Mr Viger's Evidence.

William Brown Vigers was called and sworn.

Mr Young : Can you tell me as to whether the liquidators are all agreed as to the advisibility of this ?

Witness : Yes; they say so in their affidavit

I understand there has been some different—some disagreement, between them ?—Not that I am aware of.

You have seen the balance sheet of the Ward Farmers' Association for June 1895 ?—Yes.

Did you assist in its concoction ?—No.

What advantage do you say there is in this over an ordinary liquidation ?—Well, we do not run any risk of assets disappearing, we save a lot of interest, and we get an addition guarantee on the amount we have to pay. We have to pay £5000, and we are getting that guaranteed.

You mean the Brooks account? Are there no assets against that ?—No; we have got pay it.

Do you know the financial position of Messrs Smith and Reid ?—No.

Are you quite sure that they are able to pay £62,000 ?

The witness, who spoke indistinctly through out his evidence, was understood to say that they would be able to pay within a fortnight.

Do you happen to know by whom the money is being paid ?—I do not.

Do you know if the Bank of New Zealand assisting them ?—I cannot say.

I take it that a limited company can never pay more than it has got, and therefore Smith and Reid take it over they cannot more out of it than you can ?—No, but they can take a longer time. Liquidation means sacrifice.

You suggest they can keep the company going ?—I do not suggest; I think it probable they will.

The fact of its going at the rate at which has been going means a loss ?—They were probably change the way of doing business.

You think it probable that they can liquidate to better advantage than you can?—I take that they are not going to liquidate, but that they are going to carry on as a going concern.

You would realise what securities you have got? You have securities?—We have guarantee by Mr Ward.

Have you no other securities ?—No, we have no other security.

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His Honor : That is so. It is stated in the affidavit that there is absolutely no security. That is not the fault of the liquidators. It is a point that may come up hereafter.

Mr Young: Yes, it probably will.

His Honor : It is possible—I suppose it is not the case?—that these debentures are a first charge on all the assets of the company.

Witness: I believe it is so, on all the uncalled capital and assets.

His Honor : They came in in priority to the sundry creditors ?

Mr Woodhouse : That is so.

Witness: The debentures are, I understand, secured by the uncalled capital and assets.

Mr Young: The Colonial Bank practically hold a mortgage over the uncalled capital to secure the debentures?—Witness was understood to reply in the affirmative.

Mr Haggitt: There is a provision that the debentures became due if the company goes into liquidation.

Mr Young (to witness) : What was your capacity in June 1895—at the time when the balance sheet of the Ward Association was prepared?—I was inspector of the Colonial Bank.

Were you aware of the bogus draft for £30,000 ?—What do you call a bogus draft ?

A draft which never went on.—I was aware of a draft that never went on. I do not know that it was bogus.

Is it not the same thing ?—I do not think so.

Why did it not go on ? If you have no objection, I shall be glad if you will explain what the transaction was.—I have no objection. The draft was drawn on a credit for £30,000, supported by warrants for oats that went to the credit of the association.

A draft on whom ? Do you remember ?—A draft on John Connell and Co. (Limited).

His Honor : That amount was placed to the credit of the Ward Farmers' Association with the Colonial Bank ?—Yes

Mr Young : It was practically a discount ?—Practically a discount.

What was the date ?—About the 29th or 30th June. I cannot be certain.

On the balance day, apparently ?—It was one of those two days.

His Honor: It was not the bank balance day. That had the effect of reducing the overdraft to £1185 4s 1d ? The draft did not appear as a liability ?—It became a discounted bill. They did not put discounts in at all.

His Honor: But, then, against that they had the warrants for the oats.

Mr Young: Would it not appear on the other side of the balance sheet as a draft against shipments ?—I had nothing to do with making up the Ward Farmers' Association balance sheet. You cannot ask me about that.

I am asking you, as an expert, under ordinary circumstances.—If it was not shown on one side it would not be shown on the other.

What became of the draft?—It was afterwards recharged to the Ward Farmers' Association.

Was it cancelled ?—Yes.

The transaction was written back ?—Yes.

Can you say how soon after the 29th June it was written back ?—I should say about the 19th October. It was some considerable time. It was the 13th October.

Should it not have gone on to London in June ?—It did not go.

It was kept in the bank safe, I suppose ?—Yes.

Do you know why it did not go on ?—Yes. It was not quite clear as to the terms of credit. It was done under cable.

Do you know what was the value of the oats?—No. They were supposed to be worth £30,000.

What became of the warrants for the oats ?—They were handed back, I understand.

Mr MacGregor: Do you tell us that the draft and documents were held by the bank from the 29th June to the 13th October ?—Yes. That is from memory, of course.

You have no personal knowledge of the value of the oats?—No. I suppose it would be the fair market value.

That had the effect of making the Ward Association's balance sheet considerably more favourable than it otherwise would have been ?—Yes. It did not show the contingent liability.

Do you know at whose suggestion the transaction was carried out ?—The bank's.

Which individual officer of the bank ?—Myself.

And you are one of the liquidators ?—Yes. I acted under instructions.

From whom ?—The general manager, Mr Mackenzie, who had the cable.

Were the directors aware of this transaction ?—I do not know, I am sure.

Whom did you advise to do this ?—The manager, in conversation at Invercargill.

You were in communication with the head office by wire ?—No; I went down.

How did it happen that this transaction occurred on the balance day of the Ward Association ?—Because the cable came that morning.

Was the cable in reply to another cable ?—I do not know.

Is it not a fact that what you went to Invercargill for was to insist that the account should be reduced as nearly as possible to credit?—Very possibly we wanted the account in credit.

And this providential cable arrived on the day on which you went down ?—On the morning before, I think. I understood that arrangements were made in London to have those credits established.

Arrangements with Mr Ward ?—Probably.

There is an extraordinary coincidence as to the date. Do you know whom the cable was from ?—I could not say.

How was it that this draft remained hung up for so many months without the transaction being settled?—I suppose because it was not convenient to find the oats.

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The oats were not forthcoming. Where were the oate which were represented in the warrants ?—They were supposed to be in the stores.

Were they ?—I do not know.

Have you any reason to believe that they were ?—Afterwards I had reason to believe that they were not.

So that this £30,000 bill was lying in the bank safe with a parcel of worthless bonds attached to it ?—We did not know that.

His Honor : Were the bonds worthless when you got them ?—They were not so to our knowledge.

Were they as a matter of fact ?—I believe so.

Mr MacGregor : Do you mean that the oats were never there at all to represent the warrants ?—I think not, from what I subsequently learnt.

What did you subsequently learn ?—That there was considerable difficulty in getting the oats.

Was it Mr Ward's bond they were supposed to be stored in ?—They were supposed to be in different places.

Did they duplicate the warrants ?—I think the man gave warrants when the oats were not there.

The bondkeeper ?—They do not have bondkeepers at these places.

His Honor : They would be free stores.

Mr MacGregor : Who signed the warrants ?—Witness : The manager of the company.

The manager of the Ward Company ?—Yes.

And you took his word that the oats were there ?—Yes.

And the Ward Company had the use of this £30,000 from June until October on the strength of this draft ?—It simply wiped off the overdraft.

It saved interest, I suppose ?—The interest would be charged back.

His Honor : If the oats had been there the account would have been £30,000 to the good.

Mr MacGregor: Were oats rising at the time ?—Witness : I think they were.

At the time of this transaction Mr Mackenzie was in Dunedin, and he instructed you to proceed to Invercargill to arrange this ?—Yes.

Do you remember when Mr Ward came back from England ?—I remember about the time.

At the time he came back were you aware of the financial position of the company ?—No.

When did you first become aware of their position ?—As far as I recollect, about the beginning of September.

Was this one of the accounts you had to inspect?—I inspected it once thoroughly, and once the figures on the books of the bank.

When was the thorough inspection ?—In November.

Until September did you consider that the company was in a solvent condition ?—Yes.

When did your suspicions become aroused about the oats ?—I was told about it. I heard in a general way.

When ?—Some time after September.

You have heard Mr Ward tell us that in the month of August he reported to the bank the damaging report that his manager had sent, Is that correct?—My own impression is that it was somewhere about the 2nd or 3rd September.

You would get to know that a few days after Mr Ward making it ?—Yes. It was made to Mr Mackenzie in Wellington.

While Mr Mackenzie was away were you acting as general manager ?—I was looking after the office. I was not acting as general manager.

There was no one in command except yourself ?—No; but there was a man in command in New Zealand—in Wellington. I attended to the routine work.

He had other work ?—I presume so. He stayed there for a considerable time.

That was the time of the proposed amalgamation ?—Yes.

You say that you made a thorough inspection of the affairs of the company in November?—thorough inspection so far as I could.

Did you take out a balance sheet or a statement of affairs ?—Yes.

Can you tell us roughly how it compared with Mr Cook's?—I made it pretty bad, but not quite so bad. I did not go so thoroughly into it as Mr Cook did.

Were you surprised to find it so bad as you did?—Yes.

Had you anyone assisting you ?—I had some assistance from the men in our own office, and from the men in Mr Ward's office.

There was nobody assisting you from the Bank of New Zealand ?—No.

Had not your own office cessed to exist then ?—No; it was prior to the 18th November.

I notice that you, along with the liquidators concur with Mr Cook in saying that this is the best offer you can get. Have you taken any steps to find whether you can get any other offer ?—No.

You have not called for tenders, for example ?—No; we have not called for tenders.

And this is the only offer you have had ?—Yes.

Or asked for ?—This is the result of our starting to put the company into liquidation. We called on the Bank of New Zealand to take it over. They declined, and we asked them to take steps to liquidate. Then we got this offer. We then stopped the liquidation proceedings in the meantime to consider this, till we thoroughly understood this and saw what was the best that could be done.

The Bank of New Zealand had actually commenced to liquidate the company ?—They had not actually commenced. They had received instructions.

Was it through the Bank of New Zealand that you received the first word of this offer?—No.

You received the notice through the Bank of New Zealand ?—No.

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And you do not know that the Bank of New Zealand are finding the £62,000 ?—I do not bow that they are finding one shilling.

You have no ideas on the subject ?—I have no ideas.

Mr Woodhouse: Do you think it would be a wise thing to call for tenders ?—No; I think it would be very unwise.

You think it would have a prejudicial effect?—Decidedly.

Mr Young observed that he did not wish to ask anything of the other liquidators.

Mr MacGregor said he would like to ask Mr Simpson a few questions.