W. H. CUNNINGHAM.]

25

I.—3a.

Duncan syndicate would be right at the bottom. Mr. Philipps has, in addition to his mortgage security, £27,000 first-mortgage debentures equivalent to those held by Mr. Grace, forming part of the £80,000 issue. I know of nothing that puts Mr. Philipps down below any of the other debenture-holders of that issue. I have always understood that they were all equal. That is the position we would endeavour to maintain if the company was in liquidation. The result of putting Mr. Philipps down in the way proposed by Mr. Grace would be that he would get ss. or 6s. in the £1 on his whole claim on the Tongariro Company. But the Tongariro Company's own claim is put in as £60,000, and is then halved, with the result that the shareholders would get 20s. in the £1 on the actual amount of cash that they subscribed. Ido not want to keep the Committee any longer, beyond saying that the £10,900 advanced for royalties is, I respectfully submit, a charge upon the bush itself, which is there uncut, and we should be repaid that amount in full. The remainder of the claim is a debt due by the Tongariro Company for which Mr. Philipps has certain securities, which I ask should be recognized reasonably and fairly according to the order in which the various claims are allowed to rank. W. H. Cunningham examined. (No. 6.) The Acting-Chairman (Mr. Williams).] What is your full name, Mr. Cunningham ?—William Henry Cunningham. You are a solicitor ? —Yes, sir. And who do you represent ?—I represent the Armstrong, Whitworth Co., and also the AngloFrench and Belgian Corporation, which has a small claim. Will you now proceed ? —Yes, sir. lam grateful for the remarks which Mr. Cooke made yesterday in reference to Armstrong, Whitworth's claim, and I confirm absolutely what he says, because he personally knows a good deal more about the detail work than I do. I took over the claim for the reason that he gave, that he did not feel he could act for two parties whose interests might conflict. Now Armstrong, Whitworth's claim is based, first of all, on an agreement which is dated the 20th October, 1922. It was made in England between Sir W. G. Armstrong, Whitworth, and Co., Ltd., of the first part; the Tongariro Timber Co., Ltd., of the second part ; and Edmond Tudor Atkinson, of the third part. The negotiations leading up to this agreement were conducted by Mr. Tudor Atkinson in England. Under this agreement Sir W. G. Armstrong, Whitworth, and Co., Ltd., agreed to construct a railway in accordance with the Order in Council of the 12th September, 1921, upon the terms set out in the agreement, and to find the money required to provide for the cost of construction of the railway. The moneys so found were to be repayable by the company within twelve months of the completion of the line, the construction for purpose of payment being divided into two portions —the first eighteen miles to be paid for within twelve months of the completion of such eighteen miles, and the further twenty-two miles to be paid for within twelve months after completion of that particular portion. The agreement to construct the railway was entirely conditional on the part of the Sir W. G. Armstrong, Whitworth, and Co., Ltd., on the result of a preliminary survey of the proposed line and the examination of the value of the timber in the Northern and Eastern Divisions. In terms of clause 13 of the agreement Sir W. G. Armstrong, Whitworth, and Co., Ltd.'s, representatives were to be sent out forthwith to make the necessary survey and examination, and to report the result to England. Clause 14 provided that, in the event of the contractors determining not to proceed with the contract, their costs, charges, and expenses of the investigation were to be paid by the company, and were to be secured by a mortgage of certain of the company's timber interests and the land granted or to be granted for the railway route. A memorandum of mortgage was subsequently executed by the Tongariro Company under its seal, dated the 14th April, 1923, and a caveat was duly lodged by Sir W. G. Armstrong, Whitworth, and Co., Ltd., against all the titles affected by the mortgage to protect the interests of the mortgagee. At the end of 1922 representatives were sent by Sir W. G. Armstrong, Whitworth, and Co., Ltd., to New Zealand, amongst whom were Colonel Wilson, Colonel Greenhough, Sir Edwin Cornwall, and Mr. Geard from the staff of Messrs. Roney and Co., the company's solicitors. These representatives remained in New Zealand for a good many months, and examined every aspect both of the railway construction and the proposed development of the timber rights. A tremendous amount of work was involved in investigating not only the company's concessions and titles, but also the value of the timber and the prospects of successfully placing the timber on the market. After the fullest investigation and after negotiations extending over many months Sir W. G. Armstrong, Whitworth, and Co., Ltd., decided not to go any further. A formal demand under the mortgage for their expenses to date was served on the 25th February, 1925. The amount demanded was £13,171 lis. 6d. lam handing in the details of this claim. In terms of the mortgage, interest is payable on the amount secured at current rates, in default of agreement between the parties. It is submitted that, as against the Tongariro Company, interest at 6i per cent, would be fairly claimable since the 25th February, 1925, on the amount secured by the mortgage. This, taken on the amount claimed, for five years amounts to £4,275, approximately. The exact amount which is due to Sir W. G. Armstrong, Whitworth, and Co., Ltd., has never actually been settled between the parties, the Tongariro Company not being altogether satisfied that it has not been debited by Armstrong, Whitworths, Ltd., with expenses some portion of which is properly chargeable against other jobs Armstrong, Whitworths then had in hand or in anticipation in New Zealand. That is the position so far as the Armstrong, Whitworth claim is concerned. Hon. Sir Apirana Ncjata.] In regard to that last point you raise, you say the amount has never been actually settled ? —Yes. That was as between the company and Armstrong, Whitworth. The company was not absolutely satisfied with the details available, and, apparently owing to the unfinancial position of the company, they did not bother to go further into it.

4—l. 3a.