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Enclosure 3.
C.O.
20455
RECR
(Rec 19 00 91
70
The Daily Press.
HONGKONG, SEPTEMBER 11, 1891.
SUPREME COURT.
10th September.
IN BANKRUPTCY,
BEFORE HIS HONOUR SIR JAMES RUSSELL, CHIEF JUSTICE.
BE BORABJEE KUSTOMJEE.
His Lordship then proceeded to give judz. ment. He said that he had drawn up, as reports and figures had to be analysed, his decision, and the explanation which had been offered that day had not rendered it neces- sary for him to alter it at all. His lordship continued-The Bankrupt was adjudicated on a creditors' petition on 28th October, 1889. He field a schedule showing liabilities at $99,744.41, assets nil, with the exception of furniture on which there was a bill of sale for $10,000, which was subsequently set aside. The furniture re- alised $3,165,10." The first and adjourned first me ting of oreditors was held on the 13th, 20th and 27th November and 4th December, 1889, and a Mr. Michael was appointed to belp the Bankrupt to make up his 12 months' as. pounts. A mass of memoranda, chiefly brokers' Hotas, and papers were handed over to Mr. Michael, and after 8 months' labour, and at an expense of $800 to the creditors, Mr. Michael submitted a report and certain schedules showing something of the deal- ings of the bankrupt. From Mr. Michael's report and that of the official assignee, it ap- pears that at the beginuing of November, 1888, the Bankrupt started share operations on a large scale, nearly all time bargains for months ahead, being then in debt, and that his purchases of shares according to the brokers' notes is the Bankrupt's possession amounted to $2,805,933,59, but according to the brokers' statements 84,244,700.93. ~ This report of Me, Michael was read at an adjourned mesting of creditors and; both he and the bankrupt were present. It was a document most unfavourable to the bankrupt, for it expressed his disapproval of the way in which the bankrapt carried on a gigantic business without keeping any accounts or even memoranda from which accounts of any kind could be satisfactorily compiled. It stated that it was impossible for any one to make up Buy accounts from the materials at his disposal "eren when supplemented by the written state- ment I have made from the brokera." He said that no attempt had been mad, to keep accounte even in the orudest form, and by reason of the absence of particulare in the counterfoils of his cheque and paying in books "he has effectually prevented the making up of any accounts by any one for him." In addition the bankrupt has drawn out sums, exceeding $40,000, by means of cheques drawn in his own favour about which it is impossible to
obtain information for whom or for what the e monies were drawn or whether they have actually: ever been paid away and are not still in the bankrupt's possession or under bis control. Neither is it possible to shew whether at the date of his bankruptcy the bankrupt had any shares still in his possession as long as the sam of $264.084.45 paid into the Bank by him in bank notes remains unaccounted for. This amount
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may represent proceeds of shares sold, but there! is nothing in the accounts given me to prove that this is so." Mr. Michael when examined upon his report stated that the Bankrupt told him to keep his accounts separate from those of kis friends, but that he could not make ang distinction aa to his dealing as principal and agent. He further stated that he had made 28 applications to different persons with regard to items unaccounted for, namely 130 items amount- ing to $1.88263.81, applications made in re- spect of figures which appear in the counterfoil of cheque books and the paying in books, and; which did not denote what they were paid in for. Nor do the monies paid in by the Bank- rupt show from what source they came and in "respect of what transactions they were paidin." The Bankrupt complained that Mr. Michael did not help him as be should have done. On his ap- plication Mr. A. P. Soares wasappointed to farther: assist him in making up his account, but after- wardsMr. Soares called on the Registrar and stated it was impossible to make up the bank- rupt's accounts and declined to enter ou the duty. Then a Mr. E. A. Da Silva, on the bank. rupt's nomination, was appointed to help him, in December, 1890. Mr. Silva's report was not prepared until the 16th May, 1891. He tells us the difficulties ho had and makes out balance i sheets beginning with October, 1883, and is evidently as favourable to the bankrupt as he can be, but he says he was only successful in making his statements such as they are after three attempts, and gathering full informa- tion from various sources, and placing himself "at the merciful convenience of those on whom ha called until they found a suitable time for the appointment." Why had he to gather informa- tion from outside sources and place himself at the ' merciful convenience of the brokers? Absence of books or accounts. Mr. Silva makes the Bankrupt's cash balance on 30th September, 1888, to be $46,788.20 overdraft against securities which he valued at $66,803, and he says there were other securities which make up a sum of $28,527.30 "to form the principal basis of ospital on the strength of which he commenced his speculating." and that the most part of his operations were on forward transactions. The bankrupt was examined on the report of Mr. Silva, and said the accounts were correct, bat in further examination he admitted that when he squared his account on 2nd October with the Bank he had only $12,000 odd. that $4.000 were in hands of a Mr. Poon Fong, and that heowed $5,000. So it appears that be had ca 2nd October about $11,000 on his own showing, a sum which should be further reduced by $5.000 owing Father Torres. Mr. Silva reports that at the end of October he had nothing, but was in debt, and this accords with Mr. Michael's report as to bis state on 2nd November, 1888. Mr. Silva says he "recovered $5,301.83 in November, but in December he lo $8,509.95, while in January he recovered $7,567.13, but in February, March, and April his loss88 reached $24.280 63, while in May and June he recouped $7,338.62." Theu came the crisis and the bankrupt's losses were 886.417.86 during July, August, and September. These operations were the result of some backward transactions entered into in April or May for forward delivery pay. ment. It is hardly possible for any one to work over his banking scounts as there is no complete specifications made in the counterfoils of his oheque books, some of which were even left blank""mouies placed in the Bank collected from different sources were deposited in large heaps of bank notes and cheques trans- ferred from one broker to another constitnting mere part payment of accounts." Mr. Silva re- ports that the net loss sustained in shares
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