Argus (Melbourne, Vic. : 1848 - 1957), Saturday 14 October 1893, page 15


THE FEDERAL BANK.

APPLICATION TO REMOVE THE

LIQUIDATOR.

ARGUMENTS CONTINUED.

In the Supreme Court yesterday arguments were continued before Mr. Justice Holroyd, upon the application of Thomas Marriott, a creditor, that Mr. A. Priestley might be removed from the position of liquidator of the Federal Bank of Australia Limited, which is in voluntary liquidation under the supervision of the Court, and that Mr. John Arthur should be appointed liquidator in his stead. The application is being made in the interests of the British creditors.

Mr. Isaacs and Mr. Donald Mackinnon appeared for the applicant ; Mr. Johnston and Mr. Weigall for Messrs. Blake and Riggall the attorneys under power for Mr. C. J Stewart, the official liquidator in England, and for the committee of advice appointed in England ; Mr. Mitchell for Henry Scott and 10 other creditors in South 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, as furnished by Mr. Priestley at the request of the English liquidator. The next account on the list was that 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 and land at Toorak, valued by Mr. Arkle in May, 1893, at £17,500, but no mention of this security was made in the first return supplied to Mr. Riggall. Mr. Priestley added a note that the advance was made chiefly to take up shares in the South Australian Brewing and Malting Company, so as to ensure the bank in Adelaide retaining the company's business. Whittingham Brothers appeared as debtors to the amount of £18,092, one of the firm, T. Whittingham, being a director of the bank, and Mr. Whittingham himself had a separate overdraft of £7,000. The chief security for the firm's debt consisted of the deeds of the Alton Downs Station, South Australia, which was put down at Mr. Whittingham's- own valuation of £25,000. There was nothing to show the actual present value of this security, and nothing appeared to have been done to realise the security. This ended the list of

accounts.

Mr. Justice HOMIOYD.-DO you make any specific charge of delay against the liquidator in connection with these accounts ! Mr

ISAACS It was impossible to deal fully with each particular case. All that was now urged was that there was ample necessity for an 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 made to check the increase of these overdrafts, or to realise the securities. The 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 the advances, and it was through their influence that he was appointed liquidator at a salary of £1,000 a

year. Mr.

IuviNE.-What evidence is there of that? Mr

ISAACS,-It was 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 introduced by the latter. In the later return he said he was informed by James Munro that this was not correct. He would resume now the consideration of the matters dealt with in' Mr. Riggall's affidavit. 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 by him for the information of the English liquidator, Mr. Riggall asked for an explanation. Mr. Priestley's reply was that he had written off a total sum of £233,050 as being bad debts, there having been some appropriation for that purpose in the balance-sheet,-,. ... Mr

Justice,ITOLROYJ),-I cannot for the,

life of me' understand the object of this writing off. -?

Mr. ISAACS.-The- object could only have been to make it appear in England that the indebtedness of the directors and their friends WItH so much less than actually was. In addition to that several accounts were entirely released just before the bank went into liquidation. Instructions were sent out from the English creditors that steps should be taken to have Mr. Priestley removed from the office of liquidator.

Mr. Justice noutovD asked how it was that the English liquidator did not himself move in the matter.

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 made no motion by themselves or anyone representing' them.

-. Mr. ISAACS said that an application would be made on this subject at a later stage. He had now put all the facts which were available before the Court., He would now, read Mr. Priestley's answering ' affidavit, and the Court would be able to judge of the value of the explanations which were there given. Mr. Priestley declared that wherever advances were made which were not authorised by the board they were, made by the assistant manager without his (Mr. Priestley's) knowledge or consent. Then Mr. Priestley had a report prepared by Mr. Andrew Lyell upon the state of the accounts, and upon the lines laid down by Mr Priestley himself. That report would be found to contain eloquent

evidence of the real state of affairs. Mr

IRVINE said 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.