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The Pamphlet Collection of Sir Robert Stout: Volume 74

Addresses by Counsel

Addresses by Counsel.

Mr Young submitted, on the authorities cited by him, that there were two matters which his Honor would consider—first, the question as to whether the compromise was advisable from a pecuniary point of view; secondly, whether there were any circumstances surrounding the trading of the company and the issuing of its balance sheets, and the trading of Mr Ward himself, which would justify the court in refusing to sanction the proposed compromise. That it was a compromise he did not think his Honor could have any doubt. As to the first question, the only suggestion which the liquidators could make, in order to show that the compromise would be more beneficial than any ordinary winding-up process, and the only reason they gave for proposing it was delay and cost, wherefore they considered that the offer of Messrs Smith and Reid was the best offer. As to delay, it was quite evident that there need not be any great delay. The bulk of the assets of the association could be realised in a short time, and so the liquidators could reduce the amount of the debentures on which they were now paying interest.

Mr Woodhouse : They have to pay interest on everything.

Mr Young pointed out that the court had been told by Mr Cook that his valuation was slightly lower than what liquidation proceedings would be likely to realise.

Mr Cook interposed that he stated distinctly that his valuation was made as nearly as possible on a liquidation basis.

Mr Young: It does not mean allowing for cost of liquidation ?

Mr Cook : No. The cost might come in. That is a matter of opinion.

Mr Young said it was evident Mr Cook did not consider that the cost of liquidation was a serious item. The liquidators had never tried to get a better offer; they had simply accepted the first one that came along. The probabilities were that they would have got a better one if the thing had been left open.

Mr Haggitt: What! after these exposures.

Mr Young said with regard to the question of delay it was quite evident now that a lot of the farmers, in consequence of the rise in the price of oats, could pay up the amounts owing by them almost immediately. But the peculiar part of the whole thing was this : that Messrs Smith and Reid were buying the debts of the Hon. J. G. Ward and of the association—they were not only buying the securities but the whole of the debts as well. If the whole of the assets that were to be sold were worth nothing, the debts of Mr Ward might be worth something. If the company was to be put into page 32 liquidation the directors might be compelled to refund the dividends to the creditors. That was a matter that the liquidators had not taken into consideration. And if Mr Ward became bankrupt it was most probable that the court would suspend his discharge until he paid a certain amount in the pound. The items had been taken out of Mr Ward's statement of assets and liabilities, and they showed that his estate would pay 8d in the pound, taking into consideration " contingent liabilities," or 1s in the pound if the contingent liabilities amounted to nothing. These were two matters which had not been taken into consideration in considering whether a compromise should be accepted. And as the result of further examination there might be other matters come out which the court was not at present aware of. As it was, his Honor had already found out, in examination, that there were some life insurance policies and a small credit in the Bank of New South Wales.

Mr Haggitt: He puts no value on them whatever.

Mr Woodhouse: The next payment will exhaust the surrender value.

Mr Young said as to the pecuniary advantages of the compromise, he submitted that no great advantage to the shareholders from a pecuniary point of view had been shown in favour of accepting the compromise as against the realisation of the securities and exhausting every remedy against the company and Mr Ward himself. Then there was another matter come into consideration—that was the conduct of Mr Ward and the company. As for Mr Ward, he was managing director of the company. By some extraordinary means or other he became indebted to the company for £55,000, but as it turned out it was really the bank's money. It was evident be gave his name to the bank in a most promiscuous way, and he did not take any means to ascertain what his position really was; and now he practically offered to the creditors 8d in the pound. For these reasons he (Mr Young) hoped the court would not sanction the compromise so far as Mr Ward was concerned. Then, as to the conduct of the company, Mr Cook (who had investigated their affairs) told the court that that position had been brought about by reckless trading—during the last two years at any-rate. He could not speak as to before that. The balance sheet that was produced was an extraordinary one, and was absolutely " cooked"—no other term could be used—with the assistance of the bogus draft for £30,000, which was supposed to be secured by warrants for some imaginary oats. Either an advance was made against those oats or it was not. If it was made then the officials of the Colonial Bank had not satisfied themselves that the oats were in existence.

His Honor: They took somebody's word for it.

Mr Young : They made an advance.

His Honor: Well, not an advance. The money was owing already. It was not a fresh advance.

Mr Young : They practically took his security upon a customer's word that the securities really existed.

His Honor: They are not in any worse position than they were before supposing the security did not exist.

Mr Young: It enabled the association to show a reduction in their liability to the bank of £30 000.

His Honor: No doubt it did that.

Mr Young proceeded to say that the company was represented to be in a most flourishing condition, and paid dividends and bonuses every year. They recommended their debentures to their shareholders; and they were party to this arrangement by which £55,000 was transferred by them to Mr Ward.] Vigers's explanation of that transfer now was that they wanted to keep hold of Mr Ward. For what reason did not appear.

Mr Haggitt: He does not say so. He only supposes that.

Mr Woodhouse: He suggests that as a possible reason.

Mr Young said the real fact appeared to be that the liquidators were most anxious to effect this compromise. They sought to sell these debts to Messrs Reid and Smith, who were Mr. Ward's friends, and might be his nominee. He (Mr Young) therefore, submitted that the court should not be a party to a transaction by which a company was enabled to avoid the ordinary course of liquidation, with its inconvenient inquiries, or by which Mr Ward would be enabled to elude the Bankruptcy Court, with its inconvenient inquiries and possibly further proceedings.

Mr MacGregor said he did not propose to trouble the court with any lengthy address after the extraordinary and discreditable disclosures which had come out during the examination on the previous day. He would, therefore, leave the matter entirely in the hands of his Honor to say whether it was a case on which the court should set the seal of its sanction. After quoting "Buckley" to show that these matters were left entirely to the discretion of the judge, he said that he, on behalf of a number of the shareholders for whom he appeared, was prepared to leave it in that position. If the court was prepared to grant its sanction to this compromise he thought that either Mr Ward or the proposed purchasers ought to bear the heavy costs of these proceeding. Why should the shareholders of the Colonial Bank, who were already losing a great deal, have to pay the costs rendered necessary on account of the proposed sale ? This was a compromise of the debts owing by Mr Ward and the association. It was an effort on the part of the friends of Mr Ward to get him and his company out of the clutches of the law. It had come out in evidence that the purchase had stood to make a very handsome profit by reason of the rise in the price of oats. He(Mr MacGregor), therefore, did not see why they should not be compelled to pay out of this amount the expenses of the present proceedings, which were page 33 really for the benefit only of Mr Ward and the philanthropic gentlemen who had come forward to help him, and he did not propose to discuss the matter from the commercial morality point of view. It was perfectly plain that the transactions of the company with the bank and of Mr Ward with the bank had been carried on with almost unprecedented looseness. Such transactions were altogether inexplicable, except on the assumption that the parties were preparing for the smash that must inevitably come, and were trying to set their house in order accordingly. He would now point out one very significant thing as showing that the court had not sufficient material before it to sanction the sale. Mr Ramsay had estimated the cost of liquidation at £10,000; but Mr Cook had said that he had not been able to estimate the matter close enough to say whether he included the cost of the liquidation in his estimate. The business might be worth £74,000 or it might be worth £50,000. That was the closest estimate they could get. He did not like to take upon himself the responsibility of saying that the court should refuse the sanction to the sale. But it was perfectly plain from the exposures that had taken place that a desire for secrecy had been evinced all through these proceedings; and the action of the shareholders had been vindicated. Another significant fact was that in the proceedings for the appointment of permanent liquidators Mr Haggitt, who, no doubt, acted according to his instructions, made this statement to the court:—

Mr Haggitt said he had been requested to state that as to the difference between the £272,000 and the £327,000—the £55,000 which had been written of the "C" list—security had been taken for the amount before the Colonial Bank consented to write it off.

Mr MacGregor : From whom ?

Mr Haggitt said from the persons liable.

It now appeared that the security was worth no more than the paper it was written on, and that the bank and Mr Ward knew that fact, although his learned friend evidently was not informed of it. The security was like one of Mr Micawber's, and the probability was that it was of as much value then as it was now. It was for the court to say whether such statements should be allowed to be cloaked up; but if the court were satisfied from the evidence that this was the best offer that could be obtained, he thought that the purchasers might reasonably be ordered to pay the costs of these proceedings.

Mr Woodhouse said the position of the purchasers was this: They derived no benefit whatever by the transaction. What had been said by Mr Ward was perfectly true. What they were doing was a matter of friendship to Mr Ward, in the hope of being able to put the association on its feet again.

His Honor: Do you mean to say these gentlemen are going to pay £62,000 without any hope of getting anything for it ?

Mr Woodhouse: They hope to get £62,000 again, but they do not expect to get any profit.

His Honor: To pay £62,000 out of friendship without any hope of profit—astonishing ! If it is so, it is the oddest thing I ever heard of; but I suppose it is a business transaction, and that they hope to make something out of it.

Mr Woodhouse : I repeat that they do not hope to make any profit for themselves.

Mr Young: Then for whom do they make it ?

Mr Woodhouse : For the Ward Association.

Mr Young; They are the nominees of the Ward Association.

Mr Woodhouse : Mr Ward has nothing to do with it. It is simply to avoid loss and disaster to the association. They have been prompted by friendship for Mr Ward, and would like to see the transaction carried through as proposed. There can be no question that this is the best thing that the liquidators can do.

His Honor: The business of your clients is to get a good bargain, and as good a bargain as they can.

Mr Woodhouse said Mr Reid and Mr Smith were persons who were able to deal with this business. Their experience, knowledge, and resources enable them to deal with it much more satisfactorily than most persons could do, and they could give the highest price for it. There could be no question that the liquidators had found the very best market that they could find for selling this concern. The only alternative that was to be thought of was the alternative of liquidation; and it had been abundantly shown that that alternative would be very disastrous indeed to the persons interested—to the shareholders of the Colonial Bank. The analysis of Mr Cook's statement, which was made by Mr Braund, was of itself sufficient to induce the committee to sanction the sale. According to that analysis, Messrs Reid and Smith offered to pay £4600 more than the value that was placed on the assets, Then as regards the position of the Colonial Bank, there was the further fact to be considered : what the cost of liquidation would be. That cost would no doubt be very heavy indeed. A much better value would, therefore, he realised by the sale than was likely to be realised by any other means. With regard to the other aspect of the matter, the commercial morality aspect of it, he submitted that the authorities cited and the considerations mentioned did not apply. In the first place, the cases relied upon by Mr Young were all cases in bankruptcy, and in these cases the compromises were not for the benefit of the estate but for the benefit of the bankrupt. That was the case in every instance. It was not needful to go through the cases at any length. The reason which actuated the court in refusing to give its sanction was that the bankrupt was going to get some advantage out of it, which for certain reasons he ought not to have; or because it could mean the hushing up of some transactions in the way of fraudulent preference or something of that sort, which if page 34 gone into and exposed would result in a larger dividend. These considerations did not apply here. The debtor company was a corporate body, and supposing there was anything wrong in the balance sheet referred to or in the advance on draft it was a wrong the association had nothing to do with; it was done by the management, and not by the association, and if anyone was in fault it was not the shareholders. Then whatever remedies the shareholders had would still remain. If they had a grievance it would afford no remedy to them to force the association into liquidation. The considerations which applied in the case of a compromise with an individual did not apply in the case of an association. There was no example to be held up so far as an association as a corporate body was concerned. It was not suggested here, and could not be suggested that there were any further assets which could be brought to light by liquidation or by any other proceedings. A most exhaustive investigation had been made into all the affairs of the company, and it was much more easy to investigate the affairs of a company than of an individual. The books disclosed what the assets were. As to the balance sheets they certainly were very rosy; but that simply arose from this: the figures were right enough, but the values ought to have been written down.

His Honor said that as a matter of fact the figures were not right enough. It was not a question of writing down.

Mr MacGregor said it was a question of cooking.

Mr Woodhouse said, however that might be, it did not affect his argument very much. With regard to the £30,000, the draft which was first drawn and afterwards redebited, that did not affect the Colonial Bank, there was no advance made respecting it, nothing was lost. The amount simply went to the credit of an overdrawn account, and was afterwards charged to the same account. As far as Mr Ward was concerned he had been put in the same position so far as his affairs were concerned as if he had been bankrupt. He had given up everything, even his wife's property—all his wife's property,—and bankruptcy could have no greater effect upon him financially than these proceedings had. It could not be suggested that he had anything else. He had made a complete disclosure of his property, and there was no doubt everything would go from him. There was no suggestion of any impropriety at all on Mr Ward's part beyond the fact that he had been rather speculative and extremely unfortunate in the result. The learned counsel submitted therefore that if the court was satisfied—and the court must, from what had been placed before it, be satisfied—that it was the most beneficial thing for the shareholders of the Colonial Bank that this sale should be sanctioned, then the court would sanction it, for there had been no reason shown why it should not be sanctioned.

Mr Haggitt, in addressing the court, said that he could, he thought, show by the most convincing things and, at the same time, the most fallacious things—figures—that this transaction was the best possible thing that could be done in the interests of the Colonial Bank on the valuations before the liquidators and the court. The whole matter was now before the court. His learned friends could not suggest that there had been any secrecy in these proceedings—that there had been any attempt on the part of the liquidators or, for that matter, on the part of Mr Ward, who was most interested in this respect,—to keep anything back from the court. Nothing had been glossed over, everything had been exposed in the barest possible manner. The court had before it, from the liquidators and from those employed by them, the whole of the facts in their nakedness. The result was that it appeared that for a debt of £92,179 the Colonial Bank held as security some shares in Nelson Bros. (Limited), which were worth nothing; Mr Ward's guarantee for £20,000, which was worth nothing, or nearly so; and Mr Ward promissory note for £55,150, which was worth as much as his guarantee. They held his equity in certain freehold, which was valued by Mr Ward at £3850, but which, if realised, he ventured to say, would not yield more than 10s in the pound of that amount—say £2000. There was no provision for the cost of realisation, so that not more than that sum would be realised. The Hokonui Railway Company's guarantee was worth nil, so that the whole of the securities did not amount to more than £2000.

Mr Young : The uncalled capital.

Mr Haggitt said he would deal with that presently. According to Mr Cook's figures the actual assets of this company amounted to £112,797, less £48,756, which left a balance of £64,040, to which was to be added the uncalled capital, which would yield £8457. Adding these sums together they got £72,497. From that they would have to deduct the cost of realisation, which, according to the estimates, would be from £5000 to £10,000. That was not by any means an over-estimate, and he took it between the two at £7500. That left the sum of £65,297 only. The cost of realisation had been dealt with by the English judges, who had a great deal of experience and knew what such costs were.

His Honor: We know a little about it here, respecting some companies that have been wound up.

Mr Haggitt cited from cases showing the opinions of English judges (ex parte "The Merchants' Banking Company of London in re Durham, 16 Ch D., 639 and 643, and others.") These went to show that the costs of liquidation were recognised as being exceedingly heavy. Mr Ramsay's estimate was clearly not extraordinary or excessive. To go on with the figures, there were some contingent liabilities put down at £5498, which were not taken into account as liabilities at all. He proposed to allow something in respect of these, and had allowed £1500 only; that was one-fourth. This reduced the value of the assets to £63,497. The page 35 learned counsel here went into calculations, the result of which showed that the total assets by liquidation would net £56,500. If the estate went into liquidation the very most they could expect to get out of it would be about £61,000, whereas the offer made was £62,750 and relief from a guarantee the Colonial Bank was subject to of £5000 more, so that there was an actual gain of £1750 exclusive of the guarantee, or £6750 including it.

Mr MacGregor asked respecting the liability for £5000 whether that had been definitely ascertained.

Mr Haggitt said it was definitely ascertained and fixed before the agreement of 18th October. If they looked in the "C" list they would find other things besides actual accounts.

Mr MacGregor said it was not stated that £5000 liability had been definitely ascertained. It was stated as a probable liability; not as definitely ascertained.

Mr Haggitt said it was not ascertained to a shilling or to £500. but it was clearly ascertained to the extent of £5000 and upwards—what the upwards amounted to he could not tell. There was another distinct advantage in favour of accepting the offer of Messrs Lee Smith and Reid as against liquidation. If the association was brought to grief that would injuriously affect a large number of accounts in the "B" list, and would affect the liquidation of the bank generally. That the liquidators were positive of.

Mr MacGregor said he did not think that appeared on the affidavits.

Mr Haggit said it appeared in the evidence, and it was shown inferentially in the affidavits.

His Honor: The particular point to which you refer now is that if the Ward Association is forced into liquidation it will have a bad effect upon the accounts in the "B" list.

Mr Haggitt said that was so, and common sense, he thought, would lead anyone to that conclusion. Of course if there were any Southland accounts in the "B" list it must necessarily be so. They knew very well that a large bankruptcy had a similar effect to that produced by throwing a stone into a pool of water—the disturbance by the waves in the rings nearest the place where the stone fell was the greatest, but it spread further and further, getting smaller as it reached the outer edges of the pool. So it would be if the association was forced into liquidation. That was a very important consideration outside altogether the price which the liquidators were getting for what they were selling—a very important consideration. As against all this what had they had advanced ? First, his learned friend Mr Young asked his Honor to consider whether the compromise was desirable from a pecuniary point of view. That he had answered. Then his Honor was asked to consider whether there were not reasons surrounding the transition which ought to render it inadvisable that the sanction of the court should be given to it. Those reasons, so far as he understood his learned friend, were that certain balance sheets of the Ward Association were not what they ought to be, and that arising out of these balance sheets there might be possible grounds for prosecuting someone—he supposed the late general manager of that company.

Mr MacGregor: There might be a return of dividends.

Mr Haggitt said that asset must come in under the value of the shareholders' liability, and, if the whole value of the shareholders was only £8057, they could not get more out of them because they called for a refund of dividends.

Mr MacGregor: Get it out of the directors.

Mr Haggitt replied that a list of the directors had been put in, and there was only one worth anything and, as he was a shareholder, he must be valued in the estimate of £8057. That was clear enough. What was there besides; what had the liquidators to look to ? They had to look to getting the most money they could for the shareholders of the bank they were liquidating. What benefit would it be to them—what pecuniary benefit would it bring to the liquidation of the estate of the Colonial Bank if a prosecution would lie against the late manager of the association, or against any of their directors. It might be from a strictly moral point of view that an offence being committed, it was someone's duty to prosecute the offender, but he submitted that was not the liquidators' duty. The duty of the liquidators was to get as much as they could for the assets of the bank, and to realise them to the best advantage. It would not prevent anybody who had been injured by the action of the manager or directors of the Ward Farmers' Association—if the bank got rid of this liability it could not prevent anybody else prosecuting them, nor could he see how it could prevent the Colonial Bank prosecuting them. They sold the debt, it was true. If a prosecution would lie on account of anything that had been done previously, the sale of the assets, it seemed to him, would not affect that; so that there was nothing really in that argument at all. Then it was said that this kind of thing must not be done because it amounted to a compromise, and to effect that compromise would be to screen somebody who ought not to be screened—Mr Ward, his learned friend pointed at, no doubt. But how was he screened, he (Mr Haggitt) would like to know ? What greater injury could be done to him than to subject him to such an examination as he had been subjected to during the last two days ? The only thing that could possibly have been secured to him of any value would have been secrecy and silence with regard to the transactions of the Ward Farmers' Association. Why, they had been ripped up from top to bottom in the proceedings taken during the last two days, so that even that advantage, if it was an advantage, had been absolutely lost. The repetition of these scandalous doings, for scandalous they were, would become staler and staler every time they were repeated, and less and less interest would be page 36 taken in them. The proceedings so far no doubt had been, or would be, telegraphed all over the colony, and appear in every paper in the colony; and would prove intensely interesting to Mr Ward's political opponents, but the next time anything occurred regarding the matter there would be but a brief notice of it. Looking at this matter, he asked who was being screened? What was being screened? What possible motive could be attributed to the liquidators but to do the best in the interests of the liquidation? That was, he submitted, the consideration for his Honor, and the suggestions as to screening had not only not been proved, but had been absolutely disproved by the publicity which had been given to the proceedings. It had been said that there were other assets not mentioned, that there were certain life insurance policies. Those policies had been referred to, and, regarding them, it had been shown that the very next payment which had to be made would cover their surrender value. The liquidators were certainly not going to keep up these policies at a cost of tome £400 a year or thereabouts out of the funds of the bank even if the liquidation of the bank was likely to last for the period of Mr Ward's life, during which these payments would have to be made. Moreover the policies were pledged to secure Mr Ward's private indebtedness, and not to secure the Ward Farmers' Association, and these policies were in possession of the Bank of New Zealand at the present time, and all the liquidators would have a right to would be the right, after paying off the debt due to the Bank of New Zealand, to come in—in fact they would obtain these with the other equities if they paid off that account. What was there in that? The bank did not consider them of any value, and the proposed purchasers did not consider them of any value; they were not included in the sale. There was now only one thing to mention, and that was the rise in the price of oats. That was a matter that had been fully considered by the liquidators before this agreement was actually signed. Of course the rise in oats had been since the agreement was really entered into. The liquidators had bound themselves as far as they could before the rise bad taken place, and it would have been, as Mr Simpson had put it, exceedingly dishonourable for a private individual to try to back out of a bargain simply because the price of the article he had sold had risen after the sale had taken place. If such considerations were to influence the court at arriving at a conclusion, no provisional contract could ever be entered into; every contract would have to be entered into with reference to the price of produce, as on the day when the contract came before the court to be sanctioned. The matter, however, only incidentally entered into the consideration of this subject, for the association had no oats or very little—what they had there were more than sufficient outstanding store warrants to cover,—and the price of oats did not enter much into the contemplation of the parties at the time of the contract, and it now only arose incidentally in this way: that some of the debtors of the association was small farmers who had small quantities of cats, and, therefore, with the rise in price, their position was bettered, if they took advantage of the present market; but, if they did note it was just as likely as not when they attempted to realise they would get no more for them than the price they were at when the contract was originally entered into. He believed oats had risen 5d per bushel, but if in place of rising they had fallen 5d and Messrs Smith and Reid had tried to get out of their contract in consequence of the fall, would not indignation of the deepest kind have been expressed against these gentlemen for having tried to get out of a deliberate bargain, because there had subsequently been a fall in prices ?

Mr MacGregor: They would just have for-feited the £500 deposited.

Mr Haggitt said it might have been that the whole of the purchase money had been paid and what would have been said if they had come to the court and asked for the recision of the contract because oats bad fallen in price?

His Honor said the valuations were on the 20th March, and there were negotiations and agreements by letter or partly by letter, and partly verbal, based on the valuation of the 20th March, but they were not absolutely completed. One or two terms were left open, but these negotiations were working up to final settlement of terms, and the terms were closed and the agreement entered into on the 1st June.

Mr Haggitt replied in the affirmative, and said that the rise in price never entered into the contemplation of the parties until after the agreement had been made. The price was fixed on the statement, and oats did not rise till afterwards. The terms of the contract were agreed to and the deposit paid long before there was any rise at all in oats. That was the position of matters, and his opinion accorded with Mr Simpson's—that even if the liquidators had power to alter the contract or to back out of it in consequence of the rise in the price of oats, it would be a most dishonourable and disreputable thing to do.

His Honor: I understand that after the original contract there were letters from the liquidators insisting on something more, and that they finally got it.

Mr Haggitt said that was so, that however, was not the cause of the whole delay. He did not suggest that. The liquidators required balance sheets and affidavits from certain people before anything was finally concluded. It was a condition from the first, a condition of entering into this contract, that the affidavits should be obtained, and they were obtained only on the day before the contract was actually signed.

Mr Woodhouse: The £5000 between the two banks is a new term.

Mr Haggitt raid the purchasers had conceded that, as they agreed that it would be page 37 unfair that they should only pay 11s in the pond in respect to an item in which 20s in the pound might be paid by the liquidators. He did not know that there was anything more for him to say in connection with the matter. It seemed to him to be so absolutely obvious that this transaction was in the best interests of the bank that it was absolutely unreasonable to dispute it. Certainly the only person who did dispute it was Mr Braund, who had professed to analyse Mr Cook's figures, and had come to the conclusion that the purchasers would make a profit of of about £440, but had made no provision for the expenses of liquidation, and had not taken any account of what Mr Ramsay in his calculations had pointed out—namely, that there would be a considerable loss in interest to the bank, which it would have to pay while the liquidation was going on, so that the position would be altered for the worse by at least £8000 if the company went into liquidation instead of this offer being accepted. Beyond that the only argument urged against the acceptance of the offer which had been made to the liquidators was what he had already dealt with—the balance sheets of the Ward Farmers' Association. That they had nothing to do with. As to the consequences of dealing with the Ward Farmers' Association, in respect to any future action against the directors and officers of the Colonial Bank, the liquidator had provided for that as far as they could, and had got a clause inserted in the agreement, without exception being taken by the purchasers, providing for the production, if necessary, of books and papers disclosing the transctions between the association and the bank and between the association and Mr Ward. As the had already suggested, the liquidators had nothing to do with possible proceedings which might be taken against the directors or manager of the Ward Farmers' Association. That was a matter which, it seemed to him, was left open even although this sale was carried out.

Mr MacGregor, referring to the correspondence preceding the agreement to purchase, which had been handed to him by Mr Haggitt, observed that Messrs Reid and Lee Smith had submitted their offer for the assets on behalf of Mr Ward and his friends. That was what he had tried to get Mr Ward to admit on the previous day.

Mr Simpson: They changed their ground since.

Mr MacGregor said it was also stated that the offer was based on the balance sheet of the 19th March.

Mr Haggitt: That was admitted all through. His learned friend had said that the costs in this matter should be paid by the purchasers. Be submitted that if such a condition was attached it let the purchasers clean out. The court had no power to bind the purchasers to a new term of contract. The subject of the payment of Mr Cook's charges had been distasted, and the liquidators had had to give way.

Mr Woodhouses said that there was no reason why the purchasers should pay the costs. The matter was as much to the benefit of the Colonial Bank as it was to theirs.

Mr Haggitt said Mr Simpson had asked him to mention a thing which he had mentioned before, that liquidation or the acceptance of this offer were the only two things that were open to the liquidators, and procedings had actually been taken to put the company into liquidation when this offer was made.

Mr Young remarked that he did not base any argument upon the price of oats, because it would be clearly unjust to back out of the agreement on that account, but he would point out that the liquidators were in no worse position. As to the costs of liquidation the Hank of New Zealand were bound to liquidate for the Colonial Hank, under clause 26 of the bank agreement, free of expense except in regard to disbursements.

His Honor said he would give his judgment in a day or two.

The court roue at 1.45 p.m.