SHAW BANKRUPTCY.

Press, Volume XLIX, Issue 14839, 3 December 1913, Page 2

SHAW BANKRUPTCY.

ACTION TO UPSET SALE.

OFFICIAL ASSIGNEE v. TIMARU PROP-EItTY CO.

The hearing of the case wherdin the Offici&l Assignee in the estate of Walter Shaw sought to upset the sale of certain properties by Shaw to the Timaru Property Co. was continued at the Supreme Court yesterday . before 31r Justice Denniston Mr M. Myers, with him Mr Kinnerney and Air Weston, appeared for the Uiiicial Assignee, Mr C. P.. Skerrett, ii.C, with him Mr Cassidy, appeared ior the defendants other tuan Trevurza, and JJr J. H. Hosking, K.C., with him .Ur H. D. Aclandj appeared for Tre\*urza. VALUATION OF ASSETS. John 'iaibot, farmer, bouth Canterbury, gave evidence that he had been valuing tor mortgage purposes tor many years. Ho uad valued tour of tlio tarms in Shaw's e&tate tor the Othcial AsMgnee in conjunction with two other valuers. They valued Gates's V'siiley farm of 202 acres at £5 10s, liatee'e iarm of 4oU acres at £9 to £9 10s, total £4050 to £42.0; Levels farm of 88 acres at £12 10s, total £1100; JBiggs's farm of 177 acres at £13 10s, total £23S'J. Total lor the four farms £8875. The valuations were based on the quality of the land, the condition of the properties, and the selling values. The usual terms on sale were considered when the valuations were made, a deposit of 25 to 30 per cent., the balance to remain at current rates of interest or the vendor to find someone to lend the outstanding balance. Generally the vendor would allow the balance to stand, and would allow more to remain than a mortgagee would advance. The properties were valued in November, 1913. They were now in a neglected state, with the exception of Bates's farm, and had been deteriorating. Values had been fairly well maintained since last year. To Mr Skerrett: He made the valuations for the purposes of the case. He could not say that money was difficult to get at Timaru towards the latter part of last year, but money was more difficult to obtain in large sums than in small. He did not know the properties were subject to mortgages. Three of the farms were in bad order. He thought the properties would be disposed of by auction at the prices quoted, but not very readily, with the exception of Bates's farm. The others would require nursing before . they could be disposed of. A Government valuation generally allowed a margin, and he would not" be surprised to find a difference of 10 per cent, between the Government and private valuations. It would be found generally that properties were sold at prices above the Government valuation. Ho did not know that his valuations of the properties named were lower than the Government valuations. •-

To Mr Hosking: If the properties were offered to him in one lot he would not buy them, for no one but a speculator could buy them; they were so scattered, and were hardly suitable for individual holdings. Even Bates's farm was «really too small considering the country.

; SHAW'S EXAMINATION. The examination of Walter, Shaw was 'then continued.. v ■■••■'. ■ Shaw stated, in reply to Mr. Myers, .that Bates's farm carried a mortgage of £3000 to Eiworthy's Trustees. The .mortgage was raised in February, 1912. He had initialled a statement of deductions from the money coming to him in Imrie's'offico on April 13th. He went to see Imrie, and told him he might not'see him again. At that timo he intended to abscodd. He told Imrie that- he- had :been using: trust moneys, and was liable to imprisonment. Imrio then asked-him to initial the account in the ledger, and told him it would have saved a lot of trouble had he spoken before. The deductions totalled £2052, and in addition thero was £500, the value of the equity of the Wai-iti road property, which. he was to take over. Ho did not value tho equity at more than £100. He valued the property himself at £800, and there was a mortgage of £700 on it,"which did not allow a proper' margin. What really happened was that he sold all his interests for £4500, but the Wai-iti road property was left him. Ho did not know why, the purchase money was made up to £5000. In the deductions there appeared an item of £150 to Imrie and Higgins for selling his interests to the Company, an item of £300 for commission owing by Trevurza to Imrie, and an item of £150. which was a, bonus he offered to Mr Imrie. Hβ made that offer when he thought there was a risk of the sale not going through. To that £150 was added £50 due by Trevurza for commission, which he (witness) agreed to pay. He decided not to abscond, and on Monday, December 14th, there was a tremen<fcus rush of people to his place from nine o clock in the morning until two the next morning.. They all wanted their money, and he told them he was calling a meeting of creditors, and would probably be landed in gaol before the day wa Sj pver. He wrote to the bank suspending payment. For some time after he started business he made- all his trust account cheques payable to n £ rae ' j nnd in AP" I . 1908, he changed to numbers. That was done by Ins clerk, ard there was really no reason for it. Some of the money he advanced Trevurza'was for putting up buildings on sections he bought. Apart ST?™ r he ded , u ?t'?ns and an item of iAOO For commission he did not think the company knew of any further liabilities. Trevurza really did not know what ho owed witness. It April, 1912, he tried to effect a settlement with Mr Trevurza. Trevurza said it would be better for both of them to settle by the payment of a lump sum, and not to go into a statement. It seemed.to him Trevurza thought that some of the witness's methods of backing might be questioned. He understood that Raymond and Campbell were acting for Trevurza first of all, and for the Timaru Property Company after. Trevurza had told him he was advised that if ho filed criminal proceedings would be taken against him for reckless speculation. Trevurza therefore desired to have the sale effected. During tho negotiations with Trevurza he was considerably worried. He>confided in nobody, but used to write down in a diary tlie* state of his feelings each day.

To Mr Hosking: During his business career at Tjmaru the market for town properties was a rising one. He had not met many people -who had made money out of land speculations. In iNoveruber, 1911, money hardened, but it did not affect him much, for he was accustomed to pay high rates. He allowed his clients 6 per cent., but paid considerably more than that himself. He first iuet Trevurza in 1906, when ho received instructions to prepare the transfer of a email property. Trevurza then started out to buy properties, and came to witness for money to finance the purchases. Trevurza bought, as a. rule, without consulting him. On one occasion. Trevurza came to him regarding a email property in Elizabeth street, which was offered to him for £495. He advised Trevurza not to touch it,'but-Trei-urza bought the property for £485 from a man who only held an option of £400. This Surchase turned out. badly, as others id. In some of the cases, Trevurza came to him for the deposits. Hβ came to an arrangement with Trevurza to advance him money to complete the purchases. Hβ told Trerurza that if the securities were satisfactory, he would try and find the money. Hβ pointed out to Trevurza that it would be necessary to have some arrangement with the bank or witness, so that it would not be necessary to have to register a fixed mortgage against any property to be sold. Hβ took a power

of attorney from Trevurza. Some thirty-tivo propeities were purchased in the course of a month, and witness advised Trevurza to stop buying as they would be landed in a hole. One property bought* for £180 was sold for £130, and another bought for £275 ■was sold for £250. \He covered the properties with clients' money, and everything would have ueen right had 'lrevurza closed, but within two or three days after be thought he had stopped, Trevurza bougiit eight or nine other.properties. Some £350, the proceeds of sale of somo stock of Trevurza's came in about December 1907. He told Trevurza things, were much better, but almost immediately after Trevurza told him that \ there was £150 to pay on a motor-car. He told Trevurza he was sailing close to the wind to get him through, and Trevurza said he hoped he would not get witness into trouble. Trevurza did cot sugge t that vrboa the money was th..ra ho was going to begin buying again. Only otic of the thirty-two properties nas mentioned to him before Trevnrza bought, and that one Trevurza bought in defiance of witness's advice. Trevurza *aid it would be difficult to make up a statement of account, as there were so many details, and 6tiggested it would be better to agree on a lump sum instead of going into details. The same idea, he thought, had occurred to both of them. His reason for not making up the account was-because he did not think he would he paid. He did not tell Trevurza what he owed him, as he was never certain from day to day what the amount was. After the temporary halt, operations bogan again in February, 1908. Trevurza told him he could dispose of three of the properties if he liked to take a farm property in exchange. He told Trevurza to look at the place, but to do nothing until he had seen witness. He thought it would be better to let Trevurza get back to a farm, as it would keep him out of town speculations. Trevurza went off to inspect the property and on return said he had bought it, paying £10 deposit! TJie bank manager brought the cheque along, and said he proposed to dishonour it, but witness said he would fix it up. He tried his utmost to stop the sale, but was not successful. He did not remember telling Trevurza that things were as "right as rain." He did not tell Trevurza it was time ho bought some more property, for the bank manager advised him not to have anything more to do with Trevurza and not to lend him any more money. He did not remember Trevurza sayinpc, "If you can find the money I am quite agreeable." No such conversation took place between them. Trevurza used • to 1 get a cheque occasionally for personal household expenses. He used to come in and get money when he wanted it. He did not remember Trevurza asking if he woiild keep an account himself. He might have told Trevurza that he (witness) was keeping an account of moneys received and paid in his ledger. Trevurza had only to ask for a statement to get it. In 1908 no properties were bought, apart from an exchange, but in 1909 and 1910 Trevurza did very little dealing. Hβ erected' housce on some of the vacant sections he had bought, with money found for him by witness. In most of the exchanges Trevurza had to make a cash payment, which witness found. The houses were put up with witness's consent, and he knew he would have to find the money, but he thought Trevurza was bettering his position. -In 1909 and 1910 he did not, suggest to Trevurza that there would -be a difficulty in finding the money. In -1909 witness .bought a block of. land from Mr George Kerr. Up to tbqn there were no trust moneys which he had appropriated. It was a fact that four mortgages over properties first acquired by Trevurza did not provide a third margin that caused him to continue to support Trevurza. The four mortgages totalled £3300, and ihe a At I ?K- * he - £2000. Trevurza was" Indebted to witness in other amounts.- In -Jcovember, 1911. a blunder was made in selling a fnrni at Motukaihd. I*H|i J; placc was sold as a g ing ccnccrn. TSere was stock valued at £1200, and a lien on it to tho National Mortgage. It was thouchfc that the property was sold subject to this li n.biit it found that the sheep had to be clear and the Notional Mortgage had to be paid off. The rr»<niU rras that instead of a profit of £2€oo thee was a paper profit of about £500, for the buyers paid no interest for a year. The purchasers were clients of hie and in that affair he did not advise either party but allowed thorn to complete the deal themselves. In 1911 he began to feel tho strain of the many payments that had to be jnado. and in January, 1912, he told Trevurza that his physical condition was giving way. In April, 1912, Trevnrza asked him for a statement as to how he stood. About the previous Christmas or New Year he had prepared a statement of Trevurza's affairs for the bank. To make that statement appear as well as possible he did not include what Trevurza owed hint. On the statement Trevurza's equities appeared at £16,0C0. whereas after allowing for money ow : ng to witness, tbo nmonnt,would be reduced to £10,000. He did not indicate to Trevurzn that something had to come off the nlfchoUEh ho told Trevurza that the statement was not altogether an accurate one. He did not remember tellinir Trevnrza that his estate was only a flea-bite compared with other affairs witness had to manage, and find money for. In April. 1912. Trevurza went to Auckland. The posif'on -wns then becoming worse, for Trovurza was building houses, nnd there were second mortgages falling duo and eoirties of exchange to be arrnreed. Trpvurza wanted to sret into further trouble by making a big exchange for an Auckland property. Trevurza went to Auckland without his consent. Trevnrzn telegraphed him from Auckland, but he did not know what renly he sent. It rnipht have been t>>nt tbo exchange could not be done. When Trevurza returned from Auckland witness offered him £7000 for his equities, payable on torms. Mr Imrie was then trying to offe?t a settlement between witness and Trevnrza. That offer was reie~ted and a counter offer made of £9500, with £1300 cash. He did not accept that offer, but made another on© of £7000 with the Level* farm cleared. Mr Raymond's office then took over Trevurza's affairs, ard Mr Imrie appeared on the sr-ene again. Mr Imrie wanted to find out the position between Trevnrza and bims_elf, and the position of the properties with a view to selling or financing. When he signed the option disposinnr of his interests he knew that Mr Imrie was trying to form a company. He.was prepared to tako an interest in the company himself. When he made the first verbal offer to Mr Willie Raymond it referred solely to his claim against Mr Trevurza and there -was no talk of Trevurza disposing of his interests. The arrangement of it. had it come off, would hnve meant that he would he clear of Trevurza. and receive £10.0 CO. also bills from Raymond and Campbell for the balance. As things turned out all he fr 2\- ° f . the affair fas-a discharge of liability m respect of Trevurza for from the £4600 coming to him, £2000 was deducted for charges and coromisMons, £1500 he had mid on account of Trevurr-a, and the balance of £1100 was more than covered by interest he did not pet. On October sth he knew that Trerurza had offered to sell his interests for £3000.

FURTHER CROSS-EXAMINATION. To Mr Skerrett: The negotiations for the settlement of his affaire with Treruraa extended from April to October sth- During that period there were requests to close the connexion, but they originated with witness. His first offer toTrerurza was £7100. That was a bona fide offer made to get the account settled both in witness's and Trevurza's interests. Trevurza said lie waa played

out in the district. Witness, volunteered the offer of £7100, and fixed the siirn. Trevurza would have been justified iri accepting the otfer.: ■Hβ could »uave dono so.honourably. Trevurza would have got a. good bargain had the £9500 offer been accepted. A proposal was made by him to assign equities valued at'£B9l4 to Trevurza in full settlement of his claims. That oirer was tirst made ou July 2/th, ana was suusequentlv increased to £10,000. Trevurza could honourably have accepted that offer from the knowledge he had of the dealings. Trevurza said himself he was entitled to £10,000 if witness retained all the equities. In August he sent a statement of accounts to the solicitor for Trevurza or to Imrie. That statement was intended to show the most that Trevurza "was worth after witness's claims were placed on the lowest scale. Trevurza did not know all tho mortgages on his properties. He told Imrio that if all Trevurzajfc properties were sold for cash the most he could make was £9000. Imrie agreed with him that the interests, commissions, and costs set down were on the low sid.e. Tho idea of the statement was to show Trevurza that his estimate of his wealth was grossly exaggerated. The offer of October sth was a genuine one, and he was astonished that questions as to his financial position were not raised, seeing that he had mentioned that he was receiving deposits. Furthermore, everybody in the street seemed to know'from May, 1912. till the bankruptcy, that he was bankrupt, and ho had also been called on by Raymond and Campbell to restore certain money left with him for investment. Hβ wont to Imrie on two occasions to try and pet an advance of £300 or £400, out Mr Imrie did not lend him any money. He mentioned those matters to show why he thought suspicion might be aroused. He could not recall any more cases. Raymond and Campbell treated him with every consideration in those transactions. From October. sth to the 18th there was no formal agreement binding him to sell his interest for £5000. When he saw Mr Willie Raymond he had in mind the transfer of his claim against Trevnrza. which was about £11,500. He told Mr Raymond that supposing the debt was £11.500. ho would sell tor £5000.

At this stage the court was adjourned until 10 a.m. to-day..