Company Affairs

Waikato Times, Volume 122, Issue 20493, 9 May 1938, Page 8

Company Affairs

SUPREME COURT ACTION

CAMBRIDGE MAN SUED £IOB4 ALLEGEDLY LENT The return of £IOB3 18s 3d, being money allegedly lent to defendant by plaintiff was the object of a civil action started in the Supreme Court, Hamilton, to-day, before the Chief Justice, Sir Michael Myers, by the Taihape Printing and Publishing Company, Limited, of Taihape (Mr 11. E. Barrowclough) against W. Hamill, retired journalist, of Cambridge (Mr A. H. Johnstone, K.C., an'd Mr C. L. Mac Diarmid). Prior to February, 1937, said Mr Barrowclough, all the shares in the company were held by defendant and his wife, defendant holding most. In February last year, however, defendant granted an option to sell the goodwill, stock, plant and other assets, the option being considered by a syndicate, of which Mr F. McGuire, of Hamilton, was a member. The figure mentioned in the option was £3300. Assisted by Mr W. A. Smith, a Hamilton accountant., an investigation of I lie financial position of the company was made. This showed the company’s hooks to be imperfectly kept. A ledger account in defendant’s name was, however, found, apparently showing that defendant owed the company sums of money. Elsewhere in the hooks there were found other indications that defendant owed the company money. Defendant’s explanation was that these sums would be offset by profits, that, in other words, they represented drawings other than salary. Balance-sheets Unavailable At that time the profits made by the company were not known. The past three balance-sheets were unavailable, but according to a statement provided by defendant moderate profits had been niade in that period. The negotiations with the syndicate, which began as negotiations for the purchase of certain named assets, finally resulted on March 25 in the purchase and transfer to the syndicate of the shares in the company, apart from £2OO worth, which were retained by defendant, who agreed to sell these to the syndicate for £2OO if called on. Since then the plaintiff company had been unable to find any record of any dividend paid by the company to meet the drawings mentioned. The incometax returns had also shown that the company had made losses over the three years for which balance-sheets were not available.

William Aubrey Smith, public ac« countant, of Hamilton, described the visit in February, 1937, to Taihape. Witness had been unable to get the three previous balance-sheets but profit and loss accounts in {he books showed the following sums:—Year ended August 31, 1933, loss £74 18s 4d; 1934, profit £175 9s 4d; 1935, profit £268 6s 8d; 1936, profit £7O 9s sd.

The books of the company revealed that the drawings of defendant were: 1933, credit balance, £l3 16s 2d; 1934, debit, £250 15s lOd; 1935, debit, £172 14s; 193 G, debit, £159 12s sd: August, 1 936. to March, 1937, debit, £l9l 18s 3d. Witness had, however, been more immediately concerned with the revenue-producing capacity of the company than with the question of the debits. A deal was arranged at that first meeting, and next morning, with Mr McGuire, witness visited a Taihape solicitor who was to complete the deal formally. Witness knew that the transaction actually entered upon was a purchase of shares by the syndicate and not of assets.

Witness subsequently visited Taihape as auditor to plaintiff company and inspected the minute-book, produced to him by defendant. Such book showed no declarations of dividend. There was no record In the wages book nor ledger of the money claimed in the statement of claim. Losses Shown In Tax Returns Witness applied to the Commissioner of Taxes for copies of the income-tax According to these returns, losses returns of the company foe 1933-36. were shown for the years ending 1933, 1934 and 1935, and a small profit for 1936, as follows:—l933, £235 2s 5d (loss); 1934, £l6l 16s lOd (loss); 1935, £lO7 19s 8d (loss) ; 1936, £7O 9s srl (profit). The department informed witness balance-sheets had not been received. Witness found no authority in fhe books for writing off the various debits shown in Hamill’s account. Tr Air Johnstone, witness admitted that while defendant was in charge of the company it. was In effect a one-man business. (Proceeding.)