: in] agreement. Mr Ward, as they [unclear: remember] got 2½d for first-class sheep—55lb [unclear: to] and a less price for sheep over and [unclear: under] weight. The other company got 2½d [unclear: for] sheep—prime sheep meaning from 50lb [unclear: to] and sometimes they were allowed [unclear: even] as 80lb; they got 2½d per lb for sheep [unclear: bet] 50lb and 55lb and between 55lb [unclear: and] whereas Mr Ward got less prices. [unclear: On] other hand, Mr Ward was [unclear: able.] said, to get sheep which were [unclear: not] Later on, when Mr Ward's terms [unclear: were] the company were again offered Mr [unclear: Ward] terms in an express letter, and later [unclear: on] were offered the same terms in [unclear: another] when Mr Ward's contract had been [unclear: md] and he had secured a remedy for [unclear: a] grievance he had suffered. Mr Ward [unclear: had] competing but he had been unable [unclear: to] at a profit; but when be was put [unclear: on] Messrs Nelson Bros, attempted to [unclear: call] terms they said to the other people, "[unclear: you] have Mr Ward's terms." The Southland [unclear: company] were offered a grading contract, [unclear: but] did not want to be graded—they [unclear: wanted] per lb with a wide range. Then, [unclear: when] Ward found he was not on equal [unclear: terms] with Southland Company, he came to [unclear: the] relying on a clause in his contract [unclear: entitling] to be put on the same terms; and he [unclear: got] were called concessions, but what he [unclear: was] entitled to—namely, an increase [unclear: in] because he was to be put in all other [unclear: respected] the same terms.

page 61

Sir R. Stout: All other respects than the [unclear: terms] in the contracts.

Mr Bell: Whatever Mr Ward was entitled [unclear: to] in the strict letter of the law he was [unclear: entitled] to that in honest dealing, and the Nelson [unclear: Company] did not come with any catch legal [unclear: interpretation] of the clause—they did not want [unclear: to] take advantage of such technicalities as the [unclear: southland] Company unfairly and unjustly, [unclear: with] the able assistance of his friend, were [unclear: endeavouring] to take. He might say at once [unclear: that] he had no doubt that the jury would [unclear: have] very forcible and brilliant attack upon his [unclear: ents] at the conclusion, and at that time both [unclear: himself] and his friend (Mr Hosking) would be [unclear: ent]

Sir R. Stout: You have no right to open to [unclear: the] jury in that way.

Mr Bell said his friend (Sir R. Stout) was [unclear: possibly] right in his legal interpretation, but [unclear: the] Nelson Bros, had endeavoured to act in [unclear: accordance] with an honest and common-sense [unclear: eaning] of the contract. He was only [unclear: projecting] his clients in warning them that if Sir [unclear: Robert] Stout was keeping in reserve all that [unclear: attack], of which there were so many muttered [unclear: hreats,] it would be impossible for him (Mr [unclear: ell)] to answer it. He did not know the [unclear: notive] of the violent attack Sir Robert was [unclear: going] to make, but probably he was going to [unclear: eserve] all the merits of the case for the [unclear: refence.] The Mamari, learned counsel [unclear: continued], was not a Tyser steamer, but was a [unclear: Shaw-Savill] steamer, and the arrangements in [unclear: connection] with it were not under the [unclear: control] Mr Dobson or Mr Reid. On the 9th May [unclear: Mr.] Reid, writing to Mr Cuthbertson in [unclear: answer] that, said:—

As you are probably aware, arrangements have [unclear: been] made with the Tyser Line (Limited) to [unclear: carry] output of your works, and we cannot hand [unclear: your] over to an outside steamer even if we wished [unclear: do] so Of course, if work was actually [unclear: delayed] your works being blocked, as in Mr Ward'[unclear: s] we would make the best arrangements possible. but so far I have never been advised [unclear: that] works will be full before Star of [unclear: Victoria]. I do not intend to go fully into the [unclear: question] of our agreement with Mr Ward, but [unclear: you] my assurance that there is not a clause in it [unclear: which] gives that gentleman the slightest [unclear: advantage] over your company.

[unclear: How], as his Honor had clearly pointed out, [unclear: there] was no pretence that the company did not [unclear: know] of it. Mr Reid's right to make the [unclear: agreement] was never contested. But Mr Reid [unclear: said] there was no advantage to Mr Ward, and [unclear: That] was true:

You will no doubt remember that I asked you [unclear: same] months ago to adopt the grading system, [unclear: but] you have not displayed any great anxiety [unclear: to] our wishes in the matter; had you done so [unclear: I] could have arranged a price for sheep that [unclear: were] too light or heavy for first quality. I suppose [unclear: it] is to this class of sheep you refer when you say [unclear: that] anything is frozen at Ocean Beach works whether prime or inferior. Before closing this subject I can only say that if you prefer Mr Ward's contract to the one you are at present working under you can have it, but I trust that, even if the competition between you is keen, you will distinctly understand that rests entirely between Mr Ward and your directors.

Now Mr Reid said, "The contract gives Mr Reid no advantage, and you can have it." All that Mr Cuthbertson had to say was, "Let us have a look at it; we'll see if we like it." And probably it was after that that Mr Cuthbertson called on Mr Ward and saw it and did not like it. On May 18 Mr Reid wrote in answer to another complaint from Mr Cuthbertson. The latter wrote on May 13:—

We regret that you are not prepared to offer us the same facilities for shipment as are being granted to Mr Ward. We think that you will readily see that it is no affair of ours to which line our meat has been promised, and we still contend that in making arrangements for sending in the Mamari to Bluff you entirely overlooked this company and consulted only Mr Ward's convenience. Under the circumstances we consider we are fairly entitled to ask for payment of the meat.

—that was to say, that the Shaw-Savill Company's steamer should take equally their meat as well as Mr Ward's, and what foundation could there be for that other than what Mr Cuthbertson frankly stated on the 5th May—namely, that the seventh clause of the contract entitled them to certain rights. On the 18th May Mr Reid wrote:

You have not been delayed a single day by shortage of freight, and whenever you asked for a steamer arrangemants have been made to send you one. I will at all times be glad to meet your wishes with regard to freight, and if proper notice be given you will be supplied, but I fear you are not trying your utmost to try and meet me in the same terms. Otherwise you would not have complained of the arrangements made for carriage of your meat this season. Then on the 23rd of May there was another letter from Mr Cuthbertson, to which learned counsel asked special attention, as it followed the same lines as the letter of the 5th of May:

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 much 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.

He wished to lay special emphasis on that, for it showed that it was not a shipping complaint, page 62 but that apparently what the company complained of was that some privileges were granted to Mr Ward which were not granted to them. Then came an important letter of the 6th of June from Mr Cuthbertson to the Nelson Bros.:

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 understand 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 freight is payable by you and not by Mr Ward or ourselves we must apply to you to place us on the same footing as Mr Ward in this matter.

He (Mr Bell) did not know if his Honor had observed that the claim was founded only on the fact that the purchase of Mr Ward's output was on the same terms as theirs—f.o.b. That was a demand for 2½ per cent, based on the existence of the contract to buy Mr Ward's output, and based on the 7 th clause of their contract that they should be placed in the same position. Mr Reid replied to that to Mr Cuthbertson:—

I am in receipt of your favour of the 6th inst., contents of which are noted. It is true that Mr Ward receives a small loading commission from the Tyser Line (Limited) on his meat shipments, but with this Messrs Nelson Bros. (Limited) have nothing whatever to do I am going to Napier in about 10 days, and will then represent your case to Mr Dobson, and advise you whether he can see his way to give your company the same concession. Wishing you will consider this satisfactory.

Sir R. Stout: Mr Reid says in another letter he would have to consult Nelson Bros.

Mr Hosking: Because it would have to come out of the Nelsons' pocket.

Mr Bell: Mr Cuthbertson, writing to Nelson Bros, on the 11th June, says:

I am duly favoured with yours of the 8th inst., informing me that it is a fact that Mr Ward receives a commission from Tyser on his meat shipments, but that with this your firm has nothing to do. I have to thank you for promising to see what can be done in this matter when Mr Reid goes to Napier shortly, and I need only say that this company will not be satisfied unless it is placed in as favourable a position as Mr Ward. I would also beg leave to point out that we have been definitely assured that Mr Ward has sold his output (f.o.b. Bluff) to your good selves at the same price and on the same terms as ourselves. Such being the case, the shipments are not his, as you put it, but yours—

His Honor would see how they founded their claim—

and it therefore follows that he receives commission from Tyser's on meat sold by him to you f.o.b. and shipped by ourselves, or, in other words, on your shipments.

Now, it would be seen that the Southland Company claimed the per cent., because they said the meat was sold to the [unclear: Nelsons] and, therefore, the shipments were [unclear: Nelson] and not Ward's, and, therefore, [unclear: they] entitled to the per cent., and [unclear: that] Nelsons should give it, and not Dobson.

His Honor: What date is that letter?

Mr Bell: The 11th June 1892. [unclear: From] time forward, through 1892 and 1893, [unclear: subject] one or two other letters which he [unclear: would] from the beginning to the end of the [unclear: deali] the company, that was the basis on [unclear: which] dealt. The company said: "The [unclear: shi] are not Ward's, but yours [unclear: (Nelsons')] therefore, you get the commission, [unclear: and] must give it to us; we claim it [unclear: not] Tysers, but from you, and you [unclear: must] it;" and yet, having so dealt [unclear: with] Nelsons throughout 18 or 19 [unclear: months,] said now that the Nelsons' contract was [unclear: a] breach, and they demanded heavy [unclear: damages] the breach of the contract and for [unclear: the] done. Then there was some [unclear: corresponded] with Mr Cuthbertson, which he (Mr [unclear: Bell] want to put in, but he was not going [unclear: to] the jury with it There was a letter [unclear: from] Reid to Mr Cuthbertson on the 16th [unclear: June]

As previously advised I will discuss the [unclear: q] of the 2½ per cent, loading commission [unclear: paid] Ward by the Tyser Line (Limited) [unclear: with] William Nelson.

The company were claiming from Mr [unclear: Nelson] if the commission were received by Mr [unclear: Nelson] and not by Mr Ward. Mr Reid [unclear: continued.]

I may say there is very little difference [unclear: in] contract with Mr Ward from that [unclear: made] your directors. I think the only variation [unclear: is] Mr Ward has agreed to weigh [unclear: each] separately, while you could not see [unclear: your] do so. The highest price we pay Mr [unclear: Ward] f.o.b. for prime sheep weighing 55lb [unclear: to] lower grades in proportion. I give this [unclear: intion] for your own private use only, for [unclear: I] to be able to tell your directors that you [unclear: fied] that Mr Ward is not getting [unclear: better] than the company you represent. [unclear: I] trust you will, as I request, treat [unclear: this] strictly private, and that you will not [unclear: again] notice of any reports circulated [unclear: contradiction] information herein contained.

Then on the 4th August Mr [unclear: Cuthbertson] wrote:

I shall of course submit to my [unclear: directors] offer to give us 2½ on the freight [unclear: provident] grade the meat as Mr Ward does.

—that was the offer to give the 2½ per [unclear: cent] to them provided they graded—

I shall feel obliged if you will [unclear: kindly] exactly the different prices and [unclear: classes] you arrange with Mr W. I [unclear: did] take a note of them yesterday, [unclear: and] I know the price for first-class [unclear: sleep] be 2½d and for lamb 3½d, yet I do not [unclear: r] the two intermediate prices, nor [unclear: the] shall also be glad if you will let me [unclear: know] Mr Ward has to wait till the bill [unclear: of] signed before he is paid for the whole [unclear: or] of a shipment. You will remember [unclear: my] to day that the treatment we have [unclear: received] page 63 [unclear: Nelson] Bros, during the last six months or so was [unclear: very] different from what had been previously [unclear: ccorded] to us, and you deprecated such an idea. [unclear: But] in order to show you that it has a solid [unclear: foundation] in fact, and that we have not received [unclear: from] you anything like the same consideration [unclear: that] our rival has—

[unclear: Mr.] Cuthbertson reported that old grievance [unclear: about] the Star of England, and then said—

We find that in addition to his contract [unclear: price] meat Mr Ward gets a commission on the [unclear: freight.] You simply decline to give us a similar [unclear: cession.] It is beside the question to say that [unclear: this commission] is given by Tyser and that Nelson [unclear: has] nothing to do with it. No judge or jury [unclear: would] ever draw such a distinction. The [unclear: concession] cannot be separated from the contract, the [unclear: commission] forms an integral part of the price [unclear: received] by Mr Ward for his mutton, and was [unclear: given] him, admittedly, as an inducement to get [unclear: him] to sell his output to Nelson. There is no [unclear: getting] away from that fact. And the position I [unclear: take] up in this matter is checked by two things: [unclear: (1)] That while the offer made to Mr Ward by the [unclear: Tyser] Company in common with the N.Z. and [unclear: S.S] Companies was that he should receive a [unclear: commission] on all his shipments, and not on other [unclear: people's] shipments, yet the Tyser Company are [unclear: actually] giving Ward a commission on shipments [unclear: made] by another firm—viz., a firm who purchase [unclear: his] output of meat. In all fairness and justice, [unclear: Mr.] Ward has no claim on Tyser for a commission [unclear: on] any shipment but his own; and yet Tyser (as [unclear: you] put it) voluntarily gives him a commission [unclear: to] which he has no claim whatever under [unclear: their] original offer. Then when this company [unclear: asks] merely to be put on the same footing as Mr [unclear: Ward] they are refused. (2) That the foregoing [unclear: negotiations] were carried on by the same [unclear: individual] which is equal to saying that in this [unclear: matter] Nelson and Tyser are one entity. I feel [unclear: that] we have many good grounds for complaining [unclear: that] we have during the last six months been [unclear: repeatedly] refused when we have asked for the [unclear: same] treatment as has been given to Mr Ward; [unclear: and] it is absolutely certain that a continued [unclear: real] on your part to place us on an equality [unclear: with] opponent will lead to serious results. I have [unclear: erto] done all in my power to make things [unclear: to] smoothly in connection with the contract, [unclear: because] I thought you treated us well, and [unclear: that] might have been sometimes treated better [unclear: by] us; but in the matters referred to I cannot any [unclear: ger] take your part, as I have done many a [unclear: time] before. I trust that you will yet manage [unclear: this] matter of the 2½, as I feel certain that the [unclear: directors] will not agree to any alteration of our [unclear: present] standard.

There was a point yet to be determined, [unclear: which] had not yet been put, and that was, what [unclear: would] have happened if the negotiations had [unclear: ulted] in the Southland Company getting the [unclear: 2½ per] cent.? They were offered the 2½d per [unclear: cent.] if they accepted the grading.

Sir R. Stout: Surely that is not the [unclear: connundrum] we have to settle.

Mr. Bell said there was still another form in which the matter could be put to his Honor at the close of the case: he had still to ask his [unclear: Honor] for a direction upon the evidence. Then [unclear: came] this letter from Mr Reid to Mr [unclear: Cuthbertson] the 10th August:

Referring to the conversation I had with you last week, I now put in writing the offer then made, which, if accepted, will take the place of the present agreement, as far as the modifications contained herein go: 1. That all sheep shall be weighed separately, and the weight of each carcase marked on the ticket attached. 2. That 6 per cent, shall be deducted from that weight for shrinkage.

That was the offer of the grading contract for sheep—an offer which was formally repeated then. The last paragraph was important.

I will also agree to pay 2½ per cent, on net amount of freight on above meat. Terms cash on exchange for bill of lading; but should your works become blocked with meat at any time and we are unable to provide freight, arrangements can be made to pay for meat in the works on production of store warrant.

The new terms were that if the Southland Company accepted the grading they would get the per cent, commission in order to make the thing perfectly level, and Nelson Bros, would, instead of paying with the bills of lading, pay, if the works were blocked, on the production of the store warrant, and that would relieve the company of the previous complaint that while they had meat ready for shipment they were not allowed to get it away. Then what happened? There were three letters of the 15th August, which were all of the utmost importance to his clients. The first was a letter from Mr Cuthbertson to Nelson Bros. (Limited):

Your favour of 10th inst. was submitted to my directors at their last meeting, and while I was instructed to inform you that they are unable at present to agree to your request to adopt the new system of grading and taring, owing to the expense connected with the necessary alterations to our building and the consent of our guarantors being necessary to the new system of tare, I am also to state that my directors consider the 2½ per cent, commission on freight granted to Mr Ward is an infringement of their agreement with you, and formally ask you to grant them the same consideration.

So that the Southland Company were still insisting on the same position—they were refusing the grading contract and they were reiterating their demand for the per cent. Mr Cuthbertson was directed by the board of directors to make that demand, and there was a minute to that effect. The other letter of the 15th August was also a letter from Mr Cuthbertson to Nelson Bros., and that letter was a letter demanding that the Nelsons should exercise as against Ward certain powers which it was assumed they had under the contract with Ward. Mr Cuthbertson said:

We are advised that Mr Ward recently offered to freeze sheep for one of our clients, and allow him to dispose of them either in the colony or elsewhere as he chose. We are also advised that he has not only offered but has actually frozen beef for one of our clients on the distinct understanding that the latter is to be permitted to dispose of it anywhere he thinks fit. We shall be glad to know if Mr Ward's contract with you permits page 64 him to do so, and if not we have to request that you will take such steps as may be necessary to put a stop to the practice.

The jury would observe that on the 15th August there were two formal demands—one for per cent, on the basis of the position that Mr Ward had sold his whole output to Nelson Brothers; and the second a demand by the secretary by direction of the board upon the Nelsons', assuming the existence of a contract between the Nelsons' and Ward, and requiring the Nelsons' to stop a practice by Ward. Then on the same date there was a private letter from Mr Cuthbertson to Mr Reid:

Surely it must be obvious that we do not complain of the shipping arrangements made for us in themselves. What we do complain of is that better arrangements were made for Mr Ward, and when we asked for similar consideration or an equivalent commission both were refused to us. Had not Mr Ward received considerations that were not accorded to us in the way of getting his meat away, and getting paid for it, we should have had no cause for complaint. As it is we certainly have cause to say that we have not been put on the same footing

When he said that from first to last it had never been pretended that there was any complaint by the company against the Nelsons founded upon the making of the output agreement there was some question raised about it, but it was now absolutely borne out that the company never complained that the output agreement was a breach of the eighth clause, and as Mr Cuthbertson put it here, "We never complained of the shipping arrangements in themselves; we admitted you did the best; our complaint is that you did better for Mr Ward; that is what we complain of; and had not Mr Ward received considerations that were not accorded to us in the way of getting his meat away and getting paid for it, we should have had no cause of complaint." Now, that letter was written on the same day—and at the same time no doubt—as the two official letters written by Mr Cuthbertson, each of which recognised the existence of the contract for the purchase of Ward's output, and each of which vested a solid claim as against the Nelsons upon that assumption. As he (Mr Bell) had already said, he would be able to show that instead of Mr Ward getting the advantage the Southland Company had got the advantage from start to finish. Mr Ward complained, but in regard to that learned counsel would not trouble the jury by reading the letters. There was a letter of the 7th August by Mr Fisher, Mr Ward's principal man, complaining bitterly that he could not compete with the Southland Company because he was not put on the same terms as to prices. He said he could fight them on equal terms, but he was not on the same equality with them in the matter of price. And that was a fact, for Mr Ward only got 2½d per lb for sheep between 55lb and 65lb, whereas the other company got 2½d for sheep between [unclear: 50lb,] 75lb; they were able to buy first-[unclear: class] against him, and, though he was [unclear: cing] to buy, and intended to go on, he [unclear: a] to the Nelson Bros, to put him on [unclear: fair] with the Southland Company, and that [unclear: was] Some concession was made to Mr Ward [unclear: pu] to the provision in the contract, and [unclear: the] Bros, were to hold the balance [unclear: between] parties, and not join either one or [unclear: the] In answer to the letter of August 15, [unclear: cl] commission, Mr Reid wrote [unclear: formally] secretary of the company:

I am in receipt of your favour of 15[unclear: th] have previously advised you that the 2½ per [unclear: cent.] loading commission on freight to which [unclear: you] is a matter between the Tyser line and [unclear: Mr.] and Messrs Nelson (Limited) have [unclear: nothing] with it.

And then he added in a postscript:

The Nelson Bros, get the total [unclear: output] Ward's works as explained privately to [unclear: Mr] bertson.

Sir Robert Stout had put it that [unclear: that] first statement by Mr Reid to the [unclear: sec] regarding the contract, but that was [unclear: absu] was written on the 19th August in [unclear: ans] two letters of the 15th which founded [unclear: a] on that assumption, and in the letter [unclear: of] there was the same suggestion that [unclear: Ne] Bros, had bought the output. His [unclear: le] friend Mr Hosking suggested to [unclear: him-] was confident that the suggestion was [unclear: con] that the postscript was in answer [unclear: to] inquiry of the 15th August whether [unclear: Mr.] was at liberty to freeze for outside [unclear: per] To that the answer is, "No; Mr [unclear: Ward] freeze sheep to be sold elsewhere, nor [unclear: ca] a sell as he thinks fit." Mr Ward [unclear: was] treat with others, but was to give [unclear: the] output of every kind, including [unclear: clients'] Throughout this correspondence, [unclear: which] up to December 31, 1892, there is [unclear: never] complaint. Ward's meat is being [unclear: po] passed into Nelsons' ships f.o.b.—[unclear: into] same ships as the Southland Company;[unclear: s] There is no suggestion of complaint [unclear: til] months—no, nor till two months-ago, [unclear: be] when this action was launched nobody [unclear: then] there was a basis for this claim. I [unclear: was] read a letter of 19th August. There [unclear: has] a suggestion that Ward was allowed to [unclear: fa] inferior sheep to the detriment of the [unclear: Southland] Company, but it was their [unclear: brands] damned and it was Ward who got [unclear: the] The Southland Company had [unclear: previously] careful, but ceased to be careful in 1892-95.

Sir Robert Stout protested against [unclear: this] going to the jury.

Mr Bell read the letter of August [unclear: 19,] Reid to Ward:

I don't think, taking all things into [unclear: tion,] there is much, if any, difference [unclear: between] you, and you are both getting a [unclear: splendid] your meat. I have no control over the [unclear: southland.]

page 65

Company as far as their charges are concerned, and if the directors ike to give away [unclear: 2]d by increasing the price to producers I cannot object. I quite understand how difficult it is for you to purchase sheep just now and make your freezing charges out of them at contract price; but this is all the result of unhealthy competition in Christchurch, and I venture to hope that things will shortly settle down to their proper level. You will, I am sure, admit that at present London prices there is less in the business for Nelson Bros. than for you. The growers get all the cream.

I want you to remember that although it is attempted to say that the competition with Ward was the only thing which made prices high, yet, as Mr Reid points out, unhealthy competition in Canterbury was raising the prices in Southland. It was the fever in Christchurch which raised the prices. Meat went up abnormally by reason of the competition by people who knew nothing of the business and "the growers got the cream." But when the Southland Company says that the competition between Ward and the Southland Company created the losses of the Southland Company, there is a perfectly genuine piece of evidence in this letter. In the letter of 20th August to Nelson Reid refers to the same point as in his letter to Ward. Both of these letters refer to the absurd state of things, the fevered state of things in Christchurch; the price of stock put up all over the country. There is a letter on August 1892, in which Mr Nelson says:

I feel it will be to our interest to keep Ward alongside of them (the Southland Company), which he is not unless their sheep are all first-class weights. 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 [unclear: 1]d then let him go to the wall. Of course, I would rather not do this (though if we did it would be cheaper mutton than we have been getting from Christchurch), but Cuthbertson's letter, which you sent me, makes it clear Ward will be a more comfortable man to deal with in future.

Ward was receiving 2½d per lb for sheep of 55lb to 65lb, whereas the Southland Company received 2½d for sheep of 50lb to 75lb. So that he was not being kept alongside them in his grading under the contract. Nelson says:—

"I want to give Ward no advantage." "I would rather give him [unclear: 7]d on second-class than let him go to the wall." That would bring him to 2½d for prime instead of for first class. At the end of 1892 it became necessary for Nelsons to choose between the Southland Company and Ward. It was obvious that it would be with the greatest difficulty they could get a contract from both. Both were complaining, though Ward was disposed to make the best of it. It was only natural that any person at a distance reading the correspondence would think Ward would be a more comfortable person, &c., but in September Ward complained that he had not been put on level terms. On 3rd September Reid wrote to Nelson:—

I had a long yarn with Ward on his way south, and as you say he seems much exercised over the meat business. . . . I have thought over the business in every possible way, and have come to the conclusion that the only way to carry on the business successfully is to give Ward an all-round price of 2½d f.o.b. for all prime sheep.

That would bring him level with the Southland Company. The meaning of that is "they were good sheep, though too light. Anything under 55lb is not first class, anything under 50lb is too light, but if you don't freeze lots including light weights somebody else will." The grower has a certain proportion of first class, heavy, and light, and of course gives the preference to the buyer who will take the lot. Freezers may run up to 90lb and be as low as 45lb A large grower has sheep running 55lb to 80lb, another's run 45lb to 55lb. A man wanting to buy only first class will have a bad chance against a freezing company who would buy all kinds. Nelson wanted only first class, but it would not do to follow that course too persistently, or else another would get the market for all classes. Now you are aware that in 1893 the agreement was made which his Honor has held to be in equity a breach of agreement. We accept that position. The contract made at the end of 1893 to buy in 1894 was to take effect on the 1st January. No man agreeing to stay out of business for a term would by his agreement be debarred from making preparations to resume business at the end of the term. The jury had been told that Nelson Bros, most improperly injured the company by doing what they did. What they did in respect to this purchase was technically a breach of contract, and had been so ruled, but no damage was suffered by the Southland Company, nor did his clients act in any improper way in purchasing. They simply acted upon their construction of a business agreement, and blundered into entering into a binding contract. If they had said, "You keep that offer open to us till January 1," the ruling would have been in their favour instead of in favour of his learned friend.

Sir Robert Stout said the jury had nothing whatever to do in a case of damages for breach of agreement of contract with the honesty of the men who broke the agreement, nor with motive.

His Honor: That is so.

Mr Bell observed that the jury might have inferred from Sir Robert Stout's address that they had something to do with it.

Sir Robert Stout said his address was on different ground altogether.

Mr Bell proceeded to say that if his clients had committed a breach of contract it was a mere technical breach, that no damage followed from it, and that they did not break the spirit of the agreement. He also read the following extract from the minutes of a page 66 meeting of the directors of the Southland Frozen Meat Company, held on the 26th April 1895:—

Manager explained the reasons which led him to believe that Nelson Bros, had been connected with the Ocean Beach Works since 1891, and suggested that an action should be brought against them for damages on account of breach of contract. Draft letter to Bank of New Zealand submitted for approval. Resolved—"That the draft letter as amended be sent to the Bank of New Zealand, and that prior to doing so Mr Hall be instructed to engage Sir Robert Stout as counsel for the company . . . and that the amount of costs to be incurred at the outset not to exceed £100. That a writ be issued against Nelson Bros, for £30,000 damages, whether the bank consents or otherwise."

He stated that on April 22, 1895 the Bank of New Zealand wrote to the Southland Frozen Meat Company as follows:—

The Bank of New Zealand, as mortgagee under the several securities shortly specified in the schedule hereto, does, by this notice in writing signed by its manager at Invercargill, hereby demand that you will pay or cause to be paid to it or its manager or one of its cashiers in Invercargill aforesaid the sum of £22,141 7s 5d, being the amount of all moneys which according to its books appear to be this day due, owing, or payable by you to it under its said securities, together with such further sum as shall be the amount of interest on the said sum of £22,141 7s 5d at the rate of £8 per centum per annum, being the current rate for the time being by it to its customers in Invercargill on overdrawn accounts, computed from the date hereof until the actual date of the payment thereof, together with all costs and expenses as provided by the said securities: And hereby gives you notice that in case you make default in payment of the said principal and interest moneys it will proceed to exercise the powers of taking possession and sale of the mortgaged properties pursuant to the terms of the said securities.

Then on April 26, 1895 Mr Cuningham Smith wrote the following reply to this letter from the bank:—

I have received, through Messrs T. M. Macdonald and Son, your demand dated 22nd inst. for payment of £22,141 7s 5d, due by the company to the bank, which I laid before my directors at their meeting to-day. The directors will use every exertion to find the money required within the time specified in the mortgage—viz., three months from date of notice—and they ask for the co-operation of the bank in the following matter:—

On June 26, 1891, this company contracted with Messrs Nelson Bros. (Limited) to sell them the whole of the output from their works for three years from 1st January 1891 to 31st December 1893. One of the conditions of this contract was embodied in clause 8: "That Nelson Bros. (Limited) shall not, during the term of three years, erect, or assist, or be in any way interested or concerned 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 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 [unclear: p] the company."

The Ocean Beach Works were erected [unclear: in] during the currency of the contract, and [unclear: w] strong evidence to show that Messrs [unclear: Nelson] (Limited), during the years 1891, 1892, were largely interested in these works. [unclear: P] the erection of these works this [unclear: company] a prospering state, paying regular [unclear: dividends] shareholders. Since, and owing to their [unclear: ere] they have lost £30,000.

The directors, having taken legal [unclear: advice,] passed a resolution to the effect that a writ, [unclear: ing] £30,000 damages for breach of [unclear: contract,] once issued against Nelson Bros. ([unclear: Limited,]) they ask the co-operation of the bank as [unclear: mort] which they confidently expect to [unclear: obtain.] evident that if the company should [unclear: sa] in obtaining adequate compensation [unclear: for] loss caused by Nelson Bros.' [unclear: action] above, they would be in a better [unclear: tion] to meet their liabilities, [unclear: which] been caused by Nelson Bros.' [unclear: breach] contract. Our solicitors are of opinion [unclear: that,] the evidence in hand, a strong case for [unclear: dan] could be made out.

He went on to say that he was going [unclear: to] in the interrogatories administered, for the [unclear: pose] of showing what kind of fraud [unclear: and] honesty was alleged against his clients. [unclear: I] were the interrogatories:
1.Did any communications pass [unclear: between] Hon. Joseph George Ward and the [unclear: defended] any of their servants or officers in [unclear: connection] the Ocean Beach Freezing Works either [unclear: befo] erection of the said works, or during the [unclear: coerection,] or after they were erected? If [unclear: so,] the nature of all such communications. [unclear: and,] same are contained in letters, state the [unclear: date] all such letters and the persons by [unclear: whom] whom the same were written respectively.;
2.Did the defendants order or [unclear: cause] ordered in England or elsewhere all or [unclear: any] the machinery used in the said Ocean Beach [unclear: ing] Works? If so, what were the [unclear: circuns] under which the same were ordered? If [unclear: the] was ordered on behalf of the said [unclear: Joseph] Ward, did he ever pay the [unclear: defendants] same?
3.Did the defendants remit to the [unclear: sail] George Ward, or to any bank or person [unclear: for] ment to him, any sum or sums of [unclear: money] shortly before the said Ocean Beach [unclear: Fr] Works were erected, or during the course [unclear: of] erection, or shortly after their [unclear: erection?] state the amounts of any sums of [unclear: money] the dates on which the same were [unclear: respec] remitted.
4.Did the defendants, either [unclear: directly] directly, pay or contribute any sum [unclear: or] money towards the cost of erecting [unclear: the] Ocean Beach Freezing Works, or towards [unclear: ment] of the purchase money of the land [unclear: or] the same were erected?
5.Did the defendants or any of [unclear: their] with their knowledge and consent, [unclear: guarat] repayment to the Colonial Bank of [unclear: New] of any moneys advanced or to be [unclear: advanced] said Joseph George Ward in connection [unclear: with] erection of the said Ocean Beach [unclear: Fre] Works?page 67
6.Have any moneys been paid to the said bank by the defendants or any of their officers on account of any such guarantee?
7.Is any sum of money now owing from the defendants or any of their officers to the said bank on account of any such guarantee?
8.Did the defendants either directly or indirectly pay or contribute any sum or sums of money towards the expense of carrying on the said Ocean Beach Freezing Works before the 31st day of December 1893?
9.Did the defendants employ or pay any of the Servants employed in or about the said works before the said 31st December 1893?
10.Did the defendants ever agree to purchase the said Ocean Beach Freezing Works or any interest therein from the said Joseph G. Ward or any other person? If so, state the date and terms of the said agreement, and whether the same was ever carried out.
12.Was any agreement or agreements ever made between the defendants and the said Joseph G. Ward in relation to the said Ocean Beach Freezing Works other than that set out in the statement of defence? If so, state fully the terms of any such agreement or agreements?
13.Did the said Joseph G. Ward ever hold, and, if so, what number of shares in the Ocean Beach Refrigerating Company (Limited) as a trustee for the defendants?
14.Does he now hold any, and. if so, what number of such shares as such trustee as aforesaid?
15.Was any agreement or agreements ever made between the defendants and the said Joseph George Ward is relation to any shares in the said Ocean Beach Refrigerating Company (Limited)? If so, state fully the terms of any such agreement of agreements.
16.Was any agreement or agreements ever J made between the defendants and the said Ocean Beach Refrigerating Company (Limited) in relation to the said Ocean Beach Freezing Works? If so, state fully the terms of any such agreement or agreements.
17.Is it true, as stilted by Mr W. S. Davidson, one of the directors of the defendants, at the ordinary general meeting of shareholders of the defendants, held on the 5th February 1895, that the defendants had then lately acquired a large Interest in the said Ocean Beach Freezing Works, and that this had tended to swell the item of investments in the balance sheet? If so, state when and under what circumstances the large interest acquired in the said works was so acquired.

Note.—The whole of the above interrogatories are to be answered by William Nelson, the general manager in New Zealand of the defendants.

Mr Cuningham Smith seemed to be a very suspicious gentleman, and he came to the conclusion that the Southland Company were dealing with a pack of rogues, and so this £100 was used voted for these interrogatories. A mare's nest had, however, been discovered. No such investment as they expected was ever made. The investment they were most curious about was an investment in their own meat company's works, whereas they thought that Nelson Bros, had bought shares in the Ocean Beach Works. Unfortunately for his clients the £100 had been expended and something had to be got for the £100, perhaps something more, and so the action was pursued upon a technical ground which had not entered into anybody else's mind until it came before the jury, when it turned out that there was a technical ground. He hoped, however, the jury would not forget that the damage was caused by the output agreement.

Sir Robert Stout: You cannot say that.

Mr Bell did say that, and he intended to prove it. It never was pretended that there was any complaint, but they had it from Mr Cuthbertson that there was some kind of a growl shortly after the output agreement was made. The fact that the directors did growl at one time was a strong point in his clients' favour, as showing that they had the matter before them and came to a deliberate conclusion and determination with regard to the output agreement. Having shown the history of this matter from the beginning to the end, and having endeavoured to show that his clients were honestly trying to carry out their contract on every side he had performed his task.

Evidence was then called.

James B. Reid, representative for Nelson Bros, in the South Island, deposed: The Mutual Agency Company is agent for the Tyser Company in Dunedin at the present time. In 1891 I was the agent, and Mr Cars-well was agent in Invercargill. Mr Dobson was the colonial representative of the Tyser line in New Zealand. He was never agent for Nelson Bros. He might have done some work for them by special request. He was representative of the Northern Investment Company in New Zealand, and his duties in that capacity and as representative of the Tyser line occupied his time pretty fully. Mr Dobson lived at Napier, and Nelson Bros'. (Limited) place of business is about 12 miles from Napier. In 1891 the commissions for the Tyser line were divided between Mr Carswell and myself; they did not go to Nelson Bros. The commission which I divided with Mr Carswell Nelson Bros, had nothing to do with. Later on at my suggestion Mr Ward was appointed joint agent with Mr Carswell at Invercargill. I discussed the matter with Mr Dobson in connection with other business—that was, the wool business. The per cent, commission was then lost by me and went to Mr Ward. That was about the time Mr Ward's freezing works were started. Nelson Bros, did not make it up to me in any way. It was a mistake to suggest that it in any way came from the Nelsons. I got it from the Tyser Company, not from Nelsons, and it went from the Tyser Company to Mr Ward. I remember the contract which existed with the plaintiff company. That in the ordinary course would have expired in 1891. We were paying 2[unclear: 1]d, and entered into a new contract for three years at 2½d, gaining an extended contract. Early in page 68 1891 we considered it an advantage to get a three-years' contract in lieu of the one-year's contract, and we paid [unclear: 1]d per lb for that. We had then also their sale output. I made the arrangements which resulted in the contract dated the 29th of June 1891. There was a good deal of negotiating before the contract was signed. At the time it was signed I do not think we had any control over the Mataura water power. It was about the time of the scare concerning opposition at Mataura that we secured the water power rights there. When we acquired these rights we immediately offered them to the Southland Company, without any advantage to ourselves. After Mr Ward's resignation of his position as a director of the Southland Company and his threatened opposition I never took any action inconsistent with my letters. I never invested any money in Mr Ward's works, nor did Nelson Bros, prior to January 1894. The whole of the negotiations, except an interview or two, is shown in the correspondence read. Under the agreement set out we purchased Ward's output for two years. It was thought that would be an advantage. There was a prospect of charges being reduced somewhat, and it was thought better to have a purchase for a long period than a short one. The meat market was very good at Home in February 1891 It was decided in the interests of the Southland Company that we should make that firm contract with Ward. At that time both lamb and mutton was high in London, and Ward could have sold his sheep by cable at higher prices than our contract prices. No objection was ever made to me to cur entering into an output agreement with Mr Ward. Quite the contrary. I had several interviews with Mr Cuthbertson, but I cannot give dates of them. It was generally known before the 15th of May by those interested in freezing that we had purchased Mr Ward's output. Mr Ward put the meat on beard the steamer—we bought f.o.b. Nelson Bros, had the contract to supply the Tyser line with cargo, and the cargo was supplied by Nelson Bros. I was on good terms with Mr Cuthbertson, and remain on good terms with him. From May 1892, and thereafter throughout 1893, we were openly buying Ward's output. There was never any complaint or suggestion of complaint by any person on behalf of the Southland Company of our buying Ward's output. I have compared the prices under the contract with the Southland Company and the prices paid under the contract with Mr Ward. It is not true to say that Ward was favoured in the contract made with him as compared with the contract made with the Southland Company. The contracts were of different kinds. Ward's contract (the original contract) was for graded. We arranged with him for 55lb to 65lb sheep—that is the very pick of the sheep,—the most most valuable weights, and when you take out of a small range of weights you get [unclear: a] small percentage of a mob of sheep. [unclear: With] company we simply had a prime [unclear: qua] arrangement—all weights from 50lb to [unclear: 80lb] we treated as prime, and paid for [unclear: at] all round; whereas Ward only got [unclear: 2½d] to 65lb, and a reduced price [unclear: under] That is the original contract, and [unclear: compa] the company's contract with the [unclear: original] tract, that appears from the price paid [unclear: to] Ward as well as from my own [unclear: judgment] often saw the sheep. A modification [unclear: was] in the contract with Ward. On 29th [unclear: September] I wrote to him:—

We have not yet written to you [unclear: confr] your arrangements made in connection [unclear: with] contract with us for the output of [unclear: the] Beach Freezing Works. They are as [unclear: follsw] The price of all prime, first-class sheep [unclear: wei] from 50lb to 75lb net weight, to be 2½d [unclear: per] f.o.b.; prime carcases up to 80lb net to [unclear: be] up to 5 per cent, of shipment at the [unclear: same] All sheep under 30lb and from 75lb to 80[unclear: lb] the 5 per cent, already mentioned, to be [unclear: pai] at 2d per lb f.o.b. In reply to your [unclear: f] received on the——instant, proposing [unclear: an] ments to these arrangements, we have to [unclear: i] you that the matters contained [unclear: therein] receiving careful consideration, and as [unclear: soon] have determined what course should be [unclear: foll] we will write you further. In the [unclear: meanti] will be better to abide by the new [unclear: arrangement] as they stand, so please invoice the Star [unclear: of] land shipment in accordance [unclear: therewith,] oblige.

Those terms were equal to the Southland [unclear: Company's] contract, or, if anything, in [unclear: favo] the Southland Company. We were [unclear: comp] to take aged ewes from the Southland [unclear: Compe] but not from Ward. I am able to say [unclear: tively,] as the maker of the [unclear: contract] as an expert, that the Southland [unclear: Comp] had much the best of it at first [unclear: and] September 1892—thereafter, much [unclear: the] We were then only compelled to [unclear: take] per cent, of the heavy weights, whereas [unclear: with] Southland Company we had to take [unclear: then] With regard to the matter of providing [unclear: cient] shipping, we had no control [unclear: over] Marmari, but we arranged for her to go [unclear: to] Bluff to load. The Southland [unclear: Company] plained that their works were blocked, [unclear: but] the works in this island were blocked [unclear: in] summer months of 1892. There was a [unclear: glnt] freezing and a deficiency of [unclear: shipping] Timaru we were blocked for a long [unclear: time,] had an arrangement with Mr Ward [unclear: to] his works clear. With the Southland [unclear: Company] we had an agreement to [unclear: provide] steamer every six weeks, and we [unclear: proti] steamers in accordance with our [unclear: cont] At times we were short of steamers [unclear: but] always endeavoured to provide. In [unclear: Napier] held back a lot of sheep to give space [unclear: to] Bluff—we kept them back and gave the [unclear: Southland] Company and Mr Ward more [unclear: space] is a fact that we sent a store man to [unclear: Wi] page 69 works. We sent a man who was recommended by Mr Cuningham Smith. We were asked to send a man because I complained that they had not a thoroughly qualified man to attend to the temperatures. Referring to our advising Mr. Ward re grading, we wanted to bring about a uniform system (Mr Nelson's system) of grading and bar branding, and we advised all the freezing companies, not Mr Ward specially, we always wanted grading done. It is a great advantage to the buyer, I know Mr Price, the dealer. He wanted from us a five years' contract such as we gave to Mr Bell, but five years were only made with growers. We didn't make a five years' contract with him. I believe Mr Ward did, but we had nothing to do with it. I know that Mr Ward bought sheep outside the Southland district as far as Milton and froze them at his works. Before the year 1893 those sheep went to Burnside. Ward bought a great many sheep north of Clinton which had previously gone to Burnside, so any increase to the output of Southland would be due to that as well as to other causes. He bought Hill End sheep, 14,000 or 15,000. I don't think the Southland Company bought out of their own district. I had a general knowledge of Mr Ward's sheep, and know that there were resales of the inferior sheep, especially at Wallacetown. He was not freezing inferior sheep—the rejects were sent to the sale-yards I had no control of Ward's or the Southland Company's buying. I only took their meat at the prices agreed on. Those prices would not be advantageous to the freezing works. Mr Ward had not any practical experience as a buyer. It hadn't been any part of his own work to buy sheep. About the boilers—they were ordered by the New Zealand Refrigerating Company, and we agreed to take them, but it was found that we could not use them, and they lay in Sparrow's yard for 18 months I offered them to Mr Ward sometime afterwards, and he bought them, getting a year without interest in which to pay. I obtained Mr Nelson's confirmation by my telegram and letter of 17th November 1892.

To Sir Robert Stout: The Nelsons and Tysers were interested together to a certain export in the freight, but not otherwise. There was to be a sliding scale of freight depending on the Price brought by the sheep. The Tysers were not to my knowledge otherwise interested in the price of the sheep. Mr Edward Montague Nelson, of London, is a director of the Tyser line and of the Nelson Company. The Mr Nelson here looked after the Tyser line, and nothing was done by Mr Dobson about the Tyser line without consulting Mr Nelson. Mr Nelson did not take any part in the matter of the commission. It would have paid us well to have given the Southland Company 2½ per cent. if they would have graded their sheep. This 2½ was to have been paid by Nelson to the Southland Company if they had accepted a grading contract. Mr Ward, manager, acted in conjunction with Mr Carswell for Tyser. I told Mr Ward to treat Mr Carswell as their agent. Mr Ward was to get per cent, on the freight on his own meat. When we entered into the contract with Mr Ward in May mutton was high. Weconsidered Ward's a good contract. We did not think of the price as over top price or more than the sheep were worth. When I wrote to Mr Ward on 29th January that our offer was over market price I referred to the price of the moment. The price rose in March. I had fixed up a contract which gave Ward more than market value, but I knew that sheep rose in England in February and March, and as it was a two years' contract we considered it good. We probably lost by that contract, as things came down after the contract was made, and we had to make a concession to Mr Ward on 29th September 1892. New Zealand mutton (prime Canterbury) was low at the time. It was only lower on 19th August We had to give Mr Ward that increase to make him level wish the Southland Company according to our arrangement. The two contracts had to be practically the same. We raised the price in accordance with that arrangement. We had an understanding with Mr Ward besides the writing. It was only some time after the making of the contract that we recognised the stringency of the conditions of the grading contract. It was impossible to get the sheep. We did not make the concession to Save Ward from loss. I can't say whether the Southland Company experienced the same difficulty. They didn't grade.

The court adjourned at 6.30 until to-day.