H— 30,

122

May I remind you that the reason why the Board was willing to allow the " Admiral Codrington " to participate in the shipping service, and, indeed, to afford to that ship exceptional treatment, was that it belonged, or was stated to belong, to a New Zealand meat company. The ship is not now under the control of the New Zealand company, nor has it any real interest in the ship or in its running. The, reason for the inclusion of the ship in the contract has gone, and the Board is unable to justify its inclusion in the contract to the shipping companies who are the main parties to it. I have, therefore, to definitely inform you that the Board is satisfied that the Poverty Bay Farmers' Meat Company is unable to satisfy the conditions referred to in the Board's letter of the 18tli March, 1924, and has determined that it will not include the ship in the shipping contract for the 1924-25 season. Yours, &c., J. Fraser, General Manager.

APPENDIX T. OPINION FOR THE CHAIRMAN OF THE NEW ZEALAND MEAT PRODUCERS' BOARD Re S.s. " Admiral Codrington." (1.) Mr. W. D. Lysnar, the Chairman of the Poverty Bay Farmers' Meat Company, has been claiming that his company is entitled to have the above steamer put on the list of ships comprised in the 1924-25 shipping contract, and further claims that the action taken by the Board in declining to allow the steamer to be included in the 1924-25 shipping contract was a definite breach of the Board's undertaking contained in its letter of the 18th March, 1924. I have already verbally advised the Board as to the course it ought to adopt with regard to Mr. Lysnar's claim, but I have been asked to put in writing the substance of my opinion. (2.) It will be remembered that on the 18th March, 1924, the Chairman of the Board by letter informed Mr. Lysnar that the Board was prepared to allow the above steamer to be put on the list of ships in the 1924-25 freezing season provided that the vessel remained the property of the Poverty Bay Farmers' Meat Company and the Board were satisfied of the ability of that company to carry out its contract, and subject to such conditions as it should think necessary to safeguard the interests of the shippers for whom it was agent. It was obvious that the conditions imposed by the Board before allowing the above steamer to be included in the contract were conditions which it was bound to make in the performance of its duties to consignors and shippers to make satisfactory and expedient arrangements for the shipment of meat to the Home markets. It is also clear that it was necessary not only that the ships to carry out the contract should be efficient shijjs, but that the owners of the ships should be in a financial position to pay the necessary current expenses, charges, and disbursements while the ships were performing the contract. During the previous year consignors and shippers were very loath to ship their goods by the above steamer, and the persons controlling the running of the ship certainly had difficulty in providing the current disbursements of the ship during the season. Nevertheless the Board made tentative provision in the contract with the combined shipping lines commencing from the Ist November, 1924, under which it was able to include the " Admiral Codrington " in the shipping contract if it were satisfied that the conditions laid down by it were in point of fact satisfied. (3.) I associated myself with the inquiry by the officers of the Meat Board as to whether the conditions laid down by the Board in the letter of the JBth March, 1924, were satisfied or could be satisfied. I am satisfied from the inquiries I have made that in October and November, 1924, the steamer was not the property nor under the control of the Poverty Bay Farmers' Meat Company. It is clear from a declaration made by Mr. Lysnar himself that the company's land, buildings, plant, and machinery were sold under the conduct of the Registrar of the Supreme Court by the mortgagee to an English company, and that the other assets of the company were held by receivers for the mortgagee. It is clear that the above-named steamer was subject, amongst others, to a first mortgage to the Bank of Scotland to secure about £60,000, and it; was plain that the bank had entered into possession of the ship and was then controlling her as mortgagee. In his declaration Mr. Lysnar, referring to the steamer, said as follows : "At the present time the said ship is not trading to New Zealand, but is engaged in the carriage of goods between South American ports and England. The profits derived from such trading are not being remitted to New Zealand. The main object, therefore, in keeping the company still in existence is so that the ship can be sold when a suitable opportunity offers instead of being sold by a liquidator at an inopportune time. In any event it is plain that any surplus above the amount of the mortgage over the said ship will not be sufficient to discharge the balance due to the said bank. The holders of shares in the capital of the company will not receive anything when the company eventually goes into liquidation." The financial position of the Poverty Bay Farmers' Meat Company was thus stated by Mr. Lysnar in his declaration, viz. : " The company has no funds with which to pay the annual license, and any moneys which it may possibly receive by way of calls or otherwise must at once be paid to the. bank (meaning the National Bank of New Zealand)."