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THE FEDERAL BANK.
APPLICATION TO REMOVE THE
In the Supreme Court yesterday arguments were continued bpfore Mr. Justice Holroyd, upon the application of Thomas Marriott, a creditor, that Mr. A. Priestley might be re- moved from the position of liquidator of the Federal Bank of Australia Limited, which is in voluntary liquidation under the super- vision of tlie Court, and that Mr. John Arthur Bhould be appointed liquidator in lils stead. The application is being made in the interests of the British credi-
Mr. Isaacs nnd Mr. Donald Mackinnon appeared for the applicant ; Mr. .Johnston and Mr. Weigall for MeBsrs. Blake nnd Rig- gall, the attorneys under power for Mr. C. J, Stewart, the official liquidator in England, and for tho committee of advice appointed in England ; Mr. Mitchell for Henry Scott and 10 other creditors in Soutli Australia ; and Mr. Higgins and Mr. Irvine for the liquidator, Mr. Priestley.
Mr. ISAACS concluded his analysis of the details of advances made to the directors and their friends, ns furnished by Mr. Priestley at the request of the English liquidator. ..The next account on the list was Unit of \Tolin Robb, a director, whose overdraft amounted to £21,000. In the detailed return part of the security was stated to consist of deeds of a house anil lund at Toorak, valued by Mr. Arkle in May, 18!)3, at £17,500, but no mention ot this security was mude in the first return supplied to Mr. Riggall. Mr. Priestley udded n note that the advance was made chlelly to take up shares in the South Australian Brewing and Molting Company, so as to ensure the bank in Adelaiele retaining the company's business. Whittingham Brothers appeared as dcbtorB to the umount of £18,092, one ot the firm, ,T. Whittingham, being a director of the bank, and Mr. Whittingham himself hod a separate overdraft of £7,000. The chief security for the firm's debt con- sisted of the deeds of the Alton Downs Station, South Australia, which was put down at Mr. Whittingham*- own valuation of £25,000. There was nothing to show the actual present value of this security, anil nothing appeared to have been done to realise the security. This ended the list of
? Mr. Justice HOMIOYD.-DO you make any specific charge of delay against the liquidator in connection with these accounts ! '
Mr. ISAACS.-It wus impossible to deal fully with each particular case. All that was now urged was that there was ample necessity foran investigation. The directors had made enormous advances to one another upon securities which were taken at the valuations placed upon them by the borrowers. No attempt seemed to have been mnde to check the increase of these overdrafts, or to realise the securities. Thp general manager must have some responsibility in these things. At any rate, he was not the person to make the necessary inquiry. He noted in concert with the directors in regard to theBC advances, and it was* through their influence that he was appointed liquidator at a salary ot £1,000 a
year. . . I
Mr. IuviNE.-What evidence is there of that? --
Mr. ISAACS,-It wns a fair inference. There was evidence, at any rate, that Mr. Priestley consulted Mr. James Munro in the prepara- tion of these returns. In one return Mr. Priestley stated that the account of G. M. Munro, a son of James Munro, was intro- duced by the latter. In the later return he said lie was informed by James Munro that this was not correct. He would resume now the consideration of the matters dealt with in' Mr. Rlggall's allidavit. Upon discovering that the advances to the directors and their friends were so greatly in excess of the amounts stated by Mr. Priestley in the first return furnished hy him for the information of the English liquidator, Mr. Riggall naked for un explanation. Mr. Priestley's reply wns that he had written off u total sum of £233,050 ns being-'bad debts, there having boen soma nppropriution-for that purpose in the balance-sheet,-,. ... ,
Mr. Justice,ITOLROYJ),-I cannot fpr the,
life of mc' understand the object of tliis writ- ing off. -?
Mr. ISAACS.-The- objpet could only have been'to make it appear in England that the indebtedness of the directors and their friends WIIB BO much less than ¡factually was. In nddition to ' that, several nccounts were entirely released just before the bank went into liquidation. Instructions were sent out from the English creditors that Bteps should be taken to have Mr. Priestley removed from the office of liquidator.
Mr. Justice noutovD asked how ¡t was that the English liquidator did not himself move in the mutter.
Mr. ISAACS.-The present application was being made substantially on behalf of the British creditors, but there might be some technical difficulty in making the English liquidator a party by name. , .
Mr. Justice HOMIOYD.-You are speaking of the wishes of the English creditors, but they have modo no motion by themselves or nny one representinL' them.
-. Mr. ISAACS said that an application would be made on this subject at a hitor stage. He had now put ull tho facts- which were avail- able before the ,Cpurt., He would now, read Mr. Priestley's aiiswering ' affidavit, and the Court would be lible tb'judge of the value ot the explanations which were there given. Mr. Priestleydeclared that wherever advances were made which were not authorised by the board they were, made by the assistant manager without his (Mr. Priestley's) know- ledge or consent. Then Mr. Priestley had a report prepared by Mr. Andrew Lyell upon the state ot the accounts, und .upon the lines laid down by Mr Priestley him.olt. That report would be found to contain eloquent
evidence of the real state of affairs. ..
Mr. IIIVINE auld that Mr. Lyell had been given a perfectly free hand in the preparation of his report.
The further hearing of the application was adjourned till next week.