H.—3o.

28

asked if there was a directors' meeting there that day his answer was, " No, I don't think so.'" The other independent witness was Mr. McLellan, the former manager of the company. He remembered young Mr. Vestey and Mr. Trott being at the works while he was living at Waipaoa, but did not remember what time of the day, but it was early in the morning. He remembered that Mr. Lysnar, Mr. Witters, and, he fancied, Mr. Matthews, were there. He said that the directors very seldom came out to the works, and it was not a common occurrence for directors to be holding meetings out there. He said that his impression was that the directors who were there had gone out for the purpose of welcoming those passing guests that morning. He was cross-examined by Mr. Lysnar, and he said that the directors very seldom met at the works. Mr. Lysnar asked, " But there was a Works Committe that used to meet at the works ? " He answered " Very seldom." " Still, there was a Works Committee ? " " There was one in existence." He admitted that it was the practice of Mr. Lysnar to go to the works early- -at 7 o'clock —in the morning. He was pressed by Mr. Lysnar about the Works Committee meeting, and said, " They were very seldom there." In answer to Sir John Findlay he said that he could not remember ever having seen the Works Committee out at the works, his answer being, " not holding meetings." Mr. Tolerton, at page 1320, said, speaking of the directors, " The three of them were there when we arrived." He says the party left Gisborne shortly after 8 o'clock, that they arrived at Motu shortly after 1, and that the directors and Mr. Rowlands had a fairly lengthy discussion in the room. We believe that Mr. Rowlands's recollection about this matter is correct. We believe that it was Mr. Lysnar and not Mr. Rowlands who suggested the inspection of the works by Mr. Rowlands and party on this occasion. What Happened at Waipaoa. There is a dispute as to what happened at the works regarding the negotiations. We are satisfied that Messrs. Lysnar, Withers, and Matthews did take Mr. Rowlands into a room separate from the other people, and that a discussion took place between the directors and Mr. Rowlands which showed a desire on the part of the directors to get Mr. Rowlands to entertain the purchase of the works. Conditions op Proposed Sale. Mr. Lysnar says that when he did discuss with Mr. Rowlands the value of the works he raised certain conditions —viz., that if they did sell it would be on terms which would permit the shareholders in Mr. Rowlands's company to have their stock frozen in the works at certain rates, depending upon the average freezing rates for the time being. Mr. Rowlands says, " There were conditions talked about at first which he mentioned in his opening remarks, but in negotiating he quickly dropped them, because I told him nobody could take him up in earnest if he kept discussing these conditions. This showed he realized they were useless." Proposal pop Mr. Lysnar's Company to buy Taruheru Works. Mr. Lysnar also says that at all the interviews that took place between Mr. Rowlands and himself he was endeavouring to get Mr. Rowlands to put a price upon the Taruheru works, so that Mr. Lysnar's company, probably with some others, would buy Yesteys' works and close them up. On the 25th August Mr. Lysnar wrote a letter to Mr. Rowlands, a copy of which is as follows : — At the last meeting of the directors of P.B.F.M. Company the question that we had discussed with you on several occasions, regarding the possibility of the sheep-farmers of the Poverty Bay district purchasing your company's Taruheru works and closing same up, came up for consideration, when I was requested by the directors to communicate with you and ask you to endeavour to expedite a reply on the question from your principals at as early a date as possible. My directors feel very strongly there is no room for three large works in the Gisborne district, and if your company builds another large freezing-works there to replace your Taru-