SALE OF A FARM

Press, Volume LXXI, Issue 21418, 9 March 1935, Page 8

SALE OF A FARM

SOLICITOR'S HANDLING OF DEPOSIT SUPREME COURT ACTION TO RECOVER £IOSO Allegations of false and fraudulent statements by a Christchurch solicitor, William Lancelot Aynsley, and two of his clients, of conspiracy to defaud, of fraudulent conversion, and of breach of trust, were made in an action brought in the Supreme Court yesterday. The plaintiffs were George Tracey Fisher, of Ellesmere, farmer, and Elaine Mabel Fisher, a married woman, of Ellesmere; the defendants were Aynsley, Henry Martin Boyle, of the Trafalgar Hotel, Nelson, and Elsie May Boyle, his wife. The conduct of the defendants, it was alleged, had caused the plaintiffs to lose £IOSO, and the return of this sum was sought. It was stated that the plaintiffs had agreed to buy a farm at Ellesmere from the Boylcs, on which there were arrears of interest, rates, and land tax. To allow these to be cleared the plaintiffs, it was alleged, gave as a deposit a mortgage of £IOSO on the understanding, given by Aynsley, who was acting for the Boyles, that the proceeds would be used for this purpose. But Aynsley had paid the money raised to Mrs Boyle, who had invested it in an hotel in Nelson, and the contract between the plaintiffs and Boyle had not been completed. The defendants, while admitting that the contract before the purchase of the farm was made on August 14, 1934, completely denied that any such undertaking as was alleged by the plaintiffs was made by defendants or any of them. They also completely denied that the mortgage of £IOSO was handed to them on any condition that it should be applied specifically in payment of the interest owing on the first mortgage. The defendants denied that there was any misrepresentation, or that there was any conspiracy to defraud the plaintiffs, or that they had in any way converted the mortgage moneys, or that they became trustees of the mortgage on the moneys which came from it fur the plaintiffs. They admitted thai some of the money from the mortgage was applied to the purchase of an hotel in Nelson and contended that the arrangement made permitted thir> and that the written contract placed no restriction on their use of these moneys such as was alleged by the plaintiffs'. Mr Justice Johnston was on the bench. Mr C. S. Thomas appeared for the plaintiffs, Mr R. Twyneham for Aynsley, and Mr W. R. Lascellcs for the Boyles. riainlifTs' Case Mr Thomas said the plaintiffs had for some time been looking for a properly to buy, and at the end uf July the linn of Coombes and Company was trying to sell a properly which was the basis of the present action, and a contract was arranged on July M 0 for the sale of a farm at Ellesmere. Under that contract a cash deposit ol' £IOOO was required. The plaintiffs were to take over a Government mortgage of £5892, a mortgage to the New Zealand Farmers' Co-operative Association of £I7OO, and gave an equity in a property in Christchurch.

Boyle had no money and was insolvent, although that was not known : at the time. There were some morti gages which could be sold by the ( Fishers to provide the deposit, and Coombes and Company were author- : ised to sell these. During the negotiaI tions it was made clear to the Fish- , ers that Boyle was in trouble linanci- > ally and that he was in arrears in [ payment of land tax a:id interest i under (lie mortgage of £5892. The mortgages were not sold, and by Aug- . ust 8, the time for completion, the con- . tract could not stand. Negotiations ■ were then opened for the sale of Ihe farm as a going concern, and on Aug- ■ ust 14 a conference was held at the [ oflice of Aynslcy, who was acting for the Boyles. Fisher would say that Aynsley told him that any arrangement would have to leave Boyie enough money to clear Ihe title of overdue interest, amounting to more than £4OO. Aynsley asked Fisher if he would transfer a mortgage of £IOSO to allow Boyle to arrange finance. Fisher was perhaps too trusting, and agreed to this. Mr A. D. Barman. who acted for the Fishers, a few days later drew attention'to the unusual course of transferring' such a large mortgage as a deposit, but Aynsley said it was necessary to do this to arrange finance. Aynsley said that to show his bona fides he would have a transfer, signed by Boyle, left with Mr Barman. Immediately that mortgage was obtained by Aynsley he went to a bank, arranged an overdraft of £7OO. paid it to Mrs Boyle, who immediately put the money into a hotel in Nelson. Thus Boyle was divested of his means of completing the transaction by paying arrears of interest and rates. Denial of Arrangement It was also necessary for the goodwill of the New Zealand Farmers' Co-operative Association to be obtained. for this company held a mortgage over the Ellesmere property. Aynsley had gone to Mr Machin. manager of the association, and told him that he had obtained the mortgage to arrange finance for the paying off of the association's mortgage. But Aynsley, he understood, would deny that he had ever made any arrangement to raise money to pay oll : interest and land tax on the mortgage for £SOOO odd on the Ellesmere farm. Boyle was never in a position to settle, but he and Aynsley had come to Mr Harman's office threatening to take action if the contract were not carried out. Mr Harman told them that the Fishers were willing to complete, but would not do so until Boyle had paid the arrears. And he drew attention in a letter to Boyle and Aynsley to the arrangement made by the latter that the mortgage of £IOSO was being transferred as a deposit to allow finance to be fixed for the payment of arrears of interest and land tax. Aynsley, however, wrote back saying that the contract had not been completed because of the Fishers' indifference. That attitude was taken, said Mr Thomas, when the deposit of £IOSO had really been stolen. Today the Fishers had not the mortgage of £IOSO and had not the money for it; and Boyle had not completed the contract. Boyle claimed that he had given his wife a lease of the Ellesmere farm for 50 years, and that he had to pay her for the goodwill of that to allow the sale to go through. Thus Mrs Boyle had received the £7OO that was raised on the mortgage put up by the Fishers. That money was placed into a hotel in Nelson. Solicitor's Evidence Annesley De Renzy Harman, a solicitor, of Christchurch, gave evidence of the negotiations. One of the terms of the sale of the Ellesmere farm was the payment of a deposit of £IOOO. For the raising of that deposit Fisher's mother gave three mortgages to be sold. Arrears of rates and interest on the farm made such a lai'ge sum necessary as a deposit. The contract was not carried out, and another contract was made. At a meeting in his office, at which Mr Jack Fisher, his mother, Mr Coombes, and Mr Aynsley were present, witness said he did not like the proposal to hand over so large a mortgage by way of deposit. To this Aynsley said it was essential that the mortgage be handed over as funds had to be raised by this mortgage to allow him to settle, and to pay off liabilities on the farm. He said that as a guarantee of good

faith witness could draw up a transfer of the farm which Boyle would and it could be held by witness. This was done, and the mortgage was handed over. At. no time was if possible to get in a position where the deal could be completed and Movie could fulfil his obligations. On November 29 witness cancelled the contract and the mortgagees sold to the plaintiffs. Aynsley assured witness that, the money raised on the mortgage of £IOSO would be used in the settlement.

William Machin, manager of the New Zealand Farmers' Co-operative Association of Canterbury, Ltd., said his firm carried an account for Boyle for the Ellesmere farm. On August Hi Aynslev told witness that Fisher had bought the property, and asked if the company's second mortgage could remain. Fisher's mother was assisting in the financing of the deal, and she had given him tvyo mortgages, and Boyle intended to pay oft encumbrances from the proceeds of the sale of the mortgage. The amount required would be about £750.

Anthony Crisp Cottrell. a solicitor of Christchurch. said his firm, as solicitors for the first mortgagee, had received a letter on August 9 from Aynsley. stating that Boyle would have to make arrangements to pay arrears of interest, rates and land tax on the Ellesmere property. Witness understood that arrangements for this to be done were being made with the firm of T. D. Harman and Son. Charles Coombes, a land agent, gave evidence that Aynsley had asked him for the mortgage of £IOSO, saying that he must have it to complete the deal. He said nothing about using the money for a hotel deal. The hearing' was adjourned until a suitable date could be arranged for its continuation.