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For the descendents of Richard Dearie and his son John Russell


LETTER FROM DISTRICT OFFICER, KLANG, TO THE SECRETARY TO RESIDENT, SELANGOR. 10TH JANUARY 1924 7 in D.O.K. 407/1923 District office, Klang 10th January 1924. Match Factory at Klang Sir, With reference to your letter No. 2 in 4569/1923 dated the 29th November, 1923, I have the honour to report that Mr. Kim Lee Soo would be glad of further information as to the nature of the specification to be furnished. 2. A plan of the building can be supplied. I have the honour to be, Sir, Your obedient servant, ? District Officer, KLANG.

From National Archives of Malaysia. Sel 4569/23 Transcribed by P.C

LETTER FROM THE DEPUTY COMMISSIONER, CHIEF POLICE OFFICER, SELANGOR TO THE SECRETARY TO RESIDENT SELANGOR. 26TH JANUARY 1924 5 in C.P.O. Sel: 63/24 Kuala Lumpur, 26th January, 1924. Sir, I have the honour to submit the attached plan of a Match Factory to be erected at Port Swettenham by Mr. Lee Kim Soo. 2. The Government Town Planner, the Health Officer and Executive Engineer Klang, have no objection. 3. I recommend that a provisional license be issued, on the understanding that fees will be settled and paid afterwards and that suitable fire extinguishers are provided to the satisfaction of the Superintendent Fire Brigade. I have the honour to be, Sir, Your obedient servant, ? Deputy Commissioner, Chief Police Officer Selangor

From National Archives of Malaysia. Sel 4569/23 Transcribed by P.C

Match Factories-the Elkayes Match Factory at Port Swettenham, the only one in Selangor, is situated on the Port Swettenham- Klang road, one and a half miles from Port Swettenham, and has been in operation for fourteen years. (Started 1924 from 1938 report)

The Singapore Free Press and Mercantile Advertiser (1884-1942), 26 February 1924, Page 11
 BRITISH MALAYA. A review of Coal Imports. Although her internal need of fuel is, for the most part, supplied by the Rawang Mine of the Malayan Collieries, Limited, or by wood from the jungle, a large quantity of coal is imported by British Malaya for the use of steamers bunkering at Singapore and Penang. In 1921 British Malaya imported 533,343 tons of coal, valued at £1,949,628, and in 1922 547,367 tons, valued at £1,230,062. During the first nine months of 1923 imports were 424,922 tons, valued at £788.842. A comparative statement of the principal countries from which these exports were received, showing quantities and values, is interesting. The principal exporting countries during the first nine months of 1923 were:

 

Tons

£

British Possessions

155,328

271,514

Japan

131,014

258,757

United Kingdom

27,158

60,218

output of Malayan Collieries during 1922 amounted to 281.828 tons. 1921 1922 Tons

 

1921

 

1922

 

 

Tons

£

Tons  

£

U. K’dom

10,360

24,404

90,583

206,714

Japan

340,007

1,254,067

226,646

533,814

Australia

92,914

403,835

67,277

155,934

S. Africa

11,656

27,200

76,501

160,105

 

Page 2 Advertisements Column 1 [Advertisements] The Straits Times, 14 July 1924 ( Legal notice for Van der harst leaving Loxley and Co. on Feb 29 1924.)


The Straits Times 4 March 1924, page 9 Hong Guan-Russell Case Our Kuala Lumpur Correspondent writes: - The Hong Guan – Russell case in which the plaintiff claims $500,000 from Mr. J. A. Russell as alleged partnership profits in the re-sale of the Malayan Collieries Borneo property, was mentioned in the Supreme Court on Monday by Mr. Mackie of Messrs. Freeman and Madge for fixing. Mr Joaquim appeared for the defendant. The case was postponed until after the hearing of the Peck- Russell case.

PECK v. RUSSELL CASE N.B. Some of the days and or pages of the Malay Mail below are missing in the coverage of the Peck v. Russell case between 17 March and 16 April. The Straits Times and The Singapore Free Press and Mercantile Advertiser have not yet been transcribed for the trial but they can be read online at the Singapore Archives website.

THE MALAY MAIL, MONDAY, MARCH 17 TH, 1924.p.9 Malayan Collieries Case Opens. PECK v. RUSSELL $1,720,000 CLAIMED The action by Mr. Frederick Charles Peck, on behalf of himself and others the shareholders in Malayan Collieries Ltd., other than the first defendant, against (1) John Archibald Russell, (2) Messrs. J.A. Russell and Co., (3) Malayan Collieries, Ltd., claiming payment to the company by the first and second defendants of $1,720,000 damages, and interest thereon, was taken up this morning, before Mr. Justice Whitley, in the Supreme Court, Kuala Lumpur. Mr. Roland Braddell, with Mr. Hastings, appeared for the plaintiffs. The Hon. Mr. G.S. Carver and Mr. M.J. Upcott, with Mr. D. Shearn, for the first and second defendants; and Mr. F.B. Ivens for the third defendant. Mr. Braddell opened by outlining the case, and drew the attention of the court to its importance, not because of the large amount of money involved, but because certain important principles were involved. In the first place, the case was important because it pertained to what was regarded as a gilt-edged investment in this country. Its shareholders were to be found in all parts of the world, and it was necessary to show that foreign capital is protected here by the same rules of law and equity as elsewhere. It was also important because they were striving for recognition of certain laws and principles which apparently had not been recognised by the directors of the company. Mr. Braddell then proceeded to deal with the agreement between Russell and Co. and the Malayan Collieries, Ltd., for the sale of Gonoeng Batoe Besar property. The hearing is expected to last three weeks.

MALAYAN COLLIERIES. [Articles] The Straits Times, 17 March 1924, Page 9 MALAYAN COLLIERIES. Cause Celebre at Kuala Lumpur. Opening of Peck-Russell Case.

THE MALAY MAIL, TUESDAY, MARCH 18TH, 1924.p.9 PECK v. RUSSELL Story of a Coal Concession IGNORED PRINCIPLES OF EQUITY Shareholder Sues Director and Agents When it is completed, the action Peck v. Russell which began yesterday, before Mr. Justice Whitely, in the Kuala Lumpur Judicial Commissioner’s Court, will stand in the records as one of the most important, and the most voluminous, which have ever been heard in a court in British Malaya. Already the record has assumed enormous proportions and the volume of files of minutes, correspondence, evidence on Commission, etc., which has been “put in” is large and puzzling enough even to those who have followed the proceedings from the very beginning. Mr. Braddell’s opening Mr. Braddell, in opening for Mr. Peck, said that the action was brought by a shareholder to recover certain monies which the plaintiff alleged were due to the company. The action was one of very grave importance not so much because of the very large amount of money which was involved in it, for that might be a quality common to other actions, but in the first place because of the investment, which had always been regarded as a gilt-edged investment, involved. The Malayan Collieries was a company of paramount importance, its share list showed that persons all over the world were interested in it and it was of the greatest importance that foreign capital should know that it was safeguarded and protected here by the same rules of equity and justice which prevailed in other parts of the British Empire. The action was also important in that they were striving for the recognition of certain principles which apparently had not been recognised by the directors of this company. As the position stood the rules of law and equity had been ignored by the other directors, it might be bona fide ignored. The action was brought to recover 80,000 shares in Malayan Collieries Ltd. received by the second defendants, Messrs. J.A. Russell and Co. in connection with an alleged sale by them to the Malayan Collieries, Ltd. of a concession on a coal mine at Goenoeng Batoe Besar, and the first defendant was sued in a two-fold capacity. He was sued as managing partner of J.A. Russell and Co., and he was also sued as chairman of Malayan Collieries Ltd. An Important Agreement Counsel here referred his lordship to the agreement entered into between J.A. Russell and Co., and the Malayan Collieries Ltd., which was as follows: - An Agreement made the 10th day of June one thousand nine hundred and twenty one between J.A. Russell and Company of Kuala Lumpur (hereinafter called the “Vendors”) of the one part and Malayan Collieries Limited of Kuala Lumpur (hereinafter called the “Company”) of the other part whereas by virtue of an Agreement dated the 5th October 1920 and made between Eastern Mining and Rubber Company Limited and Ng Hong Guan (a copy of which agreement is set out in the schedule hereto) the said Ng Hong Guan became the holder of the option to purchase the property and rights mentioned in the said Agreement on the terms therein mentioned and whereas by virtue of an Agreement dated the 19th November 1920 and made between Khoo Wee Chuan and the Vendors, the Vendors became the holders of the said option to purchase and whereas the Vendors have agreed with the Company for the sale to the Company of the property and rights mentioned in the said Agreement of the 5th October 1920 subject as therein mentioned now it is hereby agreed as follows:- 1. The Vendors will sell and the Company will purchase All and Singular the property and rights mentioned in the said Agreement of the 5th October 1920 subject to the performance and observance of the conditions and stipulations in the said Agreement reserved and contained. 2. The Vendors shall procure and transfer to the Company the whole of the share capital in the Mijnbouw N.V. Goenoeng Batoe Besar consisting of three share certificates for in all six hundred fully paid shares of Two thousand five hundred Dutch Guilders each of and in the said undertaking known as the Mijnbouw N.V. Goenoeng Batoe Besar. 3. The purchase price shall be the sum of $1,600,000 (dollars one million six hundred thousand) payable as to $600,000 in cash and as to $1,000,000 by the allotment to the nominees of the Vendors of 100,000 fully paid shares of $10 each in the capital of the Company. 4. The said fully paid shares shall be numbered 180,001 to 280,000 and shall be allotted to the Companies and persons following as nominees of the Vendors. that is to say: - Shares numbered to. Allotted to. 180,000/200,000 20,000 The Eastern Mining and Rubber Company Limited, Singapore. 200,001/201,000 1,000 Grace Peckha Lim, Singapore 201,001/203,000 2,000 Ng Sam Teck, Singapore 203,001/208,000 5,000 Ng Hong Guan, Singapore 208,001/225,500 17,500 Khoo Wee Chuan, Singapore 225,501/233,500 8,000 Poey Yew Teck, Singapore 233,501/241/500 8,000 Poey Yew Bee, Singapore 241,501/248,000 6,500 Lim Gee Soo, Singapore 248,001/249/500 1,500 Yeo Boon Hap, Singapore 249,501/250,000 500 Lim Low Neo (f), Singapore 250,001/262,000 12,000 Tan Hong, Singapore 262,001/277,000 15,000 Tan Hee Soon, Singapore 277,001/280,000 3,000 John Archibald Russell, Kuala Lumpur 100,000 As Witness the hands of the Vendors and the Common Seal of the Company the day and the year first above written Sd. J.A. Russell Sd. A.A. Henggeler Directors Sd. J.A. Russell and Co. Witness Sd. H.D. Brown, Accountant, Kuala Lumpur Counsel drew his lordship’s attention particularly to the recitals of the agreement in the first paragraph of the agreement. Five False Conclusions Continuing counsel submitted that any shareholder studying that agreement would come to five distinct conclusions, he might come to more. These were: - 1. That Ng Hong Guan obtained for himself or on his own account an option over Gonoeng Batoe Besar from the Eastern Mining and Rubber Co., on Oct. 5, 1920. 2. That that option was either sold by Hong Guan or passed from him to Khoo Wee Chuan, though exactly how was not recited, and could not be understood clearly from the agreement. 3. That on Nov. 19, 1920 Khoo Wee Chuan transferred that option to J.A. Russell and Co., and doubtless shareholders would think for value received. 4. That J.A. Russell and Co. sold the option to Malayan Collieries Ltd. on June 10, 1921. 5. That the only profit made by J.A. Russell and Co. was 3,000 shares allotted to J.A. Russell, or at $30 a share which was the price expressed in some of the correspondence, a sum of $90,000. Every one of these conclusions, counsel continued, was wrong and contrary to the real truth. They would be right on the foundations of that document, but they would be wrong according to the real and true facts of the case as they now knew them. The plaintiff urged upon the court that that document was a false and fraudulent document. The reason that it was filed with the Registrar of Companies was because the Companies Enactment, and every such enactment in the world probably, required a return of allotment to be made where shares were allotted to those other than subscribers. That was under section 88 of the Enactment. It had to be stated clearly who the allottees were. Referring to exhibit “A” his lordship would see it admitted that every one of those allottees was the nominee of J.A. Russell, and this admission included Khoo Wee Chuan’s holding. He would by and by tell his lordship who Khoo Wee Chuan was. He now knew that the return of allotment was a false document. Counsel suggested it was not only false, but it was clearly and deliberately false. The law required that where shares were allotted for other than cash the company must register that with the Registrar of Companies a list of the shares so allotted, the persons to whom they had been allotted and the consideration must be given. In this instance the only document attached to the return of allotment was the first agreement between E.M.R. Company and Hong Guan. Counsel suggested very carefully and purposely that the registrar was not told what the consideration was for the allotment to these Chinese, including 17,500 shares to Khoo Wee Chuan, of 30, 000 or 40,000 shares, all of whom were now admitted to be nominees of the first defendant. According to the law a defaulting manager, secretary or other officer would be liable to a fine not exceeding $500, and under clause 4 of the section a defaulting person might apply to court for relief and the court if satisfied might allow the documents to be filed. It was unfortunate that this matter had been entirely overlooked by the Registrar of Companies. He never came to court. Of course he was blaming anyone. Counsel suggested that it was part of the callousness with which this transaction had been regarded by many persons. Plaintiff said that J.A. Russell and Co, made a profit of 80,000 shares which they ought never to have made, and he submitted to court that in equity these profits belonged to the company. He said, (1) That Russell and Co. were the managing agents of the company. (2) That the option was obtained either for the company or under circumstances which made it, in equity, the company’s. (3) That the truth of the transaction had been fraudulently concealed from the shareholders who had been deceived into supporting J.A. Russell and Co. to some extent. (4) That the defendants, the first defendant in particular, had embarked upon a course of deliberate fraud in which he still persisted. Counsel said that the plaintiff relied on three Well-known rules of Equity and law as governing this action and they were:- (1) That no agent can make any profit out of a matter of his agency beyond his proper remuneration without the knowledge and consent of his principal. (2) That all profits directly or indirectly made in the course of, or in connection with, his employment, by an agent without the sanction of his principal belong absolutely to the principal. (3) No agent is allowed to enter into any transaction in which he has a personal interest conflicting or which might conflict, with the interests of his principal. And if he does so the principal has the choice of two remedies. He may either rescind the transaction, repudiate it, or he may adopt it and recover the profits made. As Mr. Ivens was anxious about it, counsel said, that plaintiff did not claim the recession of that contract. He had never claimed it, and in order to make Mr. Ivens quite satisfied he wished to repeat it. Continuing Mr. Braddell said that those three principles of equity were vital especially in this country where nearly every company was run by agents or firms of managing agents. It was unusual in England. In England a company had its own staff, its own office etc., but in this part of the world it was not so. Of course there were certain admirable firms which were carrying on the work of managing agents excellently. In the case before the court, the firms of managing agents, whose managing partner was the chairman of Malayan Collieries Ltd., obtained an option on a coal bearing property of just such a nature as the company had for long been searching and which if it fell into the hands of strangers would have been a formidable competitor to the company, which was within the knowledge of the managing agents. These managing agents were entrusted with the administration of the company’s business. He wanted to emphasise at the outset of the case that it was not merely brought against the director of a company who had sold his property to his company. It was far more than that. It was a case brought against the company’s managing agents whose managing director was also chairman of directors of the company. The defence entirely avoided that point. They seemed to take shelter under section 92 of the articles of association of the Company. Counsel then referred to certain passages from Storey on Equity and other authorities. Continuing counsel said that the onus in that case was on Mr. Russell to prove he acted in good faith. He did not know, but it was quite impossible to believe, quite apart from what counsel saw in that case that the first defendant told the other directors of the company the real truth. If he did they would be equally guilty with him and he (counsel) would be entitled to join them as defendants with him. It was Inconceivable that these gentlemen could have been told what they now knew, and it was inconceivable that they knew even now what he was about to expose. He thought they were honest men whom Mr. Russell had misled from their duty, and induced to do so by Mr. Russell by his personality, influence, and long friendship. He brought no charges against them, but he would wait to hear their explanation, and after hearing the evidence in that case the only conclusion which the court could come to was that they must have been deceived by Mr. Russell. He thought that the first defendant would call some of these gentlemen. He did not propose to call them for the plaintiff because their attitude had been one of opposition to the plaintiff and they had tried to block his case. The onus lay on the first defendant to call them. Some shareholders of the company did not understand the position. The reason why the company was made a party to this case was this. According to the law anything that the plaintiff recovered belonged to the Company subject to the plaintiff’s remuneration for himself and his agents in recovering the amount, where the company refused to allow its name to be used by the shareholders, the shareholders must make the company a defendant. His lordship would see what happened at the various meetings where the position appeared to have been misunderstood by certain shareholders. It was really a matter of technicality, as the court must have before it all the persons who were to be bound by its judgment before it could make an order. These remarks, said counsel, were by way of introduction, and he would from this place start on the history and facts of the case. Mr. Braddell said that according to the prospectus the company was floated in June 1913 and the first defendant J.A. Russell was the vendor to the company and he took his profits in shares. He had from the inception been a large shareholder of this company and had personal interests quite apart from his position as director or partner in the firm of managing agents. His interests were strongly bound up in the company so much so that it even paid him at times to advance large sums of money to this company. Prior to the transaction complained of he had such a large holding that he told the shareholders that the contract made by Hong Guan with the E.M. and R. Co. could be satisfied with his own holdings, and it was in the region of just under 53,000 shares. From the very beginning he was a director of the company and his firm were the agents and secretaries. Counsel at this stage put in four files of correspondence etc., marked B1, B2, B3, and B4. He explained that among these documents there were certain letters admitted by the other side on the understanding that they were, however, not proof of the facts alleged in them. Dramatis Personae Counsel next referred to file No I which he described as the “who’s who” or dramatis personae of the case. When any name is mentioned his lordship would be able to find it quite easily in that file. Referring to these files and correspondence counsel drew attention to the fact that the offices of Russell and Malayan Collieries were all in one building. If they wanted to see Mr. J.A. Russell they walked into the office of Mr. Russell and Co. There was not a single member or a single employee of Malayan Collieries Ltd. in that office with the exception of Mr. James Barr. The entire business machinery was the same. So that when he went to the office he met a gentleman called Mr. Brown. He was private secretary to Mr. J.A. Russell. He turned twice and said “Now I am Malayan Collieries Ltd.” and he turned twice more and said “Now I am Russell and Co.” The judge: There is nothing unusual in it. It is, I believe, the case of a firm having a number of agencies. Mr. Braddell: No, my lord, there is nothing unusual in it. But it is important when you go to the English cases. Mr. Peck and I have gone through over a hundred cases, but I have not found where an office has been run in that way. The judge: Do you expect the company to have a separate office? Mr. Braddell: It was impossible for a man to go into that office with an option for Malayan Collieries and find out to whom it had been given. Continuing counsel said that he had some evidence on the point in Mr. England’s evidence taken in London. He invited the attention of his lordship to the Malayan Collieries note paper at the top of which were the words “please address all communications to J.A. Russell and Co, Kuala Lumpur.” It went to show that because a letter was addressed to J.A. Russell, or it is signed by J.A. Russell, it does not necessarily follow that it is a letter by J.A. Russell individually, by the firm or as agents of Malayan Collieries Ltd. If evidence was necessary to prove the fact that Mr. Russell himself had always been the moving spirit of Malayan Collieries Ltd. it would be found in the evidence of England. It had always been so since the company was floated. Turning to the file containing the minutes of Malayan Collieries Ltd., counsel said that between Sept. 1, 1919 and Sept. 21, 1920 there had been only four meetings of the directors and the minutes of none of these meetings exceeded a portion of a page. His lordship would find many instances where Russell had been doing things off his own bat, and doing things in his own interest without consulting the other directors. If any evidence was necessary of the fact that the administration of the business of the company was entrusted to Russell and Co. they got it in their letter of explanation to the shareholders. There was no minute defining the exact duties of Russell and Co., but they were the company’s managing agents. That was admitted in the pleadings and in the rubber chop of the company. There was a minute dated Feb. 20, 1914 which was the first minute fixing their remuneration. In 1914 at a meeting of directors it was decided to pay the agents and secretaries $500 a month. This proposition was passed, moved by Mr. Brash and seconded by Mr. Henggeler. In or about 1920 Russell and Co., opened a firm called Loxley and Co. It did not appear in the directory before 1920. They had a branch in Singapore, another in London, and a branch or branches in China, and a subsidiary company in Tennaserim, called Perrin Cooper and Co. When this company was bought by Russell and Co. it was appointed the agents of Malayan Collieries Ltd. in London, and the commission agreed upon was 2 ½ per cent. on the invoice value of all purchases on behalf of the company made by them. Later on the fees paid to Messrs. Russell and Co. was raised from $500 to $2,500 a month, obviously with the knowledge of the directors and afterwards confirmed by them and made retrospective. He drew attention to this fact to show that Mr. Russell was the company himself. On Nov. 23, 1920 they had another instance of this happening. There was a minute to the effect that the increase of the fees of the managing agents from $1,500 a month to $1,750, as from Oct. 1919 was confirmed. His lordship: Do you urge that the amount had already been drawn? Mr. Braddell: I know that it had already been drawn, and the secretary of the company would give evidence of that. There was another increase in April 1922. Then they came to the auditors’ report of April, 5. Counsel did not suggest that Russell and Co. were deliberately dishonest in doing this, but showing Mr. Russell was the Malayan Collieries Ltd. He would give another illustration, and it was an interesting illustration because this gentleman Mr. Ng Hong Guan came into the case. This man Hong Guan owed Mr. Russell personally some money. After that his shares had been transferred and Mr. Russell had no security for this sum of $25,000. He wanted some security. What did he do? He assigned this private debt of his to the Malayan Collieries Ltd. and wrote a letter on behalf of the company calling a lien on the shares held by Hong Guan. Incidentally if Mr. Russell did not do that the plaintiff would probably never have come to court. That was the match that set fire to the whole thing. Here they had a man using the company for recovering a private debt of his. He did so without the other directors’ knowledge. His lordship: This is rather an important point, is it not? Mr. Braddell: I am on this part of the case to show that Russell was in a position of paramount importance. The importance of the letter referring to the lien was this. A firm of sharebrokers in Singapore sent in a transfer for Hong Guan to be registered. The company refused to register it alleging that there was a lien on the shares and the whole transaction came to light, and to the knowledge of Mr. Peck. But for that it was quite possible that this matter would never have been exposed. Goenoeng Batoe Besar. Counsel then proceeded to relate the history of the Goenoeng Batoe Besar property, and to facilitate following the various localities mentioned he put in a map. The concession was at Pamoekan Bay. The original concession was obtained in 1905 from the Dutch Government by a man named Broers. On June 30, 1915, a Dutch company known as the Tehweh acquired an option to purchase this concession for 200,000 guilders. And until that amount was paid they had to pay a royalty at a minimum rate of 500 guilders a month. Counsel said he was going to show that the option was sold for fl 200,000 and the amount was paid from the million and a half dollars which the Malayan Collieries raised. The option passed into the hands of the Eastern Mining and Rubber Co., and on May 3, 1920 the directors of that company decided to take over the mine and to issue fresh capital to work it. At this time Dr. Lim Boon Keng was appointed a director of the E.M. and R. Co. On May 20, the shareholders of the company were told about this transaction and that the purchase price was $813,000 worth of shares in that company and the balance $600,000 in cash. It was proved in that case that the price set out above was false and that according to the evidence in this case it was very clear that a similar fraud was perpetrated on the shareholders of the E.M. and R. Co. by their directors as was done in the Malayan Collieries Ltd. The plaintiff alleged that the difference in the price paid and alleged to have been paid went into the pockets of Dr. Birnie, Dr. Lim Boon Keng and Tan Way Ann who were the principle witnesses of Mr J.A. Russell. Mr, Russell then got himself appointed a director of the Eastern Mining and Rubber Co. and for the purpose Dr. Birnie transferred 100 shares out of the proceeds of this transaction to Mr. Russell. At this stage the court adjourned for tiffin and resumed at 2.15 p.m. On Aug. 17, 1920, Mr. Braddell continued, the transaction was reduced to writing and executed by Dr. Birnie on behalf of both parties. In that document the purchase consideration was fraudulently set out. Then in the 8th annual report of Malayan Collieries Ltd. Goenoeng Batoe Besar appeared as an asset of the company for the first time, and consideration for purchase of this company was put down as $1,600,000 and that amount became very much more because the share value was put down at par whereas the real value of the shares was very much more. That was the history of Goenoeng Batoe Besar. Mr. Peck Opens his Charges Counsel then went on to relate how Mr. Russell became a director of the E.M. and R. Company, and how the present action started. There was a meeting of Malayan Collieries Ltd. in May 1922. At that meeting Mr. Peck opened his charges. Mr. Russell replied to those charges and Messrs. Russell and Co. replied to them in a letter to the shareholders. On Aug. 16, 1922 a general meeting of shareholders was called. At that meeting Mr. Peck was armed with some 82,000 odd shares against Mr. Russell. Principal among Mr. Peck’s supporters was the E.M. and R. Co. who owned 24,000 Malayan Colliery Shares and they gave Mr. Peck a proxy for those shares, subscribed to Mr. Peck’s funds for the campaign a sum of $2,400 and gave Mr. Peck a partial, not an entire, discovery of valuable documents. At that meeting Russell and Co. saved the situation by putting into operation the full force of their voting power. Had it not been for that they would have been heavily outvoted. Counsel submitted that after that meeting Mr. Russell went through Mr. Peck’s proxies and saw that the E.M. and R. Co. were Mr. Peck’s second largest supporters. Mr. Russell, counsel suggested, saw that if he could stop that company from supporting Mr. Peck in the first place it would deprive Mr. Peck of much needed funds and reduce his voting power considerably. So he got in touch with this Dr. Birnie, who it was said had already expressed a desire that Mr. Russell should become a director of the E.M. and R. company. Dr. Birnie then transferred a hundred shares in the E.M. and R. Co., for no consideration, these hundred shares being part of the loot which Dr. Birnie had acquired. He also gave Mr. Russell a power-of-attorney and command of the majority of shares of the Pamoekan Company. “It was quite clever of Mr. Russell” remarked counsel, “and I give him full marks for that.” Continuing counsel said that at the next meeting of the E.M. and R. Co. Mr. Russell attended with Mr. Shearn who addressed the meeting after which the company withdrew its proxy from Mr. Peck and took steps to recover the money which they had subscribed to the funds. Thus Mr. Russell acquired a voting power of 48,000 shares. Another great supporter of Mr. Peck at that time was the Loke Yew Trustees who owned 35,000 shares for which they gave a proxy to Mr. Peck. That proxy was also withdrawn and he would later give the circumstances under which it was withdrawn. Now they came to the real heart of the case. It would be seen from the correspondence that the first time that Goenoeng Batoe Besar was mentioned was on Aug. 21, 1920 in a letter received by Mr. Henggeler a director of Malayan Collieries Ltd. from a gentleman in the Dutch East Indies. At the date of this letter Goenoeng Batoe Besar was turning out coal. On receiving this letter Mr. Henggeler, who was an honest man handed it over to the head of managing agents, and so Mr. Russell got to know Goenoeng Batoe Besar. An Undisclosed Letter Then they came to a letter dated Sept. 6, which was never disclosed either by Mr. Russell or his company, but was given to counsel after a request sent to Mr. Shearn a month or so ago. He particularly directed the attention of the court to the nature of this letter, the paper on which it was written and the method by which it was signed. It was written on Malayan Collieries letter paper and it was signed by J.A. Russell not J.A. Russell and Co., secretaries and agents of the Malayan Collieries, Ltd., and it was written in the first person. It was a reply to the letter received by Mr. Henggeler offering him a month’s free option over Goenoeng Batoe Besar. The letter stated among other things that a longer period than a month would be required and that an extension of six months would also be required for borrowing purposes, should the prospecting report be satisfactory, and for this extension he would be willing to pay a sum not exceeding $100,000. In Mr. Russell’s explanation to the shareholders, which certainly influenced the minds of some of them it was stated that the option involved no payment by the company. It was a false statement and Mr. Russell was trying to make out to the shareholders that the company would only obtain the option if it involved no payment. Counsel continuing said that the Malayan Collieries for some time had found that their coal was unsatisfactory for bunkering and they had been endeavouring to secure a property producing good bunkering coal. The company had been searching actively for such a property for about three years. So that if Seboekoe provided good bunkering coal it was the very thing they were after. Counsel then proceeded to refer at some length and in some detail to Mr. Russell’s explanation of various points raised by Mr. Peck in the course of which he said that after long inquiry the company were investigating two properties reputed to contain bunkering coal. Those two properties which Mr. Russell had in mind, counsel submitted, were the Goenoeng Batoe Besar and Soeboekoe properties. Counsel next went on to deal with the intimation of the sale of this option to Russell and Co., to the Company. They had already found out from the document which had been extracted, how Mr. Russell first came to hear of the Goenoeng Batoe Besar property, what was Russell and Co’s explanation to the shareholders, and what was their defence? It was to be found in paragraph 8 (a) of the defence set out by the 1st and 2nd defendants, which was as follows:- (a) After prior discussion between the said Ng Hong Guan and the 1st defendant the said Ng Hong Guan on the 27th September, 1920 in order to obtain indulgence in respect of a certain debt owing by him to the 2nd defendant offered to sell to them an option dated the 25th day of September 1920 over the said property granted by the Eastern Mining and Rubber Co. Ltd., which offer the 1st defendant refused to accept. Who was Hong Guan? He was a personal tool of Mr. Russell, not in an offensive sense at all, but as one who was employed by Mr. Russell to get option on tin mines etc., and they got a very interesting light on Mr. Russell’s mentality when they went through the correspondence. It was essential, counsel remarked, that he should show wherever he could anything that would illuminate Mr. Russell’s mentality. He was charging him with fraud and anything that went to show that mentality was of great importance. It was also interesting to remember in passing that Mr. Russell prosecuted this very Chinese for criminal intimidation and trying to exhort money from him. He submitted that this man Hong Guan was well known to Mr. Russell. Counsel next referred to the action brought by Hong Guan to recover money said to be due to him by Mr. Russell on a contract and he put in evidence the pleadings in the two actions one of which was withdrawn and the other was pending. Counsel also referred to the fact that Mr. Russell knew that Hong Guan had great influence with the people connected with the E.M. and R. Company. It would be seen from Dr. Lim Boon Keng’s evidence that Ng Hong Guan had married Dr. Lim’s wife’s niece. Dr. Lim when cross-examined with regard to the allotment of 1,000 shares of Malayan Collieries to his wife got angry as would be seen from his reply which was to the effect that he did not know it. He knew of 500 shares being allotted to her by Hong Guan in respect of the financing of Hong Guan’s broking and prospecting business. It was clear that Mr. Russell found out what influence Hong Guan had with the director of the E.M. and R. Co. Mr. Russell spoke Chinese. Hong Guan was employed as agent of the E.M. and R. Co. and also as agent of Mr. Russell. He was broker for both sides whoever the purchaser might have been. At 4 p.m. the court rose. Hearing was continued at 10.30 this morning when Mr. Braddell continued his address. Mr. Braddell is expected to occupy the whole of the week.

The Straits Times, 18 March 1924, Page 9 MALAYAN COLLIERIES. Sensational Case at Kuala Lumpur. Mr. Peck's Allegations Against Mr. Russell.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 18 March 1924, Page 6
 THE PECK-RUSSELL CASE

THE MALAY MAIL, WEDNESDAY, MARCH 19TH, 1924, p.9 PECK v. RUSSELL Inception of Alleged Fraud AMAZING DOCUMENTS Dr. Lim Boon Keng’s Peroration (Continued from yesterday’s issue.) Mr. Braddell, continuing his address in this case yesterday, pointed out that in the defence it was pleaded that Hong Guan sold this option to J.A. Russell who posed as a partner of J.A. Russell and Co. It was not the case that J.A. Russell and Co. had received this option on behalf of Malayan Collieries Ltd. He next came to the fact as to whether Russell employed Hong Guan to obtain this option for Malayan Collieries Ltd., or not. Counsel went further and said that J.A. Russell and Co. did actually employ Hong Guan to get this option for the Company. He reminded the court that in Russell’s explanation to the shareholders in May 1922 Russell stated that at the time Hong Guan obtained this option for J.A. Russell and Co. he owed that firm considerable amounts of money. In the report of May 4 of Malayan Collieries Ltd., Mr. Russell stated that Hong Guan was not the representative of the Malayan Collieries Ltd., in this matter. He stated further that Hong Guan had been obtaining options over mining properties for J.A. Russell and Co. for several years. That was the first time Mr. Russell told the shareholders what had happened in this transaction. Counsel did not leave the matter at that. He took it further. In the suit brought by Hong Guan against Russell in paragraph 3 of the defence filed in December 1922 the defendant Russell alleged that he had about Sept. 5, 1920 an interview with the plaintiff at Kuala Lumpur, on the matter of this option. It was a vital matter because it showed that this matter of the option started on Sept. 5 and not on Sept. 20 as he told the shareholders. The matter did not rest there because Mr. Russell obtained the evidence of Dr. Lim Boon Keng in Amoy. The whole point of that evidence was to prove that Hong Guan obtained this option from the E.M.R. Co. for J.A. Russell and Co. He objected to certain parts of the doctor’s evidence where he repeated what he had heard from Hong Guan unless Hong Guan was called. Evidence on Commission The question of the reading of Dr. Lim Boon Keng’s evidence was then raised. Mr. Braddell pointed out that the ordinary rule was that they could not put in evidence taken de bene esse unless it was read word for word. He thought the most convenient thing to do would be for him to read such parts of the evidence as were in his favour and Mr. Carver to read those which were in his favour. Dr. Lim Boon Keng’s evidence was then put in and Mr. Braddell quoted largely from it commenting on certain parts. Commenting on this evidence counsel stated that the more profit the intermediaries made on this option the lower would be the profit to the E.M.R. Co. They had no evidence in this case of any inquiry by the directors of the E.M.R. Co. as to any intermediate profits. That was circumstantial evidence showing that they knew they were dealing with Malayan Collieries Ltd. If they knew they were dealing with Malayan Collieries Ltd., they would not make any such inquiries. If the fact was, as Dr. Lim Boon Keng tried to make out, that Hong Guan was selling to Russell and Russell was selling to the Malayan Collieries, Ltd., it was then the duty of the directors of E.M.R. Co. to enquire into Russell’s profits because by that amount of profit which Russell made, the Malayan Collieries shares were getting an extra watering. Counsel submitted that The First Issue of Fact in the case was whether Hong Guan was a broker in this case or not. Before going to the important date of Sept. 27, he wished to refer to the Seboekoe matter which was prior to that date. Counsel then referred to the two letters. One of Aug. 25, 1920, By E. de Stoutz to Mr. Henggeler and the reply to it by Mr. Russell dated Sept. 6. They were as follows: - Soerabaia, Aug. 25, 1920. Without Prejudice. My dear Henggeler, -Referring to the conversation I had some three months ago with you and to the papers about Seboekoe I left with you I come now to see if your people are willing to work the property. I have just had a trip to Borneo and have heard that a Singapore company (the Eastern Mining and Rubber Co., mostly Chinese) has bought a coal mine not far away from our place at Goenoeng Batoe Besar, and intend to work it extensively. Their beds are only 6 feet and 7 feet and their coal has over 12 per cent ash and it is underground mining. This is the same coal as the Poeloe Laoet mine, which was bought by the Government for f. 3,200,000. The coal they sell now (the Poeloe Laoet) is so dirty that the engineers of the Paketvaart Navigation Co. assure me it contains over 30 per cent ashes, and they have raised lately the price of this coal from f. 12 to f. 35 for this company and f.45 for private ships. You no doubt know that the Dutch Government have monopolised the coal all over the country and it is impossible now to get new concessions and it is only the old ones which can be worked. The profit therefore to be made in coal now is very big and the mine cannot keep up with the demand: there is a shortage everywhere in this country. The ships of the Paketvaart, of which many have been fitted to burn petroleum residue, are now being altered again to burn coal, because the residue costs now f. 140 per ton. I came back from Kora Baroe with a chemist of the big oil refinery at Balik Papan and he told me they were also going to use coal everywhere on account of this very high price of the oil and they expect to use 400,000 tons per year. Here in Soerabaia the demand is very big for the sugar mills, electric tramways etc., and they cannot get enough even at these very high prices. There are enough people who are willing to do this business with me, but as I have already spoken to you about it long ago, and I think you and your friends are better able to do it than others, I come to you first (my friends in England are too slow about it, since three months they have not arrived yet to a decision.) Now I am disposed to make an agreement (equivalent of mining lease) for the coal in the 500-acre block marked on the blue print I left with you, under the following general conditions: - 1. Payment in cash (one pound shares if convenient to me) of f. 1,000 at the time of signing agreement. 2. Royalty of f.1 per ton coal extracted from mine with minimum of 100,000 tons per year. This minimum would start only after the first year from time of agreement, so as to give time to get ready. 3. In case of non-payment of money due power to seize plant and to cancel agreement. As I have transferred the concessions to a Dutch company all the agreements would be made here before public notary (none of these rotten lawyer agreements). As you are aware the 500 acre block is estimated to contain 10,000,000 tons. The coal can be worked to a great extent by opencast, and can be sent by lighter on river, or by rail, etc., to the sea which is less than two miles distant. Now please acknowledge receipt of this letter, and let me know if you are disposed to send a man here to inspect property, and prepare agreements, and I will give you one month’s option free to inspect the property, provided I have not yet disposed of it. Therefore please do it as soon as possible. I hope you are quite well and have good news of Mrs. Henggeler and your little daughter. I am quite well and like this climate much better than Singapore. -Yours, (Sd.) E.de Stoutz. P.S. I enclose herewith copy of a correspondence between Wilson’s (the liquidator) solicitor and mine, to show you their appreciation of the property when the coal was still low. It came to nothing on account of their unreasonableness, and my mistrust of them. Our coal is recognised as one of the best of the Dutch Indies. In case you send an expert there is a small steam launch for hire in Kota Baroe to go to the island. But tell him to take camp bed and mosquito net. Address: Post Office, Soerabaia Cable: Stouts, Soerabaia Mr. Russell’s Reply Malayan Collieries, Ltd., Kuala Lumpur, Sept. 6, 1920 E. DE STOUTZ, ESQ., c/o Post Office, Soerabaia, Java. Dear Mr. de Stoutz, -Mr. Henggeler has kindly shown to me your letter of August 25, regarding the Soeboekoe Coal Concession, which letter I have read with much interest and have carefully discussed with Mr. Henggeler. We should be exceedingly glad to be able to come to terms with you, but fear that your present conditions make the chance of our doing so rather difficult. One month’s free option would not be sufficient time. We should have to send a man over to make a rough preliminary report, and owing to the inaccessibility of your concession it would take this man quite three months to go to Soeboekoe, make his investigations and get back to Kuala Lumpur to give us his opinion and report. If he reported that the property was, in his opinion, worth boring, we would then require a six month’s extension of the option to enable us to have the place bored and more carefully reported on. For this extension we should be willing to pay you a sum not exceeding f.100,000. Your price of f. 1,000,000 seems to us high, and if we agreed to this price we could not pay a royalty of more than 25 cents a ton. We do not feel prepared to trouble further about the matter, nor to go to the expense of sending a man to make a preliminary report, unless we are given the coal rights over the whole of your concession. Five hundred acres is not sufficiently attractive. You say that this area contains 10,000,000 tons of coal, but we imagine that this figure can be little more than a guess. We are not asking for your valuable iron rights, but require the whole of the coal. Finally, we could not bind ourselves to pay you in shares, for it might be impossible for Malayan Collieries to arrange for this form of payment, but we could perhaps be able to arrange for you to have a seat on the Board of Malayan Collieries, Ltd. I can assure you that if we can come to terms, we mean business. We are prepared to spend a considerable sum in investigating the property and, if it be proved workable, in developing it. We have the plant and the men ready and could start straight away, and we only need to satisfy ourselves that the property contains a big enough deposit of good workable coal, but as we have the offer of coal properties in South China and elsewhere we would require to fully satisfy ourselves upon this point before we purchased it. I am leaving for South China, where we already have a colliery engineer, in about six weeks’ time, and shall probably be away for a couple of months, so if we are to do anything with regard to Soeboekoe I hope to hear from you before I leave Kuala Lumpur. I am glad to hear from your letter to Mr. Henggeler that you are quite well and prefer the climate of Soerabaia to that of Singapore. With kind regards, -Yours sincerely, (signed) J.A. Russell. There was another letter dated Sept. 15 from Mr. de Stoutz written “without prejudice” to Mr. Russell. In it Mr de Stoutz informed Russell that the terms which he had already given to Henggeler were the best he could do, that he had had other offers for the Seboekoe property but that he had more confidence in Russell’s and was willing to give two months free option. On Sept. 23 de Soutz wrote again acknowledging receipt of a telegram from Russell accepting the terms and sending him a draft option. They would see from that, that Russell, on behalf of Malayan Collieries Ltd., had accepted this option from Oct. 15. The Vital Date Next they came to the vital date, Sept. 27, on which Hong Guan and Russell had an interview. Before they met, Russell had accepted the option on Soebeokoe. On that date two documents were made of tremendous importance to this case. Counsel submitted that an honest transaction was one which was honestly carried out. But when a defendant had to be continually explaining away things, then they had immediately the beginning of a case of fraud, because the transaction was not carried out in an honest way. There might be a slip here or there, but taken through and by an honest transaction would be honestly carried out. It was set down that payment was to be made for the concession of $1,125,000 in Malayan Collieries Shares. He did not know whether it was suggested that Mr. Russell intended to go into the market and buy the shares necessary. The first document of Sept. 27 was stated to be the result of prior discussion between Hong Guan and Russell. Russell’s shareholdings at that time amounted to 52,000 and 53,000. That was to say that Mr. Russell proposed to go into the market and buy 25,000 shares to fulfil this transaction. Russell’s story was that Hong Guan was sent away to bring evidence that he was acting bona fide. The story of Dr. Lim Boon Keng was that the E.M.R. Co. sent Hong Guan to bring evidence to prove the bona fides of his purchase. It was clear that both sides required evidence of bona fide. So far as Mr. Russell was concerned that evidence was contained in the letter of Sept. 21 which was brought to him on Sept. 27. That letter when offered was unacceptable to Mr. Russell. The price was too high, and Hong Guan was sent back to get better terms. The position was that Hong Guan was leaving Kuala Lumpur and he had been asked to furnish the evidence of his principal’s bona fides. Then came this Letter of Authority Malayan Collieries, Ltd., Kuala Lumpur, Sept. 27, 1920. To Whom It May Concern. This is to authorise Mr. Ng Hong Guan to apply for options over coal properties in the Dutch East Indies. For Malayan Collieries, Ltd. J.A. Russell and Co. (Sgd. J.A. Russell) Managing Agents and Secretaries Was not that the authority which was necessary to Hong Guan? On the same day another letter was written by Mr. Russell. He also wrote to Hong Guan that the Malayan Collieries would be glad to have options on less developed properties than Goenoeng Batoe Besar. From that it would be seen that Russell thought that he was empowered to authorise people to search for options without first asking or consulting his fellow directors. But he had explained, or tried to explain, that he had no authority to deal with coal properties. The question naturally arose why, if the Malayan Collieries were interested in less developed properties, they should not be interested in a mine which had all the qualities necessary for Malayan Collieries. It did not stop there. There was another letter written on that same day which he submitted, clinched Mr. Russell and ended the case. This letter was not mentioned from the beginning to the end of Mr. Russell’s explanation to the shareholders. Mr. Peck, when he opened these charges against Mr. Russell at the meeting of May 4, only referred to the letter of authority. At that time Mr. Peck was a layman, now he was a lawyer. He did not then realise the importance of this second letter of Sept. 27. He had then only a copy of it and without calling Hong Guan he could not have proved that letter. Fortunately Mr. Russell Prosecuted Hong Guan for criminal intimidation and in the course of this case the second letter of Sept. 27 was put before Mr. Russell and he admitted it. At the end of that day, or earlier, the case was withdrawn. The difficulty in this case was that Mr. Peck could not discover documents, and what he had he could not prove. He had only copies. The directors of Malayan Collieries never allowed him access to the correspondence and it was only after the affidavits had been filed that they could get at those documents, so that this second letter of Sept. 27 was not mentioned at the May meeting of the Malayan Collieries, Ltd., and not a word was said about it in the letter to the shareholders. This letter was also written on Malayan Collieries paper and signed by Mr. Russell. This company (Malayan Collieries) had no letter book. It used the filing method and copies of letters in red paper with heading “Malayan Collieries, Ltd,” with the “M” and “C” in big type, were filed. This letter of Sept. 27, given to Hong Guan by Russell, was filed in a Malayan Collieries file. Counsel had seen it there. Mr. Ivens had seen it and Mr. Hastings had seen it. It was not set out in the company’s affidavit of documents, although it was in Mr. Russell’s. He was not suggesting for one moment that the company suppressed the letter at all. Counsel then read the letter, which was as follows Malayan Collieries, Ltd., Kuala Lumpur, Sept.27, 1920 NG HONG GUAN ESQ., 227, Telok Ayer Street, Singapore. Dear Mr. Hong Guan, -With reference to your visit of this morning, I have been considering the proposition which you put before me, and I wish to say that though I am prepared to send an expert to prospect and report upon Goenoeng Batoe Besar, I consider the price asked is a high one. I am not anxious to obtain an option over the Goenoeng Batoe Besar property, because I have just secured one over Seboekoe. I understand that Seboekoe is more difficult to work than Goenoeng Batoe Besar, but the quality of coal is about the same and the quantities are greater. We should have to spend more money in developing Seboekoe, but against this would be the fact that the price asked for Seboekoe is much cheaper than you and your friends require for Goenoeng Batoe Besar. Once Seboekoe were adopted, it would be able to compete with Goenoeng Batoe Besar, and I would point out that although you are getting very good prices at the present time for Goenoeng Batoe Besar coal, with competition these prices cannot continue and I expect to see the price eventually drop to about $15 a ton c.i.f. Singapore. Both Seboekoe coal and Goenoeng Batoe Besar coal are the same as Malayan Collieries coal, that is to say, they are high-class lignites or sub-bituminous coal of the Tertiary measures. The two Borneo coals are better than our coal because they have less water and will store, and can therefore be used for shipping, but if we briquette our coal, it can also be used for shipping, and a briquetting plant is now on its way out from England. In regard to ash, our coal is much superior to the Borneo coal, and while we have two seams each 30 to 40 feet thick, have an area of nearly 10,000 acres and over 100 millions tons of coal, Goenoeng Batoe Besar appears to be a very small place and only to contain 12 million tons of coal. Mr. Platt says that the 12 million should be confirmed by further investigation, and this means we ought to do a good deal of prospecting. In view of the distance of the Goenoeng Batoe Besar from Kuala Lumpur, of the absence of prospecting work done on the property, and of the high price asked, and the further large amount of money we should need to sink in development (say for the latter $1,500,000), we should want an option for at least six months. -Yours sincerely, (Sd.) J.A. Russell. The End of the Matter Continuing, counsel stated that he had pleaded that this letter was written by Mr, J.A. Russell, and that it was written by him in the capacity of chairman of Malayan Collieries, Ltd. He submitted that the letter could not be explained away, and on the face of it, it was clear as anything that it was Malayan Collieries, Ltd., that was obtaining this option from Hong Guan. That letter was written on the same day as the authority given to Hong Guan. Counsel submitted that he had referred to that letter in paragraph 10 of the plaint as follows: - “On the same day, the 27th Sept. 1920, the first defendant, in his capacity of chairman of the said company, in a letter addressed to the said Ng Hong Guan informed the latter that the said company would be willing to enter into treaty to buy the said property.” Counsel submitted that the paragraph was amply proved by the way in which it was written, the paper on which it was written, and it being filed in the Malayan Collieries; file. Counsel here asked the court to compare that letter with the letter written by Mr. Russell to Mr. de Stoutz on Sept. 6, 1920. It was written on the same paper and signed in the same way and it talked about “I” and that he suggested, meant as chairman of Malayan Collieries, Ltd. Was there any real defence to that letter? Counsel submitted there was none. Para 3 of the defence required the plaintiff to prove his documents. Para 5 stated “Subject to para 3 hereof these defendants deny that the letter of Sept. 27, 1920, referred to in para 10 of the plaint, was written by the first defendant in his capacity of chairman of the 3rd defendants, nor do they admit the interpretation thereon by the plaintiff nor that it was read and understood by the said Hong Guan in the sense pleaded in para 10 of the plaint.” That was all that Mr. Russell said in his defence. He told not a solitary word to the shareholders about it. He simply said, “I do not agree with your interpretation.” But what did he say when he was cross-examined in the criminal case? He stated, “I identify the document shown me. It is a letter given by me to the accused.” Clearly it was not written to him but given to him. Counsel said it was given to Hong Guan in order to obtain better terms from the E.M. and R. Co. At the end of Mr. Knowles’ cross-examination of Mr. Russell, or after adjournment, the case was withdrawn, Mr. Shearn having addressed the court. Mr. Russell had on oath stated that he wrote this letter and that he gave it to Hong Guan, but Mr. Russell endeavoured to make out that he did not do so as chairman of this company, or as senior partner of Messrs. J.A. Russell and Co., managing agents for and on behalf of Malayan Collieries, Ltd. They had then, counsel continued, a letter by which Mr. Russell authorised Hong Guan to obtain the Goenoeng Batoe Besar option for the Malayan Collieries, Ltd. If English Meant Anything that statement was correct. And the vital importance of that letter was that it was the letter on which this option was obtained and everything could be traced back to that date, Sept. 27. Counsel proceeded to show that was from Mr. Russell’s own defence by reading para 8 (b), (c), (d), etc., as follows: - 8. (b) The said Ng Hong Guan thereupon volunteered to obtain an amended option upon the lines discussed between them, the 1st defendant and the said Ng Hong Guan, which option the said Ng Hong Guan proposed to offer to the 2nd defendants. (c) The said Ng Gong Huan subsequently obtained an amended option over the said property, dated the 1st October 1920, and on the 3rd October 1920 sold it to the 1st defendant as a partner in 2nd defendants. The terms of the sale were reduced to writing by the 1st defendant and signed by the said Ng Hong Guan. (d) One of the said terms of sale was the said Ng Hong Guan should give to the 1st defendant full benefit of any better terms than were contained in the said option which the said Ng Hong Guan might be able to obtain. (e) On the 4th October 1920 the 2nd defendants deposited in the Hongkong and Shanghai Bank, Kuala Lumpur, $60,000 of their own moneys, being the option money payable for the exercise of the said option of the 1st October 1920. (f) The said option of the 1st October 1920 was varied as a consequence of the said Ng Hong Guan’s agreement to obtain better terms as pleaded in sub-paragraph (d) hereof (g) On the 6th October 1920 the said Ng Hong Guan brought to the 1st defendant the said amended option which was dated the 5th day of October 1920 and is the option referred to in paragraph 6 of the plaint herein. So that the defence was that the document of Oct. 5 was obtained as a consequence of the documents of Oct. 1 and 3. and the document of Oct. 1 was obtained as a consequence of what occurred on Sept. 27. Counsel submitted that this letter was a direct authority to Hong Guan to negotiate for this option on behalf of Malayan Collieries, Ltd., even if the other letter was not, but the two taken together put the matter beyond all possible doubt. In the letter there was a reference to Mr. Platt and to 12 million tons of coal. From where did he get that information? He got it from a report made by Messrs. Platt Jansen, consulting engineers to the E.M.R. Co. It was a very full report of the Goenoeng Batoe Besar property and dealt fully with the subject, such as storage, water supply, power, etc. And it gave some vital information about this mine as follows: - The cost per ton of coal f.o.b. alongside wharf is about £5 at present, but after reorganisation should come down to about half. From a rough calculation the amount of coal available on the concession is about twelve million tons, but these figures should be confirmed by investigation work on all the seams and at different points. That was what Mr. Russell was referring to when he said: “Mr. Platt says that the 12 million tons should be confirmed by further investigation, and this means we ought to do a good deal of prospecting.” An Extraordinary Defence. Continuing, Mr. Braddell said that his case was that Russell and Co. were the managing agents of this company and they were managing agents to do this very thing. Their agency implied the obtaining of options. Counsel next quoted two authorities in support of his contention that a man might so act as to estop himself from defining that he was an agent, and he said that when Russell gave to Hong Guan those two documents of Sept. 27, he did so act. He was sorry to say that the defence in that case was an extraordinary one. All the evidence on commission was taken to prove that Russell bought this option for himself. Unless the defendants could convince his lordship that the letter of Sept. 27 was not written on behalf of Malayan Collieries, Ltd., and counsel submitted his lordship could not be convinced of that, then all the defence was not of the slightest use. Once his lordship found it as a fact that the letter of Sept. 27 was written on behalf of the company that was the end of the case. He could not see what his learned friend’s reply to that letter would be, but it might be that when Mr. Upcott came to speak he might argue that there was no mandate given to the defendants. Counsel submitted that the question of mandate was not material to the case at all. Counsel then went on to Sept. 28. It was evident, he said, that Mr. Russell continued to write on Malayan Collieries paper until the bird was in his hands. After the bird was in his hands he wrote on Russell and Co.’s paper. On Sept. 28 Mr. Russell wrote to Hong Guan informing him that there was reported to be a coal concession near Padang, containing 150 million tons of coal, that a Mr. Upton who was staying at Raffles Hotel had the concession for sale; asking him to find out something about the concession, and hoping to see him in Kuala Lumpur on Oct. 2 or 4. Mr. Russell also asked Hong Guan to bring all the papers he could, particularly in regard to any information about Tehweh. He also mentioned in the letter that there was a steamer leaving Singapore for Kota Baroe on Oct. 8, adding, “and I should like to send my mining engineers by her.” On the following day Hong Guan wired to Mr. Russell as follows: - Goenoeng Batoe Besar tribute system one million two hundred thousand payable half cash half shares in Malayan market value ten per cent down and can complete say four months will not sell outright we pay royalty two and half dollars per ton lease six years reply urgent am probably visiting you tomorrow. That same day Russell replied to Hong Guan by telegram as follows: - Cannot agree new terms which are worse than those contained in your letter of 25th. But trust see you tomorrow to discuss matter. Hong Guan saw Russell on Sept. 30, and came to terms subject to a sliding scale for royalty and slight modification in the amount of deposit. That telegram was signed by J.A. Russell and Co. Referring to Mr. Russell’s explanation of this part of the case to the shareholders, counsel said that he then told the shareholders A Deliberate Falsehood The telegram disclosed very much more than Russell told the shareholders. Then Hong Guan came back with the amended option. The defendant’s story was that Hong Guan arrived on Oct. 3, with the amended option, about which Mr. Russell knew nothing, that it was a badly drawn-up document, and that Hong Guan’s attitude was, “There is the option, take it or leave it as you please,” that Hong Guan also stated that there was an offer from one Mr. Lowe of Calcutta to whom he could sell it; that it was thus an impossible position and Mr. Russell had to take up the option. That story, counsel commented, was absolutely untrue and false. The fact was that Mr. Russell had accepted the option by a wire dated Oct. 1. The shareholders of Malayan Collieries, Ltd., were led to believe that Mr. Russell had to pay $60,000 to get the option. The telegram of Oct. 1 was: “I confirm arrangement will meet you in office on Sunday morning at ten.” How could that be reconciled with what he told the shareholders? On that same day he wires again to Hong Guan: - In drawing up option please ask for six weeks from time of boat leaving Singapore as one month insufficient for my men to go and return with report also ask that deposit be with Kuala Lumpur branch of bank. So that his lordship would see that it was at Mr. Russell’s request that the time was extended to six weeks, and the arrangement was made for the deposit of the money in the Kuala Lumpur branch of the Hongkong bank. Mr. Russell wrote to Hong Guan on the same day, again on Malayan Collieries paper. He had not then received the option in writing. This letter confirmed the sending of the two wires. In it he said “I sincerely hope that you will do your very best to get six weeks instead of only one month’s free option.” The option was handed to Mr. Russell on Oct. 3, and that was the date on which the fraud was committed. The court adjourned at 1.15 p.m. for lunch. An Amazing Defence In para 8 (c) of the defence, Mr. Braddell continued after the resumption, the defendant pleaded that this option of Oct. 1 was sold to them on Oct. 3. Whatever the 1st defendant’s position in this matter was he was certainly an agent; whether he was an agent, as he stated, for his own firm, or for Malayan Collieries, was a different matter. Clearly he acted as an agent for somebody. Then in para 10 of the defence it was stated “that the said option was by the said document of Oct. 3, 1920, transferred by the said Hong Guan to the 1st defendant as a partner in the 2nd defendants.” It was an amazing defence. It was their case that Mr. Russell bought this option on Oct. 3 as agent. Then they came to the document which purported to be the document of sale, which was as follows: - Dear Sir, -In return for your depositing for a period of two months upon my behalf in the K.L. branch of the Hongkong and Shaghai Banking Corporation, in the joint names of yourself and the Eastern Mining and Rubber Co. Ltd., the sum of $60,000, I agree to transfer to you, and do hereby transfer to you, my option agreement dated Oct. 1, 1920, for the lease for 60 years of the Goenoeng Batoe Besar coal concession from the Eastern Mining and Rubber Co., Ltd., of Singapore, and I further agree to give to you the whole benefit of any better terms for the leasing of the said property, which I may be able to obtain from the Eastern Mining and Rubber Co., Ltd. Should you or your nominees lease this property it is agreed that you shall pay to me or to my nominees the sum of $100,000 in shares of Malayan Collieries, Ltd., at the rate of $30 for each $10 share. Should you not at the end of the period of free option wish to exercise the same, the deposit of $60,000 shall be released to you and neither I nor the E.M. and R. Co., Ltd., shall have any claim upon it. Yours faithfully, (sgd.) NG HONG GUAN. This, counsel commented, was an amazing document. It was entirely in the handwriting of Mr. Russell, excepting for the signature. It was on ordinary plain white paper without a heading of any description. It was not stamped and on Dec. 6, 1922, a fine of $50 had to be paid in consequence. Counsel repeated that it was an amazing document, and the defence was an amazing defence. Mr. Russell was undoubtedly In a Dilemma If that was a genuine document, and if Hong Guan did actually sell this option on the date given, the agreement of June 10, 1921, was a false and fraudulent document. On the other hand, if the agreement of June 10, 1921, was a genuine document, this document of October 3 was a false and fraudulent document. The two were irreconcilable. The reason for that statement was this. On the face of this document of Oct. 3 it was definitely stated that Hong Guan sold this option for 3,333 Malayan Colliery shares, and Russell became possessor of it on Oct. 3. The next step in the transaction was that the option was sold by Russell to the Company. The actual fact, however, was that Hong Guan got 8,000 shares not 3333. In the document dated June 10, 1921, it was stated that Russell bought this option from one, Khoo Wee Chuan, on Nov. 19. The vital importance of that to Mr. Russell was apparent, for counsel could not see how Mr. Russell could come to court and pledge his oath in this manner. If they referred to the minutes of Malayan Collieries, Ltd., of Nov. 23, it would be seen that the meeting resolved that the option held by Messrs. J.A. Russell and Co., to acquire the Goenoeng Batoe Besar property be acquired by the payment to Messrs. J.A. Russell and Co., or to their nominees, the sum mentioned in the option, and held by and in the name of Khoo Wee Chuan, that is to say $600,000 in cash and $100,000 fully paid shares of $10 each in Malayan Collieries, Ltd. Counsel remarked that the other directors of the companies were, on that occasion, deceived by Mr. Russell. Now where did Mr. Russell stand? Which of these documents was false and which was genuine? Of the documents one was what the law required to be filed. The agreement of June, 10, 1921, was the one which was filed because the law required that the directors of these companies should let the world know why they allotted these shares. Mr. Russell had to admit that either the document which was filed or the document of Oct. 3 was false. If he made either of those admissions where would be his defence, because his defence was that he bought on the latter document of Oct. 3? In this document there was another minor point. It was pleaded that the reason why Hong Guan sold them was because Russell was going to forebear suing on that note for $60,000. That was not only pleaded but put forward to the shareholders in explanation. But The Consideration expressed in the document was entirely different, and the document was written by Mr. Russell himself in his own handwriting. On the next day, Oct. 4, Messrs. Russell and Co. deposited $60,000. The plaintiff’s case was that, up to Oct. 3, Russell acted as agent of Malayan Collieries, Ltd., until he got the written option in his hands. Once he got this he used his own paper. Even then, counsel submitted, he utilised the company. In his explanation to the shareholders Mr. Russell made a great point of this $60,000 having been paid, he spoke of it as a payment. That was absolutely incorrect. He paid no money at all. What he did was to take $60,000 out of Russell and Co.’s account and put it back in the same bank in fixed deposit, at one per cent. interest per annum, in the name of himself and the Eastern Mining and Rubber Co., Ltd., and the deposit was so endorsed that nobody but J.A. Russell could touch the money. That money only became payable if the option was exercised and counsel promised to show, by and by, what happened when the time came to exercise this option and that was that this money never came to be paid. Counsel submitted that the whole of that explanation was a suggestio falsi. There was another thing about payment into deposit. In his explanation Mr. Russell suggested that this money was paid in order to see if the mine really existed, and if the mine existed the amount became payable to the E.M. and R. Co. Again, it was said that if the option was not exercised within two months the sum of $60,000 would be forfeited. But according to the second option of Oct. 5 that clause about forfeiture was entirely omitted. There was no provision there for forfeiture at all. This idea of verifying whether a mine existed at all was a remarkable point, because Mr. Russell had Mr. Platt’s report, and Dr. Lim Boon Keng’s evidence. In the latter’s evidence they found that the idea of putting $60,000 in deposit as a proof of good faith was entirely Mr. Russell’s. What Mr. Russell wanted this free period for was to enable him to send men to investigate the land to put bore holes, to make surveys, etc., and not to find out whether a mine existed. He could have found that out from any shipping company in Singapore because ships were burning this coal. The Bird in the Hand Thus the money was deposited on Oct. 4, and then Mr. Russell wrote to Mr. Hong Guan on Russell and Co.’s paper. That was because he had then had the option in his hands. Here Mr. Russell realised that the first option was very vague, that it was badly worded, and that he could exercise it at any time as there was no real period fixed for paying. Yet Mr. Russell was telling his shareholders all the time that he was risking $60,000, that there was a very short period to exercise the option etc. Then they came to the option of Oct. 5, and there was no doubt about that at all. It was not given to verify the existence of a mine at all. It was as clear as clear could be. It said: - This option is given to Mr. Ng Hong Guan to send his representative to prospect and report on the coal concession at Goenoeng Batoe Besar, Dutch Borneo, of Messrs. Eastern Mining and Rubber Co. Ltd. within a period of five weeks after the arrival at Goenoeng Batoe Besar of the s.s. Nanyo Maru No 1 or any other first steamer, on condition that he deposits the sum of $60,000 in the joint names of Messrs. J.A. Russell and E.M.R. Co. Ltd. for the exercise of the option etc. If his lordship compared that with what Russell told the shareholders it would be found that the explanation given to the shareholders was a false one. There was nothing of a gamble about this option at all. There was nothing which the directors of Malayan Collieries would not have jumped at. So that when Russell told the shareholders that it was a gamble, that he was risking $60,000, that it was against the settled policy of the directors of the company, it was all untrue, as a great many other things were. The option contained certain clauses which made it a document in favour of Malayan Collieries, Ltd. The fact that the deposit was in the name of Mr. Russell did not mean that it was a transaction with him. The banks always preferred to deal with individuals in such cases. Then there was clause (k) of the option which ran. After the allotment of the 20,000 shares of Malayan Collieries Ltd., the Eastern Mining and Rubber Co., Ltd. has the right to nominate a director on the board of the Malayan Collieries, Ltd., and to appoint representatives to check the output of the mine. Counsel submitted that the above clause applied to the company and it could not possibly apply to Messrs. J.A. Russell or to Russell and Co. The allotment of shares and the “right to nominate” directors were well known terms. Mr. Russell tried to make out that allotment meant his transfer of 20,000 to the E.M.R. Co. Eventually Dr. Lim Boon Keng was nominated as a director of Malayan Collieries Ltd. and this nomination was later confirmed Commenting on the evidence taken on commission, Mr. Braddell said that the defendant, after the Court of Appeal decided that this action must go on, began taking out summonses for the examination of witnesses in various places, all of which were strongly opposed. The Chief Judicial Commissioner however made an order saying it was a case of such importance that the defendants should be given the benefit of calling any evidence they wished to. The court adjourned at 4.15 till 10.30 this morning. In yesterday’s report of the case we regret three printers’ errors: - (1) On page 9, column 3 line 32, the word not was omitted the correct reading being “of course he was not blaming etc.” (2) On page 16, col. 1, line 8, should read “obviously without the knowledge of the directors”; not with the knowledge. (3) On page 16, Col. 3, line 54, read Seboekoe not Goenoeng Batoe Besar. (To be continued)

The Singapore Free Press and Mercantile Advertiser), 19 March 1924, Page 6 PECK-RUSSELL CASE. THE PLAINTIFF'S ALLEGATIONS

The Straits Times 19 March 1924 page 9 MALAYAN COLLIERIES Mr Russell and Borneo Coal Option Second Day’s Hearing

The Singapore Free Press and Mercantile Advertiser , 20 March 1924, Page 6
 PECK-RUSSELL. MR. BRADDELL CONTINUES

THE MALAY MAIL, THURSDAY, MARCH 20, 1924, p.5 PECK v RUSSELL Second Day’s Hearing. (continued from Yesterday’s issue.) Continuing his speech Mr. Braddell said that the first Commission which the defendants applied for was to England to examine Mr. England. The second commission was to Amoy to examine Dr. Lim Boon Keng. In connection with that, counsel read a paragraph of the affidavit by Mr. Russell in which he said that from enquiries made he found it impossible for Dr. Lim Boon Keng to come to this country to give evidence. The impression he gained from that affidavit was that Dr. Lim Boon Keng was a perfectly willing witness, ready to give any evidence possible in the matter. But what he heard when Mr. Peck returned was that The Doctor was very Annoyed. That was evident from several passages in his evidence. At the end of his examination Dr. Lim Boon Keng, at his own request, made the following statement:- I ask for this because cross-examinations don’t give all the facts and may make statements made by me misleading when disconnected from their natural connection. The first statement is that I ought to state for the information of the Court in Kuala Lumpur how and why I have willingly submitted too this very prolonged examination. I declare that the first intimation I had that I was to be asked to give evidence before H. B. M. Consul in Amoy was given to me by my friend Mr. Peck when I saw him on board the van Overstraten. I had received a wire from Mr. Russell from Hongkong that he was coming by this boat. I thought he was coming to fulfil an old engagement to visit Amoy when coming to Hongkong at ‘Xmas time. Mr Peck’s information astonished me. I went up to Mr. Peck and had a conversation. He was surprised that I knew nothing about it and he said he was coming to examine me and was sorry he had some hasty questions. (Mr. Peck interpolates “unpleasant” was the word he used.) I felt annoyed with Mr. Russell that in sending me the telegram he had not been frank to inform me of the coming examination. When I found that it was so as Mr. Peck stated I agreed at once to appear before you, sir, to give evidence, as in my own judgement, despite what Mr. Peck told me about the unpleasant questions, and that I could have refused to submit to such an ordeal, in my opinion I would be failing absolutely in my duty as a public man of many year – of the Straits, an ex – J.P. of Singapore and the ex-chairman of the E. M. R., to hesitate for a single moment to come forward and submit to any kind of cross-examination and give all the facts within my knowledge, if I refrained simply to avoid being the target for unpleasant insinuations, hasty queries or pettifogging quibbles. Even though my personal reputation might be besmirched I have always held the principle, and shall hold to the bitter end, fiat justitia. One point more and that is I should like to make clear the position of my wife Grace Pokha Lim vis a-vis her niece’s husband Ng Hong Guan in connection with the receipt from him of certain shares of M. C. given to her by him. The questions put by Mr. Peck relating to this matter were to obtain certain answers which without full explanation must be injurious to her and to me. I emphasise the fact that neither my wife nor myself had ever anything to do with J. A. Russell and had never negotiated with him or anybody to obtain these shares, and further that her getting the shares from Ng Hong Guan would not in the slightest degree have mattered whether the M. C. Ltd., acquired the option directly or Mr J. A. Russell did it in the first instance, provided that Ng Hong Guan was not doing work for nothing. Therefore if any insinuation was to be drawn by virtue of the fact that my wife’s receipt of shares from Ng Hong Guan had in the slightest degree led me either as individual or as director of the E. M. R., I say emphatically in view of the facts s that it is absolutely unjustifiable. Besides Ng Hong Guan gave the said share to her as much out of affection and gratitude for many benefits conferred by her upon him and his wife before and after their marriage and Ng Hong Guan, as Mr. Peck himself knows, was giving shares round without any consideration whatever. (Mr. Peck:-I suppose my silence with regard to that will not imply consent.) I think I have said enough to explain this matter. Counsel next dealt with the despatch of the three engineers, Messrs. England, Brickman and Hastings by Mr. Russell to Goenoeng Batoe Besar, and how they returned after putting down diamond drill bores, quite satisfied with the results, but without visiting Seboekoe where Mr. de Stoutz was waiting for them for the purpose of inspecting his concession. Two of the engineers Messrs. England and Brickman were employees of Malayan Collieries Ltd. and the diamond drill which they took with them belonged to the Malayan Collieries Ltd.

THE MALAY MAIL, THURSDAY, MARCH 20TH, 1924,ps 9 and 16. PECK v. RUSSELL On the Horns of a Dilemma SIGNIFICANT DISCLOSURES Before Mr. Justice Whitely yesterday, Mr. Braddell, before beginning his address, drew the attention of his lordship to an unfortunate slip in the Malay Mail report of the case, which did an injustice to Mr. Henggeler, as well as to Mr. Russell. In column 3, on page 16, the letter of Mr. De Stoutz to Mr. Henggeler was reported to have referred to an option on Goenoeng Batoe Besar. It should have been over Seboekoe. Of course the reporter, counsel said, had not the letter before him, and he himself spoke somewhat fast. The case was reported very fully in the Malay Mail and it would be well to have the correction made. There was one thing more. Mr. Ivens had handed him a letter written by Mr. Henggeler to Mr. Stoutz on Sept. 7, 1920, referring to that letter of Aug. 25, which it would be best to include in the record in order to complete it. The letter stated that he had handed the letter to Mr. Russell. The conclusion of yesterday’s report will be found on page 5. Continuing his argument, Mr. Braddell said that in the agreement of Oct. 1, the vessel Nanyo Maru was mentioned. This was important in view of Mr. England’s explanations. The clause (f) in that agreement was as follows:- The optionholder or sub-lessor undertake as an essential part of this contract to acquire the charter-party relating to the steamer the s.s. Nanyo Maru no 1, on the same terms and conditions held by the Eastern Mining and Rubber Co., Ltd. At the seventh annual general meeting of Malayan Collieries Ltd., Mr. Russell, in his speech to the shareholders stated that the company’s representatives, were then investigating two properties which were then under consideration and which might, he said, prove as unsuitable as those which had been inspected. On the date, Oct. 15, the boring party was already down in Singapore and the vessel sailed on Oct. 16. Counsel referred to Russell and Co.’s letter to the shareholders of Dec.23, and asked his lordship to mark the words: ” the land which has been thoroughly examined and reported upon by Mr. E. England, your colliery manager……estimates the coal in sight at 40,000,000 tons.” Now it was A Fact that Goenoeng Batoe Besar was prospected and examined by engineers of the company, with the company’s property, and at the company’s expense before Mr. Russell even thought of exercising that option. That was again another one of many circumstances in this case which Mr. Russell had to explain away. He had to get out of it, and counsel explained how Russell endeavoured to get out of it in his letter to the shareholders. Counsel summarised this as follows:- 1. Arranged that Brickman and England should inspect and bore Seboekoe taking with them a diamond drill and a gang of coolies. 2. As they had not been long in the country it was arranged that Mr. Hastings, an employee of Russell and Co., should be lent for a month to help them. 3. The plan was for England to inspect Seboekoe leaving Brickman behind to bore it if he thought fit. 4. On Oct. 9 the Seboekoe option arrived which stipulated that the engineers of the company should leave on or before Oct. 15. 5. Russell and Co. having no one to send to Pamoekan Bay except Hastings at first told England they could not spare him for Seboekoe. 6. The Nanyo Maru was due to sail on the 14th and Russell and Co. had been offered accommodation in her. 7. It was finally agreed that England and Brickman and party should travel by the Nanyo Maru which even though she went first to Pamoekan Bay would take them as quickly to Kota Boroe as if they had travelled via Batavia and Sourabaya. 8. It would also give England a chance of getting a free and convenient inspection of the property for Malayan Collieries Ltd. incurring no expense to the company. 9. The party could disembark at Kota Baroe upon the return journey to Seboekoe. 10. Hastings was to return from Seboekoe as soon as possible and in the meantime report to Russell and Co. by cable. 11. On his arrival at Pamoekan Bay England was so greatly impressed that he decided on his own initiative to land his men there and to begin borings and surveying. 12. He held up the Nanyo Maru some days and then returned to Singapore by her, leaving behind him Brickman and the boring party. 13. Hastings and England got back to Kuala Lumpur on Nov. 9. That was the story given to the shareholders. The shareholders were led to believe that the examination of this property by the company’s engineers was a fluke. The company’s engineers, it was said, were supposed to go to Seboekoe, but owing to the convenience of accommodation they travelled by a ship which went to Pamoekan Bay and Goenoeng Batoe Besar and that the examination was only made by England on his own initiative. That explanation was an Absolutely False one. The trouble did not rest there. Mr. Russell called the witness England to support that story. If Mr. England gave evidence that was untrue, clearly someone got him to do it. That evidence was taken in England in an expensive way, and the plaintiff was unable to send to their counsel in London all the documents and full instructions. If it was said that the cross-examination was not full, counsel agreed that it was for the reasons which he had stated. At that date on which the commission went Mr. Peck had been through the documents and taken shorthand notes. Their counsel in London evidently thought that if Mr. England’s evidence was palpably false, it was best to get him down to his story and leave his lordship here to see it. Mr. Braddell said that there were three commissions and the documents came in dribbles. After reading Mr. R.C. Russell’s affidavit one would imagine that this witness, England, had been written to asking him to give evidence. At this stage Mr England’s evidence was put in. Mr. Braddell remarked that England’s answers were of a type familiar to his lordship and familiar to most of them. It was the type of answer which they came across in police courts where a witness denied knowledge. It was a standard type of answer. In passing, counsel referred his lordship to a minute of Malayan Collieries Ltd. meeting as follows: Salaries. -That in future the engagement of servants of the company, their remuneration and increases be left to the decision of the managing agents. Mr. England had a son in the company’s service. Counsel then read the following extract from Mr England’s evidence. -You left the East at the end of 1921, did you not? -On Sept. 6, I sailed from Batoe Besar to Singapore for home. You have not been back there since? -No. What was the last time you saw Mr. Russell?-I went up to the Malayan Collieries to settle up my accounts. I think I can make it a bit shorter. Have you seen him since you left the East?-Seen Mr. Russell? Yes?-I met him in London once. You met him in London fairly recently, did you not, he has been on leave recently, has he not?-He was home, sick. He came home for a visit?-Yes. When was that?-This last August. In August you saw him? How did you come to see Mr. Russell? Did you see him in London? I think you are living in Yorkshire?-Doncaster. Did you see him at Doncaster or did you see him in London?-I saw him in London. Did Mr. Russell ask you to come and see him?-I wrote out to my son. I have the boy under the same company and the boy wrote and told me that Mr. Russell was coming home for a health spell, so I wrote back again and told him if Mr. Russell comes along I should very much like to see him. It was my suggestion really. So on Mr. Russell coming to London he wrote me and said he had arrived in London; if I cared to go down I could take the opportunity, and at the time it suited me quite all right. What did you want to see Mr. Russell about?-On behalf of my son, which business I decline to enter into. I do not want to pry into it. If you tell me it was only on behalf of your son, that is quite good enough for me. Was there any other matter discussed?-No, only just how things were going on in the Far East. No mention of this case?-No. Quite sure of that? -Quite sure. Did you know at that time that this action had been brought against Mr. Russell and his company?-No. Never heard about it?-No. That is what has really put me in a bit of a dilemma, because the time has elapsed so long. You think Mr. Russell may have refreshed your memory if you had had a talk about it?-It may be a little better if I got to know it from some source. I have no doubt a conversation with Mr. Russell would have been most helpful, but, as a matter of fact, you did not have one?-It was not discussed. It was not discussed at all?-No. When did you first hear that the action had been brought? -Just before Christmas. Who approached you with regard to giving evidence?-This gentleman here (pointing.) Mr Haslam? -Yes. Turning to another part of the evidence counsel drew the attention of the court to the following passage:- And in September, 1920, it was arranged that you should go to view Seobekoe on behalf of the Malayan Collieries Limited?-Yes Your story is this, is it not, that it was arranged for the convenience of Mr. Russell and Mr. Hastings that you should look at Batoe Besar on the way. Mr. Russell wanted Batoe Besar viewed as well?-I beg to differ there. It was for My Convenience not for Mr. Russell’s. I was not worried about Mr. Russell’s convenience at all. It was the Malayan Collieries I was representing. It was arranged, no matter for whose convenience, that you should go to Seboekoe and visit Batoe Besar on the way?-My arrangement was to go to the Seboekoe district. And to go to Batoe Besar afterwards? -No. My sole visit from the Malayan Collieries was Seboekoe, my instructions rather. -You say you were acting purely on behalf of the Malayan Collieries Limited?-Yes. Was it after the first arrangement was come to that it was subsequently arranged (you have already told us this) that you should also visit Batoe Besar?-The arrangement was for the combination trip. The answer is yes, is it not?-Yes. And what, in fact, resulted was that you did not go to Seboekoe at all but you did go to Batoe Besar?-Yes You did not go to the place that you were commissioned by your employers to go to but you went to Batoe Besar which you had nothing do to with whatever?-Yes, I went to Batoe Besar. Counsel continuing said that he did not want to read the whole of that because they had in evidence that Hastings was paid ?$550 a month by the Malayan Collieries during the time he was in their employ. On the contrary what happened was that Russell and Co. paid the money and got it back from Malayan Collieries Ltd. If he was wrong with regard to Hasting’s salary the only amount that Russell and Co. paid him was $50 a month. They would see from the following evidence of England how he changed his mind regarding Seboekoe. A Change of Plan. Q. Looking at the matter from the interests of your company, what conclusion did this information lead you to with regard to the expediency of examining the Seboekoe property?-From what I heard in Singapore and what I heard in Bandjermasin about these two different properties it struck me very forcibly that the Batoe Besar property would be a very dangerous opponent if it proved successful. The Seboekoe property did not strike me very forcibly according to the conversation. It rather upset my arrangements altogether, and I decided to proceed to Batoe Besar along with Hastings as a passenger and wait his return. How did England come to examine Goenoeng Batoe Besar? The explanation was interesting and was as follows:- At that time what was your opinion of the respective merits of Batoe Besar and Seboekoe when you made that decision? -From what I had heard, remarks about the conversation, it struck me very forcibly that there must have been something at the back of it, for Batoe Besar to be boosted up as a valuable property. Therefore I decided to go to Batoe Besar and call on my way to Seboekoe, but while I was at Batoe Besar I changed my plans and decided to return direct to Singapore. There was no question about getting to Batoe Besar quickly on the return journey? -No. Was it not because you went to see the two properties on behalf of the Malayan Collieries, Ltd., and you inspected the best and you were satisfied? -I beg your pardon. I did not go out to inspect both. I went to Seboekoe and on my own initiative I went to Batoe Besar. And the only reason you can give for not going to the place which you were sent out to inspect, and going somewhere else, was that you were told things by the various people?-I heard the conversation. On Another’s Property When you went to Batoe Besar the first time you made an entirely independent examination of the mine?-Yes. What right had you to do that?-Because I had the privilege of staying there and I took the opportunity. According to you, Mr. Russell had an option over that mine?-Yes. Mr. Hastings was his employee?-Yes. And you had nothing whatever to do with Mr. Russell?-No. You were the employee of someone else entirely who had no interest in the mine at all?-I had no interest in Batoe Besar. You agree with me that according to your story the Malayan Collieries, Ltd., had no interest in the Batoe Besar property at all?-Yes. Now tell me frankly: what business at all had you to go and make an examination of Batoe Besar property in those circumstances?-I asked if I should go to Batoe Besar and call there on my way out, would Mr. Russell have any objection to my having a look at his property, and when I was there, I took the opportunity as any Mining Engineer would in the near vicinity of a neighbouring concession: it would probably instruct him and give him some key note to the situation. I hope you will understand me. I am putting it as plain as it is possible. Was there anybody in the world, counsel enquired, so simple minded as to believe that this man got off the ship with his party and set up his diamond drill on another man’s property. Because this property belonged to the E.M.R. Co. the defendants wanted them to believe that England did so on his own initiative. Hastings wrote a letter to Mr. Russell on Oct.21, but in that letter there was no mention of any change of plan at all. That was a minor point, and they knew that Russell’s explanation was a false one. The truth of that was shown in England’s evidence. Mr. England stated in his evidence that Russell did not know that he was going to Goenoeng Batoe Besar. What was the scheme at the time in your mind with regard to the examination of Mr. Russell’s property, the Batoe Besar property, and the Seboekoe property?-The arrangement in my mind as near as I can remember was this: if I had stayed at Kota Baroe, it would not have been of any service to me; I should have been held up there, and so I went to Batoe Besar along with Hastings and waited there, to pass the time away better, and the arrangement was that when I landed there, I took the opportunity of having a look round for my personal use. Wanted a “Look-in.” You mean for the Company’s use?-For the Malayan Colliery Company’s use. I thought if there was anything there worth acquiring, I was going to have a look in as well as other people. When you say you, you mean the Company?-I represented the Malayan Colliery Company. I was the General Manager all the time, and I was taking the opportunity of having a look round. You have told us of the conversation you had with Mr. Russell, and that if you approved of the property and the Company wanted first refusal of it he would give it to you?-I asked him if he had any objection if I should have a look. He did not know I was going to Batoe Besar. But being there under the circumstances you have told us, did you think it in the interests of the company to look at the property?-I suppose any mining engineer who was rather enthusiastic would take the opportunity. It was to my interest and experience to be in that part of the world when I was going to call at Seboekoe. How far was the property from Van Ryswyk’s house?-He is a Belgian really. It is in the neighbourhood?-His house is on the quay-what we call the wharf. They call it “on the go-down” in Dutch, and the mine was just surrounding. Did you under these circumstances go round the Batoe Besar property and make an examination of it?-Yes. The fact was that Russell wired to Mr. De Stoutz on Oct. 5, that England and his party were leaving Singapore and would visit his property after examining another property on the way. That telegram destroyed Russell’s explanation and also England’s explanation. And if England had been persuaded to give false evidence-it was a very sinister part of the case. There was another letter written by Russell to Stoutz on Nov. 29 in which he said:- I am sorry that Mr. England was so stupid and did not follow out our strict instructions to go to Seboekoe if possible on his way to Goenoeng Batoe Besar, and if that could not be done, then, on no account to fail to do so on his return journey. Counsel next reminded his lordship of Russell and Co.’s letter of Dec. 23 in which he underlined a certain passage. Mr. England now wanted to make out that his examination was a merely casual one. He had stated in evidence: Now I want to come to the examination of the property at Batoe Besar that you made. Did you examine it with Brickman?-I instructed him to give me assistance. Did you examine it with Hastings?-No. Hastings made an independent examination of the mine?-Yes. And you made your independent examination of it?-Yes. Just tell me shortly what conclusion you came to as to the value of it, having made your examination. Perhaps we had better deal with it in detail as to how you examined it. What steps did you take?-I took Brickman with me. We went round the outcrop seams. I went all round the property to find out all the borings and see if there were any faultings at sight and what outcrops there were; and I was looking to see what mining facilities and benefits could be derived by cheap mining. Then I had several surveys made just roughly taking bearings and depths and sections for my own perusal. Then I went into the mine and examined there, and I came to the conclusion that it was a very valuable proposition. I did not make any notes for anyone. I kept it for my own private use. Did you form any conclusion as to the price per ton at which it would be possible to land coal at Java from this property?-Yes. From what I could see of the crude methods of mining, I could land coal at Singapore at 6 to 8 dollars which was a valuable acquisition. An “Extraordinary Document.” Had you within those four days completed your examination?-Yes, I had completed so far as I could, but I should have liked another one or two days so as to have made a positive opinion, but Hastings said the boat could not stay any longer than four days, and therefore I came to the conclusion and instructed Brickman to place a bore to confirm my reports-to place a bore so far from the outcrop to see whether the coal really existed towards the Bay. His lordship would see that England told Russell on Nov. 10 what he thought of Goenoeng Batoe Besar, but he did not tell the directors anything about it till later. England said that he only made a rough inspection, yet he was able to prepare plans etc. Did Mr. Russell then agree to convene a board meeting of the company as soon as you were ready to give them the assistance of your advice upon the matter?-I told him that upon Brickman’s bore I should like to meet the board and put my views before the board. So, upon receiving a wire from Brickman, I wrote a letter to the office and told them I should like to meet the board at their convenience. Did you prepare any plan of the mine?-Yes. And the plan of your proposed lay-out?-Quite so. The fact was that he made a thorough inspection of the land and he made a report. That report of England’s was not a report of valuation but a report of development. That report was a very extraordinary document. It was written on Malayan Collieries’ paper, and addressed as “Dear Sirs.” It was not signed. It did not say whether the report was good or not; it was merely a development report. The date of that report or letter was Nov. 14. Russell did not exercise this option until the very earliest which they could think of-Nov.18. Where was the end of that report and what had England to say about it? What he had to say was this: On the morning of the board meeting did you hand to Mr. Russell a short report which you had made dated the 14th November, and made on or about that date?-That was on the morning of the board meeting. Can you tell me what became of that report-the original of it. The report dated 14th November, 1920: was it left with the Company? -Yes, I presume it would be. This document will be marked E.E.3. Is that your report?-Yes, that is the very one. That is the report which you dictated as it appears here, on Nov. 14, to your typist? -Yes, that is the report as I handed it in. It is the report which you dictated to a typist on Nov. 14?-Yes. Which you kept in your possession and revealed to no one until the morning of Nov. 23?-That was typed by my private clerk. And you kept it in your possession until Nov. 23 without disclosing it to anyone?-Yes. That is the date of the board meeting?-Yes. On the morning of the 23rd just before the board meeting, you handed it to Mr. Russell?-Yes, I have a copy of that original report in my home at the present time. I see it is not signed. Why was that? -I did not expect it to be signed when I wanted to explain it to the board meeting. It was just reference notes really. He was cross examined on that and the result was as follows:- On Nov. 10, you saw Mr. Russell?-Yes. You told him that you had visited the Seboekoe property?-Yes, that is the day following my return to Batu Arang. I mentioned to Hastings in the morning to tell his representative that I had not visited Seboekoe and that I was coming tomorrow to give explanations. You made out your report on Nov. 14th, and handed it to Mr. Russell on Nov. 23rd? -Certainly. Who was that report addressed to?-It was my private report. Who was that report addressed to?-The Malayan Collieries. To the Board of the Malayan Collieries? -Yes. And you handed it to Mr. Russell?-Yes. Sir Albion Richardson: That is not quite so. It speaks for itself. There is nothing about the Board of Directors. Mr. Bridgeman: It is addressed to “Dear Sirs” The “Sirs” you meant were the Board of Directors?- That was Etiquette Etiquette or not, when you said “Dear Sirs” you meant the directors of the company?-I presumed it was going to be fixed up all right. Nobody is blaming you. Immediately on your return you make a report on the Malayan Collieries, Ltd., notepaper?-Yes. To the directors of the company?-That was made a good few days before the board meeting. To the directors of the company? -Yes. About the Batoe Besar coal mine?-That was my private note. Do answer the question and you can explain afterwards. That is so, is it not?-I do not quite follow you. Let us try again. Almost the first formal thing you do on arriving back is to make a report on the Malayan Collieries Limited notepaper to the directors of that company, is that not so?-Yes. And the subject of that report deals with these Batoe Besar coal mines and nothing else? -Absolutely. Counsel continuing, said that on Nov. 19 Brickman telegraphed from Goenoeng Batoe Besar where he was boring: “Struck nine at forty-nine proceeding to Seboekoe bores going home Nanyo Maru arriving Singapore about 26th.” “Nine at forty-nine,” counsel explained, meant a nine feet seam at forty-nine feet depth. The date of that telegram, Nov. 19, was important because that was the date on which Khoo Wee Chaun slipped into the case To whom was the Report Addressed? Counsel suggested that on the face of it Hastings’s report on the property was addressed to Russell as agent of Malayan Collieries Ltd. and not as suggested to a purchaser at arm’s length with the company. He did not want to read the whole of Hastings’s report. It was not addressed to Malayan Collieries Ltd. but J.A. Russell, agent and chairman of Malayan Collieries, Ltd. Why that was so was because Hastings pointed out what was a terrible competitor the G.B.B. would be to the Malayan Collieries. He was paid by the company and counsel said that an honest man would not have sent that report to Russell if he knew that he was not the agent of the company and was at arm’s length. That would certainly have been double-crossing. Hastings’s was the only report on G.B.B. outside Platt Jensen’s report. Therefore he suggested that this really was the report which decided Russell’s mind. It was a long report and counsel invited his lordship to look at its wording. After reading that could it be suggested that Hastings was there as Russell’s agent, and England as Malayan Collieries’ agent? The following are the most important passages in that report: Quantity of Coal.-From the plan of the concession obtained from Mr. van Ryswijk, showing outcrops and seams and the results of pitting, it will be seen that the concession probably contains 40 million tons of coal. Mr. van Ryswijk says that the amount is much larger than 40 millions, and puts the quantity at over sixty (60) million tons. But all this coal may not be workable, and I myself think that 20 million tons would be a safe figure. I do not know what Mr. England’s figures are, and until his bore is sunk I do not suppose he has arrived at a figure. There is no sign of faulting, and I agree with Mr. van Ryswijk that the bore is not needed. Costs under Proper Management In estimating this I am allowing for proper skilled labour being employed, and the sum of Dols. 100,000 being spent on reorganising the mine. With better loading appliances a steamer should easily be able to make two trips a month between the mine and Singapore. A vessel with a capacity of 2,000 tons could be chartered for Dols. 14,000 a month. This could be Dols. 3.50 per ton. However, I have put this figure at Dols. 4.50 per ton. With proper miners and proper loading appliances I estimate that the present production cost of F.4 should be reduced to F.3 or say Dols. 2.10 per ton. Dutch Government Royalty could remain the same, i.e. 40 guilder cents, or say SS 30 cents per ton. I understand that the E.M.R.Co. are charging a royalty of Dols. 2.50 per ton. I am also allowing a commission of 50 cents per ton, which might have to be paid to coal merchants. It would be necessary to rent a coal dump in Singapore, and I understand that this rent usually works out at 50 cents per ton. My figures are based on an output of 10,000 tons per month. We have then:- Per ton Mining …$2.10 Freight … 4.50 Dutch royalty …. .30 E.M. and R.Co. royalty ...2.50 ______ 9.40 Handling charges S’pore ….1.50 Office charges …1.50 Dump … .50 Commission … .50 ________ Per ton… $13.40 _________ I think that this is a liberal estimate; as Singapore office charges should not be as much as Dols 1.50 per ton. With a bigger production than 10,000 tons a month the above costs per ton could be reduced. I do not know what Mr. England’s figures are, but I believe that he is calculating upon a much larger output per month and a much lower cost landed at Singapore. Market Compared with Malayan Collieries’ Rawang coal the market is much better because Rawang coal is only used in the F.M.S. and depends mainly upon tin mining and the price of firewood. It is now apparent that its market also depends upon the competition of the Batu Besar, which coal could be landed at Johore, Port Swettenham, Port Weld or Penang, for much the same price at which it could be landed in Singapore. The profits from Batu Besar depend upon shipping, which is a much bigger, better and more secure market that the Malayan Collieries has. Batu Besar could not only find a market for its coal in the Straits and F.M.S. but in Java, Manila and Hong Kong as well. Comparison with Malayan Collieries Property.-Batu Besar coal is in every respect a much better coal than Rawang coal, and should the concession fall into hostile hands there is no doubt that Malayan Collieries would be in a very serious position, for I believe that in time it could undersell Rawang Coal in the F.M.S. I am not depreciating Rawang coal but it is a very inferior article, and if it came to a fight between Rawang and Batu Besar I think that Malayan Collieries would have to fight hard for its existence. That report, counsel continues, was in Russell’s hands before this option was exercised. He never told the shareholders about it, but he had actually told the shareholders of this company that if the company did not buy the option he (Russell) was prepared to float a company to work this coal mine. That submission to the shareholders showed the absolute lack of any understanding on Mr. Russell’s part of what his duties were. He was telling the shareholders that he, their managing agent, would float in opposition to them a coal mine which, he knew, was of such a nature as to kill their business. Throughout Mr. Russell’s speech in reply to Mr. Peck at the May meeting he never said a word of his having been the vendor of this option. It was only after Mr. Peck got up that the shareholders of the company, only about nine of whom were present, knew that the Russell Co. were the vendors. Compare that fact with the words he used when Mr. Peck opened his charges. Counsel then referred to the following evidence of Mr. England: - As a matter of fact, you were the other side of Seboekoe and you returned without making any call at Seboeke, even on the return journey? -Yes. You did not have to wait for Mr. Hastings?-No, he came along and I altered my plans quickly. You had abstained, I think, from giving that report until you had heard from Mr. Brickman? -Yes. Mr. Brickman being another employee of the Malayan Collieries Ltd? Yes. Assistant Surveyor. And on November 22nd, the day before you handed this formal report to Mr. Russell, you wrote to Mr. Russell and gave him some details, the purport of the wire from Brickman, which would show that the property was a valuable property. May I read the letter? “I have received a wire from Brickman showing he has reached the coaling bore” etc., (Reading the letter)-showing that the property tended to be a valuable property.- That was in compliance with our discussion previously. A Difficult Position It was a little different for you to tell Mr. Russell as the Chairman of the Malayan Collieries Ltd how valuable the property was, and, as senior partner of Russell and Company to keep quiet on the matter.-Just place yourself in my place. It was a very difficult position. If you were the manager of a Company and I was speaking of a property that I wanted to acquire for myself, do you think it would be fair for me as a Manager to go and disclose everything, I am sympathising with you. Do you think it would be honest for me as a Manager of the Malayan Collieries to go and give away anything that I wished to acquire for my Company? It was for me to get it. I was not worried about Russell and Co. It was a very difficult position for you? Yes; I wanted the Company to think it over. It was a very difficult and unusual position for you to be placed in? It was the first position I had been placed in. Here you had a gentleman who was in one capacity entitled to know all you could tell him about the great value of this property which you had seen. He was the Manager of the Company who had sent you? He was the Managing Director of the Company. And in that capacity, he was entitled to know all the information you could place at his disposal as to the great value of this property?-Yes, but he did not get it. In that capacity he was entitled to know it. In his capacity as Mr. Russell, the chief partner in Russell and Company the Agents, you felt, as an honest man, that you could not tell him what you knew? It would not have been fair to disclose my private report. I had the share holders to consider. It was a very unfortunate position for you to be put in, if I may say so. As a matter of fact, although this report was in existence for nine days, you never showed it to any of the other Directors, did you?-The original of the report and the copies I have at home at the present time are the only documents that I and my private clerk have seen, and he could not understand English very well. I brought the original away from the office to my bungalow. Do not think I am suggesting you showed this to Mr. Russell before the 23rd. You showed it to nobody between the time you dictated it on the 14th and the 23rd. To no one-not a single person on the property. The First Person. Mr. Russell was the first person to have the advantage of seeing this document- On the morning of the Board Meeting, and that was a very short period. I suppose the only intimation which you gave Mr. Russell as to the value of this property was that the wire from Mr. Brickman proved that the coal certainly went under the Bay. That is about the only indication which you gave him? I presumed that there was coal but I could not be positive until I had placed the bore. Therefore I should have been reluctant to hand my report to anyone until I was sure. You went into the Board Meeting, did you not?-Yes. I think you told the Directors that you thought Batoe Besar might be a dangerous competitor to Batu Arang?-Yes. I just want you to consider. Is the coal produced by these two mines the same?-No. Now what England did was that he walked into the office of the E.M.R. Co. and told them that he was going to recommend to Malayan Collieries to buy G.B.B. What he did say on that occasion was found in the evidence given by Chong Choo of the E.M.R. Co. who was examined in Singapore. Counsel gave the history of the circumstances leading to the examination of this witness. He reminded the court of the first letter which the E.M.R. ever wrote to Mr. Russell in which they said; “we have had the pleasure of meeting your representatives from your mine.” This was the company which they were asked to believe knew that they were dealing with J.A. Russell as an entirely different person from Malayan Collieries. So that these persons, employees of Malayan Collieries called at the E.M.R. on their way to G.B.B. and called in again on their way back. Was it likely that England would have gone in and told the E.M.R. people that he would recommend the company to buy G.B.B. if he was not aware that the option was for Malayan Collieries? Counsel submitted that England knew that he was sent out to Malayan Collieries and he knew that the company was going to buy the property. It was perfectly clear from the letters which had passed between the E.M.R. and Russell that the former knew that England was the man on whose report the question of the option turned. Russell had told the shareholders that he had incurred large expenditure in inspecting this mine. That statement was made both in answer to Mr. Peck and in the letter of explanation to the shareholders. Throughout that letter the suggestion was made that Russell and Co. had borne all the expenditure of prospecting this property. The fact was that the company paid the whole of the expenses. Even where such expenses were paid in the first instance by Russell and Co. they were recovered from the company. Not only that, Mr. Russell actually paid all legal expenses including his own lawyers out of the Malayan Collieries account. Counsel produced Messrs. Drew and Napier’s account. Altogether a sum of $1,500 was paid by the company. The exact total of the bill was $1,520.54. After Mr. Peck had opened his charges and Russell and Co. had replied in the newspapers Russell wrote, or asked Messrs. Drew and Napier to send him a statement showing how much of that bill had to be paid by him personally. To which Drew and Napier replied and Russell paid back $50. Even that amount had not been paid back at the time that Russell was telling the shareholders that he bore the whole of the expenses. Counsel next referred to the analysis of coal from G.B.B. obtained by Mr. Russell. The Coal Analysis The court adjourned for lunch at 1.10 p.m. Returning, Mr. Braddell referred again to these analyses and he said that the shareholders were told that the analysis was made for the company by Russell and Co. What did that involve Russell and Co. in? It involved them in the fact that at the time they were acting for the company, but the defence stated that they were at arm’s length with the company. They had two important facts. On Oct. 25 Russell was in possession of the G.B.B. option and secondly that he was having the coal from G.B.B. analysed. That clinched Mr. Russell once more. It involved Mr. Russell in a great deal more than that. In his letter of explanation to shareholders he said that he had paid $60,000 to verify whether a mine existed. Yet here was Russell in October, in possession of coal from this very mine and in November writing to the Straits Trading Co. that he could let them have a bulk sample of 50 tons at the end of next month. It did not stop there. He had another analysis made by the Municipal analyst in Singapore. Who gave these samples of coal to Russell? Counsel had no doubt that these must have been brought by one of the three members of the prospecting expedition. They were sent by Russell for analysis and J.A. Russell and Co. in a circular letter of Dec. 23 admitted that the analysis was made for the company. The results of these analyses coincided with the particulars given in that letter. The coal was sent for analyses on Nov. 16 and he exercised the option on Nov. 18, and he got these analyses for the company at the time he now contended he was at arm’s length with the company. Now what were these great expenses that Mr. Russell was put to. The other side had put in a list showing the amounts spent in stamps and telegrams and this expenditure of Mr. Russell’s amounted to $30, and possibly $50 more for Hastings which Russell already had to pay, being Russell’s employee. Russell had given an entirely false account of this prospecting. So that they got the fact that when the option was in his hand he knew that the mine at G.B.B. was one which if it were worked in competition against Malayan Collieries would have destroyed the Malayan Collieries. How could Russell set up a defence against that. “A Confession of Fraud.” Counsel submitted that his defence was in fact a confession of fraud, because his defence was an admission of that which no court of equity would allow an agent to do. Going back to the chronological order of events Mr. Braddell said that on Oct. 11 there was a communication from the E.M.R. to Russell which was addressed to J.A. Russell c/o Malayan Collieries, and on Oct. 19 Hastings wrote to Russell and gave him information about the coal. Then on Oct. 20, another letter came from the E.M.R. Co. to Russell. Then on Oct.21, he wrote a letter to the E.M.R. which counsel suggested must have been written on behalf of the company. That referred to locomotives about which the E.M.R. Co. had enquired. There were other letters on Oct. 22 and on Oct. 23. Notice was given to the shareholders for a meeting on Nov. 2, to increase the company capital. Now they knew why the shareholders were asked to increase the capital. The reason was that the company wanted to be in a position to buy one of the two properties if required. On the same day, Nov. 2, there went out another notice to shareholders for an extraordinary general meeting to confirm the resolution increasing the capital. On the same day the E.M.R. wired to Hong Guan asking him whether he was going to exercise his option. They knew from the papers that the capital of the company was being increased to buy the G.B.B. property. On Nov. 2 Russell had a wire from Hastings saying “all satisfactory.” On Nov. 6 the Nanyo Maru arrived in Singapore, on the 9th Hastings and England reached Kuala Lumpur, and on the 9th they had Hastings’s report. On the 10th England saw Russell and told him what he had seen in the mine. On the 9th Russell wrote to Puey Keng Seng of the E.M.R. Co.: One of my engineers has now returned from G.B.B. but has left the other there to sink a bore with the diamond drill which we sent over…..I think the probability is that we will take over Mr. Ng Hong Guan’s option, but we would like to here about this bore hole first. Now, who was “we”? If as Mr. Russell said that by “we” was meant Russell and Co. it involved him. Namely, that Russell and Co. were only waiting for the Malayan Collieries engineers to put in a bore to see whether this property was worth buying and selling to Malayan Collieries. That would be a strange position to take up. On the other hand, counsel suggested that “we” meant Malayan Collieries. Once more he suggested that Russell was in an awful dilemma. Puey Keng Seng’s letter of Nov. 9 saying, “As Mr. England has now arrived and has already reached your place and given his report we should like to know definitely what you are going to do with the option,” and Russell’s reply, “I would point out that Mr. Ng Hong Guan’s option does not expire until five weeks after the arrival of the Nanyo Maru at Goenoeng Batoe Besar……..” So that the option does not expire until Dec. 1, were proof of this. The 17th of November was the date on which the increase of capital of the Malayan Collieries was to be confirmed. The following misprints occurred in yesterday’s report of the second day’s hearing:- P.16, Col.4, sixteenth line from bottom, the figure should be $6,000 not $60,000. P.16, Col.4, 40th line from bottom, 100,000 shares of $10 each, not $100,000. (To be continued.)

The Straits Times, 20 March 1924, Page 9 Third Day of Mr. Braddell's Address. Further Points in Plaintiff's Case.

THE MALAY MAIL Friday Mar. 21, page 10 not seen)

THE MALAY MAIL, FRIDAY, MARCH 21, 1924, p.9 PECK v RUSSELL Fourth Day’s Hearing. MR BRADDELL CONTINUES A New Pleading (The conclusion of the report of Wednesday’s hearing will be found on page 10,) Yesterday Mr. Braddell continued his opening address in the above case. He referred again to the two documents of Nov. 19 which he read the previous day and which were as follows:- Singapore, Nov. 19, 1920. To Khoo Wee Chua2n, Singapore. Dear Sirs,—By virtue of an agreement dated Oct. 5, 1920 and made between the Eastern Mining and Rubber Co. Ltd. and myself I am the holder of the option to purchase the property and rights mentioned in the said agreement and in consideration of $5 now paid to me by you (the receipt of which I acknowledge) I hereby grant to you the option to purchase the same property and rights upon all the terms and conditions contained in the said agreement at the price therein mentioned and the additional price of 4,000 fully paid shares in Malayan Collieries, Ltd. the value of $10 each. The said price shall be payable to me only if you exercise the said option and if I shall procure the said property and rights to be legally vested in you or your nominees or assigns to your entire satisfaction. The option hereby given shall be exercisable at anytime on or before Dec. 1, 1920 and you are at liberty to give notice in my name to the Eastern Mining and Rubber Company Limited exercising the option given to me by the said agreement if you sod desire. I will give to you the whole benefit of any better terms for the acquisition of the said property and rights which I may be able to obtain from the Eastern Mining and Rubber Company Limited. You or your assigns are at liberty to negotiate direct with the Eastern Mining and Rubber Company Limited and carry into effect any modification in the terms of the said agreement of Oct. 5, 1920 and I agree to be bound thereby in the same manner as if I had so negotiated myself.—Yours faithfully, (sgd.) Ng Hong Guan. Khoo Whee Chuan Transfers. Singapore, Nov. 19, 1920. To Messrs. J. A. Russell and Co. , Kuala Lumpur. Dear Sirs,—By virtue of an agreement dated Nov. 19, 1920 and made between Ng Hong Guan and myself I am the holder of the option to purchase the property and rights mentioned in an agreement dated Oct. 5, 1920 and made between the Eastern Mining and Rubber Co. Ltd. and the said Ng Hong Guan, and in consideration of $5 now paid to me by you (the receipt of which I acknowledge) I hereby grant to you the option to purchase the same property and rights upon all the terms and conditions contained in the said agreement dated Nov. 19. 1920 at the prices referred to and mentioned in the said Agreement of the 19th November, 1920 and the additional price of 76,000 fully paid shares in Malayan Collieries, Ltd. of the nominal value of $10 each. The said price shall be payable to me only if you exercise the said option and if I shall procure the said property and rights to be legally vested in you or your nominees or assigns to your entire satisfaction. The option hereby given shall be exercisable at anytime on or before Dec. 1, 1920, and you are at liberty to give notice in my name to Ng Hong Guan exercising the option given to me by the said agreement of Nov. 19, 1920 if you so desire. I will give to you the whole benefit of any better terms for the acquisition of the said property and rights which I may be able to obtain from Hong Guan or the Eastern Mining and Rubber Company Limited. You or your assigns are at liberty to negotiate direct with Hong Guan and or the Eastern Mining and Rubber Company Limited. and carry into effect any modification in the terms of the said agreement of Oct. 5, 1920 and or Nov. 19, 1920 and I agree to be bound thereby in the same manner as if I had so negotiated myself.—Yours faithfully (signed in Chinese characters). Both at the meeting of Malayan Collieries Ltd., in May 1922, and in the explanation issued to the shareholders these documents were ignored. Counsel then referred to paragraphs 15, 16, 18, and 19 of the plaint as follows:- 15. On Nov. 19, 1920 the said Ng Hong Guan transferred the said option of Oct. 5, 1920, to one Khoo Wee Chuan. The document attached hereto and marked “F” is a copy of the said transfer. 16. On Nov. 19, 1920, the said Khoo Wee Chuan transferred the said option of Oct, 5, 1920 to the 2nd defendants but whether this was by agreement in writing and upon what terms or for what consideration neither the plaintiff nor the shareholders in the said Company know nor have the 1st or 2nd defendants ever disclosed the same to the plaintiff or the other shareholders in the said company. 18. On or about June 10, 1921, the terms of the said purchase were reduced to writing by an agreement of that date, a copy of which is attached hereto and marked “G”. The plaintiff will refer to the same for the terms of and consideration for the said purchase. 19. The 1st defendant employed the said Ng Hong Guan to obtain the said options of Oct. 1 and 5, 1920, on behalf of the said company but wrongfully and in fraud of the said company and of the plaintiff and other shareholders therein the 1st and 2nd defendants procured the said option of Oct. 5, 1920 to be got into the name of the 2nd defendants which they did by getting the said Ng Hong Guan to transfer the same to the said Khoo Wee Chuan who was their nominee and by getting the said Khoo Wee Chuan to transfer the same to the 2nd defendants. Thereafter the 2nd defendants without disclosing the said facts or the full and true circumstances of the transactions sold the said property to the said Company as pleaded in paragraphs 17 and 18 herein. At that date the plaintiff knew nothing about these documents but he knew about those transactions, and pleaded that Khoo Wee Chuan was Russell’s nominee. What was the defence? It was contained in paragraphs 9 and 10 of the statement of defence as follows:- 9. The plaintiff is put to the proof of the matters referred to in paragraphs 15 and 16 of the plaint. These defendants deny that it was at any time their duty to make any disclosure as to the matters referred to in such paragraphs. 10. The defendants deny each and every of the allegations contained in paragraph 19. of the plaint. They say that the said Ng Hong guan was not employed by the 1st defendant but that as pleaded in paragraph 8 hereof for his own purposes he sold to the 2nd defendants in their individual capacity and not as agents for the said company the said amended option of Oct. 1, 1920 and the further amended edition thereof of Oct. 5, 1920, and that the said option was by the said document of Oct. 3, 1920 transferred by the said Ng Hong Guan to the 1st defendant as a partner in the 2nd defendants. A Serious Position. He drew the attention of the court to the extraordinary character of that defence. Counsel said that he pleaded the transaction as it was disclosed in the documents filed with the Registrar of Companies. They ignored that and stated that they bought the option on Oct. 3. Could they be heard to say that at all quite apart from the position which they let themselves into? Counsel wanted to reinforce the point to let the other side see clearly where they stood. Counsel then referred his lordship to the Companies Enactment. On the previous day he referred to section 88, and now he referred to section 293 which was as follows:- Any person who in any return, report, certificate, balance-sheet, or other document required to be published for the purpose of any of the provisions of this enactment wilfully makes a statement false in any material particular, knowing it to be false, shall be liable to imprisonment of either description for a term which may extend to two years. If the defence was true and Russell bought the option on Oct. 3 then the document of June 10, 1921 was a false document, false in a very material respect, and it must have been wilfully and knowingly made, and if that was true Mr. Russell was liable to prosecution under this section and to be sentenced to two years rigorous or simple imprisonment. It seemed to him that if Russell went into the witness-box he ought to say which of these documents was true and which false. One of them was false. Counsel next referred to Russell’s visit to Singapore on Nov. 17. He said that Russell having Got All He Wanted got the company to raise the capital, E. M. R. to forego the $60,000, and wired to his office in Kuala Lumpur to call a meeting of directors for the 23rd. That notice was not disclosed, but counsel came across it as he was going through the company’s documents and was in what was called the directors’ file. Counsel next referred to certain letters written by Messrs Sisson and delay to the Eastern Mining and Rubber Co. regarding the raising of their capital. Before he read that letter he wished to explain. As he said on the previous day the whole vigour of the defence so far had been directed to show that the E. M. R. Co. knew that they were dealing with Russell and Co. Dr. Lim Boon Keng, Dr, Birnie and Mr. Tan Way Ann, and in London, Mr. England, were also examined to that end. He had already stated that the evidence was irrelevant. It was irrelevant to this case what those people thought. The court was trying to decide whether this agent could do what he did. What Hong Guan, Dr. Lim Boon Keng and others thought they were doing was irrelevant. Counsel wanted to show now that it was not only irrelevant but false, absolutely false. He wished to quote a little law before he went further because he had said that the evidence was irrelevant. Although this evidence was irrelevant it had been put in issue. According to section 1 of the Evidence Ordinance, counsel said, “facts not otherwise relevant are relevant if they are inconsistent with any fact in issue, or relevant fact.” Counsel then gave the definition of “fact.” Thus if in any document he could show the court that the E. M. R. C. or their solicitors knew that they were dealing with Malayan Collieries, Ltd. it would be A Relevant Fact, even although otherwise that would be irrelevant. Counsel said on Nov. 19 there was this interview between Russell and the E. M. R. at the office of Messrs. Sisson and Delay. Then on Nov. 22 they had a letter written by Messrs. Sisson and Delay to the E. M. R. on the subject of the increase of capital. There they had a statement as clear as any statement could be made by the solicitors to the directors of the E. M. R. in which they raised the following query:- (1) The option to Malayan Collieries, Ltd. provides that the approval of the shareholders to the granting of the option must be obtained by the company. Has this approval been obtained? We would point out that an appeal by individual shareholders is not the same as an appeal by the meeting of shareholders and that we think a meeting of shareholders should be convened to consider and approve the granting of the option and the carrying out of the contemplated arrangement with Malayan Collieries, Ltd. They now came to what the E. M. R. directors told their shareholders at the annual general meeting on March 24, 1921. They said that the Pamoekan Bay coal concession had been sold to the Malayan Collieries, for $1,200,000. That was the price mentioned in the option given to Hong Guan, the unwatered price. Dr. Lim Boon Keng asked them to believe that the E. M. R. Co. knew they were dealing with Russell and Co. If the true story had been told to the shareholders it would have been: “We have given an option to Hong Guan for $1,200,000. He has passed it to Russell and Co. and they passed it to Malayan Collieries, Ltd., for $1,600,000.” Counsel submitted that the minutes of the E. M. R. Co. meeting was convincing proof that they knew they were dealing with Malayan Collieries, Ltd., not merely because the name of Malayan Collieries occurred there, but more conceivably because of the price put in. This company (E. M. R.) petitioned to the court at Singapore to be allowed to incorporate its capital. Counsel put in a certified copy of the documents connected with that application. In that application the only purchaser mentioned was Malayan Collieries, Ltd. Nowhere was Russell and Co.’s name mentioned. Counsel went on to explain how he came to discover this document. He said that after his recovery from his illness he had a week before the case. and he went to Mr. Hastings’s office and there went through the papers of Mr. Mundell who argued the appeal in this case. On going through these papers he came across the memorandum of articles of association of the Malayan Collieries, Ltd. and a reference to this petition. Counsel wired immediately to Singapore to find out all about this application and he got a certified copy of the documents on Tuesday. Counsel submitted that it was now beyond all possible doubt that the E. M. R. Co. directors told their shareholders, and told the court in Singapore that the sale was being affected through Hong Guan to Malayan Collieries, Ltd. He could not understand why a man of the standing of Dr. Lim Boon Keng should try to support the narrative that they were dealing with Russell and Co. A Pitiful Explanation. Dr. Lim Boon Keng’s explanation was pitiful. It was:- I see copy marked L. B. K 34 and initialled W. M. H. dated Nov. 22, 1920. I think Sisson and Delay wrote to the Secretary of E. M. R. the letter of which this is a copy. Of course I am speaking from memory, but my impression is that such a letter was written. Office gave their instructions in this matter. We had two or three interviews with them, some informally, on this matter, just before the writing of this letter, I explain this letter marked L. B. K. 34 with reference to the references to M. C. Ltd. in particular as follows:--You will see from this letter of our solicitor that the whole thing is in a muddle in the writer’s mind and that he is asking all sorts of questions. At this time information must have been conveyed to him that in all probability the M. C. would take over the option from Mr. J. A. Russell and the terms mentioned about how it was to be taken over were possibly mentioned, must have been mentioned to him, but previously M. C, did not occur, therefore he said “in view of the present arrangement with the M.C. Ltd. of which we did not know when we drafted “resolutions”. These words indicate to my mind that the M. C. exercising the option was the latest development and by this time we must have known that Mr. Russell was preparing to hand over to M. C. Ltd. and spoke of it in our conversation to the solicitors. That is how I explain this letter, I interpret “the option to M. C. Ltd.” as meaning the option given to Ng Hong Guan and sold by him to Russell and re-transferred to M. C. Ltd. In a letter such as this to their clients I suppose it is quite understood what it meant. It is a brief way of saying this round-about way. I suppose the Secretary must have circulated this letter to the directors. In case of this matter (i.e. difference of exchange between Guilders 600,000 and Straits $ 600,000) the question was left to the managing director and Mr. Peck asks whether I have seen this before. I didn’t recollect of this and all I have to say is if this matter occurred it was referred to the managing director to make the explanation. Dr. Lim Boon Keng, counsel said, had tried to suggest that a certain Mr. Tan Kheam Hock, a well known man in Singapore, now dead, knew that Russell was the purchaser. Tan Kheam Hock was the only director of the E. M. R. who had no shares allotted to him out of the profits made. Dr. Lim Boon Keng’s evidence was:- I do not think there was any great discussion as to the parties between whom it (L. B. K. 15) was made, but I think Mr. Tan Kheam Hock said why don’t you make it direct with the M. C. It was pointed out to him that the arrangement was with J. A. Russell and we had no direct dealings with M. C. I pointed this out, so did others there: Mr. Tan Kheam Hock agreed, he did not persist and there was no further discussion on that point. Counsel said he had further evidence showing that these persons thought they were dealing with Malayan Collieries. In a letter addressed to the managing director of the Straits Steamships Co. on the same date that the directors of Malayan Collieries, Ltd. held the meeting to consider the option, the Eastern Mining and Rubber Co. wrote: “We are not in a position to quote you on G. B. B. coal as we have not yet come to a final agreement with the Malayan Collieries, Ltd. who are going to take over the mine as from Dec. 1.” That letter was quite a plain document. Dr. Lim Boon Keng tried to explain away the circumstances. Amusing Passages. Counsel next referred to an amusing thing in Dr. Lim Boon Keng’s evidence in the following extract:- (Continued on page 16)

THE MALAY MAIL, FRIDAY, MARCH 21, 1924, p.16 PECK v RUSSELL (Continued from page 9.) Mr. Peck: “Did the directors know of the profit he had made on the sale of the option.” “Dr. Lim: I cannot say now, probably they had heard of it. Mr. Peck: “Will you not now admit that Hong Guan was employed to sell the property G. B. B., and that the option was given to him for that purpose? Dr. Lim: I say this question is ingenious: is a trap for a man like some of the Singapore and F. M. S. people to fall into. I am asked to admit that Hong Guan was employed to sell the property: now this is quite a distinct idea and proposition and if we did ask him to sell the property he was entitled to a handsome commission and Ng Hong Guan I know was not an idiot and incapable of looking after his own interests and the person who drafted this question to me should have seen any written promise of the company to pay him commission for selling the property. The ?... question that should have been put to me should be “Will you not now admit that the option to sell the G. B. B. was given to Ng Hong Guan,” such a question would be foolish to ask at this stage of the enquiry. I hope you will excuse this long way of explaining, sir, but I feel it is such an unfair way of putting questions and this is only one specimen out of many. Mr. Peck, (reading L. B. K. 36 para. 7:) The above statement of facts does not pretend to be a full statement of every detail. (I want to emphasize the words every detail) in connection with the arrangements made by the directors. It is thought, however, that all the essential facts have been set out.” Now my question is this: “Referring to para 7 of L. B. K. 36 do you think that the fact that J. A. Russell and Co. were intermediaries in the transaction and were making a large profit was an essential fact.”) Dr. Lim: I mean when I referred to that paragraph that the company had at their disposal all the papers that concerned the business and that we were entitled to have. The same question, something to that effect, was put to me yesterday about the difference between what E. M. R. received and M. C. paid, of course this refers to the same thing again. I stated to the best of my memory that our papers contained the information: that’s what I stated. I mean, of course, that if such information was among our papers the shareholders would have had the information at their disposal. Now the way that this question is out to me puts me on my guard against another such catch. I should have said yesterday that the difference “if” known to the company would be available to everyone interested in the company from the papers in the possession of the company. The fact that there was a difference has been known to me for such a long time and without thinking of the matter from a point of view of Disentangling Legal Conundrums. I said that the papers of the company should show this difference, but now that the matter is put to me in this question which is more direct, I cannot see why J. A. Russell who bought the option from Ng Hong Guan would inform the E. M. R. of what profits he made. Nor can I think of any legal or moral right of the E. M. R. to demand from J. A. Russell the disclosure of his profits except such rights as been stipulated expressly in our option and I therefore beg your honour to note in your paper that this explanation is a commentary on the attempt on my part to explain and answer Mr. Peck’s question of yesterday regarding the difference between the price at which E. M. R. were selling and M. C. Ltd. were buying. (The wording of the question was supplied by Mr. Peck at Dr. Lim’s request, the word “E. M. R“ being supplied for the word “they” with Dr. Lim’s approval) and now with this explanation I state that the fact that Russell and Co. were making a large profit would probably not be among the papers in the possession of the company, but no doubt it was known that Russell was making large profit and although I think it was an essential fact in connection with the matter of Russell taking up the option and selling it to the M. C. Ltd., it was a matter as concerns the directors and shareholders of E. M. R. at any rate at the time a post facte circumstance which, however much they might regret, they could not help themselves. Mr. Peck: I would point out to you this para 7 is in a circular to shareholders giving particulars as to a new offer to shareholders and apparently inviting subscriptions in the further capital being issued by the E. M. R. Dr. Lim: Have you quoted the paper? Mr. Peck: It is in L. R. K. 36, (continuing) the value of the new E. M. R. shares would be affected by the watering of the capital of M. C. Ltd. due to the profit made by J. A. Russell and Co., therefore was not that large profit an essential fact which should have been mentioned in the circular L. B. K. 36? Dr. Lim asks to see the question again. (Read to him.) Dr. Lim: I say that if the company knew at the time what profits J. A. Russell had made in an official manner they were in the hands of the company’s solicitors. Messrs. Sisson and Delay were experienced company solicitors and para 7 referred to them specifically and surely they and not the directors including myself should see that all the information the shareholders should get were obtained, if so obtainable and I cannot now answer this question as put without a lengthy exposition of commonsense interpretation which I dare not ask your honour further to listen to. That is all I can tell you, Mr. Peck, if you put questions like that. Comment Superfluous. Counsel said that comment was superfluous. All this long explanation was in reply to the question, “if you knew that Russell and Co., were the purchasers why did you not tell them.” Returning to the chronology of the case counsel said that the next event was the meeting of directors of Malayan Collieries, of Nov. 23, at which the Company agreed to buy G. B. B. There were a great number of arrangements to be made, but everything appeared to have been cut and dry. The minutes of the meeting contained the following:- Exercise of Option: It was resolved that the above-mentioned option be duly exercised and that the sum of $200,000 in part payment of the purchase price be remitted to Messrs. Drew and Napier. Then followed matters dealing with the issue of shares etc. On the same day Russell wrote for Russell and Co, managing agents and secretaries Malayan Collieries, Ltd., to Drew and Napier as follows:- We enclose a first of exchange draft upon the Hongkong and Shanghai Bank in your favour for the sum of $200,000 being the amount payable by Messrs. J. A. Russell and Co. to Messrs. The E. M. R. Co. Ltd., of Singapore, as a deposit upon the purchase of the Goenoeng Batoe Besar coal property In Dutch South-East Borneo. Please note that our company has agreed to acquire from Messrs. J. A. Russell and Co. their option over this property. If you have not already done so kindly exercise the option and arrange for the proper transfer of the same to us. Please do not pay over the money until you are sure that titles are clean and everything in order. We understand that you will place money with the Netherlands Trading Society who will not release the same until the property has been transferred free from incumbrances to the Goenoeng Batoe Besar Co. and all the shares in the Goenoeng Batoe Besar Co. have been duly transferred to us. That letter, Mr. Braddell continued, was the exercise of the option so far as Malayan Collieries were concerned. Messrs. Drew and Napier replied on Nov. 24 saying that they had exercised the option, that $200,000 had been deposited with the Netherlands Trading Society, and enclosing a copy of their letter to the society in which terms were set out. Messrs; Drew and Napier added that power to withhold payment until the Goenoeng Batoe Besar shares were transferred was not within the arrangements made, as it was agreed that these shares should be handed over on Feb. 1, 1921 in exchange for the balance of the price and shares in M. C. Counsel suggested that this letter was written by the solicitors under the impression that the Malayan Collieries, Ltd. was exercising the option. Mr. Braddell then made the following submission. If J. A. Russell and Co. were the purchasers of this option how was it that they never exercised the option? On their defence Malayan Collieries would say to J. A. Russell and Co., “We buy;” J. A. Russell and Co. would say to Hong Guan, “We exercise”; Hong Guan would say to E. M. R. “I exercise.” That was not done, and was never done. What actually happened was that Malayan Collieries, Ltd., exercised the option by the paying of $200,000 and Hong Guan wrote out his exercise of the option on Nov. 24. Taking these two documents of Nov. 19, and 24, together with the solicitors’ letter of Nov. 24 his submission was that Messrs. Sisson and Delay could only imagine that it was the Company which was exercising the option. Then there was A Strange Letter From Khoo Wee Chuan to Hong Guan dated Nov. 24. “I hereby exercise the option granted to me by the agreement between yourself and myself dated Nov. 19, 1920.” Counsel submitted that this was a false document. With this ended the documents of Nov. 24. Then came the question, if the directors of E. M. R. Co. did not know from the beginning that they were dealing with Malayan Collieries, Ltd. was it likely that they would have agreed to Russell’s suggestion on Nov. 18, to release the deposit of $60,000. Surely they would have said, Now Mr. Russell how do we know that your directors will agree to buy. Until we know that how can we forgo this $60,000?” Instead of that they released the $60,000, gave back the deposit receipt, which counsel submitted they never had, and they were left in the air without anything. Counsel submitted, therefore, circumstantially these facts corroborated the written evidence, and the whole of it was overwhelming proof that the E. M. R. Co, thought that they were dealing with Malayan Collieries, Ltd. The exact date on which Russell withdrew his money from the bank was Nov. 20. On Jan. 31, 1921, the shares were actually allotted to Russell and his nominees. On Feb. 7, the E. M. R. Co. got their 20,000 shares. On May 23 Dr. Lim Boon Keng was nominated a director of Malayan Collieries, and on June 10, Russell and Co. filed that return of allotment with the Registrar. Counsel then proceeded to show how without calling a single witness he had proved his case by going through the plaint. He also showed the five false conclusions to which he referred at the beginning of his address. He next summarised the various points which he had made. After the adjournment, continuing his argument, Mr. Braddell said that when he filed the plaint the full facts were not before them. The plaintiff only began to get discovery and inspection in October and November 1923, and he had been getting it ever since in driblets. The point which he wished to make was this, that he did not want it said that he had not pleaded what he was going to make out. He wished to plead the further point: That Russell obtained the option not merely by the utilisation of his position and the authority of the company as pleaded in para 20 but by the utilisation of the company’s servants, namely England, and Brickman, and Hastings, to the extent to which he was the company’s servant, the company’s coolies who formed the boring party; that he utilised the company’s property to obtain this option—the company’s diamond drill; that he utilised the company’s money to obtain this option to wit the $200,000 which he arranged should be paid at the Nov. 18 interview, and which was actually paid on Nov. 24; that he utilised two analyses of coal which (the analyses) he obtained on behalf of the company, and that thereby he clearly could not be allowed to come to this court and say that he did not obtain this option on behalf of the company. If his learned friend wished to make any point on this, why these facts should not be pleaded, he wished to hear them at that moment, as he hoped to utilise the week-end to draft it and put it into the form of a pleading, and to have it added to his plaint, although he submitted that this was not necessary. Mr. Carver: I think it is better to have it formally put in. Mr. Braddell promised to put it in on Monday. The court here intimated, in reply to an enquiry by Mr. Carver, that it did not intend to sit on Saturday. Crux of the Defence. Mr. Braddell next dealt with the defence. He said that the defence was based entirely on two propositions. The first proposition was that Hong Guan bought this option on his own account and that he sold it to the 1st defendant as a partner of the 2nd defendant on Oct. 3, 1920 in order to obtain indulgence in respect of a certain debt owing by him to the second defendant. Then the defence went on to say that they were at perfect liberty to buy from him and sell top the company and they were at liberty to do so without disclosure. If those were the two bases of the defence then counsel submitted that he had exploded them both and they were left in the air. Article 92 of the articles of association of the Company covered the position of the 1st defendant only, if it covered him at all. If ratification was suggested, his answer would simply be that they would only have ratification after full knowledge and full disclosure. There could be no question of ratification in this case because plaintiff pleaded fraud and the defendant said that he never committed fraud, and his explanation all along had been that he bought personally. Therefore he submitted that the question of ratification did not come in. He had put before the court the considered explanation which Russell made, and counsel submitted that it was incorrect from beginning to end. Now fraud might be proved by conduct both antecedent and subsequent. He did not think that proposition would be disputed. (To be continued.)

 

The Singapore Free Press and Mercantile Advertiser (1884-1942), 21 March 1924, Page 6
 PECK vs. RUSSELL. MR. ENGLAND'S EVIDENCE.

The Straits Times, 21 March 1924, Page 9 MALAYAN COLLIERIES. Fourth Day -of Important Action. Counsel Finishes with The Facts.

THE MALAY MAIL, SATURDAY, MARCH 22ND, 1924. PECK v. RUSSELL Stampeding Peck’s Entourage HOW THE TRICK WAS TURNED Plaintiff’s Claims Outlined. (Continued from yesterday’s issue.) Mr. Braddell continued that on Nov. 15, 1921 the financial year of the Malayan Collieries Ltd. was changed. No reason was given at the time why the financial year should be changed. Later on defendants did explain to the shareholders. That was in 1922 and the explanation was that it was done for the convenience of the Dutch company, in order to bring the Malayan Collieries financial year to coincide with that of the Goenoeng Batoe Besar. The fact was that whatever the reason the shareholders had no opportunity of questioning the directors with regard to this transaction. They ought to have had a general meeting in the middle of 1921. If that meeting was done the shareholders would have been able to question the directors at a stage nearer the event. From June 30, the financial year was postponed to Dec. 31. His Lordship: That means there were no regular general meeting for eighteen months? Mr. Braddell said that was so. He wished to make the point quite clear. Goenoeng Batoe Besar was acquired on Nov. 23, 1920, on Dec 23 a circular letter was addressed to the shareholders by J.A. Russell and Co. telling the shareholders that the property had been acquired. No purchase price was mentioned in that letter, none of the circumstances of the transaction was set out, not even the names of the vendor, and certainly no mention was made of Russell and Co. having any instruction in the transaction at all. All that the circular did was to tell the shareholders what enormous profits would accrue to the Malayan Collieries and to them. On June 10, 1921 the allotment return was filed. A copy of the agreement was not sent to the shareholders. The end of the financial year, ordinarily, would have been ten days after the filing of the document. The annual general meeting would then have taken place in October, but it did not. The shareholders were told on Nov. 15, 1921 that the financial year had been altered, no reasons were given for the alteration, but they were promised a cash dividend, obviously to make Them Keep Quiet. Now the excuse which was given for the alteration of the financial year was that Goenoeng Batoe Besar Co. finished its year on Dec. 31. That reason was given to the shareholders by Russell at the Malayan Collieries meeting in May, 1922. And Dr. Birnie when he was examined in Soerabaya explained that it would have been very difficult for the G.B.B. Co. to alter its financial year to agree with that of the Malayan Collieries Ltd. because to do so they would have had to get a special order from the Governor General. In the course of Mr. Peck’s cross-examination of Dr. Birnie it was found out that it was quite a formal order and very easily got. They found then the parent company dealing in a very large sum of money altering its financial year to suit the little holding company in Borneo. Counsel suggested that the directors of Malayan Collieries were again utilised by Russell, the managing agent of the company, and that he (Russell) the Managing Director of the Company altered the financial year of the company to agree with the Dutch Company. The directors of the Company were busy men and counsel had no doubt that they relied on Russell and Co. to give them sound advice. It was a curious fact that in the minutes of the company there was no minute to show that the directors agreed to alter the financial year. Perhaps it was done by circular, although counsel had seen no circular disclosed to him. Counsel then drew the attention of his lordship to what he described as amicable infractions of the law. The fact remained that no explanation about Goenoeng Batoe Besar was given to the shareholders till May 4, 1922. There was no opportunity. Mr. Peck apparently was the only wide awake shareholder in the company and on Nov. 17, he wrote to The Straits Times a letter raising several points regarding the transaction. This letter was completely ignored. The information which Mr. Peck asked for was information which should have been supplied to the shareholders. Then they came to the May meeting of the Company when Mr. Peck made the chairman speak, but Russell did not say a word about his interest in Goenoeng Batoe Besar. A long part of the speech was taken up in crowing over the excellence of the mine and if it had not been bought what a serious competitor to the Company it would have been. Counsel asked his lordship to contrast that conduct with the conduct of the directors of the E.M.R.Co. with regard to the shareholders of their company. Mr. Peck then opened his charges against Russell and Mr. Russell answered him. Mr. Peck tried to get the shareholders to move an amendment to the effect that the G.B.B. matter be held over until fuller information was available. The motion was put to the meeting and Mr. Peck was high and dry the only voter, even his seconder voting against the amendment. On May 13, a leader appeared in the Straits Times and it very forcibly put down that Russell should give an explanation. On May 16 Russell wrote to the Straits Times saying that he would give an explanation, and he actually did so in about 14 days. On May 21 Mr. Peck had an interview with Mr. Brash, a director of the company, and on May 23, Mr. Brash wired to Mr. Peck. Then Mr. Peck wrote to him giving in detail all that he said at the meeting. Then on the 24th the directors held a meeting, and the minute said:- “The board does not consider that the negotiations for the acquisition of fresh properties for the company is part of J.A. Russell and Co. The business of the company, the administration of which is entrusted to Messrs. J.A. Russell and Co., is not that of dealers in coal properties. The board does not consider that the remuneration paid by the company to Messrs J.A. Russell and Co. covers services required to obtain such properties. They consider that Messrs. J.A. Russell and Co. are at liberty to deal with the company in the matter of the sale to the company of coal concessions in the same way as any other firm. Mr. Russell refrains from voting” Counsel wished that minute was not there because the directors who passed that had Not the First Idea of the duties which the law cast upon the managing agents or the agents of a company in the exercise of their duty. Every sentence of that minute could be refuted by law. Had the directors consulted their lawyers they would have known it, but it was a curious thing to the case that the lawyers of the company were never consulted until the second meeting in Nov. 1922. That minute showed that the directors had such absolute confidence in Mr. Russell that they allowed him to do as he pleased. The only impression that could be left on the mind of the court was that Russell was the Company and did as he pleased with the company. Counsel wished the other directors had not done what they did. He did not want to say anything against them, but he could not pass over such a thing. On May 30, Mr. Brash wrote back to Mr. Peck and told him that Russell and Co. were issuing a circular on the subject. On June 5, Russell and Co.’s letter appeared. In the meantime Mr. Peck had consulted him (Mr. Braddell) and he had given a certain opinion. Counsel did not suggest that his opinions were of very great value to anybody. Still the directors did know that a lawyer had come to a certain conclusion. They might have thought, “here is a lawyer, who has been practising in this country for some time, comes to this conclusion.” What happened? They held a meeting on June 25 and this was the minute:- “Mr. Brash handed in a further letter he had received from Mr. Peck. This letter was read to the board together with an extract attached thereto of an opinion that the conduct of Messrs. J.A. Russell and Co. in connection with the acquisition of the Pamoekan Bay property was actionable.” It was strange, counsel said, that it never occurred to any of these gentlemen, “here is a lawyer who has given an opinion; supposing we asked him to come here and tell us the reason for his opinion.” Or better still perhaps they might have said, “Here is an opinion; let us call the company’s solicitors.” The next meeting of directors was on June 27 when Mr. Shearn was called in at Mr. Russell’s request. There Mr. Shearn produced Mr. Russell’s files of correspondence and papers and informed the board that these were open to the inspection of the board. The members of the board other than Mr. Russell, who did not vote, having considered the matter, unanimously resolved (1) “that the allegation made against Messrs. J.A. Russell and Co. is unfounded and that this company has no legal cause of action against either Messrs. J.A. Russell and Co. or Mr. J.A. Russell personally.” The meeting also decided to call the shareholders together to refer the matter to the referees. This decision was come to on June 27. On June 28 there was a letter printed on two sides to be circulated to shareholders. If that could have been done by any printer in Kuala Lumpur in such a short time they had the Singapore directors beaten hollow. What counsel thought was that although the letter was dated June 28 it was sent out later. This letter simply said that the directors entirely disbelieved the allegation, that the board unanimously decided that there was no legal cause of action, further that they were going to call a meeting and that they proposed to nominate three referees to whom the matter would be referred:- The board discussed the personnel of the Committee. Mr. Russell refrained from suggesting or voting any names and the remaining members of the board decided to invite Messrs. A.N. Kenion, J.H. Rich and D.H. Hampshire (none of whom is a shareholder in the company) to act as referees if the shareholders decided that further independent investigation was necessary, and in default of any of these gentlemen agreeing to act, to request some other impartial gentleman or gentlemen of standing to act. [Notice of meeting of Aug. 16 was sent out on July 16. The referees mentioned in the notice being Messrs. D.A.M. Brown, A.N. Kenion and J.D. Kemp] The following letter was addressed to the shareholders by J.A. Russell and Co. on Aug.2: - “The attached proxy form is sent to you in connection with the extraordinary general meeting of the company which has been convened for Aug. 16, 1922. The board being of the opinion that there is No Cause of Action against Messrs. J.A. Russell and Co. and or Mr. J.A. Russell, cannot possibly take legal proceedings unless they have reason to think that their opinion may be wrong. The result of the enquiry which is now proposed will either agree with or differ from the opinion formed by the board and in the latter event the board will then convene a further meeting of the company and ask for authority to act in accordance with the recommendations of the referees.” This meeting was called and there was a letter sent out calling for proxies. The shareholders must have understood that these referees were really going into this matter like arbitrators. His lordship would see what the referees actually did. What counsel proposed to disclose was something which was so far unknown to any shareholder of this company. That was a document dated July 31, 1923. Messrs. Bannon and Bailey, wrote to the Hon. Mr. Kenion as follows: - To the Hon. Mr. A.N. Kenion, Ipoh. Dear Sir, -An application for discovery of documents will shortly be made by the plaintiff. We are writing to know what you wish us to do about the report of the referees which is in our possession. If you wish it we will claim that the document is privileged but the courts may hold that it is not, and that the plaintiff is entitled to discovery. -Yours faithfully. (Sgd.) Bannon and Bailey. Mr. Kenion’s reply was as follows: - Dear Sirs, -The case submitted to us was ex parte. Mr. Bannon will recollect the preliminary discussion which took place as to whether the referees sitting and hearing the case would (a) serve any useful purpose, (b) be a contempt of court seeing that a plaintiff was out. In these circumstances it was decided that the three referees were to act more in an advisory capacity to the independent directors to assist the legal advisors in arriving at an opinion (not necessarily on the law, though Mr. Bannon was good enough to say my assistance as a lawyer would be of considerable assistance to him) as to what view independent persons took of the matter. If you agree that this is so it seems to me the document is privileged as a document connected with the preparation of the defence of the independent directors. The report to a large extent discloses Mr. Russell’s defence and evidence on which it is based. I should imagine he could strongly object. (Sgd.) A.N. Kenion. It was held up to shareholders that these referees after due consideration came to a conclusion adverse to Mr. Peck. Supposing the facts had been told to the shareholders at the second meeting regarding the attitude of the referees. These gentlemen far from doing what they were expected to do came to the conclusion that all they could do was to assist the independent directors in the preparation of their defence. The judge: Were they honorary referees. Mr. Braddell believed that they were paid $1,000 each by the company. On July 19, counsel continued, there was a notice sent out calling a meeting to appoint the referees. On July 29 the resolution was passed. Mr. Peck’s plaint was dated July 29, and then they started the “Miscellaneous application,” Mr. Peck having to obtain permission to bring the action. On Aug. 4 they had Messrs. Sisson and Delay’s letter on behalf of Mr. Peck sending to Messrs. Russell and Co. a notice of an amendment. It was unfortunate that this letter was sent during the August bank holidays and it did not get into Messrs. Russell’s and Co.’s hands until after the holidays. They wrote to say that apart from any legal consideration, the time necessary to have this amendment printed and circulated to shareholders was not sufficient. Of course notice could be given by the insertion of an advertisement in the Malay Mail that same night, but even then he was not sure whether there would have been time. Then on Aug. 12 Messrs. Bannon and Bailey advised that the amendment could not be proposed at the meeting either as a substantive motion or as an amendment. It was a bona fide opinion. Whether it was right or not, counsel did not propose to discuss. It was, however, an unfortunate point that the amendment was never allowed to be put to this meeting as a direct resolution. At the meeting on Aug. 16 a vote was duly taken and 157,834 votes were cast in favour of Russell, and 82,512 votes against, of those 157,834 votes 126,644 were held by Russell, and Russell and Co. held proxies for 9,950 votes. Then there were a number of letters between Mr. Peck and Mr. Kenion. Counsel continued that Mr. Russell did not take the view which Mr. Peck took of those referees, and six statutory declarations and two witnesses were put before the referees. In addition to that both Mr. Shearn and Mr. Russell appeared before the referees. Mr. Russell was anxious to give a statement and on Aug. 30, the following letter was written to Hong Guan by Mr. Russell’s solicitors. Aug. 30, 1922. To Ng Hong Guan, 227, Telok Ayer-st., Singapore. Dear Sir, -You are doubtless aware that an enquiry is being held at the instance of the above-named company concerning the purchase by that company of the Goenoeng Batoe Besar property. We are aware of your recent action against our client and it seems to us that in the matter of the allegations made by Mr. Peck, your interest and our client’s are identical. You apparently allege that you were Mr. Russell’s partner in the profit made consequent upon the acquisition of the option and the sale thereof to Malayan Collieries, Ltd. Mr. Russell, on the other hand, states that you acquired the option for him and that you were to receive definite fixed remuneration irrespective of the amount of profit made on the resale. Quite apart from whichever of these views is correct it is clear that both you and Mr. Russell are interested in showing that there was a legitimate profit made as a result of the purchase of the option and subsequent sale thereof to Malayan Collieries, Ltd. We think you had better consult your solicitors before giving us any statement; and we wish you clearly to understand that if you do give us a statement Mr. Russell will, if the proposed action is fought out in court, require you also to give oral evidence either in court or upon commission. Will you please let us know whether you will give us the statement and that you are also willing to give oral evidence. If you are prepared to do so kindly make an appointment with us at your early convenience for the purpose of taking down your statement. -(Sgd.) Pooley and Co. Counsel reminded his lordship of his remark earlier that Russell had also scared away the Loke Yew trustees from supporting Mr. Peck. When Mr. Justice Farrer-Manby gave Mr. Peck leave to sue in this case he gave it subject to Mr. Peck giving security for indemnifying the large number of shareholders whom he represented. That order put a tremendous weapon in the hands of Mr. Russell. He did not know how that order came to be made, and counsel showed that the order was wrong by quoting from the Red Book where it was said “Representative parties are not liable to costs.” The result was that it created a stampede among the whole of Mr. Peck’s entourage. It was a very illuminating part of the case and referred to certain letters particularly to a letter by Messrs. Ford and Delamore, dated Oct. 18, to Messrs. Sisson and Delay with reference to the indemnity as instructed by a shareholder and asking for certain information with regard to the deposit. On Oct. 21 Mr. Peck’s solicitors wrote back asking who their client was, whether he was a supporter of Mr. Peck, as they did not intend to give information to those who were inimical. Messrs. Ford and Delamore wrote back to say that their client was Mr. Russell F. Grey, and later that Mr. Grey had given his proxy to Mr. Russell and that this fact was not within their knowledge when they first wrote. On Oct. 30 there was a summons in Chambers by Messrs. Ford and Delamore asking Mr. Peck to indemnify their clients, and Counsel continued that these summonses kept on pouring on them. Further they started to circularise the whole body corporate of this company. It was perfectly obvious that the circular by Ford and Delamore was sent out by Russell. Whoever sent out that circular had access to the share register of the company as the folio number was given. This stampeded some of Mr. Peck’s supporters. Then Messrs. Loke Yew Trustees were written to as follows: - Dear Sirs, -We write to you as Mr. Russell’s solicitors in connection with the general meeting of Malayan Collieries Ltd., to be held on the 21st inst. At the last general meeting of this company when the question of whether or no the company should take proper advice as to the allegations made by Mr. Peck was decided, Mr. Peck who held a proxy for the Loke Yew Estate voted against the resolution. In spite of Mr. Peck’s votes the resolution was carried and as you are aware the Hon. Mr. A.N. Kenion, the Hon. Mr. D.A.M. Brown and Mr. J.D. Kemp were appointed referees. These gentlemen have now advised the company not to associate itself with Mr. Peck in his suit, and acting upon that advice and the advice of the company’s solicitors Messrs. Bannon and Bailey as to the course now to be adopted the directors in this country other than Mr. Russell have decided on behalf of the company to defend the suit brought by Mr. Peck. The meeting to be held on the 21st inst. is for the purpose of confirming the decision of the directors other than Mr. Russell. They have already sent out forms of proxy and we should request you to use the votes you hold in favour of the resolution put forward by the directors. We would remind you that the independent directors have from the outset advised the shareholders that the allegations against Mr. Russell were unfounded. Their opinion has been confirmed by three independent gentlemen whose ability and impartiality is beyond question. We ourselves acted for Mr. Russell in the enquiry by the referees and have gone into the matter with the greatest care and at very considerable length. It would appear that Mr. Peck has seen fit to bring this suit without full and proper information and investigation, and we think that had Mr. Peck’s advisers before them the evidence adduced by Mr. Russell before the Referees they would themselves agree that their client’s case is hopeless. Under such circumstances we feel that it cannot be the duty of the Trustees to support litigation which will prove of no value to the interests of the beneficiaries which they are concerned to safeguard. On the other hand the question of the liability of the estate for costs upon the failure of the suit must be considered. Mr. Peck purports to sue on behalf of all the shareholders of Malayan Collieries Ltd, other than Mr. Russell. Mr. Justice Farrer-Manby has ordered him to give those shareholders indemnity against the costs likely to be incurred in the suit, thereby establishing that in his opinion anyway the shareholders incur liability. You will remember that Messrs. Ford and Delamore in their printed letter of Nov. 2 last wrote about the question of indemnity that as regards those shareholders who have supported Mr. Peck there is much to be said for the argument that they are liable to the defendants for costs upon the failure of the suit. We agree with that view and it seems to us scarcely open to argument that Mr. Peck’s supporters are his principals and as such liable for whatever liability he incurs. An application will be made to the court at an early date to strike out Mr. Peck’s suit as being unauthorised and not maintainable. The decision of the company at the meeting on the 21st will be extremely material upon this application. We ourselves confidently expect to see this suit struck out before the end of the year and we would ask you to assist us in this-by giving to the independent Directors the proxy sent to you and thereby helping to save the enormous costs which otherwise will be incurred-Yours faithfully (sgd.) POOLEY and CO. The Trick Turns That did the trick, and Peck lost 35,510 votes. Thus his lordship would see that Mr. Justice Farrer-Manby’s order placed a powerful weapon in the hands of Russell who increased his voting power and got certain shareholders to withdraw their support from Mr. Peck. Then the plaintiff was struck out, the decision was appealed from, and it was restored. Thus his lordship would see that Russell attempted by every means in his power to keep the case out of court. Counsel suggested that in his own mind Russell knew that he had not much of a case. The other point he wished to make was that the Company’s solicitors were not consulted. On August 16, the chairman of Malayan Collieries at a meeting stated that no solicitors had been consulted in the matter. So that these directors circularised their shareholders that Mr. Peck had no case and that Russell and Co. had done nothing wrong, and they did that without consulting any solicitors. Fifth Day When the court resumed yesterday Mr. Carver explained the circumstances under which certain documents had been found and which he proposed to prove later. Mr. Braddell, before beginning produced the official guide to Singapore road which showed that when he said that a certain road mentioned in the allotment document did not exist he was correct. Continuing Mr. Braddell said that he divided his case into two parts first the facts and then the law. That was done merely for convenience but he submitted that in that case the facts could not be separated from the law and the law from the facts. What he apprehended in that case was that Mr. Carver would address the court at length on the facts and Mr. Upcott on the law. He submitted that the law and the facts in this case were like the Siamese Twins. He did not understand the defence, and he thought he said that every day and it was useless for the defence to try and separate the case. Mr. Upcott had been in Singapore the whole time, and although during that time he had had the best information of what had been happening it was utterly useless for him to come here and to ignore the facts when he spoke on the law. After elucidating certain points of his argument at the request of his lordship Mr. Braddell began citing authorities. The authorities quoted dealt with; Director as agent, he might be a trustee; general law of agency; directors are not principals, they are merely Agents. For Russell and Co. to submit that there had been full disclosure there should have been full disclosure to the shareholders of the Company; that a firm of managing agents managing a coal business could not possibly buy a coal mine and sell it to their own company; that even a director, much less a firm of managing agents cannot do so except under and by virtue of article 92 of the articles of association of the Company or in similar article; even if disclosure to directors were sufficient Russell must prove that they knew what profit he was making. So far as he knew there was not a single document showing what profit Russell was making. The only document known gave the profit at 3000 shares whereas he got a profit of 32,000 shares. The Relief. Mr. Braddell, addressing his lordship on the question of damages, outlined the relief he was entitled to. He did not claim his remedy of recission of the agreement, which had already been stated. He had suggested to the other side that they should leave the question of damages over. But they said no, and that he must address the court on the question. Counsel asked his lordship to say then, or at a later stage, that he need not go into the details of damages. What he had to do was to say what he was entitled to, leaving the particulars to the Registrar or to a later stage of the case. He did not wish to waste the time of the court calling a number of share brokers to prove the value of the share, etc. Counsel submitted that he was entitled to the highest reasonable price for which these shares could have been sold during the whole time that they had been in Mr. Russell’s possession whether he sold them or not. That was if he wished to retain the shares; or counsel submitted that he was entitled to a return of those 80,000 shares less reasonable remuneration to Ng Hong Guan the broker, plus any dividends which Mr. Russell had received on those shares and the usual interest on these dividends. The plaintiff, he said, would prefer to have the surrender of the shares as they would be cancelled and the company’s capital would be decreased to that extent. The amount of the remuneration due to Hong Guan was not for him to say but for the shareholders to decide. He had put down the value of the shares at $21.50, but he understood that the shares had been higher than that. If the decision went against the defendant, counsel submitted, he though perhaps the defendant would like to give back the shares instead of his going to the market, selling them to recover the money, and the plaintiff preferred to have the shares with a view to their cancellation. In case the defendant could not return the whole of the 80,000 shares the plaintiff would be prepared to accept as many as he could return and the balance in cash. Mr. Braddell next proceeded to quote authorities in rebuttal of the defence that had been set up. He dealt at some length with article 92 of the Articles of Association of the Company under which the defendants sought protection. That article, counsel said, afforded no protection to the defendants because they made no full disclosure to the shareholders at any time, as was required by law, which was explained in the authorities he quoted. Even if the article could be taken to protect it could only be taken as protecting Mr. Russell and not Messrs. J.A. Russell and Co. The principle of law was waived only so far as directors were concerned but not so far as the managing agents and secretaries were concerned. Mr. Braddell in the course of his citation quoted from a digest of an Irish case, a report of which they had tried unsuccessfully to obtain. It was written for twice but it was believed that when during the Irish rebellion, the law courts were burned, this report too had been destroyed. The court adjourned till Monday morning when Mr. Braddell will call the plaintiff and probably two other witnesses.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 22 March 1924, Page 8 PECK-RUSSELL. MR. BRADDELL'S INDICTMENT.

The Straits Times, 22 March 1924, Page 9 MALAYAN COLLIERIES. Conclusion of Five Days Address. Legal Questions in the Case.

THE MALAY MAIL, MONDAY, MARCH 24TH, 1924.p.9 PECK v. RUSSELL Second Week’s Hearing Begins MR BRADDELL’S FEAT To-day, in the Kuala Lumpur Supreme Court, began the second week’s hearing of the action in which Mr. F.C. Peck, a shareholder in Malayan Collieries, Ltd., is suing before Mr. Justice Whitley (1) J.A. Russell, chairman of the Company, and managing partner of J.A. Russell and Co. managing agents of Malayan Collieries, Ltd., (2) J.A. Russell and Co., managing agents; (3) Malayan Collieries, Ltd., for the recovery of 80,000 shares of the Company, alleged to have been profits wrongfully made by the 1st and 2nd defendants, and dividends so far paid on those shares with interest thereon. Last week Mr. R.S.J. Braddell, who is appearing with Mr. Hastings for the plaintiff, traversed the whole case from the plaintiff’s point of view, in the course of a speech which lasted five days-a speech which for its eloquence, lucidity, and logic has been a wonderful effort. From the mass of documents which have been accepted by both sides, and which, therefore, will not have to be proved, he strove to establish his case. As a feat of physical endurance alone, apart from its merits from the legal standpoint, the speech will be recorded in the annals of the Malayan courts as a remarkable one. A New Pleading. When the hearing began this morning, Mr. Braddell referred to the new pleading which he had mentioned last week. He said that copies of this had been sent to his learned friends. Before he put the new paragraphs in, he wanted to make it quite clear that if he amended his plaint he did not want his learned friends to open a long technical discussion on what had been pleaded and what had not been pleaded. His submission was that he would be entitled, in the circumstances of this case, to file a reply. Had he been in the Colony he would have asked permission from his lordship to file a further reply. So far his learned friends had not objected to his adding this new plea. Mr. Carver said that he had raised no objection to the amendment proposed and he did not raise any objection now. What he wished was that the new allegations should be formally framed and be in the pleadings, and where it was stated that the defendants were estopped from pleading “agency,” he wanted the grounds to be set forth. There was no fewer than thirteen allegations in this new plea. He did not object to these, but if there were other matters besides those which had already been set forth, he wanted these matters also to be set out. Mr. Braddell said that he had opened his case fully. Mr. Carver said that he did not want to go through his learned friend’s long opening, of which he already had 100 pages of typewritten sheets, to find out what he relied on, besides the new allegations, for his case for estoppal. After further argument, Mr. Braddell decided to put the new plea in the form of a reply instead of adding it to the plaint. Appeal Court Judgement Mr. Braddell next enquired from his lordship whether he wanted the judgement of the Court of Appeal read. His lordship said he did not think it necessary. He had a printed copy of it. Mr. Braddell said that he had already said that he would rely on Mr. Mundell’s arguments and the authorities quoted by him in that case. Mr. Braddell asked his lordship whether he would like Chong Chew’s evidence, taken on commission, read. If so, Mr. Hastings would read that evidence. This was agreed to and Mr. Hastings read the evidence of Chong Chew, secretary of the Eastern Mining and Rubber Co., Ltd. The first witness called was Mr. H.D. Brown, accountant, of J.A. Russell and Co., who produced several statements which he had prepared at Mr. Braddell’s request showing payments made by Russell and Co., and Malayan Collieries, Ltd., in connection with the various expeditions to Borneo. Just before the lunch interval, it transpired that one document had been taken out from the Company’s file of letters, upon which fact Mr. Braddell commented strongly. A full report of the evidence will be given tomorrow. ____________________ In Saturday’s report, on page 16, col. 3, in the 29th line from the bottom, the figure should be 72,000, not 32,000.

Straits Times 24 March 1924 page 9 Malayan Collieries. Mr. F. C. Peck Commences His Evidence.

THE MALAY MAIL, TUESDAY, MARCH 25TH, 1924, p9 PECK v. RUSSELL E.M.R. Co’s Minutes. PLAINTIFF IN THE WITNESS BOX A good portion of the morning yesterday was taken up by Mr. Hastings, who read to the court the evidence of Mr. Tan Chong Chew, secretary of the Eastern Mining and Rubber Co., Ltd., who, when examined on commission in Singapore, on Jan. 26, and on several subsequent occasions, produced the minute books and files of the Eastern Mining and Rubber Co. A whole series of these documents marked with the letters M.R. was produced, and among them were minutes of meetings of directors and shareholders of which the following are among the relevant ones: - Minutes of Oct. 10, 1922-“Resolved that the appointment of Messrs. Tan Chong Kee and J.A. Russell as directors, which was passed by a resolution in writing by all directors, be recorded. “The matter of the support given by the company to Mr. Peck in his action against Mr. Russell and others was discussed. Mr. P. Keng Seng proposed and Mr. Yeo Ban Keng seconded the undermentioned resolutions which were carried unanimously, Mr. Russell refrained from voting:-(1) That having regard to the statements made by Mr. Yeoh Ban Keng and P. Keng Seng, the company cannot support Mr. Peck in his proceedings against Mr. Russell and others; (2) That the proxy given in the name of the company to represent the company at meetings of Malayan Collieries Ltd. is invalid and steps be taken to withdraw the same; (3) That as regards the payment of the company’s moneys to Messrs. Sisson and Delay to support Mr. Peck in his action the return of so much thereof as has not been expended be demanded from Messrs. Sisson and Delay by the secretary in the name of the company.” Minutes of Oct. 25, 1922-“Resolved that Messrs. Tan Kheam Hock; Yeo Ban Keng and J.A. Russell be appointed to make full enquiries into the matters raised by Dr. Birnie and into such other matters as may arise during the course of their investigation.” “Mr. Tan Kheam Keat put the following questions to the chairman:- (1) Have all the loans been given with the knowledge and approval of the board of directors? (2) If not who is responsible for them? (3) Are all the loans fully secured? (4) If not can you give me a list of all loans that are secured together with the details of the securities against each loan, and a list of loans that are unsecured? (5) Have all the interests due on loans up to date been paid by the debtors? (6) Further I see that promoter’s shares have been given to some shareholders in the old company and new. I am a shareholder in both companies, but I have not received any such shares. Can you tell me, Mr. Chairman, why this is so? Also was any mention made in the new company’s prospectus about promoter shares? (7) I was told by the late Mr. Tan Kheam Hock, who was a director of this company, that you, Mr. Chairman, had given him to understand that you would act as managing director without any fee whatever. Is this true? etc. Lampong Concession These questions were replied to at the meeting of the board on Nov. 8. Minutes of March 23, 1923-“It was reported that Mr. J.A. Russell had agreed to purchase the Lampong concession on certain terms arranged with Dr. Yin, and it was resolved that the sanction of the board be given to the arrangement. Mr. J.A. Russell refrained from voting. Minutes of May 31, 1923: “Mr. J.A. Russell, on behalf of the sub-committee on the question of the promoter shares, reported as follows: “We think the opinion of a lawyer should be obtained upon the various matters referred to the sub-committee. During the course of our investigations certain matters have come to our notice which are of considerable importance and we think it is only fair to Mr. Poey Kang Seng that before any opinion is passed or any decision come to by the sub-committee or by the board, we should know exactly what is the real position in law of the various matters. We think that any opinion given without first obtaining legal advice is of very little use and moreover that the directors would be acting very wrongly if they neglected to obtain legal advice, and might be severely criticised for not doing so.” After referring to these minutes Mr. Tan Chong Chew’s evidence was as follows: - On March 22, 1923, I see minutes of a directors’ meeting and attached to the page is a list of debts due the company. There Mr. J. A. Russell is shewn as owing $20,000, the security being $40,000 of Malayan Collieries shares. I took the shares at $20 each, which means 2000 shares actually deposited. No date is given. The certificates were in Mr. Russell’s name. This $20,000 has not been paid back. The money was lent in March, 1923. Dr. Lim Boon Keng’s shares have not yet been registered in the name of the Commercial Rubber Co., and at this date the Commercial Rubber Co. still holds as security 1,000 shares of Dr. Lim Boon Keng. The Eastern Mining and Rubber Co. act as agents and secretaries of the Commercial Rubber Co., from 1921 as far as I can remember. Dr. Boon Keng was a director of the Commercial Rubber Co. while he was in Singapore. I do not know if he was a director of Kim Koe and Co., Ltd. At that date Dr. Boon Keng owed the Commercial Rubber Co., $50,000 and security for this was the 1,000 shares in the Eastern Mining and Rubber Co. He had bought these shares with the money borrowed. On May 31, 1923, I see minutes of a directors’ meeting M.R.I.T. The concession of the G.B.B. property had not been paid for when the company sold it. I see a copy of a letter of June 14. 1920, M.R. 24. I have produced all the letters that I can find to and from Mr. Russell. I have not seen at any time any letter from a director to Ng Hong Guan. I do not think there are any other letters to Hong Guan besides those in M.R. 3. I have not found any memoranda by any director as to the granting of an option to Hong Guan. All the files put in have recently been lent to directors of the company. They have not been taken away from the office. Mr. Russell has had them. I produce the record of the meeting of the shareholders of the T.P. Co., shewing that these shareholders agreed to sell their G.B.B. concession for Gs. 600,000 in cash and $400,000 in shares of Eastern Mining and Rubber Co., Marked M.R. 25. I produce a true copy of a letter from Dr. Lim Boon Keng marked M.R. 26. Expedition Ship’s Log I have the log of s.s. Nanyo Mora. She left Singapore at 4 p.m. on Oct. 16, 1920 for Banjermassin and arrived there on the 22nd at 7.15 a.m. At 2.10 p.m. on the 23rd she left again for Kota Bahru. Got there at 11.50 p.m. on the 24th. At 10.10 a.m. on the 25th she left for Goenoeng Baroe Besar (G.B.B.) where she arrived at 6.30 p.m. on the 25th. At 2.30 a.m. on Nov. 1. she left G.B.B. and arrived at Kota Bahru same day. She left at 5 p.m. arriving at Singapore on Nov. 6. My company took over from plaintiff the proxies for 24,000 shares in Malayan Collieries Ltd. after the 1st defendant had become a director of my company. All these proxies were given either to first defendant or the directors of the Malayan Collieries Ltd. Question: Have you got a letter from Mr. Birnie explaining the position of affairs with regard to the purchase of G.B.B. by the Eastern Mining and Rubber Co.? –Yes. Mr. Braddell calls for the original letter and enclosure. Witness states that they are in the possession of the Eastern Mining Company’s lawyers Messrs. Rodyk and Davidson. Witness produces a true copy of the letter and enclosure. Counsel: Are you willing to produce the originals? =Yes, with the consent of the company’s lawyer. Mr. Braddell wished to put in the copies pro tem. Mr. Carver objects because (1) copies are secondary evidence; (2) these are statements obtained by him personally as counsel to the Eastern Mining and Rubber Co., Ltd., for the purpose of litigation in which they are engaged and in which Messrs. Braddell Brothers are engaged for the other side. Mr. Braddell states: As to (1) I have already asked the witness to produce the originals and if he does so I will put them in place of the copies which the witness says on oath are true copies. As to (2) the letter and statement go to Mr. Birnie’s credit as a witness in this action. There is a commission now in Java examining Mr. Birnie as a witness on behalf of the first defendant. Letter and statement are both put in an envelope marked “confidential” and sealed without being shown to Mr. Braddell, who states that he is not aware of their contents. Witness (continuing): I now produce the allotment book of Eastern Mining and Rubbber Co. Folio 3 shows the allotment of 4,000 shares to Telek Pamoekan Company; the whole page is cancelled. Mr. Braddell puts in folios 3,5, and 10 of the allotment book marked M.R. 28. A.B.C. Transfer of Option I have not been able to find any notice from Hong Guan of the transfer of his option to anyone, or any notice of exercise of option by Khoo Wee Chuan, nor any notice of transfer of option by Khoo Wee Chuan, nor any copy of a letter from the Eastern Mining and Rubber Co. releasing the deposit of $60,000. My company’s offices are above Loxley and Co.’s premises at 59-60 Robinson rd., Singapore. The first defendant could have looked at all the documents of the Eastern Mining and Rubber Co., since he became a director. He has done so, frequently. The company did not press-copy its letters in a letter book in 1920. In September or October 1920 it did not. We did in November 1920 after I became manager. I did not press-copy all, only local ones to Singapore and Kuala Lumpur. Not to Java so far as I know. In or about December 1920 I attended a conference at Messrs. Sisson and Delay’s office in connection with the renunciation of some bonus shares in Malayan Collieries. My father, the late Mr. Tan Kheam Hock was present, and also Dr. Lim Boon Keng. Mr. Dickinson produced a draft document in connection with the bonus shares. My father asked to look at it and did so. He said in Chinese to Dr. Lim Boon Keng in my hearing: “Why don’t we make this direct with Malayan Collieries?” Dr. Boon Keng replied in Chinese: “No. We are dealing with Mr. J.A. Russell.” My father replied in Chinese: “Oh, is that so? If so, all right.” I do not know if prior to this my father knew that the company was dealing with Mr. J.A. Russell. He never spoke to me about it. This is all that took place at that conference. My father did not take a very active part in the affairs of the company. He never received any Telok Pamoekan shares. Not once. I produce a piece of paper written and signed by the first defendant, marked M.R. 29. I also produce a paper written and signed by Hong Guan, marked M.R. 30. I found these two pieces of paper in one of the drawer’s of the company safe which is open all day long. The drawer is not locked. When Mr. Russell came back from Hongkong in January 1924 he asked me if I had a document which he gave to the company when he received the deposit note back from the company. I did not know what he meant but promised to make a search for it. I did so. A general search was made in the office and I could not find anything. I informed Mr. Russell of this. He did not say anymore. Finding of “M.R. 29.” About a week later he came back and said to me that he was quite certain that he gave a receipt when he got back the deposit note from the company. I said I would make another search throughout the office and then I found M. R. 29. I had never seen M. R. 29 and M. R. 30 until I found them then and yet as manager since 1920 had been to the safe and to that drawer hundreds of times. I was a shareholder in the Eastern Mining and Rubber Co. from June 24, 1921. I came in as manager on Nov. 1, 1920. I knew that the company was selling the G.B.B. property in November 1920. On the following day witness said: I wish to say that my company did have a press copy letter book with Java since I became manager. It is not in the office now and I do not know where it is or who took it away. The Banjermassin letters must either be in the Java book or there must be another letter book, but I have no recollection of any such book. As regards the conference in Messrs. Sisson and Delay’s office I wish to add after the words spoken by my father “Is that so? If so, all right” the words also spoken by my father “but I thought we were dealing with Malayan Collieries, Ltd. “ Mr. Carver objects to these additional words mentioned by witness. Cross-examined on behalf of first and second defendants, witness said: -As regards M. R. 16 Dr. Lim Boon Keng signed transfers for these 700 shares, 470 shares to Mr. Poey Keng Seng and 200 shares to Mr. Yeo Ban Keng. I have these transfers in my office. The 479 shares appear in folio marked M.R. 14. 200 shares to Yeo Ban Keng appear in Folio 21 M. R. 18. The odd 30 appear in M. R. 14 under Poey Keng Seng’s name. The date of the transfer is also Oct. 11 1922. These shares were Mr. Tan Chong Kee’s qualification as a director. Continuing witness stated that the loan to Mr. Russell was out of a large surplus which the E.M.R.Co. had at that time. The company first approached Mr. Russell regarding the loan, and they did not want to recall the money. The money was earning 10 per cent. interest per annum. The company was Satisfied with the Security. He was present when Mr. Russell inspected the files of the company. Mr. Russell and Mr. Tan Chong Kee were appointed directors because Mr. Tan Kheam Keat and Dr. Birnie wished to have them appointed. These two and their friends represented about 60 per cent. of the shares of the E.M.R. Company. Witness was present when the decision was arrived at, but he did not hear Dr. Birnie make any threat. There was no necessity to make any such threat. Accountant’s Evidence. The first witness called by Mr. Braddell was Mr. H.D. Brown, the accountant of the second defendants. Henry David Brown, accountant, said: I am an employee of Messrs. J. A. Russell and Co., since Jan 14, 1921. I have access to Russell and Co.’s files at all times, as representative of Russell and Co., secretaries of Messrs. Malayan Collieries, Ltd. When I joined the firm Russell and Co. had their offices in the same place—the first floor of the Hongkong Bank. There is only one employee of Malayan Collieries in J. A. Russell and Co.’s office, Mr. James Barr, the technical manager of Malayan Collieries and G.B.B. He was also general manager. His duty was to inspect coal from the mines. Prior to becoming general manager of the mines, I believe he was an employee of Russell and Co. Mr. James Barr joined Malayan Collieries while Mr. England was still in the mine. Mr. Braddall said that did not bear out the minutes. Witness continued: When Mr. England, manager of Batu Arang, went to Goenoeng Batoe Besar as manager, Mr. James Barr of Russell and Co. was appointed general manager of both mines. To his lordship—Up to that time Mr. Barr had been under Russell and Co. Continuing, witness said that when Mr. England was dismissed, Mr. Barrett was appointed manager of G.B.B. There was also a Mr. Hastings in the employ of Russell and Co. He did not know whether the estate, the name of which was mentioned, was a rubber estate. Mr. Braddell said that apparently Mr. Hastings, in 1920, was the manager of a rubber estate. Witness continued: I sent in the return of allotment of this company on June 10, 1921. I myself had no personal knowledge whatever of the matter contained in the document. I did not know whether the allottees were genuine or not. I have prepared a number of extracts from the accounts of Malayan Collieries, Ltd, for counsel. Mr. Braddell drew the attention of the court to these documents. One of these was a list of payments made from month to month to the secretaries of Malayan Collieries. In his opening, Mr. Braddell said, he had relied on a document prepared by Mr. Brown under a misapprehension, and had stated that Russell and Co. increased their salary without the consent of the Board. He had now a correct list of the payments as he wanted and he wished this latter document substituted for the former, which he wished to withdraw. Expedition Accounts Witness continued that he prepared an extract from the ledger for counsel, headed “expedition account.” He had another statement “Borneo expedition account” accurately prepared from the company’s books. The next was a statement showing “Hastings’s salary” and a further statement of “Hastings’s salary” taken from the Borneo Expedition account. One payment of $500 to Hastings in 1920 was in the Borneo Expedition account, and the other payment of $500 was in the European staff salaries account in 1921. The statement he had provided showed that Hastings had been advanced money both by the Company and Russell and Co. Subsequently the advances made by Russell and Co. were debited to the Malayan Collieries account. He prepared another account headed “Drew and Napier, G.B.B. acquisition account” showing the payment of $200,000 on Nov. 23, 1920, and on the same page there was another account “Dutch G.B.B. Co.” There was another statement showing a payment to Messrs. Freeman and Madge. On Nov.16, 1921 there was a payment to Drew and Napier of $1,520.54, and later in September, 1922 a repayment of $50 by Russell and Co. Mr. Braddell then put in these statements, marked “J.” Witness (continuing) said that Hastings went away on Oct. 16 and returned on Nov. 19. Hastings’s salary for Oct. was paid by Russell and Co. He was paid twice by accident. These two sums amounted to $550 each. These sums were in respect of his October salary. By a voucher dated Nov. 2, 1920 and by a bill dated March 10, 1921, also rendered by J. A. Russell and Co. again showing among many other items Hastings’s salary for October, Russell and Co. got back the two sums which had been paid to Hastings twice. Mr. Braddell: Who paid the salary for Nov.?—Messrs. J. A. Russell and Co. Malayan Collieries paid $1,000 for that month’s work to Hastings? —Yes so far as we have gone. Subsequently there was a refund of one of these two sums of $500 to Malayan Collieries. That was on July 19, 1922. By whom were the expenses of the G.B.B. expedition paid? —By Malayan Collieries Ltd. Leaving aside Hastings’s salary, were they paid in their entirety by Malayan Collieries, Ltd? —Eventually, yes. Give shortly what you mean by “eventually, yes”—When this expedition started, money was being drawn to meet those expenses both from J. A. Russell and Co. and Malayan Collieries. Subsequently, in April 1921, all this expenditure was collated, and the Company refunded to Russell and Co. what they had originally supplied. And may I take it, Mr. Brown, as a common thing for Russell and Co. to pay out money on vouchers and get it back? —Yes. Have you in the books of Malayan Collieries anything about Seboekoe? —No, nothing separately. So that all the expenses under Seboekoe appear under the heading Borneo Expedition? —Yes. Who paid the expenses for Seboekoe? —I believe the company. It is impossible to draw a line between the two sets of items. I believe a concession at Lampong was prospected by the company? —It was prospected by the Malayan Collieries Ltd. but the Eastern Mining and Rubber Co. paid the expenses. [Mr. Braddell drew the attention of the court to the minutes of the E.M.R. Co., where the arrangements for this prospecting were sanctioned.] Mr. Braddell remarked that the other side had now agreed that the Company had paid for one of the coal analyses. Pink, Yellow and White Letters What is the system of letter filing used by Russell and Co.?—Carbon copies are taken, one on a white sheet and one on a yellow sheet. This yellow sheet is filed away either personally or by subject. And the white sheet should be filed chronologically. What is the system with regard to J. A. Russell and Co.’s letter? —The same system. I suppose the same people are in charge of both these filing jobs? —Yes. [The Malayan Collieries file of 1920 is produced, containing the letter of Sept. 27, 1920, attached to the pleading, addressed to Hong Guan beginning with “Dear Mr. Hong Guan.”] Continuing, witness said that Russell sometimes dictated his letters, sometimes he drafted them in his own handwriting. How do you know into which file his drafts are to go? —He probably tells the typist. Mr. Carver objected to this evidence as it was merely a theory of the witness. Mr Braddell: Will you explain how a letter has to go into the Malayan Collieries file or Russell and Co.’s file? —Mr. Russell drafts it himself; the typist would send it on to him for his signature. If he dictates? —I don’t know what happens. Now you turn to J. A. Russell and Co.’s file of Oct., 1920. Is there not in that file a letter belonging to Malayan Collieries on pink paper dated Oct. 1? —I have not brought that file. Mr. Carver admitted that it was so. Mr. Braddell looking over J. A. Russell and Co.’s September file, said that he had found there a letter to Mr. Henggeler on the Seboekoe property. He regretted that all letters which referred to Seboekoe had not been supplied to him. Somebody for the plaintiff should go through these files, or they should allow him to do so. He wished to know whether any document had been taken out of the file. If so, he wanted to know why it was taken out of the company’s file. Mr. Shearn handed over the letter dated Sept. 6, to Mr. Stoutz, which Mr. Braddell wanted. Mr. Carver explained that it was taken out because Mr. Braddell had asked for copies. Mr. Braddell said that copies could be taken without taking the documents out of the file. He asked whether Mr. Shearn had any other documents taken out of the company’s file. Mr. Shearn would not say definitely. The court adjourned at this stage for lunch. An Explanation. On resumption after lunch, Mr. Carver explained, with regard to the letter which was taken out of the file, that Mr. Braddell had asked for copies of these documents, particularly a letter written by Mr. Stoutz to Mr. Russell on Sept. 17, and one from Russell to Stoutz of Sept. 6. Mr. Shearn then asked Malayan Collieries for the letter which was taken out and given to him. He took it to Singapore where copies were supplied to Mr. Braddell. Mr. Braddell took the assurance that the letters were taken out of the file for the purpose mentioned. He added however that he had only asked for copies. Mr. Shearn explained that he had prepared a file of original documents to facilitate production in accordance with his affidavit. Mr. Braddell asked why Mr. Shearn should produce Malayan Collieries letters as Mr. Ivens was there to represent the company. Mr. Shearn said that in his affidavit he undertook to produce all documents in the possession of, or under the control of, the defendants. These documents were under their control, and therefore he had to produce them. Mr. Braddell said his difficulty was that they could not find out the source of these letters. They had a letter of Oct. 1, written on Malayan Collieries’ paper, in Russell and Co.’s file. It was, however, too late to rectify this. Mr. Ivens had very kindly promised to go through the files and find out the letters that should be in the proper file with Mr. Brown and Mr. Henggeler. Mr. Brown was asked to stand down at this stage and Mr. Peck was next called. Mr. Peck’s Evidence. Frederick Charles Peck, examined by Mr. Braddell, said: I am a shareholder in Malayan Collieries Ltd. At the time this action was brought I had 303 shares. At present I have only three shares. My original profession was that of analytical chemist. I came to Malaya as an employee of the Straits Trading Co. I retired from the Straits Trading Co. and I am out here watching my investments, and have been doing so for some two years. I became interested in the rubber industry about 15 years ago, and in 1913 practically the whole of my investments were in rubber. In that year Malayan Collieries Ltd. was floated, and the company interested me at that time and I have still the original prospectus which I then obtained. I was interested in the Company because it was stated that the Government had the right to nominate a director. I had very little faith in mining companies out here, but this important factor attracted me. When rubber got into a bad way in 1920 I began to consider a re-arrangement of my investments. Among the companies in which I considered it wise to re-invest was the Malayan Collieries Ltd. I first became a shareholder in 1920. Mr. Braddell remarked that Mr. Peck originally came into possession of 150 of Hong Guan’s shares and 400 of Khoo Wee Chuan’s. Mr. Braddell: What first roused your suspicion in the matter of Goenoeng Batoe Besar? —I received a circular dated Dec. 23, 1920, informing the shareholders that the Goenoeng Batoe Besar property had been bought without setting out what the purchase price was or anything else. I had previously heard something about Hong Guan in connection with the sale of G.B.B. Not Satisfied with Circular. What was the next thing? —I was not satisfied with the circular, but took no action. Nothing else occurred to draw my attention, I mean to rouse my suspicion, until I received the circular of Nov. 15, 1921. That was the circular in which the shareholders were told that the financial year of the company had been changed from June to December? —Yes. And as a result of that circular you wrote a letter to the Straits Times? —Yes, on Nov. 17, 1921. That letter drew no answer? —I never heard anything in answer. What occurred next? —Some time in April 1922 I heard something about the registration of Hong Guan’s shares, in the offices of Messrs. Bell and Co., sharebrokers, of Singapore. Were you shown either then or later any document in connection with the matter? —In the latter half of April Mr. Bell handed me a copy of the letter of authority. Mr. Braddell: The chit, you mean, as my learned friend calls it. (Laughter.) Mr. Peck: Yes. Mr. Bell handed to me a whole file of correspondence consisting of original letters from J. A. Russell to Hong Guan and copies of Hong Guan’s replies thereto. The Campaign Opens What did you do? —I went through the file and took a note of the letter of authority after carefully checking it with the original. This was in April 1922. There was to be a general meeting of this company in May 1922. And I think you were asked to go to that meeting by some shareholders in Singapore? —Yes. I think your expenses were paid to do so? —Yes. Up to that time had you seen that second letter of Sept. 27, given to Hong Guan by Russell? —I saw it on the morning I already referred to. But I had no copy of it. I believe you did not appreciate its importance at that time? —I did. I don’t. But anyway you did not mention that letter in your speech at the annual general meeting? —No. When you got to Kuala Lumpur before the meeting did you go anywhere? —Yes. I went to the company’s office. I asked to see the share register. I looked up the holdings of the directors, of Hong Guan, and of Khoo Wee Chuan. Mr. Peck, in this case from time to time you have made shorthand notes of important things? —Yes, but not always. Those are the notes you are now referring to, to refresh your memory? —Yes. (Continuing.) I made a note of the holdings, in the presence of Mr. Brown. The note read as follows: - J. A. Russell—Total acquired up to 1921, 77,861 shares. His lordship: What do you mean by up to 1921? Mr. Peck: I cannot now say, my lord. (Continuing.) “Transferred—7,565 shares; allotted 3,000 shares on 31-1-22.” I made a note in ink under that to the effect that it was obviously a mistake for 31-1-21. Then my note read “Khoo Wee Chuan—17,500 shares.” Will you tell us how you got at this document of June 10, 1921? —I found that these shares did not make up the total number of shares of which I had received information in Singapore. And as a result? —I asked Mr. Brown if he could give me any further information with regard to this. I forget what I exactly told him, but I believe he suggested to me the Registrar of Companies. I immediately went to the office of the Registrar of Companies. There you inspected the document of June 10, 1921? —Yes. The Allotment Returns And took a shorthand copy of it? —The meeting was at 11 in the morning and I had to take down a quick note of it. That was the return of allotment. And then you went over to the meeting at which Mr. Russell was in the chair? —Yes. After that you returned to Singapore? —Yes. What was the next thing? —I interviewed as many shareholders as possible in Singapore. Did you do that before or after the leader in the Straits Times? —Both before and after. I saw shareholders and discussed the matter with them. Mr. Braddell handed up a copy of the Straits Times leader with a copy of the letter which Mr. Russell wrote to the same paper subsequently promising an explanation, remarking that he wanted it clearly understood that he put in the article for no other purpose that to show how Russell and Co. came to write the explanation to the shareholders. The leader was dated May 13, 1922, a week or so after the meeting. The leader ended as follows: --“Mr. Russell may have been taken by surprise the other day, but we hope he has a much fuller and more conclusive answer than that which he made to Mr. Peck.” Mr. Russell wrote on May 17. Then at the beginning of Russell and Co.’s letter of explanation there was a reference to this leader. Mr. Braddell: Now, Mr. Peck, you went round to the shareholders and directors of the company. Now let us see to which directors you went first. —First of all I interviewed Mr. Grant Mackie, one of the directors. Then I believe I saw Mr. Chew Kam Chuan on the same day. Did you see Mr. Henggeler? —No, I did not see Mr. Henggeler, and I have never spoken to him on the subject. I also saw Mr. Brash in Ipoh on May 20 and 21, 1922. You got no satisfaction from the directors? —None from Mr. Kam Chuan or Mr. Grant Mackie. Mr. Brash appeared willing to inquire into the matter, but he did not reply to my final letter. You took counsel’s opinion somewhere near the end of May? —I saw counsel in the latter part of May. And you circularised shareholders in June? —Yes. And received from a number of shareholders a subscription. At what rate was that? —At various rates, but the majority at 10 cents per share; some paid more, a few less. And you caused a plaint to be issued in July 1922? —Yes. Plaint Held Up That plaint did not actually become substantive by the time the meeting of Aug. 16, 1922 was held? —No. It was still lying in the registry here awaiting an order of representation? —I do not know what you call it. I know it was waiting here. When you went to that meeting of Aug. 16, you commanded some 82,000 odd votes? —Yes. His lordship: Will you tell me how many shares were there?—310,000, my lord. Mr. Braddell: And this proposition of the directors to refer the matter to the referees was carried at that meeting? —Yes. But for Mr. Russell’s vote it would have been heavily lost? —Yes. Then your plaint was duly admitted and you were appointed by Mr. Justice Farrer Manby to represent the shareholders other than the 1st and 2nd defendants? —I was not appointed. You were allowed? —Yes. So your plaint became substantive? —Yes. I think you had to advertise the plaint in the local paper? —Yes. Then in October there was the defection of one of your supporters, was there not? —Yes, the Eastern Mining and Rubber Co. withdrew their support. They subscribed $2,400 to your fund? —Yes, at the rate of 10 cents per share. Now, while they were supporting you did you obtain inspection of some of their documents? —Yes, some of them. How many of them? —One or two of them. I was allowed to go over the documents, but if I wanted to take copies I had to get the permission of the managing director. Since you obtained discovery in this case, and inspection, I think you have seen a good many more documents in the E.M.R. Co,’s files than you had seen before? —Oh, yes. You did hold a proxy from the trustees of Loke Yew Estates for 35,000 odd shares? —Yes. That proxy was also lost? —Yes, in November 1922. Expensive Commissions To jump a little, when they got their commission to London were you in a position to spend very much on the Commission? —No, except from my own pocket and risking my own money. Before that commission came I was already risking my own money. And when they got the commission to Amoy you had to attend that yourself? —Yes. And so with the commission to Soerabaya? —Yes. Now at the commission to Soerabaya a person called Tan Way An was called to give evidence? —Yes. And the main point on which he gave evidence was that he had been told that the purchasers of Goenoeng Batoe Besar were J. A. Russell and Co.?—J. A. Russell or J. A. Russell and Co. And it was sought to prove certain documents in which he purported to say that? —Yes. You remember that I gave notice to the other side to produce the originals of those letters, and it was agreed that they should be proved? —Yes. After you got back from Soerabaya did you receive a document from Mr. Poey Keng Seng? —Yes What is the date of that? —I think it was Feb. 27, 1924. Mr. Braddell said that he proposed to tender the document in evidence under sections 11, 9 and 155 (3) of the Evidence Act, as he had already mentioned. It was to rebut the evidence which this man gave, and the latter contained statements which absolutely contradicted his evidence in Java. His lordship: Is the evidence of this man put on? Mr. Braddell: No, my lord, I understand my learned friend is going to put it in. Of course if he does not intend to do so I shall withdraw this letter. But I believe he will put in the evidence. His lordship: I have not read this evidence yet. Mr. Braddell: Then I shall just put in this document and leave it to a later stage after your lordship has read the evidence. Mr. Carver laid an objection. Replying to Mr. Braddell, Mr. Peck said that he brought the document straight to Mr. Braddell, who sent it straight on to the Malay interpreter. On the morning of the 4th did Mr. Peoy Keng Seng give you another letter and is this the letter he gave you (produced)? —Yes. This letter is dated Oct. 28, 1920. I gave this too to Mr. Braddell on the same date and he sent that also to the interpreter. Mr. Braddell asked that letter to be marked F.C.P. 1 for identification. Then did Mr. Poey Keng Seng give you a private letter book? —Yes, on the same day, I think. Later on I got his permission to use it. (Marked F.C.P. 2) Mr. Braddell did not want his learned friends to see that book until it became admissible. Mr. Braddell (producing a small pass book): When did you get that? —I saw it first on Dec. 14, 1922, from Mr. F.H. Smith of Singapore (F.C.P. 3). You have had it ever since? —Yes, I and my advisors have had it. It has been inspected by the other side. Now, Mr. Peck, did you examine the proxies at the meeting of Aug. 16? —Yes. And at the meeting of Nov. 21, did you see a number of proxy papers signed and witnessed, with Chinese signatures? —Yes. Did you know what these proxies purported to be? —Yes. —They purported to be the proxies of the Chinese allottees. A Missing Manifest These proxies were admitted by the directors were they not? —Yes. Mr. Peck, you remember going with Mr. Smith and myself to the Eastern Mining and Rubber Co.’s office to get the manifest of the steamships Nanyo Maru No. 1 on her trip to Goenoeng Batoe Besar? —Yes. Was that manifest in our possession? —No. There were other documents but this particular document was missing. This manifest was not there. Did we three then go to the office of Japanese Steamship Co. who were the charterers of the ship? —Yes. Did they have it? —They said they hadn’t it. Did they tell us that if the manifest was in existence it would be at the head office in Kobe? —Yes. Are there any matters, Mr. Peck, which you would like to bring to the notice of the court which I have omitted to ask you about? —At the first meeting a part of what Mr. Russell said, I think…. Mr. Braddell: No, I don’t think we need that. A circular was issued to the shareholders by Messrs. Ford and Delamore? —Yes. Did that have the effect of frightening any of your subscribers? —Yes, some of my supporters were frightened away at the time. And you had to send out yourself a counterblast dealing with the whole position? —Yes. And you sent out a circular? —Yes. Now, you recollect, Mr. Peck, in opening the case I drew attention to a number on the top of the circulars issued by the Company, and the number on the top of Messrs. Ford and Delamore’s circular? —Yes. What was your number? —I cannot remember, but I have seen a number of circulars with the folio number at the top. Cross Examination Mr. Carver: How many shareholders withdrew their support from you after Messrs. Ford and Delamore sent out their circular? — About ten altogether. What number of shares did they represent? —I cannot say off hand, but the Loke Yew Estate was one of them, and they represented 35,000 odd shares. What is the date of that circular? —November 1922. Did the Loke Yew Estate withdraw after that? —I forget the date. Yes, they withdrew on Nov. 18. Have you a letter from them giving the grounds for withdrawal? —Yes. They said that on the advice of their legal advisers they withdrew their proxy. —Mr. Carver read the letter which stated that they had been advised by their legal advisers that the trustees ought to adopt a neutral attitude in the matter. Therefore the proxy given to Mr. Peck was cancelled. Have you any letter from the other shareholders who withdrew their support coupling their withdrawal with the circular by Messrs. Ford and Delamore? —No one has actually mentioned Ford and Delamore’s circular but they have mentioned the substance of it. [Witness here read a letter from Mr. C. Bradbey, withdrawing his support, which was put in evidence at Mr. Carver’s request.] Witness was then re-examined by Mr. Braddell. Mr. Braddell: Do you remember on what date you deposited the proxies for the Aug. 16 meeting? How long before the meeting? —I arrived in Kuala Lumpur on Aug. 14, and I remember depositing the proxies on the morning of the 15th. After this circular of Ford and Delamore a number of your supporters withdrew their support? —Yes. In addition to those you told us, the trustees of Loke Yew Estate withdrew their proxy? —Yes. Prior to their giving this proxy to you, are you aware that the trustees consulted their legal advisers? —Messrs. Donaldson and Burkinshaw of Singapore. The court adjourned at this stage till 10.30 a.m. to-day.

The Straits Times, 25 March 1924, Page 9 MALAYAN COLLIERIES. Evidence Called for The Plaintiff.- Mr. Peck's Three Shares.

THE MALAY MAIL, WEDNESDAY, MARCH 26TH, 1924. PECK v. RUSSELL Plaintiff’s Case Closed A REPLY TO THE DEFENCE Mr. Carver Opens Mr. Braddell closed this case for the plaintiff shortly before 4 p.m. yesterday. When the hearing was resumed in the morning Mr. Braddell mentioned the matter in connection with Mr. Dickinson’s coming up to give evidence. Mr. Braddell proposed to read and put in several letters which had passed between himself, Mr. Dickinson, Sisson and Delay and the Eastern Mining and Rubber Co. in the matter. The first letter was dated March 3, in which Mr. Dickinson wrote that he would like to ascertain his former clients’ wishes before he agreed to give evidence in the Peck v. Russell case. Mr Dickinson did consult the directors of the E.M.R. Co. and wrote on March 7, to Mr. Blundell to the effect that the directors did not give him permission to go to Kuala Lumpur to give evidence, neither did they refuse it. In the absence of permission therefore, he did not feel justified in waiving privilege in the matters on which his evidence was required. Mr. Braddell then wrote to him on the same day pointing out that the position was a very extraordinary one and as the case had been postponed, asking him to write again to the directors asking for definite direction one way or the other. Mr. Dickinson did that too, and wrote again to the E.M.R. Co., after which he replied on March 13, to the effect that the reply which he had received from the directors left the matter where it was. Under the circumstances he did not think he could run the risk of it being said that he waived privilege in a matter of this kind. He had, personally, no objection to giving evidence although he did not know whether it was material in the case. Mr. Braddell said that Mr. Dickinson’s attitude was perfectly proper and right. Every solicitor when called to give evidence had to raise the question of privilege at once. Mr. Carver referred to two other letters which he thought should go in with these. One of these was a notice from the E.M.R. Co. calling a meeting of directors to discuss the letter from Messrs. Sisson and Delay re Mr. Dickinson’s giving evidence, and the other Mr. Russell’s reply that he did not propose to attend the meeting because he could take no part in the discussion on that matter. These documents were admitted. With his lordship’s permission Mr. Braddell proposed to call Mr. F. H. Smith of Singapore. A Clerk’s Evidence. Francis Herbert Smith said that he lived in Singapore and was employed by the Singapore Harbour Board. Before he went to the Harbour Board he was with the E.M.R. Co. When he was in the E.M.R. Co. he was their shipping clerk and general assistant, and also acted as private secretary to Mr. P. Keng Seng the whole time he was there. He joined the E.M.R. Co. in September or October 1920, but he was not sure. He could not remember how long he had been in their employ when the Goenoeng Batoe Besar sale took place. No, he was with the company in 1919. He had been in their employ two years and some months. He could not remember when he left them. When he was shipping clerk the E.M.R. Co. had charter of a vessel called Nanyo Maru No. 1. Witness kept a note book when he was in the employ of E.M.R. Co. He usually recorded events in that book on the dates of their happening or a day or two after. To the judge: The longest time between the event and its recording in the note book was two days. His lordship: It may have been a month after? —Never so late, my lord. Witness continuing said that from his note book he said that three gentlemen namely, Hastings, Brickman and England went by the Nanyo Maru No. 1 to Goenoeng Batoe Besar. He could not say whether they were engineers or not. He dispatched the Nanyo Maru and she was to sail to Goenoeng Batoe Besar, and so far as he knew there was no arrangement for her to go to Seboekoe on that voyage. As shipping clerk it was his duty to fill up the manifest, and on that occasion he did so. He had some difficulty in filling up the manifest in regard to their personal luggage, medicine, and boxing tools. Another shipping clerk suggested to him that they should be included in the manifest and not as personal luggage. Eventually these went as cargo. Mr. Carver objected to this secondary evidence, in the absence of the manifest. Mr. Braddell submitted that this was one of those cases where the court had power to admit secondary evidence owing to the expense or futility of trying to get the originals. Even if the original manifest had been sent to Kobe it would have been destroyed. Why the Staff was Interested. Witness said that the staff of E.M.R. Co. were interested in the sale of G.B.B. because the managing director promised them a bonus on the completion of the sale. In fact the staff got that bonus. He gave this note book of his to Mr. Peck in 1923. From the time he gave it to Mr. Peck it had been out of his possession and he first saw it in Mr. Braddell’s office. Even after that it was out of his possession. So that his memory had not been refreshed before he came to court. As private secretary of Mr. P. Keng Seng and as an employee of the firm he heard a good deal about G.B.B.- Mr. Braddell cautioned witness not to answer the next question until he was told to. Question: -Did you at any time hear that Messrs. J. A. Russell and Co. were to be the purchasers of Goenoeng Batoe Besar? Mr. Carver objected to the question. Mr. Braddell said that Mr. Carver could not have it both ways. He had got the expensive commission to Amoy to get Dr. Lim Boon Keng to say that he was told by Hong Guan that Russell and Co. were the buyers. Another expensive commission was sent to Soerabaya for a Dutch gentleman to say the same thing. Then they had Mr. Tan Way An not only telling what he was told but actually putting in letters where Tan Way An says he was so told. Then they had Dr. Birnie telling what he was told. If all that evidence was to be withdrawn he would not press his question. Mr. Carver said that the question put to the witness was a perfectly general question. It did not seek to get the information on whether he had heard it from any particular person. His lordship: The answer would not be admissible. Mr. Carver: If my learned friend is going to ask the witness next whether he was told by Poey Keng Seng then Poey Keng Seng would be a material witness. Mr. Braddell: But my learned friend is conducting a case for fraud against Mr. Poey Keng Seng which, we say, has been instigated by Russell. It is quite impossible for me to call Poey Keng Seng. Mr. Carver said that he had not called evidence of the nature described. Mr. Braddell said that the evidence which had been called, such as Dr. Lim Boon Keng’s, was merely hearsay evidence. Dr. Lim Boon Seng had stated over and over again what he had been told by Hong Guan. His learned friend was not going to call Hong Guan. Mr. Carver said that Hong Guan was at least a person connected with the case. Mr. Braddell said that what he was going to prove was that this witness was Mr. Poey Keng Seng’s private secretary, and also was an employee of the E.M.R. Co., and that it was common knowledge and common talk in the office of that company that certain persons were going to purchase Goenoeng Batoe Besar. The witness had already given a reason why the staff was interested in the matter. What he wanted the witness to say was that who was going to purchase Goenoeng Batoe Besar was common knowledge in the vendor’s office. His lordship said that he could not see how certain commissions which admitted inadmissible evidence would bind him to accept more inadmissible evidence. Mr. Braddell said that he did not want Mr. Smith to finish his evidence and go back to Singapore, and then Mr. Carver to raise this point again necessitating the calling back of Mr. Smith. His lordship did not think that the question could be put. Mr. Carver admitted that a good deal of inadmissible and hearsay evidence had been recorded on commission. If both sides were treated alike he was willing to expunge the whole of that inadmissible evidence. Mr. Braddell: I am treating you as you treated me and you don’t like it. Mr. Carver: Mr. Shearn has nowhere asked for what was common knowledge. Mr. Braddell: Then would you like me to ask the witness whether he was told by somebody? Mr. Carver: That would be hearsay evidence. Mr. Braddell then examined the witness as follows: - Were you told by anybody who the purchaser of Goenoeng Batoe Besar was. —Yes. By whom were you told? —By the managing director, Mr. Poey Keng Seng and the secretary Mr. Tan Kim Hoe. Mr. Braddell: Is Mr. Carver calling Mr. Tan Kim Hoe? Mr. Carver: Yes. Mr. Braddell: Does Mr. Carver object to my asking this witness to tell us what Tan Kim Hoe told him? Mr. Carver: No. Mr. Braddell (to witness): What did Mr. Tan Kim Hoe tell you? —He told me of the sale of Goenoeng Batoe Besar to the Malayan Collieries through the broker Hong Guan. About what date were you told that? —On Sept. 29, 1920. Then you have an entry in your notebook “Sale of Goenoeng Batoe Besar for 2 ½ millions completed yesterday between G.B.B. and Malayan Collieries?”—Yes. Then you have an entry on the following date, “sale in dispute”? —Yes. That entry of Sept. 29, was it written on information given to you by Mr. Tan Kim Hoe? —No. I wrote it after what I heard from Mr. Poey Keng Seng. The information given by Mr. Tan Kim Hoe was before that. Continuing, witness stated that he was never told by Tan Kim Hoe that J. A. Russell and Co. were to be the buyers. Nobody at any time told him that. A Book of Reminiscences Cross-examined by Mr. Carver witness identified the entry of Oct. 18, referring to Dr. Birnie. That must have been written between the 18th and 20th October. Oct. 18th was a Monday, and Monday was usually the date on which the Dutch mail arrived. Mr. Carver questioned witness on various entries which witness admitted could not have been written either on the day of the event or two days later, sometimes a week. Mr. Carver: I suggest to you that this book is in the nature of a book of reminiscences rather than a record of actual events? —Sometimes the events are recorded on the day they occurred. Sometimes when I was busy they have been recorded a few days later. Mr. Braddell re-examining, stated that it was unfair to leave the matter there. He wanted to know from Mr. Carver whether the suggestion, as the last question indicated, that this note book had been prepared for the purpose of this case. If so counsel said he would prove it and put it in. Mr. Carver said that the book did not contain matter on which the witness could properly refresh his memory. It was eventually agreed not to put in this note book in evidence. Mr. Brown Recalled Mr. Brown recalled, said that $2,500 a month was charged by Malayan Collieries to the E.M.R. Co. in connection with the boring of the Lampong concession, to cover the apparatus and European supervision. The apparatus he understood was the diamond drill. The work was done by Mr. Hastings, and later by Mr. James Barr. He could not say off hand how much the diamond drill cost the company. He had the proxies used at the meeting of Aug. 16. His lordship allowed Mr. Braddell to put in the proxies of the eight Chinese nominees. Witness continuing said that he did not know who typed them. There was another block of typewritten proxies also in favour of Mr. J.A. Russell. They were by a number of European shareholders. Is not the typing and the paper the same as those Chinese proxies? —The typing is substantially the same and the paper is I think the same. His lordship examined the proxies. Mr. Braddell drew the attention of the court to the fact that the stamps were cancelled with a single tick. Witness was next questioned on the Directors’ minute book. The dates of the meetings held were Sept. 1919, the next meeting was in January 1920, the next in May, the next in September, the next November. The next meeting of directors was February 15, 1921, the next in April 1921, the next June 10, 1921, the next Dec. 16, 1921. From June 10, to Dec. 16, 1921, there was no meeting of directors. In addition to meetings of directors opinions of directors were obtained by circular. Whenever that was done those opinions were filed in what was called the directors’ file. Between June and December 1921 do you find in the directors’ file anything in connection with the changing of the financial year? —No. There is no mention of it. So that the company’s year was altered and the law was broken, but you can find nothing about it either in the minute book or the directors’ file? —No. Mr. Ivens said that Mr. Braddell could have full inspection of all the files of the company if he wished. Mr. Braddell said that up to now he had been unable to secure full inspection of the companies documents. Witness, in reply to Mr. Braddell stated that the file he was referring to covered the period of Jan. 20, 1920 to May 12, 1922. Mr. Braddell said that he did not want to put in the file in evidence if it was agreed to leave it in court for what use counsel could make of it. Because whoever the unfortunate party who was going to appeal in that case might be, he did not want the task of typing the whole of that file. It was agreed to leave the file in court. Mr. Braddell asked whether in the file between Aug. 25 and Oct. 16, 1920, there was any reference either to the G.B.B. option or to the assembling of the Expedition party. Witness said that there was no direct reference to Goenoeng Batoe Besar. Now you start from Oct. 16, and go on to Nov. 18, and search? —There is no reference to G.B.B. until we come to Nov. 19, when we have a notice calling a directors’ meeting. Now you look at the minutes of directors’ meeting of Feb. 15, 1921? Now, will you tell the court that the letter of Russell and Co. in January is gummed to the minutes of Feb. 15? —That is so. I think, Mr. Brown, you know that the shares were actually allotted on Jan. 31, 1921? —That is the date entered in the register. So we have it then that the shares were allotted on Jan. 31, and the directors were asked to confirm that on Feb. 15? —Yes. An Omission In the directors’ file between Jan. 31 and Feb. 15 is there any record that the directors gave any permission for allotment on Jan. 31? —No. The position is that Messrs. Russell and Co. allotted these shares and then got the directors’ permission? —Yes, there was the omission to get the directors’ permission outside the authorisation of Nov. 23. Mr. Braddell drew attention to the minute of Feb. 15: “The allotment of 100,000 shares to be issued as fully paid and numbered 180,001 to 280,000 is hereby authorised. By order of the Board R.P. Brash, A. Grant Mackie (directors).” Witness pointed out that the word authorised was a slip of his and it should be “confirmed.” Witness, asked about the reference to “minutes were read and passed after amplification,” said that it referred to minutes of May 24, 1922. What was the amplification referred to? —Mr. Brash received a letter from Mr. Peck. Do I understand that in the original minutes of May 24 as you put before the board on June 20, you had only headings? —I had a paragraph dealing with Mr. Peck, but it was not full enough and I had not given sufficient details. Do you recollect the circumstances of the meeting of May 24? —I have some recollection. You see the resolution “It was unanimously resolved etc.”?—Yes, but I don’t remember whether it was prepared before the meeting or in the course of the meeting. Cross-Examination Mr Carver: Messrs. Russell and Co. received a salary from the Company? —A fee. That included the whole of the salary of the office staff, stationery specifically purchased for the Company, etc. When you prepare an allotment return would you consider that as part of the secretarial work? —Yes. Would you trouble Mr. Russell regarding such a matter? —No. It is a matter of routine? —Yes. Have you any reason to think that you referred to Mr. Russell before you sent in that return of June 10? —I pointed out to Mr. Russell that I had not seen the agreement of June 10, and that it was not on the file. And I think you ascertained that a letter had been written to Messrs. Drew and Napier on the subject? —Yes. Mr. Carver read the letter which asked the solicitors to send a rough draft of the agreement for the sale of the options to Malayan Collieries. You found out that it had not been done? —Yes. So far as you were aware Drew and Napier had not done what they were asked to do? —That is so. Subsequently they sent it in. When you took over your duties did you find the book-keeping of the office was done in a satisfactory manner? —It was all in a chaos. I took over from Mr. Coutts, and I had one day with him. I could not do much taking over on that one day. I do not want to disparage Mr. Coutts, but he had not done his work in a satisfactory manner? —Yes. I think it was due to lack of experience. So much so you had to edit many of the books? —Yes. An instance was the account showing the Borneo Expedition statement of accounts? —Yes. Do you remember whether the refunds of money by Malayan Collieries to Russell and Co. were made by book entries or by cheque? —By cheque. The accounts showed the dates on which Hastings received the money from Russell and Co. but not the dates on which Russell and Co. received it from the Company. When you took over the accounts you found current accounts both by Russell and Co. and Malayan Collieries at the post office in respect of telegrams? —Yes. In cases where directions as to whom they should be debited were not given what would happen? —They would be debited to J. A. Russell and Co. On second thoughts I don’t think they would send a telegram unless you paid cash or gave instructions. Mr. Carver next referred to a file of vouchers of J. A. Russell and Co. Witness produced a statement of telegram fees incurred by J. A. Russell. A bill for $57 odd was paid by J. A. Russell and Co. That sum had never been transferred to Malayan Collieries Ltd. This statement contained a record of “a telegram to Loxley, Hongkong, $13.10.” That was paid for by Russell and Co. Witness produced another account from the post office from June 16 to June 30, and from Sept. 25 to Sept. 30, paid by J. A. Russell and Co. and never transferred to Malayan Collieries. There was a telegram there to Hong Guan and another to Lim Boon Keng both of which were paid by Russell and Co. There was another such document which included two telegrams to Hong Guan in October, one on Oct. 2, two on Oct. 4, and one to Soutz on Oct. 5. Mr. Braddell remarked that in that statement there was a telegram “Emarco Singapore” which had not been disclosed to him. Mr. Carver said that that telegram had not been found although a search had been made. It referred to the E.M.R.C.’s office in Banjermassin. The court adjourned at this stage for lunch. Borneo Expedition Expenses. I think you have now verified the fact that the expenses incurred by Russell and Co. regarding the expedition were subsequently refunded by cheque? —That is correct. Referring to Hastings’s salary, you have extracts of counterfoils of Russell and Co.’s cheque? —Yes. They show the payment for September to December to Hastings at the rate of $550 a month? —Yes. The October salary was paid twice? —Quite correct. The Malayan Collieries had paid as Hastings’s salary for October $500 twice? —Yes. After Mr. Peck raised these questions one of these $500 was refunded? —Yes. Continuing, witness stated that the whole of the Borneo Expedition expenditure was transferred to Malayan Collieries. Since Mr. Peck raised these questions a part of it had been refunded by Russell and Co. He produced a counterfoil of a cheque relating to $60,000, drawn by J. A. Russell and Co., debited to suspense account. He also produced an extract from J. A. Russell and Co.’s cash book showing a refund of $60,000 on Nov. 20. The next document he produced was an extract from a pass- book of J. A. Russell and Co., which showed that Hongkong Bank debited $2.88, and $60,000, the debiting of a cheque of $10,000 on Oct. 9, and the crediting on Nov. 20 of $60,007.27. That was the old $60,000 plus interest. He also produced an extract from Russell and Co.’s pass book showing a cheque of $10,000 debited, which referred to the sum loaned to Hong Guan, payable on demand at 10 per cent. interest per annum. Have you ascertained from the account whether the Company in the past has spent anything in buying options? —I have gone carefully through the book but I can find nothing. Can you find any traces of expenses in connection with prospecting? —No. I could find nothing very substantial. Have you looked to see any payment made by Malayan Collieries in respect of any analyses made by the Straits trading Co? —No. I think you did find $75 paid in connection with this analysis made by the Municipal analyst? —Yes. It was paid by an order on petty cash? —Yes. Signed by Mr. Russell and handed out in actual cash? —Yes, from Mr. J. A. Russell’s cash box. Considerable sums seem to have been spent on stores taken over at G.B.B? —Yes. Can you say exactly how much was spent? —About $1,500. The Lampong Concession. Mr. Braddell: I think you would like to give more information regarding the boring at Lampong? —The E.M.R. Co. paid Malayan Collieries, Ltd. That fee included the expenses of boring plant, the boring party of twelve, supervision, and the final visit of Mr. James Barr, general manager of the Company, and his report. If there had been another European it would have cost more? —Possibly. Do you know now the cost of a diamond drill? —I am told by Mr. Barr that one of them costs about £1,500. The wear and tear on a diamond drill is said to be very heavy. Messrs. Russell and Co. acted as secretaries to other companies besides Malayan Collieries? —Yes. Exactly the same staff is employed? —Yes. From those other companies Russell and Co. received fees? —Various remuneration. How many other companies? —Three or four. Before you came here you were thoroughly conversant with company work? —Yes. And you were familiar with the necessity of filing an agreement with the allotment return? —Yes. The allotment was made in January 1921, and the directors confirmed that in February 1921? —Yes. At the time you observed that, did you not also observe that grave omission of the absence of any agreement to file with the allotment? —Yes. I went to Mr. Russell and told him about it. In due course this agreement was given to you? —It came up under cover from the lawyers. It came up for execution. Who executed it on behalf of Malayan Collieries? —Mr. J.A. Russell and Mr. Henggeler. Who executed it on behalf of Russell and Co? —I witnessed it. It is signed “J. A. Russell” and who signed that? —Mr. J.A. Russell. Now Mr. Russell executed on behalf of both parties? —Yes. Did Mr. Russell know that you were going to file that with the allotment? —I don’t think he understood it. He did not know sufficient company law. Did you not tell him that it had to be filed? —I don’t remember. Am I right in saying that between September—December 1920, and January 1921, Russell and Co. were being paid $2,500 by Malayan Collieries? —Yes. Am I right in saying that keeping the books is a principal part of their duties? —Yes. I suppose you had to refer to Mr. J.A. Russell a good deal with regard to these accounts when you took them over? —No. The accounts were in arrears and I had to make them from the documents with the assistance of the staff. Any suggestion that books could not be made up without the assistance of Mr. Coutts would be wrong. About a Telegram In the course of Mr. Braddell’s re-examination of Mr. Brown, regarding the charges on telegrams paid by Russell and Co., his lordship remarked that the cost of a longer telegram was less than the cost of the shorter telegram which was missing. Mr. Braddell said that was precisely why he wanted to see the original of that shorter telegram. The original telegram was found to be missing from the file of original documents. Witness admitted that some telegrams referring to Malayan Collieries had been paid by Russell and Co. and those amounts had never been refunded. Regarding the analyses, he said that $75 was paid for G.B.B. coal and $100 for Seboeckoe coal. Regarding the $60,000 cheque referred to, he said there was nothing in the books connecting this $60,000 with the E.M.R. Co. The letter of credit given to Hastings and drafts under that credit were refunded by the Malayan Collieries. There was only one account of J. A. Russell and Co. in the Hongkong Bank and that was J. A. Russell’s account. There was no separate account of Mr. J. A. Russell. Witness was handed a pass-book containing the name J. A. Russell and Co. His lordship: Do you want to amend your previous answer? Witness: I all along thought there was only one account. That account, as far as I know, has been in the name of J. A. Russell. I was not aware of the alteration. Has this company bought any coal property beside G.B.B? —No. What was the approximate total cost of the Borneo Expedition? —The expedition and incidental expenses incurred cost about $11,000 or $12,000. The stores amounted to about $1,500, in addition to the above figure. And all that was paid either directly or by transfer by Malayan Collieries, Ltd. Mr. Carver: Does that $11,000 include the expenses of the subsequent party which went to take over the mine? —Yes. Mr. Braddell then closed his case subject to putting in later certain correspondence referring to Seboekoe. Reply to the Defence. Mr. Braddell submitted these new pleadings in the form of a reply to the defence set up by the 1st and 2nd defendants, as follows: - 1. The plaintiff joins issue with the 1st and 2nd defendants upon their defence herein. 2. The plaintiff says that the 1st and/or 2nd defendants on or about June 10, 1921, caused a return of allotment of 100,000 shares in the 3rd defendant company to be made to the Registrar of Companies as required by section 38 of the Companies Enactment, 1917, wherein the consideration for which such shares had been allotted was stated as follows: - As expressed in the agreement for sale of property and rights in coal concession at Goenoeng Batoe Besar, between J. A. Russell and Company and Malayan Collieries Ltd. and dated June 10, 1921. The said agreement was filed with the said return of settlement and is the document a copy of which is marked “G” and attached to the plaint herein. The plaintiff says accordingly that the 1st and 2nd defendants cannot now be heard to set up the defence pleaded in paragraph 8 and 10 of the defence herein, viz: -that the 1st defendant as a partner in the 2nd defendants bought the option of the 1st October, 1920, from the said Ng Hong Guan on the 3rd October, 1920. 3. The return of allotment of the following 69,000 shares was false and fraudulent viz: - 17,500 Khoo Whoo Chuan 8,000 Poey Yew Teck 8,000 Poey Yew Bee 6,500 Lim Jee Soo 1,500 Yee Boon Hap 500 Lim Low Hoo 12,000 Tan Hong 15,000 Tan Hoe Soon The plaintiff says that the said 69,000 shares were owned by the 1st and/or 2nd defendants and that all the said alleged allottees were either mere nominees or fictitious persons. 4. The plaintiff says that the 1st defendant represented to the directors of the 3rd defendant company at the meeting of the 23rd November, 1920, pleaded in paragraph 22 of the plaint herein, that the transfers of the said option of the 5th October, 1920 by Ng Hong Guan to Khoo Woe Chuan and by the latter to the 2nd defendants, were genuine and bona fide transactions. 5. The plaintiff says that the 1st and 2nd defendants were entrusted with the general administration of the business of the 3rd defendant and were well aware that the 3rd defendant was in need of a coal-mine of the description of Goenoeng Batoe Besar and had been actively searching for such a property for some 3 years prior to October, 1920, and that at an annual general meeting of the shareholders of the 3rd defendant company held on the 15th Oct. 1920 the 1st defendant told the said shareholders that two properties were then under examination with a view to their acquisition or the acquisition of one of them by the Board of Directors of the 3rd defendant company. By the said two properties the defendant meant Goenoeng Batoe Besar and Seboekoe. 6. The plaintiff says that: - (i) the representatives sent to prospect and report on the said coal concession at Goenoeng Batoe Besar as provided for in the said option agreement pleaded in paragraph 6 of the plaint herein, were Messrs. England and Brickman, employees of the 3rd defendant, together with a Mr. Hastings who was being paid by the 3rd defendant for the said purpose; (ii) the said 3 persons prospected the said concession between the dates the 25th October and the 1st November 1920 so far as the said England and Hastings are concerned and between the dates the 25th October 1920 and the 9th November 1920, so far as the said Brickman is concerned; (iii) in order to carry out the said prospecting coolies and tackle of the 3rd defendant were used and in particular a bore was sunk by the said Brickman with a diamond drill belonging to the 3rd defendant; (iv) the cost of the prospecting expedition to the said concession at Goenoeng Batoe Besar were borne by the 3rd defendant; (v) on or about the 9th November 1920 the said Hastings made a written report upon the said concession to the 1st defendant; (vi) on or about the 10th November 1920 the said England reported verbally upon the said concession to the 1st defendant; (vii) on or about the 20th October 1920 the 1st defendant asked the managing director of the Straits Trading Company at Singapore to cause an analysis to be made by the analyst or analysts of that company of a sample of coal from the said concession at Goenoeng Batoe Besar and on or about Nov. 1, 1920 the 1st defendant received the said analysis; (viii) the 1st defendant obtained the said analysis for and on behalf of the 3rd defendant; (ix) on or about the 16th November 1920 the 2nd defendant gave or sent to Mr. J. P. Halloway of the Singapore Municipality three samples of coal from the said concession at Goenoeng Batoe Besar for the purpose of having them analysed; (x) on or about the 21st November 1920, the 2nd defendant received the three analyses made by Mr. A. G. Harrington the Municipal Analyst; (xi) the aforesaid three analyses were obtained by the 2nd defendants for and on behalf of the 3rd defendant who paid therefor; (xii) the said option pleaded in paragraph 6 hereof was exercised not by the payment of the sum of $60,000 therein mentioned but by the payment on or about the 24th November 1920 of $200,000 by the 3rd defendant. (xiii) the arrangements for the said sum of $200,000 were made by the 1st defendant on or about the 18th and 19th November 1920. 7. The plaintiff says that in consequence of the aforesaid promises and of all the other facts in his reply and in the plaint herein pleaded the 1st and 2nd defendants cannot be heard to say that they bought the said option for themselves and sold it to the 3rd defendant. 8. The plaintiff says that if the 1st defendant did as a fact buy on behalf of the 2nd defendants the said option over Goenoeng Batoe Besar as pleaded in paragraphs 8 and 10 of the defence herein (which the plaintiff does not admit) then such purchase was a breach of duty by the 1st and 2nd defendants and amounted to a fraud upon the 3rd defendant and each and every shareholder therein other than the 1st and 2nd defendants. 9. The plaintiff prays a declaration that the said option of the 5th October 1920, must be held in equity to be and at all material dates to have been the property of the 3rd defendant and that the 3rd defendant is in consequence the owner in equity of the 80,000 shares mentioned in the said agreement of the 10th June, 1921, being all the shares therein mentioned save the 20,000 allotted to the Eastern Mining and Rubber Company Ltd., and the plaintiff claims the return of the said 80,000 shares together with all dividends paid thereon and interest at the rate of 8 per centum per annum on such dividends from the date of their respective receipt until re-payment, and the plaintiff makes this last claim on the alternative made to the plaint herein. The Defence Opened Mr. Carver in opening the case for the defence stated that he agreed with one point raised by Mr. Braddell in his speech and that was with regard to the importance of that case. It was vitally important, not only because of the reasons which his learned friend mentioned but also because of the direct and specific charge of fraud which was made against Mr. Russell and his firm of Russell and Co. Russell was a gentleman who had built up a considerable commercial business in this part of the world by many years of hard work and to him this was a very serious thing. Further than that his learned friend had set up certain legal propositions, which he ventured to think would, if they were sustained, strike at the root of a great deal of commercial practice of this place. To show what he meant he wished to read two extracts from the speech, according to the notes made at the time by Mr. Shearn. One extract was: It is no answer for a director to say “I must be allowed to deal with my usual business. He (Russell) can buy tin properties, but so long as he is a director of Malayan Collieries he may not buy coal mines, because that is the business of Malayan Collieries.” Another extract was as follows. “The managing agent of a coal mine who is managing his own business cannot in law buy and sell to the company. A director cannot do so except by and in virtue of article 92 or a similar article.” Mr. Braddell’s argument as counsel read it was thus: That while Mr. Russell was a director of this company, whose business is ?araly coal mining, he cannot buy up any coal mine. In his capacity as director he is prevented not from selling a coal mine, but from buying one. When they came to the firm of Russell and Co. they were likewise prevented from buying and selling to the company which they managed. Now if that proposition was true with regard to coal mines then it would be equally true with regard to tin mines and rubber estates, and counsel submitted that they could prevent any person who was a director of a rubber estate from buying a rubber property or a manager of a rubber estate from doing a similar thing or any person who was a partner or agent from doing so. If it was a proposition of law it would go further and prevent a person holding a power-of-attorney from buying shares, or someone else on his behalf doing so. Such a proposition as that, counsel submitted could only arise out of a Confusion between Fact and Law. To develop the arguments under those heads, he said, would come within the province of his learned friend Mr. Upcott, but counsel wished to set down what they contended very shortly. They contended. (1) What a servant may buy for his master would depend on the terms of his appointment. If he breaks the terms of his appointment the remedy is in damage. (2) What an agent may buy for his principal would depend on his mandate. (3) What an agent may sell to his principal would depend on the nature of the agency, and if necessary the disclosure of his position as seller. If these propositions were true they would underlie the whole case and the relationship which existed between, Russell, Russell and Co., and the Company. They knew that Russell was a director and they knew also that Russell and Co. were the agents and secretaries, the managing agents and secretaries. He wished to go back a little to the history of the parties. Mr. Russell himself had long been a speculator in mining land. He came out here some time early in 1900 and he started the firm of Russell and Co. with his two brothers as partners. They were the agents for owners of mining properties and financial agents and secretaries for public companies. Counsel referred his lordship to the “Who’s Who” of the case where the firms for which Russell and Co. were managing agents and secretaries were given. It was therefore clear that whatever the contract between Russell and Co. and Malayan Collieries was it was not a whole-time contract. On the staff of Russell and Co. his lordship would see from the directory there were four gentlemen who were described as mining engineers. So that Russell and Co paid these gentlemen for some form of activities connected with mines. There were two chief forms of mining activity in which they might be engaged, tin and coal, and possibly gold and during the war, wolfram. Counsel next read the articles of a tin mining company for which Russell and Co. were agents and those of Malayan Collieries Limited in order to contrast their primary objects and subsidiary objects. Counsel next read an article from the Malayan Collieries memorandum remarking. “Now my lord that is the article which gives the power to this company to do what might be termed Speculative Business. as opposed to the actual business of carrying on a coal mine. That business is that of dealing with options and it is exactly the same business as that of Russell and Co. Counsel promised to show from evidence that the Company knew this when they entered into the agreement with Russell and Co. It could have been seen in the directory that Messrs. Russell and Co. were employing a staff of mining engineers and it was difficult to see what other activities other than mining they could be engaged in. If Mr. Russell, as Mr. Braddell said, was disempowered by virtue of his position as a director, or secretary or agent, from dealing both in coal and tin mining it was difficult to see what other activity they would have been able to carry on. If that was so counsel would ask his lordship to hold that as servants of this company no terms were implied which prevented them from buying for themselves an option over a coal mine situated in Borneo several hundred miles away from here. Mr. Russell got an option over Batu Arang in 1912. He went to England over that business and acquired the option which he sold to the trustees of the company on an agreement dated June 13, 1913 and he put into his pocket 50,000 shares of Malayan Collieries, Ltd. The Malayan Collieries were incorporated in the F.M.S. in June 1913 with the primary object of working the Batu Arang coal mine. Mr. Russell was from the start chairman and Messrs. Brash and Henggeler were original directors. It was provided also that there should be not less than three directors and not more than nine. Russell and Co. from the beginning of the business acted as agents. There was no agreement as to what their duties were to be. The defendants contended that their duties were the normal business of the company as ordinarily carried out and they contended that by no implication could their duties be extended to exercising abnormal powers. Nowhere in the minutes of the company could they find a definition of the powers of the agent. At 4.20 p.m. court adjourned till this morning, when Mr. Carver continued his address.

The Straits Times, 26 March 1924, Page 9 MALAYAN COLLIERIES. Case for the Plaintiff Closed. Counsel on Serious Issues Raised

The Singapore Free Press and Mercantile Advertiser (1884-1942), 26 March 1924, Page 7 PECK v. RUSSELL. SECOND WEEKS HEARING BEGINS.

THE MALAY MAIL, THURSDAY, MARCH 27TH, 1924, p9, PECK v. RUSSELL Defence Elaborated. HONG GUAN’S POSITION DEFINED Mr. Carver, resuming his address yesterday morning, said that on the previous day he had addressed his lordship on the position of Russell and Russell and Co., as agents, and their relationship with the Malayan Collieries Ltd. He had submitted that the scope of their service and the extent of their authority was to carry on no more than the business of Malayan Collieries Ltd., without prejudice to their own business. He had shown what business they in fact did carry on for themselves. Apart from the acquisition of tin properties Mr. Russell and Mr. Henggeler went in 1918 to South China and when they were in China a company was formed called China Minerals. It was registered in Hongkong and its capital was subscribed by Russell, Henggeler and some others. That company was formed for the purpose of exploring for coal and other minerals in South China. The capital was 100,000 Hongkong dollars, then worth a good many more Straits dollars. Counsel could not put it as high as that it was agreed, but he would show from correspondence that there was at least an understanding that, if the China Minerals found anything worth considering in China it should be offered in the first place to the Malayan Collieries. When the China Minerals exhausted all their capital Mr. Russell, —and when he said Mr. Russell he meant Russell and Co. also, and he made no distinction between the two—had his own employee in China continuing the investigations. That was Mr. James Barr, who was an employee of Russell and Co. at the time. He was employed in China at the expense of Russell and Co. and altogether on him Russell and Co. spent somewhere near $45,000. Now the same arrangement would have applied as before if Mr. Barr had found anything worth offering to Malayan Collieries. But nothing was found and the whole of that money was absolutely lost. The whole of Mr. Barr’s expenses were paid by Russell and Co. and they did not debit a cent of that to the Malayan Collieries and no suggestion was ever made that it was expenditure incurred on behalf of Malayan Collieries Ltd. Counsel next referred his lordship to certain letters of July 1919, which he said were of the greatest importance to that case. The first was a letter written by Mr. R. C. Russell, of Russell and Co., forwarding to Mr. McCall, the manager of Malayan Collieries at the time, certain reports he had received from Mr. Barr who was in China and who had inspected the Longchong coalfield with unsatisfactory results and informing Mr. McCall that it appeared as if his trip to China would have to be dropped as the China Minerals did not seem to have anything worth offering to the Malayan Collieries. The letter also stated that both J. A. Russell and J. A. Russell and Co. had dropped a good deal of money in this affair and reiterating his expression of opinion that these prospecting companies never pay. That, counsel said, was a letter which clearly set out that Russell and Co. were losing money over prospecting for coal properties and it also set out Clearly the Intention of China Minerals to offer to Malayan Collieries any good thing that they might find out. No business man would for a moment conceive that China Minerals, if they found anything worth considering, should necessarily have put it before Malayan Collieries at cost. In the transaction which was in suit the same thing applied to Russell and Co. Counsel next referred to two telegrams, one to Loxley and Co., Hongkong, inquiring whether with reference to China coal they required McCall as he could leave at any time, and the other from Loxley and Co. in reply to the effect that the coal proposition was not sufficiently advanced for McCall. Continuing, counsel said that Mr. Brown when cross-examined by him had said that he could find nothing in the books to show that Malayan Collieries had spent anything in prospecting for coal properties. In fact counsel would endeavour to show that the company did not spend anything at any time before the Goenoeng Batoe Besar transaction. The most the Malayan Collieries did at any time was to send a man to look out for coal in Malaya at Slim and Enggor, in Perlis and to Trang in ?South Siam. These were alleged deposits which the Malayan Collieries sent a man to look at and they paid nothing in that connection excepting the expenses of the man who went to see them. Counsel said that Mr. Braddell strongly attacked the position he had taken that Malayan Collieries did not spend any money on explorations. Mr. Braddell said that what he said was that what Mr. Carver was now opening was news to him and that the prospecting in Goenoeng Batoe Besar was paid for by the Malayan Collieries. Mr. Carver regretted if he misinterpreted Mr. Braddell’s remark. Continuing, counsel said that Mr. Braddell in opening had quoted from a speech made by Mr. Russell as indicating that the company’s activities did in fact extend to the explorations in China and other places. What Mr. Russell actually said at the meeting of Oct. 19, 1920, according to a reprint from the Malay Mail was that it was the intention of the board shortly to ask for sanction to increase the capital of the company from two million to four million dollars in view of the possible acquisition of other properties by the company. He had also stated that the company’s representatives had inspected coal properties in China and were inspecting two others in the Dutch Indies. So far as China was concerned, counsel explained, it was quite clear that no representative of the company had ever been to China to inspect any coal field at all. Therefore so far as China was concerned it was quite clear that Mr. Russell was not speaking literally. Mr. McCall of the company had been ready to go to China but had not gone because there was nothing worth inspecting by the company. So Mr. Russell had Made a Loose Remark such as any one of them was likely to make in their lives and it was not to be interpreted literally. His lordship: He spoke as chairman at a general meeting. Mr. Carver said that even then a loose remark like that was not to be literally interpreted. Excepting the four properties in Malaya which had been inspected by the company at no expense it had inspected no other property. Counsel then referred to the shareholders, and also to the correspondence with Mr. Stoutz in connection with the Seboekoe property. Counsel submitted that there was nothing in these letters or documents to show that Russell or Russell and Co. were in any way able to commit the Malayan Collieries or that it was their business to commit their capital in the acquisition of speculative mining propositions. Next counsel went back to the position of Russell and Co. vis à vis the Malayan Collieries. They had a lump sum paid for their services which included the provision of an office staff etc. Mr. Braddell had drawn his lordship’s attention to the instruction at the top of the company’s notepaper that all communications should be addressed to J. A. Russell and Co. Mr. Carver drew his attention to the telegraphic address which was given as “Arang, Kuala Lumpur” whereas Russell and Co.’s telegraphic address was “Jar, Kuala Lumpur.” Even though, therefore, there might be some confusion with regard to letters, no confusion could arise regarding telegrams. If a person went to Russell and Co. in any capacity whether to see Malayan Collieries, Malayan Matches or any of the tin or rubber companies, there was possible to be some confusion but that was not a confusion which was solely applicable to Russell and Co. but might apply with equal force to any of the other firms carrying on similar business and the confusion would soon be cleared up by the person declaring in what capacity he wished to see a representative of Russell and Co. Now Hong Guan came to Russell and Co’s office, counsel said, in connection with a Debt due by Him to Russell and Co., and he said that Hong Guan came with a view to obtaining time for that payment of that debt. So far as counsel could ascertain it was on the 5th or 6th September. Nothing of importance happened between that date and the important date, namely the 27th of September when Hong Guan came back with a letter and an offer of an option. If Hong Guan thought that he was interviewing a representative of Malayan Collieries and not Russell and Co. one would have expected him to use in his telegrams the cable address of the company namely “Arang” instead of the address “Jar.” The telegrams of Sept. 29 and Oct. 1 were both addressed to “Jar, Kuala Lumpur.” It was not as if Hong Guan had not the telegraphic address of Malayan Collieries before him when he sent these telegrams because he must have had the chit and the letter of Sept. 27, both of which were on Malayan Collieries paper and which contained the company’s telegraphic address. At that time nobody had imputed any fraudulent motives to Mr. Russell. It was stated that the fraud was committed on Oct. 3 or thereabouts. From that point counsel next passed on to the letter which actually introduced the subject of Goenoeng Batoe Besar to Mr. Russell. It was important to remember that Russell and Hong Guan had been engaged in tin mining ventures for some time and in connection with one of these Russell had stated in a letter that the $15,000 which he paid should be a first charge on the venture. As the result of long correspondence a sum of $6,000 still owing by Hong Guan to Russell was transferred by Hong Guan to Tak Seng Kongsi, Russell getting Hong Guan to guarantee payment as they did not know the Tak Seng Kongsi. Hong Guan gave a promissory note to the Tak Seng Kongsi. The promissory note was important merely to show Hong Guan’s indebtedness and the fact of the previous tin mine ventures in which the parties were engaged. The due date of the promissory note was Aug. 7, and the letter from Russell and Co. pressing for payment was dated Sept. 7, and it spoke of a prior application for repayment of debt. That letter led up to the interview of Sept. 5. At that interview Hong Guan mentioned to Mr. Russell this Goenoeng Batoe Besar concession with a view to getting Mr. Russell to give him some Latitude with Regard to his debt or to stop him for pressing for it. Mr. Braddell had pointed out that before Hong Guan came on the scene Mr. Russell had already had before him the letter of Aug. 25 from Mr. Stoutz to Mr. Henggeler in which there was some mention of this Goenoeng Batoe Besar property. Was it seriously suggested, asked counsel, that in consequence of what Stoutz said in his letter about Goenoeng Batoe Besar Russell became greatly excited and sent Hong Guan to make inquiries and get samples of coal. Mr. Braddell: I suggested that he sent Hong Guan but never suggested that he got samples of coal from the mine in two or three days. Mr. Carver said that if he sent Hong Guan as a consequence of that letter to make inquiries about it it became rather material to look more closely at this letter of Stoutz’s. Counsel said that what Stoutz said in the letter was that a Singapore Chinese company had bought the Goenoeng Batoe Besar property and intended to work it extensively and all else he said about Goenoeng Batoe Besar was disparaging to that property and the coal found there. Anybody reading that letter would find nothing there to show them that this property was worth exploiting as a concession and there was certainly nothing in it to excite Mr. Russell’s imagination regarding the exceptional value of this Goenoeng Batoe Besar mine. Mr. Russell would tell the court that on that letter from Stoutz he took no action with regard to Goenoeng Batoe Besar, and that his action was based on the information given to him by Hong Guan. Mr. Braddell had dealt with Hong Guan as an agent. He (Mr. Carver) was willing to accept that suggestion that “Hong Guan was the agent of the company as they say or agent of Russell and Co. as we say.” Mr. Braddell: Do you admit that he was an agent? Mr. Carver: Yes, I am willing to admit my learned friend’s attitude. But it is a fine distinction. Mr. Russell might have intended Hong Guan to obtain this option for him but had nothing to hold Hong Guan to that position. His lordship: Do you mean that Hong Guan might have changed his mind? Mr. Carver: Yes, my lord, we had no writing to show that he was an agent. For instance Hong Guan might have gone away after his conversation with Russell and having obtained a valuation of the land at Russell’s instigation he might have turned round and said that he was the seller of the option. It was perfectly open to Hong Guan to obtain the option and to say that he did not agree with the view that he was agent of Russell and also to point to the fact that Russell had nothing in writing to show that he was agent. Whether it was the firm’s business or the company’s business dealing in options of this kind was a Highly Speculative Business and there were many mistakes which might occur. Counsel continued that it was therefore necessary to get people like Hong Guan to bring options. If they were treated generously they were more likely to bring good things to the same dealer. He did not think that it required much imagination to see that if a dealer in options was not generous he would not go very far in his business. Going back to the interview of Sept. 5, counsel said that Hong Guan spoke to Mr. Russell about Goenoeng Batoe Besar, promised to bring an option to Mr. Russell together with the particulars. The particulars were contained in a report which was evidently supplied to E.M.R.Co., sometime previously and it stated that the coal was fair, the mine was favourably situated for production, that the production for the time being was small being only 50 tons, that labour difficulties were being experienced and that there were certain restrictions on navigation. This report was evidently not authenticated. If it was suggested that those unauthenticated particulars had fired the imagination of Mr. Russell and had created a great desire to secure Goenoeng Batoe Besar he failed to see why Mr. Russell did not obtain it for himself from the very beginning. If counsel’s submissions were correct Russell of course had a perfect right to do that, and there was no need for any subterfuge at a subsequent date. If that was the document which excited Russell’s ambition, and if that was the document which struck Russell’s mind so strongly then counsel submitted that he would have acquired the property for himself, but the actual fact was that it struck him nothing more than a matter that might be inquired into. His lordship said that no part of that document had been read in the opening. Speculative Dealers Mr. Carver said that in this case his attack on it was premature. He referred to the document in connection with the information which Russell had about this property in September. Counsel summarised his submissions so far as follows: (1) Russell and Russell and Co. were, both before and after the formation of Malayan Collieries Ltd., speculative dealers in mining properties. (2) They had spent considerable sums of money in investigating speculative coal propositions. They never claimed any reimbursement in respect of any such expenses by Malayan Collieries. (3) That Malayan Collieries were miners proper and never spent any money on coal speculations. (4) That Hong Guan had mining dealings with Russell and Co. and Russell personally. (5) That Russell and Co. had spent their own money in connection with these mining dealings and were pressing Hong Guan over debt. (6) That Malayan Collieries had nothing to do with the Paka concession and spent nothing in connection with it. (7) That Hong Guan came to Russell personally in connection with that debt. Continuing, Mr. Carver said that so far there was no ground whatever for the suggestion that Russell made any request to Hong Guan or that he did in any way bind him to be an agent of the Malayan Collieries. That was the case for the plaintiff covered by paragraphs 1-19 of the plaint where it says that Hong Guan was the agent of the Malayan Collieries from the beginning. What he had stated was the first phase of the defence. The second phase dealt with the negotiations for, and the acquisition of, this option. Mr Russell’s money at this time was very largely invested in Malayan Collieries shares. He had 52,558 shares in the company worth $25 each. The total share capital of the company at that time was 150,000. If Mr. Russell desired the acquisition of a mine he would have at the same time considered how to pay for it, and if it involved a large payment it would have been desirable from his point of view to make arrangements for such payment without having to go to the realisation of shares. His lordship would appreciate the fact that if a person of Mr. Russell’s position, knowing that Russell and Co. were the vendors to the Company, threw his shares on the market, it would have a far greater effect than if it were done by any ordinary person. In addition to paying a large amount of money it appeared at the time that there might be some hitch in the negotiations as was disclosed in the telegrams and the only Possibility of Acquiring the option might have been by turning over to the Malayan Collieries if there was any hitch. That was contemplated in connection with the China explorations as well, and if therefore that kind of thing happened it was still more desirable to arrange for Mr. Russell to have to pay part of the money in Malayan Collieries shares. In talking to Mr. Hong Guan Mr. Russell told him that if he obtained a proposal a condition should be stipulated and inserted in the option that part of the consideration should be paid in Malayan Colliery shares, and he also told him that the proposal should be made in writing. His lordship would appreciate that Hong Guan did not obtain this proposal but brought the particulars in the form of an offer. There was nothing known as to the price that might be asked. What Mr. Russell did was to ask Hong Guan to go and see the people in Singapore and if any proposal was made it should be a condition that part of the purchase money should be payable in Malayan Collieries shares and that he should have to get the proposal in writing. What Hong Guan did when he went, counsel had no evidence to prove, and his only evidence was with regard to what happened when he got back with the document of Sept. 25, in which it was suggested that part payment should be made in Malayan Collieries shares. The obvious explanation of that was that Malayan Collieries had no shares because a company could not own its own shares although it could issues fresh shares. The issuing of fresh shares of the company meant a subdivision of its profits among a larger number of people. Whereas Mr. Russell having this large number of shares in his hands it was quite natural he thought that he should stipulate something like that. Being a heavy holder he would be adversely affected by any fall in the value of the shares if he went into the market for realisation. Nothing further happened until Sept. 27, when Hong Guan came back and saw Russell again. He brought with him this letter of Sept. 25 and Russell did not get it till Sept. 27. This document required Russell to pay $1,250,000 in Malayan Collieries shares at par and that was very much more than the whole of his holdings at the time. Mr. Russell found that that document was of no good to any one and he discussed with Hong Guan certain Other Coal Properties among which Hong Guan mentioned Teh Weh. He told Mr. Russell that he could get a longer term free option over that. Mr. Braddell: Can we have what Hong Guan told Mr. Russell? I do not want that confusion which we had yesterday repeated again. Mr. Carver said that he was perfectly at liberty to say what passed between Russell and Hong Guan to show for what purpose this document of Sept. 27 was given. Mr. Braddell; If my learned friend if going to give evidence of what Hong Guan said through Russell then he must call Hong Guan. He can give general evidence on what Russell said. I know from the documents which have been disclosed that Russell was after Teh Weh. This could be got out of the documents without repeating what Hong Guan told Russell. Mr. Carver said that he would not say what Hong Guan said but he was content to have it recorded that Teh Weh was discussed. Possibly other properties were also discussed. That was how that letter of Sept. 27 came into existence. Mr. Braddell’s suggestion was that the chit of Sept. 27 was given to credit Hong Guan in the eyes of the Eastern Mining and Rubber Co., and the letter of Sept. 27 was written to Hong Guan as agent conveying his own instructions. Mr. Carver submitted that Mr. Braddell had invoked the letter of Sept. 27 as a letter in which Russell was alleged to have used Malayan Collieries name to procure something for himself. Mr. Braddell had started by saying that the chit of Sept. 27 was a chit of credit and the letter of the same date Russell’s private instructions to the company’s agent. If those were Russell’s private instructions given to his agent how could his learned friend say that by writing in Malayan Collieries name he procured something for himself. If Mr. Braddell’s argument was that the letter was written in order to influence the E.M.R.Co. what became of his theories with regard to the chit. Why was the chit given? No letter to credit Hong Guan with the E. M. R. Co. directors was necessary. Counsel next referred to the letter containing some reference to the Padang concession to show that Hong Guan was concerning himself with Teh Weh and also other properties. If he could establish, Mr. Carver continued, that this chit of Sept. 27 was not given in connection with Goenoeng Batoe Besar the whole significance of it with regard to this case would disappear. It was, he said, most clearly a document written on behalf of Malayan Collieries. The signature was vital. If therefore that document was given to Hong Guan in order to obtain an option over Goenoeng Batoe Besar clearly he was acting on behalf of Malayan Collieries, Ltd. Therefore the Significance of the Letter was of the greatest importance. At the interview of Sept. 27 Hong Guan produced the report of the E.M.R. Co. mining engineer. The report of Platt Jensen’s was dated Sept. 17. Presumably Mr. Platt or somebody went out between June and September and examined and inspected the property. The report which ran to about 10 pages dealt more or less on the mechanical aspect of the question, or from an engineering point of view. The signature of that report might have given Mr. Russell information of some kind, but the document produced before Mr. Russell was not a signed copy of this but a typewritten unsigned copy. His lordship: I do not think it is suggested that that was all the information he had. Mr. Carver: My instructions are that was all we had. I will endeavour to show your lordship that that was all the information he had. His lordship: Was not there a suggestion that this coal was being burnt by the ships? Mr. Carver, arising out of that question from the Bench, went on to deal with the charter party of the Nanyo Maru which was dated Aug. 6, 1920 in favour of the E.M.R. Co. The date for delivery was set down as between the 1st and 30th September. The actual date on which the vessel was delivered was, however, September 24. The first time that she was back in Singapore with coal was at the time that Mr. Hastings was going to Borneo, and Mr. Hastings sent back some coal. Mr. Braddell wished to know how it was sent back, whether it was by post, and if so he wished Mr. Shearn to see if he could produce the cover. Continuing, Mr. Carver said, referring to the document under consideration that there was no guarantee that any title for the property existed in favour of E.M.R. Co., there was nothing to show that the property had been vested in them. Counsel did not think that any purchaser would accept what was said in the document as sufficient evidence of title on which to put up $60,000. In fact Mr. Russell would tell them that he did not take any samples from the mine, nor did he try to get them, nor was there anything to show that he could have got any samples. After Hong Guan had left, probably late in the evening, Mr. Russell being very busy at the time, could not write his letters till late in the evening when the letter of Sept. 27 was written. It was written on Malayan Collieries notepaper, and if his lordship would notice the name of the clerk who typed it was given as K.H. His name was Keng Huat, and he came to the office with a Mr. Dickinson sometime in August. Mr. Dickinson was employed by Russell and Co. at the time in connection with their tapioca business and this clerk Keng Huat worked with Mr. Dickinson in the same room. It was curious that the letter was found in the Malayan Collieries file. The clerk usually filed letters according to the notepaper on which it was written and unless special instructions were given he chose the notepaper according to the subject matter of the letter. Nobody could remember how this letter came to be in Malayan Collieries paper, but the theory which he wished to put before his lordship was that Keng Huat was a new clerk. He was probably given this letter to be typed from manuscript, and seeing the name of Malayan Collieries in the body of the letter, he assumed that it ought to be on Malayan Collieries paper. That was how it got into the Malayan Collieries file. The same thing happened, counsel suggested, regarding the letter of Oct. 1. Mr. Russell of course noticed the mistake in that case, and told the clerk that it ought to go on J.A. Russell’s file, and that future letters on that subject should be typed on J.A. Russell’s paper. The same clerk typed the letter of Oct. 4, but he did that correctly. That was a possible theory of what might have happened. The court adjourned at 1 p.m. for lunch. Resuming After Lunch Mr. Carver reminded his lordship of Mr. Brown’s evidence in cross-examination that as far as he knew there was only one account of Russell and Co. in the Hongkong and Shanghai Bank and that it was in the name of J. A. Russell. This evidence was challenged and the bank passbook with the name of J. A. Russell and Co. on it was produced. Counsel now found that Mr. Brown was right, that there was only one account, and that it was in the name of J.A. Russell. The mistake had obviously been made in the bank in writing the name on the pass book. Mr. Carver also wished to go back for a minute to those telegrams to Loxley and Co., Hongkong to say that the modus operandi contemplated there was the same as the modus operandi adopted in the present case. If something was found in South China Mc Call was going there to examine it. In fact in the present case England, the mine manager, did go to examine the property. He drew the attention of his lordship to the analogy in the modus operandi. Referring for a moment once again to the chit of Sept. 27, counsel contended that if that were a letter given at the instance of the Eastern Mining and Rubber Co. to Hong Guan by the Malayan Collieries to credit him, then one would expect the E.M.R.Co. to take advantage of the document and make their option out in favour of Malayan Collieries Ltd. But they failed to do so. The advantages of doing so would have been obvious to any business man especially having regard to the fact that part of the consideration was to be paid in Malayan Collieries shares. The E. M. R. Co. directors must have seen that if they could get direct contact, and establish direct relations with Malayan Collieries they would eliminate middle profits. Further as prospective shareholders in Malayan Collieries it would clearly be to their interest if they saw to getting the property for Malayan Collieries as cheaply as possible. So it was very extraordinary that if that chit were given to the credit of Hong Guan they found on Oct. 1 the option being made out not in the name of Malayan Collieries but in the name of Hong Guan, and also that where the deposit of $60,000 was referred to it was stipulated that it should be placed to the deposit in the joint names of Mr. Russell and the Eastern Mining and Rubber Co. Mr. Braddell had referred to some difficulty which the banks experienced in dealing with companies instead of individuals. Counsel had heard of no such difficulty and corroborations of that was found in that very deposit which was made in the name of Russell and a company. Further the chit stated “This is to authorise Hong Guan to apply for options,” but there was no direct reference to Goenoeng Batoe Besar. If it was given with regard to Goenoeng Batoe Besar it was difficult to see why it was not directly mentioned or why it should not have been addressed directly to the Eastern Mining and Rubber Co. instead of openly. There was No Evidence that this chit was shown to the directors of the E.M.R. Co. Dr. Lim Boon Keng’s evidence was that it was not shown to him. Dr Birnie’s evidence was that Hong Guan wanted from him an option over the Teh Weh mine. Counsel, continuing, said that he had already directed attention to the form in which the letter of Sept. 27 was written. So far as the matter contained in it was concerned, counsel submitted, that it was an unstudied letter, and carelessly worded, the writer mixing up his own capacity as a shareholder in Malayan Collieries Ltd. with the Malayan Collieries Ltd. This letter was written at a time when there was no object of concealing the conversion of any property of the company to himself. Mr. Russell used “I” and “we” both in that letter, the “I” connected with himself and the “we” apparently in connection with Malayan Collieries. His lordship could not form an opinion as to the intention in Mr. Russell’s mind without bearing in mind, when reading that letter, the close connection that exited between Mr. Russell and Malayan Collieries Ltd. It was nothing unusual in Kuala Lumpur for people speaking to Mr. Russell to call it “your mine” and for Mr. Russell to refer to it when speaking to others as “my mine.” Counsel read the letter which has already been published. It was a curiously worded letter, remarked counsel. How did Russell intend it to be? Did he intend it to be a Malayan Collieries letter or did he intend it to be his own letter? If the choice of note paper in the writing of the letter appeared to be a mere accident as counsel submitted it was, then the significance of that letter regarding this case disappeared, as far as Mr. Russell’s intention was concerned. They could find out the intention in the mind of Mr. Russell from what he did on the next day or a short time after in connection with that very matter, and counsel asked his lordship to bear in mind when reading that letter the telegram which succeeded it. Reading them together, counsel submitted, his lordship could arrive at Mr. Russell’s Intention with practical certainty because a correction in the telegram as to how the cost should be debited was initialled by Mr. Russell himself. The correction was asking the cost to be debited to J.A. Russell’s account. That was two days after the writing of the letter of Sept. 27. The debiting of the cost of that telegram to himself was an act of deliberate choice performed at a time when there was no suggestion that Russell was acting other than in good faith. Everything else being equal a man would not send his own money on another’s business. His lordship would see from this that Russell’s intention when he wrote that letter of Sept.27 was that he was writing on behalf of Russell and Co. The letter in itself showed that he had before him Platt’s report. If it was suggested that it was in consequence of Platt’s report that Russell changed his mind, then why was it that up to Oct. 6, at any rate, he acted in perfect good faith. If that was so, would he have continued to write on Malayan Collieries paper. Counsel next referred to the unsuitability of the original proposal and the suggestion by Russell of the tribute system and then a later document which contained not a proposal for an option but an offer of sale. Hong Guan’s new terms were not acceptable to Russell who wired on the same day to that effect and that led to an interview at Kuala Lumpur between Russell and Hong Guan where the terms that would be acceptable to Russell were discussed and the question of deposit was also gone into. Hong Guan then wrote out a telegram and sent it from Russell and Co.’s office, Mr. Russell signing it. Then the question of the terms of the deposit assumed the greatest importance. Mr. Braddell had contended that the $60,000 which Russell had deposited in the Hongkong and Shanghai Bank was never risked. He (Mr. Carver) contended that under the terms of the contract it clearly appeared that the $60,000 was undoubtedly risked apart from anything that Hong Guan might have said about it. Now Hong Guan went back to Singapore and brought back three documents. Counsel then went on to explain the significance of the option and certain contradictions which appeared to be in the first and second paragraphs. He contended that the meaning of that document was that $60,000 should be deposited immediately in the joint names. That was done very shortly afterwards. Then after a certain period they came to another stage of the transaction. That deposit was to be a deposit in good faith to enable them to do what Hastings did. His lordship: I do not see why you should deposit $60,000 to see whether there was a mine or not. Mr. Carver: Ordinarily I would not do so. Platt’s report said that a mine existed. Even if Platt’s report was accepted further investigation had to be made into the titles etc. and in fact a call was made on the Resident at Banjermassin for that purpose. That was why Russell and Co. wanted that deposit to be made and why the E.M.R. Co. wanted it was perhaps because they wanted to see and feel that there was money about in the transaction. Mr. Carver here read from the option which we print below to facilitate reference. Option The option dated Singapore Oct. 5, is as follows: - This option is given to Mr. Ng Hong Guan to send his representative to prospect and report on the coal concessions at Goenoeng Batoe Besar, Dutch Borneo, of Messrs. Eastern Mining and Rubber Co. Ltd., within a period of five weeks after the arrival at Goenoeng Batoe Besar of the s.s Nanyo Maru No. 1 or any other first steamer on condition that he deposits the sum of $60,000 in the joint names of Messrs. J.A. Russell and Eastern Mining and Rubber Co. Ltd. for the option to acquire the following rights:- (1) The right to work the Goenoeng Batoe Besar mine for the period of 60 years on the terms of the lease held by the Eastern Mining and Rubber Co. Ltd. on payment of :-(a) $600,000 in cash; (b) $600,000 in shares of Messrs. Malayan Collieries Ltd. at $30 per share; (c) To pay the royalty to the Eastern Mining and Rubber Co. Ltd as per annexed schedule on the sliding scale according to the output; (d) The completion of this transaction is to take place two months after the exercise of the option by transferring the above-mentioned $60,000 to the credit of Messrs. Eastern Mining and Rubber Co. Ltd. (e) Should the option be exercised the sum of $60,000 shall be deducted from the price of lease consideration and should at the end of the further period of two months the option not be exercised the above mentioned sum shall be forfeited. (f) The option holder or sublessor undertakes as an essential part of his contract to acquire the charter-party relating to the steamer Nanyo Maru No 1 on the same terms and conditions held by the Eastern Mining and Rubber Co. Ltd. (g) To take over the labour force and refund proportionate amount of advances incurred by the Eastern Mining and Rubber Co. Ltd. (h) To pay for at cost all materials, machinery and also for all materials machinery and plant bought as shown in our books as from 1st July 1920 and plant not yet used lying in the store at the mine. (i) In all respects to conform to the conditions of the different lease and the requirements of the Netherlands Indische Government and to guarantee the Eastern Mining and Rubber Co. Ltd., from all losses claims or damage for breach of the different conditions of the lease passed over to the sublessor; (j) The sublessor will pay all the rents due to the Government and royalties of the mine charged by the Netherlands Indische Government now or in future to be levied: (k) After the allotment of the 20,000 shares of Messrs. Malayan Collieries Ltd., the Eastern Mining and Rubber Co. Ltd., has the right to nominate a Director on the Board of the Malayan Collieries, Ltd., and to appoint representatives to check the output of the mine: (l) To take over all the stock of coal already brought to the surface by the Eastern Mining and Rubber Co. Ltd., and shall be paid for at the current market rate; (m) This option is however subject to the approval of the shareholders which the Directors will endeavour to obtain within the period of 5 weeks after the arrival of the s.s. Nanyo Maru No 1 or any other first steamer at the mine at Goenoeng Batoe Besar. This option cancels all previous options. Eastern Mining and Rubber Co. Ltd., (Sd.) P. Keng. Seng, (Managing Director.) His lordship: If the option was exercised they would credit you with that $60,000. What was happen if you failed to complete the transaction? The $60,000 would still have gone? Mr Russell’s Money Risked. Mr. Carver: By exercising the option the deposit was transferred from a deposit into a payment on account. It would then be forfeited by virtue of the terms of the agreement if they failed to complete the transaction. It is therefore quite clear that whatever money Russell put up was risked. Continuing, Mr. Carver referred to Hong Guan’s telegram of Oct. 1 after obtaining that option and reading as follows: - “Fixed up option put deposit five per sent sixty thousand Hongkong Bank in joint names of yours and Easterns money will not forfeit etc.” Counsel said that was an incorrect statement and was not in accordance with the terms of the option. Russell wired back: I confirm arrangement will meet you in office Sunday morning at ten—Russell. meaning thereby, counsel contended, that he confirmed the arrangement which Hong Guan wanted confirmed in the previous telegram in which he said boat leaves tenth visiting you Sunday morning confirm wire Eastern share balance one thousand etc. etc. It was this telegram of Russell’s, counsel said, that the other side said constituted the contract. It was extremely unlikely, counsel said, that Russell would enter into a contract of this kind in that manner. Mr. Braddell said that he would accept that if not for the second telegram of that same date. This telegram read as follows:- “In drawing up option please ask for six weeks from time of boat leaving Singapore as one month insufficient for my men to go and return with report also ask that deposit be with Kuala Lumpur branch of Bank. Russell.” His lordship remarked that it was an unnecessarily long telegram. A Puzzling Document Mr. Carver admitted that it was a document which had been puzzling everybody in that case. His lordship: Reading the telegram again I should say that “confirm by wire” in Hong Guan’s telegram referred to the confirmation of the fixing up of the option. It was not likely that he would ask Russell to confirm the arrangement to see him Sunday morning by wire. Mr. Carver accepted that. He then went on to point to the fact that it was Mr. Hastings who was going to report on the property not Mr. England although England was the mine manager of Malayan Collieries. Russell after referring to the telegrams exchanged between him and Hong Guan (referred to above) writes: I sincerely hope that you will do your very best to get six weeks instead of only one month’s free option, dating from the time of the sailing of your boat to Pamoekan Bay. It would be almost impossible for my man to report to me by cable, while a letter would take just as long to come as it would for Mr. Hastings and the others to get back here themselves. The only safe way would be for Mr. Hastings to return to Kuala Lumpur and make his report to me personally. He would have to get back a few days before the expiration of the free option. I estimate that one month would be insufficient time, but that six weeks would be just long enough. Please do your best to get the free period increased to six weeks. Also please arrange that I pay the 5p.c. deposit into the Kuala Lumpur branch of the Hongkong and Shanghai Bank. It would be much more convenient for me to do this and would make no difference to the Eastern Mining and Rubber Co. Perhaps Mr. Poey Keng would have to come up here, but I think it would be a good thing if he did so, in order that we could have a private talk about future arrangements. He could go out and have a look at the Colliery. If you bring him up I would suggest that you do not bring him up on Sunday, but that he comes later on in the week. However, we can talk over the advisability of asking him to K.L. on Sunday morning when you are here. Perhaps you may think that it would be absolutely necessary for me to go to Singapore in which case there should be no need for Mr. Peng Seng to come here. That, counsel submitted, was quite clearly a letter written by Russell on his own behalf. Hong Guan came to Kuala Lumpur with the option on Oct. 1. Oct. 3 was the Sunday. He saw Mr. Russell with the option and wanted Russell to decide at once whether he would take over the option and deposit the $60,000. The question was discussed as to whether it was in fact an option, whether the deposit would be forfeited or not, and Hong Guan was willing to back his opinion that it would not. Mr. Russell thought that the option was not an option but as Hong Guan stuck to his view and, as his guarantee was not considered a valuable guarantee, Russell took up a paper and drew up a document himself. It was in Russell’s own handwriting. The fact was that while it might not have been an option so far as the Eastern Mining and Rubber Co. was concerned it was an option so far as Hong Guan and Russell were concerned. Obviously the last clause was inserted because somebody thought that the option of Oct. was not a free option. At 4.10 p.m. the court adjourned till 10.30 this morning.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 27 March 1924, Page 6
 PECK v. RUSSELL. THE DEFENCE OPENED.

The Straits Times, 27 March 1924, Page 9
 MALAYAN COLLIERIES. Counsel Replies to Plaintiff's Allegations. Position of Mr. Russell's Firm (N.B. Image not available. Not seen)

THE MALAY MAIL, FRIDAY, MARCH 28TH, 1924, p9 PECK v. RUSSELL Borneo Expedition Explained FOOLISH DOCUMENTS NOT FRAUDULENT Mr Russell’s Nominees. Mr. Carver, continuing his address yesterday morning, said that having addressed the court on what happened on Oct. 3 he came to what was done after that. His lordship was aware of the fact that Russell and Co. paid $60,000 by cheque on the Hongkong and Shanghai Bank and placed it in deposit in the same bank. That money was refunded on Oct. 20 and that money was never paid by or debited to Malayan Collieries Ltd. The deciding factor in the case was whether that money of Russell and Co. was their own money. He had already addressed the court on the question as to whether the money was at risk and counsel submitted that under the terms of the option it was. So far as the deposit notice was concerned it could only be cashed by the endorsement of J. A. Russell. So that although the money was in deposit it was still under the control of J. A. Russell and Co. It was deposited for two months and fell due on Dec. 4. So that it was for counsel to say that that document went out of Russell and Co.’s possession. They next had the document of Oct. 6 which was in the nature of an acknowledgement by Hong Guan of the deposit receipt dated Oct. 4. That showed conclusively whatever the agreement between Hong Guan and Russell vis à vis the Eastern Mining and Rubber Co., the money was subject to the option of Oct. 1. His learned friend argued that on that date the fraud had been committed and he said that by that date the defendant had converted to his or their own use and interest the option belonging to the company and that they did not make an innocent mistake but it was an act of fraud. Now if that was an act of fraud and that by that time he had converted the company’s option for his own interest how could Russell make such remarks as he made at the general meeting of the company knowing that they would be reported in the public press and that they might be taken as indicating that the company had some connection with this option. If Russell had a fraudulent intention on Oct. 3 was it likely, counsel asked, that Russell would have used the words he did two weeks later. Would not his mind have been alert to detect any such reference as that, would he not have been alert also to see that nothing incurred by Hastings in that expedition was debited to the Malayan Collieries, and would he not have taken very good care to prevent Mr. England going on that expedition with Mr. Hastings at all? All these things disposed of the suggestion of any guilty mind in Mr. Russell on Oct. 3. Counsel wished to mention another matter connected with that deposit. Mr. Russell had to Exceed his Overdraft in order to make that deposit. He had already overdrawn to the extent of $828,000 and the limit of his overdraft was $850,000 so that he had to make special arrangements for that cheque for $60,000. In addition to that he had to pay interest on it at the rate of 6 per cent. whereas in deposit it was earning only 1 per cent. On the other hand the Malayan Collieries Ltd. were in credit to the extent of $117,000 at close of business on Oct. 6. it had already been pointed out that cheques of Malayan Collieries Ltd. were signed by the agents and secretaries and one director, Russell had the power to operate on that account if he wished to do so and had authority to draw a cheque for $60,000 on Malayan Collieries account. The power was given to him by a resolution of the board, recorded in the minutes of July 30, 1913. On the material which he had so far placed before his lordship on this point counsel asked his lordship to draw the following deductions. (1) That Russell and Co. were at liberty to buy coal options. (2) Russell and Co had nothing to gain by putting the option in their own name and paying $60,000, if they were dealing with Malayan Collieries, and that their position was such as to render it entirely impossible for them to claim reimbursement from Malayan Collieries had the option proved valueless. Counsel did not think there was any need to labour the point as they had before them the past dealings between the two parties and the correspondence relating to them such as R.C. Russell’s letter to Mr. McCall. Supposing the mine had proved useless, supposing Russell and Co. put forward a claim for reimbursement of $60,000, supposing it was paid and the item appeared in the balance-sheet was it conceivable that the shareholders would not have objected to such a transaction? His learned friend’s contention was only tenable if Russell and Co. at the time had the knowledge that the mine was a proved mine and that the option was certain to be taken up. Counsel submitted that Russell had no authority to enter into a transaction on behalf of Malayan Collieries had he wished to do so. He had not got the sanction of the directors and he would show the court that as a single director he had no authority whatsoever. That was shown by article 112 of the articles of association of the company. Russell was never The Managing Director of the company but only the chairman of directors. If Russell had been appointed the managing director of the company then he would have had the powers of the board himself, but he had no such power at the time. Russell being only a member of the board it was outside the scope of the authority of Russell and Co. as agents and secretaries to pay $60,000 of the company’s money on a gamble. Continuing, counsel submitted that the transaction had been concluded and the option belonged either to Malayan Collieries or Russell and Co. Whatever happened after that could not affect that. He was not dealing for the moment with the question of estoppel. The option now belonged to either the one or the other. What followed next was the revision of the option of Oct. 1. Whoever owned the original option also owned the revised option. Instead of Hong Guan getting the unsigned document which the court would remember signed, he brought with him this revised option. The importance of that option (published yesterday) lay in the extension of the period to five weeks. It was a curiously worded document and was not very clear. It was, however, plainly stated that the $60,000 was to be deposited as option money for the exercise of the rights. It could have been put more correctly by saying “for the right to exercise the right to the option.” There was no variation in the first and second clauses, but the clauses which had been added were those at the end of the option. Counsel asked his lordship to bear in mind in considering these that they were not Mr. Russell’s additions but the additions made by the E.M.R. Co. And there were two matters in these additions which called for comment. One was the reference to the allotment of Malayan Collieries shares and the other the right to nominate a director. b As regards allotment the word clearly was not used technically. There was no object in the E.M.R. Co. stipulating the allotment of shares rather than for the transfer of shares. If they were getting transfer shares they were getting something better than if they were getting allotment shares. The allotment of shares presupposed additional subscription to the company’s capital. It was evident that the E.M.R. Co. by introducing the word allotment never intended to break away their rights. Counsel also submitted that the untechnical use of the word allotment was also disproved by the E.M.R. Co.’s own subsequent action in connection with the bonus shares. The position was that the Malayan Collieries had decided to issue one bonus share to Every Five Held and also allow the right to apply for fresh shares at the rate of $16 per share. Both were valuable rights. The right to subscribe was also valuable because the shares then stood at $25. The E.M.R. Co. wanted the rights to these shares. They wanted both sets of rights, for bonus shares as well as for the new shares. Counsel here referred to the correspondence which took place at the time on the subject. The E.M.R. Co. did not get their bonus shares but they knew that the capital of Malayan Collieries was being watered by the issue of these shares. They knew that if their contract was with Malayan Collieries something was being done which would greatly reduce the value of their consideration. His learned friend had argued that they knew that they were dealing with Malayan Collieries and that was why they made no enquiries. Counsel submitted that the reverse of that proposition was the truth. Mr. Braddell said that he had assumed that what the directors of the E.M.R. Co. told the shareholders in public was true. If it was now contended that the directors were acting publicly in one way and doing another thing subterraneously then he would not rely on what they said. Mr. Carver said it was a matter that he could not test. If his learned friend was willing to retain that argument on what the Eastern Mining Co. thought in the matter he was willing to accept that. What the directors said in the matter did not much matter. If that argument was retained, counsel contended that the direct reverse of that was the truth. If the Eastern Mining thought that they had a contract with the Malayan Collieries it was their interest to see that the Malayan Collieries shares were not blown up. His lordship did not think they could take what they thought as evidence. Mr. Braddell said that they put against him what they subterraneously thought and he put against them what they said publicly. Mr. Carver said that was how it all started. Paragraph 19 of the plaint involved what the Eastern Mining thought. That was what set the whole train going. On the face of that Mr. Shearn rightly decided that he could not possibly neglect that plea. Since it started, it had become a sort of ever widening and vicious circle. It was An Intolerable Position for his lordship to be put into. His lordship said that what the Eastern Mining Company thought could not be relevant. Mr. Carver said that if his lordship kept that issue in balance that was all what he and his friend asked. Mr. Braddell said that what they wanted was to take out as much as was inadmissible from the whole thing. Mr. Carver continuing his argument, said that if it was a fact that the E.M.R.Co. had direct contractual relations with Malayan Collieries it would be a gross fraud on them if the Malayan Collieries as soon as they entered into the contract blew up their shares. No court of equity would tolerate such a thing and the Eastern Mining Company were well aware of that. What happened next? When these new shares were issued five were delivered absolutely free to every holder of one share and that added 30,000 shares to the company’s capital. There was no consideration for that. Counsel suggested that that would have been a matter which concerned the E.M.R.Co. if they had a direct contract with Malayan Collieries. The next claim against him in connection with this same document referred to the stipulation made with regard to the nomination of a director. There it was in the document that the Eastern Mining and Rubber Co. had the right to nominate a director and to the appointment of a representative to check the coal output of the mine. As regards checking the output of the mine it referred to the Goenoeng Batoe Besar and not to the Malayan Collieries. That was because they were being paid partly by royalty on the output. Now Mr. Russell had this document and the ship was sailing not very long after, but on Oct. 14, he had to consider whether he should raise any objections to these clauses or chance it. He could not legally confer the right to nominate a director, nor could the company confer such a right excepting by altering the articles of association. It was certainly true that he had as little right to agree to that on behalf of the company as he had on his own. The question was whether it was worth objecting, and almost certainly he could have passed it through. If he sold eventually to Malayan Collieries, the alteration of the articles could have been stipulated for. If he kept it for himself and floated a company Other than by Sale to the Malayan Collieries it was different. So that Mr. Russell did not in fact in writing back object to the insertion of these two stipulations although he did object to the stipulation mentioned in “N” namely the option being subject to the approval of the shareholders which the directors promised to endeavour to obtain before the date of the expiry of the option. He did not bother to take exception to the other clauses. It was easy for a lawyer to attribute undue importance to the clauses E.L and M. A lawyer thought of the legal side, whereas the business man was much more interested in the business side of the situation. Russell made a somewhat similar offer to Stoutz and that of course was quite as unsound legally as the arrangement with the Eastern Mining Company. The word in the phrase was “to nominate” not “to appoint.” Counsel did not know how the ordinary man would read that. He left it to his lordship to say that. What they did was another matter. Counsel next referred to the correspondence relating to the nomination of Poey Keng Seng to the place vacated by Dr. Lim Boon Keng on the board and the reply by Russell and Co. to the effect that the board did not intend then to add to their number. Counsel read the articles of association dealing with the appointment of directors. He added that the directors themselves filled up vacancies on the board and the appointments were confirmed at the general meeting of the company. That being arranged the next thing that happened was the arrangement for proving the mine and the ascertainment of its value etc. On Sept. 28 Russell started making preparations for the expedition for Borneo. It had been contended with regard to that, that, as Mr. England, the manager of the company, was going with his assistant, and as they were new to the country and did not know the different languages, Mr. Russell had arranged that Mr. Hastings should be lent by the company to accompany the expedition as manager interpreter, Mr. Hastings knew Chinese. As his lordship was perhaps aware Seboekoe and Goenoeng Batoe Besar were both about the same distance from Singapore and they were reached by first going to Goenoeng Batoe Besar and then changing there for Seboekoe. On Oct. 1 Russell told England, after the exchange of the telegrams fixed up the option with Hong Guan that Hastings might have To be Withdrawn from the expedition and counsel pointed out that in his letter later Mr. Hastings was mentioned as going to G.B.B. but not Mr. England. On Oct. 4. Mr. Russell rang Mr. England up, matters having developed and the deposit of $60,000 having been paid, and told him to send Mr. Hastings back. That was done and Mr. Hastings came back to the office to take instructions from Russell. On Oct. 5, England came to Kuala Lumpur, complained of Hastings being taken from him, told Russell that it would be very difficult for him, and suggested that the two expeditions might go together if they could get accommodation for the two on the Nanyo Maru. England was told about Goenoeng Batoe Besar, that it would be offered to the Malayan Collieries if it were a useful proposition. Another advantage which England might gain by looking at Goenoeng Batoe Besar was that he might make a comparison after looking at the mine at Seboekoe. It was therefore arranged at that interview that if accommodation could be obtained the two parties should go by the Nanyo Maru, that Hastings should inspect G.B.B. while the ship was there, and that Hastings should go to Seboekoe also if he had time, but that he should bring a report on G.B.B. on time even if it meant cutting out Seboekoe from his programme, that England and Brickman should go on to Seboekoe in any case taking Hastings with them if he could go. A main feature of this part of the case was whether this expedition was one or two expeditions, whether it was a joint expedition, whether it was Russell’s and partly Malayan Collieries’, and counsel would show the court what evidence there was in support of his contention that it was a joint expedition. On Oct. 5 Russell telegraphed Stoutz to the effect that England and Brickman, of Malayan Collieries, were leaving to inspect his property and asking him to be ready to meet them. On the same date he wrote that England from the Malayan Collieries and Mr. Hastings from his office were leaving. Now if Russell had any fraudulent intent at that time would he have made that confusion at all. The obvious explanation was that he was drawing distinction between the capacities in which England and Brickman on the one hand and Hastings on the other were visiting Borneo. If there was fraud in his mind would Russell have employed England of the company at all in that expedition? When the expedition started they found Hastings writing to Mr. Russell and the letter showed that he was entirely preoccupied with Goenoeng Batoe Besar and hardly at all about Seboekoe. The next thing that happened was very much more suggestive. On Oct. 21 or a couple of days later they had a letter written from Banjermassin which showed very clearly that England was worrying about Seboekoe and Hastings about G.B.B. There Hastings was worrying about investigating the title to the property and Hastings wrote that Mr. England was very disappointed with what he had heard about Seboekoe and almost considered it a waste of time to go there. Where G.B.B. was concerned it was Mr. England who saw the Dutch authorities. Where Seboekoe was concerned it was Mr Hastings who was disappointed and thought it a waste of time to go there. Mr. Braddell enquired whether during this time there had been any correspondence between England and the Malayan Collieries or England and Russell and Co. as none had been disclosed to him. Mr. Carver said that there was one letter by England in November. Mr. Braddell said that that was long after the expedition, but what he wanted to know was whether there had been any letters written by England during the expedition. It appeared to him that England did not write at all. Mr. Carver admitted that that was so. There was no correspondence between England and the company or Russell and Co. England, counsel continued, was quite clear about the point in his evidence and with the permission of the court he asked Mr. Shearn to read five pages of his evidence taken on commission dealing with the matter. Mr. Shearn read the evidence with a few explanatory remarks. Mr. Carver continued that Mr. Ho Man now came into the scene. He was a very big Chinese miner and mining speculator and on Oct. 5 Russell told him about the Goenoeng Batoe Besar option and the expedition. He also told him that it was the intention to give it to the Malayan Collieries if it turned out well, and suggested that if the Malayan Collieries did not want it Ho Man should join him in making use of the property. Mr. Ho Man thought favourably of the proposal and in fact obtained the men who formed the boring party which accompanied the expedition. The expedition started from Kuala Lumpur on Oct. 11. Mr. Braddell drew the attention of Mr. Carver to the evidence of England where the letter referred to Mr. Ho Man as the kepala. Mr. Carver said that the mistake was In the Solicitor who put the question to England and probably England did not know Ho Man before. Continuing, he said that the expedition stopped at G.B.B. for six days from Oct. 25 to Nov. 1 and then came back to Singapore arriving on Nov. 6 which happened to be a Saturday. They did not see Mr. Russell till the 8th or the 9th. Hastings arrived on the same day as England. They returned together. Now, after the expedition left Kuala Lumpur and before it reached Singapore the general meeting of the Malayan Collieries of Oct. 15 was held and the two properties which Mr. Russell spoke about at that meeting must have been G.B.B. and Seboekoe. If it was true that Russell had told England that Malayan Collieries would have first refusal of G.B.B. it was perfectly natural that England should have inspected the property while he was there. Because if what was contemplated took place he would have been the person to advise the Company as its general manager as to the value of G.B.B. Counsel referred his lordship to the analogy between this situation and the other one in the past where Mr. McCall was ready to go to China to inspect a probable coal field which might have been offered to Malayan Collieries if it had proved valuable. What happened then on this occasion was that England on his way to Seboekoe had heard unfavourable reports about it, such as that it was almost level with the sea, that two lighters had been sunk etc., both from the charts and from the Dutch harbour master, and his coming back without carrying out his operation in Seboekoe was an extraordinary action. Counsel submitted that it was a strong action fully justified by the circumstances of the case, for Mr. Hastings and Mr. England were acting differently. Surely the whole question turned upon this action of England’s. If they were all in one expedition, why should not England have gone to Seboekoe and allowed Hastings to bring his report to Singapore. What urgency was there for England to return at the same time if they were in the same interest? If the expedition was a dual one as he asserted then the position was quite explicable. England must have realised at once the importance of G.B.B. He noticed the many advantages of the mine, its favourable situation next to deep water and the many facilities which it afforded. He could not Get Cabled Instructions from Kota Baroe, so that he came back with Hastings leaving Brickman behind to go on to Seboekoe. Counsel submitted that the decision of England to come back was based on his desire to get back as soon as possible and report the matter to his directors in order that his company got the mine. He could not leave Hastings alone in the field if Hastings represented Russell. Counsel next referred to a certain letter which Russell had written to Poey Keng Seng about a contract to supply 10,000 tons of coal a month. In that letter Russell stated that he could not say anything definitely until England returned from Goenoeng Batoe Besar. Counsel said that the mention of England’s name in this letter was curious. But the obvious explanation was that England was a practical collier. He was the man whose business was to work coal. Secondly the output on which the question of entering into such an agreement largely depended was a deciding factor and this output largely depended on the Malayan Collieries and as to whether they decided to buy the Goenoeng Batoe Besar mine or not. The Malayan Collieries had mining facilities which nobody else had, and if Russell worked the mine with Ho Man they would not have had the facilities necessary for increasing the production of the mine for a considerable period of time. Moreover the opening of a new mine by a new company meant the engaging of the whole staff. So that England’s decision would be the one which would regulate this extra production which was necessary to fulfil the proposed contract. On Nov. 19 Russell continued the correspondence with Poey Keng Seng and stated that one of his engineers had arrived but that the other had been left behind to put down a bore and that he was waiting to hear the result of that bore. In fact what it meant was that he had decided to take over Hong Guan’s option but would like to hear about the bore. That, counsel said, was a loosely worded letter, but it could not affect the situation. The court adjourned for lunch at this stage. Continuing after resumption, Mr. Carver said that Hastings telegraphed to Russell and Co. on Nov. 2, “England and myself expect arrive Saturday all satisfactory.” That was the first information Russell had of the outcome of the expedition. As regard the quality of the coal he of course had a sample sent to him by Hastings on his way to Goenoeng Batoe Besar. On Nov. 9 Hastings sent in his report after arrival. That Report Showed that the mine was undoubtedly a valuable concern, that its situation tended towards economical working and that the quality of coal was suitable for bunkering. That report also showed that Hastings and England had not been working together but separately because the report stated “I do not know what England’s figures would be etc.” If these gentlemen were working together and making one report they would not write in that strain. Russell now appreciated that this coal mine was very valuable. England on arrival did not report to Russell but went straight to Batu Arang. He saw Mr. Russell later on but did not make anything in the nature of a report on the mine. On Nov. 15 Hong Guan came to Kuala Lumpur and a discussion took place which led up to the making of the documents of Nov. 19. There was no doubt at all that Mr. Russell did not want his property to become public property, and the suggestion was made that nominees should be produced in the transaction and it was carried out. Then on Nov. 18 he wrote to Poey Keng Seng to the effect that the option would be exercised. Mr. Braddell said that this was one of the letters which he challenged. He did not want to say that it was false but he wanted to see the original. Mr. Carver said that he could not get the original. He could only prove it by the evidence of Mr. Russell and by the fact that a copy of it was found in Mr. Robinson’s bundle of papers and handed back to Mr. Russell. That letter, Mr. Carver continued, contained the informal exercise of the option which was going to be legally exercised. On receiving this the $60,000 should have ceased to be a deposit and should have been paid over to the E.M.R. Co. as payment on account of the purchase money. The deposit note was then with the Eastern Mining and Rubber Co. and the time for the paying of it was not due. Moreover it was not a transferrable document. What Mr. Poey Keng Seng did was to hand the note back to Mr. Russell getting a receipt for it and Mr. Russell to make the payment not of $60,000 but $200,000 which Mr. Russell was willing to accommodate. Why the E.M.R. Co. wanted this large and increased amount was because they had to deal with the Dutch people. The sum of $60,000 had to be transferred from the joint names, and in what Better Way Could the E.M.R. Co., without much trouble and extra expenditure in the shape of exchange charges etc., do so than by giving the note back to Russell and asking him to pay them the larger sum which they required? Counsel then came to the documents of Nov. 19, those exercising the option, the transfer by Hong Guan to Khoo Wee Chuan and by Khoo Wee Chuan to J.A. Russell on the same day etc. “Now it was extraordinarily foolish to have these documents prepared” Mr. Carver remarked in dealing with these. They did not represent a transaction which actually took place. Khoo Wee Chuan was a nominee of Russell or Russell and Co. It might be that it was very foolish to have had these documents prepared, but it did not follow that they therefore were fraudulent as was suggested. The utmost that could be said was that they might be put to use for a fraudulent purpose. What his lordship had to decide was whether they were or whether they were not used for a fraudulent purpose. Counsel submitted that it was not a fraud to use the name of a nominee merely with a view to concealing the amount of a trader’s profits. It would be fraud if that document were used to induce a contract. If it was suggested that this document was so used it was denied. It was denied not only by Mr. Russell but by the other directors who sanctioned the contract. He submitted that the consideration given in Khoo Wee Chuan’s document was the very consideration which Russell asked the company, namely 100,000 shares. Supposing that document was shown to the directors. It would show that Russell was passing on an option at cost. It would also show, taken at its face value, that apparently Khoo Wee Chuan had bought this option on Nov. 19 and passed it to Russell on the very same day at a profit of a very large number of shares. If it were so it was a peculiar transaction. They had it that this document was never shown to the directors and counsel submitted that if either Mr. Henggeler of Mr. Grant Mackie had seen that document and understood from it that Russell was passing on the option at cost they would have known that Russell had committed a fraud on the company and they could not have kept silent. And then it would have been clear to them that it was their duty to support Mr. Peck. It was almost incredible from a business point of view that Russell would suggest to the directors that he as seller was not making any profit. The Documents Themselves at the date of that meeting were at the office of Messrs. Drew and Napier in Singapore. Counsel could not say whether copies of these documents were made or not, but they were not put before the meeting. Looking at the minutes of the meeting of Nov. 23 it appeared as if the directors understood that Khoo Wee Chuan was a nominee of Russell and not the seller to Russell. As a matter of fact the name of Khoo Wee Chuan was never mentioned at the meeting. In the minutes there was mention of the name of Khoo Wee Chuan in connection with Russell’s option, but it did not say that the option was produced before the meeting. Replying to Mr. Braddell Mr. Carver said that he was going to call the directors. Continuing, counsel said that the adverse effect of these two documents would disappear if it was coupled with the knowledge that Khoo Wee Chuan was in fact the nominee of Russell. If the knowledge existed that Khoo Wee Chaun was Russell’s nominee that would make the profits of Khoo Wee Chuan’s Russell’s profits. So that it would be for his lordship to decide whether this document was in fact used to show to the directors that Russell was the buyer from Khoo Wee Chuan and that it was being passed to the company at the same price. It was not a fraud, counsel submitted, for a vendor to omit what he got at but it was a fraud for a vendor to say that he paid a false price. The minutes of that meeting were not circulated till Dec. 20. There were a number of matters requiring drafting by the lawyers and they were drafted by Messrs. Freeman and Madge. The notice of the meeting was given on telegraphic instructions received by Russell and Co. from Russell. The only directors residing in Kuala Lumpur, at the time, were Messrs. Henggeler and Grant Mackie. Mr. England came to Kuala Lumpur for the meeting and brought with him the document of Nov. 14 which he had previously drawn up. It was not a complete report and it was not addressed to anybody. And no doubt England, as he had said in his evidence, was in a difficulty in this matter. He said that he had never been put in a position like that before. There was Mr. Russell who was his only channel of communication and at the time Russell was the proposing vendor to the company. Directors’ Dilemma His lordship asked whether it was part of Mr. Carver’s case that up to this time the directors did not know anything about this transaction. And that they had to make up their mind somewhat suddenly. Mr. Carver replied in the affirmative. But the directors might have had time until Nov. 29 to make up their minds, that was the date on which the option expired. But supposing they refused the option, then Russell had to consider what had to be done in other directions and would have had to make arrangements with Ho Man or somebody else. It was their case therefore that the directors were faced with a proposition which they had either to take or leave. Counsel submitted that at that meeting Russell did not vote and the parties were then in the normal position of vendor and purchasers, and there was no half-way house between vendor and agents. Either they were vendors and not agents or they existed solely in the capacity of agents. Counsel said his case was that Russell and Co. were never agents for the purpose of such a business as this. His lordship put to Mr. Carver a certain question regarding the legal aspect of the matter and Mr. Carver said that Mr. Upcott would deal with the aspect of the matter which his lordship had in mind. Continuing his argument, Mr. Carver said that when the minutes were circulated Mr. Henggeler asked who Khoo Wee Chuan was and Mr. Russell told Mr. Henggeler that he was a man whom he knew and that he was Russell and Co.’s nominee. Mr. Braddell wanted to know whether that was in writing. Mr. Carver said that it was told verbally. Continuing, Mr. Carver went on to explain what happened when the allotment of shares took place in June 1921. Mr. Russell still being anxious to avoid the public knowing what his profit was, got a number of Chinese names which were written down on a piece of paper some in ink and some in pencil. Those in ink were written down by Mr. Hong Guan and the others by Mr. Russell. Counsel put the document in evidence in connection with the application for allotment. This document showed the manner in which the shares were actually allotted. Counsel submitted that that document the allotment return could not have had any legal effect, he meant that the putting of shares in the name of the nominees could have No Legal Effect unless the contract between Russell, Russell and Co., the E.M.R. Co., and Malayan Collieries had been included. It was not material to the case and it was wrong disclosure subsequent to the transaction. Counsel admitted that Russell, and Russell and Co., did not disclose their profits before the transaction and he submitted that there was no duty to disclose either before or after. The shares were issued in the manner requested by letter and the whole list of names in that allotment, with the exception of Russell, the E.M.R. Co, and Hong Guan, contained the names of Russell’s nominees. Continuing, Mr. Carver said that a letter was written to Messrs. Drew and Napier as soon as the transaction was completed instructing them to exercise the option as soon as the directors had arrived at their decision and a sum of $200,000 was sent by draft. In this connection he referred to a letter written by Messrs. Sisson and Delay to Mr. Poey Keng Seng on Nov. 19 and also to other documents. Thus the option was duly exercised and the property in due course was taken over by Malayan Collieries Ltd. The agreement of June 1921 was made because Messrs. Drew and Napier had forgotten to draw it up earlier. A letter was written to them on the subject but that was not attended to because Mr. Robinson was preparing to go home. Mr. Robinson’s departure was the cause of the delay. When that agreement was drawn up it was drawn up in the form that any conveyancer would draw up a similar document upon the documents as they existed, perpetuating the introduction of the names of the nominees, and it did show the consideration which passed between Malayan Collieries and Russell and Co. That agreement was only the outcome of the existing documents. It in no way led to the contract, nor did it in any way induce the contract. Mr. Peck then opened his charges, apart from the letters which he wrote to the press, at the meeting on May 4, 1922. They knew what action the board took regarding it. They decided that it was no part of Russell and Co.’s duties as agents and secretaries of the Company to secure options on coal properties for the company and that they were at liberty to sell such options to the company. Was it conceivable that they would have consented to adopt the attitude which they did in that resolution if they had the document of Nov. 19 before them and if it had been used at that meeting of directors of Nov. 23 purposely to deceive them? Counsel submitted that under such circumstances these gentlemen would never have allowed that resolution to be passed. At 4 p.m. the court adjourned until 10.30 this morning when Mr. Carver continued his address.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 28 March 1924, Page 6 MR. CARVER'S ARGUMENTS.

The Straits Times, 28 March 1924, Page 9 MALAYAN COLLIERIES. Chinese Nominees and The Profits. Foolish But not Fraudulent Documents.

THE MALAY MAIL, SATURDAY, MARCH 29TH, 192, p9. PECK v. RUSSELL More Documents MR UPCOTT ON THE LAW When the hearing in this case began yesterday morning Mr. Braddell put in a bundle of letters, etc. pertaining to Seboekoe property which had been discovered in one of Mr. Henggeler’s files, with the assistance of Mr. Ivens. There were eight of these documents. Last night, Mr. Braddell continued, Ivens, Hastings and himself visited the offices of Messrs. Russell and Co., and the Malayan Collieries Ltd. where Mr. Brown gave them inspection of the post office vouchers of both the Malayan Collieries Ltd. and Messrs. Russell and Co., and as a result of the inspection of those vouchers they ascertained that there were a number of telegrams which had not been disclosed, but which would apparently be relevant. They included two telegrams to Hong Guan, one of Oct. 8 1920 and one of Nov. 23. In the vouchers both those items were underlined with a coloured pencil. Then there was a telegram in October to Mr. P.E. Hastings which might be important or not. After the inspection of these vouchers in Russell and Co.’s file they went on to the inspection of vouchers in Malayan Collieries’ file. In that they found three telegrams, one to de Stoutz, two to Brickman at Kota Baroe, one of Nov. 8 and the other of Nov. 10. Mr. Brown was present in court and would produce as many of those telegrams as he had been able to get. If it was necessary to give any evidence in the matter he had no doubt that his learned friends would allow him to do so later. These telegrams which he had mentioned were not the only documents but they were the most important. The Main Submissions. Mr. Carver, continuing his address, said that there was only one other topic which he wished to touch upon in opening that case and that was the question of whether Mr. Russell or Russell and Co. had possession of, or controlled a majority of shares in Malayan Collieries on the day the plaint was ?filed. Mr. Upcott would submit that it was the only date which was material. Counsel believed that the amount of the defendants’ holdings a few days after the date was in evidence. The plaint was filed on July 26. Mr. Braddell said that the plaint was presented on that date, but it was lying in the registry awaiting the representative order. Mr. Carver said that he was not quite familiar with the local ordinance to argue on that point. Mr. Shearn said that in that case the special order was to be made under section 22 of the Code. Mr. Carver thought that the action was instituted when the plaint was presented. Mr. Braddell said that the order of representation was in the Miscellaneous Application and dated Aug. 23. Mr. Carver, continuing, said that at the first meeting in May, the company decided nothing. It was quite a colourless meeting. At any rate, at that date it was for his learned friend to show that Mr. Russell had possession of or controlled, a majority of shares. The total share capital of the company at the time the plaint was instituted was 310,000 shares. The total number of shares held by Russell, Russell and Co., and the partners of Russell and Co., which might be said to be under Russell’s control, amounted to 126,744 shares. So that Russell’s holdings, owned and (or) controlled by him amounted to between one-third and a half of the company’s voting power at the time of the institution of the suit. Counsel then put before his lordship the facts which, he submitted, his lordship would find sitting as a Judge. They were: - (a) That Russell and Co. had no mandate from Malayan Collieries to buy the option, and owed no duty to the Malayan Collieries to refrain from buying it for themselves. (b) That Russell and Co. acquired the option for themselves. (c) That Russell disclosed the nature of his interest, though not the amount of his profit, on Nov. 23, and he disclosed the fact that Russell and Co. were the vendors. (d) That Malayan Collieries Ltd., is in possession of the property still and has not thought of returning or rescinding. (e) That these proceedings were begun before the Malayan Collieries Ltd. had determined its attitude in general meeting. (f) When these proceedings were begun neither Russell nor Russell and Co. held or controlled a majority of Malayan Collieries votes. (g) That Russell and (or) his firm did not use the Malayan Collieries to enable them to acquire the option so as to constitute him or his firms the trustees of the company. Mr. Carver concluded shortly after 11 a.m. remarking that Mr. Upcott would address his lordship on the law based upon those findings of fact. The Law Mr. Upcott said that on the legal side of the case there seemed to be two main points. They were: - (1) What is the law applicable if Russell and Co. were trustees of the option? (2) What is the law applicable if they were not, that is to say if they were selling a property of their own to the Collieries? There was, counsel submitted, a preliminary question, and that was, what are the tests in point of law to determine whether Russell and Co. were trustees or not? Counsel considered that point first, and he discussed in that connection the case made out in paragraph 19 of the plaint. And the defendants said that the case in paragraph 19 would be insufficient to establish trusteeship without showing a prior mandate from Malayan Collieries to Russell and Co. to acquire the option. The plaintiff relied on the general mandate to establish the trusteeship desired in this way; that in point of law Russell and Co.’s position as agents prohibited sale by them to the Collieries without discovery of the amount of Russell and Co’s profit and the sanction of a general meeting. He had put the point in several ways. Counsel contended that the application of all that would depend on whether the transaction complained of could be counted as a transaction within the scope of Russell and Co.’s agency. In general principle, counsel doubted whether the general proposition would be disputed. A employed B as an agent to buy rubber. Therefore B could not sell his own rubber to A without full disclosure and consent. But B could, of course, sell to A anything else, such as a house, as an ordinary vendor. The plaintiff’s case was that the transaction came within the scope of the agency. Counsel then proceeded to refer to the cases cited by Mr. Braddell taking them one by one and contending that they did not apply to this case. Continuing, Mr. Upcott contended that what they said was that this question of the scope of the Agency was primarily a question of fact, and it was so dealt with in a case reported in Chancery, 1891. That case established three things: - (1) That an agent cannot make a profit within his agency. (2) That an agent employed outside his agency may make his own bargain, if fair. (3) That the scope of the agency is primarily a question of fact. The defendants had been telling that their case was that the acquisition of this property was neither within the scope of the general agency, nor within the special employment outside the general agency, but that it was an acquisition outside any agency at all, either general or special. It had been suggested that Russell and Co. had a right against the Collieries for immediate re-imbursement of whatever was expended by them in connection with this option; that Russell and Co. could at any time, without reference to the board commit the Collieries to the payment of option money of an undefined amount. Counsel submitted that it was not a sound or reasonable position either from a legal or commercial point of view. It had also been suggested that Russell and Co. had the duty of making options available to the Collieries. That was putting the scope of the agency question in another form. He would say again that it was primarily a question of fact. Put as an abstract proposition of law it would have most remarkable consequences. A house agent with a commission to secure a house for a client would be legally disabled from securing a house for himself. Was such a proposition sound commercially or reasonable? Counsel said that his submission on paragraph 19 was that trusteeship could not be established without a finding of fact as to whether the obtaining of an option was within the scope of Russell and Co.’s general agency. He then passed on to the case in paragraph 20 of the plaint as amplified by paragraph 6 of the reply. He proceeded to argue that the case of estoppel set out in the plaint and the reply could not be maintained. What the plaintiff was endeavouring to substantiate by this estopped was this: a false representation to the Malayan Collieries before Nov. 23, 1920, inducing a resolution to purchase, which would not otherwise have been passed. He contended that misrepresentation was made to the Malayan Collieries, and also that it was long after the date of the resolution to purchase, and therefore could not induce the contract. Counsel next proceeded to discuss the law applicable if he was wrong. For the plaintiff to succeed he must show either that this transaction was ultra vires the company, or that Russell and or Russell and Co., controlled the majority of shares at the beginning of the action. It was perfectly settled law for many years that a company could condone a fraud in itself, or to put it in another way, fraud did not of itself disable the company from giving condonation. It was not necessary, counsel said, for him to establish that every conceivable fraud in the world was condonable. That would be a kind of rash and abstract proposition. Counsel contended that it made no difference whether disclosure came before or after the transaction. If the disclosure came before the transaction that transaction could not be a fraud. There was no reported case to be found allowing a minority to impeach a condonable transaction except where the defendant either controlled an actual majority of the votes at the date on which the action was brought or had used his own votes to turn the scale of voting at a meeting actually held before the action was brought. The hearing was adjourned till Monday at 10.30 a.m.

The Straits Times, 29 March 1924, Page 9 MALAYAN COLLIERIES. . Legal Side of Defendants' Case. Mr. Upcott Addresses The Court.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 29 March 1924, Page 8
PECK vs. RUSSELL. RUSSELL'S ACTIONS EXPLAINED.

The Straits Times, 31 March 1924, Page 9 MALAYAN COLLIERIES CASE. Continuation of The Legal Argument.

THE MALAY MAIL, MONDAY, MARCH 31st 1924. PECK v. RUSSELL Eleventh Day’s Hearing MR UPCOTT CONTINUES HIS ADDRESS The hearing was resumed this morning before Mr. Justice Whitley of the case of Peck v. Russell, which began a fortnight ago. Mr. Upcott, who began his argument on the law applicable to the case on Friday, continued today, reading a long judgement on the question of majorities and minorities. He contended that the fraud referred to was a fraud in the procuring of a favourable resolution, not a prior fraud in the transaction itself:-or, in other words, the defendants’ fraud in procuring the resolution let in a dissentient minority to sue. Counsel contended that neither the general meeting of Nov. 21, 1922, nor the general meeting of Aug. 16, was relevant. The November meeting was irrelevant because the plaintiff had not a right of action at the beginning of the proceedings, and nothing there occurred to give him a right of action which he did not otherwise possess. The August meeting was in the same category, because, taking July 26 as the date on which he started this action, the meeting of Aug. 26 did not declare the company’s attitude one way or the other. Counsel next passed on to show the law applicable, assuming that Russell and Co. were not trustees of the benefit of this option. They then had a case of managing agents, one partner of whom was also a director of the company selling their own property to their company. Counsel then put forward the following contentions: - (1) That Russell was only bound to comply, and that he did comply, with article 92, by disclosing to his co-directors that he was a vendor, without disclosing the amount of his profit. (2) That Russell and Co. had at any rate no higher duty than Russell. (3) That in any case the only remedy would be recission. (4) That in any case the plaintiff has no title to sue unless he prove that the first and second defendants owned and controlled the majority of votes at the date of the beginning of the action. Counsel then dealt at length with article 92 of the Malayan Collieries, Ltd., articles of association. [In our Saturday’s report of the case, Mr. Braddell’s statement regarding the new documents connected with the Seboekoe property should read: “which has kindly been produced by Mr. Henggeler off his file.”]

THE MALAY MAIL, TUESDAY, APRIL 1ST , 1924. ps.9 and 16. PECK v. RUSSELL Third Week of Hearing EVIDENCE STAGE REACHED Mr. Upcott’s Submission on Law. (continued from yesterday’s issue.) Continuing his argument on the law, yesterday, Mr. Upcott for the 1st and 2nd defendants, (Mr. J.A. Russell, and Messrs. J. A. Russell and Co.,) in the above case, referred at some length to the article 92 of the articles of association of the Malayan Collieries, Ltd. He read the article, which is as follows: - No director or intended director shall be disqualified by his office from contracting with the company either as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the company with any company or partnership, of or in which any director shall be a member or otherwise interested be capable on that account, of being avoided, nor shall any director so contracting or being such member or so interested be liable to account to the Company for any Profit realised by any such contract or arrangement by reason only of such Director holding that office, or of the fiduciary relation thereby established; provided always that each Director shall forthwith disclose the nature of his interest in any contract or arrangement in which he is interested and shall not vote in respect of any such contract or arrangement but this provision as to not voting shall not apply to the agreement mentioned in clause 3 of these Articles or to any other agreement in connection therewith or to any matters arising thereout respectively. A general notice that a director is a member of any specified firm or company and is to be regarded as interested in any transaction with such firm or company, shall be sufficient disclosure under this article and after such general notice it shall not be necessary to give any special notice relating to any particular transaction with such firm or company as aforesaid. The first question which arose, counsel said, was, as to whom the disclosure was to be made, and that, he submitted, was not a reference to any decided cases but rather to the interpretation of the article itself. The article was based on the form given in the books. The word “forthwith” was totally improper if it were speaking of a general meeting of the company. It would be rather strange if there were to be such a general meeting because articles 119 and 120 involved a great whittling down of the directors’ powers because they amounted to saying that in every contract in which a director was interested there must be a general meeting. That was rather a curious result. If it was a general meeting to which the director had to disclose, then it was likewise a general meeting at which he was prevented from voting. The law was that there was nothing to prevent an interested director using his votes at a general meeting of the company. Counsel’s main contention was that the plaintiff’s interpretation of that article involved the ousting of a recognised right. If his interpretation was right it must be of universal application and would extend to any contract in which any director was interested. One would expect A Fundamental Right like that to rest on proper law and not on any special provision of the articles. Counsel’s contention was that the word “forthwith” was contrasted with the words “at the next meeting etc.” They both referred to a point of time, but they did not change the fundamental character of the disclosure in any case. Many cases had been cited on this point, but counsel contended that they had no bearing on the present case, because they did not deal with the interpretation of any article. They were cases dealing with the liability of a board of directors in connection with something not allowed by the articles. In both cases he referred to there were found expressions to the effect that disclosure ought to have been made to a general meeting. Counsel submitted that they had little or nothing to do with the question of the true interpretation of article 92 which was a question of language itself. In principle it seemed difficult to see why a co-director should not be an agent of the company to affect his co-directors with knowledge. The next question was as to the nature of the disclosure. Had Russell disclosed the amount of his profit? Counsel submitted that this again was primarily a question of the interpretation of Article 92, and the meaning to be given to the last sentence of that article. That last sentence was as follows: - A general notice that a director is a member of any specified firm or company and is to be regarded as interested in any transaction with such firm or company, shall be sufficient disclosure under this article and after such general notice it shall not be necessary to give any special notice relating to any particular transaction with such firm or company as aforesaid. Counsel thought that it would be hardly disputed that this company had knowledge of the fact that Russell was a member of the firm of Russell and Co. Had he actually given formal notice to his directors that he (Russell) was a member of the firm of Russell and Co. he would appear to have complied with the provisions of the article. It had been said that article 92 did not protect a director against fraud. But it must be remembered that the question whether there had been a fraud or not depended on the measure of the legal duty under article 92. Saying that a director, although complying with the terms of article 92 ought never to have done more, would almost amount to setting a trap. The contention, as counsel argued it, was that the obtaining of options was outside the scope of Russell and Co.’s agency. There was no principle, counsel said, under which Russell and Co. could be made to disclose the amount of their profit. They contended that the application of the rules laid down in Boustead’s would depend on the plaintiff first proving that the transaction was within the scope of the agency. The defendants said that there was no principle under which an agent in matters outside the agency owed any general duty to his principal, and counsel put it rather higher than even that and said that an agent who happened to carry on an independent business on the same commodity could sell to his principal on disclosing that he was a vendor without disclosing his profit. In order to arrive at the proposition whether they could make the defendant account for profit they would have to prove the trustee position, and nothing short of that would do. The facts that might establish trustee position were no doubt very varying. Counsel continuing said that the next question arose as to whether this claim for profit could be put into the form of an action for damages on proof of fraud. He submitted two reasons why even if Russell induced the Malayan Collieries to buy by fraudulent representation an action for deceit would not lie. Firstly because on the evidence they would see that he did at any rate disclose that he had an interest as apart from the amount; and secondly because the case set out showed that it referred to a Secret Promotion Profit obtained by a promoter under circumstances in which the law regarded him as a trustee for the unformed company. Not every promoter was stamped as a trustee at the outset. It must depend to some extent on the circumstances of the promotion. In every case which was put forward as having a bearing on the present position it was most material to show where it was a promoter’s case. Counsel continuing said that the other question which they had to deal with was the question of the majority votes. On that he had nothing to add to what he had already said on Friday. The only other question was that of damages. The court rose at 1.15 for lunch. Question of Damages. Resuming after lunch Mr. Upcott dealt with the question of damages. On the question of damages, he said that if Russell and Co. were trustees to the benefit of the option then the measure of damage would seem to be that set out in re Jubilee Cotton Mills, Chancery, 1923, p. 33. Counsel read a part of the judgement. That would seem to mean that so far as the defendant still had shares unencumbered or undisposed of, they could be ordered to return them if judgement was given against them on a trusteeship footing. As regards the shares disposed of it was a question of value of the shares. Counsel did not propose to enter into the details of the question of how that would apply in the circumstances. Supposing that, contrary to their contention, damages were obtainable here as in an action for deceit, short of proving that the defendants were trustees of the option, that would be damages for fraudulent misrepresentation whereby the company was induced to purchase. The measure of damage, therefore, would only be the difference, if any, between the price obtained by the company and the true value of the property. Counsel submitted that the price paid by Russell and Co. was no criterion of the actual value. They could not be in a worse position than that suggested by Lord Justice Bowen in his dissenting judgement in re Cape Breton Co. reported in 29 Chancery Div. p. 803 et. seq. Measure of Damages. Counsel said that the measure of the damages would not be more unfavourable to them than it was in that case. It might be suggested that there might be fraud found in the present case, but there was no fraud in the Cape Breton Co.’s case. Counsel submitted that absence or presence of fraud could not in itself alter the measure of damage. The company’s real assets were not made greater or less by the motives if the defendants. The court was sitting not to punish the defendants for fraud but to ascertain the real loss to the company. If in this case they had no evidence about the true value it might perfectly be that the company had nothing. Once the case was held to fall short of a trusteeship the position, counsel submitted, would be, firstly that even assuming fraud the plaintiff should either have no judgement at all on the ground that the court would not fix a new price between these parties, or secondly, if he were to have any judgement that could not be more than the difference between the price charged and the true value of the property. Evidence on Commission. Mr. Carver next moved to read the evidence which was taken on commission, and he suggested that in the course of the reading those parts to which exception was taken should be expurgated. Mr. Carver then began to read the evidence of Dr. Lim Boon Keng taken on commission at Amoy. Mr. Braddell referring to a certain passage, drew the attention of his lordship to the admission already made by Mr Carver to the effect that Hong Guan was an agent. Mr. Carver said that what he said was that he was content to take the position that Hong Guan was an agent. Mr. Braddell asked whether Mr. Carver admitted that Hong Guan was Russell’s agent. He did not wish to have the admission merely for the purposes of argument. Mr. Carver said it was a question of fact. His lordship said his recollection was that Mr. Carver admitted Hong Guan was an agent, but he refused to bind him as the agent of any particular person. Mr. Carver said that he stated that the distinction was a fine one. He did not quite know what Mr. Braddell proposed to build on this. Mr. Braddell said that unless Hong Guan got this option for himself he could not sell it. If he got it for somebody else as agent, then an agent could not sell to his principal. If Mr. Carver admitted that Hong Guan was Russell’s agent then he need not be constantly raising the point. His lordship did not think that Mr. Carver’s admission went so far. Mr. Carver said that his submission was that it did not matter. In the course of the reading, several passages were deleted from the evidence. Dr. Lim Boon Keng’s Evidence. Some portions of Dr. Lim Boon Keng’s evidence, quoted by counsel in the course of their opening speeches, have already been published in these columns. We give below other extracts. Dr. Lim Boon Keng, it is interesting to note, was first examined on Dec. 20, 1923, before Judge Meyrick Hewlett at his Majesty’s Provincial Court at Amoy. The examination and cross-examination lasted three days. Dr. Lim Boon Keng, O.B.E., of 64, Pit Kay Sen-rd, Kualangau, examined, in reply to Mr. Shearn, states that he is the President of the Amoy University; formerly lived in Singapore, was a medical practitioner there and a member of the Legislative Council; holds the degree M.B.C.M. and other degrees. In the year 1920 he was the chairman of the Eastern Mining and Rubber Company Ltd. (Hereafter called E.M.R. Co.). He thinks he took an active part for the function he held in the concerns of the Co. In the year 1920 the E.M.R. Co. had agreed to buy a coal concession in Dutch S.E. Borneo called Goenoeng Batoe Besar (hereafter called G.B.B.) and the vendors were a Dutch company. The Dutch company was represented by 2 or 3 Chinese and a Dutch lawyer, so far as he recollected. He thinks the name of the Dutch lawyer was Dr. Birnie. The price payable to the Dutch company was partly in cash and partly in shares of E.M.R. In 1920, he could not remember what month, a large sum of money was payable to the Dutch company as the purchase price of G.B.B. The E.M.R. had not sufficient money to pay for the property. The E.M.R. endeavoured to raise money from its shareholders to finance the purchase of the property. They did not get all they wanted for this purpose. The Dutch company was reminding them that the money must be paid according to contract. The E.M.R. tried to sell to somebody who would take over the purchase in order not to lose the contract. They tried to sell by different members of the Board approaching persons likely to be interested in mines and also gave the information to certain brokers. One Broker eventually found a purchaser. His name was Ng Hong Guan. Ng Hong Guan was well known to him, and was known to the other members of the Board of the E.M.R. Ng Hong Guan married a niece of his wife. Dr. Lim then stated: I see a document dated Sept. 25, 1920, Singapore, signed by the managing director of the E.M.R. I cannot remember having drafted the letter I was present when it was drafted, and I think I had something to do with the drafting: in any case I know about it. That document was, I believe, given to Ng Hong Guan. I see a reference to the shares of Malayan Collieries Ltd. (hereafter known as M.C. Ltd). Part of the purchase price is expressed to be payable in M.C. Ltd. shares. This document (“L.B.K.1”) was the result of long discussions by the directors and forms the offer which was made. I did not know Mr. Russell at the time personally, but anyone doing business at Singapore knew of him as a powerful man in the M.C. Ltd. and a rich man. This document (L.B.K. 1) was our first offer and a basis of negotiation. The Board of E.M.R. would surely have liked cash, especially as we had to take M.C. shares at a price that was high. We would have preferred cash to shares at a high premium. The market price of the shares was, I think, at that time, between 25 and 28 dollars. From what I can remember the only way in which the transaction would be carried through was by part payment in shares. The E.M.R. desired to retain an interest in the G.B.B. after they had sold it to Mr. Russell unless they could get something very big to compensate. That interest was to be reserved by making a royalty payable. I see a document dated Oct. 1, 1920 “L.B.K. 2.” I Had a Hand in drafting this document. I think it was the composite work of those present. This document was given to Ng Hong Guan. I hear you tell me that the plaintiff in this suit is alleging that the option in L.B.K. 2 was given on account of the production to the Board of E.M.R. of a document dated Sept. 27, 1920. I see a document dated Sept. 27, 1920 (L.B.K. 3). I did not ask Ng Hong Guan to obtain any such document as L.B.K. 3 before granting L.B.K. 2. If I had seen L.B.K. 3 and we were dealing with M.C. and this (L.B.K.3) was sent to support the authority of Ng Hong Guan to act on behalf of M.C. Ltd., we would have made out L.B.K. 2 in the name of M.C. Ltd. and E.M.R., and not in the names of Mr. J.A. Russell and E.M.R. The provision that $60,000 was to be deposited was a test to see whether Mr. Russell meant business. I did not see L.B.K. 3 in connection with the G.B.B. Meetings of the Board were of all sorts, formal and informal. The secretary of the company was present at all the formal meetings and some of the informal meetings. We had every reason to think Mr. Russell would sell the option to M.C. if he could prove it was a good mine. The E.M.R. wanted the mine proved and were trying to do so……We wanted the holder of the option to carry out the proving of the mine, which we had started. I hear you told me that the plaintiff in this suit alleges that the deposit of $60,000 mentioned in L.B.K. 2 would not have been forfeited. It was the intention of the Board that the $60,000 should be forfeited. The Board had no intention to give a free option. My reason for stipulating for so large a sum was that we wanted the man who took up the proposition to give a guarantee that he would go into proving the mine and would go into it properly. We wanted him to do it as quickly as possible. It is stated in the option the money was to be deposited as A Deposit of good faith, the idea coming from the other side: before the option holder had a chance to verify our documents and visit the place, the $60,000 was a deposit in good faith. The moment our allegations were proved correct that deposit would then become option money and cease to be a deposit in good faith, our allegations being, we held a lease for 60 years and that there was a mine which was working. Dr. Lim continues: I see a document dated Oct. 4,……(L.B.K. 5.) If it had been shown to me the Board would not have thought of giving a free option. I cannot say what the Board would have done with L.B.K. 5. If L.B.K. 5 had the effect of giving a free option the Board would not have signed. I have already said they would not give a free option. Further Dr. Lim states: I see option dated Oct. 5 L.B.K. 6. I think I wrote down parts of this document; many expressed opinions which were jotted down: if I had written it all I should not have expressed it in this way. I see the period of the option is stated as within a period of 5 weeks after the arrival of the s.s Nanyo Maru. This is an extension over the period mentioned in L.B.K. 2. There was no change in the policy of the Board as to giving free options over G.B.B. I see clause K. gives E.M.R. a right to nominate a director on the Board of M.C. We wanted a director because in the terms of our option we were going to take over 20,000 shares. The Board did not think we could appoint a director to the Board of M.C. We expected to get our nomination considered…..I do not think “allot” was used in a technical sense in clause K. When the option was drawn up we had no idea of dealing directly with the M.C. Further, I see a telegram sent by “Highsea” Nov. 30, 1920. (L.B.K. 7), and I see a letter from the E.M.R. Nov. 30. L.B.K. 8. In the telegrams and letter the E.M.R. claimed rights on the 20,000 shares of M.C. We claimed that in this option we were entitled to old shares but I find these described in L.B.K. 7 and L.B.K. 8 as original shares. I mean by “old” and “original” shares, shares already issued. We claimed bonus shares also. We claimed both and we got “rights.” We considered when the telegram was sent we were entitled to both. Continuing, I see copies of 3 letters…..I remember receiving letters and I think these were some of the letters received by me, especially the one where the quid pro quo is mentioned. I think the letter of Dec. 15 (L.B.K. 14) is the final arrangement arrived at at the time for payment. I see a draft agreement dated Dec. 1920. (L.B.K. 15). I remember such an arrangement was discussed in the offices of Messrs. Sisson and Delay. (To be Continued.)

THE MALAY MAIL, WEDNESDAY, APRIL 2, 1924, p.5 PECK v RUSSELL DR. LIM BOON KENGS EVIDENCE Cross-examined by Mr. Peck The following is the continuation of Dr. Lim Boon Keng’s evidence from yesterday’s issue:- In answer to the question, Can you remember some of the people present at that meeting, Dr. Lim hesitated. The question was then put in the following form. Was Mr. Tan Khean Hock present? Dr. Lim: Yes, I think he was. Was Mr Poey Keng Seng present? Dr. Lim: Very likely he was. Was Mr. Tan Chong Chew?—I cannot say he was present at that meeting. He was often present with his father. I cannot say at what meeting he was present without notes. Mr. Yeo Ban Keng?—He was generally present. The lawyer consulted was generally Mr. Dickinson. He generally met us. In his absence it was one of the partners. There was a final agreement, the terms had been changed often, there was a final to finish up to bring all modifications, agreements and arrangements to date. I thought some agreement was executed, at least there surely was an intention to execute, we did not spend hours at the lawyer’s office without intention to execute. Dr. Lim (continuing): I see a document Nov. 18. 1920 addressed to Poey Keng Seng, L. B. K. 16. At nearly every meeting there was Discussion as to Payment. The terms of the option were varied. I think at least twice, many proposals were made to vary. The variation was in regard to time of payment and details of taking over. Dr. Lim further states: I see document to Ng Hong Guan Sept. 27, 1920 from J. A. R., also I see another document dated Sept. 28 also to Ng Hong Guan from J. A. R., and I see a third document unsigned dated Oct. 1, all 1920 L. B. K. 17, 18 and 19. I have seen many documents from Ng Hong Guan. He possibly showed these to me. Anything likely to be connected with the work we were doing he very likely showed to me. I should not have thought Ng Hong Guan was negotiating on behalf of M. C. Ltd. if I had seen those letters. Obviously I had many conversations with my directors on the subject of G. B. B. I cannot say what each individual co-director thought regarding whether Ng Hong Guan was negotiating on behalf of M. C. Ltd. I did not hear them say anything to make me believe they thought he was acting. Cross Examination. Ng Hong Guan married a niece of my wife. The niece being my wife’s brother’s daughter. My wife’s name is Grace Pekha Lim. Ng Hong Guan’s father’s name is Ng Sam Teck. I became chairman of the E. M. R. in May 1920, but I cannot be sure of the month. I cannot remember when I obtained my qualification shares, it can be found in the company’s books. Poey Keng Seng was managing director during the whole time that I was a director. Yeo Ban Keng was a director the whole time that I was. I purchased 1,000 shares, $50 paid, in the E. M. R. in November 1920. I am not sure whether these were my qualification shares as director because I was a director before these shares were subscribed. I borrowed the money ($50,000) from Mr. Yeo Ban Keng, and I confirmed what he has done for me: Both Mr. Poey and Mr. Ban Keng were very anxious that I should help to collect as much money for the needs of the Company. I said I had no ready cash and they both said, ‘we will find the money for you and I agreed but I did not know how the money was to be obtained. Mr. Poey assured me he could arrange it easily; the result afterwards was the loan as put to me in the question. The $50,000 was borrowed on the security of the said shares and a promissory note, the shares being collateral security. I cannot remember the date, but if I could see the promissory note I would agree that the date was correct as on the note. That promissory note was, I think, for $50,000. I only saw the note once, I think that was the amount. I think the note was signed by Kim Hoe and Co. Ltd. It was endorsed by me. The $50,000 was borrowed in order to pay for the said 1000 shares. I never saw the money. The money was paid by Mr. Ban Keng or Mr. Keng Seng direct to the company. At the date of the making of the said promissory note Yeo Ban Keng was head of Kim Hoe and Co., Ltd. I believe Yeo Ban Keng was also a director of the Commercial Rubber Co. at that date. I think, but I am not quite sure, that Poey Keng Seng was also a director of the Commercial Rubber Co. at that date: my impression is that he was but I had very little to do with the Commercial Rubber Coy. I cannot tell whether, with the exception of Poey Keng Seng and Yeo Ban Keng, any of the other directors of the Commercial Rubber Coy. knew at this time of this loan. I never repaid anything of this loan: my attorney lately, a month ago, wrote and said he had paid something to the amount of interest, so far as I know that is all that has been paid and they asked for further security. At this time a sum of $1000 was paid. The promissory note was renewed on or about Nov. 9, 1923. I think my present holding in the E. M. R. is 1002 shares. I bought the other 2 shares from Mr. Poey Keng Seng: this was the qualification required under the old articles. I acquired them very soon or after joining the board. I Do Not Remember owing anything to E. M. R. when I was one of the directors. I never applied to them for any money. I did not owe the E. M. R. $50,000 during the time that I was director. I do not remember owing them anything; they certainly never asked me to pay them anything; this is the first time I hear I owed them money. I owed the $50,000 to the Commercial Rubber Co. as a result of the arrangement I have already explained. If the books show it I suppose that the Commercial Rubber Co. during the time I was a director of the E. M. R. did owe $53, 528.21 to the E. M. R. I do not know whether during the same time Kim Hoe and Co. Ltd., owed the E. M. R. $30,000. I suppose they might have owed something but I had not the management of the company and do not remember. I do not know who drafted the two circulars to the shareholders of the E. M. R. now shown to me and marked L. B. K. 20 and L. B. K. 21. I know about them and must have seen them: they were probably drafted by the solicitors, the managing director was overseeing the whole thing. I was a member of the Board and as such they were issued with my approval. I think the Mijobouw Maatach ppij Telok Pamoekan (hereinafter called the Dutch Co.) was the owner of the concession G. B. B. which the E. M. R. ultimately sold to M. C. Ltd….I cannot tell off-hand how much the E. M. R. actually paid to the Dutch Co. for the concession but the payment was in terms of written arrangements between the parties. I cannot really say off-hand without looking at office papers and minutes what was the amount actually received by or paid to the Dutch Co. but I remember payment was to be in shares and cash. I suppose some confirmation was done by the Dutch Co.. but I cannot remember the date or place: I cannot remember particulars regarding the amount approved unless I see papers……….I do not remember actual figures and anything we agreed will be found in the actual papers of the company and I will vouch for my approval having been given at the time to such papers. I want to state to make this clear that the Board acted almost entirely upon information supplied by the managing director, Mr. Poey of the E. M. R. who was in touch with the Dutch Co. I cannot remember what was stated in the documents issued to the shareholders but the statements were in accordance with what was supplied to us by the managing director. It is stated in L. B. K. 20 and L. B. K. 21 and I see the sum of $600,000 in cash and $813,000 in shares of the E. M. R. I do not know that the difference between guilders 600,000 and Straits dollars 600,000 was kept by the directors of the E. M. R. and I am entitled further to state that as far as I am concerned at the time I relied entirely upon Mr. Poey for information as to details of our liabilities to the Dutch Co., and this statement of payment in dollars and shares of the company was approved by me in the belief that they represented accurately the terms we were paying to the Dutch Company and I Most Emphatically Declare that I had never any idea of making any profit out (of) the transaction by way of taking advantage of the difference in exchange values of the amounts. I make this statement so that my “Yes” or “No” to Mr. Peck’s question might be understood. [The question was: Was not the difference in cash between guilders 600,000 and Straits dollars 600,000 kept by the directors of the E. M. R. and Mr. Birnie a director of the Dutch Co.] I have no knowledge of any such thing as an instruction to Messrs. Sisson and Delay by the secretary of the company and if such instruction had been sent I am not aware of it: as chairman and director of the company I do not know these things unless special reference was bought to us. I see document Bill of Costs Sisson and Delay (L. B. K. 23) and I see the entry on Nov. 23, 1920. I cannot explain the entry. It was not to my knowledge that the difference was kept as stated but I know from statements supplied by Mr. Poey that shares were allotted to him and others including Dr. Birnie and some shares in my name. I understood also that the shares in the names of Mr. Poey and Dr. Birnie were shares due to them from the Dutch Co. that is as far as I know the position. They were due to them as shares from the Dutch Co. as shareholders of the Dutch Co.; it was my belief the whole time that Mr. Poey was a shareholder or in some way interested. I do not remember what did become of the difference in the cash price, especially as I did not know until now that there was such a thing. I did not receive any of it. I cannot remember the number without reference to books, but a large number of shares according to a list, I think somewhere in the company’s books were allotted to Mr. Poey Keng Seng and others, I cannot say off-hand without seeing the documents and office records whether an agreement in writing dated Aug. 17, 1920 was entered into between the Dutch Co., and the E. M. R. in which the consideration for the sale of G. B. B. was stated to be Straits $600,000 in cash and $813,000 in fully paid shares of 100 dollars each in the E. M. R. There was I suppose Some Agreement but I cannot remember details. There was no statement in any agreement that I approved that I knew at the time was false. I think all agreements binding the company were agreed to at a board meeting. All important agreements received my approval as a member of the board. I cannot tell without looking at books whether on or about Dec. 3, 1920, the E. M. R. allotted and issued as fully paid 8.130 of its shares to the nominal value of $813,000. I suppose the company carried out the terms mention in L. B. K. 20 and L. B. K. 21. I do not remember the date, I cannot remember the details, but I think the names are familiar in connection with this matter as asked in the question, which was whether on or about Dec. 3, 1920, 4,000 out of the said 8,130 shares were allotted and issued to the Dutch Company and the remaining 4130 were allotted and issued to Poey Keng Seng as to 2630 and to the nominees of Poey Keng Seng 1500, that is to say, to Tan Way Ann 500, to Tan Tay Hock 500 and Dr. William Birnie 500. I believe that a return of allotments to the Registrar of Companies showing the allotments made by the company was made by the E. M. R. I cannot remember the exact date I cannot remember the particulars unless you show me the papers form the office. If you say there are two allotments there must be two allotments, that is if the papers of the office have been examined. I think there was a refusal of the Registrar to file the said return on some technical point, something to the effect that no contract in writing showing the title of the allottees of the shares as fully paid up otherwise than in cash. I must add this was put through entirely by the office and if I had been shown it before being sent to the Registrar by the office I must have been assured that the terms were correct. Evidently when the Registrar refused to file the return then only I knew that the office had not complied with the regulations. (Continued on page 9)

THE MALAY MAIL, WEDNESDAY, APRIL 2ND, 1924. p.9 PECK v. RUSSELL Dr. Lim Boon Keng’s Evidence EXPLANATIONS OF TRANSACTIONS (Continued from page 5.) Dr. Lim Boom Keng said: I must see the minutes before I can say whether a meeting of the directors of the E.M.R. was held on Jan. 7, 1921 at which the directors passed a resolution whereby 8,130 shares were purported to be allotted or re-allotted as fully paid up to the Dutch Company, and I want to add that if there was an allotment made by this company, the allotment was always made by board meeting. I attended so many meetings and I missed some meetings that it is very difficult to say whether I was present at that meeting after three years, but it can be found in the records and other documents where they keep the records of meetings. I was present at some allotment, but my presence on a particular day must be determined by reference to the actual meeting. Speaking under affirmation I wish to be precise. We discussed questions at many meetings, some formal, some informally. Dr. Lim states: I see document L.B.K. 22, paragraph 14. As far as I know with reference to para 14 and paras 11 and 12 now that my memory is recalled by re-reading and Mr. Peck having stated what he wants, it may be simpler if I state what I know of this matter as far as he is concerned. Mr. Poey went to Java and fixed up the whole arrangements for the purchase of the interests of the Dutch Company and wanted Mr. Ban Keng and Mr. Tan Kheam Hock and myself to join, and I myself was led to believe he was interested in this Dutch Company and I agreed to join on condition that as little work as possible was thrown upon me. By “join” I mean in helping to carry out the operations of the company as a director, and I expected the office, i.e. the managing director to have all the details examined and put before our solicitors for examination; and Mr. Tan Kheam Hock whom I went to see with Mr. Poey in the first instance made a similar stipulation when he was asked to join the board of E.M.R. And with regard to this particular matter mentioned in L.B.K. 22, paras 11 to 14, I must confess that I was too dependent on Mr. Poey for information; as the documents were in Dutch, I never remember seeing them even, I accepted in good faith what the managing director put before me and I remember, I think, that there was a meeting to do this and I think Mr. Poey said this was to put right a technical legal point and if I agreed to the resolution I was in the belief that the statement set out was a truthful one and in the terms of any contract with the Dutch Company. I can hardly recall this first allotment except in reference to the refusal of the Registrar. I think I do remember the second allotment of the whole 8,130. I do not remember the figures, but suppose they are correct shares to the Dutch Company. I am not aware that only 4,000 out of 8,130 shares were issued to the Dutch Company; my impression is that the shares due to them were issued to them or to their nominees; how many were issued I do not remember; it can be seen in the books. I cannot say, but I suppose it must have been done, it is Purely Office Work and would not be brought to my attention, that there was a new return of allotments sent to the Registrar and filed showing the whole 8,130 shares as allotted to the Dutch Company. The question is an office matter and if they did have it filed it would be recorded in the office. I cannot state that it is a fact that 200 out of the rest of the 8,130 shares have never been issued: I cannot vouch for the exact figures referred to in the question except I remember 700 were in my name. Dr. Lim states: I see para 15 of L.B.K. 22, and continues; I remember this list now: I took it that this was the list of shareholders or nominees in the Dutch Company except in the case of myself as I was not in the least interested in the Dutch Company. I made the transfers almost the same day I believe, for which I never received any consideration whatever and handed them over to Mr. Poey. I left these shares with Mr. Poey and I suppose they are still in his possession and with regard to the others I was in the belief till I heard of the contrary in the proposed litigation against Mr. Poey that these were shares fraudulently obtained, that they were allotted these shares because they had interest in the Dutch Company. Everyone of those names were persons known to me at the time as attending in connection with the Dutch Company and domiciled in Java except Mr. Poey who was related by marriage to some of the people and who made all the arrangements in Java, so when this was put before me I suspected nothing at all that there was anything irregular. I have stated in writing that I know little about the above transaction as the E.M.R. affairs were in the hands of Mr. Poey, the managing director, and I make that statement as I could not without office books, as I have repeatedly insisted, give particulars, but if Mr. Shearn and Mr. Peck could produce as they have done, pegs on which to Hang My Recollection from association I can recall old facts. I have stated that 700 shares were put in my name and I have explained what was said at the time I do not recollect that I claimed shares. I had some correspondence, one or two, about these shares, but I do not file my correspondence and I cannot tell you whether they are destroyed or not. You can get the correspondence from the E.M.R. and as I have no wish to keep back anything from the court I will write and give Mr. Peck my authority to ask for the letters and as far as I remember about the 700 shares it is that the company wrote and asked about the 700 shares in my name if I could give some explanation how they came to me and what I said above is the explanation. I believe Dr. Birnie was acting for the Dutch Company. The following question was then asked: Was your wife allotted 1,000 shares in M.C. Ltd. out of the 80,000 fully-paid shares, being the difference in price between what the E.M.R. received for G.B.B. and what M.C. Ltd. paid for it? In reply Dr. Lim stated: A direct answer to such a question worded in such a manner would be unjust, unfair and untrue with regard to my wife and myself. So if Mr. Peck allows me I make a plain statement of what I know about the matter. In the first place this is the first time I hear 1,000 shares were allotted by M.C. Ltd., to my wife. I know of 500 given to her by Ng Hong Guan as part of the profit in his business of broker, speculator and mine prospector for which business he was financed by my wife and her people, and he told her that he was paid for transferring his option by Mr. Russell in shares and he had asked that part of his due be made out directly in my wife’s name to save a transfer afterwards, and as far as she is concerned or I am concerned the obtaining of these shares had nothing to do with the difference in price between what the E.M.R. received and the M.C. Ltd. paid, and I wish to add that The Insinuation In the question of having been influenced by the allotment of 1,000 shares to do anything for Mr. Russell or anybody is absolutely unjustified, because the gift of 500 shares by Ng Hong Guan to my wife was tendered and accepted by her after the whole thing was completed and without any reference to the business, it was part of the business he was carrying on as mentioned above. She got the scrip sometime after they were issued and if M.C. Ltd. issued 1,000 we never heard of the allotment of the 1,000, my wife never received it. Hong Guan had offered her another 500 when he gave her the first 500 but she never heard anything more of the other 500. The consideration for the 500 was money she had advanced and shares she had acquired in his business. I cannot tell how much cash, but I remember sometimes 2,000, sometimes 3,000, sometimes 1,000: sometimes in cheque, sometimes in cash: it was all a family business, and sometimes by loans of shares to his mother-in-law to be used by him. My wife has not sold any of these shares so far as I know. I cannot remember having seen the report by Platt Jensen Ltd. upon G.B.B. I saw some reports. I cannot remember this gentleman’s name. I was certainly led to believe G.B.B. was A Property of Great Value to E.M.R. from what I heard and from some statements put before me. I cannot remember by whom, but by the office: I had no outside information except from the office. I have written Ng Hong Guan so many letters I really cannot remember or answer the question whether I had any correspondence in writing with Ng Hong Guan prior to Nov. 23, 1920 with reference to the option granted him. I cannot produce the correspondence. I keep no file. I cannot remember the dates, but I had some correspondence with Mr. J.A. Russell. I do not remember dates. I cannot say whether there was any before Nov. 23, 1920. I have nothing to show whether I had correspondence before that date. I gave nothing to Ng Hong Guan directly; if he got anything to show Mr. Russell it was delivered to him by the office. I do not know if anyone gave him the original or a copy of any report on G.B.B. I do not remember. I again see L.B.K. 1 and in reply to the question, and to the question of drafting of this and of all other documents I state I sometimes wrote down names of what the meeting agreed, of what I thought was important; some clerk of the company, the secretary or his substitute, took down what was to be drawn up, nearly everybody present had a share and the result was handed over to the office to typewrite, my share was generally to put the English right. The facts were brought forward by the managing director and the board had no reason to suspect that the managing director who was cautioned repeatedly to be very careful about figures and facts as our documents were not all in Singapore had any reason not to put before them the exact situation. Mr. Poey was the Man Mainly Responsible for the content of all these statements and documents: he had files of papers and documents. I had none, I relied on papers furnished to me by the office. Mr. Poey really ran the business of the company, as managing director. I had nothing to do with the keeping of the documents, I only acted as chairman of the board meetings and attended board meetings. Mr. Poey Keng Seng had authority to carry out the policy of the board without reference to the directors, but he had no authority from the board to commit the company to large and serious business without the board’s sanction. Our way was the usual way companies are run in Singapore. L.B.K. 1 was signed by the man who runs the business. I know at that date (Sept. 25) that Hong Guan was well known to J.A. Russell. I know at that date that J. A. Russell was chairman and J. A. Russell and Co., managing agents of M.C. Ltd. The option letter was given to Ng Hong Guan because he was a broker and said he could dispose of the property for the E.M.R. The affair of getting money by the E.M.R. was known to many people; we were anxious to get money: we approached many people and Ng Hong Guan heard about it and offered to do the business for the company. The board of directors were surely consulted about it. I suppose they approved. Their approval should have been minuted in the company’s minute book. I cannot tell if it was minuted unless I see the minute book, it is the secretary’s business to see that and the managing director and the directors too. L.B.K. 1 again. Question asked: “Who made the verbal agreement referred to in L.B.K. 4 with Ng Hong Guan?” Dr. Lim in reply: I don’t remember what The Verbal Agreement is, but the letter explains that it must be the members of the board. It says “we beg to inform you the verbal agreement made with you this morning” and the letter is signed by the managing director. I suppose there was a directors’ meeting, that morning, I presume so from reading that letter. I suppose I was present. I do not know whether Hong Guan had at that time any shares in M.C. Ltd. I cannot tell you at what price M.C. shares stood on Sept. 25, 1920. As I said to Mr. Shearn I think it was anything between 25 and 28 dollars. I do not remember whether I was shown L.B.K. 3 before Oct. 1, 1920. I do not remember when I was shown L.B.K. 17 or if they were shown. I have seen so many papers. I cannot recollect definitely what papers were put before me, possibly all these were put before me, I had seen many papers. I do not recollect being told the content of these letters apart from the letters being shown to me at the time. I do not know whether Messrs. Sisson and Delay are still the company’s solicitors, but until I left the Colony they had acted throughout. I had many conversations with Hong Guan and many others regarding this particular option (L.B.K.2). The conversations were with reference to the terms. The board of directors was consulted with reference to making the option agreement. I think they approved. I cannot tell you whether the approval was minuted in the minute book. Question was then put: Was the circular now shown to you (L.B.K. 20) sent out to shareholders of the E.M.R? Dr. Lim replied: I cannot be sure and as regards the drafting I have already given a general statement. In a formal prospectus like L.B.K. 20 or L.B.K. 21, seeing references to the Companies Ordinance 1915 is put in I assume that the office had carried out instructions and had had the drafting passed by our solicitors, and the language showed that it had Gone Through Legal Hands. I cannot tell you without looking up books the date of the agreement referred to in the 2nd para of L.B.K. 20, neither can I tell you the date of the agreement referred to in the 3rd paragraph. I cannot remember the date on which the circular was issued. As regards drafting L.B.K. 6 I have answered before in a general statement. It was submitted for L.B.K. 2 owing to the alterations in the terms—periods and so on. I might have seen L.B.K. 19. I now see document dated Oct. 3 and marked L.B.K. 24 and initialled W.M.H.: this document I now see for the first time or a copy. I now see document dated Oct. 4 and marked L.B.K. 25 and initialled W.M.H: this letter I do not remember having seen at all. Some of the general contents I know, such as the $60,000 having been placed in the Hongkong and Shanghai Bank but the other things I know nothing about. As regards L.B.K. 24 paragraphs 2 and 3 I did not know. I know nothing of paras. 2 and 3 neither from that letter nor conveyed to me in any way. I do not know whether Hong Guan had any shares in M.C. Ltd, on Oct. 5, 1920. I made no enquiry. I know he could not buy this thing himself. I believe I was nominated by the E.M.R. as a director of M.C. Ltd., and I believe I was appointed. The appointment was the result of this condition in the option. I explain the word allotment as being used in a loose or general sense without any technical meaning being attached to it, as the whole document will show. Asked for a further explanation Dr. Lim stated the other directors all took part in the discussion and someone might have used the word allotment and it was put down. I would not have used that word myself, if I had the drafting of it myself; but in the combined working I did not cut it out, it escaped my attention. Now you call my attention to it I certainly would not have allowed it. Now that Mr. Peck has raised this question I wish to refer to one telegram shown me yesterday L.B.K. 7 and a letter shown to me L.B.K. 8 and another letter of mine I saw L.B.K. 13 referring to the shares which will explain that the 20,000 shares referred to were “the real M.C. as known to them in October” and when I permitted a work like that to pass I must have been very tired and allowed it to pass as Equivalent to Transfer or receipt. We meant by the “real M.C. as known to them in October” shares already in existence and therefore allotment in the technical sense would have no meaning, would be nonsense. We stipulated for 20,000 M.C. Ltd, shares to be delivered out of the shares already issued and that is why we claimed rights and privileges. By shareholders mentioned in L.B.K. 13, I meant shareholders of E.M. R.; surely not all; at the time I wrote I had some of the shareholders in mind. Some of the shareholders are not directors. We spoke about the matter and the object in L.B.K. 13 was to explain that the shareholders, of course including the directors, insist on the rights. I suppose because they had been told by the directors. I myself told everyone who was interested at the time and I suppose the other directors did too. The E.M.R. had difficulty in raising sufficient money to work the mine themselves and therefore they wish to dispose of it with a profit if they can. Hong Guan offered to negotiate for us if we gave him an option. But as the matter was a very important and serious one and time was an important consideration the company E.M.R. asked for the name of the party for whom he might be working, for none of us thought that Ng Hong Guan could buy the mine for himself: that is why he had to mention the principal. The reason why Mr. Hong Guan’s name was kept in was that Mr. Hong Guan insisted so that his brokerage or profit might be recovered from his principal. The company received nothing from Ng Hong Guan for this option, on the contrary he claimed something from the company for his trouble. This was not Entertained The following question was put: In the Circular to Shareholders (L.B.K. 20) the directors said the G.B.B. property was a valuable one: then why did they give Ng Hong Guan an option over it to make what he liked out of it? Dr. Lim: I have already stated we had difficulty to make arrangements to meet our liabilities to the Dutch Company. It is not true we gave to Ng Hong Guan an option to make what he liked out of it. I find in L.B.K. 1 the amount asked for was $1,500,000 half in cash and half in shares at par, and the second one (L.B.K.5) was $600,000 in cash and $600,000 in shares at $30. The explanation of the difference is that of course as vendors we asked as high a price as we could possibly or anyone was likely to pay us, possibly we put much higher than we ever meant to get, and the other one of Oct. 5 the best terms that we could obtain, and which the position in which we were stood at that time almost compelled me to accept. I must say the board’s acceptance depended on their ability to meet their obligations vis-à-vis the Dutch Company. I believe the Dutch Company was worrying us. A Correction Dr. Lim asks to make a correction. It is in connection with the questions or question relating to the business existing between Grace Pekha Lim and Ng Hong Guan. I stated that she had paid different sums, I think 1000 sometimes, 2000 sometimes and 3000 and I stated sometimes in cash, sometimes in shares given etc. I relied at the time upon the recollection of statements regarding to 1000, 2000, 3000, made by my wife in connection with money paid to Ng Hong Guan. At the time when I made the reply to Mr. Peck I was still under the influence of a feeling of indignation at the nature of the wording of the question put to me. I had repeatedly insisted that I could not vouch for detailed statements without something to recall my memory and I had at that moment the desire to answer quickly as on a previous occasion when I asked for a rest of a minute, to think of the incident of a meeting not specified in date, which I had no means of verifying, occurring 3 years ago, Mr. Peck had asked your honour to note that I hesitated. I made this statement and troubled your honour in order not to make the court in Kuala Lumpur misunderstand my attitude in this matter. I asked my wife this morning what was the nature of the transaction. I told her what I had remembered and she stated I had mixed up the amounts paid. The story is this. She had given her sister-in-law Mrs. S.K. Yin 2000 rubber shares of $1 nominal value each. The nominal value is her valuation, the nominal value was 2/- each. These shares Mrs. Yin was not to sell without her consent as she intended the dividends for the use of the children of her sister-in-law—of Mrs. Yin, and this Mrs. Yin was the mother in law of Ng Hong Guan. She came to ask that consent be given to sell these two thousand shares so that the proceeds might be given to Ng Hong Guan for his business. The 2000 shares were sold for $1000. When this was reported to my wife she was very indignant as she thought the shares would ultimately be worth, if kept, $3000. These statements were said to me repeatedly by my wife for a long time and I heard these figures and as I knew my wife had paid Hong Guan some fairly big sum I thought these were the figures approximately of the amount. On hearing of this statement of my wife I now wish to correct the statements made yesterday as to the payments of the different sums mentioned in my evidence. What my wife paid was a sum of $5,000 paid by me out of money belonging to her as proceeds of the sale of some property belonging to her and I regret at the moment I had overlooked this because I had other money transactions with Mr. Ng Hong Guan. This is the correction I wish to make and I must apologise for the confusion but under the circumstances I really could not help it, speaking without the book, and I make my apology to Mr. Peck, Mr. Shearn and to the court. Mrs. S.K. Yin is not the wife of Dr. Yin but is the wife of Mr. S.K. Yin deceased and a brother of Dr. Yin. After asking about Dr. Yin, Mr. Peck then proceeded with his questions. Dr. Lim continues: I see document marked Copy J. A. Russell and Co., Oct. 6. marked L.B.K. 26. The contents seem familiar to me. I now see document October 20, marked L.B.K. 27. Copy has been similarly marked. I think the E.M.R. wrote this letter. I suppose it is on official paper. It is signed by the managing director Mr. Poey Keng Seng. In that letter “your mine” naturally means M.C. “your mine.” I explain by taking the suggestion you put to me whether this letter was addressed to Mr. Russell in his capacity of chairman or agents of M.C. My answer to that is No. It says here J. A. Russell Esqr., c/o M.C. Ltd. Surely if the Co. had wanted to make sure they were dealing with M.C. Ltd., they would address differently, I should think. I certainly would have put it Messrs: M.C. Ltd., and then Dear Sirs, or J. A. Russell Esqr., Agents M.C. Ltd, or rather J. A. Russell and Co., Agents M.C. Ltd. This being my opinion, therefore I have No Hesitation in explaining that the letter was addressed to J. A. Russell Esq., in his personal capacity, and now I try to explain the information you want—“Your mine,” I said “your mine” must mean M.C. Ltd. The word “Your” being used in a general sense without any idea of a special reference to the option. We were assured by Mr. Russell that he wanted the mine proved, that he wanted to send somebody to prove the G.B.B. Mine and the office writing as laymen naturally concluded that Mr. Russell would probably obtain some people working in the M.C. Ltd., to work for him. I was not aware that he owned any other mine, that he was working any other coal mine in F.M.S. and I presume that the office did not know any better, therefore I say “your mine” must be M.C. Ltd. That is the only explanation I can give, Mr. Peck. I think my statement covers the questions you put especially with reference to the query “was it not written under the assumption that E.M.R. were dealing with M.C. Ltd.,” in writing L.B.K. 27. I think there was an increase of capital by M.C. Ltd., but I cannot remember the particulars unless I have the means of looking it up. This was about Nov. 2, I think. I now see document E.M.R. to Ng Hong Guan dated Nov. 4, 1920, marked L.B.K. 28, copy of which is similarly marked, and I see document marked L.B.K. 29. E.M.R. wrote these letters, they are on their office paper. I recognise it is their official chop. I see document marked L.B.K. 30 dated Nov. 5. I find no heading referring to E.M.R. and no signature. Will you permit me to read this through? It is very difficult for me to say without further corroboration especially as this letter has no heading. All the official letters of the E.M.R. are written on official paper and this being only A Copy Without the Signature of anyone I don’t see how I can say one thing or another. I now see documents marked L.B.K. 31. It appears that Poey Keng Seng wrote this letter. I cannot say the exact date when the increase of capital of M.C. Ltd., was confirmed. If you ask whether it was confirmed I can say it was, and of course in connection with the business of taking over the option. I now again see L.B.K. 16. There is no reason for me to think Mr. J. A. Russell did not write this letter. I can only say I suppose that if this letter was received by the managing director he must have shown it to me. I cannot tell when a letter was received addressed to the office three years ago. I see copy of a document now marked L.B.K. 32, dated Nov. 19, 1920. I suppose Hong Guan did write to E.M.R. this letter of which this is a copy on that date. I cannot remember dates but I accept this as a copy. I cannot tell whether it was enclosed with a letter copy of which is now shown to me and marked L.B.K. 33. This letter of Drew and Napier is dated Nov. 24, 1920. I see in this letter it says enclosed a document which is obviously L.B.K. 32 and if it is a genuine copy then I should say yes. I did not know in Nov., 1920, that Hong Guan had transferred his option to Khoo Wee Chuan. I heard it later when it was made public and when it became known in Singapore, but I cannot tell where I got and how. I heard about it close to the period of the waiting of the completion of the business with us. I do not recollect the particulars why Ng Hong Guan transferred his option to Khoo Wee Chuan but I remember reading about it. I think in a paper, or newspaper or something, issued by the M.C. Ltd. Well, I heard about it at the time. I heard about it but I cannot tell where or how. I say that I have No Recollection. Not remembering what the particulars are to-day I cannot tell you whether I thought it strange that the option should be transferred to Khoo Wee Chuan. Having no recollection of the particulars I cannot say now what I thought at the time. I cannot answer without referring to the books of the company (the E.M.R.) whether any formal notice of such transaction was ever given to the E.M.R. I may know Khoo Wee Chuan by sight but I do not recollect the person from the name now: at any rate he was never an intimate acquaintance, not well known to me personally. I thought he was a merchant or miner in K.L. beyond that I can’t say. I did not know that at that month, i.e. November, I should say the exact date that Khoo Wee Chuan had transferred the option to J. A. Russell and Co., but I had known of this sometime before to-day. I could not say when I heard of this; reading somewhere or hearing somebody. It is months ago either this year or many months ago: this is not a new knowledge. I cannot tell when it came to me: it is a long time ago. I have already said I don’t know when I heard about it: it is a long time ago (this in reply to a query from Mr. Peck. Did you hear about it in 1920?). What is the use of making a guess? If you say is it another month, another week, how would I answer the question if I don’t remember the exact time. It’s a matter that is of very little interest to me personally, that is the reason that I don’t keep it in my mind. I put this in to explain why, and I try to explain why I don’t know this gentleman. My reply to your question, Was any formal notice of the transfer from Khoo Wee Chuan to J. A. Russell and Co. given to the E.M.R. is, I don’t know, please refer to the office. Mr. Carver objected to a passage here but after a long discussion the objection was withdrawn. [A long extract of the evidence here was published.] I see a copy of letter marked L.B.K. 35 and initialled W.M.H. and in reply to the question “Did Hong Guan write to the E.M.R. the letter of Nov. 24?” I state probably he did. A letter to this effect was sent. I cannot remember the exact wording. This is a copy: if I saw his signature I could say more definitely I certainly did not draft the document marked L.B.K. 36 now shewn to me. This must have been done by the office solicitors. I think the circular probably received the approval of the directors, I think including myself. If I didn’t I should put “but I didn’t approve.” When you ask “Did you approve?” I did not approve qua an individual solely but as a constituent of the board. I cannot say when it was sent out unless you ask the secretary of the company. I am assuming that the copies seen by me of L.B.K. 36 are bona fide copies of the document issued by the E.M.R. How can I answer the question “When was this document sent out” 3 years after the transaction and after a consecutive 180 questions. Mr. Peck must think I am a miracle. I am on affirmation and must say things exactly as I know now. Guess work is of no use to you. I must say things as I know them. I now see document marked L.B.K. 37 and in reply to the question as to whether I drafted it I reply No. With reference to para number 4 of L.B.K. 36 as to how the directors of E.M.R. got the M.C. to pay $200,000 at once, it seems to me that arrangements were made with Mr. Russell and if he made over his option with modifications and conditions which he secured for himself would ipso facto be transferred to M.C. Ltd.; this is a short way of putting the fact; that is My Explanation of it. This arrangement was made with Mr. Russell and as for when, just before this document was made. I see document, copy of a letter, marked (24) L.B.K. 38 dated Nov. 19, 1920. I suppose if this is the real copy Poey Keng Seng received this letter from Sisson and Delay. I believe I attended a meeting with Mr. Robinson, Poey Keng Seng and others but I cannot tell the exact date: judging from this letter I have seen, L.B.K. 38, I should say it was round about that date. Very possibly as a result of this meeting Messrs: Sisson and Delay wrote L.B.K. 34, either at that particular meeting or a meeting just before that. I say possibly, that surely meant as far as I can remember now. I suppose Drew and Napier did write to the company’s solicitors L.B.K. 33. I cannot say without looking at the office book whether the letter of which L.B.K. 39 is a copy was sent. I cannot tell you why the resolutions in Agenda L.B.K. 37 do not state who were the purchasers off-hand. I cannot reply off-hand without the necessary references, but I should think that the solicitors or the person who drafted this was depending on some previous information already supplied. I again see L.B.K. 36 and in reply to the question “was not the circular to shareholders L.B.K. 36 referred to above so worded as to lead any reader to believe that M.C. were the purchasers without any intermediary other that Hong Guan—read it again carefully before answering,”—I think the explanation is this-the solicitors who drew this up wanted to give a brief statement to shareholders without setting out in full all the intermediate steps and the many modifications and another reason which I now recollect must be that they were pressed for time; para. 7 asked the shareholders who wished for detailed information to apply to Messrs: Sisson and Delay in the following words “the above statement of facts etc,” and referring these “members who desire any further information to apply to Messrs: Sisson and Delay, the company’s solicitors, who have instructions to furnish it. Members who sign the application without further enquiry must do so upon the basis that they accept the above facts as sufficient etc.” That is my explanation. I expect A Business Document like this must be read in its entirety. I cannot put myself into the position of one who simply glances at the document: anyhow this was drafted by the solicitors of the company and any further enquiries should be addressed to them. You ask me to read it carefully. I have done so, and as a shareholder reading this document, before I come to any conclusion, before I am justified to come to any conclusion such as Mr. Peck asks me to make, surely it is my duty to apply to Messrs: Sisson and Delay for the full particulars and I have no doubt Messrs: Sisson and Delay would have shown all the papers relating to the option from the beginning to the end. I cannot answer a catch question: that is all the explanation I can give. I have lived long enough to know some questions cannot be answered by Yes or No. See para 7 of L.B.K. 36 and my previous explanation as to why J. A. Russell and Co. were not mentioned specifically. The shareholders were told in the circulars that were sent out to them what was the price the company was getting, and for details of the transaction they were referred to the office of the solicitors as by para. 7 of L.B.K. 36, and if they read the notice sent out they should find out all about the transaction and therefore will find out the difference between the price at which M.C, pays and E.M.R. receives. That is my answer; to make it clear I could answer many ways but the effect would be the same. (The question was, were the shareholders told at any time what was the difference between the price at which they were selling and M.C. were paying). With my explanation already made I say Yes, meaning by that that all the information not set out may be found at the solicitors’ office and shareholders are warned by L.B.K. 36, para 7, if they wish to have full information, to consult Messrs: Sisson and Delay. They might have been told verbally apart from this means of information. I said before that information was given to interested shareholders verbally. I suppose they were told by the office people and the directors: it is difficult to say when: many opportunities I suppose. To the question, “is there any printed or written record in existence of their having been so told?” I reply it is a catch question: what would “so told” include? Mr. Peck replies “the difference between the price at which they were selling and M.C. were buying.” Well, I suppose they had a meeting of shareholders to confirm, and explanation must have been given unless all the people who attended were known to have all the information concerning the questions discussed: if anyone who did not know some particulars had asked for information not detailed, his attention at such a meeting would be called to papers. I did not know before any option was given that Hong Guan was to receive $100,000 in M.C. shares at $30 per share if J.A. Russell or his nominees should lease the property. I knew of no such transaction with reference to that question. I did not know at that time of letter L.B.K. 24. I did not know of that arrangement referring to the $100,000. I know that J. Russell was not going to hand over his option to M.C. for nothing and therefore he made profit. It is all set out in the options that half the price the E.M.R. were to get was to be in shares of M.C. Obviously the more the M.C. shares were watered the lower would be the actual price which the E.M.R. would receive. It was every director’s duty to protect shareholders’ interests and the company’s interests. I made no enquiries on what profits were being made by Hong Guan on the option granted to him. I heard about profits being made by J. A. Russell and Company. I cannot say what amount off-hand, it was something big I think. I Do Not Understand the question “Did you take any steps to protect the interest of your shareholders in connection with the watering of M.C. capital?” because the question is worded in such a way that a direct answer must be misleading. It contains, i.e. the question, an assumption that the directors of the E.M.R., having the power to prevent illegal watering of the shares, did not take steps to prevent it, whereas the facts, so far as the directors and their solicitors were concerned was always clear. Mr. J. A. Russell was the principal to whom our option had been granted and he having taken the risk of bringing his $60,000 and the cost of his proving the mine was entitled to dispose of the option to anybody. It was primarily a question for the M.C. this watering of shares: as far as the directors of the E.M.R. are concerned they are surely bound by the option granted to the directors and had never been advised that they should proceed to break up their agreement with Mr. J. A. Russell. Personally, as a large shareholder of the new E.M.R. shares, I would be a sufferer like the other directors, but they did not see they could deny arrangements made with Mr. Russell who had paid the option money of $60,000. I think the final option to Hong Guan, L.B.K. 6, provided for the deposit of $60,000 as a deposit in the first instance. You can add the words “for the exercise of the option”; according to this option L.B.K. 6, the exact words are “for the exercise of the option to acquire the following rights” then follow different clauses 1 (D) and 1 (E) referring again to this $60,000. That deposit was made, I cannot tell you when. You will find that in the office records, I think one of the letters I read just now mentioned it. I cannot remember at what Bank. I think some Bank arranged between Mr. Russell and E.M.R., perhaps a Dutch Bank. I knew this at the time, but it has long ago been cast off from memory. I know the deposit was paid because the option was given to Mr. Russell, and Mr. Russell proved the mine. Without that option money he would not have had the right to do all the things he had done. I really do not know what Bank the M.C. dealt with. I must see the book of the company before stating whether E.M.R. received any letter from any Bank regarding the deposit: possibly they did. I knew at the time about the deposit: the deposit was paid to some bank: the office knew about it and I knew about it. This office knew it, so, I suppose, they must have received a letter. If you say what letter I cannot answer. I see L.B.K. 40, a telegram from Hongkong Bank, dated Oct. 4. I think I saw either the telegram or a copy at the time. I know the deposit of $60,000 was made and I think the telegram was shown to me. I suppose he informed the company and that the company knew where the money was. I mean Hong Guan by “he.” I did not keep the telegram. I had no reason to. The company probably did or rather the company should. Clause D of the option L.B.K. 6, says “The completion of this transaction is to take place 2 months after the exercise of the option by transferring the above-mentioned $60,000 to the credit of E.M.R.” I cannot say whether the money was so transferred, but it was ultimately paid in accordance with arrangements made. Mr. Peck’s Question Mr. Peck: “As a matter of fact did you not arrange for this payment of 200,000 dollars by M.C. Ltd. immediately instead of the transfer of the $60,000 two months ahead.” Dr. Lim: A question that is set like that I cannot answer off-hand without re-studying all the papers and the modifications, etc., but I say that $200,000 were paid in accordance with arrangements made. I again see L.B.K. 33. This explains all that you want. I could not remember the where and how, but this gives the answer to Mr. Peck. In reply to the question being repeated Dr. Lim continues: The arrangements made was “in lieu of the $60,000 payable on the exercise of the option, $200,000 is to be deposited with the Netherlands Trading Society and to be paid by them and released to the E.M.R. only on their deed of concession being registered in the name of the G.B.B. free from incumbrances and in particular free from the charge of 500 guilders, etc.—“ the Bank may so release the said sum when the bank solicitors in Soerabaya advise the bank that the deed of Concession is so registered as aforesaid free from incumbrances.” (Mr, Shearn here asks for it to be recorded the paragraph in inverted commas was quoted from L.B.K. 33). The question put to me was “As a fact you arranged for the payment of 200,000 dollars by M.C. Ltd. immediately instead of the transfer of the $60,000 two months ahead.” I wish to remark that this question as worded could not be rightly answered by a Yes or a No. I must see the office books and the bank account of the company before I can say what became of this particular sum amongst other items. I must see the books of the company before I can answer whether E.M.R. released that money after three years. I cannot keep all the accounts in memory. I must refer you to the books of the company as to whether the E.M.R. wrote to the Hongkong and Shanghai Bank at K.L. authorising its release to J. A. Russell or to J. A. Russell and Company. You must refer to the office records to ascertain whether J. A. Russell and Co. at any time gave out that they had transferred the option to M.C. Ltd. I mean by “you must refer to records” that these are office records which no sane man, I hope, keeps in his head. I have Done Many Things in the past three years and I am busily occupied day and night in the past three years in conducting educational work, and I cannot remember these things; these things have gone out of my memory. Mr. Peck then put the following questions: Did M.C. ever write to E.M.R. authorising the exercise of the option? Dr. Lim: I cannot remember. Mr. Peck: Or informing the E.M.R. that they had purchased it? Dr. Lim: I cannot remember. Mr. Peck: When did you first know that M.C. had anything to do with the option? Dr. Lim: I cannot tell you the precise date, but some time before one of the arrangements was concluded Mr. Russell was in Singapore and told us that he would be able probably to dispose of the option to M.C. Ltd. I think that would be the first opportunity of any definite statement being made to us. It was round about the date given in L.B.K. 16 of Nov. 18, 1920. Mr. Peck: When did you first come to know that J. A. Russell and Co. had anything to do with the option? Dr. Lim: From the very beginning as I have said before. I mean from the beginning of the option being given to Ng Hong Guan. Mr. Peck: How did you come to know it? Dr Lim: I suppose Hong Guan told me and we asked him. Mr. Peck: Did not E.M.R. transfer the concession over G.B.B. to M.C. and not to J. A. Russell and Co.? Dr. Lim: Yes, the E.M.R. did so in terms of contracts, arrangements, modifications of the option sold to J. A. Russell. Mr. Peck: Were not Drew and Napier solicitors to M.C. as well as to J. A. Russell and Co.? Dr. Lim: I suppose they were. Mt. Peck: Did you have any written communications with J. A. Russell or his firm prior to Nov. 29, 1920? Dr. Lim: I cannot say. Dr. Lim: I see copy of a document marked L.B.K. 42 dated Aug. 30, 1921. I don’t know whether Hong Guan wrote a letter of which this is a copy. I was not in the colony. I do not know what he referred to. I attended so many meetings. I attended some meetings when Mr. Hong Guan claimed some remuneration for putting through the sale of the option given by the E.M.R. in connection with the G.B.B. His claims were discussed and the result was minuted, I believe, somewhere in notes. No decision was come to, I think. The nature of the discussion was that that they didn’t see that the E.M.R. was called upon to pay him as he was the option holder and if he wrote this letter on Aug. 30, it was plain that up to that time he had not heard anything from the company. The company had not settled anything with him. I now see copies of three documents marked L.B.K. 43, L.B.K. 44 and L.B.K. 45. Not being in the Colony and having ceased my connection as officer of the company I do not know whether these letters were sent. Mr. Peck: Had Hong Guan been promised any remuneration? Dr. Lim: For what? Mr. Peck (reads from L.B.K. 44): For commission on the sale of the G.B.B. property to the M.C. Ltd. Dr. Lim: My reply is that no limited company can or ever does give verbal promises of remuneration to any person to whom a written option had been given, and I cannot answer what verbal promise the managing director might have made on his own account, two-and-half years, possibly, ago. Mr. Peck: Or on account of the company? Dr. Lim: On any account, and if he did make any such promises they would be absolutely unbinding upon the company without the board of directors’ approval. Mr. Peck: Do you mean to say that promised made by a managing director of a company are not binding on the company? Dr. Lim: I say that that question is not quite disingenuous; if I do not happen to understand English, the English of this, I might say something quite foolish; surely my answer means that within the limits of his duties as executive officer his promise would be binding; if he exceeded the limits, surely no board of directors would consider they were bound by the managing director’s promises. [A long extract from the evidence has already been published.] Mr. Peck: Would that (meeting Mr. England) be in Oct. 1920? Dr. Lim: Yes, it would be about October. Mr. Peck: Was there a third European with them? —Dr. Lim: I don’t recollect, I remember Mr. Hastings very well, he could speak a little Chinese and he brought Mr. England to meet me. Mr. Peck: Did they both go in Oct., 1920, to visit G.B.B.? Dr. Lim: My impression is they left together in the same boat. Mr. Peck: For the purpose of inspecting G.B.B.? Dr. Lim: They were going to see G.B.B. and other mines so I was told. I am speaking from recollection of conversation. Mr. Peck: In your examination in chief you said different members of the Board approached different people likely to be interested in mines and also mentioned the matter to brokers. Which members of the Board did this? Dr. Lim: I should say that what I mean by that reply was that we were expected all to do what was implied in my previous answer. Mr. Peck: You don’t know any more than that? Dr. Lim: I think everybody did their best. Mr. Peck: Whom did they approach? Dr. Lim: I cannot tell you now, these brokers are people you do not remember, you want anything particular you go to people who are likely to get brokers for you. Mr. Peck: Different members of the Board approached different people likely to be interested in mines, did you not mean by that principals? Dr. Lim: I spoke of brokers first because the question that was put to me contained two items, and with regard to this particular bit, yes—principals. Mr. Peck: What principals did they approach? Dr. Lim: I cannot tell you now—after three years. Mr. Peck: Did anyone approach M.C. Ltd.? Dr. Lim: I do not know. I did not. Mr. Peck: Why did you not? Dr. Lim: Because I did not think that a working mine was likely to take up an option within a fortnight for such large commitments and speedy completion which at that time was a sine qua non on the part of the Directors to guard against losing the contract with the Dutch people. They had to get money quickly and they thought the best plan would be to get hold of someone who could go into it at once without the delay that dealing with the Company might render necessary. And now I am going to speak for myself. I never had any personal dealings with either J. A. Russell or M.C. and I had no reason to approach either as I Was Very Busy and expected the managing director to do all the canvassing: amongst the people I spoke to must have been Ng Hong Guan whom I knew to be working in connection with mines and he said he would take an option. At first he did not seem very keen to say who he was going to pass this to but we could not wait and therefore we would refuse to deal with him unless he disclosed immediately a bona fide strong man whom we could rely upon and he, to the best of my recollection, mentioned without any suggestion Mr. Russell of Kuala Lumpur. This is as far as I remember my part in this transaction with reference to this question. Mr. Peck: Did you give the option to Hong Guan on that statement of his? Dr. Lim: Yes. Mr. Peck: Did you not require some further evidence as to who would be or was his principal? Dr. Lim: No, because the test of the bona fide was within a fortnight or in the terms mentioned in the option to pay the deposit, and I had no reason not to believe Ng Hong Guan. Mr. Peck: I want you to see L.B.K. 1. Was there any condition mentioned in the second set of terms in L.B.K. 1 about any deposit? Dr. Lim: There was no mention in this one, except you see in the sale outright the deposit of $250,000 within a fortnight, and the reason was that the Board would have preferred No. 1 and if No. 1 was not acceptable the amount to be deposited for working on a royalty was subject to negotiation so we could not expect such a big deposit to be accepted, but looking at this document of Sept, 25, the working on royalty is part of the option and I think at the time the Directors must have expected in either case a deposit of the $250,000 whether mentioned or not, at any rate I am positive that the Board was not in a position to give such an option without substantial guarantees. One of our Directors, Mr. Tan Kheam Hock, was a very careful business man, he was the Compradore of the Harbour Board and was largely interested in the E.M.R. I remember him taking notes of what occurred on bits of paper and if he or the others had the slightest idea at any time that we were dealing with J. A. Russell as agents of the M.C. Ltd., I may assure Mr. Peck that not one of the Directors of E.M.R. would have consented to Mr. J. A. Russell making his profits, and I think it is due to our solicitors Messrs: Sisson and Delay to say that they did not so understand and I cannot possibly believe that a gentleman like Mr. Dickinson would have permitted us directors by our negligence to allow such a fraud against the interests of both companies, E.M.R. and M.C. without calling our attention to it; those facts show the attitude of the company in this matter, and this is the reply to the question Mr. Peck has put, as far as I know. Mr. Peck: Is it not possible that the other directors agreed to give “the option of Oct. 5 L.B.K. 6 on the understanding” mentioned in the previous question? Dr. Lim: That is that they thought Mr. Russell was acting as agent of M.C.? On an answer in the affirmative by Mr. Peck, Dr. Lim continued: This option is the continuation of the other option and the modifications adopted in this arose out of the previous option that I have already spoken on at length and the possibility of the other directors or some directors thinking they were Negotiating with J. A. R. as agents of M. C. directly is negatived by their not acting to prevent what Mr. Peck has called the watering of the shares and by our solicitors who conducted all the essential legal transactions never having given to any of us any warning that we had been trapped. Mr Peck: Have you stated in a Statutory Declaration that you drafted the option letter? Dr. Lim: I made a declaration something to that effect. Mr. Peck: Was that statement true? Dr. Lim: The statement was true in so far as I have explained very fully my share of the work. I will now say that I believe I was better qualified to put things in English than the others, and the others asked me to look over the English grammar of the option. I therefore have no hesitation to state that I drafted, but the contents and the nature of the stipulation were not my own but those of the Board and some of the expressions used I should not have used myself had I had time to draft the thing as a lawyer might have done. As this question is put to me again and I do not know the reason for having it put to me I wish to refer to the previous detailed explanation of how the drafting was done, and I wish to state that whatever was written at the meeting by me as a result of discussions was handed over at the time to the Secretary and a subsequent treatment was carried out by the office. Mr. Peck: You do not wish to add anything more with regard to that word allotment? Dr. Lim: I think I have said sufficient. Mr. Peck: Did you state in that Statutory Declaration that you were the chairman during the whole of 1920 of E.M.R.? Dr. Lim: If it is in the Statutory Declaration I must have made the statement. Mr. Peck: Was that true? Dr. Lim: I made the declaration to the best of my belief as I was here at that time and I remember I was chairman during the whole period this business had come before the company, but of course I am quite willing to admit that perhaps for some months of the year previous to my joining the board and up to the time of my being appointed as chairman I was really technically ?not, and I might have said during the period of this business of the E.M.R. buying the G.B.B. and disposing of it. I was; that is as far as my memory goes but I am prepared to admit that if the books show to the contrary I was mistaken as I depended on my memory at the time. Mr. Peck here wishes it recorded that before putting these questions in regard to the Statutory Declaration he read paragraphs 3,4 and 5 of Mr. Russell’s affidavit in support of the application for this commission. Mr. Peck: Is it not a fact that the administration of the E.M.R. during the year 1920 was very imperfect? Dr. Lim: The directors had sometimes to make complaints. Mr. Peck: Is it not a fact that many records in writing that should have been made were not made? Dr. Lim: I say I cannot say off-hand, my previous answer covers part of this; there were complaints by the directors. Mr. Peck: Is it not a fact that there is little or no record in the minute book of the company in regard to the G.B.B. option and its sale? Dr. Lim: I cannot say without looking at the minute books. Mr. Peck: I would remind you that you were chairman and that as such the confirming of the minutes would be made by you: can you recollect anything more than you have stated? Dr. Lim: I am impressed by your warning, but I do not know that even the best chairman of the best London Company or of the Bank of England could be expected to do what you are asking me to do; to keep in mind the contents of minutes confirmed by the chairman three years after the event, and you know perfectly well that during the three years interval I have been away from the Colony and Lost all Association with this matter. This is as shortly as I can put it. Mr. Peck: Did you attend every Board meeting of the E.M.R. during 1920? Dr. Lim: I don’t think it was possible and if he wanted exact information he should apply to the office, the records are there surely and can be obtained by application. Mr. Peck: Are you sure that no authority was given to Hong Guan to inform his purchaser or principal that the $60,000 deposit would not be forfeited? Dr. Lim: I am sure as Chairman that I am not aware that such an authority was given by the board and if the board ever gave such an authority the authority would be in writing given to Ng Hong Guan. Mr. Peck: I remind you of your statement that there were complaints about the administration. In the light of that do you adhere to your statement that such an authority would have been given in writing? Dr. Lim: Yes. Mr. Peck: Is it not possible that decisions and authorisations were made by the other directors at board meetings, from which you were absent? Dr. Lim: Surely the possibility is there, without looking at books I do not know. Mr. Peck: And consequently that the authority previously mentioned may have been given in your absence? Dr. Lim: I say that if the board gave any authority to do such a thing they would give it in writing to Hong Guan and if Ng Hong Guan would not substantiate what he alleged the board at any time had sanctioned him to do by production of a written document I should not accept the plea that the board had given him such authority. At this point Mr. Shearn produces at Mr. Peck’s desire a file of documents to be subsequently marked. Mr. Shearn states at Mr. Peck’s request that those are disclosed in Mr. Russell’s affidavit of documents. Mr. Shearn states he makes no admission to their admissibility as evidence in this case. Mr. Peck asks for a letter dated Nov. 29, 1920 from Lim Boon Keng to Mr. Russell now marked L.B.K. 46. Mr. Peck: Did you write and send this letter to Mr. Russell? Dr. Lim: Yes. Mr. Peck: You see in the letter references to remittances in guilders and a mention of completing the 600,000; do you not admit that you know at this time that the cash consideration payable to the Dutch Co. was guilders 600,000 and not Straits $600,000? Dr. Lim: I wrote this from information supplied to me by Mr. Poey and this is shown by the heading of the letter E.M.R. Ltd. It was sent off in a very great hurry and It is not True that because I wrote this down in guilders on information supplied that I was at any time conscious of the fraud alleged in making the difference between the guilders and the dollar exchange. Of course I knew all the time our payments to the Dutch were in guilders. Mr. Peck: The next telegram a copy of Nov. 30, now marked L.B.K. 47 did you receive this telegram? Dr. Lim—I suppose I did: it is an office thing. Mr. Peck then produced copy of a letter dated Dec. 3 marked L.B.K. 48. Did you receive a letter of which this is a copy? Dr. Lim—I suppose I did. Mr. Peck: Who does the words “we” and “our” refer to in that letter? Dr. Lim—The context shows that clearly. Mr. Peck: Namely? Dr. Lim—M. C. of course. Mr. Peck: Although initialled in this copy J.A.R.? Dr. Lim—I see it is so. I said so before I said the context showed it must be M.C. Mr. Peck: You now see letter and copy of Dec. 4, both marked “L.B.K. 49. Did you write and send that letter to Mr. Russell? Dr. Lim: Yes. I see a query mark in the copy. Mr. Peck: I will cross out the query. Dr. Lim: It may be crossed out. Mr. Peck: In the last para. You see a reference to “our mutual advantage”, to whom does this word “our” refer? Dr. Lim: The people who were taking over the option to work it and the E.M.R. Mr. Peck: It does not refer to Mr. Russell and yourself personally? Dr. Lim: No assuredly no, it cannot by any manner or means be so interpreted and anyone who insinuates that this line has any reference to advantage to be derived between Mr. Russell and the writer must be guilty of malice prepense. Mr. Peck: It was signed on behalf of the company, was it not? Dr. Lim: It was written in the interests of the company. Mr. Peck: And on the company’s behalf? Dr. Lim: And on the company’s behalf, and I wish to add that the first para explains fully that there was a discussion between Mr. Robinson, Mr. Russell’s solicitor, and the directors of the E.M.R. I think I have said enough, Sir. Mr. Peck: Similarly Mr. Russell might send letters signed by himself personally but on behalf of M.C. Ltd.? Dr. Lim: It is possible. The whole thing depends on the context and the matter discussed. Mr. Peck: Consequently in L.B.K. 48 Mr. Russell might have signed that letter on behalf of M.C. Ltd.? Dr. Lim: I think that question had better be asked from Mr. Russell himself. I do not see I can guess what he had in his mind. Mr. Peck: Did you say that a man might so sign for his company such as M.C. Ltd? Dr. Lim: I say Yes, if you remember the context and the subject matter of the letter, which I had already said. Mr. Peck: With reference to L.B.K. 9 did you receive the letter of which that is a copy? Dr. Lim: I suppose I did. Mr. Peck: L.B.K. 10 also? Dr. Lim: Yes. Mr. Peck: That is to say you received the letter of which that is a copy? Dr. Lim: Yes. Mr. Peck: L.B.K. 11: did you receive the letter of which that is a copy? Dr. Lim: I suppose I did. Mr. Peck: Copy of Telegram dated December 15, 1920 now marked L.B.K. 50 did you receive the telegram of which that is a copy? Dr. Lim—You see this is a copy of a telegram and Mr. Peck asked me if I received this. I have no recollection: it is purely an office affair and if I received it I must have passed it on to the office. Mr. Peck: L.B.K. 12: did you send that telegram to Mr. Russell? Dr. Lim: I suppose I did as part of the company’s business. Mr. Peck: “But you cannot recollect sending this telegram?” Dr. Lim: I cannot recollect unless I see the original copy in the office, as there might be error in the course of transmission and a difference from our office copy. Mr. Peck: L.B.K. 13 did you send that letter to Mr. Russell? Dr. Lim: Yes I did. Cross-Examination concluded. Re-Examined: Mr. Shearn: Dr. Lim you were asked with reference to Hong Guan’s authority to make the statement “the money will not forfeit.” You were asked this question—is it not possible that decisions and authorizations were made by the other directors at board meetings from which you were absent. With reference to that question I ask you this “was it the policy of the board of the E.M.R. to give a free option over G.B.B.?” Dr. Lim: I did not know of it, of any. Mr. Shearn: So far as you are aware was the contrary their policy? Dr. Lim: I don’t quite understand about policy and what that meant but I do not know they were willing to give any option on the G.B.B. without option money. (To be continued) The reading of the evidence taken on commission concluded at 1.10 p.m. to-day. A long argument ensued regarding the admissibility of certain documents which Mr. Braddell tendered and Mr. Carver objected to. His Lordship held that the documents were inadmissible, and the court adjourned at 1.40 p.m. till 2.45 p.m. This afternoon Mr. J. A. Russell, the first defendant, is expected to begin his evidence.

The Straits Times, 2 April 1924, Page 9
 MALAYAN COLLIERIES. Evidence of Four Absent Witnesses. Amoy, Sourabaya and London.

Malay Mail Thursday April 3 1924, page 7 PECK v. RUSSELL DR. LIM BOON KENG’S EVIDENCE Objections to Hearsay Testimony The following is the concluding portion of Dr. Lim Boon Keng’s evidence: - Mr. Shearn: You were asked with reference to L.B.K. 23 to look at the entry of November 23, you were asked to explain the entry and you said I cannot explain this. Now I ask you this further question. Did you send the secretary round to Sisson and Delay to make that statement? Dr. Lim: I as chairman of the board of directors would not have to order the secretary about, it was the duty and the business of the managing director. So I must say I could not possibly have sent him and if he was sent he must have been sent by the office. Mr. Shearn: If this difference between dollars and guilders was in fact retained, has that been of any advantage to you? Dr. Lim: No, I don’t see how it can benefit me personally. Mr. Shearn: If it had been retained, would you be the loser? Dr. Lim: Surely. Mr. Shearn: You said this, “I must confess that I was too dependent upon Mr. Poey for information as the documents were in Dutch. I never remember seeing them even.” Will you please explain this, how did you know they were in Dutch, if, so far as you remember, you never saw them? Dr. Lim: I don’t remember having seen the documents and now recalling the circumstances I should say the documents were entirely dealt with by our legal experts, and the word Dutch came out as I spoke because the company was a Dutch one and possibly the documents were in Dutch, but the thoughts came out and I Said Things before coming to a definite statement. My statement was that I don’t remember having seen the documents even. Mr. Shearn: Look at para 15 of L.B.K. 22: do any of the 700 shares mentioned in this para. stand in your name? Dr. Lim: I don’t think so: at any rate I have never had these shares in my possession and the details I have already explained in the reply made previously. Mr. Shearn: When they were issued did you sign transfers of the whole 700? Dr Lim: Yes. Mr. Shearn: At whose request? Dr. Lim: The managing director. Mr. Shearn: Mr. Poey? Dr, Lim: Mr. Poey. Dr. Shearn: Have you ever received any consideration for transferring the shares? Dr. Lim: none whatsoever. Mr. Shearn: have you at any time made any gain out of the 700 shares put in your name? Dr. Lim: Never. Mr. Shearn: In your answer to this question—Is there printed or written record in existence of their, that is to say the shareholders of E.M.R., having been told of the difference between what M.C. were paying and E.M.R. were getting you replied to this effect—“I suppose they had a meeting to confirm and explanation must have been given unless all the people who attended were known to have all the information concerning the question discussed. If anyone who did not know the particulars had asked for information his attention at such a meeting would be called to the papers.” What was the explanation, you think, which was probably given at the meeting to confirm? Dr. Lim: - You will see from my answer to Mr. Peck’s question that I really could not say without referring to papers: what I meant was if the details as to the difference were known to the office the shareholders would have got them: but I am sorry in trying to answer a question which involves the fact of my knowledge of there having been a difference which I personally must have known of as soon as the matter was made public, I was not sure at the time whether our E.M.R. had the information, and my attempt to explain what Mr. Peck wanted was really to ask that the papers of the E.M.R. be consulted; further my explanation of certain enquiries made by Mr. Peck to-day relating to this subject has, I think, given all that I can possibly say about this matter. Then followed his explanation which has already been published. Objections to Hearsay Evidence. During the course of the reading of Dr. Lim Boon Keng’s evidence on Tuesday, Mr. Carver objected to certain evidence going in, as it was hearsay. There were two such objections, one in connection with the evidence given by Dr. Lim Boon Keng pertaining to a letter written by Messrs. Sisson and Delay as solicitors, and the other to a circular issued by the Eastern Mining and Rubber Co. to their shareholders in which particulars were given of the purchase price which coincided with the price mentioned in the option. Mr. Braddell continued that in both cases the evidence was admissible, and a long argument followed. In the case of the first objection his lordship held that the objection was a good one on the ground that it was hearsay evidence. But if there was anything to be gained by holding up his final decision on the point his lordship had no objection to doing so. Mr. Braddell: I protest most strongly, and this for the last time against the course deliberately entered upon by my learned friend Mr. Shearn. What I want to say is that he has gone to all these places, Amoy, Hongkong, Soerabaya, and got in all this hearsay evidence which even the man in the street would say is not evidence. It has been deliberately done, and now that I have done my best to answer all these they say that it must all be left out. At a later stage in the discussion Mr. Carver withdrew his objection to the passage. With regard to the second objection raised by Mr. Carver at which Mr. Braddell expressed his surprise as he had never had any notice that objection was to be raised against the circular to shareholders, his lordship held that the evidence was admissible as showing what the shareholders thought was the purchase price. Later on, in connection with Dr. Lim Boon Keng’s evidence on a certain declaration which he had made, Mr. Braddell said he had already noticed the other side to produce the statutory declarations put before the referees. He applied to see the statutory declarations made by Dr. Lim Boon Keng. Mr. Shearn stated that the statement was not used by the referees as it arrived late. Mr. Braddell: May I see the document, if you don’t mind? Mr. Shearn said that it was dated Dec. 23, 1922. Mr. Braddell said that when the application for the commission was made before the Chief Judicial Commissioner in Chambers, Mr. Shearn had this statutory declaration of Dr. Lim Boon Keng, and offered to show it to his lordship. His lordship enquired whether the declaration had been used. Mr. Braddell said that it had been used in this way. Its contents had been sworn to by Mr J. A. Russell in his affidavit. The statements in paragraph 5 of that affidavit were derived from the statutory declaration. After further argument his lordship held that the statutory declaration had not been used and was therefore in admissible. TWELFTH DAY’S PROCEEDINGS Mr. England’s Evidence. At the conclusion of Dr. Lim Boon Keng’s evidence on Tuesday, Mr. Carver, for the defendants in this case, read the evidence of Mr. Ernest England taken on commission by Mr. F. O. Langley, of 7 Fig Tree Court, Temple, London on Jan. 3,1924. Mr. G.F.L. Bridgeman, instructed by Messrs. Pyke, Franklin and Gould, solicitors, appeared for the plaintiff. Sir Albion H.H. Richardson, instructed by Messrs. Haslam and Sanders, London, agents for Messrs. Pooley and Co., Kuala Lumpur, appeared for the defendants. Mr. England was examined by Sir Albion Richardson as follows: - What is your full name? —Ernest England. I think in September 1920 you were the general manager of the Malayan Collieries Ltd.?—That is correct. How long had you been general manager at that time? —From April previous. Did you, in or about that month, hear of a property called Seboekoe? —I did. How did you first come to hear of it? —Mr. Russell, the director, ‘phoned to me to come into the offices. The first intimation I got was from Mr. Russell, the managing director, calling me into Batu Arang as he wished to see me that particular morning, as there was a proposition to discuss about going to Seboekoe, as the company had an option there, and he asked me to go and inspect, and I consented. Where did the interview take place? —In the Kuala Lumpur office. Mr. Russell’s offices? —Mr. Russell’s offices: that is the company’s. It is all one? —Yes. At that interview he told you about the Seboekoe property? —Yes. And you got instructions to inspect it? —Yes. I do not know whether we need trouble for the moment about the exact situation, but it is shown on this map which I may as well put in. Just look at that map. Is that a map of the district which covers the area which is in discussion in these proceedings? —This is the upper part of Borneo, the East Indies, the place where Seboekoe lies. The witness pointed on the map where Sebokoe was marked. Was anything said at this interview with regard to whether you should go alone or who should go with you on this expedition? —I Made a Suggestion to Mr. Russell, putting it to him in this way, as I was new out to the East and I did not know the ropes quite so well, I asked him if he would oblige me by letting me have one of his officials, a mining engineer of his company. That is the company of J. A. Russell and Co.?—Yes, he said he might let me have Hastings if he could spare this man, as he was a mining engineer of Russell and Company. Did you at that time know Mr. Hastings? —No. Will you tell us as shortly as possible what was the advantage of having anybody else whom you could have obtained at that time? —I presumed that Hastings, being An Old Employee of Russell and Co., would know the East. He had been with the company a good few years from what I could learn, and I required a man who was accustomed to that part of the world and could speak the language and knew the local mining conditions. Had you a man named Brickman? —Yes, he was my assistant. He was new out to the East too. But he had not the necessary experience? —No. But Hastings would be able to speak for the expedition? —Quite so. Was anything said at this interview with regard to the payment of Hastings if he was able to go? —Yes. What was said and by whom? —It was arranged that I give consent that the company should pay $650 to Hastings per month while he was in my employ as a representative with me—as my assistant. That was, of course, because he was engaged in the company’s business? —Quite so. Towards the end of September, the month we are speaking of, did Mr. Hastings come to see you at Batu Arang? —Yes, he came out, and on his arrival there I gave him instructions. Prior to my conversation with him, I tested him to see if he was competent enough in my estimation, and my experience of him was quite satisfactory. Therefore the expedition was arranged between Hastings and myself as to the particular journey we should take, seeing it was rather a difficult route to go direct. He was arranging the expedition. The boring people are coolies, and he was arranging the necessary labour as I had not really the time to devote to my own particular business. You were satisfied that Hastings had the qualifications necessary, and he assisted you in mapping out the expedition? —Yes. And what should be done? —Yes. I think that exhausts the month of September. Did you hear from Mr. Russell at the beginning of October as to whether he was prepared to let Mr. Hastings come or whether any alteration was made in the original arrangement? —He ‘phoned me up one morning from the head office saying he required Hastings’s speedy return. Return from where? —Back from Batu Arang to the Kuala Lumpur offices. The head offices? —Yes. I was rather taken aback at his recalling him and asked him the reason why. This was on the ‘phone? —This was on the ‘phone. He said “the reason why is because I want him to go and examine a proposition for myself.” I was Very Much Annoyed at being cut off so short in making arrangements. Therefore I said I wanted an explanation, and that I would come next day and discuss the matter which I did. You called at his offices? —I called at his offices the next day. After the ‘phone conversation? —Yes. In order to ascertain why he wanted Mr. Hastings to examine a property for him? —Quite so. ?So that at that time you thought he was depriving you of Hastings’s services in examining Seboekoe? —That is the point. What did Mr. Russell tell you at that interview with regard to his own property? —I asked why he had taken Hastings away. He said, “I have taken him away because I have a proposition which wants examining, and I have put a sum of money down that I do not wish to lose sight of.” I said “What sort of fix is it putting me in being new to the East,” and he said, “I cannot help your troubles. I have my own end to look after.” I said “We will discuss it over. Is there any possible way out of the difficulty? Can you assist me further?” Did he tell you what was the name of the property? —Batoe Besar and Lak (?) Bay was his property. Did he tell you he had got an option for it as a coal proposition? —Quite so. And it was that property which he wanted Hastings to inspect? —It was that property which he wanted Hastings to inspect personally for himself. Was anyone present at this interview besides Russell and yourself? Was Hastings present? —Yes. A Way Out To get over the difficulty which arose owing to this altered arrangement which deprived you of the services of Hastings in the examination of Seboekoe, was a method discussed by which Hastings could serve you, at the same time serving the Company, and at the same time Mr. Russell? —Yes. What was that arrangement? —Mr. Russell helped me out of the difficulty. He said it might be possible to join the expeditions together seeing that the Nanyo Maru was sailing early in October, but he was not quite sure whether he could make the arrangement definite and he would inform me. The Nanyo Maru was a ship I think. Who were the owners of it? —The Eastern Mining Company. That sailed from Singapore. What was its ultimate destination? —From Singapore to Pamoekan Bay. Standing out of Kota Baroe? —Yes. Which was the port for Seboekoe? —Yes. And touching next day at Batoe Besar where Mr. Russell’s property was? —Quite so. This interview you were telling me took place in the presence of Hastings, and you were in the middle of telling me what the arrangement was which you come to at that interview between you, on behalf of the company, and Mr. Russell with regard to the two expeditions, the one to Seboekoe and the other to Mr. Russell’s mine at Batoe Besar, being amalgamated so that both would have Mr. Hastings’s services? —Yes. Mr. Russell said that he might be able to fix up both the expeditions to go back to Kota Baroe but he was not quite sure unless he had the consent of the Eastern Mining people. A little later it was arranged by the Eastern Mining Co. to give consent that I should go and make both expeditions together on this specific date. Did they give their consent to Mr. Russell or to you? —To Mr. Russell. You learned that a few days after, did you? —Yes. I take it from what you have said that you regarded it as in the interests of your company that these expeditions should be amalgamated? —Quite so. Will you just state very shortly why? —It assisted me to keep in touch with the boring kapalas and the boring machines, and it was more convenient for me because I was not quite familiar with the language and Hastings had knowledge of the language of Chinese and Malays, and he was very good at organising the trip. Therefore it greatly assisted me and it relieved the company of a certain expense on my behalf in travelling as passenger with the ship. Would it have meant delay if you had not gone on this expedition? —Yes. Why was that? —Because I could not have been prepared to have taken this expedition on unless I had looked round and got further assistance. Therefore I took this opportunity as it was more helpful to myself. If you had not gone on the Nanyo Maru what other method was there of getting to Seboekoe? —The option people were expecting my sailing from Singapore by Oct. 14 and if I had not gone on that particular day it would have rather upset the expedition. And incidentally I suppose you saved the passage money? —Quite so. And the freight on your plant? —Yes. Then you had another interview with Russell after you knew that the Eastern Mining Co. agreed to allow you to go on their steamship the Nanyo Maru? —Yes. Before that interview had you made any suggestion to Mr Russell as to whether the company you represented should have any right by way of first refusal in the event of your approving of the property over which Mr. Russell had the option? —Yes. Just tell me what was said on both sides? —I asked Mr. Russell if this property should prove successful upon Hastings’s report, would he give the Malayan Collieries the first refusal, and he said “Yes.” Did you consider that it was in the interests of your company that you should under these circumstances examine this property over which Mr. Russell had the option? —Yes. Just summarise why you considered it to be in the interests of the company that you should under these circumstances examine this property over which Mr. Russell had the option? —I heard from the Eastern Colliery people in conversation with Hastings in Singapore. Hastings was making enquiries. He said he was going to Batoe Besar on behalf of Russell and Co. I heard the conversation with Keng Seng, telling Hastings he was going to a very good property, and that it was one of the finest properties in the East. I was there at the conversation and I Pricked Up My Ears and it made me a little inquisitive personally as to why this property should be so valuable, and I thought if there is anything to be gained from it I am going to try and keep that up my sleeve for myself, as I was going on this journey. After this arrangement had been come to by you on behalf of the company with Russell for the joint expedition, you proceeded, I think, to Singapore to embark on the Nanyo Maru? —Yes. Intending at that time to examine the company’s property at Seboekoe and the property over which Mr. Russell had the option at Batoe Besar? —Yes. I will put this general question to you and my friend can cross-examine you about it in detail if he wants to. Was there any question at all at that time, or at any time, in your mind that the option over Batoe Besar property was the option of Mr. Russell? —Yes, it was Mr. Russell’s option. That was quite clear to myself. Did you ever hear until long afterwards any suggestion that the company had any interest in the option over the Batoe Besar property? —No. Until these proceedings were begun? The Malayan Collieries had not any interest in the Batoe Besar property whatsoever. It was J. Russell & Co.’s private enterprise. Now we will come to Singapore. In the beginning of October did you embark at Singapore? —Yes. For the purpose of this expedition? —Yes. Tell us of whom the expedition consisted—its personnel? —The expedition consisted of Hastings and his Chinese man, myself, Brickman and my boring people, and the bring machinery. That was pretty expensive, the boring machinery? —Yes, it was a diamond drill set. What would be the weight of it? —There is no particular weight. It depends on the depth of the bores required. I mean the machinery you took with you? —Probably about a ton we had there. We had spare parts besides. A diamond drill set is a big massive tripod with worm gearing and handles and shoes and hooks and rods and casings, all sorts of things. Do you remember a Chinese man named Ho Man who went with Mr. Hastings as his assistant? —One of the Chinese leading kapalas was in company with Mr. Hastings, but I did not know the Chinese personnel. A kapala means a head contractor. Do you know whether Ho Man went on the expedition with Hastings on this ship? —This kapala went as Hastings’s representative. The ship sailed from Singapore and I think she touched at Bandjermassin? —Yes. With Hastings? —Yes. Whom did you see there? —Hastings saw a Chinese man called Tan Way An. He was interested in this Eastern Mining business. Mistaken Identity Is he the Secretary to the Resident? —No, he is something to do with the Eastern Mining. Hastings went to see him. Did you see the Secretary to the Resident? —Yes. Why did you call upon him? —It is customary in the Dutch parts of the world to get familiar with these people and therefore I thought it was an opportunity of making investigations in respect of Seboekoe for myself. He gave me some very valuable information, but very discouraging. What was the information with regard to the Seboekoe property? —I told him I was coming out to inspect the Seboekoe concession on behalf of de Stoutz, who was the concessionary holder on behalf of the Malayan Collieries. De Stoutz was the holder of the concession. He said, “I would not. If I were going to buy a concession I should not buy one like that; it is absolutely a washout.” This is what the Secretary to the Resident said to you? —Yes. I said “Why?” He said “Because it has been explored before and it has been an absolute failure.” Therefore I was not satisfied with it and I called upon the chief marine. The Chief of the Marine Department? —Yes. I asked him if he had any charts of Seboekoe by him in the offices, and he said “Certainly.” I said “Would you be kind enough to let me have a look at them” because I was going to Seboekoe and I wanted to know the particulars. When I saw the chart I asked him, was it possible for an ocean-going steamer to approach the shore. He said “It is impossible.” I said “Why?” He said, “The water is so shallow” and that even for the lighters it was impossible because they had gone there before and they were still stuck in the mud. I asked him about the boring machinery. He said “Do, as you like, but I would not take any heavy weight there because it is practically impossible.” That was a (not a) very encouraging remark to be made by these people who were quite familiar with that part of the country. I was not going to risk my boring machinery being stuck in the mud there. What was the only way by which, according to your information, you could have got the machinery to Seboekoe from the Nanyo Maru? —We should have had to take a large proportion of it on a prau. What about the other portion of it? —I would not take it under those conditions, and there not being able to take the whole machinery it was not any further use. I could not make any progress. What happened Before. Did he tell you what happened to some machinery they once attempted to land there? —Yes. Some people had built a pier a good way from the shore, and were landing boilers, etc., and the pier sank and all the machinery went out of sight. It was all what they called a mangrove swamp. Did you refer in the course of this conversation to your own machinery and ask his opinion as to whether it was possible to land it? —I asked the Marine if it was possible to land heavy machinery there, and he said, according to his knowledge, it was impossible under the conditions as he had heard before. This information was practically private from this particular person. I did not want to make it broadcast that I was getting something for my own perusal. Did he say anything about previous attempts which had been made actually to mine the Seboekoe property for commercial purposes? —He said there had been attempts but it was a failure. Looking at the matter from the interests of your company what conclusion did this information lead you to with regard to the expediency of examining the Seboekoe property? —From what I heard in Singapore and what I heard in Bandjermassin about the two different properties it struck me very forcibly that the Batoe Besar property would be a very dangerous opponent if it proved successful. The Seboekoe property did not strike me very forcibly according to the conversation. It rather upset my arrangements altogether, and I decided to proceed to Batoe Besar along with Hastings as passenger and await his return. Before you left Bandjermassin did you see a gentleman named Tan Way An, the agent of the Eastern Mining and Rubber Co. ?—Yes. Ridiculed and Laughed At I think you saw him with Hastings? —Yes. Did you get any further information from him with regard to the Seboekoe property? —Yes. He gave some very discouraging remarks, something similar to the Secretary to the Resident and the Marine people. He ridiculed and laughed at the matter. Laughed at what? —At the idea of my going to Seboekoe. He said, “It is a waste of time.” Did you believe that? —I heard it by so many different sources that I put one and one together as absolutely the proof of it. Was that the conclusion you formed at that time? —Yes. I think the boat sailed from Bandjermassin and arrived off the shore at Kota Baroe? —Yes. How near to the shore did the ship come? —A few miles out from the shore. We were not allowed to go alongside because it was a port of call, and we had to get permission from the Customs people before we could proceed to Batoe Besar. The bay was an open port. What was the object of the ship stopping there—to get permission to go on? —The captain could not proceed until the people came alongside. I say to get permission to go on; that was the object of the ship stopping? —Quite so. That is the custom. I think the Boarding Officer came on board? —Yes, that is the boarding officer, the official representative. Did Mr. De Stoutz’s agent come on board too? —Yes.

Malay Mail Thursday April 3 1924 page 9. PECK v. RUSSELL Thirteenth Day’s Proceedings. MR. RUSSELL IN THE BOX After several days of weary reading through the lengthy evidence taken on commission in London, Hongkong and Soerabaya, the hearing of this case entered an interesting stage yesterday afternoon when the Hon. Mr. G.S. Carver, who is appearing for the first and second defendants, called Mr. J. A. Russell. The reading of the evidence of Dr. Birnie and Mr. Tan Way Ann lasted almost up to the adjournment for lunch. Lengthy passages of this evidence, together with documents relating thereto, were expunged from the record as being hearsay and irrelevant, and Mr. Braddell asked his lordship to make a note that this evidence was cut out under the direction of his lordship with the consent of counsel. Continuing, Mr. Braddell said that as Mr. Carver had withdrawn all this hearsay evidence he himself proposed to withdraw certain documents as well as some evidence given by the witness Smith. If Mr. Carver was not going to call Mr. Tan Kim Hoe he would agree to the withdrawal of the whole of Smith’s evidence. Mr. Carver agreed to this and expressed his appreciation of Mr. Braddell’s fairness. The Petition. A long discussion next took place with regard to the admissibility of the petition given by the Eastern Mining and Rubber Co. to the Supreme Court at Singapore for the alteration of their articles of association. Mr. Carver objected to this document. Mr. Braddell said that he relied on that document most strongly. He said that a petition to the Supreme Court was a formal document and under the rules of evidence it was clearly admissible. His lordship having already ruled that what the E.M.R. Co. paid was relevant, and also what the shareholders thought about the purchase price was relevant. Counsel could not understand how they could keep out the petition which was only a link in the chain. It was through the petition that all the matters which had already been discussed by the directors and shareholders was placed before the Supreme Court for final authorisation. Mr. Carver said that the document was a very long one and that it was a petition signed by Mr. Poey Keng Seng who was not a partisan of Mr. Russell. He knew of no rule of law under which a petition to the Supreme Court could prove itself as evidence. His lordship: I take it that your argument is that that document is not admissible? Mr. Carver: It is quite clear, my lord, that Poey Keng Seng is intimately mixed up in this affair. I might as well file an affidavit by Mr. Russell in Singapore and ask your lordship to accept that as evidence. The whole object of the Evidence Ordinance is to keep out any evidence that could not be subjected to cross-examination, except in certain special cases. Mr. Braddell said that what he had tendered was a complete record certified and sealed as correct. It was not supported by an affidavit of Mr. Poey Keng Seng alone. There was a petition, an affidavit by Mr. Dickinson, an affidavit by Mr. Poey Keng Seng to which Mr. Carver had already referred, some articles of association, together with the changes which were proposed. What the Supreme Court was asked to do was to grant permission to change the memorandum, and the reasons why these articles had to be changed were set out in the petition. Poey Keng Seng’s affidavit was only an identifying document. He repeated in connection with the admissibility of this document what he had already said in connection with the admissibility of the circular to shareholders. If the minutes and the circular were admissible, this petition a fortiori was admissible. His lordship held against Mr. Braddell. He said that the petition to the Supreme Court in Singapore was not evidence in his court. The petition and the connected documents were therefore ruled out. Mr Russell’s Evidence. When the court resumed at 2.40 p.m. after lunch Mr. J. A. Russell entered the box and was examined by Mr. Carver. In reply to Mr. Carver, Mr. Russell said: My name is John Archibald Russell. I live in Kuala Lumpur and am a partner of Messrs. J. A. Russell and Co. I have lived here for about twenty years. I founded the firm of J. A. Russell and Co. and I also carry on business under the name of W. R. Loxley and Co., in London, Hong Kong, Canton and Singapore. I also carry on business as Perrin Cooper and Co. in Tientsin, with a small branch at Peking. The firm of Russell and Co. has been established for about eighteen years at the commencement of which I was sole proprietor. Mr. D. O. Russell, my brother, was my partner. Our first activity was connected with mining and throughout I have been interested in mining. I have acquired mining land in various parts of the Peninsula, and I have also developed mining land on my own account and in partnership with others. I have speculated in mining land. By speculating you mean buying up and selling at a profit? - Not necessarily buying up, sometimes getting options and speculating on them. Later on you began to act as agents for other firms? - Yes When did you first start acting as agents? - I cannot remember but I think the first agency we held was for the Singapore Tin Syndicate. How would you describe your business as it was in 1913? - Principally a speculator in mining land. But at the same time I held property and in fact did nearly everything but pure merchant business. If there was such a thing in this country I might even have called myself a financier in a small way. The Malayan Collieries Ltd., were formed in 1913? - Yes. [Here witness was shown the “Who’s Who” of the case and admitted the accuracy of the information given therein with regard to the various companies for which Russell and Co. were either agents or secretaries or both.] You had a mine engineering staff of four gentlemen? - Yes Europeans? - Yes. Prospecting in China. If you go back to 1911, I think that is the year you became interested in coal mining propositions in China? - I became interested in coal mining propositions in a district near Canton. Then in 1912 did you come in contact with the Batu Arang coalfields? - Yes I went to England, saw the proprietors and got an option over the property. And I think you were successful? - Yes I purchased the option. Then in 1913 I think you floated the Malayan Collieries Ltd.? – Yes And sold them the option? - Yes And I think they have ever since worked the Batu Arang coalfields as a mine? -Yes I think you received a certain amount of cash? -Yes. I received some cash, but by an arrangement with the vendors, it was put back into shares. I think you also got 50,000 shares as part of the consideration? - What happened was that it was difficult to get the floatation through and some underwriting commission, etc., had to be paid. At the end of all these adjustments I was left with 50,000 shares and nothing in cash. I think on the floatation of the company your firm were appointed secretaries and managing agents? - Yes Had your firm an agreement with the company? - No As secretaries what were your duties? -Secretarial, I suppose. As managing agents what do you say were your duties? - Our principal duties were the sale of coal and also the purchase of supplies to the mine. Batu Arang was the only property that the Malayan Collieries owned at the time? - Yes. As managing agents you managed the mine? -As agents we managed the mine subject to the Board. Was the business of Russell and Co. at any time exclusively connected with the business of Malayan Collieries? - No Did you at all times continue to do business which you did previous to the formation of the company? -Yes That included speculation in mining property? - Yes Members of the Board of the Malayan Collieries knew of your activities in that respect? - Yes. Did they at any time suggest that your firm should discontinue their other activities? –No Mr. Braddell said that he did not want to keep on objecting to all this evidence but he hoped that his lordship would appreciate that he maintained that it was all irrelevant and inadmissible. Mr. Carver (to witness): If they had suggested it would you have agreed? - No I would have refused. Was it ever suggested by the Board that it was part of your firm’s duty to search for coal properties for the Malayan Collieries? - No. Or to obtain options over coalmines? - No I am not now speaking about Seboekoe or Goenoeng Batoe Besar, but before these transactions did the Malayan Collieries ever spend anything on options over coalmines? - No Or did they ever prospect or send out prospecting parties? -They did not send out prospecting parties. But Mr. McCall looked at three properties. Meaning of Prospecting. I am coming to that, but you would not call that prospecting? -I would not call a manager looking at a coal deposit a prospecting party. What do you mean by prospecting? - It is a technical term used to mean investigation or inspection. It is a definite mining term. What do you mean by a prospecting party? -A party that goes out to prospect (Laughter in court) Prospecting is something more than investigating and it is a more definite act. You say that a person who is prospecting is hunting for something of which he does not know? His lordship: It is something more than that, I take it? Mr. Braddell: Perhaps the dictionary will help us. Mr. Russell: - Prospecting does not mean searching. It is more than that. It is testing either a deposit or something reputed to be a deposit. Mr. Braddell: Personally I should have thought that the two terms were synonymous. Mr. Russell: I can investigate a coalmine by sending a man to inquire into the production, the cost of production and various other things like that. But that would not be prospecting. Mr. Carver (to witness): I think you have said that the company on some occasions sent the manager to look at the local mines? - Yes. His lordship: Property, is the correct term I think. Mr. Russell: It might not be a property. It might be a coal deposit or a reputed coal deposit. His lordship: On some occasions then the Collieries sent their manager? Mr. Russell: I can remember Mr. McCall looking at the Enggor coal deposits in Perak. Mr. Carver (to witness): Do you know about other occasions? –Yes, I can remember Mr. McCall going to two other places. One was to look at a reputed deposit at Slim also in Perak and the third occasion was when Mr. McCall took a trip to Trang, primarily on holiday, and went across to look at the Ghirbi fields in South Siam. His lordship: Was that deposit actually being worked? - No. Attempts had been made to work it and a company had been floated. But at the time Mr McCall went to see it there was no work being done, the company having been wound up previously. Mr. Carver: There was one other place? - There was a deposit on which the company actually spent about $4,000. That was on the Perlis- Siamese border. We prospected the deposit at the request of the F.M.S. Railways. You mean the Malayan Collieries? - Yes and the Railways reimbursed the Company the whole of its expenses plus its fee of $1,200. Mr Muir saw that property. He was not there the whole time but went there once or twice during the time the company was boring. His Lordship: Who is Mr. Muir? -He was an employee of Malayan Collieries Mr. Carver: Now Mr. Russell, before Seboekoe can you say whether the Malayan Collieries had any other activities in connection with the search for coalfields outside its own territory of Rawang? - As far as I am aware they had not. I wish to be more positive and say they did not. And in all these cases you mentioned they spent nothing on the expenses of their employees? -I can find nothing in the books even for the expenses of their employees. I imagine perhaps Mr. McCall included in his petty cash a small sum like $5 when he went to see Slim, possibly $50 when he went to see Enggor, and nothing when he went to see the Ghirbi fields, because he did that while he was on his holiday. My recollection is that it cost the company about $150. You are not speaking from say books but merely from recollections? – Yes. Carrying you back to 1918 where were you at the end of that year? - In December I was in Hongkong. And who was with you? - Mr. Henggeler. Did you and Mr. Henggeler take any interest in minerals there? –Yes Mr. Braddell (soto voce) Waters or what. What did you do? We went up there in connection with minerals in China. It appeared to us that it would be worthwhile spending a certain amount of money in searching for mineral deposits in South China and prospecting them. What particular type of minerals did you have in mind? - Our first idea was wolfram coal. Perhaps wolfram bulked rather more largely in our mind than coal. As it actually happened I should say that five per cent of our activities in South China were devoted to coal properties. I do not want it to be understood that we started with the idea but that’s what actually happened. The Armistice I take it, took place about the time? - I think I can give the exact date, November 11. (Laughter) I think after the Armistice the Government stopped buying wolfram? - No, sometime after that. Quite a long time. When Government stopped buying the price went down? - If your point is that that is the reason why we did not get wolfram that is not so. The reason why we did not get wolfram was because we could not find it. So we went in for coal. Suppose you had found a coalmine in South China what did you intend doing? –Mr. Henggeler and I discussed this matter. Mr. Carver enquired whether Mr. Braddell wished Mr. Henggeler, who was in court, to go outside. Mr. Braddell said he had no desire to ask Mr. Henggeler to go out and moreover it was quite likely that Mr. Ivens might object to that as Mr. Henggeler was present on behalf of the defendants. The Refusal Continuing, Mr. Russell said: If we found anything we decided that we would give first refusal of any property that seemed worth acquiring or operating to the Malayan Collieries Ltd. That means that if you found anything good you would have given it at some profit? - We had no intention of handing it over at cost. I take it Mr Russell that generally in searching for coal mines there are many misses to expect? - All our searches in China were misses. I take it that for the purpose of carrying out the work you formed a company, did you? -Yes. Called the China Minerals Ltd.? - Yes. What was the start-up capital of that company? - 1000 Hongkong dollars which were equal at that time to about 200,000 Straits Dollars. And how much did you contribute? - I wish to explain that the whole of that $100,000 was the working capital. There were no ?prospecting expenses commission etc. How much did you contribute? - Directly and indirectly I contributed one-third of that capital. Perhaps you may wish to explain to his lordship what you mean by indirectly? - I contributed about one-sixth of that capital in my own name and the other one sixth by reason of my holdings in Eastern Tungsten Co. who were large subscribers. And I think Mr. Henggeler also contributed part of the capital? - Mr. Henggeler also directly and indirectly contributed the same amount, namely a third of the capital. Mr. Braddell wished to see the prospectus of that company. He was asking this because none of the things now being mentioned had been disclosed to him. Mr. Carver ( to witness): Do you remember how much capital Eastern Tungsten put in? -I believe Eastern Tungsten had $40,000 worth, I had $20,000 worth and Mr. Henggeler’s holdings in Eastern Tungsten were greater than mine. My manager in Hongkong, Mr. Beatty had $10,000 and the balance $20,000 were taken up by friends in Hongkong. The directors of the company were myself, my brother R. C. Russell and Mr. Beatty. Messrs. Loxley and Co. were the agents of the company. I think they were agents and secretaries. Mr. Barr’s services The China Minerals obtained the services of Mr. Barr? – Yes. They engaged the services of Mr. James Barr and my brother Mr. R. C. Russell. What was Mr. Barr? - He had worked before in the F.M.S. as a mining engineer. And your brother? - He was also working in the F.M.S., but not as a mining engineer. He had experience in mining and spoke a certain amount of Chinese. Then I think at the beginning of 1919 you came back to the F.M.S.? - Yes Who was the general manager of Malayan Collieries then? -Mr. McCall. Did you tell him of the China Minerals Ltd? - Yes. And was any arrangement made as to what should be done on Mr. Barr’s reports on coal properties? - Yes. There was no agreement between the China Minerals Ltd. and the Malayan Collieries. What I told him was that if any coal property was discovered the company would undoubtedly give the first refusal of it to Malayan Collieries if it wished to dispose of it in some way. And, owing to the large interests in China Minerals Ltd. which Mr. Henggeler and I had, we thought we could guarantee that the China Minerals, not having sufficient capital to work any place themselves and found it necessary to float a company, would give the first refusal to the Malayan Collieries in any coal property they discovered and which seemed to them to be of any value. Mr. Carver (referring to a bundle of documents); You see there a letter written by Mr. R. C. Russell to Mr. McCall? -Yes I think when that was written you had gone back to China? - Yes I beg your pardon. At the time of this letter I think I was in England or America. I had gone to China and from there to England via America. I take it that Mr. Barr continued his investigations under China Minerals for a considerable period? - For about 18 months. Entire Capital Lost. And during that time did they spend the whole of their capital? - They spent something like $98,000. I know there was a small balance left over. That was entirely lost? - Yes Your share of the loss directly and indirectly was about one-third of that? - Yes Did you ever seek to reimburse that money from Malayan Collieries? – No Were you ever reimbursed? – No. Now, after the end of the China Minerals Ltd. did you discontinue the investigation or did you continue it? - Mr. Barr continued investigations for J. A. Russell & Co. for about eight months more. China Minerals had been liquidated. Mr. Barr was paid by Loxley and Co., Hongkong. Russell & Co. owned Loxley & Co.? - Yes there was no difference between the two. While we are on the subject you do all your business on account of Russell & Co? - Yes Mr. Barr discovered nothing of commercial value? - No I think there was a mine found which showed some promise? - That was on account of China Minerals that Mr. Barr discovered a very promising deposit of coal at Yau Mi Shau on the Canton-Hunan border. What happened with reference to that? - This deposit although it appeared to be a very excellent one, required the linking up with the Canton-Hankow railway. China Minerals Ltd. requested the Hongkong Government to build a branch railway line from the mine to the terminus of the Canton-Hankow railway. These negotiations fell through? - They lasted for a considerable time and finally fell through the Government being unable to get the permission. Was it at any time suggested that Mr. McCall should visit the property? - Yes Will you tell his lordship the facts relating to that proposal Mr Russell? - He was to have gone to Hongkong, visited the property to see whether it would be of any use to the Malayan Collieries, and then gone on to America looking at some of the modern coal mining plants on the way. Mr McCall’s Disappointment. What actually happened? - When he arrived in Hongkong negotiations had definitely fallen through. He did not go? - No, he stayed there a few days and then return. Apart from the China Minerals, Mr. Russell, can you give us a rough idea of how much the subsequent operations in China cost you? - About 30,000 Hongkong dollars. Did you ever seek reimbursement for any part of that money from the Malayan Collieries? –No Or get it? - No When did you or Russell and Co. first have dealings with Hong Guan? - If my memory serves me right very early in 1918. In connection with what? -Obtaining rights over a tin concession in Trengganu. You remember the name of it? – It was on the Pakau river in Trengganu and belonged to a Malay lady. I cannot remember whether it was Tungku Nar or Tungku Asar. And I think Hong Guan became indebted to Messrs. Russell and Co. on that account? - Yes. How much was the indebtedness? -I think at the time it was about $23,000. Did anyone approach you with regard to giving time for repayment? – Yes. I think part of that debt was liquidated? - Yes it was liquidated with the exception of $6,000. Was a promissory note given to you to secure this $6,000? - Yes Hong Guan transferred his rights in the Tek Seng kongsi. The arrangement was that he was to have the concession and I was to receive back $23,000. Did he pay that note on the due date? - No Mr. Carver (referring to a letter from Russell and Co. to Hong Guan of Sept. 1920): Did your firm write him (Hong Guan) that letter? - Yes it was written by Mr. H.H. Robbins. At this stage the court adjourned till this morning. To-day’s Hearing. Mr. J. A. Russell, continuing his evidence this morning, said that although his brother Mr. R. C. Russell was not a partner, the bulk of certain of his shares and properties belonged to the partnership. He thought that Eastern Tungsten had 50,000 or 60,000 shares in China Minerals but this did not affect his interest or Henggeler’s. From the memoranda of Bakau Tin, Ltd., it had amongst its objects the acquisition of certain tin mining lands in Selangor, and also, later on, searching for among a number of other things, coal. In response to a letter in September Hong Guan came up about Sept 5 or 6 to see him. He spoke English to him. Chong Kim was present at the interview, but knew no English. Mr. Braddell objected to the witness saying what Hong Guan had said. Mr. Carver suggested that the witness could give evidence of what he heard. His lordship overruled the objection. The witness continuing, said that Hong Guan told him that he could not pay his debt at that moment and asked him to allow it to stand over. Hong Guan then said that in return for any indulgence which the witness might show him in the matter of paying his debt, he would be able to put before him the opportunity of acquiring an option over a valuable coal property at G.B. Besar in Dutch Borneo. Mr. Braddell made a general objection as Hong Guan was not being called. He was living in Singapore, and could not easily be got if necessary, or a commission could have been got for his evidence. The witness could say anything about what was arranged between himself and Hong Guan, but not conversations he had with Hong Guan. Continuing, Mr. Russell stated that now he was not sure whether Hong Guan mentioned G.B.B. at the interview on the 5th. He must have mentioned it shortly afterwards. Hong Guan also mentioned other matters. He spoke about a syndicate, mentioning that he represented a syndicate who wished to look into his tin mining lands. Mr. Braddell remarked that, his objection being overruled, the witness ought to give evidence about coal mines and not tin mines. The witness: Hong Guan mentioned other coal mines. He mentioned other coal deposits in the Dutch East Indies, particularly a place in the district of Tehweh, which is up the Rito River from Banjermassin. He gave me certain information with regard to that land. Hong Guan also gave particulars of G.B.B. He held out the prospect of being able to get me an option. He spoke of a free option. On Sept. 5 Hong Guan gave me a document of particulars which was unsigned. The document showed an output of 3,000 to 6,000 tons a month. I thought that if that statement was correct the property was one which merited investigation. The letter of Aug. 25 mentioned the name of the G.B.B. property. The remarks about it were certainly not attractive. Hong Guan undoubtedly mentioned a price which the E.M.R. Co. wanted, but I thought I could get it at a cheaper price- something in the neighbourhood of $1,000,000. It occurred to me that if I acquired the property I might have to put up a large sum of money. At the time I had not readily at hand any large sum of ready cash. I would therefore have had to realise certain assets to get that sum. I had large holdings in M. C. Ltd., and the shares were not only at a high premium but also readily marketable. Moreover, if I was investigating a new coal property it would be a fairly safe thing for me to transfer the interest which I had in coal to a fresh coal property rather than to sell other assets such as town property and put that money into coal. The witness went on to explain his statement, saying that he did not want to have “all his eggs in one basket”. Owing to this reason, he desired to pay half the purchase price in M.C. shares. He mentioned this to Hong Guan there was also a further reason. It occurred to him that if he was given an option over this coal mine owing to his very large interest in M.C., which at that date amounted to over 52,000 shares, he might possibly give the benefit of his option to M.C. Ltd, or he might examine the property himself, and if it proved valuable, offer to sell it to M.C.

The Straits Times, 3 April 1924, Page 9 Malayan Collieries. Mr. Russell in the Witness Box.

Malay Mail Friday April 4, 1924, p. 7 PECK v. RUSSELL England’s Evidence ( Continued from page 5 .)N.B. Page 5 Missing property?—Yes. From what I could see of the crude methods of mining I could land coal at Singapore at 6 or 8 dollars which was a valuable acquisition. And what price at Java? —Six dollars and Singapore $8-$6 to $8 a ton I assume. I think the Malayan Collieries had a mine at Batu Arang? —Yes. Are you the manager of it? —Yes. A Dangerous Competitor. Did you form any conclusion as to the effect which the competition of the Batoe Besar property would have? —Yes, that is what struck me very forcibly. Upon the company’s mine at Batu Arang? —Yes. What conclusion did you come to with regard to that? —From what I could see of the cheap shipping and the convenience of this property to Singapore, and from our property in the interior of the Malay States, it was going to be a very keen competitor and a dangerous opponent for our sales, as our coal was nothing to boast about at K.L., but still we used to keep it on for our purposes. How did the quality of coal at Batoe Besar compare with the other? —Batoe Besar was a bunkering coal and Batu Arang was a fuel which would not bunker. “Bunker” means store. It was very spontaneous and therefore people did not like it on a ship. Batoe Besar was a very fine coal and far superior in every shape and form. So far as market values are concerned shipping people will not entertain the idea of a spontaneous seam except for a very short period. That was the danger I foresaw. If Russell and Co. or some other foreign company acquired this property, I know we should have been done because the Batu Arang mines were very inferior, and that is what made me so very keen in considering this proposition on behalf of my company. You have dealt with the quality of the coal and the natural features of the property. I think the ship was staying at Batoe Besar for four days, was it not? —Yes. Had you within those four days completed your examination? —Yes, I had completed so far as I could, but I should have liked another one or two days so as to have made a positive opinion, but Hastings said the boat could not stay any longer than four days, and therefore I came to the conclusion, -and I instructed Brickman to place a bore so far from the outcrop to see whether the coal really extended towards the Bay. Assuming that the bore which Brickman was to make was satisfactory and confirmed the opinion you had already formed of the mine, did you come to any conclusion at that time whether it could be in the interests of Malayan Collieries to acquire the property? —It depended on the bore. A Valuable Acquisition Assuming that the bore proved to be satisfactory? —Yes. You mean you did consider in that case? —With the bore proving satisfactory, in my opinion, I considered it was a very valuable acquisition to the Malayan Collieries Ltd., to procure. I do not know whether you know the exact period of the option, but did you know the option which Mr. Russell had on the Batoe Besar property had a very short period to run? He told me so. Did that knowledge affect the course you took with regard to the examination of Seboekoe? —It was like this; with such a short time and Hastings having to return I was not going to lose sight of the property on hearing what I had heard about Seboekoe—such discouraging reports—and therefore I advised this bore. I was after this proposition for the Malayan Collieries if it was possible to instruct the people. Did you determine, and for that reason, to leave the boring in charge of Brickman—the boring at Batoe Besar—and return to Singapore on the Nanyo Maru which was going straight back to Singapore? —Quite so. Brickman to Cable Did you leave instructions with Brickman after he had completed the bore at Batoe Besar to go on to Kota Baroe and cable you as to the result of the bore? —Yes. You expected to be back at Batu Arang before the boring work had been completed? —Yes. I do not know whether any comment has been made upon it, but I will ask you this: Did you in fact communicate by cable with Kuala Lumpur as to your change of plan? —No. It was very difficult to get into communication and it was quicker for me to go by boat than to communicate, because we were out of any communication whatever there. I think the nearest cable station was at Kota Boroe? —Yes. In order that Brickman could get from Batoe Besar to Kota Baroe after he had completed the bore (I am giving this as an instance of the difficulties of transport out there) it was necessary to obtain a large prahu? —Yes. From a place called Semalantakan so as to be in readiness to take Brickman? —Yes. You had to give several days’ notice of that? —We had to give several days’ notice. These people were out fishing and it was very difficult to drop on them, so I gave plenty of time for Brickman to be able to proceed to Kota Baroe by this prahu. You have told us the impression you formed from information given you as to the character of Seboekoe? —Yes. It was a property of no value? —Quite so. Has the information which you have received since at to what happened at Seboekoe confirmed the view which you then formed? —Yes. And that your surmise was correct? —Yes. That Seboekoe was a property of no value? —That is so. I think the instructions that you left with Brickman were, that when he got to Kota Baroe you would send him instructions by cable? —Yes. I made the arrangement with the Administrator at Batoe Besar to give Brickman every assistance. He said he knew a man named Schooner at Kota Baroe who would give him help and assistance at Seboekoe. That was the arrangement I determined on. I did suggest a cable at first, but I changed my mind and I fixed it up, being that the man was not strange. I thought I would fix it up before I left the property, which I did. Then you returned to Singapore with Mr. Hastings on the Nanyo Maru? —Yes. And proceeded, I suppose, from Singapore to Kuala Lumpur? —Yes. Did you there see the officials of the Eastern Mining and Rubber Company? —Yes, when I returned. What was your object in seeing them? —I heard on the journey (the captain told me) that the Eastern Mining Company had an agreement to buy this Nanyo Maru, and from what I had seen and learnt about the boat I wanted to make investigations on behalf of the Malayan Collieries, and if Mr. Russell should exercise this option to the Malayan Company, whether we were to be saddled with the steamer, as I considered it was a useless boat altogether for transport from Singapore, because the Eastern Mining people had great difficulty and had to chuck coal overboard at the bar. You wanted to ascertain whether, if the company bought the property they would have to take the steamer with it? —Yes. That is the object of your visit? —Yes. What was in your mind, I gather, was that it might have been in Russell’s agreement and under Russell’s option an obligation if the option was expected to acquire not only the property, but with the property the steamer. You wanted to see whether the agreement was burdened with that obligation? —I did not know but I was going to make enquiries. That was the point in your mind? —Yes, upon hearing the captain say that the Eastern Mining Company had an agreement to buy this boat or some agreement for this boat belonging to the Eastern Company, or something to that effect. Did you say anything at the offices to the officials you saw there as to the probability or prospects of the Malayan Company purchasing this property over which Mr. Russell had the option? —I had to say to them that I had inspected the Batoe Besar property, and therefore if Mr. Russell did happen to exercise his option-------------- (Question and answer objected to). Did you arrive back at Kuala Lumpur on Nov. 9, 1920? —Thereabouts. Did you then go to see Mr. Russell? —The day following. That would be Nov. 9 or 10? —The 10th, as near as I can remember. I think, in point of fact, to get it quite accurately, it was on the 9th that you sent a message to Mr. Russell by Mr. Hastings making an appointment for the next day? —When Hastings and I left the train at Kuala Lumpur, I told him I would be coming in to-morrow to see Mr. Russell. We had had a rather tiring journey, and I wanted to get home and have a rest. Did you in fact call to see Mr. Russell on Nov. 10? The day following I went to the Head Offices. Will you tell us what was said by you to Mr. Russell with regard to the visit which you had paid to the Batoe Besar property? —I told Mr. Russell I had not visited the Seboekoe property, and I told him I had made an examination, just a rough insight—over the Batoe Besar property, and that it would be a very good proposition subject to a bore. Subject to Brickman’s boring? —Yes, and if upon Hastings’s report the Batoe Besar property should prove up to expectations, did he still give the Malayan Colliery Company the first refusal as he said he should. I think you abstained from giving any valuation of the property to Mr. Russell? —Quite so. It would not have been fair to the company I represented. And you did not make any report to him, or valuation? —No. Nor were you asked by Mr. Russell to give any valuation? —No, and if he had done I should have refused. You mean because you were the servant of the Malayan Colliery Company and not the servant of Mr. Russell? —That is so. Did you tell Mr. Russell that you abstained from giving the company any view about the matter, or any advice about the matter, until you received the result of the bore which Mr. Brickman had arranged to send? —Yes. Did Mr. Russell then agree to convene a board meeting of the Company as soon as you were ready to give them the assistance of your advice upon the matter? —I asked him that upon Brickman’s bore I should like to meet the board, and put my views before the board, so, upon receiving a wire from Brickman I wrote a letter to the office and told them I should like to meet the board at their convenience. Did you prepare any plan of the mine? —Yes. And the plan of your proposed lay-out? —Quite so. You had the necessary materials in your possession? —Yes. Did you obtain all the necessary information including the cable from Brickman by Nov. 23 which was the date the board meeting was held? —I think I received a cable. The cable is dated Nov. 19. I think you have lost the original of it? —I could not say where the original was. I wrote from the original to the head office. Being at Batu Arang and going from one place to another, you cannot always keep a file up to expectations. I did not place any valuation on the telegram, because I notified it to the office. Are you able to produce the original? —No. Are you unable to produce the original because you have lost the original. You are unable to find the original? —I could not say anything about that because it is an utter impossibility. I propose to hand you a copy and ask whether it is a true copy of the original. Mr. Bridgeman: Has this witness said he has definitely lost the original? Sir Albion Richardson: He has said he cannot find it. Mr. Bridgeman: Have you looked for the original? The Witness: Why should I look for it? Sir Albion Richardson: The way I put the question is this: you had the original in your possession; are you now able to produce it. Can you find it? The answer to that question is No? —No. Sir Albion Richardson: Then I am entitled to put to the witness a copy and ask if this is a true copy of the original which he had in his possession, and which he is now unable to find. [Mr. Bridgeman objects to the question because the witness says he has not looked for the document, and he cannot be said to have lost it in the full sense.] Sir Albion Richardson: When did you last see the original? —In this particular period in 1921. I have been out of the country two years. It was sent to you “England”? —Direct to me at Batu Arang. And from the date when it was first sent to you have you seen it since? —I may have out it in the waste paper basket. But it having been in your possession that day, is it now in your possession? —No. Are you able to say what has become of it? —I really could not say. My friend asked you whether you have looked for it. Is it in this country? —No. I have not any papers here belonging to the company. Is there anywhere you could look for it in this country? —No. Is there any means which you have of obtaining possession of the document? —I do not think that I have anything by me that I can say about this cable. Sir Albion Richardson: I am going to put this copy in. The Examiner: I think it would be convenient if Mr. Bridgeman asked any question he wants to ask on it, and that would be on the Notes. Mr. Bridgeman: I have made a formal objection. It seems to me an unusual proposition of law that because a document is in another country you can give secondary evidence of it over here. It is the first time I have ever heard of it myself. Sir Albion Richardson: That depends whether it is reasonable for the witness to produce it here. Mr. Bridgeman: I do not think I want to ask him any questions. My only submission is that on the facts it does not entitle him to give secondary evidence of the document. (The copy of cable was put in and marked E.E. 2) Sir Albion Richardson: Subject to the objection, just look at that and tell me whether that document which is marked E.E. 2 is a true copy of the original of the cablegram which you received at Kuala Lumpur on the date named. What is the date? —Nov. 19, 1920. This is a correct copy. “Struck nine feet at forty nine feet.” On the morning of the meeting, did you hand to Mr. Russell a short report which you had made dated Nov. 14, and made on or about that date? —That was on the morning of the board meeting. Can you tell me what became of that report—the original of it. The report dated Nov. 14, 1920: was it left with the company? —Yes, I presume it would be. This document will be marked E.E. 3. Is that your report? —Yes, that is the very one. Report handed in and marked E.E. 3. That is the report which you dictated as it appears here, on Nov. 14 to your typist? —Yes, that is the report as I handed it in. It is the report which you dictated to a typist on Nov. 14? —Yes. Which you kept in your possession and Revealed to no One until the morning of Nov. 23? —That was typed by my private clerk. And you kept it in your possession until Nov. 23 without disclosing it to anyone? —Yes. That is the date of the board meeting? —Yes. On the morning of the 23rd just before the board meeting, you handed it to Mr. Russell? —Yes I have a copy of that original report in my home at the present time. I see it is not signed. Why was that? —I did not expect it to be signed when I wanted to explain it to the board meeting. It was just reference notes really. Before I come to what happened at the board meeting. I will ask you this: After you received the cablegram of Mr. Brickman, did you write to Mr. J. A. Russell on Nov. 22 informing him that you had received the cable from Mr. Brickman? —Yes. That will be in the possession of Mr. Russell. I will read the letter; it will be subject to the production of the original at the trial, because we have this letter in Kuala Lumpur. “Dear Mr. Russell, I have received a wire from Mr. Brickman saying that he has reached the coaling bore,” etc., etc. (Reading the letter). This is not an exhibit; it is a copy of the letter which is clearly not evidence with out the production of the original at the trial. I am not attempting to put that in. I merely read it as part of the history of the transaction. Having handed this report dated Nov. 14 to Mr. Russell on the morning of the board meeting of Nov. 23, just tell us what happened after that. Was the board assembled at that time? —Yes. Do you remember who were there? —I can remember three or four. There has been such a long lapse of time, and these Chinamen’s names are difficult to commit to memory. There were J. Russell, Mr. Henggeler, Mr Grant Mackie and if I remember a gentleman named Brush. I almost believe there was a Chinaman, but I cannot remember his name. It never struck me forcibly. When the board were assembled and after you handed this report to Mr. Russell, did he go into the board leaving you outside in the first place? —When Mr. Russell came in I handed him this short report. That is came into the company’s office? —Came into the company’s office, and he went into his private office. In a very short while it was under discussion I expect. I want to know what you know. You were outside? —I was outside. The board meeting was held in a room in which Mr. Russell had entered with your report? —Yes. You remained outside? —Yes. What time of the day was this? —Early in the morning, about half past eight. How long would it be about that Mr. Russell was there before you went in? —As near as I can remember it would be five to ten minutes. Then did he come out and ask you to come in? —Mr. Henggeler came out. He came to me and suggested about the price being asked, and what did I think about it? Just tell us about that. You mean this conversation took place outside the board room? —Henggeler came out of the board room and asked me what I thought about the price. What was said? —Mr. Henggeler said Russell was asking for 100,000 shares or the equivalent to $600,000 for this concession. What did I think about it? The remark I made was “I cannot say anything here, Mr. Henggeler; I would rather say it before the board.” I did not think it was business. So he said “Very good, I will go and see them.” So we went in. You went into the board room? —Yes, I was in front of those gentlemen, the representatives of the Malayan Collieries. Was Mr. Russell there at the same time? —Yes. Was he there during the whole of the time? —Yes. When you got into the board room did a discussion take place between you and the directors as to whether it was in the interests of the company to purchase this property? —Yes. Did they put various questions to you for the purpose of ascertaining what the result of your examination had been? —Yes. And did you answer those questions? —Yes. Truthfully? —Yes. Had you or had you not any personal interest in the company purchasing this property? —No, none whatsoever. Had you any interest which was in conflict with your duty to give honest advice to the company as to the wisdom or the desirability of purchasing the property? —My sole interest was for the interest of the Malayan Collieries. I was not worried about this other proposition whatever. What other proposition? —The Batoe Besar property, but I could see it was a dangerous opponent to the Batu Arang concession, and I advised the directors to the best of my ability, and I put the figures, and facts and plans, and diagrams before them, and I gave them my honest opinion about the concession. Did you tell them what effect on your mind the result of the cable from Brickman had? —that is as to the bore? —Yes. What did you say about that? —That gave me confidence that this property was a first-rate coal-bearing property and was a unique proposition to any company requiring a coal concession. Did you give the board the figures of the costs or the estimated costs of output and profit? —Yes. Did you produce your plans and diagrams before the board? —Yes. Did you give them an estimate of the quantity of coal? —Yes. What was that estimate, do you remember? —If I remember rightly my estimate was forty million tons. That is workable coal? —Workable coal. Of good quality? —Yes. Did you give them the estimate which you have already stated in your evidence of eight dollars a ton landed at Singapore? Yes, at the board meeting. Did you give them an estimate of the output? —Yes. Which was ten thousand tons a month? —Yes. Was that an under or over estimate in your view? —That was an under estimate. I think you have actually had experience in selling Batoe Besar coal, have you not? —Yes. At what price per ton? —I think we got for the first consignment of coal 32.50 dollars or 32.75 dollars; I have forgotten. Having given the board all this information, did you give them an estimate as to the profit which you anticipated this mine would yield? —Yes. Did you take for that estimate the cost of production as high as 15 dollars a ton? —Yes, including the royalties. And the average price you took at 25 dollars? —Yes. So that would leave a profit per ton of 10 dollars? —Yes. Was that the estimate you gave them? —Yes. Ten dollars per ton on 10,000 tons would be $100,000 a month? —Yes. I suppose you did not expect to get that immediately? —The mine was only producing a small output of 2,000 tons a month. It would take a short period to get fixed up, and the machinery established and what was required. Did you give them a higher estimate for the yield after twelve months? —Yes, I gave them something near the figures of 100,000 tons a month. At that time did you anticipate that the price of coal would drop? —No, I could not tell the fluctuations of the market. They were booming very high at that particular time of my report when I based my report on the cost of production. Your figure of profit was taken on an estimate of 20,000 tons a month? —Yes. Twenty thousand tons a month at 8 dollars profit would be 160,000 dollars a month? —Quite. Of course those were estimates? —Yes. Unfortunately you cannot see into the future, but assuming these estimates which you say were honestly given to be well founded, was the price which Mr. Russell was asking for the property, in your opinion, a reasonable price or an excessive price? —At that particular period I considered it was a very reasonable price to offer to any company. You mean in the light of your then knowledge? —In the light of my knowledge at that present time. And did you so advise the directors of this company? —Absolutely. I am not sure whether anything was said at that meeting about the Seboekoe property and the reasons why you had not made your examination of it—or did they know what had happened there? —I did not worry about the Seboekoe. I told them it was not a proposition worth discussing, and therefore I declined to have anything to do with it. You did tell them that and they did not investigate the matter further? —My sole ambition was for the Malayan Collieries to acquire this proposition through my influence. It was through my advice that they acquired it, but I could see that if J. A. Russell and Company had offered this to a foreign company or taken up the option themselves of developing it, it would have been cutting Batu Arang absolutely from under its feet. I could see the danger and that is the reason I honestly requested to be allowed to place before the board my opinion. It is common ground that these estimates were not in fact fulfilled? —No, it was impossible. What was that due to in a large measure? —When you come to foreign parts like that, you are taking labour risks, and these native people as a rule, if they can spring you, they will do so; and they caused great trouble. Then there was a European Administrator on the mine and we did not get on at all well together. Did you have labour troubles of a serious character? —Caused by the Administrator interfering where he should not have done. There were in fact very serious labour troubles out there? —Yes, that is what held us up. We were held up a week together. They would not work. They would not work for a week together? -Three, four and five days holiday. That was repeatedly happening? —It happened for two or three months in the first period. Was the effect of that that your estimates were, in fact, not fulfilled? It absolutely cut the ground from under my feet with the labour troubles. You say these labour troubles went on for how long? —Two or three months. What happened after they ceased so far as the property was concerned? —I did not fulfil the expectations of my report. It did not materialise to what I wanted, and therefore I was very much disheartened and disgusted. Unfortunately, we know from experiences in other cases you cannot see into the ground. You can only sink your bore and form your impression and estimate, and bring your experience to bear on what the ground is likely to hold? —Quite so. Was there any difficulty with machinery in addition to the labour difficulties you have spoken about? —I was not quite sure when I was placing my report whether I could acquire the necessary machinery to develop the mine locally, or from this country. Therefore, I asked Mr. Russell, seeing that he had been out in that part of the world, if he could give me any insight as to whether I could procure it locally? He said it might be able to be procured in the F.M.S. or the Malay Peninsula by going round the province and picking up all the stuff he could get hold of. At that particular time with these difficulties as you will quite understand, it was very difficult to get machinery out from home. And that accounts for a very long delay? —Yes. So far as the actual estimates of what is in the mine is concerned, have you any reason to suppose that your estimate was wrong? —No. The coal was there and is there still? —Yes, absolutely. But the production of it has been retarded for the reasons you have given us? —Yes, for the explanation I have given you. From your experience as an engineer, would you say that the winning of the coal in this particular mine was a costly or a comparative inexpensive proceeding? —In the Batoe Besar mine? —From what I could see about it from my experience of mining which has been over a period of 33 years in this country and abroad I considered that this proposition was very unique as I had never come across such a property before. Because you could win the coal more cheaply than in other mines? —Yes. How do you account for that? —Because it was near the surface and you could strike the seams straight away without any expenditure on sinking and boring. Did you see any features presenting any difficulty at the time you examined the mine? —No. I think we have it that the purchase price, in your opinion, was a reasonable price for the property which Mr. Russell asked and which you advised the company was a reasonable price of 100,000 shares in the company and $600,000 in cash? —Yes. For the sake of argument, taking the shares as worth 30 dollars each, the cash equivalent on the total purchase price would be three million six hundred thousand dollars? —Yes, the share. Was that a high price or a low price? —At that period I considered it a very reasonable price to ask. And you so advised the board? —Yes. Just one question in conclusion as to the circumstances under which you left the employment of the company. When did you leave their employment? —I think it was in 1921 was it not? —I resigned my office in July 1921.

THE MALAY MAIL, FRIDAY, APRIL 4, 1924, p.5 PECK v RUSSELL ENGLAND’S EVIDENCE CONTINUED Stoutz sends his agent. The following is the continuation of Mr. England’s evidence:- His name was Lin Djit Chan?—Yes, he was de Stoutz’s agent for Seboekoe. What was the object of his coming on board?—He had an idea that I was coming by this boat. He asked me when I was going to Seboekoe. I told him what I had heard from previous reports, and I asked him, “What do you think about Seboekoe?” He said, “It is very difficult to approach the shore.” I said, “Could I land the machinery there?” I showed him the machinery and he said it was doubtful. I said, “Under these conditions I am going to proceed to Batoe Besar and wait the return of Hastings from the Batoe Besar concession, and I should call on my way back.” Did you see on board at the same place a gentleman named Van Ryswyk?—I did not see him at Kota Baroe. I saw him at Batoe Besar. He was the administrator for the Batoe Besar concession. The ship then sailed from Kota Baroe to Pamoekan Bay, that is the nearest point for landing to get to the Batoe Besar property?—Yes. The Batoe Besar property is on the shore of Pamoekan Bay. Pamoekan Bay is the approaching bay to the property. There is no other way to it, only that. When you arrived there you saw Mr. Van Ryswyk?—Yes. Did he invite you and Mr. Hastings to stay with him at his house at Batoe Besar?—Mr. Hastings introduced me to this gentleman—this administrator—and told him my name and that I was a passenger on this boat, and asked had he any objection to my staying until Hastings returned. He said certainly not. He gave me rooms away from his place to wait for the boat to return. For Hastings’s return?—For Hastings’s return. Seboekoe Trip Abandoned. What was the scheme at that time in your mind in regard to the examination of Mr. Russell’s property, the Batoe Besar property, and the Seboekoe property?—The arrangement in my mind as near as I remember it was this: if I had stayed at Kota Baroe, it would not have been of any service to me. I should have been held up there, and so I went to Batoe Besar with Hastings and waited there, to pass the time away better, and the arrangement was that when I landed there I took the opportunity of having a look round for my personal use. You mean for the company’s use?—For the Malayan Collieries Co’s use. I thought if there was anything there worth acquiring I was going to have a look in as well as other people. When you say you, you mean the company?—I represented the Malayan Collieries Co. I was general manager all the time, and I was taking the opportunity of having a look round. You have told us the conversation you had with Mr. Russell, and that if you approved of the property and the company wanted first refusal of it he would give it to you?—I asked him if he had any objection if I should have a look. He did not know I was going to Batoe Besar. But being there under the circumstances you have told us, did you think it was in the interests of the company to look at the property?—I suppose any mining engineer who was rather enthusiastic would take the opportunity. It was to my interest and my experience to be in that part of the world when I was going to call at Seboekoe. How far was the property from Van Ryswyk’s house?—He is a Belgian really. G. B. B. explained. It is in the neighbourhood?—His house is on the quay—what we call the wharf. They call it “on the godown,” in Dutch, and the mine was just surrounding. Did you, under these circumstances, go round the Batoe Besar property and make an examination of it?—Yes. What was your impression, if you formed one, as to the facilities for mining and shipping at this port?—When we went alongside I could see the convenience of a rather large steamer being able to call along such a wharf in deep water, and when I looked at the surrounding property it struck me very forcibly that it would be rather a good proposition to endeavour to acquire it for any company in the coaling interests. That is what struck me forcibly about the place. Did Mr. Van Ryswyk give you any information as to the Seboekoe property?—He did not give me any information about the Seboekoe property, only what I asked him. Did you ask him for any? I asked him about Seboekoe. I said, “Do you know anything about Seboekoe?” He said. “Certainly, I do.” I said “How long have you been in this part of the world?” He said, “Years and years.” I said, “Will you give me some information about Seboekoe? I am going there to inspect this property for the Malayan Collieries.” He said “It is only wasting your time to go there; it is foolish.” A White Elephant. Did he say whether the property had been inspected before?—I asked the reason. He said “There have been people there before and he called it a white elephant. There had been people before, what happened?—He said they could not make any progress. Did he tell you why that was?—Because of the swamp and the bad condition—no depth of water and mangrove swamp. It went practically inland for a mile and three-quarters, and when the tide was up the water overflowed the low-lying land and this particular part of the property was inundated. What was the cumulative effect of all this information you then amasses with regard to the Seboekoe property and the impression you formed with regard to the Batoe Besar property?—When I was there I could see the Batoe Besar property, and I thought I was not going to waste my time by going to another proposition which was not worth acquiring as it would be only a waste of time. So far as expense was concerned did that involve the company in any further expense?—No. Hastings’s Salary. Before you left Kuala Lumpur had you agreed on behalf of the company with Mr. Russell what proportion of Hastings’s fees and costs and expenses should be paid by the company and what proportion by Mr. Russell?—Yes. No one had expected to acquire the servant of another company unless he was prepared to pay salary for the time of employment. Therefore I proposed giving Hastings $650 while he was in the service of the Malayan Collieries. Then afterwards when the other arrangement came about I was not going to pay $650 for Hastings’s management when he was going to do work elsewhere. Therefore we cut it down to $500. $500 a month?--$500 a month. And Russell to pay the balance?—Yes. When the notion was that Hastings was to examine the Seboekoe property alone, the company were to bear the whole of the cost. When the fresh arrangement was made whereby Hastings was to assist you in examining Seboekoe and also to employ his time during the expedition in examining Mr. Russell’s property at Batoe Besar, inasmuch as Russell would be getting part of the benefit of Hastings’s services, he was to pay part of the costs?—Quite so. I could not see that the company was going to pay the extra money when he was doing the Goenoeng Batoe Besar company’s work. Now I want to come to the examination of the property at Batoe Besar that you made. Did you examine it with Brickman?—I instructed him to give assistance. Did you examine it with Hastings?—No. Hastings made an independent examination?—Hastings was not with us at all. I was not worried about Hastings. I was looking after my own affairs. Hastings made an independent examination of the mine?—Yes. And you made your independent examination of it?—Yes. His Conclusions. Just tell me shortly what conclusions you came to as to the value of it, having made your examination. Perhaps we had better deal with it in detail as to how you examined it. What steps did you take?—I took Brickman with me. We went round the outcrop of the seams. I went all round the property to find out all the borings and see if there was any faultings at sight and what outcrop there were; and I was looking to see what mining facilities and benefits could be derived by cheap mining. Then I had several surveys made just roughly taking bearings and depths and sections for my own perusal. Then I went into the mine and examined there, and I came to the conclusion that it was a very valuable proposition. I did not make any note for anyone. I kept it for my own private use. Did you form any conclusion as to the price per ton at which it would be possible to land coal at Java from this (Continued on page 7.)

(Malay Mail Friday April 4, 1924, p.7 not seen)

Malay Mail Friday April 4, 1924, p.9. PECK v. RUSSELL Mr. Russell Continues his Evidence. INTERVIEWS WITH HONG GUAN. (Continued from yesterday’s issue.) Examined by Mr. Carver, Mr. Russell continued his evidence yesterday as follows: - I mentioned this to Hong Guan and told him that if he brought me the option such a right would be very useful to me. The realisation of Malayan Collieries shares on a large scale by me would certainly bring the shares down. It would have a doubly harmful result. I would receive a smaller sum for my shares realised and the balance of the shares which I still had would be greatly depreciated in price. The first interview with Hong Guan was on Sept. 5 or 6. About that time I had two or three other interviews with him. When I suggested that he should bring me an option I had no intention of doing so as agent of Malayan Collieries, Ltd. I was not aware that there was anything in the way of myself or my firm acquiring options. It was quite clear that we could acquire options. In Stoutz’s letter of Aug. 25 he offered one month’s free option to M. C. Ltd. I talked the matter over with Mr. Henggeler and I think Mr. Mackie. We decided that we must have at least two months’ free option involving the Company in no payment whatsoever, with the right of extension, if we desired an extension, on making a certain payment. We decided that if we secured an option on such terms Mr. England should go across to Seboekoe, with such assistance as he thought was necessary, and during the free period of the option make a report to the company on the advisability of acquiring the property. In the end we got such an option. This decision was arrived at possibly before we wrote that letter to him stating our terms. We must have discussed it before this letter, possibly also after. I received a letter from Mr de Stoutz on Sept. 23. In it he says “I am glad we have come to terms”. The option was then fixed up. The date of this letter is wrong, it should be 22nd because he says “today I wired”, and the date of the wire was Sept. 22. The actual option had been fixed up on Sept. 22. Mr. Carver here produced a bundle of fresh correspondence between Russell and Co., Loxley and Co., Malayan Collieries, Ltd., and Mr. Vanderhurst, which Mr. Braddell had called for. Mr. Braddell pointed out that one letter, dated Oct. 20, was missing. There should be two letters of the 20th. whereas there was only one. He wished to put in this bundle of letters himself marked “O”. He thought that this bundle of letters should be read before they went any further. Mr. Braddell read the correspondence, Mr. Russell standing down until this was finished. Continuing his evidence, Mr. Russell said that in the letter of Sept. 17, the second paragraph referred to Tehweh. The particulars were supplied to him by Hong Guan. What he meant by “negotiations with E.M.R. Co.” were the various interviews which he had with Hong Guan. Referring to the letter of Sept. 28, the reference to the gentleman who he proposed to see was Dr. Birnie, and his Chinese friend mentioned there was Hong Guan. Witness remembered seeing Hong Guan on the 16th or 17th. Then he went to Singapore and as far as he could recollect the first time he returned was Sept 27. On that day he saw witness and brought with him what was described as The First Option. He remembered Platt’s report on this mine which he probably saw on this date, Hong Guan having brought it. When he went through the option of Sept. 25, it seemed to him to be of no value, because the time was far too short. It left barely 12 days to run and it would have been impossible to have visited the mine in that time. The boat left Singapore on Friday, this option was brought to him early in the week. He told Hong Guan that he would accept a free option for a long period and at a price round about a million dollars. Mr. Russell continued: I told him that if he wanted to obtain any consideration from me in the matter of the payment of his debt he must bring me something more acceptable. Hong Guan said he thought he would be able to get a reduction in price, but nothing very much because this was a producing mine and coal was selling at high prices in Singapore. He did not think that he would be able to get any great extension of time. He said that if I wanted long term free options I would have to be content with undeveloped properties such as other places which had already been mentioned, particularly the coal deposits at Tehweh. He mentioned several coal deposits in Celebes, and he gave me to understand that there were several places in Sumatra and Borneo. All I can remember is what he told me about Langkat. He said that he intended to see Mr. Birnie either in Singapore or Java and to go to the Dutch Indies in connection with the other places of which he had knowledge. But he said that he was known neither to Mr. Birnie, nor was he known in the Dutch Indies, and in order to show people that he was not wasting their time he suggested that I should give him some sort of Letter of Identification. I told him that such undeveloped properties did not interest me so very much, but that possibly they might interest Malayan Collieries. Mr. Carver: Will you explain why? Witness: Yes, they would not interest me because they would take, in all probability, almost certainly a long time to develop, while I could, owing to the high price of coal, acquire for myself, or in partnership with others or for the purpose of floating into a company, a producing coal mine. From my experience in floating Malayan Collieries, because money at this time was becoming tight, I felt that I would not be able to afford to purchase myself nor could I float an undeveloped property which would take, as was the case of Malayan Collieries, from three to four years before it would pay a dividend. His lordship: That is a long sentence. How did Malayan Collieries stand in the matter? Witness: I considered that if Malayan Collieries could get a long term free option over an undeveloped coal mine they could take their time in thoroughly prospecting the same, and as the price of such undeveloped properties was not likely to be high, if the property proved a sound one, they could probably acquire it at a comparatively cheap figure, and develop it slowly without greatly interfering with their dividends. I should like to add that the distinction is this: Whereas I could not wait until an undeveloped property began to pay, Malayan Collieries Ltd., could. What did that result in? - Whether I acquired it or the Malayan Collieries acquired it, Hong Guan told me that it made no difference to him with regard to this letter of identification which he required. I then wrote and gave him the short letter of Sept. 27 on Malayan Collieries notepaper and I signed for the agents and secretaries. In giving that letter did you think you were committing M.C. to anything? –No I did not consider that I was binding M.C. to anything. That is why I used the words “Apply for option.” Did you consider you had any authority to pledge M.C. to such a transaction? - No, I knew I had no authority. Mr. Braddell: What is meant by such a transaction? Witness: To an option agreement. Had that letter any relation to G.B.B.? – No, none at all. You also knew the name of the E.M.R. Co.? –Yes. You also knew that Hong Guan had the document of Sept. 25? - Yes. Knowing those things, do you think that you wrote that letter of Sept. 27 to refer to G.B.B? - I am almost certain that had I intended this to refer to the E.M.R. Co. the natural thing would be to write to them, and address to them a letter that Hong Guan was authorised to apply for an option over the property at G.B.B. Hong Guan started an action against you in Singapore in May 1922? – Yes. That was struck out and he started a similar action in Kuala Lumpur? – Yes I think in October. There were criminal proceedings too? -Yes Hong Guan is not well disposed towards you? –No he is Mr. Braddell’s client. Mr Braddell: Did you say he is my client? – Yes Sir. The court adjourned at this stage for lunch. Significance of the Plural. Resuming after lunch Mr. Carver continued his examination of Mr. Russell, who said: Hong Guan went back to Singapore after the interview on Sept. 27. That same evening I wrote a letter to him. Comments have been made on that letter. You are familiar with the wording? Yes. There you have used the words “I”, “we” and “our”- Yes. Now these words, I think, are all used in relation to Malayan Collieries matters? –Yes. Can you say how you came to use these words? - Yes. I think these words were used loosely and colloquially. You will realise that I was the founder of Malayan Collieries, and have been closely identified with it, because I have so large a financial interest in it, and nursed it through bad times when its shares fell to about two dollars. In course of time Malayan Collieries became identified with (me in) the public mind. I have been chairman of the company since its inception, and my firm of which I am senior partner had been its agents and secretaries from the beginning, and they have frequently spoken about the mine as my mine, and about the coal as my coal. And I have been in the habit of doing so myself. My reason for writing that letter was to show that I was not too keen. The offer of Seboekoe to Malayan Collieries had a bearing on the question. If the Malayan Collieries acquired Seboekoe I might not wish to run an opposition coal mine, and if they required Seboekoe it would possibly require a good deal of money in connection with Seboekoe, a large share of which would come out of my own pocket. In the fourth paragraph of that letter I compare the Batu Arang, Seboekoe and G.B.B. coal. Comparing any coal in the East I would naturally take Batu Arang coal as my standard of comparison. In writing that letter I was not doing so on behalf of Malayan Collieries. A Denial Did you intend to use your position in Malayan Collieries to forward your private negotiations? – No. I did not. The fact of the existence of the option of Sept. 25, and the stipulation about Malayan Collieries shares shows, I think, that there was no need to forward my negotiations through in a way. The negotiations had already been opened. I have looked at the carbon copy of that letter. The initials of the clerk who typed it are K.H. Who was K.H? - Kim Huat. He had been in my office six weeks or a month. He was not one of my regular clerks. He usually worked for Mr. Dickinson. Mr Dickinson had joined me some months previously in connection with a large tapioca scheme for which we had obtained a 400 acre concession in Pahang. He occupied a separate room and had nothing to do with the rest of the office. I gave my clerks no instructions at all. They had to use their discretion as to what paper to use in typing letters. Two days after the letter I sent a telegram to Hong Guan. At the foot of that telegram there are the words “account J.A.R. and Co.” and my initials. Those words was our instruction to the Post Office as to whose account the cost of the telegram was to be debited. We had three accounts at the post office in the name of J.A. Russell and Co., Malayan Collieries Ltd. and Malayan Matches. The telegram referred to the same matter as was in the letter. If the telegram was on Malayan Collieries business I would have passed a direction to debit it to the Malayan Collieries account. The telegram of Oct. 1 “Confirm arrangement” also refers to the G.B.B., was also signed by me, and it also bears the same direction to the post office as the previous one. Referring back to the letter of Sept. 27, I want to add that “we” in the last paragraph meant J.A. Russell and Co. Kim Huat, the clerk was Mr Dickinson’s private clerk and worked with him in the same room. This letter of Sept. 27 was filed in the Malayan Collieries file. How was the clerk to know on what file to put the letter? - Unless special instructions were given the filing clerk would go by the heading of the paper on which the letter was typed. Might I explain that coming back from China and having to write a lot of letters I used this clerk of Mr. Dickinson’s. I think this is probably among the first letters which he ever typed except for Mr. Dickinson and seeing the words “Malayan Collieries” in the draft, would very likely have taken up a piece of Malayan Collieries paper to type it. Mr. Carver drew his lordship’s attention to the words “Malayan Collieries” in the body of that letter, but the words J. A. Russell and Co. nowhere. Mr. Russell added that the clerk was not very satisfactory. That clerk typed up two other letters which were found in Russell and Co.’s file. Inspection of Seboekoe. Will you say what arrangements were made for visiting Seboekoe? - On Sept. 23 or 24 immediately after receiving Mr de Stouz’s telegram of Sept. 22 Mr. England was told to take such assistance with him as he required and go to Seboekoe. What assistance? - He had, of course, the colliery staff available. He said he intended taking Brickman with him, and that he intended taking certain coolies. But he pointed out that neither Mr Brickman nor himself had done any travelling in the East, nor could they speak any Malay, having not long arrived from England. Did you make any suggestion? - Mr England asked me what I would do to assist him in the difficulty and I said, provided I could spare him, I would lend him the services of Mr. Hastings who was in my employ. What experience had Mr. Hastings? - Mr. Hastings had a very varied experience. At that time he was principally working for me in investigating tin properties which were put before me. Mr. Hastings was originally a mechanical engineer, but he had also worked in the Trinidad oil fields and he speaks Chinese. I asked Mr. Hastings to assist Mr. England and he went up to Batu Arang. On Sept. 28 I wrote a letter to Hong Guan and it chiefly refers to other coal properties. The last paragraph related to the engineers of the Seboekoe party leaving by steamer on Oct 1. That was a K.P.M. boat not the Nanyo Maru. That would mean a change of steamers at Banjermassin? - Probably. The ordinary route was to Soerabaya, and then to Kota Baroe. I do not know whether this steamer of Oct. 8 would have necessitated the changes. Option Problems At this time I had in mind as to whether I would transfer at cost to Malayan Collieries the option which I might get or keep it for myself. I was thinking of Goenoeng Batoe Besar. There was also a possibility of selling to Malayan Collieries after the tests and investigations. If the question of sale to Malayan Collieries came up would it have required some sort of inspection? – They would have required an inspection by their own representative before purchasing. When you found you were able to get an option over G.B.B. who did you want to see the property on your account? - I thought, under the circumstances, Mr. Hastings would be the person I would wish to send. In that case I suppose you would have had to take him away from Mr England? - Yes, unless it was possible for them to travel together as far as Kota Baroe. I think Mr Stoutz’s option arrived on Oct. 5? -Yes Before that date you found that accommodation was available by the Nanyo Maru for both parties? - Yes. Hong Guan’s New Terms Continuing witness said: According to a telegram from Hong Guan received later, $120,000 was to be paid at once and no option was mentioned there at all. I wired back the same day rejecting the proposal. Hong Guan arrived in Kuala Lumpur the following day, Sept. 30, and saw me. He had nothing further from me in writing. I recollect what he said. My recollection cannot be very good at this date, but from so far as I can recollect and from my letter to him of Oct. 1, I can gather what he said. I gather that he said he was able to get one month’s free option dating from the time of the sailing of the Nanyo Maru for Pamoekan Bay. If I remember rightly he said that the deposit was not a forfeitable deposit and that he could get the amount of $120,000 reduced. I can remember saying that I could not understand the reason for the deposit if it was not forfeitable, and therefore it appeared to me that what he was offering was not a free option which he promised to obtain. I said I certainly would not pay down any money until I could at least verify the title as I was well aware that according to the Dutch mining regulations quite large mines can be worked on two to three year licences which are only renewable at the pleasure of the government and are not transferable without the sanction of the Government. I told him that one month was a very short time and preferred a longer period. Hong Guan said that the option was a free one, the only reason for the stipulation that I should deposit a sum of $120,000, or less, being to show he was in touch with me, as a reliable person who had command of certain amount of money. I said that if that were the only reason I would put up the money, and if the deposit were made in our joint names it would quite satisfy the E.M.R. Co. He said he would go to Singapore and see what he could do to get the option on the terms I outlined. If I remember rightly I said I could not agree to pay a fixed royalty of $250 as I preferred a sliding scale and I recollect writing out a suggested scale. And also I believe it was at this interview that I told him that instead of taking Malayan Collieries shares at market value in order to avoid fluctuations it would be better to take them at the fixed price of $30 a share. I signed the telegram sent by Hong Guan to Dr. Lim Boon Keng, but I cannot remember the circumstances under which it was sent. Hong Guan told me about the Nanyo Maru and he told me about another steamer. About Nanyo Maru he told me that it was chartered by the E.M.R. Co. and that it would be leaving Singapore for Goenoeng Batoe Besar, I think, on the 10th. He told me that there would be no difficulty in people travelling by her, although she was not a passenger boat. Did he say anything regarding an issue of shares by the E.M.R. Co.? – His lordship: Well, is it relevant? Mr. Carver (to witness): Did Hong Guan make any request? - He asked me to take up a proportion of the new issue of the E.M.R. Co. shares for which he had promised to subscribe. What did you tell him? - I think I said that I would consider it, but I don’t think I gave him any definite promise. The Purchase Price. With regard to the value of G.B.B. what had you before you at the time? - I had very little at the time. I had the unsigned particulars supplied by the vendors. I also had a typewritten copy of a report made by a man named Platt whom I had never heard of before and I may add never heard of since. He was certainly not a recognised local mining engineer, local meaning the Colony and the F.M.S. Then I had Mr Hong Guan’s information. What else had you? - I don’t think much more. On Oct. 1 I had certain letters from Mr Vanderherst mentioning the property. I had no opportunity to verify the information about Goenoeng Batoe Besar, but I certainly thought there were promising indications. You regarded the matter still as a speculative one? - Yes, as a highly speculative one. Do you remember when you first told Mr England when Mr. Hastings might not be available to him? - I think that was about the 30th. I told him over the phone. Mr. England I think came to see me on Oct. 3 or 4. In the long telegram from Hong Guan sent later he said “money will not forfeit”? –Yes. Can you recollect what you were to confirm and what you confirmed by the reply you sent? - I cannot remember now. My impression is that it was to confirm the appointment to meet him on the following morning. Were you surprised by the term in Hong Guan’s telegram “Money will not forfeit”? – Yes. He had represented that money would not be forfeited. I had doubted myself strongly. The reason for his putting in the wire was, perhaps, to reassure me on the point. It seemed quite inexplicable. Hong Guan came to Kuala Lumpur on Sunday Oct 3, and I saw him at my office on that day. What did he bring with him? - The option of Oct. 1, 1920. Hong Guan Changes His Attitude What did he say about it? - He told me that it was a very favourable option and he wished to know what he was likely to get out of it. He said that the option belonged to him, and that he would have no difficulty disposing of it. In fact his attitude of being anxious to please to me to get extension of time for the payment of the debt to me, quickly changed. He adopted a far more independent attitude having got the option. Did he point to the time of the option? - Yes. He said the option was very short. If I did not require it he must know at once so that he might sell it in Singapore. What did he ask? - He made something like four requests. They were: - (1) That I should put up the $60,000 on the following day, Monday (2) That I should pay him down a sum in cash, probably something like $20,000 (3) If the option were exercised that I should give him a sum of $100,000 (4) That I should take up the share which he said he had promised to subscribe to in the new issue of the E.M.R. Co. The court adjourned at this stage till 10.30 a.m. to-day TO-DAY’S PROCEEDINGS Mr. Russell and Mr. Hong Guan. When the court resumed this morning, Mr. J.A. Russell continued his evidence. He said: I read the document of Oct. 1 which Hong Guan brought. I looked to see if the facts confirmed the free option. I formed the opinion that it was not a free option. I told Hong Guan that I thought it was not a free option. He still maintained that it was and that he only asked me to put up the money to show that I had it. I said that it appeared to me that if there was any misrepresentation in regard to the title of the mine I should be able to get my money back, but that if the title were in order, and I examined the property and then did not exercise my option I should forfeit the money. That ended the discussion between us. He modified his four conditions. He agreed not to insist upon my taking over from him the shares for which he had promised to subscribe in the E.M.R. Co.’s new issue. He also agreed that instead of requiring a cash payment from me he would be satisfied with a loan. I said that I would pay him the $100,000 which he wanted; I would also deposit the $60,000 in the bank which was required by the terms of the option. I agreed to lend him a certain sum. I do not think I said $10,000, but I do believe I indicated that it would be round about that sum. If he had given me good security, I should have been prepared to give him more than $10,000. I acted without the consent or authority of the Company, nor had I consulted any of my fellow directors I was acting on behalf of my own firm. I told Hong Guan that if the property proved valuable and I exercised the option I would first offer to sell it to the M.C. Ltd, and that if they purchased it from me, as the mine was represented to be a coal-producing one, they would probably pay me in M.C. shares and I therefore, wished to have the right of paying him his consideration of $100,000 in M.C. shares at the rate of $30 per share. He raised no objection to this. I pointed out that the period was less than he had promised, i.e. it was not one month but 14 days after the arrival of the Nanyo Maru at G.B.B. I said that this was a very short time and I was running a great risk. I therefore asked him to do his best to get the period of the option extended. I wrote out a document dated Oct. 3, for Hong Guan’s signature. He still persisted that this was a free option, so I inserted the last clause. I did not consider that his view was a correct one. Hong Guan already owed me $6,000, which I had been unable to collect from him, and I had further promised to pay another sum of about $10,000 if this option were not exercised. His financial position would be no better than it was before and I therefore did not consider that his assurance was of any value to me. I wrote another document of sale, dated Oct. 4. I gave the document I drafted to Hong Guan to take to Singapore in order to obtain the signature of the E.R. Co.

The Straits Times, 4 April 1924, Page 9 (N.B. ARTICLE online but in wrong order) MALAYAN COLLIERIES. Mr. Russell Tells His Own Story.. History of Borneo Coal Option

Malay Mail Saturday, April 5, 1924, page 9. PECK v. RUSSELL Fifteenth Day’s Proceedings. HEARING TO LAST ANOTHER FORTNIGHT. (Continued from yesterday’s issue.) The following is the continuation of Mr. J.A. Russell’s evidence given yesterday: - The copy on the file is taken from my own file, from the papers of J.A. Russell and Co. I have not seen since the actual paper I handed to Hong Guan. My impression is that I wrote a draft in pen or pencil. I kept one myself and gave the other copy to Hong Guan to take to Singapore. The following day, on Monday, I would have given this rough pencil draft to my clerk and asked him to type out a copy for my file. This took place on Sunday, when there were no clerks in the office. Hong Guan never brought back that document signed. I told him on that Sunday that I might wish to send the gentlemen from the M.C. to Kota Baroe by the Nanyo Maru if it could possibly be arranged. He thought that it would be possible to send them by that vessel but was doubtful whether she touched Kota Baroe on her way to Pamoekan Bay. He said that she was sailing about the 10th or 14th. I thought that if the Nanyo Maru touched Kota Baroe, Mr. Hastings could take them as far as that port, where they could be handed over either to Mr. de Stoutz or his representative. Mr. de Stoutz speaks English fluently. When I had mentioned the matter to Mr. England on Sept 30 or Oct 1, he had complained about the difficulty I would put him in if I took away Mr. Hastings. At this interview Hong Guan made some reference to Tehweh. I think it was in this interview that he mentioned to me that Mr. Keng Seng would like to take over on certain rates a contract for the delivery of 3,000 tons of Tehweh coal a month. I said I would consider the matter, but could not do anything for a couple of months. On Oct 4 I drew a cheque for $60,000, on J. A. Russell and Co., on the Hongkong bank. I paid that cheque into the Hongkong Bank to the credit of deposit account on behalf of myself and the E.M.R. Co. It was A Deposit for two Months. It was to be cashed on my endorsement. I had this clause put in as Hong Guan still persisted in his contention that the deposit was non-forfeitable, and pending the confirmation of this that I had asked him to obtain from the E.M.R. Co. If I was acting as the agent of M.C. Ltd., I could have drawn a cheque on Malayan Collieries Ltd. At that date the M.C. had about $235,000 on fixed deposit and about $120,000 on current account. I had an arrangement with my bank that I could overdraw my account up to a limit of $850,000. On that day I had overdrawn about $832,095.15. That was on Oct 4th. This cheque of mine would put me beyond my limit. Mr. Braddell: I never had any inspection of these documents or accounts. My learned friends did not supply me with the accounts of Russell and Co. It is very hard for me to meet a case like this. Mr. Carver: I was informed that the pass-book and accounts were disclosed in the affidavit of accounts. Mr. Braddell said that disclosure did not mean simply mentioning it. The document had not been shown to him. Continuing the witness said: The Trengganu Corporation was a company which obtained mining land at Pakau. I knew the security to be of very doubtful value. I also wrote to Hong Guan on Oct 4. I was very anxious to have sufficient time not only for my own man Hastings to return but also to give him sufficient time to shepherd the Seboekoe party across to Seboekoe. On the 3rd or 4th, I should think on the 3rd, I telephoned to England telling him that I must take away Mr. Hastings as I had obtained an option over a coal property, G.B.B. and wished to send Hastings there to inspect it. He was very upset and said that he wished to come and see me on the matter. He came on the 4th. Mr Hastings also came to see me, I think on the morning of the 4th. I told him that I had obtained the G.B.B. option, that he must hand over the organisation of the Seboekoe party to Mr. England, and be ready to go to G.B.B. Mr. England asked me whether I could not make other arrangements, as the loss of Mr. Hastings’s services would put him in a hole. I said that it might be possible for the combined parties to travel as far as Kota Baroe, which would enable England to have the services of Hastings at that point, but it might be that the Nanyo Maru did not stop at Kota Baroe on her way to Pamoekan Bay, in which case England would have to travel by the K.P.M. boat sailing, I think, on the 15th. England said that even if the Nanyo Maru did not put in at Kota Baroe on her outward trip he would still like to travel by her, go to Pamoekan Bay, and disembark at Kota Baroe on her return journey. He explained that it would not mean a delay of more than four days or so, which would be balanced by the extra time it would take him to travel to Kota Baroe by the boat of the 15th, and that by going to Pamoekan Bay he would have two advantages. He would have the services of Mr. Hastings to conduct the party to Seboekoe, and the visit to G.B.B. would enable him to see an actually working coal mine in the same district as was the coal deposit he was going to appraise, which would be of great benefit to him on reporting on Seboekoe. I told him that if I exercised the G.B.B. option I would undoubtedly first offer it to M.C. Ltd. I thought his suggestion a good one, as he would be able to look at the place if he so desired. I told him there was a possibility of obtaining an option over the Tehweh property for M.C., and advised him to make enquiries about the place in Banjermassin if he had the opportunity of doing so. Mr. Hastings was present at that interview. How long did you think it would take Mr. Hastings to inspect Goenoeng Batoe Besar? - As Goenoeng Batoe Besar was reported to be a working coal mine I did not consider that it would take him more than four or five days to examine it. In any case I should not afford him a longer period than this as my option was only for 14 days after his arrival there. Did you tell Mr. Hastings to go with him? – Yes I asked him to take with him two of my Chinese mining men to assist him. Did you tell him what to do after making his inspection at G.B.B.? – I told him that if he had time he was to take on England and his party to Seboekoe but that if there was any risk of his not arriving back in Kuala Lumpur before the option expired he was to leave them at Kota Baroe on the return journey. I think on Oct. 5 you received Mr Stoutz’s letter of Sept 30? - I think I received the option. Then I think you sent Mr Stoutz a telegram on Oct 5? - Yes And you confirmed that the same day by letter? - Yes Did you about that time have a conversation with Mr. Ho Man? -Yes Can you give us the date of that? - I should think it was on Oct 5. Who is Mr. Ho Man? - He is a large miner. He is also a contractor for open cast mining for Malayan Collieries and he is a gentleman with whom I have previously had mining business. Is he a man who goes in for large business? - He is certainly the largest miner in Selangor, and perhaps in the F.M.S. When you saw him did you speak to him with reference to G.B.B? - Yes. I told him I had an option over a coal mine in Borneo and that if the same proved of value I intended first offering it to M.C. but that they might not desire to acquire it. If they did not wish to acquire it I asked whether he would join with me in either taking it up ourselves or floating a company. A Valuable Opportunity What did he say to that? - He said he was very glad of the opportunity which was a proposition which appealed to him and he asked me if he could send two of his men with Mr Hastings to inspect the place. And in fact he did send two representatives? -Yes. Do you know their names? - No, I cannot remember at this date. Coming to Oct 6 did you see Hong Guan that day? - Yes. I don’t want you to say anything that he repeated, but in fact he did not produce that document which you gave him to be signed? –No He did produce however, the option of Oct 5, is it not? – Yes That option gave you five weeks from the arrival of Nanyo Maru in G.B.B? - Yes You went through that document I suppose? –Yes. What conclusion did you come to on it regarding it being a free option? – I came to the conclusion that it was not a free option. Did you also notice certain added clauses? -Yes Were they added in compliance of a request from you? –No Did you discuss these new terms with Hong Guan? -Yes I said I was disappointed that my letter had not been signed, that I had been given a new option with new conditions for which I had not asked. I particularly objected to Clause “M”. You see the word “Allotment” in clause “M”. That word was not used in any of the previous documents? -No Do you remember whether your attention was drawn to that? - No, I cannot remember, but if my attention was drawn I would have noted that it was not used in any technical sense, meaning the issue by a company of new shares. What about the clause regarding the nomination of a director? –That did not appear to me to present any difficulty. Whether I purchased the mine or the Malayan Collieries purchased it from me, the E.M. R. Co. would be the proprietors of 20,000 M.C. shares which would make them the second largest shareholders in the company. Under such circumstances I thought it was only natural that they would like representation on the board, and provided they nominated a suitable person I did not see why they should not have representation on the board. I did not consider that there would any difficulty in getting a suitable nominee to act on the board. Nomination of a Director That contemplates the probability of your selling the property otherwise than to the Malayan Collieries. Would it have made a difference if it was sold to M.C.? - Whether it was sold otherwise or to the M.C. I did not think it would affect my using my influence in getting their nominee to be on the board as they would in any case be the holders of so large a number of shares. I think you wrote a letter on Oct. 6, addressed to Hong Guan, referring to the new clauses? - Yes. What passed at this interview of Oct. 6? - I gave Hong Guan a cheque for $10,000 as a loan. I gave him also the deposit receipt which I had from the bank. Did you take a receipt from him for the deposit receipt? -Yes I think you only found that the receipt quite recently? - Yes. (produced.) The body of it was written by me. I am acquainted with the signature of Hong Guan and it bears Hong Guan’s signature. Do you remember when you found that, Mr. Russell? - It was found on March 20. I think in fact the E.M.R. Co. did nominate Dr Lim Boon Keng? - Yes He afterwards resigned? – Yes. After that Mr. Poey Keng Seng was nominated? -Yes. He was objected to? - He was not accepted. Coming back to the option of Oct. 5, regarding the appointment of a representative to check the output of the mine, what mine was meant? -Goenoeng Batoe Besar. You took no objection to that? - No, if they so desired. Did you direct Mr Hastings to make enquiries at Banjemassin? - I asked him to find out from the Government offices there what sort of title G.B.B. had, whether it was a concession or a licence, and if the former what period there was still to run. I told Ho Man that the boat would be sailing on the 14th and that his men would have to be ready by the 11th. Treasurer of the Expedition. Who was to handle the funds of the expedition? - Mr. Hastings was to be the organiser and treasurer. He was given a letter of credit for $2,000 issued by the Hongkong Bank. From my accounts he took a small sum in cash too in addition to the letter of credit. He drew on Malayan Collieries account a sum of $2,500 on various dates. His lordship: How did he do that? Mr. Russell saw that $2,500 had been drawn in cash from Malayan Collieries account for advances and payments which were made before the expedition started. He could not say how much of this sum Mr Hastings took with him. You know that in April 1921 the expenses incurred by Russell and Co. on account of the expedition were refunded by the Malayan Collieries Ltd.? – Yes, by cheque, signed by me. An Unconscious Payment Were you in fact conscious that the money had been refunded? - No When did you first become conscious? - In July I think that Hastings, England and the rest left Kuala Lumpur on Oct. 11? - Yes On Oct. 15 the annual general meeting of Malayan Collieries took place? - Yes At which you made a speech? - Yes What had you in mind when you said that the company’s representatives had inspected coal deposits in China? - I was thinking of the inspections made by China Minerals and Mr. Barr. The company had never actually carried out any inspection of actual deposits in China? - No Then you said two properties were under consideration. What were the properties which you spoke of? - Seboekoe and Goenoeng Batoe Besar. Mr England had then left on the expedition? - Yes the party left Kuala Lumpur, and, as far as he knew at the time, had left Singapore on Oct 15. But I found out later that they did not leave till Oct. 16. Mr England left to inspect Seboekoe on behalf of the company and also to have a look at Goenoeng Batoe Besar. I think the first communication you received from the E.M.R. Co. was the letter of Oct. 19? - Yes, saying they had sent me a letter on Oct. 11 which I never received. Mr. Carver: I think that certain telegrams— His lordship: Have you finished with the report of the speech? Mr. Carver: Yes, my lord. (To witness) It appears from the post office vouchers, Mr. Russell, that there are some telegrams-two to Hong Guan on Oct. 8 and Nov. 23, one to Mr. Brickman, dated Nov. 8, another dated Nov. 10, one to Mr. Hastings dated Oct. 14, and another telegram addressed to Emarco, Singapore dated Oct. 6. - which have not been found? – Yes. Missing Telegrams Mr. Russell, you have had a thorough search in the office for these telegrams? - Yes Have they been found? – No Any recollections about the copies? - I could tell the contents of the telegram to Mr Hastings and the contents of one of the telegrams to Brickman. If it is suggested that you have in any way concealed these telegrams is it true? - No Or have you at any time caused them to be removed from the files? - No Have you any idea how it is possible that copies are not found in the files? – Yes. Our telegrams, I find have not been properly filed. We do not appear to have attended very carefully to the filing of the telegrams, and it is also possible that they were sent off from the office by someone who kept the copies. Chong Kin, at this time, was having business on my behalf and on his own behalf with Hong Guan regarding tin mining land, and he would very likely have sent off a telegram on such business. The telegram to Mr. Brickman might have been sent off by Mr England. I cannot explain the telegram to “Emarco, Singapore” because there is no such address as “Emarco Singapore”. With regard to the telegram to Mr. Hastings I might have written out this telegram at the post office on my way home after office, and kept no copy. I think at the end of October you received two letters from Mr Hastings reporting what he was doing? - Yes On Nov. 2 or 3, you received a telegram from him? – Yes. That was the first news you received of the outcome of the visit to Goenoeng Batoe Besar? – Yes. And were you surprised that England was returning? – Yes. I could not understand it. On Nov. 4 you wrote to Poey Keng Seng? -Yes In that letter you referred to England’s return from Batoe Besar. Why did you refer to Mr England? - Because this letter was in reply to a telegram asking whether we could accept an order to supply 10,000 tons of Borneo coal per month. I replied to that by telegram and this letter was in continuation of that correspondence. I considered that such an order to supply 10,000 tons of coal per month would be an exceedingly valuable one and if Malayan Collieries purchased the property from me it would be an order which they would not like to miss. If Malayan Collieries did not purchase the property and I took it over in conjunction with Mr Ho Man then it would take a considerable time in making the necessary financial and other arrangements before we could be in a position to supply 10,000 tons of coal per month. The reply to the Eastern Mining and Rubber Co.’s inquiry depended therefore upon Mr England’s recommendations or intentions with regard to G.B.B. The court adjourned for lunch at 1.10 p.m. and resumed at 2.10 p.m. when Mr. Russell was further examined. After the expedition left Kuala Lumpur I think a sample of coal came? -Yes Mr. Hastings sent a sample from the Nanyo Maru. That is the sample I sent to Mr. Nutt. No covering letter came with the coal. A part of my instructions was that he should send me a sample. I have not been able to find a covering letter. I know that three other samples were analysed by Mr Harrington. I remember that Mr. England brought back some samples from the mine. I remember that when Mr. England and Mr. Hastings were in Singapore on their way to G.B.B. they went to see some of the users of coal. Among them was the Municipality to enquire about a probable market for Borneo coal. There they were told…. His lordship: This is hearsay evidence. Mr. Braddell: This is important my lord. I should like to have it. Here we have England and Hastings inquiring for a market for this coal before they left on their expedition to Borneo. His lordship disallowed the question. Mr. Russell (continuing): I remember the return of the party. I cannot be certain but it may have been the 7th or 8th that I saw Hastings. I now know that the Nanyo Maru got back to Singapore on Nov 6 I saw Hastings the day after that. I saw Hastings as far as I can recollect in my office. England did not come to see me at the same time as Hastings. I saw England, I think, for the first time on Nov. 8 or 9, a day after Hastings saw me, or possibly two days after. Hastings’ Opinion. How did Hastings describe G.B.B? - He spoke in very high terms of it. He also said that I had undoubtedly secured an option over an exceedingly valuable property. He said that he had examined the mine and was convinced that there was a large quantity of good coal there which, with the reorganisation of the mine, could be produced at a low cost. He also told me that he had tested the coal under working conditions on the Nanyo Maru and had found it to be a good steam coal suitable for bunkering purposes. Mr Hastings made a report which he completed in my office. My questioning Mr Hastings coupled with this report made me believe that the mine was an exceedingly valuable one, and that the Malayan Collieries would most likely purchase it from me when I offered it to them. Did you consider what profits you were likely to derive? - Yes, I made several calculations and as far as I can remember, at present, I calculated that the mine could produce coal and ship it to Singapore at round about $14 per ton, and that this coal could be readily sold in Singapore for $22 per ton. His lordship: Can you say at what price Malayan Collieries, Ltd. coal was selling in Singapore at the time? - I think it was selling at $16 a ton. (continuing) I considered that the mine could easily be made to increase its output to 100,000 tons per annum which would give a profit of $800,000 per annum. I thought that if the price of coal fell this profit would be more than maintained by the increase in the yearly output, and a decrease in mining costs. Likely Profits In the face of that possible profit did you come to a conclusion as to the price you would ask? - Yes, after considering the matter I concluded that I would offer it to the Malayan Collieries for 100,000 shares of $10 each and $600,000 in cash. This would mean an increase of their book capital by $1,600,000. I was advised that a sum of about $100,000 would be sufficient for reorganising the mine. You say you were advised, by whom? - By Mr Hastings. I also had the benefit of the two Kepalas who Mr Ho Man had sent. And I allowed a sum of $400,000 for development instead of $100,000. This would make a total of $ 2,000,000 in all, $800,000 of which would be profits. You thought that a proposal on these terms would be welcome to the Collieries? - I undoubtedly thought that they would be only too glad to acquire the property at such a price. Mr England saw me one or two days after Mr Hastings. He told me that he had not visited Seboekoe because not only had he learnt that the physical difficulties……. His lordship interrupted witness as this was hearsay evidence. Mr. Russell (continuing) said: The unfavourable reports which he had received coupled with the very favourable reports on G.B.B. had induced England to return to Kula Lumpur without visiting Seboekoe. He made no report to me. In reply to his lordship witness said that it was evident from Mr England’s attitude that he had formed a very favourable opinion of the property. Mr. Carver: He gave you no detailed figures? - No he said that Brickman was boring the property and that he was not prepared to make any recommendation to the board before he had received the result of that bore. Mr Hastings told me that Mr England had been Rather Exuberant in Singapore and that at the office of the E.M.R. Co. he had given out his opinion as to the value of the G.B.B. property. That made you somewhat uneasy as regards the option? - That caused me uneasiness because of the letter and telegram dated Nov. 4, asking whether he was going to exercise the option. From these it seemed to me that the E.M.R. Co. might be going to adopt the attitude that the option had expired. I realised that I had not accepted the option of Oct. 5, in toto. It was not an unqualified acceptance. And it might be that the E.M.R. thought they would adopt the attitude that it was the option of Oct. 1 that was in force. If it were the option of Oct. 1 the option would expire on Nov. 8 or 9. On Nov. 9 you wrote a letter to Mr Poey Keng Seng? -Yes In the second paragraph you refer to the engineer, that is Mr England? - Yes Why did you refer to him? - I wrote that letter for two reasons. First of all it was in continuation of previous correspondence when I told him that I would inform him when the engineer returned; and my other reason was so that the E.M.R. Co. might not think that the value of the property was beyond doubt, and thereby be more likely to change their attitude. It was for this purpose that I referred to the bore being sunk. I sent a copy of that letter to Hong Guan. On the next day I received a letter from Mr. Poey Keng Seng saying “as Mr. England had now arrived and made a report”. Mr England in fact made no report. This is pure surmise on the part of Mr. Keng Seng. Mr. England about this time told me that he would like to have a board meeting held as soon as he received a cable from Mr. Brickman. Was anything else discussed regarding the holding of the board meeting? - Mr England told me that he was not making a long report but he wanted to see the directors personally and give them his opinion verbally. I told him that if he adopted that course he ought at least to have some plans or sketches with him showing the present position of the mine and what he intended to do in the way of re-organising it. Did you see Ho Man about this time? - Yes What did you tell him? - I told him that I my opinion Malayan Collieries would undoubtedly buy this property from me and that therefore there was not much chance of his being able to join me in exploiting the property. That was somewhere about Nov. 10 or 11. He said that he had heard very good reports about the property and asked me what chance there was. I told him there was very little chance, as Malayan Collieries would most probably be buying the property. Hong Guan came to see me on the 15th and I expressed to him my doubts as to the attitude which I thought the E.M.R. Co. might take up. Hong Guan said that as the property had turned out so well I ought to really give him Something More than the $100,000 which I had agreed to give. I promised that I would give him something more but I did not mention the exact amount. My object in promising this was because I wished to secure his good will to the transaction being completed without a hitch and also because, as I had made such a hit, I did not think his request an unreasonable one. I told Hong Guan that I would be going down to Singapore on the 16th and that I intended to exercise the option and that I relied upon his influence. In connection with the proposed increase in his amount Hong Guan told me that the fact that he was going to do very well out of this transaction was known in Singapore. His lordship: To his creditors? (laughter.) Mr. Russell: No my Lord, to his relatives. He said his relatives would press him for loans and assistance which he might find difficult to evade if the exact amount of his profit were known. He therefore suggested that a certain amount of this profit he would like to put in the name of a nominee. What did you say to that? - I said that I myself would also like to put part of my profits in the names of nominees. Why did you wish that? - I did not want the world, the people in general, to know what profits I was making and to have a knowledge of my firm’s private affairs. I have found that if I sell shares of any company with which I or my firm are immediately connected the result is unduly to depress the value of those shares. Hong Guan suggested that we should use Chong Kin as our joint nominee. Did you agree to that? - I said that I would prefer Khoo Wee Chuan who is my head Chinese man. I left for Singapore on the afternoon of the 16th arriving there on the 17th. In Singapore I met Hong Guan first. He told me that the E.M.R. Co. expected me to exercise the option. He thought there would be no trouble with regard to it. I discussed with him the total amount of profit I would give him and fixed it at 10 per cent of what I intended to make. That is to say 8,000 shares? - Yes What did he say about that? - He said that he would like 4000 to appear in his own name and 4000 by nominee. Then did you see Mr. P. Keng Seng? -Yes I went to the E.M.R. Co.’s offices. There I met Poey Keng Seng. I told him I wished to exercise the option and I drafted a letter which he had typed out in duplicate. I signed both copies and gave one to him. What did you do with your copy? - I took it to Mr. Robinson of Messrs. Drew and Napier and I left it with him. That is dated Nov. 18. I may have seen Mr. P. Keng Seng on the 17th but I certainly saw him on the 18th. You say there,“ I hereby confirm the legal part to Messrs. Drew and Napier?”- I was not sure, the option being in the name of Hong Guan, whether I could exercise it myself. So I wished to leave it for Drew and Napier to do it in the proper manner. I asked Mr. P. Keng Seng for a Deposit Receipt so that I might cash it and remit money to Drew and Napier to be paid to E.M.R. Co. I did not get it then. He asked me to come later. When I went later he made a proposition namely instead of paying the $60,000, I should deposit $200,000 with the Banjermassin branch of the Netherlands Trading society. And the balance of $400,000, and 20,000 Malayan Colliery shares to be handed over at the Exchange of titles on Feb. 1921. When exactly was the $200,000 to be released by the Banjermassin bank? - I think when the titles were transferred to the Goenoeng Batoe Besar Co., the trustee Company of the E.M.R. The definite terms were not fixed up then. I had a talk with Dr Lim Boon Keng in the evening on the subject and the details were finally settled by Mr Robinson the following morning. I agreed in principal to Mr. Keng Seng’s request and the details were fixed up later. At the second interview on Nov. 18, was anything told about when the $200,000 was to be paid? - I told Mr. Keng Seng that I intended to offer the property to M.C. Ltd and I could not therefore bind myself to the exact date when the $200,000 would be paid. Why would that affect the date of payment? - For two reasons. First of all I could not be quite certain, when the matter went before the Board meeting, and secondly if for some unseen reason M.C. declined to buy the property it might take me a day or two to make other arrangements and send down the money myself. Did you give Mr. Keng Seng any indication when a Board Meeting was to be held? - I may have said that it might be on Wednesday. Did Poey Keng Seng give you a deposit receipt? -Yes and to it was attached a telegram from the Bank to Hong Guan dated Oct. 4. I gave Mr. Keng Seng a receipt for that. Transfer to Khoo Wee Chuan It is suggested that you had that receipt introduced to the E.M.R. Co., at some subsequent date. Is there any truth in that? - No, the deposit receipt was not transferable. It could only be cashed by me. Its period had not expired. The deposit had therefore to be broken, and I had to collect what interest I could on it. I cashed the deposit receipt on my return to Kuala Lumpur. I went to see Mr Robinson of Drew and Napier. I told him I wished to exercise this option and also that I wished to have sub-options showing a transfer from Hong Guan to Khoo Wee Chuan and from Khoo Wee Chuan to me; that the consideration of the transfer from Hong Guan to Khoo Wee Chuan should be so much in cash plus 24,000 shares and from Khoo Wee Chuan to myself the same amount plus 76,000 shares. I mentioned to Mr. Robinson the arrangements I had come to with Mr P. Keng Seng, asked him to settle the details in legal form and exercise the option. I told him that it was my intention to offer the option to Malayan Collieries Ltd. I went with Mr. Robinson to Messrs. Simms and Delay’s office. We saw Mr Dickinson there and arrangements were made with regard to the sum of $200,000. Then the documents were duly prepared in Mr Robinson’s office and signed by Messrs. Hong Guan and Khoo Wee Chuan. I came back to Kuala Lumpur on the afternoon of the 19th. Mr Robinson drew my attention to Article 92 of the Malayan Collieries Ltd. and advised me that I should not vote at the meeting. When I returned I brought none of these documents with me. A board meeting was convened for Nov. 23. I received a letter from Mr. England on the 22nd and he probably spoke to me on the morning of the 23rd. he wanted to know whether, firstly supposing M.C. bought the G.B.B. property there would be any objection, in my opinion, to M.C. equipping the G.B.B. with certain plant which he could spare from the colliery at Rawang; secondly whether if I thought that this, to bookkeeping or other reasons, was not possible, I would let him know whether there was much chance of picking up locally such plant as he required. It being 4 p.m. his lordship enquired how much longer Mr. Carver would be. Mr. Carver said that he would be about an hour more/ Mr. Braddell enquired whether his lordship would sit on Saturday and finish the examination in chief. His lordship said that he had already made other arrangements for Saturday. Mr. Braddell remarked that the hearing would last almost till Easter week. At Mr. Braddell’s request his lordship promised to resume the hearing at 10 a.m. on Monday.

The Straits Times, 5 April 1924, Page 10 . MALAYAN COLLIERIES. End of Third Week's Hearing. Mr. Russell's Evidence Nearly Finished.

Malay Mail Monday, April 7, 1924, ps. 7 and 10 PECK v.RUSSELL ENGLAND’S EVIDENCE CONTINUED (Continued from Friday’s Issue.) The following is the continuation from the Malay Mail of April 4, of the evidence of Mr. Ernest England, former general manager of Malayan Collieries Ltd: - I left Batoe Besar property on Aug. 6. Why was it you resigned? —Owing to the difficulties of labour troubles and the trouble with the Administrator and the great disappointment that I anticipated. My sole object was the Administrator trouble. I could not get on very well at all with this gentleman. With the Administrator? —With the Administrator. Therefore I decided to resign, which I did. I think before you were in their employment you were employed in this country by the Staveley Collieries? —The Staveley Coal Mining Company. You came back in July 1921? —I came back on Oct. 25, 1921. Did the Staveley Company, your old employers, ask you to go back to them when you returned to this country? —Yes, and I am still in their employment, in the same position as I left to go abroad for. We have heard that one of your great difficulties out there was labour troubles? —Yes. Do you know whether that trouble got worse after you left or whether conditions improved? —No, I do not know. Cross-examined by Mr. Bridgeman I want to ask you about the matter you discussed last, just to test your memory. You must not be hurt by this. Are you quite sure you resigned from this company purely because of this trouble with the gentleman who was administering the labour matters? —Yes, as I have just stated. Are you aware that in June, 1921, the Board of the Malayan Collieries were not satisfied with your work. In the month before you resigned. You told us you resigned in July, 1921. Are you aware that in June, 1921, the board of directors of the Malayan Collieries were dissatisfied with your work? —The general manager came over and we had a discussion. You can explain afterwards, but it would be better if you say Yes or No. Are you aware that they were dissatisfied with your work? —Yes, in June. That was the month before you resigned? —Yes. Are you aware that they said that your control of labour (they recorded this in their minute book) and management was weak, and displayed a general irresponsibility of action. Are you aware of that? —I did not see the minute book. Are you also aware that there is also recorded in the minute book that Mr. Barr strongly…(Question objected to) Are you aware that it was further recorded that Mr. Barr strongly recommended that your services should be dispensed with as soon as another manager could be engaged and arrive from Australia. You say you were not aware that that was in the minute book? —No, I resigned on my own initiative. Will you assume for a moment that that is in the minute book? Do you still say, testing your memory about these matters, that when you left the company’s service the following month it was purely on account of labour trouble which caused you to resign? —Yes. Sir Albion Richardson: My friend interrupted the witness when he was saying the general manager came over. The witness: The general manager came over. I will illustrate what brought my resignation to a head. The examiner: I do not think we are bound to have illustrations or a speech. Finish anything that was said. —The general manager came over and we had a discussion. My expectations did not come off and I was aggrieved about the Administrator and, therefore, I could see that it was far better for me to resign than cause any further inconvenience to myself. Sir Albion Richardson: Who was the general manager? —J. W. Barr. I do not know whether it is J.W. or W. J. Mr. Bridgeman: I want to put things quite shortly to start with. When did you first enter the employment of the Malayan Collieries? —On July 19. What year? —1919. In April of the following year, 1920, it was arranged that you should go to view Seboekoe on behalf of the Malayan Collieries Limited? —Yes. Your story is this, is it not, that it was arranged for the convenience of Mr. Russell and Mr. Hastings that you should look at Batoe Besar on the way. Mr. Russell wanted Batoe Besar viewed as well? —I beg to differ there. It was for my convenience, not for Mr. Russell. I was not worried about Mr. Russell’s convenience at all. It was the Malayan Collieries I was representing. It was arranged, no matter for whose convenience, that you should go to Seboekoe and visit Batoe Besar on the way? —My arrangement was to go to Seboekoe direct. And to go to Batoe Besar afterwards? —No. My sole visit from the Malayan Collieries was Seboekoe, my instructions rather. You say you were acting purely on behalf of the Malayan Collieries Limited? —Yes. Was it, after the first arrangement was come to, subsequently arranged (you have already told us this) that you should also visit Batoe Besar? —The arrangement was by the combination trip. The answer is yes is it not? —Yes. And what, in fact, resulted was that you did not go to Seboekoe at all but you did go to Batoe Besar? —Yes. You did not go to the place that you were commissioned by your employers to go to, but you went to Batoe Besar which you had nothing to do with whatsoever? —Yes, I went to Batoe Besar. I will tell you what my suggestion is at once. When you went to Batoe Besar you went there as the employee of the Malayan Collieries Limited, which in fact, you were, and on their behalf? —I was an employee of the Malayan Collieries. And you went to Batoe Besar in that capacity on their behalf? —As a passenger. Mr. Hastings went with you did he not? —Yes. Throughout the whole of this time, Mr. Hastings was being paid £500 a month by the Malayan Collieries, Limited, was he not? —No, $650 was the arrangement. I think you told my friend Sir Albion Richardson it was cut down afterwards to $500? —Yes. During all this time he was being paid at first $650 and after that $500 by the Malayan Collieries, Limited? —No, the arrangement in the first place, when I made the arrangement for Hastings with Mr. Russell was to take Hastings with me and give him $650 a month while he was in the service of the Malayan Collieries Company, and not in J. Russell and Company’s service. May I put it in this way: between November and September of this year, 1920, how much did the Malayan Collieries, Limited pay to Hastings? —I could not give you the figures. They paid him the whole of that time? —I presume so. And you know that he was in fact paid a salary by the company all that time? —That was arranged. Did he ever go to Seboekoe? —No. What was he being paid for? If the Malayan Collieries Limited had no rights over Batoe Besar before November of 1920, why were they paying Mr. Hastings a salary In October and the early part of November? —I presume J. Russell and Company reimbursed the Malayan Collieries. You do not know that they did, do you? —I cannot say definitely. I was their manager. You do not know, do you? —No. It does not matter what you presume. Do you know a gentleman of the name of Ng Hong Guan? —I have met him, that is all. Do you know that on Sept. 27 he was authorised to apply for options by the Malayan Collieries, Limited over coal properties in the Dutch East Indies? —What part of the East Indies? I am afraid I cannot tell you. There are several parts of the East Indies with coal-bearing properties. I can only read from the Authority itself. Do you know that he was given by Mr. Russell on behalf of the Malayan Collieries, Limited, on Sept. 27, 1920, authority to apply for options over coal properties in the Dutch East Indies? —I really could not say. In fact do you know that Mr. Ng Hong Guan had introduced properties to the Malayan Collieries, Limited before that? —I heard Mr. Russell say something some time in September about a proposition, prior to my going, to Seboekoe, that there was some coal bearing properties in a place called Tehweh, but where that is I really could not say. Generally speaking, has this man Ng Hong Guan introduced properties to the Malayan Collieries, Limited? —I cannot say. You told us that when you first saw Mr. Russell he asked you to go to Seboekoe, did he not, on behalf of the Company? —Quite so. Do you know at that time that he was not at all keen on the Batoe Besar property? —Not till after he called Hastings away from me at Batu Arang. That would be in the middle of October would it not? —No, the middle of September. You say that in the middle of September, Mr. Russell was obviously keen on obtaining an option over the Batoe Besar property? —He had the option I presume at that time. To put it plainly he told me at that particular period that he had acquired an option and he wanted Hastings to go there and examine this property on his behalf. That is what caused the inconvenience to myself. I suppose you do not know that about that time, Mr. Russell, writing to Ng Hong Guan said this, “I am not anxious to obtain an option over the Batoe Besar property, because I have just secured one for Seboekoe.” You do not know that that was written? —No. In view of what Mr. Russell told you does it surprise you to hear him expressing those terms? —I know about Seboekoe because I was asked to go and investigate the property early in September. Does it surprise you in view of what you have told us to hear that on Sept. 27, Mr. Russell was saying that he was not anxious to get an option over the Batoe Besar property because he had just secured one for the Seboekoe? —Why should that interest me at that particular time? I was not interested. I am not asking you whether it interested you, I am asking you whether, in view of what you say now that Mr. Russell told you, that that letter surprises you? —Well, rather. Because he uses the terms “I have just secured an option over Seboekoe.” –not the Company? —He was the director of the Malayan Collieries. He was a very important man in the Malayan Collieries, Limited. —Yes. He was the chief shareholder and the chairman of the company? —I could not say his financial holdings. He was the moving spirit of the company? —I know he was the chairman. And the moving spirit of the company? —Yes. He gave all the directions that you had? —Yes. And you looked upon him as your chief when you were dealing with the property? —Absolutely. Sir Albion Richardson: Having regard to the letter, I should like to see the whole of it. Mr. Bridgeman: As a matter of fact it is exhibited in the pleadings. To witness: it is exhibit D. Mr. de Stoutz was the concessionaire over which of the properties, the Batoe Besar property or the other property? —The Seboekoe. I never met this gentleman in my travels—De Stoutz. Then I will not ask you what I was going to ask you about him. Now this property was a valuable property as you have told me—Seboekoe? No. Batoe Besar—Yes. I do not know whether you know it, but Mr. Ng Hong Guan had an option on it? —No, I did not know that. If a person had an option over this and disposed of that option for $5 it would be a purely nominal paper transaction? —Quite so. Do you know that Mr. Ng Hong Guan on Nov. 19, 1920, disposed of his option to purchase this property—an option which he obtained from the Eastern Mining and Rubber Company Limited—to a gentleman named Kay Way Chan of Singapore? —No. And you do not know that on the same date Mr. Kay Way Chan transferred the option to Russell and Company? —No. “An Honest Transaction” Assuming those facts to be true from your knowledge of this particular business in that particular part of the world, does it sound to you like an honest transaction? —So far as I know at that particular time it was. Does it sound to you like an honest transaction? Here you have a thing worth some millions of dollars. A gentleman named Ng Hong Guan had the option to purchase it and he disposes of that option for $5 to a third person, and that third person disposes of the option to the defendants on the same date. Does it strike you as a usual or honest transaction? —To put matters plainly, it did not concern me because I knew nothing about it. I am asking you your opinion as an honest business man. Does that thing leave a nice or a nasty taste in your mouth, honestly? —I would rather beg not to express my opinion. I want you to answer it because you are here as an honest man coming to assist me. —I would rather not. Sir Albion Richardson: I take objection to this question on the ground that it is completely irrelevant to any matter which arises here, and I take the responsibility of advising Mr. England not to answer it. Mr. Bridgeman: I understand that it is on the notes that Mr. England would rather not answer that question. Sir Albion Richardson: He refuses to answer it. Mr. Bridgeman: He said he would rather not. Under your advice he may refuse to answer it. The Witness: I do not know anything about that, and therefore I am not going to say which is not true. Mr. Bridgeman: I was asking your opinion and you said you would rather not express one? —I presumed it was a suggested opinion you wanted of me. You say that in October of 1920 you had no doubt that the option over Batoe Besar belonged to Mr. Russell? —I knew it to be so. On what ground were you basing that? —what he told you? —He told me. Is that all? —Yes. If Mr. Russell tells you a thing, you accept it at once? —I was in his employ and if he told me a thing I should presume it was truthfully said and work on that matter. I want to get it perfectly clear. There was nothing outside Mr. Russell’s word, whatever value that may have, in October, 1920, that the option over Batoe Besar belonged to him? —I absolutely understood that was so. You mean you had nothing but Mr. Russell’s word to make you believe that? —Quite so. You went out on this expedition to see Seboekoe as you have told us? —Yes. And as I understand you to say—tell me if I am wrong—you were dissuaded from going and examining this property at Seboekoe by what you were told by various persons? —Yes, what I gathered from their conversation. There was a Dutch gentleman and one or two Chinese gentlemen? —Yes. Is it your usual habit, if you are sent out to investigate property on behalf of a person—on behalf of your employers—that if somebody tells you the property is not worth looking at, you do not bother to go there? —Under that particular influence of conversation and from what I gathered and saw of the Batoe Besar property, it convinced me quite honestly that it would be wasting my time to proceed to Seboekoe, and therefore I instructed Brickman to go as a secondary measure. Conversation in Singapore. You had in fact heard somewhat unpleasant reports about Seboekoe while you were in Singapore? —I heard in Singapore a conversation with Mr. Hastings: “Now Mr. Hastings, you are going to inspect a very valuable property-one of the best in the East.” Did you not hear any disparaging remarks about Seboekoe while you were in Singapore? —Yes, this gentleman dropped it out. That was not sufficient to deter you from leaving Singapore? —No. But when a Dutch gentleman and several Chinese gentlemen told you that the place was no good you believed them and did not trouble to go on? —Absolutely. Did you actually pass Seboekoe on your way to Batoe Besar? —A long way on the right—a good many miles away. Did you land at Kota Baroe? —No, not going out. You left Singapore. Where did you go first? —From Singapore via Bandjermassin, and from Bandjermassin via Kota Baroe. We stayed off Kota Baroe. There is no port of call. You did not go to Seboekoe then, did you? —No. Why not? —Because I should have got out of touch with Hastings and the boring and the kapalas. How long would it take to go to Seboekoe? —I really could not say. How far is it? It is quite near, is it not? —Would you say three miles? —No, it is more than that. It appears to me it is about 48 hours sailing by prahu, and you cannot approach it with a steaming vessel. And Hastings would not have waited for you for three or four days which would be necessary? —No, I decided to go to Batoe Besar and wait for Hastings’s return which I did. At that time what was your opinion of the respective merits of Batoe Besar and Seboekoe when you made the decision? —From what I had heard remarks about, the conversation, it struck me very forcibly that there must have been something at the back of it for Batoe Besar to be boosted up as a valuable property. Therefore I decided to go to Batoe Besar and call on my way back to Seboekoe, but while I was at Batoe Besar I changed my plans and decided to return direct to Singapore. As a matter of fact, you were on the other side of Seboekoe, and you returned without any call at Seboekoe, even on the return journey? —Yes. You did not have to wait for Mr. Hastings? —No, he came along and I altered my plans quickly. There was no question about getting to Batoe Besar quickly on the return journey? —No. Was it not because you went to see the two properties on behalf of the Malayan Collieries, Ltd., and you inspected the best and you were satisfied? —I beg your pardon. I did not go out to inspect both. I went to Seboekoe and on my own initiative I went to Batoe Besar. And the only reason you can give for not going to the place which you were sent out to inspect, and going somewhere else, was that you were told things by the various people? —I heard the conversation. Is that your usual way of doing business in the East? —Does your experience of commercial life in the East suggest that that is a safe thing to do—to listen to what other people say and make your decision on that only? —It convinced me very forcibly that it was the right way to think. That is the usual way in which you conduct your business? —That is not the usual way. It suited my general purpose on behalf of my company. I have no doubt it did in this particular transaction—What particular transaction? —The one we are dealing with here. When you went to Batoe Besar the first time you made an entirely independent examination of the mine? —Yes. What right had you to do that? —Because I had the privilege of staying there and I took the opportunity. According to you, Mr. Russell had an option over that mine? —Yes. Mr. Hastings was his employee? —Yes. And you had nothing whatever to do with Mr. Russell? —No. You were the employee of somebody entirely who had no interest in the mine at all? —I had no interest in Batoe Besar. You agree with me that according to your story the Malayan Collieries, Ltd. had no interest in the Batoe Besar property at all? —Yes. Why He Went Now tell me frankly: What business at all had you to go and make an examination of the Batoe Besar property in these circumstances? —I asked if I should go to Batoe Besar and call there on my way out. Would Mr. Russell have any objection to my having a look at his property, and when I was there I took the opportunity as any mining engineer would in the near vicinity of a neighbouring concession; it would probably instruct him and give him some key-note to the situation. I hope you will understand me. I am putting it as plain as possible. I quite follow you. Then I think you told us you did not communicate with Mr. Russell or your company as to your change of plans at all? —Quite. Was it not rather a serious thing. If what you are telling us is accurate, the shareholders in this company had sent you out through their directors-the chairman of directors to investigate certain property? —Yes. You had decided to change your plans? —Yes. And you did not think it worth while to ask their permission to do so, and to return home? —Quite so. You did not go to Kota Baroe and cable your views to your employer at Singapore? —From my visit to Batoe Besar and what I had heard of the Seboekoe, it struck me very forcibly and I did not want to let the Malayan Company lose sight of the Batoe Besar concession if Mr. J. Russell offered to exercise his option. I knew the value of the concession personally. But there are other people beside yourself in the employment of the Malayan Collieries Ltd? —There are other people. Why could you not have cabled your opinion home—the opinion you have just told us this morning—and advised them to approach Mr. Russell and secure the first refusal of this property? —In the first instance it was very difficult to get into communication. Now, was it? —I know you say so. You had to go to Kota Baroe to get a cable? —Yes. You could have got a message through in a day could you not? —No. You told Brickman to cable the result of the boring, did you not? —I cancelled that. But you told him in the first instance? —I cancelled that. Did he not in fact cable? —No. What? —he cabled from Kota Baroe. He did not think it was quicker to take a steamer home to tell you about his investigations. He did what most people would do. He cabled to you? —Brickman was at Batoe Besar when I left him there, and from Batoe Besar to Kota Baroe is 65 miles, or in that neighbourhood, and only one boat ran periodically a month, and Brickman had to get from Batoe Besar. I instructed Brickman to proceed to Kota Baroe and cable me from Kota Boroe the result of the bore, which he did, and there is the cable as I have seen it this morning. But you did ask Brickman to cable? —Yes. And you did not think it worth while cabling. You had been sent out there by your company to view two properties and you viewed the one which you thought very highly of, and you would not bother to cable them that you were coming back at once. Supposing this was a different occasion altogether. You go out to view on behalf of Malayan Collieries, Ltd., two properties; he one strikes your fancy very much; so much so that you do not think it worth while to see the other. You would not bother to cable your company then, would you? —it just depends. That proposition may have altered my mind in the ratio to this proposition. I think you understand what I mean. I want you to assume for a moment that you are sent out to see two properties, A and B, on behalf of the Malayan Collieries, Limited. You see one of them, and you are very much struck with it. It would not be necessary then to cable home; you would get home as quickly as you could to put the deal through? —The circumstances of the case alter opinions. Quite possibly, but take it on the circumstances which I have outlined to you? —Yes, but on this particular occasion. Do get away from this particular occasion. I am asking you to imagine an occasion, a simple occasion, when you are sent out by your company to investigate two properties and you like one of them very much. It would be quite natural then for you to return at once without cabling, would it not? —It just depends on the circumstances. On Nov. 10 you saw Mr. Russell? —Yes. You told him you had not visited the Seboekoe property? —Yes, that is the day following my return to Batu Arang. I mentioned it to Hastings in the morning to tell his representative that I had not visited Seboekoe and that I was coming in to-morrow to give explanations. You made out your report on Nov. 14 and handed it to Mr. Russell on Nov. 23? —Certainly. Who was that report addressed to? —It was my private report. Who was that report addressed to? —The Malayan Collieries. To the Board of Malayan Collieries? —Yes. And you handed it to Mr. Russell? —Yes. Sir Albion Richardson: That is not quite so. It speaks for itself. There is nothing about the board of directors. Mr. Bridgeman: It is addressed to “Dear Sirs, ”the “Sirs” you meant were the board of directors? —That was etiquette. Etiquette or not, when you said “Dear Sirs” you meant the directors of the company? —I presumed it was going to be fixed up all right. Nobody is blaming you. Immediately on your return you made a report on the Malayan Collieries, Limited, notepaper? —Yes. To the directors of the Company? —That was made a good few days before the board meeting. To the directors of the company? —Yes About the Batoe Besar coal mine? —That was my private note. Do answer the question and you can explain afterwards. That is so, is it not? —I do not quite follow you. Let us try again. Almost the first formal thing that you do on arriving back is to make a report on Malayan Collieries, Limited, notepaper to the directors of that company. Is that not so? —Yes. And the subject of the report deals with these Batoe Besar coal mines and nothing else? —Absolutely. You had abstained, I think, from giving that report until you had heard from Mr. Brickman? —Yes. Mr. Brickman being another employee of the Malayan Collieries, Ltd.?—Yes, assistant surveyor. And on Nov. 22, the day before you handed this formal report to Mr. Russell, you wrote to Mr. Russell and gave him some details—the purport of the wire from Brickman which would show that this property was a valuable property. May I read the letter: “I have received a wire from Mr. Brickman showing he has reached the coaling bore…etc., (reading the letter)—showing that the property tended to be valuable property. —That was in compliance with our discussion previously. It was a little difficult for you to tell Mr. Russell as the chairman of the Malayan Collieries, Ltd., how valuable the property was, and, as senior partner of Russell and Company to keep quiet on the matter? —Just place yourself in my place. It was a very difficult position. If you were manager of a company and I was speaking of a property that I wanted to acquire for myself, do you think it would be fair for me as a manager to go and disclose everything? I am sympathising with you. —Do you think it would be honest for me as a Manager of the Malayan Collieries to go and give away anything I wished to acquire for my company? It was for me to get it. I was not worried about Russell and Company. (To be continued)

 

Malay Mail Monday, April 7, 1924, p.9 PECK v. RUSSELL Sixteenth Day’s Proceedings. MR. RUSSELL’S EVIDENCE In this action, Mr. J. A. Russell, who began his evidence on Wednesday afternoon last week, continued this morning. Replying to Mr. Carver, the witness said he had a doubt regarding China Minerals. He had reason to believe that the shares might not have been fully paid when the company was wound up. The only document which he had in Kuala Lumpur to check his statement was the Liquidator’s report. He had sent a cable to Loxley and Co., Hongkong regarding the question, but had not yet had an answer. He had a doubt in his mind on the subject. Mr. Henggeler passed to the witness de Stoutz’s letter of Aug. 25 1920, which mentioned Goenoeng Batoe Besar, but that reference did not cause him to take action or form any intentions regarding G.B.B. Messrs. Loxley and Co., Singapore, became agents for Malayan Collieries not before January 1921. At the time he was carrying on correspondence with Mr. Vander Herst in December 1920, they were not agents. In September, 1920 Rawang coal was being sold in Singapore at $15.30, including railway freight. At the meeting on Nov. 23, 1920 the witness saw England, who showed him a document dated Nov. 14, in his private room in his office. The witness could not remember the time, but it was before the meeting. England said that he wished to attend the board meeting in order to amplify verbally his report. The witness could not remember having any further conversation with England before the board meeting. Who attended the meeting? - Beside myself, Mr. Mackie and Mr. Henggeler. Was Mr. England allowed to attend? - Mr England was called in. There were two other directors of M.C.? - Mr. Brash and Mr Chew Kam Chuan. Where was Mr. Brash? - In England. And Mr Chew Kan Chuan? - In China. An Important Board Meeting Will you describe what took place at the board meeting in connection with Goenoeng Batoe Besar? - I read the report given by Mr England to the board and stated that Mr. England was waiting outside in order to explain and amplify the report verbally. I told the board that I had an option over this property, that it had been inspected on my behalf by Mr Hastings, and that Mr England had also examined it on behalf of Malayan Collieries. I told the board that I was prepared to sell it for a sum of $600,000 in cash and $100,000 in fully-paid shares in Malayan Collieries. I told the board that I was not pressing them to purchase it because if they had doubts upon the advisability of doing so I would keep it myself, and deal with it otherwise. I told the board that I had paid the sum of $60,000 as option deposit. Anything else, you recollect? - Not that I can recollect at the moment. Had you any documents beyond the report at the board meeting? - No Had you with you at the meeting in particular either of the documents of Nov 19? - No I mean the documents of transfer, Hong Guan to Khoo Wee Chuan and from Khoo Wee Chuan to Russell? - No Where were they? - In Singapore with Messrs. Drew and Napier. Do you remember if any mention of Khoo Wee Chuan was made at the meeting? -No Was any mention made of the Article 92 of the Articles? - Yes. I was asked whether it was in order for me to sell the property to the company, and I referred the board to Article 92 of the Articles of Association. Can you now tell what happened when Mr England came in? - Mr England was told the price I was asking, and he was asked to give his opinion on the property to amplify his report, and to say whether he thought it advisable for the company to purchase the property. Did he do so? – Yes “Did not Sit Silent” Did you take part in the deliberations of the board on the subject? – No. I did not sit silent the whole time during the board meeting. The other directors, if I remember rightly, asked me certain questions, such as “How much Rawang coal are we now selling?” and “What is the analysis of the best Rawang coal?” and I answered those questions. What opinion did Mr England express? - He informed the board that he thought the Malayan Collieries would be very well advised to purchase the property from me at the price which I asked. Did Mr England and the Board arrange particulars? - Yes Did he have any papers with him besides the report? - He had sketches showing the lay-out of the mine, a plan showing the probable position and thickness of the seams, and the analysis of the coal which had been made by the Municipal Analyst, Singapore. I believe he produced his notebook, and a few other papers. The analysis was done by Mr Harrington. Do you know what became of the other papers Mr England had with him? -I believe he took them over with him when he went to G.B.B. Do you know were they are now? - No Can you give me an idea as to how long this stuff remained there? - I believe about two or two and half hours. My recollection is not quite clear. Did not Vote. Did the board come to a decision on the matter? - Yes Did you cast any vote on coming to a decision? -No What did they decide to do? - They decided to purchase the property. For the price you asked? -Yes Mr Carver referred the witness to the minutes of the meeting, which said that the price was to be the price mentioned in the Khoo Wee Chuan agreement. Mr. Carver: You said that the name of Khoo Wee Chaun was not mentioned at the meeting. Can you explain how this name came to be mentioned in the minutes? - These minutes were drawn up some time after the meeting, and Mr Coutts, whose duty it was to write up the minutes, asked me what the form of the option was. I described the transaction to Mr. Coutts, and he said---- Mr. Braddell objected to the conversation being repeated by the witness. He said that evidently what the witness was saying was that these minutes were drawn up on his instructions. The witness: I did not say that. They were drawn up by Mr. Coutts after I had explained what transactions had taken place in Singapore. Mr. Carver finished his examination in chief at 11.15 a.m. Cross-Examination Opens Mr. Braddell started his cross-examination by asking whether Mr. Russell had a good memory, to which the witness answered that his memory was an average one.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 7 April 1924, Page 6 PECK vs. RUSSELL.

Malay Mail Tuesday, April 8, 1924, p 9 &16 PECK v. RUSSELL Sixteenth Day’s Proceedings. MR. RUSSELL CROSS-EXAMINED Mr. J. A. Russell, the first defendant in this case, continuing his evidence yesterday, said that Mr Coutts left at the end of February or in March. He was not in the F.M.S. now nor was he anywhere in the F.M.S. About eighteen months ago he heard that Coutts was in Alberta but he did not know where he was now. The minutes of the meeting of Nov.23 were circulated on Dec 10 and then Mr. Henggeler enquired who Khoo Wee Chuan was. Witness told him that he was witness’s nominee in whose names he had put the option. Witness might have said that Khoo Wee Chuan was his employee but he could not recollect it. Mr. Carver: Was the preparation of the allotment return to be sent to the Registrar of Companies a matter in which you were actually concerned? –No. Shortly after this a conference took place with regard to rights? –Yes. A claim was made to certain rights on Malayan collieries shares by the Eastern Mining and Rubber Co? – Yes. In respect of certain shares being issued to them at $16 per share? – Yes. And also to certain bonus shares being issued to them? – Yes. I think the Eastern Mining people abandoned their claim to bonus shares did they not? - Yes. And did they get satisfaction with regard to their claim? – Yes. From whom? – Messrs. Russell and Co. Whom did they claim from? —Messrs. Russell and Co. On June 31 you sent in an application of allotment return and in that you gave a number of Chinese names? – Yes. Where did you get those names from? - From Hong Guan and Khoo Wee Chuan. Not all, but with the exception of the names of Khoo Wee Chuan, Hong Guan and myself the other names were given by them. Did Khoo Wee Chuan give you anything? – Yes. He handed you a paper? – Yes. Which you found last week or so? - I think it was found on the 20th with the other documents which were found by Mr Brown. Two Handwritings That paper is written partly in ink and partly in pencil. In whose handwriting is the writing in ink? - In the handwriting of Hong Guan. In whose handwriting is that part in pencil? - That is in my own handwriting. It contains the names of the nominees and the number of shares allotted? – Yes. Was anything said about Khoo Wee Chuan’s interest in the transaction? - I promised to give him a certain number of shares. Was anything definite ever arranged? - No, I cannot recollect that I arranged anything definite, but in my own mind I thought of giving him 500 shares. You signed the agreement in this transaction for both parties? - Yes I think there was an alteration in the financial year of the company from June to December? - Yes Was that alteration in any way connected with this transaction? - No. Yes, so far as it was concerned with the purchase of Goenoeng Batoe Besar. Was it intended for the purpose of concealing this transaction, so far as you are concerned? –No. This concluded the examination in chief at 11.15. Cross-Examination Begins Mr. Braddell then began his cross-examination Mr. Braddell: You have a very good memory? —No, I have stated previously that I have a very average memory. You keep a diary? —No. Are you an accurate man? —No, I would not describe myself as being an accurate man. I think you attained to the financial position you were in in the year 1920 by your own exertions? —Yes. I think you are a fluent speaker of Chinese? —I think I can speak fairly well. And I believe, Mr. Russell that you were at one time in the employ of a Chinese firm? —No. And you have at various times in your ?career been in partnership with Chinese in transactions? —Yes. Do I understand your case to be that this purchase and sale of Goenoeng Batoe Besar by Russell and Co. was a perfectly normal transaction? —It was the first transaction of that particular nature that I had done. Was it a normal and honest transaction? —Yes, it was an honest transaction. And there was no need to conceal anything except that in business one does not reveal more of any negotiation or any business transaction than is absolutely necessary. So far as the shareholders of Malayan Collieries were concerned, do you suggest there was any need to conceal anything in respect of this transaction from them? —The only thing which I wished to conceal from them and from the public generally was the amount of the profit which my firm was making. And outside of that you say that there was no reason why you should not have told the shareholders all about this transaction? —There was no reason why the shareholders should not know that I was selling the property. Mr. Russell, you have had two and a half days in the witness box to explain away this transaction. Now would you mind answering my question? Outside the matter of your profits there was no need to conceal from the shareholders anything in respect of this transaction? —What you say is so wide that it would be impossible for me to give a yes or no answer. I have already told you that I did not wish to tell the public exactly what I was making or with whom I was dealing or how I was dealing so far as it was a sale by me to the company. I did not speak quite explicitly, perhaps, but I want to make it quite clear, my lord, that I do not admit that all my transactions should be published to the world. I shall start again. You say that this was a perfectly honest transaction between you and the shareholders? —Yes. One well within your rights? —Yes. You have told us that you wished to conceal your profits? —Yes. Outside that was there anything else which you wished to conceal? —I do not say that there was any need to conceal but I say that I did not wish to tell the shareholders for whom I worked, what my holdings in various speculations are, my employees, and what I pay them. I would certainly conceal from the shareholders the amount I paid and the brokers I employed. His lordship: I take it that your reply is that there was no need to conceal, but you did not wish to tell them? Witness: Yes, my lord. Mr. Braddell: Was there any need to tell shareholders any untruths? —No. On the contrary, you agree that it was the duty of the directors to be absolutely fair and above board with their shareholders? —Yes. If Malayan Collieries were buying this option from you it would have entailed the increasing of the company’s capital in October? —Not necessarily in October. The price to be paid under Hong Guan’s option of Oct. 5 was $600,000 in cash and $600,000 in Malayan Collieries shares? —No, 20,000 shares. If Malayan Collieries took up that option of Oct. 5 at cost price it would have entailed the payment of $600,000 in cash and 20,000 shares? —Yes. Increasing the Capital And that would have entailed the increasing of the company’s capital? —I do not think it would necessarily have entailed the increasing of the company’s capital. It probably would have done so, but not of necessity. May I remind you that the capital was in fact increased in November? —Yes. That increase of capital was, as explained at the time, a precautionary measure adopted by the company in case properties were offered to it for which it desired to pay in shares. The matter, as far as my recollection goes, was brought to a head by the offer to the company of the Seboekoe property. What properties had the company in view when the capital was increased? —No properties in particular. You swear, do you, that this doubling of the company’s capital was for the purpose of being ready in case a property was offered, but that no particular property was in view? —Yes. I would add that the increase of the nominal capital of a company is a purely nominal affair. We will go to a minor detail. Why do you advertise Mr. R.C. Russell as a partner in your firm when he is not a partner in the directory? —I do not think I consciously advertised him as a partner. Did you consciously do it? —I do not suppose I ever wrote that notion in the directory. Will you look at the directory of 1918 and tell us whom Russell and Co. advertised in that directory? —Mr. R.C. Russell is given here as an assistant. Your brother Mr. D.O. Russell is also put down there as an assistant signing per pro? —Yes. This letter to Mr. de Stoutz, is it written on Malayan Collieries paper? —Yes. And signed by you? —Yes. In what capacity? —On behalf of the Malayan Collieries Ltd. In what capacity-chairman, director, or what? —I cannot say in what actual capacity. Mr. Henggeler asked me to deal with the matter, I do not think I ever considered whether I was signing as chairman or as agents. I take it that “we” in that letter means Malayan Collieries? —Yes. Where you talk of “I” I take it that you mean you qua Malayan Collieries? —Yes. This Mr. de Stoutz was a friend of Mr. Henggeler? —Yes, and mine. It was an offer of an option to the company which the company was proposing to acquire? —To be more accurate it was an offer of an option to Mr. Henggeler. It was an honest, straightforward sort of transaction? —Yes. There was no need to teach the man? —No. Will you refer to the letter which you wrote to Mr. Stoutz where you say, “as we have offers of coal properties in South China.” Was it true that Malayan Collieries had offers of coal properties in South China and elsewhere? —At that particular date, Sept. 6, there may have been no offer in hand. Will you answer my question? —I am endeavouring to. I cannot answer these questions yes or no. I am not certain that Mr. Barr, who was investigating coal properties for me in China, had not a place to offer. Do I take it that your answer is that you do not remember whether the company had an offer or not? —The meaning of that statement is that we were likely to receive offers. “Offers” of Places in China Mr. Russell, I will read to you what you wrote: “as we have offers of places in South China and elsewhere.” Do you say that that statement was an untruth at the time you wrote it? —I say that it may not be actually correct but it conveys no untruth. Now turn to the next paragraph in the letter. You wrote: “I am leaving for South China, where we already have a colliery engineer, in about six weeks time.” Were you leaving for South China in six weeks time? —Yes. You had a Malayan Collieries’ colliery engineer in China? —No, I had a colliery engineer in China. And does not “we” in that sentence refer to Malayan Collieries? —It was intended to be written as Malayan Collieries but actually it referred to J. A. Russell and Co. Now take the two paragraphs together. Was it not your deliberate intention to lead Mr. Stoutz to believe that the Malayan Collieries had the chance of properties in South China and that they had a colliery engineer investigating there? —It was not for the purpose of leading him to believe that they were having offers of coal properties in South China. It was done deliberately to mislead Mr. Stoutz? —I deny that there was any intention of misleading. The fact that the Malayan Collieries were searching for properties themselves, or whether I was bearing the expenses and running the risk and intended to hand over any property to the Malayan Collieries which my engineer might discover, would come to the same thing so far as Mr. de Stoutz was concerned. These two paragraphs were written by you with the deliberate intention of deceiving Mr. Stoutz? —I say no. They were not intended to deceive. Now you turn to the letter which you wrote to Mr. Henggeler on Sept. 7, where referring to this letter to Stoutz you say “You will understand the reference I make to China and appreciate it for what it is worth.” You still say that you were not misleading Mr. Stoutz? —I say that Mr. Stoutz would not be prejudiced by anything I wrote. You do not think that an ordinary blunt person would see that these statements in that letter were lies? —No. Now, Mr. Russell, on Oct. 23 a circular was sent out for a meeting called on Nov. 2 to increase the capital of the company? —Yes. Was that circular sent out with the approval of the board? —Certainly. And after the directors had been consulted? —Yes. At about what date had the Board decided to increase the capital? —I cannot say. There was nothing about it which would help your recollection? —It must have been at the end of September or the beginning of October. In any case it was before Oct. 15. You say that the Board was consulted? —I did not say that they were formally consulted. Do you tell the court that there was no formal meeting of the directors of this company at which they decided to ask the shareholders to double the capital of the company? —No. At a board meeting at the end of September it must have been discussed. You will admit that there is nothing about it in the directors’ file? —Yes. The directors’ file is very incomplete. Now we come to your speech at the annual meeting? —Yes. The speech was prepared before you went to the meeting? —Yes. And did you follow what is the normal custom of managing directors and circulate the speech among the other directors? —No. I had it out only the day before the meeting. In your speech you say “as our coal is not a good bunkering one.” Is that true? —Yes. That was the outstanding defect of Malayan Collieries coal? —No, not so far as the Federated Malay States were concerned. I am not talking about anybody being concerned, I am asking you whether the outstanding defect of Malayan Collieries coal was that it would not bunker? —I am not prepared to say that it was the outstanding defect. It did not affect us very much. We had no bunkering trade. You cannot do a bunkering trade with coal that would not bunker, can you? —Quite. Increase of Capital Next you say “It is probably the intention of your board shortly to ask you to sanction the increase (of) the authorised capital of the company from $2,000,000 to $4,000,000.” What was the reason for that intention? —I think I stated the reason then. (Witness here read portions of his speech where he referred to the intention of the board to strengthen the company by the acquisition of further properties.) What are the two properties which you said were under consideration? —Goenoeng Batoe Besar and Seboekoe. If I may continue reading— No, I should like you to answer my questions. You say the company’s representatives have inspected coal properties in China. Is that true? —Yes, in so far as the China Minerals were concerned, and I had got properties inspected with the intention of offering to the Malayan Collieries any suitable properties we might find. You say it is untrue? —Yes. Did the company’s representatives inspect properties in Siam? —The only investigation I can recollect is the inspection of the coal fields at Ghirbi. Did the company’s representatives inspect coal deposits in the Dutch Indies? —No. Had anybody representing the company inspected coal deposits in the Dutch Indies? —Mr. Parker of my employ did. Did he go or did he only intend to go? —I cannot tell you. I want to explain. I do not want you to explain. Do you say that he did not go or that he intended to go? —I say that he intended to go. I could not find in the accounts any payments for his travelling expenses. So far as you know that statement was untrue? —When I made that statement I had that visit in mind. Do you say, Mr. Russell, that when you made that statement you had in your mind Mr. Parker’s visit to this place? —I think I must have had. “Appeared to be Incorrect” How do you explain your telling the shareholders things which were not true? —The result was the same whether the company was bearing the expenses or whether I was bearing the expenses in trying to investigate something which we would have offered to the company. Did one of the shareholders object to this searching for coal outside? —I see that Mr. Hopson Walker objected. Would you mind reading out aloud your reply? (Witness here read out his reply from the report of the meeting.) Do you say that it is true, untrue or partially true? —It appears to be incorrect. Is it true, untrue or partially true that outside properties had been offered to the company? --That is true. Then the company’s capital was duly doubled? —Yes, the nominal capital of the company was doubled. Until Mr. Pick referred to it in May, 1922, the shareholders were never told who were the vendors of this option over Goenoeng Batoe Besar? —Yes. That omission was deliberate? —No. It was a pure oversight? —It did not occur either to myself or the other members of the board that it was material. I suggest to you Mr. Russell that you deliberately told an untruth to the shareholders about this transaction? —Not deliberately but I might have done so unintentionally. If you had told an untruth to the shareholders you could hardly have so honestly. I think that is a proposition you will admit? —Yes. Mr. Braddell next cross-examined the witness with regard to the circular to shareholders sent out in connection with the purchase of G.B.B. You say in this circular “We are instructed by the board of director.” Was there a meeting of the Board at which you were authorised? —I cannot say. I think a draft was circulated. There is nothing in the directors’ file to show that any draft was circulated? —No. Counsel read here a passage from the circular which stated that as the chairman informed the shareholders, at the annual meeting, the company had been for three years actively searching for likely coal properties particularly in the Dutch Indies and South China and asked, Is that true? —No. That sentence is untrue then? —Yes, I never made that statement. Counsel here read another extract from the circular referring to the board’s proposal to double the authorised capital of the company to the possibility of the deposit and re-examination being required. Was that true? —No, I never said that. It is untrue. Referring to the last paragraph where it was said that the analysis was made for the company counsel asked: Was that analysis made for the Malayan Collieries? —No, it was made for me. That is an untruth? —Yes. If you say that it is an untruth. I do. Will you go to the next paragraph, you say “an eight days sea voyage was made under the supervision of your company’s engineers by an ocean vessel using coal from this mine.” What vessel was this? —The Nanyo Maru. What was the eight days voyage? —Going to and coming from G.B.B. Is it true that the sea voyage was made under the supervision of Malayan Collieries engineers? —What was in my mind was that the coal burned in that voyage was G.B.B. coal. Never mind what was in your mind. Is it true that the voyage was made under the supervision of Malayan Collieries engineers? —It is an exaggeration. It is quite untrue? —I would not say it is quite untrue. It was 99.9 untrue? —No. Who were these engineers you referred to? —Messrs. Hastings and England. Now Mr. Russell, Hastings was the company’s engineer at that time? —No, he was not. Did you lend him to the company for a sum of $500 a month? —For certain purposes, yes. And as a fact the company paid him $500 for this certain purpose? —The company paid him one sum of $500 for his services to them on the voyage to Goenoeng Batoe Besar. What were his services on this voyage to Goenoeng Batoe Besar? —He was looking after Mr. England’s expedition which went to Seboekoe via Goenoeng Batoe Besar. What was the company paying Hastings $500 for? —For taking Mr. England to Seboekoe via Goenoeng Batoe Besar. As a matter of fact Hastings never went to Seboekoe? —Nor did Mr. England. Then why did the company pay Mr. Hastings $500? —The company paid him $500 because he ran the party which was going to Seboekoe. Not to Goenoeng Batoe Besar? —Not primarily to Goenoeng Batoe Besar. Before the expedition left Mr. England said that he would have a look at Goenoeng Batoe Besar. Never mind primarily. Was the Company’s expedition to G.B.B.?—Yes, as far as England was concerned. He said that he would go via Goenoeng Batoe Besar and that he would take the opportunity of looking at G/B.B. while he was there. Answering further to a question about the circular witness admitted that the second analysis of coal was made for the company. And who requested that it should be made? —Mr. England. On what date? —Probably on the day on which he returned. Let us leave the region of probabilities and see whether we can get nearer. You see that letter of Nov. 20 addressed to J. A. Russell and Co., “I attach herewith my report on three samples of coal received from Mr. J. T. Holloway.” How did Mr. Holloway get these? —When Messrs. England and Brickman were in Singapore on their way to Borneo they called on several probable consumers of Borneo coal. I understand that among those on whom they called were the municipality. They saw Mr. Holloway there. From whom did Mr. Holloway receive these samples of coal referred to in the report? —I cannot say. When you turn to the next page you can clearly see from whom he got them. (Witness admitted the samples had been sent by Messrs. J. A. Russell and Co.) Reverting to the circular, counsel read a passage in which it was stated that the directors were convinced that after several years searching they had at length discovered a property of great promise. Is that true? —It is not true in itself. Several years search is an exaggeration. Is it even an exaggeration to say that the directors have been searching? —No. I think that is the only truth in that. It says that the “directors are convinced.” Does not that mean the board of directors as a whole? —Yes. Is it true that they have searched at all, much less for several years? —No, it is not true. Is there anything in that letter to suggest that this mine had not been bought direct from its owners by Malayan Collieries? —No. On the contrary, would you not admit that anyone reading that circular would imagine that this was a direct purchase of a mine by the board after tests by the board’s engineers? —Yes. Do you still admit that this letter with all these mis-statements in it was circulated in draft to your other directors? —Yes. Did any directors raise any objections? —No. As a matter of fact there were only two directors in the country then? —I cannot remember, but Mr. Brash and Mr. Kam Chuan might have returned by then. Was that letter deliberately written in that form to conceal the fact that J. A. Russell and Co. had made a gigantic profit? —No. J. A. Russell and Co. did not wish to publish to the world their profit. I do not think it is fair to say that this was deliberately written in order to conceal that.

The Straits Times, 8 April 1924, Page 9 MALAYAN COLLIERIES. The Fourth Week's Hearing Commenced. Mr. Russell Cross-Examined.

Malay Mail Wednesday, April 9, ps.5 and 10 1924 PECK v. RUSSELL MR. RUSSELL CROSS-EXAMINED (Continued from yesterday’s issue.) Continuing his cross-examination of Mr. J.A. Russell on Monday, Mr. Braddell said: At that date you knew of course that your profit would be in round figures in the region of 1½ million dollars?—Yes. Now, Mr. Russell, you are, and have been, a director of a number of companies?—Yes, a director of several companies. One of the functions of your firm is to act as managing agents or secretaries of companies?—Yes. And you have been doing that work, I think, for a long time?—Yes, certainly since 1913. For that work you are paid?—Yes. The law requires a number of acts to be performed by directors in connection with the affairs of a limited liability company?—Yes. And the omission to perform many of these acts is made punishable by fines or, in graver cases, with imprisonment?—Yes. There are important duties which the secretaries of every company ought to carry out?—Yes. The partners of such firms ought to be familiar with those duties?—Not necessarily. Are you familiar with the Companies’ Enactment?—No, I do not think so. You have been receiving a sum of $2,000 from Malayan Collieries as a director? —Yes. And your firm in 1921 was enjoying a sum of $2,500 to carry out duties towards Malayan Collieries, Ltd.?—Yes. And you were getting directors’ fees and secretarial fees from a number of other firms?—Directors’ fees from a good number, secretarial fees from a few. And you have floated a number of large propositions in this country?—Yes. And yet you stand there and say that you are Not Familiar with Company Law and never read the Companies’ Enactment? —Yes. Do you admit, Mr. Russell, that a large body of gentlemen are relying upon you that these acts are done properly and above board? —My firm. Not you as J. A. Russell? —They rely upon me personally as a director. Relying upon you that these things are done properly and above board?—If they are relying upon me as a director, yes. If they are relying upon me as J. A. Russell and Co., the agents, no. Did Mr. Brown tell you that a return of allotment of these shares had to be made?—No, I cannot remember that. Did he tell you that the agreement whereby the shares were allotted was not in existence?—Yes. Did you know that the agreement had to be registered with the registrar of Companies?—No. For what purpose did you think that Mr. Brown wanted it?—He told me that we ought to have an agreement between myself and the company and that a minute in the minute book was not sufficient. I gather that you swear that you had no idea that any return of allotment was necessary?—I cannot say that there was no idea of an allotment return. Do you say that you know an allotment return had to be made with the Registrar of Companies?—I knew that when shares are issued the Registrar of Companies had to be informed. Does you knowledge go so far as to say that not only had to be informed but you had to say why?—Yes. And that all contracts affecting the allotment had to be filed? —No. I am aware that all contracts must be disclosed in the case of a purchase. I was not aware that all contracts must be disclosed on the sale of the property. When did you first become aware that this particular document had been registered?—I should think after Mr. Peck made his inquiries in May 1922. You admit, don’t you, that the document which was registered was a false document? —No. (Agreement shown.) You signed that document for Messrs. Russell and Co. and Mr. Henggeler for the Malayan Collieries?—Yes. Do you suggest to the court that Mr. Henggeler was cognisant of transactions disclosed in that document?—No. Do you suggest to the court that Mr. Henggeler knew that the names of the 5th, 6th, 7th, 8th, 9th, 10th, 11th, and the 12th were all names of nominees?—Yes. I distinctly said that they were my nominees. I do not say that he knew that they were fictitious or anything like that, but I say that he knew they were nominees. This kapala of yours is known as Hew Loo?—Yes. Among the Hakkas. As a matter of fact this man was well known as Tuan Russell’s kapala?—Yes. And he lives where?—Sometimes in Kuala Lumpur, sometimes in Kuala Kubu. And you have had many transactions with him outside his ordinary employment? —Yes. He drew a salary from you?—I do not know. You know that he drew a salary?—Yes. Some nominal amount? —Yes. You have been in partnership with him on several occasions?—Yes. I suggest to you that as Hew Loo or Kew Loo he would be well known to the directors of Malayan Collieries and everybody else?—No. Perhaps he would be known to Mr. Kam Chuan but not to Mr. Mackie and Mr. Brash. Why did you give this gentleman’s name as Khoo Wee Chuan? —For two reasons. One reason was that this was done to conceal my profits from the public. The second reason was that that was the name by which he was known to Hong Guan. You used the name Khoo Wee Chuan to hide the fact that he was your kapala?—Not entirely that. A great many people would know. Still I admit that it was not so very apparent. And you put his address in the allotment return as Telek Aver-st., Singapore? —That was Hong Guan’s address’ Hong Guan and he fixed it up. As far as you know those nominees of yours were fictitious people?—Yes. Do you suggest that Mr. Henggeler was aware that these persons were fictitious persons and the shares against their names were really owned by you?—I certainly do not suggest that Mr. Henggeler knew these persons were fictitious or not. Did you ever tell him that these shares were owned by you? —Certainly not. You do now admit that of those 100,000 shares stated in this allotment 72,000 are owned by you?—Yes. That Khoo Wee Chuan never got a single share? —No. Did he ever get any shares?—I had promised a certain number of those shares which are still in his name. Did he in fact get any shares? —Those shares are in his name. Have you actually given him any of these shares?—So far as I am concerned They are Given I think dividends have been paid on those shares. Did Khoo Wee Chuan receive these?—No. So that Khoo Wee Chuan had no profit out of this transaction? —No. He owes me money. As they all do. The question I put to you is whether Khoo Wee Chuan has had anything as his profit?—His dividends have gone towards the reduction of his debt. By how much has his debt been reduced? —The dividend has been 40 per cent, on 500 shares that is 40 per cent on $5000 i.e. $2000. He does not now owe me so much money as he did. Am I to understand then that every time the dividend was paid this sum has been credited by you to Khoo Wee Chuan in your books?—Not in the books. In your head? —Yes. The court adjourned at this stage for lunch. The court resumed at 2.15 p.m. and Mr. Braddell continued his cross-examination. Going back to the agreement of June 10, Mr. Russell there is a reference to the agreement of Nov. 19 with Khoo Wee Chuan. You admit now that was a bogus transaction?—Yes. Did Mr. Robinson know that it was a bogus transaction?—I cannot say what the state of Mr. Robinson’s knowledge was. You did not tell Mr. Robinson one way or the other? —You cut me short in the middle of what I was saying. I do not want to live in Kuala Lumpur for the rest of my life, Mr. Russell, but if you think it was unfair to cut you short, please go on—I told Mr. Robinson that Russell and Co. were the owners of Hong Guan’s option. Did you tell Mr. Robinson that the transactions between Hong Guan and Khoo Wee Chuan and Khoo Wee Chuan and yourself were bogus transactions?—No. Did Mr. Henggeler know that these were bogus transactions?—Mr. Henggeler knew nothing about the Khoo Wee Chuan transaction to begin with till I told him that Khoo Wee Chuan was my nominee. Do you swear that when Mr. Henggeler executed this agreement he knew that this transaction between Khoo Wee Chuan and J.A. Russell was a bogus transaction?—I do not say that. I suppose you agree, Mr. Russell, that if Mr. Henggeler did know that this was a bogus transaction it puts him in a very peculiar position as a director of this company?—No, I should not think so. I should imagine that it did not concern him what happened in the course of the purchase of the property by myself. Why did you put yourself down in this allotment for 3000 shares?—I cannot say why. It may be that I did not wish to have a larger number of shares in my name. To sum up, this agreement was put in this form deliberately to make it appear that your profit was only 3000 shares?—No. This was done to conceal the exact amount. And to make it appear that 3000 shares was the only profit you were making?—No, I say that these other people were my nominees. On the face of this document would not any person who did not know anything of these persons being your nominees imagine that your profits were only 3,000 shares? —They would imagine so but I say they had no right to draw such a conclusion. You suggest that this idea of putting shares in the name of nominees first came from Hong Guan? —The first conversation regarding nominees came from Hong Guan. Hong Guan wishing to conceal his profits from his friends and relatives? —So he said. Just look at the letter of allotment. Hong Guan’s shares were concealed from nobody. Instead of concealing them from his relatives he had part of his shares put in the names of his relatives?—Yes, at this stage. Is it really the fact that he ever desired to conceal his profit?—Yes. Now, I think you said that the cheque whereby Russell and Co. were refunded the expenses of prospecting this property was signed by you?—Yes. Do you remember the exact date?—No, about the beginning of April. In fact you signed all the cheques for Malayan Collieries?—Yes, when I am in the office. How did you come to sign cheques on other people’s money unconsciously?— I did not say that I signed unconsciously. Mr. Brown put the cheques before me and I signed. Do you suggest that you signed a cheque without knowing what it was for?—Yes, I relied on Mr. Brown. Does Mr. Brown put before you the entire cheque book?—Yes. With the stubs? —Yes. Do not the stubs show what the cheques were drawn for?—Yes. And when you sign a cheque for the company which you are managing, would you not look at the stub to see what the cheque is for? —Yes. Nearly always I do but sometimes in a hurry I do not. If the stub is not sufficiently explicit, do you not sometimes add more explicit directions as to the purposes of the cheque?—No. I cannot remember doing it. Is this not the stub of the cheque you are speaking about (shown)?—Yes. Its number is D 1258. Does that stub bear anything in your handwriting?—There is nothing in my handwriting except my initials. The writing above the initials is Mr. Brown’s. Read aloud what is written there please?—“Refunded to J. A. Russell and Co. the amount advanced on Borneo account to Hastings.” Mr. Brown put that in. Now that you have refreshed your memory I think perhaps you would like to withdraw the statement that you signed it unconsciously?—I do not withdraw that statement. Then you still persist that when you went before the shareholders at the annual meeting, you were still unaware that all these expenses had been refunded?—Yes. Did you know that in addition to what you paid, the Malayan Collieries also paid money in respect of this expedition?—Yes. Why did the company alter its financial year? —The main reason was that we did not run the accounts of the two mines separately. They are both operated in one set of books. The accountant advised us that unless the two financial periods were made to agree it would lead to accounting difficulties and complications. The other reason was that our draft balance sheet for the year ending June 30 was not ready to be placed before the directors before the end of December; it had not been audited and the audit was not completed until April 1922. So that you had No Annual General Meeting Yes. I suppose that you knew that a company has to hold an annual general meeting once in twelve months?—Yes. Did you have a board meeting about this matter? —We certainly discussed it. Did you have a board meeting?—Called to discuss this matter? No. Was this matter discussed at a board meeting?—I think it is quite likely. Is it omitted from the minutes?—Yes. Do you suggest seriously that an important matter like this would be omitted from the minutes if it was discussed? —Our board meetings were often informal. Where did you hold them? —At the offices of Messrs. Russell and Co. And Mr. Brown attended them?—Yes. Do you still suggest that it is possible for an important matter like this to be discussed and to be omitted from the minutes?—I do not say that is what happened. I am perfectly certain that a matter like this could only have been done with the sanction of the board. There is nothing in the directors’ file about it?—No. There is nothing in the minute book?—No. The alteration was made at the suggestion of Russell and Co.?—Yes. In your speech to the shareholders at the meeting on May 5, 1922, you did not speak about this property to the shareholders?—No. If Mr. Peck had not gone to that meeting, I suppose, up to this day, nobody would have known about it?—My directors knew about it, Mr. Hastings knew about it, Messrs. Drew and Napier knew about it, and the directors of Eastern Mining and Rubber Co. knew about it. Would the shareholders as a body have known about it if Mr. Peck had not gone to that meeting? —I cannot say. Perhaps a great number of them would not have known. And your company has shareholders all over the world?—I think that is rather a strong statement. A strong statement is it? There are shareholders in London, New York, Hobart, Saigon, Bangkok?—There are a certain number of shareholders in England and China. I do not think there are many outside shareholders except in England. Even if there are any such they form a very minor proportion, I am sure. You have a large number of absentee shareholders? —We have a number of shareholders but not a very large number. You suggested in your speech, as I understand it, that you would have sold this property to some competitor of Malayan Collieries or you would have worked it yourself as competitor?—If Malayan Collieries did not purchase it, I would have done so. That is to say, you would have broken or set out to break the company of which you were chairman and your firm were managing agents?—No, I emphatically deny that. If the Malayan Collieries did not purchase this property it would have still remained in my hands and under my control. Even after paying for the property out of my shareholdings in Malayan Collieries I should still have remained by far the largest shareholder in Malayan Collieries. So that if the property had not been bought by Malayan Collieries it would not have been a serious competitor to Malayan Collieries?—Not if it had remained in my control, in which case I would undoubtedly have come to some working arrangement with Malayan Collieries. Then it would not have been a serious competitor?—If I could have retained control of it, it would not have been a serious competitor. So that this statement to the shareholders is not true?—I say it is true. I say I could not guarantee to retain control. But if I had control of it I would certainly not have endeavoured to ruin Malayan Collieries. Let us start at the beginning. Do you agree that G.B.B. would not have competed seriously with Batu Arang?—It would not compete seriously with Batu Arang coal if it had been in the F.M.S. market. And you told the shareholders, did you not, that eventually, almost inevitably it would prove a serious competitor? This would have been yourself or those to whom you would sell the property?—Yes. You really think that is alright for you to do as chairman and managing agent of the company?—I say that had I retained control I would not have tried to ruin Malayan Collieries. Would you have competed with it? —Not in certain spheres. Here in the F.M.S.?—Not here in the F.M.S. or in the Railway, Mr. Braddell, and I have said so several times. Is there bunker coal used in the F.M.S.?—No. Nobody ever wants to store coal here?—Not for say longer than the Malayan Collieries coal can be stored. You really tell the court that mine owners do not want coal to bunker?—I say that it is not necessary for mine owners to have coal that would store longer than Malayan Collieries coal would store. To whom do you sell Malayan Collieries coal outside the F.M.S?—To the Brickworks in Singapore, Ice factory in Singapore, the Cold Storage in Singapore and the Tramways in Singapore. All of whom do not need a bunkering coal?—Yes. Then Malayan Collieries had a perfectly good market for its coal?—Yes. And did not stand in need of any bunker coal at all?—It would only have been an advantage to them in order to extend their business, Mr. Braddell next cross-examined the witness on the replies he made to Mr. Peck’s questions. You said Messrs. J. A. Russell and Co. did not make a profit of 72,000 shares out of the transaction. That was a lie?—I say it was an exaggeration. I was speaking on the spur of the moment, and what I had in mind were the shares which I had promised to Khoo Wee Chuan and also the $10,000 which I had paid to Hong Guan and the rights which I might have had to give the E.M.R. people. I wish to add that in the reply I spoke on the spur of the moment without very careful consideration. You did know at that time as a matter of fact that your profit was 72,000 shares?—Yes, less the small amount I promised Khoo Wee Chuan. I admit that. And you said “the whole of the financial risk involved in the acquiring of this Goenoeng Batoe Besar property and all advances were borne by Russell and Co.” That is not true? —At that time I did not realise that the whole of Hastings’s expenses had been refunded. The proceedings of that meeting were reported in the local papers and there was a leader about it in the Straits Times. That leader put it very clearly that some further explanation was necessary?—yes. I think that you went and saw your solicitors Messrs. Pooley and Co?—Yes. It was they I think who drafted your letter of explanation to shareholders? —It was a joint affair, I fancy I drafted it myself. Was it a joint effort of Mr. Shearn and yourself?—I consulted Mr. Shearn, showed him the correspondence and on his advice so far as my recollection is clear I wrote out that letter. Was it a joint affair?—I drafted it myself. Before you drafted it you went into the matter?—Yes, I went into the matter so far as I could at the time at my disposal. At the time you drafted that letter, you knew that the company had refunded those expenses of Hastings?—At that date I did not. I am quite clear on that. I think it was when preparing for the referees that I came to know about it. I went to see Mr. Robinson and he asked me to get the accounts ready. I then found that the amount had been refunded. Did you tell the referees so?— I Cannot Remember At all events you now admit that the shareholders were told both at the meeting and in your considered letter of explanation that you had paid all the expenses and you admit now that is not correct?—Yes. I admit that I did not know at the time. Now outside the documents which I have put to you was there anything else in which the shareholders were told anything about this transaction? —No, I do not think so. I think you will admit that in every one of these documents it was deliberately concealed from them that you made this very large profit of 1 ½ million dollars?—Yes. They were not told. Do you think that honest?—It seemed to me that it was no concern of theirs what profit I made. And it being no concern of theirs you were at liberty to tell untruths about the transaction?—I do not recollect that I told any untruths about the transaction. Do I understand you to tell the court that none of the directors bothered about how much profit you were making?—Yes. At no time was there any suggestions by them that you should tell them how much profit you were making?—No. Had they asked me I would have told them that I was dealing as a principal and what I am making is No Concern of Theirs Had they asked you, in other words, you would have refused?—Yes. Do you say that it was the duty of the directors of the Malayan Collieries to prevent its capital being unnecessarily watered?—If I say yes, you will say that it was being unnecessarily watered as I was making an improper profit. Therefore I cannot answer that question. Do you admit that it is the duty of the directors of a public company see how they watered the company’s capital?—If the capital of a company was being watered, yes. Was the capital of Malayan Collieries watered?—Yes. By the issue of bonus shares. Not by the issue of the shares to nominees?—No. And you stand there as a leading business man of this town and say that it was not the duty of the directors of a limited liability company to find out how much their managing agents were making?—I say if their agents are dealing with them as agents it was not their duty. What proportion of the paid-up capital of China Minerals did Eastern Tungsten put up?—I think about half. When did you buy Loxley and Co? —In 1919. What price did you pay?—I cannot remember now. Am I obliged to answer that question? His lordship: Is it relevant? Mr. Braddell: It is relevant in this way. He bought for a big price and dropped a large amount of money. I do not want to pry into your private affairs Mr. Russell but 1 ½ million dollars would have come very handy at that time would it not?—I should think so Mr. Braddell. How many shares of Malayan Collieries have you now got? —About 50.000 shares. Mr. Braddell next cross-examined witness with regard to the debt owing to him by Hong Guan and the business relationships which he had with Dr. Birnie, Tan Way Ann and Dr. Lim Boon Keng. At 4.10 p.m. the hearing was adjourned till 10 a.m. today when Mr. Braddell continued his cross-examination.

THE MALAY MAIL, APRIL 9, 1924, p. 9 &16 PECK v. RUSSELL.Seventeenth Day’s Hearing MR. RUSSELL STILL UNDER CROSS-EXAMINATION Cross-examined by Mr. Braddell yesterday, Mr. Russell said that in the allotment return, with the exception of Khoo Wee Chuan, Hong Guan and his nominees and witness, the other nominees were fictitious persons. (Witness was here shown a number of proxies.) Mr. Braddell: Did you make use of those proxies from those fictitious persons? —Yes. Which were purported to have been signed by them in the presence of witnesses? —Yes. Who actually signed these documents?—I do not know. I gave them to Khoo Wee Chuan. And who witnessed these?—I cannot say. You can read Chinese?—Yes. Take the first proxy (MI), whose signature is there as witness?—Wong Chuen. The place and the name in the proxy are in whose handwriting? —In my handwriting. Now all these proxies were typed in your office?—Yes. These proxy forms were, how shall we put it, fictitious?—Yes. But they were actually used by you?—Yes. And you even went to the trouble of stamping them?—Yes, I stamped them. Was that done with the deliberate intention of concealing fraud? —No. That was an ordinary transaction?—Yes. These were my nominees. They were not your nominees, they were fictitious people?—Yes, they were my nominees. Continuing, witness said: I made up my mind definitely to offer to sell to the Malayan Collieries from the very beginning. I always considered the possibility of selling at a profit. It is difficult to give you the exact date on which I came to a definite conclusion with regard to the matter. It must have been when Mr. Hastings returned. It was always present in my mind that if the option was worth while exercising that I would offer to sell it to Malayan Collieries. I might give the benefit of my option to Malayan Collieries. Even up to Sept. 28, I might have given the benefit of that option at cost. I definitely abandoned that idea when I found that I could not get an option that would be a suitable one for Malayan Collieries. If I could have got a free option over Goenoeng Batoe Besar, I would have got it for Malayan Collieries. The decision of the directors regarding Seboekoe did affect this matter because I knew what sort of options would be suitable for the company, and that was only free options. The company did not wish to spend money in acquiring properties which their representative had not inspected. I mean by free option an option with a free period during which the property could have been inspected. That was the type of option which Hong Guan from the beginning told me he could get. I would not say that throughout he said that he had got a free option. He said that the option of Oct. 1 was a free option. I do not think that the option of Oct. 5 was a free option. Mr. Braddell enquired from witness whether he wished to sit down. Mr. Russell said he was quite all right. Mr. Braddell referred witness to the evidence of Mr. England. Will you go as far as to say that it was arranged before he sailed that he should look at the Goeneong Batoe Besar property?—I understood that he would look at Goeneong Batoe Besar. I would not go as far as to say that it was arranged. It was arranged, was it not?—It has a fine shade of meaning. He said that he would like to see this property. It was not arranged by both parties that he should see this property? His lordship: What I understood the answer to mean is that he said he would like to go and see Goeneong Batoe Besar and you said all right. Witness: Yes, my lord. (Continuing) It was known that the Nanyo Maru was going to Goeneong Batoe Besar via Bandjermassin. Loxley and Co. sent on Oct. 18 the address of the party. That letter was acknowledged by Malayan Collieries on the next day. It was arranged that they were going via Goeneong Batoe Besar and that England would see the property on his way. How much examination did you expect England to make?—I expected nothing from Mr. England. It was left to his discretion. The diamond drill and boring party were intended for Seboekoe. [Counsel here read extracts from Mr. England’s evidence regarding what happened when Seboekoe information disappointed him, and while he waited for the return of Hastings’s party.] Continuing, witness said: Mr. England did not get off at Batoe Besar of his own initiative. I understood before he left that he would get off there. The Seboekoe Option. You said your letter of Sept. 6 to de Stoutz represented what was then arranged between you and Mr. Henggeler and you thought Mr. Mackie?—Yes, so far as the option was concerned. The option we got was, I think, in the terms set out in that letter and I think we got that option before this expedition left. You wanted a month’s free option for preliminary report, and if that was satisfactory a six months’ extension should be given for which you were prepared to pay 100,000 guilders for the right of boring. Now look at the terms of the option which you got. Don’t you agree what you asked and received were the same?—I do not agree that what we asked for and got were the same. You cannot possibly accept that, can you?—I say that was not in our mind. If that was what you asked and obtained the boring tools could not have been intended for Seboekoe? —They were intended for Seboekoe. You required two months’ free option with the right of extension. In order to bore? —No. I did not say that it was in order to bore, Mr. Braddell. Let us take this letter. You say “We shall have to send a man to make a rough preliminary report.” Is that accurate?—No, it is not accurate in respect of the word “rough.” “And owing to the inaccessibility of your property it would take quite three months for this man to investigate and report.” Does that accurately represent what the directors thought at the time?—No, the words “quite three months” is inaccurate. This sentence, like the rest of the paragraph, is an excuse for getting a longer free term than Mr. de Stoutz was offering. Then you say “for this extension we shall be willing to pay you a sum not exceeding a sum of 100,000 guilders.” Does that accurately represent what the directors thought at the time?—It is accurate except in one respect and that is that this extension was not meant for the purpose of boring, and it was not meant that we would not bore within two months’ free period. I do not mean to say that we should have done all our boring during the free period, nor do I mean to say that if we had obtained six months’ extension by paying 100,000 guilders we would not have done a further and more compete boring. I emphatically say that on an undeveloped property like Seboekoe we should have required to sink a bore or two before we would dream of putting up a sum of hundred thousand guilders to get an extension. The boring tools belonged to whom?—The Seboekoe party. They never did go to Seboekoe?—No. Seboekoe was in fact never bored?—I am not quite sure. I have an idea that it was bored, but I cannot be definite about it. Look at the telegram from Brickman to England, “struck nine at 49.” That referred to Goeneong Batoe Besar?—Yes. England wrote to you soon after that the boring party was on their way home?—Yes. Witness, continuing, said that according to Brickman’s telegram after he struck coal the boring tools and the boring party came back to Singapore from Goeneong Batoe Besar. He was surprised when he got the telegram that England was coming back. He concluded that what Hastings had told him in his letter from Banjermassin about the valuelessness of Seboekoe had induced Mr. England to return without visiting the Seboekoe property. Witness did not necessarily think that the Seboekoe trip was off. He assumed from the telegram that the Goeneong Batoe Besar property had proved to be a good one. It might have crossed his mind that England had inspected Goeneong Batoe Besar and was coming back to report on it. Before the party set out he understood the output of the Goeneong Batoe Besar mine to be some 15 tons a day. He did not think that he had any idea that it was between 3,000 and 5,000 tons a months. It was correct to assume that any amount above 1,500 a month would have meant developing the mine. Referring to the telegrams exchanged between E.M.R. and himself about the contract for the supply of 10,000 tons of coal a month he now recollected that the output of the mine there was 25 tons a month. A Valuable Contract You have told us that the telegram that England was returning had surprised you. You want the court to believe that you were expecting England to report whether the mine could produce 10,000 tons a month?—When they told me on Oct. 4, of so valuable a contract for 10,000 tons of Goeneong Batoe Besar coal a month, I naturally did not wish to lose it. So far as I was concerned I doubted whether it would be possible to increase the output to 10,000 tons a month within a period short enough to secure this valuable contract. If, however, the Malayan Collieries purchased the property from me, owing to its position it would very likely be able to produce the coal in the near future. I was anxious that if Malayan Collieries purchased the property it should not lose this contract. I knew that Mr. England must have been to Goeneong Batoe Besar and I conceived that he would be able to give some opinion from the bore as to whether the property was likely to be a desirable one for them to acquire, though I do not mean to say that I thought that he must have made a thorough inspection of it. Did he report to you?—He told me that he did not go to Seboekoe. Did he report to you? —What do you mean by report? He did not report to me on the value of the mine, but he told me that the property was satisfactory. Then he reported to you? —What do you mean by report? He told me that a bore must be sunk, that the property was satisfactory, but if depends what you mean by report. The English of that question is too much for you?—It all depends what you mean by report. You want me to say “yes” and then say that I admitted that he made a full report to me on the mine. I say he did not report. Counsel referred to witness’s letter to E.M.R. where he said that one of “my” engineers has come, leaving the other behind. That referred, witness said, to a Malayan Collieries’ engineer and the boring tools referred to were the Malayan Collieries tools. The other Engineer left behind to bore was Mr. Brickman, another of Malayan Collieries’ engineers. You say then “I think the probability is that we will take over Mr. Hong Guan’s option, but we should like to hear about this bore hole first.” “We” there meaning Malayan Collieries?—No, J. A. Russell and Co. Continuing witness said that the directors first heard that England had visited this property on Nov. 23. Eastern Mining Co. had been negotiating with others. Their wire of Oct. 4. “are you going to exercise the option?” seemed to him strange. He did not know what Hong Guan would do. Was Deposit at Risk? Referring to the option of Oct. 5 witness said that he thought that the option would expire five weeks after the arrival in Goeneong Batoe Besar of the expedition. Witness could not make any sense of it. How do you say that option was exercisable?—How can I say what I thought about it at the time, Mr. Braddell. I think my impression is that I was confused. Violent Changes in Grammar. Then the grammar of the letter has to be violently changed?—Yes. And you, Mr. Russell, the chairman of this company, were waiting for the result of this work by the Company’s engineers to make up your mind whether you were going to sell this property to the Company?—No. Were you waiting the result of the Company’s engineers’ work before you decided whether you were to take over Hong Guan’s option?—No. This seems to be a fitting opportunity for another of your long explanations. How do you explain this?—I say that I wrote this letter because I did not wish the E.M.R. people to think that the value of their property was proved beyond doubt, as I was afraid that if they thought that such was the case they might adopt the attitude that the option in force was the option of Oct. 1, and therefore I was using the sinking of this bore hole as a pretext. I learned from Mr. Hastings that while passing through Singapore Mr. England had allowed it to be seen by the E.M.R. people that he considered the property a very excellent one. Now on Nov. 8 or 9 you had a long conversation with Mr. Hastings and determined to buy this option?—Yes. You did not then figure out the gigantic profit which would arise from the sale of this property?—Yes. But I cannot say whether I did so on the 8th or the 9th. Mr. Hastings reported to you on the 8th. That was the last day on which you could have exercised the option of Oct. 1?—Yes. He told you what a valuable property it was?—Yes. What did you think you had to do to exercise that option of Oct. 1?—I probably thought that $60,000 had to be handed over to the E.M.R.C. entirely. Then you say you had a doubt as to what attitude the E.M.R. people would take? —Yes. All you had to do was to wire exercising the option?—Perhaps I am in the habit of running financial risks and I did not wish to curtail my option by three weeks, which I would have to do had I exercised the option straight away. I thought that the option was exercisable by the conversion of the deposit into a payment. Do you say that a deposit is a payment?—I cannot say. I think a deposit is money held in estro. I do not know the full significance of legal terms. What do you mean by in “estro”?—I think money held which is untouchable until certain conditions are fulfilled. That money would have been untouchable?—Yes, until I could have seen that the titles were in order. Since it was untouchable it was not at risk?—I would not say it was not at risk. What was the risk?—The risk which seemed to me was that if I did not exercise the option, then unless I could prove that there had been any misrepresentation in regard to the titles the E.M.R. Co. would have a legal claim to it. How were you to exercise the option? —By giving notice in writing, I presume, and releasing this money. By paying over this money to E.M.R. Co.?—Yes, by taking it out of estro. I do not know the legal significance of it. Do you then admit that until and unless you exercised the option this $60,000 was not at risk?—No, I do not admit that. Do you admit that this specific sum of $60,000 was not paid to the E.M.R. at any time?—I suppose not. It was included in the $200,000. You did not withdraw this specific sum? —I did not withdraw this particular sum and include it in the $200,000. That specific sum was never paid to the E.M.R. Co.?—No, not this specific sum. And that specific sum of $60,000 was never actually risked by you?—Yes, it was. Could that specific sum of $60,000 have been obtained by the E.M.R. without your endorsement on the back of the deposit note? —No. Look at clause “K” of that option. I understand your case to be that 20,000 shares which the E.M.R. Co. were to get were to be you own shares as actually held by you at that time?—Yes. Was Hong Guan obtaining this option on your behalf?—I cannot say that I ever clearly understood whether Hong Guan was acting for me as agent or whether he was the principal. (To be Continued.)

The Straits Times, 9 April 1924, Page 9
 MALAYAN COLLIERIES. Another day of Searching Questions. Mr. Braddell Cross Examines Mr. Russell.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 9 April 1924, Page 8
 PECK VS. RUSSELL.

Malay Mail Thursday, April 10, 1924, page 5. PECK v. RUSSELL CROSS-EXAMINATION CONTINUED Tuesday’s Proceedings The following is the continuation of the cross-examination of Mr. J. A. Russell by Mr. Braddell on Tuesday. Did you understand him to be the E.M.R. agent? —No, I do not think so. In fact I do not think I made any clear distinction at that time. I took Hong Guan’s word. When I wrote Mr. Vanderharst that I had negotiations with the E.M.R. I did not mean that I was doing so through Hong Guan as agent. When I am writing to my own man I would not tell him all these details about negotiations. There is no indication in this letter that I was dealing with Hong Guan as the agent of E.M.R. Co. I do not admit that even in the later letter I drew any distinction about Hong Guan. I may have regarded him as principal. By Sept. 27, Hong Guan had told me about Tehweh. He brought an offer of a free option. In addition to Tehweh there were vague references to other places. The chit of Sept. 27 was therefore intended to cover more than one property. And would not therefore have expressed in it any particular property? —I think that is a fair assumption. At a later date I understood that E.M.R. Co. held an option over Tehweh. That chit might have been used with the E.M.R. Co. at a later date. The chit of Sept.27 is in your handwriting. —My memory is very poor. If you say so I take it to be so. One of these letters of Sept. 27 is in your own handwriting, the other is typed. —Yes. I suggest that this chit was given after the clerks had left. —No. Chit to Hong Guan. Then why was it written by hand and the other typed? —I should think that it being so short and being only a note of identification, when Hong Guan wanted it I would have taken a piece of paper and written it out straight away. What do you understand by note of identification? —A letter of introduction to unspecified persons. Look at it. That clearly is a letter of authority to Hong Guan to apply for options. —It may be. Is it a letter of authority or is it not? —Yes, to apply for options. It is a letter of authority to Hong Guan. —Yes. On behalf of Malayan Collieries? —Yes. Will you tell us why you described it as a letter of identification? —Owing to the circumstances in which it was given. You say that the letter of Sept. 27, the other one, ought not to have been typed on Malayan Collieries paper? —Yes. Do you say that the fact that it was typed on Malayan Collieries paper was the fault of the clerk whose initials were K.H.? —Yes. Was that clerk employed by J.A. Russell and Co.? —His salary was paid by them. How long after September did he continue to be employed under Russell and Co.? —Three or four months perhaps. I remember he left when Mr. Dickinson left. I suggest to you that he was with you till May 1921. —May be. He left when Mr. Dickinson left. I think you told me that you drafted this letter? —Yes. Do you keep on your table draft pads? —Yes, I keep Chinese paper. And I think you have to write letters for a number of companies at various times? —No, not for a number of companies. Continuing, witness admitted that he had to write letters for J. A. Russell and Co., sometimes for Malayan Collieries, sometimes for Malayan Matches, sometimes for Bakau Ltd., and hardly ever for Serendah Hydraulic. When you hand a draft out to be typed do you write on the draft on whose paper it is to be typed? —I may have done so at times, but as a rule I would not. Did you not tell the clerk to whom you handed the draft on whose paper it was to be typed? —I do not hand over these drafts to the clerks as a rule. They are taken away by the peon. Sometimes the clerk himself may come and take it. Continuing, witness stated that in writing that second letter to Hong Guan on Sept. 27 he was not writing as chairman or agent of Malayan Collieries. In that letter you say “I am not so anxious to obtain an option over Goenoeng Batoe Besar as I have just obtained one over Seboekoe.” In “Because I have secured one over Seboekoe” you mean there “I” qua Malayan Collieries? —Yes. Do you seriously say that the first “I” in that sentence does not mean “I” qua Malayan Collieries? —Yes. Perhaps you would tell the court how the Malayan Collieries having obtained an option over Seboekoe affect your getting one over Goenoeng Batoe Besar? —In writing this letter I was principally anxious to show why I was not very keen in obtaining an option over Goenoeng Batoe Besar. That is why I used this argument. Counsel then took the witness over various sentences in the letter where the words “we” and “I” were used to mean Malayan Collieries. Do you mean that you intended to get this property for yourself, and in order to get it you were talking as though Malayan Collieries were getting it? —No. Will you tell the court why, in a letter in which you intended to get something for yourself, you wrote four paragraphs about Malayan Collieries and the Malayan Collieries business? —I say that owing to my having so much to do with Malayan Collieries I wrote this in terms of comparison with Malayan Collieries. It must be remembered that I have always had a very large financial interest in Malayan Collieries which is the reason that any dealings with Malayan Collieries affected my own dealings. The letter was brought to you typed for your signature? —Yes. Why did you not tell the clerk to take it away and type it on to Russell and Co.’s paper? —I cannot say why now. It may not have struck me as being very material. I may have had great pressure of work at that time. Do you remember at what time of day you signed that letter? —I should think it was in the late afternoon. Witness was then handed the record in the police court proceedings where he charged Hong Guan, and Mr. Braddell read a passage from Mr. Russell’s evidence in that case where he described the circumstances under which that letter was given to Hong Guan. Is it not the fact that you gave that letter to Hong Guan at that interview of Sept. 27? —I handed it to him personally? No. You say that your evidence is incorrectly recorded there? —No. The question put to me was perhaps “Did you give this letter?” and I said “Yes.” I remember the circumstances under which that letter was sent to Hong Guan very well. Perhaps you will tell us those circumstances? —Hong Guan was staying with Chong Kin at the time. I had interviews with people most of the morning and wrote out letters in the afternoon. The letter would have been taken to Chong Kin at 4 or 5 in the afternoon. You do not remember the circumstances. That is only an explanation? —No. I can remember that I did not give him a letter at that time. What time in the afternoon did you see Hong Guan? —May have been about 3 p.m. Certainly not after. What was the purpose of writing this letter? —I put down what had occurred to me since the interview. I wanted also to show that I was not particularly keen to obtain this option over the Goenoeng Batoe Besar property. I suppose you told him all that in the morning? —I may have done so. Can you swear that you did not? —How can I swear now? Without wasting the time of the court I put it to you straight, was this your letter of instructions to Hong Guan as to what he was to do in getting this option? —No. I told Hong Guan what I required. One of the purposes of this letter was to show that you were not keen to get this option? —Yes. The object of that, of course, would be to get a more reasonable price than if you showed you were keen? —Yes. Hong Guan’s Methods. You must have realised that this was a letter which was likely to be used by Hong Guan with the E.M.R. people? —Not if I knew Hong Guan. You only thought that he would use the arguments in it but not the letter itself? —I do not know what arguments he would have used, but Hong Guan had his own methods of conducting these negotiations. Were these not arguments which you intended him to use to get the price down? —They were arguments which I put before him to show that if he could not get a reduced price the option was of no value to me. And that he would be losing any profit or commission that would be going to him if he did not? —Yes. And moreover that he would lose your forbearance on that $6,000 promissory note? —Yes. Continuing, witness said that on Sept. 30, Hong Guan came to see him, but he never brought a draft option. He might accept an option without knowing what the particulars were. It all depended what was meant by the word “accept.” Referring to Hong Guan’s telegram to Dr. Lim Boon Keng, “Russell agrees terms,” witness said that he had that telegram sent. That telegram was not quite correct when it said subject to “slight modifications” in the amount of deposit. What was the amount of deposit referred to in that telegram? —I say that when Hong Guan arrived he required $120,000. I said I would not pay as much as that and I thought $60,000 would be sufficient. I would not say that the amount referred to there is $60,000. Referring to Hong Guan’s telegram saying “fixed up option etc,” witness said that what was stated there was what he had asked Hong Guan to obtain. Witness said he probably thought on Oct. 1 that this option was definitely fixed. You really say you were prepared to deposit $60,000 on an option the terms of which you did not know? —If the terms were impossible ones I would certainly have objected. Referring to the telegram “I confirm the arrangement,” witness admitted that it might have been a dangerous thing to do. He had done a number of dangerous things. At that date did you not think you were getting a free option? —I may have, but I may have had doubts in my mind as to whether Hong Guan would get a free option. The court adjourned for lunch at 1.10 p.m. Not a Free Option. On resuming after lunch witness said that the option of Oct. 1, was brought to him by Hong Guan on Oct. 3. It was, he thought, on Sept. 30, that he asked that the Malayan Colliery shares should be valued at $30 each instead of at the market price. He accepted this option, but he did not conceive the possibility of a free period under that option. He understood that he had to pay $60,000 option money which, if he purchased the property, would go towards the purchase price; and which if he did not exercise the option would be forfeitable. Where did you extract all that from? —I understood from Hong Guan’s interpretation. It seemed to me impossible that there should be a free period. Why? —Because it says that $60,000 should be paid to E.M.R. Co., as option money. Option money, I take it, is money paid for the right of the exercise of the option. I take it this is bad English. This means option money payable for this option. Option money is consideration but not money payable merely for the exercise of the option. How did you exercise the option? —The option was exercised by transferring to E.M.R. Co. the deposit as part of the purchase money. And in what event would your deposit be forfeited? —If the concession being in existence I failed to exercise the option. Which are the words in this option which lead you to that conclusion? —There are no words here. But the effect on my mind was that I was liable unless it was proved that no concession existed. Continuing, witness said that under clause “E” it seemed to him that if he failed to exercise the option in calculating damages for failure to fulfil he would have to pay the price of the property plus the purchase money. That might be the only clause which specifically mentions the forfeiture of $60,000. Do you really say that all this was in your mind on Oct. 3, or is this your attempt now to explain this document? —All I can recollect is that on Oct. 3 in spite of what Hong Guan said I thought that the $60,000 was forfeitable. The extension of the free period from two weeks to six weeks was not all that I cared about in the option. There were other considerations. Witness thought there was a free period in the option of Oct. 5. He could make no sense out of that option. This was the option you sold to Malayan Collieries at a profit of 1 ½ million dollars? —Yes Of which you can make no sense—In saying that I am referring to the deposit of $60,000 and the forfeiture of the deposit. I don’t understand what the law would be if there was no clause stating that it was forfeitable. All that was present in my mind when I received this option was that although there was a great deal about the money being forfeitable there was nothing about it being returnable. I had endeavoured to get a letter from the E.M. R. Co. saying that the money was not forfeitable, which I had failed to get. Now you would not perhaps mind answering my question. What is the difficulty about clause E? —The clause “D” is obviously senseless. It speaks of “the completion of the transaction two months after the exercise of the option.” It is nonsense. Senseless Nonsense It is nonsense and it is senseless, and yet you sold it at a profit of 1 ½ million dollars? —Yes, after Messrs. Drew and Napier and Sisson and Delay had defined the terms. After Oct. 6 I knew that my money was forfeitable if I did not exercise the option. On Oct. 6 I knew that the option of Oct. 5 was an operative or binding document. Continuing, witness said that on Nov.18, he went to Singapore and had at least two interviews at the offices of E.M.R. Co. At the first interview he saw Poey Keng Seng for the first time. He might have seen him on the afternoon of the 17th but he had no recollection. Witness told him that he wanted to exercise the option. Then he drafted a document which Poey Keng Seng got typed in duplicate, both of which were signed by him and one of which was given to Poey Keng Seng. He exercised the option by that letter of Nov. 18. He could not say now why he signed both copies. It was very fortunate that you signed both in this case, is it not, because the copy which you say you gave to Poey Keng Seng has not been found? —I don’t know whether it makes any difference whether I signed it or not. I gave it to Mr. Robinson. What is the sum which it refers to? —I myself thought that it referred to $60,000. I left my lawyer to interpret the document. Clever Letters This is another of those clever letters leading the Chinaman to believe that you were exercising the option and at the same time allowing your lawyer to see if he can find a loop-hole out of it? —No. I did not want to bind myself to any sum. I wanted my lawyer to see it. You asked for your deposit receipt? —Yes. Did you not ask for that $60,000 back in order to cash it and remit it to Drew and Napier to be paid to the E.M.R. Co? —Yes. At the second interview you got back this deposit receipt? —Yes. Attached to a telegram of Oct. 4 from the bank? —Yes, Kuala Lumpur. You took back the deposit receipt and telegram? —Yes. What did you do with them? —I cashed the deposit receipt and the telegram I filed somewhere. The deposit receipt went into the bank. You never disclosed the existence of that deposit receipt in the affidavit of documents or in your supplementary list. —If you say we did not, we did not. And these documents were only found after you returned from China after Dr. Lim Boon Keng had been cross-examined? —Yes. When you got back your deposit receipt from Mr. P. Keng Seng you gave a receipt? —Yes. It is not written on E.M.R. paper although it was written in their office? —That is so. You did not bind yourself to any new arrangement? —No, except for this letter which I gave him. Continuing, witness said he agreed in principle to the substitution of $200,000 for $60,000, leaving the details to their respective lawyers. You got back your $60,000? —Yes. And this $200,000 was a new amount not mentioned in any option? —Yes. Who was to pay this $200,000? —At the time I certainly thought that Malayan Collieries would be paying the amount if they purchased the property, otherwise I and my partners would pay it. I don’t want what was in your mind but what you told these Chinese. Did you tell them that Malayan Collieries would pay this sum? —I am almost certain I told them Malayan Collieries would pay the amount. I told Poey Keng Seng, in course of conversation, that I would call a meeting of the board to whom I intended to offer the option, but I did not say in a week or so. I told Poey Keng Seng that very probably the $200,000 would be paid by the Malayan Collieries. Continuing, witness said that on Nov. 19 as well as 18, he went to his lawyers. At that time Drew and Napier were not Malayan Collieries’ solicitors. When Mr. Robinson was not in Kuala Lumpur they were the company’s solicitors and it was so advertised in the company prospectus. Witness asked Mr. Robinson to draw up the two documents, one from Hong Guan to Khoo Wee Chuan and the other from Khoo Wee Chuan to him. At that date Mr. Robinson probably did not know of the letter of Oct. 3 whereby Hong Guan sold this option to witness. These documents were signed in Mr. Robinson’s office and in his presence. Did Mr. Robinson know Mr. Khoo Wee Chuan? —No. You know that the document is signed in Chinese characters? —Yes. On what day were these documents signed? —Either the 18th or the 19th. On that same day Mr. Robinson drew up notices exercising the option. Why did Mr. Robinson draw up those documents? —In order legally to exercise the options. The dates were not filled in when they were signed? —No. Who filled in the dates? —Mr. Robinson, I presume, on Nov. 24. On Nov. 23 a board meeting was held and Malayan Collieries had a discussion with Mr. Robinson regarding the exercise of the option. There is no exercise by Russell and Co? —No. But Drew and Napier exercised the option on behalf of Malayan Collieries? —Yes. Why was there no exercise of the option by Russell and Co.? —I don’t know. Mr. Robinson will probably know. On the 19th you telegraphed to your firm to call a board meeting? —Yes. Was it before or after your interview with Mr. Robinson? —I cannot remember. Referring to a telegram sent to Mr. de Stoutz sent in Sept. 1920, he could not say whether the cost of that telegraph was debited to Malayan Collieries. Looking at the original the witness admitted that the telegram was written in ink, that there was something scratched out at the bottom and “a/c Malayan Collieries” had been typed over it in violet ink. He could not say how that came to be done. You know that an elaborate argument has been built on the signature at the bottom of these telegrams? —I know that it has been argued. That telegram has not been altered to support that argument? —No. Continuing, witness said that on Oct. 4, Malayan Collieries had on fixed deposit $235,000. It was not necessarily there to pay the cash dividend paid on Oct. 16. On Sept. 21, the directors decided what dividend was going to be paid. On Oct. 4 he knew that this amount on fixed deposit was going to be used for paying that dividend. Mr. Braddell handed up that account to the court. Witness continued that on Oct. 5, a sum of $65,000 had to be transferred from the current account of Malayan Collieries to the dividend account. On Oct. 4 he knew that the cash to the extent of $32,000 would be required at the mine for wages. This sum was actually paid on Oct. 8. On Oct. 8 he paid $14,874.98 for white rice. On Oct. 4, he also knew that $38,575 would have to be paid to one of the company’s creditors, and actually on Oct. 8, a Chinese shop was paid that sum. He also knew that the sum of $10,000 would be required as directors’ fees, and he knew that a bonus had to be paid to the company’s servants. As a matter of fact on Oct. 16, various sums were paid as bonus to the staff at the mine. You knew perfectly well on Oct. 4 that all the company’s ready cash would be required to pay their debts? —Yes. Then why did you want to make the point that the company had a large capital and that you could draw any amount you liked? —Because as a matter of fact the company had that large sum in fixed deposit. Further hearing was then adjourned till this morning.

Malay Mail Thursday, April 10, 1924, p.9 PECK v. RUSSELL Defence Witnesses Called MR. RUSSELL’S CROSS-EXAMINATION CLOSED Eighteenth Day’s Proceedings Continuing his evidence under cross-examination yesterday Mr. J. A. Russell stated: - I understood the Nanyo Maru to go to Bandjermassin. I thought she might touch at Kota Baroe, but might not be there very long and would go to Goenoeng Batoe Besar; on her return that she would touch at Kota Baroe, again, this time perhaps for a longer time than on her outward journey. I cannot say whether I thought she would touch at Bandjermassin on her return journey. I left the decision regarding the arrangements for the trip to Seboekoe to Mr. England but it was understood that he would not disembark the Seboekoe party at Kota Baroe until the return journey from Goenoeng Batoe Besar. I though that the Nanyo Maru would stay at Goenoeng Batoe Besar for about four days. I made no arrangements with the owners for the voyage but I had obtained permission from the owners, through Hong Guan, for the Seboekoe party to travel on the steamer. I made no more definite arrangements. I did not seek to control England’s decision regarding what he was to do on the trip but there was an understanding. I made no more definite arrangements than I have already disclosed. When I wired to Mr. de Stoutz that England and others were visiting Seboekoe and inspecting another property on the way it was not a shrewd guess but a practical certainty. Mr. de Stoutz had written to say that he was arranging to meet the party at Kota Baroe. When I wrote to him, “she is sailing direct to Pamoekan Bay which they are inspecting and they will then go on to Kota Baroe,” that was what I thought they would do at the time. When I wrote to Mr. de Stoutz later “I am sorry that Mr. England was so stupid and did not follow our strict instructions to go to Seboekoe if possible on his way to Goenoeng Batoe Besar,” it was a mistake. “If possible on his way” is not correct and the word “strict” is wrong. The Eastern Mining and Rubber Co had a contract to supply a certain quantity of Tehweh coal. Mr. Poey Keng Seng had either lent or agreed to lend to Tehweh, a sum of $200,000. This referred to the coal contract which the E.M.R. were later asking me whether I would take up. The coal contract was being enquired into by J. A. Russell and Co., for their own benefit. Why? —Because it occurred to me that it might be a valuable contract for W. R. Loxley and Co., to obtain especially as we wished to establish a branch of W. R. Loxley and Co. in the Dutch Indies. How many tons a month? —If I recollect rightly it was for 3,000 tons a month. That was what I was told. Do you tell the court that whereas Malayan Collieries were trying to buy the mine, you, for J. A. Russell and Co. were trying to buy its output? —I am telling the court that whereas if they could get an option over Tehweh it would be a proposition which would pay the Malayan Collieries to consider, I, on behalf of W. R. Loxley and Co., was prepared to take up the contract which that company had already agreed to make with E.M.R. Co. to supply a certain quantity of their output over a certain period. Shown the contract, witness presumed that it was the contract. That was for the supply of 96,000 tons at $14 f.o.b. Bandjermassin. He had no figures before him but from what Hong Guan told him he thought that there would be a Good Merchant’s Profit. So you say that the company was negotiating for the mine and you were negotiating for its output? —Yes. Do you think that honest? —Yes. I consider it perfectly honest. There was no reason whatever why I should not invest $200,000 and take over a contract which the mine at that time had already entered into. Naturally in the price paid by Malayan Collieries for the property they would make allowance for this liability which the Tehweh company had entered into. For what purpose did the Malayan Collieries require this option over the Tehweh property? —I have already said that Malayan Collieries were prepared to consider an option over any property offered to them so long as it was a free one. Perhaps you will answer my question. For what purpose did the Malayan Collieries want this option over the Tehweh mine. To develop it or to sell it? —For the purpose for which mines are usually required. For the purchase of the mine if they considered the property was worth the price asked for it. Would you mind telling us, Mr. Russell, for what purpose the Malayan Collieries wanted this mine? Was it to develop or to sell it? —Presumably to develop it. Don’t say “presumably.” You are the person who authorised Hong Guan to get this option without even the consent of the other directors. For what purpose did you want the mine? —To operate it as a coal mine. That is to develop it? —Yes. And you were going to operate a mine with its output tied up? —No. I do not think it mattered if its output was tied up. As a matter of fact its output would not be tied up. It was only that it had a contract for a certain portion of its output for a definite period at a definite price in return for which it was to receive $200,000. Continuing, witness said that he could not say what the actual output of Tehweh at the time was. His information was vague. He could not say whether money would have had to be spent to develop the mine to produce 48,000 tons a year. The Khoo Wee Chuan Documents. Now tell us how did Khoo Wee Chuan happen to be in Mr. Robinson’s office? —I instructed Khoo Wee Chuan to go to Mr. Robinson’s office, some time when I went to Singapore. I had an interview with Hong Guan On Nov. 15. I went to Singapore on Nov. 16 night. If I remember rightly Khoo Wee Chuan was going to Singapore about that time to see some tin mining proposition in Johore. I arranged with Hong Guan and Khoo Wee Chuan to meet me at Singapore on Nov. 17.18 and 19. It was on Nov. 15 that I arranged that Khoo Wee Chuan should be my nominee. If my memory is correct I promised on Nov. 15 that I would increase Hong Guan’s remuneration, and I fixed in on Nov. 17. I do not think I promised Khoo Wee Chuan to give him shares on the same occasion. I remember promising to give him some shares but I cannot say where it was, whether in Kuala Lumpur on Nov. 15, or at Singapore. The Malayan Collieries shares were then about $27. My promise would have involved me in an expenditure of at least $10,000 in respect of Khoo Wee Chuan. After these promises had been made these documents were executed in Mr. Robinson’s office. Regarding Khoo Wee Chuan I cannot say whether I promised the shares, before or after, the making of the documents. England turned up on Nov. 23. He knew that the directors’ meeting was in connection with the Goenoeng Batoe Besar. I had telephoned to him on the 22nd, that the board meeting was being held. Between Nov. 8 or 9 and Nov. 23. England did not wish to explain anything to the board regarding his visit to this property because he did not wish to say anything until he received a telegram from Mr. Brickman regarding the bore-hole. I agree that England’s report is A Very Unusual Report. This report is on Malayan Collieries’ paper. It is addressed “Dear Sirs” meaning probably the board. The report starts off in good style, suddenly stops, and then is not signed? —Yes. Did you tell him, “There is no need for a report, come and tell the board verbally what you have to say?”—No. I did not say anything like it. Anyhow something occurred to change Mr. England’s mind? —Yes. Do you agree with me that so far as we have this report it is a development report? —It is a report on the property. Can you imagine an engineer sending in a development report without speaking about the nature of the mine and the lie of the seams which he is proposing to develop? —I cannot say. England says he was requested. Who requested him? —I suggested to England that in reporting to the board it would be advisable for him to have some plans and sketches with him to show how he proposed to develop the place if the board decided to acquire it. Did you “request” him as he says in his report? —I should think he was referring to our conversation. At the meeting did you produce the option of Oct. 5? —No. Or a copy of it? —No. So that the board bought an option the contents of which they had never seen? —Yes. And they could not therefore have known exactly what they were tied down to? —No. You have known Mr. Henggeler for a long time? —Yes. You have been very good friends? —Yes. Don’t you think Mr. Henggeler has always trusted in you? —Yes. And you have known Mr. Grant Mackie for a long time and he has been a good friend of yours? —Yes. And he has always trusted in you? —I think so. And have you not always been left to run the Malayan Collieries at your discretion merely asking the directors when you thought it necessary? —I cannot say that is so but I have run this company so far as non-vital matters were concerned. And after Mr. Peck opened these charges against you in May 1922, and from that time onwards, the directors of this company have backed you up and exerted all their influence on your side as against Mr. Peck? —No. I don’t accept that. If they believed in you and in your honesty there is no reason why they should not? —Whatever private belief they might have held regarding my honesty I am certain that would not have influenced them in carrying out their duties as directors. What did you believe, if they purchased this option, they would let the company into. What I mean is this. The face value of the option is $1,600,000 but the actual value would be what? —I cannot say what the other directors thought. Quite, but what did you think? How does it work out at? —It means the purchase by the company of Goenoeng Batoe Besar at a price which from the start would pay a dividend of 40 percent on a capital of $2,000,000. And I do not think the figure should be much higher than this because if the company issued 100,000 shares to the public besides the bonus shares which were already watering its capital, I am of the opinion that these shares would have realised more than about $10 a share. That is all very interesting Mr. Russell, but the question is what did you figure this transaction actually represented. May I suggest to you that it was $3,000,000? —I do not think I considered that. You considered your own profit to be a million and half dollars? —Yes. I cannot say it was actually a million and a half. What did the directors think? This matter was discussed for two and a half hours? —I do not know what they thought. They did not know what it was that they were buying for? —Yes, for 100,000 shares and $600,000. What did they take 100,000 shares to mean? —I cannot say. They did not enquire what your profit was? —No. They did not enquire what they were buying? —Yes, they did. What were they buying? —They were buying Goenoeng Batoe Besar. Were they? They were not buying an option over Goenoeng Batoe Besar from Messrs. J. A. Russell and Co.? —Yes, they were buying an option. That would make some difference would it not? —Yes. I think so. They were buying the option. Mr. Braddell’s Catechism. But all the information they had before them referred to the mine itself? —All the information that Mr. England gave them referred to the mine itself. Did you tell them that you had an option over this mine? —Yes. Did you tell them from whom you had obtained that option? —No. Did you tell them that you obtained that option for yourselves? —Yes. Nobody asked you for how much? —No. Nor from whom? —No. Nor what the terms of that option were? —Yes they asked for the terms of the option. And what did you tell them? —I stated the terms. (To be continued.)

The Straits Times, 10 April 1924, Page 9 MALAYAN COLLIERIES. Conclusion of Mr. Russell's Evidence. Keen Cross-Examination

The Singapore Free Press and Mercantile Advertiser (1884-1942), 10 April 1924, Page 7 
PECK v. RUSSELL.

Malay Mail Friday, April 11, 1924, p.5 PECK v. RUSSELL WEDNESDAY’S EVIDENCE Mr. Russell’s Cross-Examination Continued. (Continued from yesterday’s issue.) Mr. Braddell continued his cross-examination of Mr. Russell. I want to know what you told them? —I cannot remember at this date exactly what I said but I told them about the royalty, the taking over of the Nanyo Maru, the taking over of the coolies, and of the mine stores at cost. Not the price? —No. Why did you not produce the option and tell them, “There you are, gentlemen, that is what you are being asked to buy”? —I did not do so. That is the only answer you can give? —Yes. As a matter of fact the actual option was with Messrs. Drew and Napier at the time. You admit that you worked on these gentlemen’s feelings? —No. I thought that the mine was a very excellent property and I did not very much care whether they took it or not. Did you produce the analyses of the Goenoeng Batoe Besar coal? —Mr. England I believe did so. Did you tell the directors that you had these analyses made for the company? —Mr. England probably told them about the analyses. I cannot remember whether I told them. Was the coal produced? —Mr. England produced a sample of coal. And the analyses? —Yes. From whom did Mr. England get the example and the analyses? —He got the samples of coal from Goenoeng Batoe Besar. From whom did he get the samples which he produced at the meeting? —He brought samples from Goenoeng Batoe Besar. When samples are analysed they disappear. I have never heard that samples sent for analyses are returned. From whom did Mr. England get the analyses? —From the office of J. A. Russell and Co. Who handed them to him? —I cannot remember now. A clerk probably. You did not hand them over to him? —I cannot remember. I may have. Or they may have been handed to him by Mr. Robbins, I don’t remember. Witness continuing said that the minutes were circulated. It would be surprising if they were not circulated. After the meeting Mr. Coutts prepared the minutes. So that nobody at the meeting asked about the form of the option but the secretary asked for it afterwards? —Yes. Preparation of Minutes. The secretary asked you for the terms of the option in order to prepare the minutes? —He asked me to give him particulars of this transaction and what documents there were. You as chairman of the company directed what he should put in the minutes? —No. He drafted the minutes, I saw it, and I thought there was nothing wrong in it. Did you tell him the truth about these transactions? —I did not go into the details. Did you tell him that this Khoo Wee Chuan transaction was a bogus transaction? —Whether I told him or not he would know who Khoo Wee Chuan was and that he was my nominee. Do you think that was an honest minute? —It is the way in which Mr. Coutts drafted it. Do you think it is an honest minute? —Yes, I think so. Mr. Coutts asked you what documents there were? —Yes. You will agree that the documents are not shown in that minute? —No. Mr. Coutts is still a shareholder in the Company? —I cannot say without looking up. If he is a shareholder his address would be available. At the meeting of Feb. 15, 1921, when that minute was confirmed did anybody ask any question about that minute? —I cannot remember that any questions were asked at the meeting. You allotted all these shares without asking the directors? —It is a formal matter. I cannot say whether the directors were asked or not. I am not prepared to admit that they were not asked. Don’t you remember Mr. Brown coming and telling you that it was necessary to get the directors to approve so that the matter might be inserted in the minutes? —I cannot recollect. Perhaps he did so. It is the sort of thing he would do. He is a careful man is he not? —Yes. You did know, did you not, that a return of shares allotted had to be made? —I knew that when shares are allotted other than for cash a return had to be made. You knew that Mr. Brown had to prepare that document? —Yes. And you let him make a false return? —No. Bonus Shares and Rights Witness continuing said: My impression is that the E.M.R.Co. claimed the bonus shares from J. A. Russell and Co. , in the first instance. Mr. Braddell put to witness certain letters from E.M.R. Co., to him and his replies to them regarding certain details in the option in which payment was asked for, and in which E.M.R. Co. asked Malayan Collieries to help them with money. Witness said that he could not say whether one particular letter was written to him as chairman of Malayan Collieries or whether he read it as such. He replied to Dr. Lim Boon Keng giving various disbursements which Malayan Collieries had to make and which left it with little cash. It was a Malayan Collieries letter written on J. A. Russell and Co.’s paper. Mr. Braddell questioned the witness as to the party from whom the E.M.R. Co. claimed the bonus shares and rights. In one letter, he said, it was stated “As our option to you,” and Mr. Braddell asked if that did not refer to Malayan Collieries Ltd. Mr. Russell replied that the E.M.R.Co. people wrote that letter in the same way and he (witness) and a good many other people wrote, without any great care. He could not say whether the E.M.R. Co. people knew that Hong Guan was his agent. You conducted these negotiations with Hong Guan as partner, and Dr. Lim Boon Keng personally as a director of the E.M.R. Co. You did not conduct these negotiations with E.M.R. Co. direct? —That may be so. When you got that letter claiming bonus shares and rights didn’t you send for Hong Guan? —No. I don’t think so. Look at your letter on the next page. Does it say that I sent for Hong Guan? —He was coming to see me every two or three days. You explained the matter to Hong Guan? —Yes. And eventually you settled that this company would have no bonus shares but would have the right to pay for the rights? —Yes, that they would have the right to pay for the rights. And they were satisfied with that arrangement? —Yes. They accepted that arrangement. But surely they were entitled to those bonus shares, were they not? —No. I don’t think so. The option shares were held by you on that date? —Yes. Were they not clearly entitled to any rights on those shares? —I was advised that they were not entitled. Didn’t you think that they were morally entitled to them? —No. Very well, they did not, however, get them? —No. This completed the cross-examination. Re-examination Replying to Mr. Carver in re-examination witness said that the taking over by Malayan Collieries would not necessarily have added to the Company’s capital. The right to take up the 30,000 shares which were later issued by the Company at $16 per share was regarded as having a money value. Malayan Collieries’ customers were in Malaya, and what they required was price in relation to calorific value and not the coal’s storing properties. These customers took their supplies either daily or at very frequent intervals. Regarding what Malayan Collieries paid to Hastings for his services witness said that Hastings worked for them after Oct. 3 or 4 but not exclusively. From Sept. 24 to Oct. 3, he worked for them exclusively. Referring to his statement that he had not read the Companies’ Enactment, witness said that when he first started secretarial or company work he engaged a company accountant. Since his cross-examination he had found out that How Loon alias Khoo Wee Chuan was drawing a salary of $95, and living and house allowances bringing up the total to $180. This was a nominal salary and he expected to make more according to the Chinese custom. Witness said that his business was an extensive one and he would not keep in mind the amount of salary he was paying to his employees. Referring to the stub of the cheque by which Malayan Collieries paid back to Russell and Co. the whole of Hastings’s account witness stated that the stub would not convey to him that the amount constituted the whole of the expenses connected with the first expedition. He probably considered it an adjustment. Referring to the circular letter to the shareholders witness stated that the necessity for the drafting of that arose after the leader in the Straits Times. Witness said that the letter was published on June 5. During that time Mr. Shearn was not in Kuala Lumpur and he returned at the end of June. Witness went up to the Gap and saw him. There was not much time to ascertain all the facts. Whatever Hong Guan may have said of being able to procure or having procured a free option, at no time did witness think that he had done so or could do so. Witness said that boring did no damage to mining property. Regarding the $60,000 he thought that he had entered into a contractual liability with the E.M.R. Co. The Malayan Collieries had ordered the briqueting machinery to deal with smalls which it found at that time difficult in disposing of. Such smalls could be bunkered. The bringing of outside bunkering coal would compete with such proportion of the smalls as were briqueted. He had never heard of anybody briqueting anything but smalls. No Ambiguity in Option Assuming that the option was exercised in due time and in the method set out, there was no ambiguity of the price in the option. Those doubtful points were cleared up by Messrs. Drew and Napier and Sisson and Delay. After that arrangement he did not think there would be any possible ambiguity outstanding. Regarding the suggestion that the signing of duplicates in connection with the letter of Nov. 18, which he gave to Poey Keng Seng, was unusual, witness identified the duplicate of the chit he gave to Hong Guan on Sept. 27, which was signed by him. Regarding the alteration in the telegram to De Stoutz on which he was cross-examined, witness said that he was unaware of that alteration until he saw the carbon copy in the file. Although the direction there was to debit the amount to the Malayan Collieries it was in fact debited to Russell and Co. Mr. Carver wanted Mr. Braddell to confirm the fact that before the case started this alteration was pointed out to Mr. Braddell and he wished it to be understood that this was not a new matter suddenly discovered. Mr. Carver added that he telephoned to Mr. Braddell and told him about it. Mr. Braddell said he could not remember it, but if Mr. Carver said so he would accept his word. It was not a new matter at all and he had known of the alteration for some time. Continuing, witness said that the direction in the telegram as to whom the amount of these telegrams should be debited was not a haphazard procedure. The handwriting in the altered direction in the telegram was his. Referring to the Tehweh coal contract witness said that nothing came out of it and he did not receive the contracts. Regarding England’s report and its incompleteness witness said that it was quite possible that England did not want to write a report which witness would see. Therefore he stopped it and said he would report verbally. If England had brought samples of coal it was not likely that the whole of these samples would have been sent to the analysts. A greater part of them would have been retained. The rights given to the E.M.R. Co. were given by Russell and Co. and not by Malayan Collieries. China Mineral’s Capital Regarding the China Minerals Ltd., witness said that he had received a telegram in reply to his to Hongkong from which he now learnt that he had made a mistake with regard to China Minerals. The shares of that company were not fully paid up. Only 30 cents had been paid up on dollar shares making $10,000 Hongkong dollars or 20,000 Straits dollars. Of that amount his share was one-third. This concluded the re-examination. Mr. Braddell then put in the affidavits of documents in the case and letters of Pooley and Co. in January 1924 disclosing other documents. He could not say when the deposit note was discovered. With the exception of those disclosed in the affidavits and letters and the deposit note, all the other documents were discovered by him in the course of the case, but not voluntarily disclosed. Mr. Shearn said that in addition to the above there were other letters sent by him to Mr. Carver which were handed over to Mr. Braddell without any request. He mentioned a letter of Sept. 6, as an instance. Evidence of Mr. Hastings. Paul Edwin Hastings said: I live at Kuala Kubu. I studied engineering in the London University and Glasgow; I have worked as an engineer at Trinidad. I came to the F.M.S. in May 1914, and started with Russell and Co. in April 1919. They employed me more especially in connection with their mining interests. I can speak Chinese. I remember being informed by Mr. Russell that my services would be lent to Malayan Collieries to organise an expedition to Seboekoe. It was somewhere in the middle of September. Mr. Russell told me to go to Batu Arang and report myself to Mr. England. I did so. England told me that he was very busy, and asked me to supervise the engaging of boring coolies, the packing of boring tools, the buying of provisions and generally organise the work. I arranged the route which the expedition was to take. We were to go either via Batavia or Soerabaya transhipping once or twice. Later on Mr. Russell asked me to return at once to Kuala Lumpur as he had other work for me. I returned to Kuala Lumpur almost immediately. I saw Mr. Russell. He told me that he had acquired an option over another coal mine in the Dutch Indies and required me to go there and report on it. I cannot remember if he told me anything else. The following day he told me that there was a Japanese steamer named Nanyo Maru sailing direct from Singapore to Goenoeng Batoe Besar and that I could take passage by her. On the second day Mr. Russell told me the information he wanted and the work which I had to do. I cannot call to mind anything in particular which he asked me to do. I remember Mr. England coming to Kuala Lumpur on the day after I returned from Batu Arang, and seeing Mr. Russell. I was present at the interview. Mr. England complained very bitterly at Mr. Russell taking away my services from him, thus inconveniencing him, and asked Mr. Russell whether some sort of arrangement could not be made for him to go with me. Mr. Russell said that it could be arranged if he could get permission from the E.M.R. Co. for him to go to Goenoeng Batoe Besar and Kota Baroe. I was told to inquire whether the title was a good one, or whether it was a mere mining licence, and to get all the information I could get. Mr. Russell told me the name of the property was Goenoeng Batoe Besar. Nanyo Maru was expected to start I think, about Oct. 10. I did not know at that time how long she was to remain in Goenoeng Batoe Besar. She was to call at Bandjermassin, Kota Baroe and Goenoeng Batoe Besar on her way. As far as I was told I had four or five days for my investigations. If I had time Mr. Russell told me to take Mr. England to Seboekoe. If I had not time I was asked to return. If I had to return for want of time I was to hand over Mr. England and party to the representative of Mr. de Stoutz at Kota Baroe. Mr. Russell said that Mr. England could occupy his time at Goenoeng Batoe Besar by examining the mine. A Two-Fold Advantage Mr. Russell said that the advantage of Mr. England examining the mine at Goenoeng Batoe Besar was two-fold. One was that he would have the experience when he examined Seboekoe; and secondly in the event of Mr. Russell buying the mine he would offer it to the Malayan Collieries. I know Mr. Ho Man, and subsequent to this interview Mr. Russell told me that he had spoken to Mr. Ho Man about Goenoeng Batoe Besar, and that he had offered half or a share of the mine to Ho Man, and that Ho Man had sent two of his kapalas with me to assist in the investigations. These two kapalas were taking the place of two of Mr. Russell’s mining overseers. I was given a Hongkong letter of credit limited to $2,000. I drew some cash from Messrs. Russell and Co. and also from Malayan Collieries. There were three such items, $500, $800 and $1,200. I have heard of the mine called Tehweh. I heard of that first in Mr. Russell’s office, from Mr. Russell. He told me also to make full enquires about Tehweh as it was reputed to be a coal concession, and there was some talk of Mr. Russell taking over a contract for coal. I was asked to investigate. We left Kuala Lumpur on Oct. 11. My party consisted of myself, Ho Man’s kapalas, a Malay demarcator, Mr. England, Mr. Brickman, and nine boring coolies. We went to Singapore where we remained for five days. When we were there we called on several firms which were reputed to be Coal Consumers. I went with Mr. England. Besides coal consumers we went to the E.M.R. Co. where we saw some Chinese. Of these I can only remember Mr. Poey Keng Seng. Mr. England had had a conversation with Mr. Keng Seng. He thanked him for the information, for permission to travel by the Nanyo Maru and he told him that he was going to inspect a coal concession at Seboekoe. Mr. Keng Seng told him that it would be A Waste of Time and money to go to Seboekoe. He said that Seboekoe could not compare to Goenoeng Batoe Besar in value as Seboekoe was a swamp. Nanyo Maru came to Singapore after we reached Singapore. I brought a sample of coal from the Nanyo Maru which I sent to Mr. Russell in Kuala Lumpur. I cannot say whether I sent it by rail of by post, but I remember parcelling it and taking it to the station. I did that because Mr. Russell requested me to do so. The vessel sailed on Oct. 16, and we boarded her. The mine-boring coolies were the team to work the diamond drill. I took the boring plant with me. Some parts of this boring plant could be raised by me. The main body of it weighs about 7 pikuls or half a ton, and that is the heaviest part of the machinery. The pipes weighed about 3 tons. This boring outfit was taken with us to bore in Seboekoe. We did not intend to use it at Goenoeng Batoe Besar. On our way I investigated the coal as a bunkering fuel. The Nanyo Maru was burning Batoe Besar coal, and Mr. Russell requested me to make observations as to the suitability of the coal to bunker. I did that and found that it was first-class bunkering fuel. The ship had no difficulty in keeping up steam and the coal did not contain a high percentage of ash. Neither did it clinker. Mr. England, too, made investigations into the coal used on the ship. When the ship got to Bandjermassin Mr. Tan Way Ann of the E.M.R. Co came on board. Mr. England, Mr. Brickman and I went ashore. On board I wrote a letter to Mr. Russell and I sent it off from Bandjermassin. On shore we went to see the Secretary to the Resident at Bandjermassin. I wanted to know from him the kind of title to Goenoeng Batoe Besar, whether it was just an ordinary licence or a concession. I found out that it was a concession. From the record which I saw, I found out that the concession had sixty years’ life yet. I also found out that it was in the name of Broers. Mr. England was with me at this time. We also wanted information about Seboekoe and were referred to the chief of marines or the harbour master. We went and saw this gentleman. The chief of marines spoke English. The Secretary to Resident spoke English to me. The chief of marines gave us A Very Discouraging Account of Seboekoe. He told us that the land was swampy, the water was shallow and inaccessible to anything bigger than a steam launch from three miles from the shore, that previous mining ventures had been failures owing to transport difficulties, and the general inaccessibility of the concession. He showed us charts and these charts had the depths of water marked in them. I then went on board the Nanyo Maru and wrote a hurried letter to Mr. Russell, in which I said that Mr. England was very disappointed. I gathered that from Mr. England. I went to the house of Tan Way Ann. Mr. England and Mr. Brickman went there with me. There was some mention of Tehweh there. I saw some coal there. We then went on to Kota Baroe where a Chinese came on board. I think he was Mr. de Stoutz’s agent as well as the agent of E.M.R. Co. Mr. England spoke to that Chinese agent through me. Mr. England told him that he was going to Batoe Besar. In the first place Mr. Lim Jik Chan (this agent) asked me when Mr. England would be going to Seboekoe, and said that Mr. de Stoutz had already arrived from Soerabaya. Mr. England asked me to reply that he would be going on to Batoe Besar first and then would go to Seboekoe on his return journey. Mr. England also enquired what facilities were possible, mentioning specially boring. Lim Jik Chan replied that it would be impossible to land any heavy machinery without previous preparations. Eventually the ship arrived in Goenoeng Batoe Besar. I met Mr. Van Ryswyk there and Mr. Body, a mining engineer. The ship stayed seven days at Goenoeng Batoe Besar. I saw Mr. Van Ryswyk and asked him for information of the concession, the cost of production and labour force. Then I went to inspect the mine, took samples of coal from various seams and outcrops, took the angle of the dip of the seams and tried to locate the boundaries. I had the assistance of the Surveyor Radin, who was working at the mine at the time as well as my own demarcator and Ho Man’s two kapalas. No one else worked with me.

Malay Mail Friday, April 11, 1924, p9 PECK v. RUSSELL Independent Directors’ Evidence. DISCUSSED A PROPERTY AND BOUGHT AN OPTION Mr. Pecks’s Mare’s Nest. WITNESS ADMONISHED FROM THE BENCH Continuing his evidence in chief yesterday morning Mr. Hastings said that while he was engaged in doing what he had described the previous day, on Goenoeng Batoe Besar, he could not say what England was doing. England came ashore but did not go to Goenoeng Batoe Besar with him. In regard to Brickman too witness could not say what he did at the time. They had three rooms allotted to them by Mr. Van Ryswyk, one of which was occupied by England and Brickman, the second by witness and his demarcator and the third as a store and by the coolies. The diamond drill was left on the Nanyo Maru. This drill was removed from the ship four days after their arrival at Goenoeng Batoe Besar when England decided to bore the property. Two days after they arrived England informed him that he would like to make a more thorough investigation of the property and asked witness to give him some assistance. Witness consented. England then took Brickman and two coolies who had been loaned to him by Mr. Van Ryswyk. Then he went but witness did not know where they went, and he only saw England on his return to their quarters in the evening. It was on the fourth day that England told witness that he would like to bore the property. Witness pointed out then that it would be impossible for him to complete the bore before the ship sailed. He then requested witness to try and delay the Nanyo Maru. Witness saw Mr. Van Ryswyk about the matter and on his assuring the latter that he would hold himself responsible should the E.M.R. Co. raise any objection to the delay of the ship Mr. Van Ryswyk consented. The boring tools were then landed. They sailed in the Nanyo Maru leaving behind Brickman, the boring coolies and the tools. The ship touched on its way back at Kota Baroe. Mr. England did not leave the ship there. From there direct the ship came to Singapore. Before sailing for Singapore witness sent a telegram addressed to “J. A. R, Kuala Lumpur” from Goenoeng Batoe Besar. It was sent by prau to Kota Baroe for despatch. Ho Man’s kapalas too returned in the Nanyo Maru. The demarcator was left behind to assist Brickman as he could speak a little English. On his way back witness Started to Write a document which he would not call a report. It was begun on the ship. There he wrote “I do not know what Mr. England’s figure is” under the heading “Quantity of Coal.” That was written on the ship, and that was perfectly true. When he arrived in Singapore he called on the E.M.R. Co. with Mr. England and there saw some Chinese in the office. There Mr. England praised Goenoeng Batoe Besar very much. They left Singapore the same evening for Kuala Lumpur, arriving the following morning. Witness went to see Mr. Russell either the same day that he arrived or the following day but he could not recollect. Witness gave an account of the property to Mr. Russell and it was a very favourable report. He must have completed the document on the 9th, and handed it to Mr. Russell. He believed that he told Mr. Russell that Mr. England had been indiscreet in giving such a favourable account of Goenoeng Batoe Besar in the office of the E.M.R. Co. Witness did not think a bore was necessary to form an opinion on the property. Cross-Examination Replying to Mr. Braddell witness said that the diamond drill was expensive and it was not used more than was absolutely necessary. Witness would not use the diamond drill without assuring himself that it was essential. He was first employed in organising an expedition to Seboekoe. At the time Goenoeng Batoe Besar had not come into the picture at all. Witness did not know when England joined the Malayan Collieries. In 1918 witness was manager of Sungei Ledang, Kerling, a rubber estate. He was on the Serendah rubber estate previous to that, probably in 1917. Witness left Serendah and acted as manager on an estate in Batu Tiga for six months. Then he did some tin mining before he joined Sengei Ledang Rubber Estates Ltd. Then he joined Mr. J. A. Russell. When he first joined he was on A Sugar Investigation. then he was examining in propositions, and then he went on the Goenoeng Batoe Besar expedition. He first heard of Goenoeng Batoe Besar about the beginning of October. The final arrangement for all of them to go together was made before Oct. 4. The arrangement was that the whole party should go direct to Batoe Besar, and it was arranged that England should examine the property, but not officially. Witness then said that he was not quite sure that it was arranged that they should all go direct. His lordship pointed out that witness had already stated that it was arranged that they should all go to Pamoekan Bay. Witness said he wished to qualify that because it was left to his discretion. His lordship repeated the witness’s last answer and asked him whether he wished still to qualify the statement. Witness said he would like to, and he said that it was left to him to decide whether England was to tranship at Kota Baroe or go direct to Batoe Besar. When you left Kuala Lumpur, therefore, Mr. Russell did not know whether England would go direct to Batoe Besar or Seboekoe? —I don’t know what Mr. Russell thought. His lordship pointed out that if it was left to witness’s discretion Mr. Russell could not have known it. Witness: Quite so, my lord. Witness said that the boring tools were heavy, and were packed and ready to be taken, to Seboekoe even before they enquired in Singapore how they were to be landed. In Singapore they learned that Seboekoe was swampy ground. They saw Vanderharst of Loxley and Co., but did not ask him anything about Seboekoe. They left Singapore without knowing definitely whether they could land the tools at Seboekoe or not. At Bandjermassin witness learnt that it would be extremely difficult to land the boring tools at Seboekoe without previous preparation. He would not say it was impossible, and he wished to qualify his evidence in chief on the point. At Kota Baroe he learned that it would be very difficult to land the tools. He would not say whether anyone cabled to Mr. Russell for instructions. The Fashion to Qualify. At Singapore he might have had a letter of introduction from Vanderharst to a Chinese gentleman, but at Bandjermassin he did not go to see this gentleman or his shop people. He could not remember whether Brickman accompanied England and witness to the E.M.R. Co.’s office. Brickman was a quiet man. They discussed Goenoeng Batoe Besar with Mr. Poey Keng Seng. When he went to make enquiries from coal consumers England was with him. And the object was to find out a likely marker for good bunkering coal. Goenoeng Batoe Besar coal was not mentioned. It was a general enquiry. When they left Singapore witness knew that England and Brickman would have to leave the ship at Kota Baroe on their way to Seboekoe, but not necessarily on their way out because she had to touch at Kota Baroe only to show that permission had been given for her to visit a closed port and that she did not stop at Kota Baroe for any length of time. Witness could not say definitely whether he knew that England would leave the ship at Kota Baroe. He wished to qualify what he said about it. A Bad Impression. His lordship: You are creating a bad impression on me by giving evidence in this way. It appears to me that you are afraid to give definite answers. Mr. Braddell (to witness): Did you know at Singapore what England was to do to get to Seboekoe? —I cannot answer yes or no to that question, Mr. Braddell, because both may be wrong. Can you tell the court when England intended to get off the ship to go to Seboekoe? —On the return journey from Goenoeng Batoe Besar provided that I could make arrangements with the launch. Did you know that Mr. de Stoutz’s agent would be at Kota Boroe, when you left Singapore? —Yes. Did you know that Mr. Stoutz himself was waiting at Seboekoe for your party? —I heard so before I left Singapore/ Is it your evidence that you held up the Nanyo Maru for two days at Pamoekan Bay? —Yes. Did you consult the captain about it? —No. Did you send any telegram to anybody asking permission to do so? —No, I did not. Did Mr. England see the telegram which you sent to Mr. Russell? —He may have. You say that you sent that telegram from Pamoekan Bay to Kota Baroe by prau? —Yes. Mr. Braddell, here, informed the court that the original of the telegram had disappeared, and what the witness had been shown was a copy on an inward telegraph form of Russell and Co. How long does a prau take from Goenoeng Batoe Besar to Kota Baroe? —With a fair wind about twelve hours. I cannot say whether the wind was fair or not in Oct. and Nov. Continuing witness said: There were two of Ho Man’s kapalas. They were probably his representatives. England probably knew that they were Ho Man’s kapalas, Tan Way Ann probably did not know, nor did Mr. Van Ryswyk. He did not take those two kapalas to either of them. The kapalas went to Goenoeng Batoe Besar to examine the mine and probably to report to Mr. Ho Man. They went with witness to the mine only once when they were all shown the mine. He did not think Mr. England knew who came back with them on the Nanyo Maru. When they left Goenoeng Batoe Besar witness made no arrangements for Brickman and his party to go to Seboekoe. England probably did. At Kota Baroe Stoutz’s agent came on board the ship on their return journey. That man was told that Mr. England was returning to Kuala Lumpur. On Urgent Business. and asked him to convey to Stoutz the message that Brickman might go to Seboekoe later on. The agent spoke in Malay and said that he would convey the message to Stoutz. No arrangements were made with Stoutz’s agent for Brickman to go to Seboekoe. Continuing, witness said that he took a mechanical engineering course at the London University and served his time at Glasgow. Members of his family had invested in the sugar industry and for the sugar business intricate crushing and refining machinery was necessary. When he first came to the F.M.S. he was employed under Dato Lee Kong Lam prospecting for tin and looking after his estates. And all the time he was in the F.M.S. he was employed either in the tin industry or in the rubber industry. Re-examined by Mr. Carver, witness said that Ho Man’s kapalas did not travel in the same part of the ship as witness, England, and the rest, and did not have meals with them. Mr. Henggeler’s Evidence. Adolphe A. Henggeler said: I am a director of Malayan Collieries and have been so since the beginning of the Company. I have known Mr. Russell before Malayan Collieries was formed. I knew what Mr. Russell’s business was before that. So far as I knew he owned town property, worked some mines, bought land and sold land, looked after some Chinese estates. He was the vendor of the Batu Arang property to the Company. When the company was formed J. A. Russell and Co. were appointed secretaries and agents. To my knowledge no written contract was made with them. Their duties were never definitely laid down in writing, or verbally. I understood their duties to be to look after the secretarial duties, keep books and general work of that kind. As managing agents I considered their duty to be principally to look after the sale of coal, to pay wages of coolies at the mine. I know that after the formation of Malayan Collieries, Russell and Co. continued to do their previous business. Their appointment was not a whole time appointment for the Malayan Collieries. I was aware that they were secretaries and agents to other companies. Neither I nor any member of the board at any time objected to their carrying on their own business or the business of other companies as secretaries and agents. In my view the position of Russell and Co. did not preclude them from dealing in mining properties. I cannot remember any instructions being given at any time to Russell and Co. to search for coal properties, or authority to spend the company’s money on options, or in paying option money. As far as I know no money has been spent by Malayan Collieries in obtaining options over coal properties. At the end of 1918 I went to China. Mr. Russell was with me. We considered the question of minerals in China, and we formed a prospecting company in Hongkong under the name of China Minerals. I subscribed a part of the capital. The object of the company was to prospect for minerals in China. We had chiefly in view wolfram, tin, and any other minerals we came across. We actually worked silver and lead. We discussed that if we found any coal property we would offer it to Malayan Collieries. That was arranged between Russell and me, so far as we could make arrangements. We found several things but we could not get any satisfactory title and we decided to abandon. Only 30 cents were paid on the shares, 20 cents on first call and 10 cents on second, when we decided to stop. No Authority for Option Money. The board did not give either Russell or Russell and Co. any authority to spend $60,000 of the company’s money on the option on Goenoeng Batoe Besar. I would not give such authority if permission had been asked. I, as a director, would not have felt justified in spending the company’s money on such speculative options. Mr. Russell did not at any time tell the board that he had paid out $60,000 of the company’s money on behalf of the company on an option. If he had told the directors they would not have approved of it. About the end of August or beginning of Sept. 1920 I received a letter from de Stoutz. I passed on that letter to Mr. Russell for Malayan Collieries. I had interviews with Mr. Russell in regard to that Seboekoe property. Mr. Grant Mackie was also a director of Malayan Collieries. As far as I remember, I spoke to Mr. Grant Mackie about it although he was not present at all the discussions. Messrs. Brash and Chew Kam Chuan were directors but at that time they were away on leave. With regard to Seboekoe we decided to try and get a free option over it on certain terms. It was decided to send an expedition to have a look at it and do some boring. On Nov. 23 there was a board meeting of Malayan Collieries, Ltd. Before that excepting in the letter of Stoutz, I did not remember hearing of the property of Goenoeng Batoe Besar. In fact when Mr. Braddell mentioned about Stoutz having referred to it in his letter it was the first time I remembered that we had mentioned it. Request For an Explanation. Mr. Russell told us he had an option over the property named Goenoeng Batoe Besar and had given instructions to exercise that option. He told us that he sent Hastings with the Seboekoe Expedition, that England had gone to Goenoeng Batoe Besar as well as the whole party, and that England had come back with Hastings without going to Seboekoe. I asked for an explanation why this party had not gone to Seboekoe—I am now talking from memory—and Mr. Russell said that Mr. England would explain why he had come back. Mr. Russell said that he was prepared to sell this property to Malayan Collieries for $600,000 in cash and 100,000 in fully paid shares. He told us at the same time that he did not care whether we bought or not, as he was quite prepared to keep it himself. He also told us that he had paid $60,000 for his option. He said that $200,000 had to be paid down right away, the balance later on, but I cannot remember when. He told us the scale of royalty and he told us that the charter of the Nanyo Maru had to be taken over that any machinery on property had to be taken over at a local valuation, and also the mining stores. He must have had some notes with him at the meeting else he would not remember all this, but he showed no documents to the Board. He had a kind of report from Mr. England. Shown the Report. I cannot recognise this as that document. I remember that it was not a finished report and that it was not signed. The scale of royalty was, I think, in the written document. [Shown option of Oct. 1 with the scale of royalty.] I cannot remember whether this was the paper which was before the board. I did not see this document with the name of Hong Guan on it. Mr. Braddell: Your lordship appreciates that he is being shown the option of Oct 1. Mr. Henggeler: I did not see this scale of royalty, or any part of the option on Nov. 23, [shown option of Oct. 23.] I don’t think I saw the whole or any part of this document. I did not see the first three pages, on the schedule. I saw a paper containing a schedule of royalties but not this one. [Shown document addressed to Khoo Wee Chuan of Nov. 19.] I was not shown this document. [Shown document of Nov. 19 from Khoo Wee Chuan to J. A. Russell and Co.] I did not see this document either. Mr. England came to the Board meeting. I asked him for an explanation as to why he had not gone to Seboekoe per instructions, and not having gone there direct why he did not do so on his return. I pointed out to him that this expedition left Kuala Lumpur to go to Seboekoe and that it had not done so, that Mr. Stoutz had met us in every way and that I considered it Very Unfair that he should have been treated as he was. Mr. England explained that they had gone on a direct steamer to Borneo not via Java as I understood he would, and that he went on straight to Goenoeng Batoe Besar instead of getting off at Kota Baroe, as he had heard good reports about Goenoeng Batoe Besar and rather bad reports about Seboekoe. At that stage their not going to Seboekoe could not be helped and he told me that Mr. Brickman had been left behind to go to Seboekoe. Mr. Russell had then read this semi-finished report to us and then we discussed the whole proposition with Mr. England. He had notes, sketches and if I remember rightly, he also had plans of the underground workings on the property. He put figures before us with regard to the likely tonnage of coal contained in the property, he gave us reasons why he formed that estimate, mentioning the outcrops, workings, and the bores put down by Mr. Brickman after he had left. (To be continued.)

The Singapore Free Press and Mercantile Advertiser (1884-1942), 11 April 1924, Page 6

The Straits Times 11 April 1924 page 9 MALAYAN COLLIERIES. Further Evidence for the Defence. Mr. Henggeler Called

Malay Mail Saturday, April 12, 1924, p. 9 PECK v. RUSSELL Evidence Concluded FINAL STAGE REACHED Twentieth Day’s Proceedings. Yesterday was the twentieth day of the trial of this case, and late in the afternoon the concluding stages were reached when Mr. Braddell began his final address. Two Witnesses Ho Man said that he was a large operator of tin mines, living in Kuala Lumpur. He employed about 7,000 coolies, and his monthly expenses amounted to about $320,000. That was only in Selangor. He had mining interests in Seremban, Pahang and Perak. He was the open cast contractor for Malayan Collieries where he employed a large labour force. He knew Mr. J. A. Russell and remembered having a conversation with him about three years ago relating to coal property in Borneo. The interview took place three or four years ago regarding options over certain coal properties in Borneo. Mr. Russell’s intention was to exercise the option with him, and subsequently witness sent two persons over to Borneo, one of whom was his hungkong, and the other his kapala. They went to view the property with Mr. Hastings. Mr. Russell told him that the property belonged to Ng Hong Guan whom witness knew. His two men returned from Borneo and spoke well of the property. Later, when he asked Mr. Russell, he told witness that he must first consult Malayan Collieries and if they did not buy then the two of them would acquire it. Mr. Russell told him that the Malayan Collieries had bought it. The ended the matter so far as he was concerned. If the transaction had not gone through he would have been ready to put up the money. Cross-examined, witness said that he was the attorney of a firm in Ipoh and for three or four years had been open cast contractor for Malayan Collieries. In most of the mines on which he spent $320,000 a month he had shares. The mines belonged to his principals. At the time Mr. Russell spoke to him witness was not a shareholder of Malayan Collieries. When Mr. Russell, in his speech on Oct. 15, said that he was a share holder that was correct. At the time Mr. Russell spoke to him Messrs. Chan Thye Lee, his principals, were the second largest consumers of Batu Arang coal in the Peninsula. Mr. Russell showed him samples of the Borneo coal and he was told that it would store very well. Witness would undoubtedly have preferred that kind of coal to the Batu Arang coal. Regarding a promissory note for $28,000 witness had given to Hong Guan, he said that Hong Guan told him he was going to be employed at the International Bank in Singapore; he had to furnish security, and wanted a loan. Witness told him that he had no ready cash, and Hong Guan suggested that if a promissory note of $28,000 was given he could deposit it with the bank. He could not say what the interest was. That promissory note was not discounted to Mr. J. A. Russell, and to his knowledge there was no such suggestion. Re-examined, witness said that Mr. Russell showed him samples of coal from the Borneo property before his two men went. He was absolutely sure that it was only after the sample of coal was shown that he sent his two men. Coal was stored in their mines for a fortnight at the outside. At present they were using Malayan Collieries Batu Arang coal. Solicitor’s Evidence. Mr. Arnold Percy Robinson, solicitor, F.M.S. and S.S., and a member of the firm of Messrs. Drew and Napier, said that formerly they had a branch in Kuala Lumpur. It was closed in 1917. Witness was himself in charge of the Kuala Lumpur office until January or February 1916. The Malayan Collieries were formed in 1917, and his firm were solicitors for Malayan Collieries. The firm never held an annual retainer from Malayan Collieries, and up to the time he left Kuala Lumpur he continued to do work for Malayan Collieries. After the closing of the firm in Kuala Lumpur, Messrs, Drew and Napier did not continue to act for Malayan Collieries. On Nov. 18, 1920, Mr. J. A. Russell saw him in Singapore. He instructed witness on behalf of his firm of J. A. Russell and Co. Witness produced a transcript of the shorthand notes taken from his dictation of notes made in his diary at the time. He could not find these notes for some time, but his shorthand clerk recently found his note-book. Mr. Carver read the notes. Mr. Russell, when he saw him, told him that his firm had acquired the option and instructed him to draw up a transfer from Hong Guan to Khoo Wee Chuan and from Khoo Wee Chaun to J. A. Russell and Co. Also he was asked to draw up notices for the exercise of the option from Hong Guan to the Eastern Mining and Rubber Company and Wee Chuan to Hong Guan. Another document which he had to draw up was an authority from Hong Guan to the Eastern Mining and Rubber Co., authorising them to deal direct with Mr. J. A. Russell. The documents exercising the option were dated later. The five documents were afterwards signed in his office. He remembered Mr. Russell handing him some papers at the interview. Subsequently when this case was being mooted he looked through his bundle of papers on May 18, 1922 and among his papers he found either a copy or the letter by J. A. Russell to Poey Keng Seng. He had a record of papers sent to Russell on May 18, 1922. In the list was this: - “18-9-20, letter signed by Mr. J. A. Russell to P.K.S. confirming option granted by the E.M.R. Co., and that he was instructing Drew and Napier to send Keng Seng the sum mentioned in the option.” He could not say whether the paper found was the original letter or the pencil draft. On Nov. 18 and 19, he had an interview with Messrs. Sisson and Delay and he prepared a memorandum of notes of the interview. A discussion took place with regard to the question whether a letter written by Mr. Dickinson was admissible, on which a discussion had already taken place earlier in the case. Mr. Carver objected to the letter going in and Mr. Braddell thought it should go in. Mr. Carver wished to have a ruling on this point as his next question would depend on that decision. His lordship thought it better to leave out the letter. Continuing, witness said that Russell told him on Nov. 19, 1920 that he intended to offer the option to Malayan Collieries. Witness drew the attention of Mr. Russell then to article 92 of Malayan Collieries, and told him that he must not vote at all. Witness left on leave in December 1920 leaving behind an agenda of work in connection with the transaction. In June, 1921, witness was on leave, and he recognised a letter from Drew and Napier to J. A. Russell and Co. dated June 10, 1921 despatching certain documents. His firm received a receipt signed “Malayan Collieries, Ltd., H.D. Brown for J. A. Russell and Co., agents. Mr. Russell’s Instructions Cross-examined by Mr. Braddell, witness said that the option of Oct. 5 was handed to him on Nov. 18, when Mr. Russell came to see him. Mr. Russell told him that he had acquired the option and wanted the five documents which he had mentioned prepared. The two notices exercising the option were not dated because they were to be delivered to the addressees on receiving further instructions. Witness and Mr. Russell at the interview with Mr. Dickinson on Nov. 18, went into the question of how the E.M.R. Co., came to possess the property. On Nov. 19, witness and Mr. Russell had another interview with Mr. Dickinson. Witness had no idea that the Khoo Wee Chuan transactions were bogus transactions. If he knew, of course, he would not have prepared them. The option was not exercised until Nov. 24. On that day witness had an interview with Mr. Dickinson at Messrs. Sisson and Delay and told him that he would exercise the option, and on the same day he wrote a letter exercising the option. Witness was told that E.M.R. had given the option to Hong Guan, that Hong Guan had sold it to Khoo Wee Chuan for 4,000 shares and that option Khoo Wee Chuan had sold to Russell and Co. for 76,000 shares. He could not remember why he did not draw up a letter from Russell and Co. to Khoo Wee Chuan exercising the option. The letter from Hong Guan authorising the E.M.R. Co. To Deal Directly with J. A. Russell was written at the suggestion of Mr. Russell because there were still discussions outstanding regarding the completion of the transaction. Witness did not know that $60,000 had been deposited. He knew that Mr. Dickinson and he had arranged that $200,000 should be paid for the exercise of the option instead of $60,000. He paid the $200,000 on Nov. 24. On Dec. 3 he telephoned to Messrs. Sisson and Delay and wished a conference with the E.M.R. directors in respect of a loan of $70,000. Mr. Russell took his advice with regard to the rights in shares and witness advised that E.M.R. people had no rights. Witness advised that the company were entitled to issue the bonus shares prior to the E.M.R. coming on the register because the Malayan Collieries’ shareholders were already entitled to accumulated profits. The E.M.R. people said that they were entitled to one kind of shares and Russell said to another, and that was the whole question. He could not remember why he gave the advice regarding the rights, but the question was whether the shares which the E.M.R. Company were entitled to carried with them any profits. He could not carry the matter further. This concluded the evidence for the defence. Mr. Carver’s Summing Up. Mr. Carver, in summing up the case for the defence, said that the hearing of the case having now lasted twenty days, and a very wide range of subjects having been discussed he did not propose to address his lordship on every possible matter that could be touched upon but wished to confine himself to those facts which formed the kernel of the whole matter. The first question was whether Russell and Co. had a mandate from the Malayan Collieries to acquire this option. From the whole evidence of Mr. Russell and Mr. Henggeler, as well as from documentary evidence it was clear that Russell and Co. had no mandate from the company. The chit to Hong Guan in no way indicated that Russell and Co. could confer upon anybody authority to pledge the Malayan Collieries’ assets to an unlimited extent. It was inconceivable that Mr. Russell intended any such thing when he gave that chit to Hong Guan. There was no evidence of any prior act involving a mandate. With the exception of Seboekoe, which was entirely in a different category, because in that case the directors themselves gave permission, there were no prior acts by the Malayan Collieries towards the acquisition of mining properties. Even Seboekoe did not involve the company in anything more than an obligation to send an expedition to inspect it. Therefore counsel submitted that his lordship’s finding on facts on this point would be that Russell and Co. had no mandate from Malayan Collieries to buy the option. The next question was whether Messrs. Russell and Co. Owed a Duty to the Malayan Collieries to refrain from buying such options, themselves. As far as the evidence went, specially the evidence of Mr. Henggeler, it was clearly against any such restrictions having been assumed by Russell and Co. They were never whole-time employees of Malayan Collieries, Ltd. The very fact that they maintained a staff of mining engineers showed that their activities with mine engineering had nothing to do with their firm’s agency business. Counsel therefore asked his lordship to hold that Russell and Co. owed no duty to refrain from buying options for themselves. The next question was whether Messrs. Russell and Co. did in fact acquire the option for themselves. Counsel then proceeded to draw his lordship’s attention to the main points in the evidence which supported his contention that Russell and Co. did in fact acquire the option for themselves. In this connection he asked his lordship to disregard the chit to Hong Guan dated Sept. 27 as having no bearing on the question at all. The court adjourned at this stage for lunch. Mr. Carver, continuing his address after the resumption, dealt with the actual intention of the letter of Sept. 27 as opposed to its ostensible intention. The debiting of the telegrams had no bearing on the ostensible intention of this letter, but it had a bearing on the actual intention. Counsel asked his lordship to hold that the debiting of these telegrams was not a haphazard matter. If they looked at the letter for its intention, counsel submitted that they must look at the letter of Oct 1, at the same time. The plaintiffs were here in a dilemma. If there was no change of intent between the two letters, the intention underlying one would apply to both, and any doubt underlying one would apply to the other. If there was a change of intention that change must be to convert property to Russell. It was inconceivable that Anyone Perpetrating a Fraud should use his principal’s letter paper to do it. The motive for the fraud would be operative on the receipt of the telegram ”money will not forfeit;” and it would have been present when Russell wrote the letter of Oct 1, but still he wrote on Malayan Collieries paper. On Oct. 4 the motive for the fraud would have disappeared, but the letter of that date was written in Russell and Co’s paper. Referring to the expedition which was a divided expedition Mr. Carver said that if the plaintiff invoked the law of estoppal he would necessarily set up the proposition that because a man bought a property after using a particular drill the property became the property of the owner of the drill. If Russell was in a fraudulent state of mind he would not have drawn a distinction between members of the party and insisted upon it. Referring to the point that Russell and Co. themselves did not exercise the option being Afraid to take the Risk Mr. Carver pointed to the letter written by Russell to Poey Keng Seng as showing the state of mind of a man who wanted the formalities conducted by his lawyer. He asked his lordship to hold on the facts that on Oct. 4, Russell and Co. acquired this option for themselves, and that they exercised it themselves, or pledged themselves to exercise it, which came to the same thing. The next subject of importance was the question whether Russell or Russell and Co. owned or controlled a majority of votes. In regard to this he referred to a list showing Russell’s holdings which amounted to 126,644 shares out of a total issued share capital of 310,000 shares. Who were his friends, solicitors, co-directors etc., did not affect the matter at all. Control meant something more than friendship, even kinship. The next point was whether Russell Used the Influence of his connection with Malayan Collieries to enable him to procure an option so as to constitute him or his firm trustees for the company. The suggestion was Russell had used the company’s name to obtain credit. This was disproved by the fact that the parties were already in contact, and Russell was not an unknown man in mining circles. To attempt to obtain credit by using Malayan Collieries paper was a useless proceeding. He asked his lordship to hold that there was no such purpose. The final question was whether the resolution of Nov. 23 was secured by reason of the fraud of J. A. Russell. There was no reason to suggest that either Mr. Henggeler or Mr. Grant Mackie had been defrauded by Mr. Russell. Mr. Henggeler was a witness whose memory was to be relied upon as much as his honesty. If they had been defrauded they would have said so. Although it was a common-place to say that fraud must be proved, counsel contended that not only had fraud not been proved in that case but what had been proved had conclusively shown that there had been no fraud. Counsel asked his lordship to dispel any prejudice that may have been created in his mind and to consider that a man who made inaccurate statements in letters and speeches, one who, perhaps, in business transactions, was prone to seize the nearest argument, was not necessarily the man who would commit fraud or disregard the sanctity of his oath in a court of justice. Mr. Braddell began his reply a few minutes before 4 p.m. when the court adjourned till Monday. In reply to his lordship Mr. Braddell said that he would probably take one and half days more.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 12 April 1924, Page 8 LOCAL WIRES. PECK vs. RUSSELL.

The Straits Times, 12 April 1924, Page 11 Malayan Collieries. Evidence for the Defence Concluded.

Malay Mail, Monday, April 14, ps 9 and 16 1924 PECK v. RUSSELL Mr. Braddell’s Answer PSYCHOLOGY OF PARTIES Mr. R. St. J. Braddell, in his final speech to his lordship Mr. Justice Whitley on the twentieth day (April 14) of the hearing of this case, said: My lord, I opened this case as a case of fraud by the chairman and managing agents upon the shareholders of an important limited liability company carrying on a very important industrial concern. And I opened it upon such circumstantial evidence as was then in my power, circumstantial evidence which the plaintiff had been laboriously acquiring for a period of nearly two years—not acquiring but extracting from the defendants. The answer, or the attempted answer, to the plaintiff’s case has been a discussion merely of some theories which I put forward. The function for counsel for the defendants at the conclusion of a case is generally described by these words, “to sum up the evidence,” but what Mr. Carver has done, and what I probably would have done if I had been in his position, has been to ignore the evidence and what has occurred since we started calling witnesses and to continue A Laborious Criticism of one or two theories which I placed before the court upon the original circumstantial evidence in my power. I submit, my lord, that the case which I opened, that there has been a fraud, has been more and more ascertained as the days have passed. Every lane of examination into the defence which I have traversed has led once more to what would appear to be dishonesty on Russell’s part. I shall, perhaps, deal with that later because it is based on matter which I did not open. The witnesses whom he called have shown even more clearly that there has been a fraud, and the nature of the fraud, and I quite agree with Mr. Carver that Messrs. Henggeler and Mackie are honourable gentlemen who, I say, have been deliberately deceived. I will now remind your lordship what this case is. The case is about this, my lord, and this only. The plaintiff says that in selling this option to the Company the defendant has, by fraudulent practice, made a large profit which he says, amounts to a sum of $1,700,000, and which the defendant agrees, would in any case be in the region of a million and half dollars. The plaintiff says that in selling this option to the Company the defendant adopted fraudulent methods, and that he made a profit which he ought not to have made. The defendant says he acted perfectly honestly. He says that he sold the option to this company, that he did so by virtue of article 92, and that he did so honestly. I submit, my lord, that throughout this case we have been inquiring into the sale of an option, the pleadings are about the sale of an option, and the defence has been about the sale of an option. All explanations to the shareholders have been that the defendant sold us this option. An Assumption and its Sequel. Now, my lord, I assumed that this company’s minutes expressed the truth. If the directors at the meeting on Nov. 23, 1920, were told about Khoo Wee Chuan, it was obvious that a gross fraud had been committed, because this Khoo Wee Chuan was a nominee, and the whole object of his introduction into the transaction was for the purpose of blinding the true facts. But when I listen to Mr. Carver’s opening I am told for the first time that the minute is incorrect, and that that there was no mention of Khoo Wee Chuan at all at this meeting. And I am told that the omission of Khoo Wee Chuan was noticed by Mr. Henggeler, and Russell was asked about it. Now, my lord, I adjusted my mind to that position. I said to myself, now there is Henggeler in this case. What was done at that meeting, said I to myself. Why was Russell never asked to produce that option, and if he did not how was that omission put into the minute book? I put to Russell the question and he said that the option was a meaningless document. Then I said, “You sold that meaningless and senseless document for one and half million dollars,” and he had to admit that the option was never shown to the directors. I said to him, “Why did you not show it to them and say ‘Here gentlemen, that is what you are buying’ ” and Russell said that he did not. There was no explanation. From that moment I knew that these directors had been Deliberately Deceived and directly Mr. Henggeler and Mr. Grant Mackie were in the witness box that was proved and the defendant’s case goes. Both the directors have said that they were given to understand that Russell has exercised his option. Mr. Carver believes these two gentlemen, and I believe them too. It is useless, my lord, to blind oneself to what the true facts of the case are and embark on an involved inquiry into the alleged mental workings of Russell. What we have to do, I submit, is to ascertain what the facts of the case are. Never mind what anybody thought, what we want is what they did. Having ascertained these facts the question will then come, can in those circumstances, the defendants be allowed to retain this profit? That is what I shall endeavour to deal with in my reply. I am not going to follow my learned friend Mr. Carver’s methods, nor am I going to follow The Legal Red Herrings which Mr. Upcott has trailed across my path. I am going to stick to the facts of this case and from those facts I am going to prove to your lordship that a deliberate fraud has been committed, that to conceal that fraud further frauds have been perpetrated, and that even documents have been forged. My learned friend Mr. Upcott’s whole argument was based on the argument that his client was honest. He never dealt with the possible position if his client was found to be dishonest. I say this, and I say it with confidence, that this court, and any court of equity, has ample power to redress a fraud, and any arguments as to the form of the case, or whose profit it should be, will not prevent the court from doing so provided the court has before it all the parties to make an effective decree. The case of my learned friend, I submit, has been represented by a series of arguments which for the greater part are irrelevant to the case. For instance, this matter of the subterraneous workings of Russell’s mind is absolutely irrelevant. It has been held over and over again that the court does not go into the workings of a man’s mind. The court takes the facts. The court does not listen to the man who did these transactions when he says “I did not know that I was doing anything fraudulent.” If I can show your lordship from the proven evidence of this case that a fraud has been committed by the defendants, then your lordship is not going to embark on a difficult consideration of the psychology of Russell. It may be that Russell is incapable of acting in the ordinary way in which other business men act. That may be a perfectly possible explanation. It may be that from the beginning Russell himself held these two dual positions until he got his profit. What he himself thought does not matter. At this stage the court adjourned till Monday.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 14 April 1924, Page 6
LOCAL WIRES. PECK VS. RUSSELL.

Malay Mail, Tuesday, April 15, 1924, ps 9 and 16 PECK v. RUSSELL Mr. Braddell Concludes His Address. NOMINEES’ SHARES: DEFENDANTS’S UNDERTAKING Bench Reserves Judgement. Mr. Braddell continued his final speech in this case yesterday, before Mr. Justice Whitley. He submitted that the great issue which ran throughout the case, both in law and in fact, was the issue whether Russell, and his firm, of course, were or were not fraudulent. Fraud might be actual or constructive. They might have a state of affairs, and indeed they had a state of affairs in that case, where a person might be guilty of both. As far as constructive fraud was concerned the man’s mental intention was irrelevant. Counsel read two passages from Storey dealing with actual fraud and submitted that in the present case they had positive fraud. Counsel next went on to show the importance of the issue upon the law. First of all, Mr. Carver in the findings of fact which he asked his lordship to hold on the evidence, clearly omitted to mention any finding on fraud. He asked for seven findings and in all those seven findings the effect of a possible finding of fraud was ignored and it was on those seven findings of fact that Mr. Upcott addressed his lordship and he based a greater part of his case on the Cape Britton case. Counsel submitted that there was a great distinction between the Cape Britton case and the present case, because in the former there was no fraud at all. Mr. Upcott ought to have said, and it probably escaped his attention, if he had anything to say on the question of fraud. When he referred to it he referred to it only inferentially in dealing with the plaintiff’s case. Mr. Carver thought that Mr. Upcott dealt with that case on the subject of remedies. Mr. Braddell remarked that it was on the question of damages and not on the subject of remedies that he touched on the subject inferentially. He touched on the subject very lightly and he (Mr. Braddell), proposed to touch on it very strongly. Counsel then referred to In re Olympia in 1892, 2 Chancery Div. p. 153 and to a House of Lords case. He also referred to 5 Q.B.D. at page 111, and 33 Chancery Div. at page 85. His lordship remarked that none of the general principles were excluded, but a distinction had been drawn. Mr. Braddell said that he quite appreciated the fact that an attempt had been made to withdraw that case from the general principle, in fact Mr. Upcott seemed to say that there was no use of general principles in this case. Once they had persons who were in fiduciary relationship to another, or to each other, then all their transactions had to be scrutinised and had to be shown to be fair. That was The Real Rule. It could not be disputed that Russell was in a fiduciary relationship to the company because he was a director, and it could not be denied that Russell & Co. were in a fiduciary relationship because they were the managing agents. Therefore they had to deal honestly with this company. Mr. Braddell next dealt with the Cape Britton case at some length. Continuing, he said that his contention was that at the time Russell bought, just as much as the time that he sold, Russell was in fiduciary relationship to this company. He submitted that when Mr. Upcott said that they should not look at general principles and should confine themselves to particular rules he contended that that was a desperate argument. He submitted that it had been laid down over and over again that cases should not be cited on facts but on principles and he relied on certain well-known principles. His lordship had been invited in that case to go into the inner workings of Russell’s mind, to ignore the lies he told the shareholders and to go into certain subterraneous workings in his mind. It had been suggested, Mr. Braddell said, that even though Russell was fraudulent that court could not make a decree in that case. That was a technical argument which he would deal with at the end of his address. He had always been taught, Mr. Braddell remarked, that once he showed the court that there had been fraud any court of equity was bound to deal with the matter before it. That was the very function of the court. Mr. Braddell next read from the report in the Malay Mail of Mr. Carver’s opening, which, he said, accurately set out the seven findings of fact which Mr. Carver asked his lordship to hold. He did not admit that Mr. Carver had put the issues correctly in that form. Counsel submitted that the real questions were these: Firstly, at the date of the alleged purchase of the option, that is Oct. 3, and at the date of the alleged sale of the option, that is on Nov. 23, were Russell and Co. in a fiduciary relationship to Malayan Collieries and (or) was Russell in a fiduciary relationship to Malayan Collieries? Russell’s firm was responsible in law for what Russell did and Russell was responsible for what his firm did. Counsel then submitted that a man might be held in a court of equity to be the agent of another in a particular transaction if, (1) He was authorised by that other to carry out that particular transaction: or (2) He was authorised by that other to carry out a transaction of the same nature as that particular transaction: or (3) He assumes to be the agent of that other in that particular transaction: or (4) He so acted as to make it inequitable to allow him to deny that he was the agent of the other in that particular transaction. The first and second, Mr. Braddell submitted, were self-evident. In support of the third and fourth he cited two authorities. Those were the four general rules whereby a man became an agent. Mr. Braddell next proceeded to analyse The Facts of the Case. “What are the facts in this case?” he asked. “The facts are these. Here is Russell, employed by the directors, according to his own evidence, in obtaining a coal mine at Seboekoe for the Malayan Collieries. In the course of, and in the period of, that employment he utilises the company’s letter paper, the company’s servants, and the company’s money and tools for purchasing another coal mine which he sells to the directors without disclosure of those facts. That is what we have been arguing about for twenty days. Those are the indisputable facts and nothing else is left to argue about. What your lordship has to look at in this case is the whole transaction, and by applying to this whole transaction certain very well-known principles of equity to say whether or not Russell has obtained this profit by fraud. The plaintiff said that on Nov. 23 Russell & Co. fraudulently sold an option over Goenoeng Batoe Besar dated Oct. 5, 1920 to our company and by that transaction Russell and Co. acquired a large number of shares and (or) money which is really ours and which we want returned to us. Russell & Co. say ‘No. True we sold an option dated Oct. 5 to you, but we did not do so fraudulently and it was necessary for us to make any disclosure.’ Now let us see what were we, the shareholders, told about this transaction? We come to the first matter regarding the doubling of the capital of the company and so make it possible for Russell & Co. to carry out this transaction. Whether from the very beginning or not, it would certainly have been necessary to increase the company’s capital to carry out this transaction and it was increased for that purpose. The documents showing what the shareholders were told were these:- First of all you have Mr. Russell’s speech of Oct. 15, 1920. The object of that speech, one of the objects at any rate, was to get the shareholders’ mind into a condition sufficiently receptive to cause them to agree to the proposed increase of capital, and all the passages in the speech with regard to what the directors had been doing follow that. In that speech Russell said. It is probably the intention of your directors shortly to ask you to sanction the increase of the company’s authorised capital from two million to four million dollars. Then come further statements in chief and under cross-examination by Mr. Hopson Walker. Then if these statements are true this option was obtained for and on behalf of the company. The words are quite clear and they could only have conveyed to the mind of the shareholders what was being done. You now have Russell coming here and endeavouring to get out of that position by telling your lordship that These Statements Were Lies. I propose to go a step further than that an invite your lordship to base no finding of fact on Mr. Russell’s evidence. His attitude alone was sufficient to discredit him absolutely in this court. The next step is Oct. 23, within eight days of making that speech, when a notice, informing the shareholders that a meeting would be held to increase the capital, was sent out. Then the third thing we get to know is that on Nov. 2 a meeting is called at which Mr. Russell was in the chair at which it was agreed to double the company’s capital, and on Nov. 17 that resolution was confirmed. What did the shareholders know about the reason for the doubling of the company’s capital? We had been told that the capital was to be increased for the purpose of obtaining whichever of two properties, then being investigated by the company, turned out best. It was admitted that these two properties were Seboekoe and Goenoeng Batoe Besar. So that we only thought that if the capital was increased advantage was going to be taken of it in buying one of these two properties. And that, my lord, is exactly what we were told on Dec.23, 1920. Now, Russell himself has admitted that the circular of Dec. 23 was so worded as to lead any shareholder to believe that Goenoeng Batoe Besar had been purchased direct from its owners by the company after inspection by the company’s representative. When I asked Russell whether that was not done deliberately to conceal this transaction he said “no.” But he had to confess that in that circular he told lies to the shareholders. How can he now be heard to say that he was not the company’s agent? Now, my lord, if this court is going to hold that he could treat the shareholders in this way, then there would be an end to commercial morality as between principals and their agents. It is a very Licence to Plunder. It is truly inconceivable to me that any man should be so blinded to honesty that he would dare to come to court with such a case. This man comes here and tells your lordship that he has told lies, that he has clothed those lies with a false agreement by getting other documents to be forged. Who is here who would accept that argument? It is an argument which makes me wonder if I am really in a court of justice or in Bedlam. I have never heard any such case in my life, and I have heard many bad ones including the one in which I had the misfortune to prosecute the directors of the Kwong Yik bank. Those gentlemen served terms of imprisonment, but what they did is not a patch on what Russell has done in this case. I wonder whether I have been these four weeks in a court of equity or in Bedlam. I am not blaming my learned friends. They have no doubt done their best for their clients. It is amazing that a man could get into the witness box and make admissions of that kind, and if I may use an American vulgarism, be able to get away with it. Who is the man who, after reading this case, would wish to put a cent in anything in this peninsula? Will there be a man who will even grant a power of attorney to a man in this country? I submit no. Even without taking into account all that preceded and all that followed Dec. 23, the facts are such that Russell cannot be heard to deny that he is the agent of the company. He has not told us what was done, he has got us to act in a way detrimental to our interest, and still he denies that he was our agent. Then, my lord, the next date is Nov. 15, 1921. We were then told that the board had decided to alter our financial year. We were not told why, we were only told the fact. Now, the shareholders of this company are Notoriously Quiet Animals and they are not shareholders like those you come across in London. No shareholders objected to that except Mr. Peck who wrote a letter to the public press. The changing of the financial year involved a breach of the Companies Ordinance. Why was the Companies Ordinance broken? Because it suited Russell’s purpose very well, because it postponed any chance of inquiry into this transaction for another good many months, and Russell being in a country where memories are notoriously short so far as Russell was concerned there was good reason for the alteration. But was there any good reason from the company’s point of view? I submit there was none. To alter the financial year of the parent company to agree with its holding company was a self-evidently unnecessary transaction and there was no evidence that the directors were consulted in any way. There is no minute about it, there is nothing in the directors’ file, although Messrs. Henggeler and Mackie have been called neither of them has been asked a word about it. I submit now, as I submitted in my opening, that this was done by Russell for his own purpose and it shows how the affairs of this company were left in his hands. Then, my lord, somewhere about April, 1922, the shareholders got the report and accounts for the year ending Dec. 31, 1921. In the accounts Goenoeng Batoe Besar appeared as an asset of the company at $1,600,000. Again the shareholders are left to imagine that this property was bought directly by the company. Then we come to the chairman’s speech on May 4, 1922, and I must ask your lordship to look at that speech once again to make the point which I wish to make. Counsel Here Read the Report of the Speech. From the beginning to the end of Mr. Russell’s speech there is not one word or suggestion that he had anything to do with the purchase of this property. The shareholders were left to believe that this was an ordinary transaction and a direct purchase by the company of a property of the nature of which the company had been searching for many years. And that that property had been inspected on their behalf by the company’s engineers. Is that a defensible position in this court or in any court? He told the shareholders that their board had done everything and that he did nothing. Your lordship will see that I have omitted the document of June 10, 1921. I did that because I submit that on what was told to the shareholders there was nothing which would have sent any of them to the Registrar of Companies to look for any return of allotment in connection with the purchase of Goenoeng Batoe Besar. Such a return would only be necessary where a part of the purchase money had been paid in shares, but the shareholders were not told a word of the fact that part of the purchase price was being paid in shares. If it had not been for Mr. Peck this matter would not have been known. Mr. Russell has suggested that everybody knew about it. The fact is that nobody knew about it. Nobody knew that he (Russell) made one and half million dollars, and nobody knew that he (Russell) took particular care to see nobody knew about it. Mr. Henggeler didn’t know about it. The only finding that one can come to is that this man from beginning to end was Deliberately Dishonest. And this long excursion into the psychology of Russell’s mind is one which I ask your lordship to reject. It may be that Russell is one of those persons incapable of any differentiation between truth and lies, honesty and dishonesty. There are such people in this world. Many instances have been brought to light through the investigation into the flotation of companies. Russell may be such a man. On the other hand he may be able thoroughly to appreciate between truth and lies, honesty and dishonesty but had been deliberately dishonest from beginning to end as I have shown. Your lordship has seen him. I submit that you have never heard evidence of that type before in any court of justice. To say that he is a European with a Chinese mind would be unfair to the Chinese. I submit, my lord, that your lordship has never heard such evidence given before you, I never have and I am perfectly certain my learned friend Mr. Carver has not. One word more about that document of June 10, to show the degree of deception to which that document goes. If your lordship looks at the document your lordship will find that one of those fictitious persons is solemnly made to appear to be a female. If that is not an illuminating illustration of Russell’s mind I do not know what it can be. We have been solemnly told for 20 days that he was an honest man. Now I cannot pass over the forgery of these proxies. If these proxies were made with a dishonest object, and I shall show you that they were made with a dishonest object, then The Offence of Forgery under section 465 is complete. Counsel invited his lordship’s attention to explanation (2) of section 464 of the Penal Code where it is said that the making of a false document in the name of a fictitious person intending it to appear that it was made by an actual person might amount to forgery and counsel submitted that it did amount to forgery under the main part of Section 464 if it was done dishonestly or fraudulently. He submitted that the man who did that or took that risk could only have done so because he knew that there was something vital which he had to conceal. Were they to believe when Russell, who had been in this business for so long, said that he did not know that the document had to be filed? Such a suggestion must be rejected. If he did not know it he ought to have known it because he received money from people to see that such things did not occur. The substantive case for the shareholders was that they had been cheated out of one and a half million dollars and they wanted that money back. If such things as this were allowed that would be then end of the safety of investors in this country. Mr. Braddell next went on to deal with certain outstanding episodes of the case, drawing the attention of his lordship to the oral and documentary evidence which had been placed before the court. Dealing with the question of the chit of Sept. 27, 1920, given to Hong Guan by Russell, Mr. Braddell asked “What was it that the Eastern Mining and Rubber Co. wanted? I submit, my lord that it is perfectly clear that they wanted a purchaser of the property, not an option-monger or speculator. They wanted a bona fide purchaser of the property. They were under contract to buy that property, they tried to get capital for it and failed, and, I submit, they were not looking for someone to buy the option form them and sell it at an enhanced price to somebody else. That was why that chit was given. It was a Malayan Collieries chit. The evidence of Dr. Lim Boon Keng is clear on the point. If that chit was not going to satisfy the Eastern Mining and Rubber Co. that they had a real purchaser than I ask the court what that company had in writing to show that they were after the mine? They had nothing. I submit that Hong Guan was the mutual broker.” Dealing with article 92 Mr. Braddell said that assuming that Russell’s defence was based on this article 92 how did it save him? If the circumstances of the case were such that this property was the property in equity of the company then article 92 had no application at all, because article 92 clearly defined the sale by a director of something which was his own. Summarising Mr. Upcott’s argument on this article, which, Mr. Braddell said, seemed to have created some impression on his lordship’s mind, he said: The effect of the argument is that if a director is selling to the company himself then he has to disclose the nature of his interest: but if a firm in which the director is a partner sells then all that has to be disclosed is the fact that the director is a member of the firm, and even where that firm is the director’s own and the company’s managing agents the nature of that firm’s interest in the transaction has not to be disclosed. That showed, said Mr. Braddell, that Mr. Upcott’s argument was a trap argument. His proposition was That when Russell is contracting with the Malayan Collieries he will have to state the nature of his interest. If his firm, the company’s managing agents, are contracting with the company, all that needs to be done is to say that he is a member of that firm and nothing more need be said. There was a proposition, counsel submitted, which was self-evidently nonsense. He suggested that nobody had ever put such a construction on the articles before Mr. Upcott, who notably was minus any authorities whatever. At 4.30 p.m. further hearing was adjourned till this morning. Judgement Reserved. At 1.15 p.m. to-day Mr. Braddell concluded his address. Mr. Braddell brought to the notice of his lordship an undertaking given by Mr. Carver. Mr. Carver undertook on behalf of the defendants to deposit on or before Thursday, the 51,000 shares which Mr. Russell admitted were put in the name of nominees, with Messrs. Bannon and Bailey, the Company’s solicitors, until the result of the case, unless the court otherwise ordered. His lordship reserved judgement and thanked counsel.

Malayan Collieries. [Articles] The Straits Times 15 April 1924, page 8

Malay Mail, Wednesday, April 16, ps. 9 and 16 1924 PECK v. RUSSELL End of Remarkable Trial. TWENTY-TWO DAYS’ HEARING. Not in one, but in many respects the Peck v. Russell case will go down in history as the most remarkable trial that has ever taken place in a court of law in Malaya. The importance of the case to the commercial community of Malaya, as well as to the general public, regarding which counsel on both sides agreed when the trial opened on Monday, Mar. 17, has been growing in intensity day after day as new facts and figures were disclosed, and the measure of public interest could have been gauged by the tremendous rush for copies of the Malay Mail which has been the only paper to attempt a full report of the case. The hearing came to a close yesterday when his lordship, Mr. Justice Whitley reserved judgement. The action was by Mr. Frederick Charles Peck, on behalf of himself and others, the shareholders in Malayan Collieries, Ltd., other than the first defendant, against (1) John Archibald Russell, (2) Messrs. J. A. Russell and Co., (3) Malayan Collieries, Ltd., claiming payment to the company by the first and second defendants of $1,720,000 damages and interest thereon. Mr. Roland Braddell, with Mr. Hastings appeared for the plaintiff. The Hon. Mr. G.S. Carver and Mr. M.J. Upcott, with Mr. E.D. Shearn, for the first and second defendants; and Mr. F.B. Ivens for the third defendant. Yesterday’s Proceedings. Continuing his address yesterday morning Mr. Braddell apologised to his lordship for a digression into law in the midst of a statement of the facts. He then dealt with the actual date of the exercise of the option and read two documents showing that the E.M.R. Co. knew then were selling themselves the option to the Malayan Collieries. However these facts might work out in law counsel submitted that the option was never exercised till Nov. 24, and then it was exercised with Malayan Collieries money. It was very clear that the directors were unaware of those facts, whether they ought to have known it or not. Then in the course of his argument on Article 92 his lordship started to put to him the proposition if it had not been a mine but only a house. Then, counsel submitted, the answer would be this, that any transaction between Russell and the Company to be upheld would have to be proved to be a transaction in good faith and on full disclosure. His lordship put to Mr. Braddell several hypothetical cases. Mr. Braddell said that the principle underlying them would be that any dealing with one person who was in a fiduciary position with another was scrutinised by the court when it came before the court, and if there was any unfair dealing the court would then at once give the principal his remedy. The remedy was twofold. It would either be recision, or any profit, if the court could ascertain the profit, or in lieu damages. Where two persons were in a fiduciary position to each other the onus was on the defendant to show that the whole transaction was fair and above board. Counsel submitted that there must be a finding by the court whether Russell knew or not, even though he wanted to acquire it for himself, that this mine was just that type of mine which was necessary for his company to have. Mr. Braddell next read the paragraphs 3,4,5,6 to 14, of the plaint and 5 and 6 of the plaintiff’s reply. He said that the most important plea was the one relating to the letter given to Hong Guan by Russell on Sept. 27. Extent of Disclosure. Taking these facts into consideration counsel continued, no matter what Russell intended to do he could not now turn round and say that he acquired this property for himself, that really it was his own property sold by him at arm’s length to the company. The disclosure must be to the shareholders and not to the directors unless the articles provided otherwise. Mr. Upcott had argued that the articles inferentially so provided. Where such rules as were necessary for public policy were waived there should be a definite waiver. The rule was very clear that there must be disclosure to the general body of shareholders unless the article had been specially waived. The sections which Mr. Upcott relied on as showing the doing away with the necessity for disclosure to the shareholders were articles 119 and 120, which Mr. Upcott said fully comprised the making of contracts. That was not the point. What they wanted was the article which waived. That rule was to be found in Palmer at page 706. In that form were the words “At the next directors’ meeting” which clearly waived disclosure to the shareholders, and substituted for it disclosure to the directors. The articles 119 and 120 of the company which Mr. Upcott relied on were found in Palmer as forms 109 and 109 (a), and there was a note to the effect that 109 (a) was unnecessary where form 109 was used. The solicitors who drew up the company’s articles probably wanted to make certainty doubly certain and put in both forms. The point which counsel wished to make was that in the form the words, “At the next meeting of directors” had nothing to do with the power to make general rules, in other words, those words were put in to waive the rule. The Right to Sue. Mr. Braddell next argued the matter of the right to sue. He submitted that in considering the question of the right to sue the case must be divided into two categories. One must in one’s mind separate this case from the case where the question was whether the proper parties were before the court, from those cases where the question was whether the proper parties being before the court the plaintiff can recover. Counsel submitted that the law with regard to the right to sue was very well settled, and was very clearly stated in Halisbury’s Laws of England Vol. 5, paragraphs 521 and 523. Mr. Braddell next dealt with the question as to the date from which the plaintiff’s rights must be ascertained. Dealing with Mr. Upcott’s argument that that date should be July 26, Mr. Braddell said that that could not be the date because that was the date on which the plaint was signed in Singapore by Mr. Peck in Mr. Mundell’s office before Mr. Mundell. Counsel then enumerated the various stages through which Mr. Peck’s plaint had to go, and submitted that the suit was not actually begun till September. He did not agree with Mr. Upcott’s argument at all and submitted that all that the plaintiff had to show was one of two things, either that the Company refused to sure or that the state of affairs was such that it would have been futile to ask the company to sue. The next point which Mr. Braddell dwelt upon was the amount of control which the defendants exercised over the voting power of the company. What happened in the case, he submitted, was that Mr. Peck approached some of the directors and wrote to one of them asking that he should be given facilities to inspect the company’s documents, with a view to a suit being instituted by the company. That letter was put before the board on two occasions, and with no solicitor for the company appearing, but with the solicitor for Mr. Russell appearing, the directors decided to refer the matter to the referees. They sent round notices to the shareholders that they were going to do that. Mr. Peck, either at that time or just after that, was starting his application to get his plaint admitted. That was occupying his attention and he made a slip in sending in his notice of an intended motion which he proposed to put before the meeting of Aug. 16. He sent that notice in on a date which did not leave sufficient time to give eight days’ notice as required. The company’s solicitors held that owing to the absence of notice this motion could not be put forward as a substantive motion, and it could not be put in as an amendment. The Voting. When they got to the meeting, the chairman, Mr. Russell, recognised that this decision had put Mr. Peck rather in a difficult way, and said that although Peck was ruled out, those shareholders who were in favour of that motion could give their votes against the directors. At that meeting 157,834 votes were cast in favour of the motion to refer the matter to the referees, of which 126,644 votes were actually held by Russell, exclusive of the proxies he held. The total voting was some 240,000 votes odd. At the meeting Mr. Peck had a large majority of independent votes. At the last meeting there was a big change Russell securing a number of proxies which were held by the other side. A curious thing was, however, that at both meetings the voting was numerically the same. Of course when considering whether Russell commanded a majority counsel did not consider only the votes held by himself, but he had to consider the shares held by his relatives, employees and the other directors who were backing him up. It was perfectly clear, therefore, that at the date the plaint was filed the company was not going to court, and it was perfectly clear that the defendants had, by using the bulk of his votes, turned the scale, and prevented the company from taking action against him. But for his voting Mr. Peck would have had a majority of 3 to 1 votes. Mr. Braddell then cited the authorities on which he relied in support of his argument on this point. A Denial of Justice. In concluding his address Mr. Braddell submitted that the plaintiff in this case had had a denial of ?they justice. The transaction complained of was ultra vires in the narrower sense of the word, in the sense of the word which Mr. Mundell and he used, but not in the sense in which Mr. Upcott used. They had before them a transaction in which the majority could not bind the minority. That had been held definitely by Mr. Justice Farrer Manby and also by Sir Lionel Woodward qualifying it with the words “I should have thought.” As a matter of fact the point was actually conceded by Sir Arthur Adams when he argued the case before Mr. Justice Farrer Manby. Counsel submitted that if this option was really acquired under circumstances which made it in equity the property of the company no vote of the majority could bind even one single dissentient shareholder. Summing up his case Mr. Braddell said that Russell and Co. were managing agents of this company and as such it was perfectly within the scope of their authority to procure such an option as that of Oct. 5 for this company. Mr. Carver had said that it was not within their scope to procure a speculative option but it was within their authority to apply for such options as those and obtain them. If a deposit of money was necessary they ought strictly speaking to have obtained the permission of directors to deposit such money, but had they said this, “the money after all is not to be risked and we will put up the money temporarily for the company,” that would have been perfectly within the scope of their authority to do. Mr. Braddell said that he joined issue with his learned friend as to the scope of Russell and Co.’s authority. He went further and said Russell and Co. must be held in that court to have assumed to act as the company’s agent. He said that because of the letters of Sept. 27, and 28 and Oct. 1 addressed to Hong Guan on Malayan Collieries paper. He went still further and said that Russell and Co. had to be held to have been the company’s agent in procuring this option by reason of all the circumstances of the transaction starting on Aug. 31, and concluding on Nov. 29, when the option was exercised. Mr. Braddell reminded his lordship of the way in which he put the case yesterday. Finally he said that the evidence showed that certainly from Sept. 17, 1920—he took that date from the letter written by Russell to Henggeler where he purported to quote a letter from Vanderharst—right up to now there was clear evidence that Russell and his firm acted male fide towards the shareholders and to conceal this transaction they had deliberately stated what was untrue to the shareholders. In considering whether Russell was fraudulent or not his lordship would have to look to his actions not only prior but subsequent to the date of the transaction complained of. Conclusion. Mr. Braddell presumed that his lordship would reserve judgement, and Mr. Carver and he had agreed that there would be no need for his lordship to go into the details of damage etc, in case the plaintiff succeeded in his action. If his lordship allowed copies of the judgement to be sent to them in Singapore they would consider it together. Mr. Carver said that what they wanted was a little time to consider the judgement before they came again before his lordship. Mr. Braddell said there was one other matter which he wished to refer to, and that was in connection with the shares held in the names of the persons now admitted to be fictitious. Those shares amounted to 51,500. Those shares were to be deposited with Messrs. Bannon and Bailey, solicitors of the company to be held by them until judgement or other order. The necessity of making a formal application to his lordship had been obviated by Messrs. Carver and Ivens meeting him half way. His lordship enquired whether Mr. Braddell wanted him to make an order. Mr. Braddell said that they only wanted his lordship to note that they had agreed to the arrangement. Mr. Carver did not see how far he could give an undertaking to do something which might be physically impossible. But if possible he undertook on behalf of the defendants to deposit the shares on or before April 17. What he had said about those shares applied only to the fictitious nominees’ shares, not to others’ such as Khoo Wee Chuan. There might be some difficulty with regard to the dividends and the exercising of the voting powers of those shares. Mr. Braddell said that that was a matter for the company to deal with. His lordship reserved judgement and thanked counsel on both sides for their assistance.

The Straits Times, 16 April 1924, Page 9
 Malayan Collieries. Judgment in Peck-Russeil Case Reserved.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 16 April 1924, Page 8
 PECK vs. RUSSELL.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 30 April 1924, Page 9 F. M. S. MINING MATTERS. The Chamber's Report. The 1923 year book of the F.M.S. Chamber of Mines shows that membership totals 289 after a somewhat searching revision of the list. The accounts showed $7,371 receipts and $6,420 expenses, whilst the Chamber had, invested, $5,500. Twelve Council meetings were held during the year. (Summary: government legislation referred to chamber, output, materials, labour, six cases of exhibits sent to Wembly exhibition, paper by Mr. W.R. Jones on origins of tin deposits in Kinta, testing, mine tailings, recommendations carrying capacity of rivers, using silt to improve valueless swamps. The “visits to mines” included a particularly interesting one to Malayan Collieries. Mr. Jones paper: results of bores sometimes gives misleading information, knowledge of processes gives reliable information.) (372 words)

The Straits Times, 30 April 1924, Page 9
 Supreme Court. Echo of Malayan Collieries Case. The Goenoeng Batu Besar coal concession, which was the subject of the Malayan Collieries case, has given rise to further litigation which will commence before the Chief Justice (Sir Walter Shaw). There are two cases down for hearing, and in both of them the eastern Mining and Rubber Co. are suing Mr. Poey Keng Seng formerly chairman of the Company for $413,000 damages in connection with the sale of the option. Mr. G. S. Carver appears for the plaintiffs, and Mr. Laycock for the defendant.

The Straits Times, 1 May 1924, Page 9 A Coal Concession. Eastern Mining and Rubber Co.'s Claim. Important litigation commenced in the Supreme Court this morning, before Mr. Justice Acton, in connection with the Goenoeng Batu Besar coal concession, which was the subject of the Malayan Collieries case at Kuala Lumpur. The plaintiffs are the Eastern Mining and Rubber Co.(Allegations of fraud against Mr. Poey Keng Seng formerly chairman of the Company.)(1277 words)

The Singapore Free Press and Mercantile Advertiser (1884-1942), 2 May 1924, Page 12 COMPANY LITIGATION. SERIOUS ALLEGATIONS AGAINST LOCAL DIRECTOR. Important litigation involving identically similar principles and equally serious allegations against the defendant as were wrapped up in the Malayan Collieries case recently before the Kuala Lumpur Court, commenced before Mr. Justice Acton, in the Supreme Court yesterday morning. The plaintiffs to the action are the Eastern Mining and Rubber Company, a local company with a capital of $5,000,000 and the defendant is Mr. Poey Keng Seng, who at the time of the transactions out of which the action arises, was managing director of the company. The proceedings are likely to last a considerable time, and after the Hon’ble Mr. G. S. Carver, who appears with Mr. Guy Stevens, for the plaintiffs,…..defendant is represented by Mr. John Laycock, with whom is Mr. Stuart Bell. (Summary: E.M.and R. Co. held capital of company called Handel Maatschappij Goenoeng Batu Besar. Another company named the Teluk Pamoekan Company owned mining concession over land at Goenoeng Batu Besar, near Pamoekan Bay in Dutch Borneo. (Had held the option since July 2, 1905) Mr. Poey Keng Seng negotiated with Dr. William Birnie as representative, (managing director) of the vendor company for sale to E.M.R.Co. of the concession. Proposed cost: Guilders 600,000 and 4,000 shares of $100 each in EMRC. Defendant accused of making it appear as $600,000 instead of G600, 000. To keep the difference as secret profit. Contract made on August 17, 1920. EMR Co claim $413,000 as damages for deceit.”) ….."Counsel also referred to a letter written by Mr. .J. A. Russell, following his receipt of letters from Dr. Birnie, and following which a meeting of the Directors was held. Subsequent meetings took place at which questions were addressed to Mr. Poey Keng Seng, the answers to which, Mr. Carver submitted, were entirely dishonest”….. (3509 words)

The Straits Times, 2 May 1924, Page 9 Borneo Coal Option. More Litigation in Supreme Court. The Goenoeng Batu Besar coal concession, which gave rise to the Malayan Collieries Case, has become the subject of further litigation, which commenced in the Supreme Court yesterday, before Mr. Justice Acton. (1003 words)

The Straits Times, 3 May 1924, Page 7, The Straits Times, 5 May 1924, Page 14 ,The Singapore Free Press and Mercantile Advertiser , 6 May 1924, Page 11, The Straits Times, 7 May 1924, Page 14, The Straits Times, 7 May 1924, Page 8
, and The Straits Times, 8 May 1924, Page 12. MALAYAN COLLIERIES, LTD. NOTICE OF 10th ANNUAL GENERAL MEETING AND CLOSURE OF SHARE REGISTERS. NOTICE is hereby given that the Tenth Annual General Meeting of the Members of the Company will be held at the Registered Offices of the Company, Hongkong and Shanghai Bank Buildings, Kuala Lumpur. F.M.S. on Tuesday, May 13, 1924 …. J. A. Russell and Co Secretaries, April 29, 1924.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 8 May 1924, Page 12, and edited version in The Straits Times, 8 May 1924, Page 9
 Borneo Coal Option. EASTERN MINING CASE. DR. BIRNIE'S EVIDENCE. The hearing of the action brought by the Eastern Mining and Rubber Company against a former managing director, Mr. Poey Keng Seng, was resumed before Mr. Justice Acton in the Supreme Court yesterday. The Company claims $413,000 alleged to be secret profits made by the defendant in the course of the sale to the E.M.R.C. of a coal concession at Goenoeng Batu Besar, or received by him as a present for negotiating the sale. Allegations of fraud are made against the defendant….. Counsel for Mr. Poey Keng Seng argued that all the directors had participated in the division of the spoils and they should all be on trial…” Mr. Russell was the person who received 100 shares from Dr. Birnie, and he was the person who wrote asking that a meeting of the Directors should be held to investigate Dr. Birnie’s complaint. That tended to show that if this action was allowed to go on in its present form the court was being asked to superimpose one fraud upon another”….he is overruled… “Dr. Willem Birnie a Doctor of Laws, and managing director of the Telok Pamoekan Company, which bought the concession at Goenoeng Batu Besar in 1918….E.M.R.C. being a foreign company could not hold a mining concession in Netherlands Indies.. the Goenoeng Batu Besar Company was a holding company to facilitate the transfer…. coal was being produced from Goenoeng Batu Besar in 1919..” Dr. Birnie said he himself had received 930 of the E.M. shares. He had transferred 100 shares to Mr. J. A. Russell. Did Mr. Russell pay you anything for those shares? - No, they were transferred in order to enable him to get a qualification as a director. I wanted him appointed a director of E.M.R.Co. Do you hold a blank transfer signed by Mr. Russell for these shares? – Yes. So that Mr. Russell, even as a person on the board of the company, is your nominee and he holds the shares as long as you choose to let him hold them? – Yes You wrote to Mr. Russell about these secret profits? - I never thought they were secret. I left it all to Poey Keng Seng and we thought it was all right. (S.F.T.&.A. version) You wrote to Mr. Russell, complaining about the way in which these promoters’ shares had been divided up? - Yes. After you had made him a director as your nominee? - No, I asked him several times. (S.T. version) You wrote to Mr. Russell about this after you had made him a director as your nominee? - No, about seven months before. (S.F.T.&. A. version) Did you have him made a director with a view to re-opening the question of the division of the promoters’ shares? – No, it was only to protect the interests of the Java Shareholders. I originally made it a condition that the manager of the Pamoekan Bay Company should be a director of the E.M.R. Co. but for some reason he was not appointed. (S.F.T.& A : “they did not appoint me”) We were not protected, and I asked Mr. Russell to become our nominee. Mr. Russell is interested in Malayan Collieries, who have acquired Goenoeng Batu Besar from the E.M.R. Co. They paid a smaller price than E.M., but with a royalty? – Witness: Malayan Collieries bought for $600,000 in cash, $240,000 (M.C. shares) E.M.R. Co.’s shares, and a royalty of $1.50 per ton, afterwards reduced to 50 cents per ton, with a minimum of $50,000 a year, so I think that price paid by Malayan Collieries is greater than the price paid by E.M. 0. What would you capitalise the royalty at? - At anything from $800,000 to $1,000,000……. Evidence from Tan Chong Chew manager and secretary of EM who instigated Board to take action… “ Did the rot start with the complaints by Dr. Birnie, with the letter written by Mr. Russell in October 1922? - It started before that”….

The Singapore Free Press and Mercantile Advertiser (1884-1942), 9 May 1924, Page 7 EASTERN MINING CASE. JUDGE REFUSES TO ADMIT FRESH DEFENCE. The litigation between the Eastern Mining and Rubber Company and Mr. Poey King Seng, a former managing director of the Company, came to an end earlier than was generally anticipated yesterday afternoon, after Mr. Justice Acton had refused to allow an amendment of the statement of defence. (2429 words)

The Straits Times 10 May 1924 Page 8 and Singapore Press and Free Mercantile Advertiser 12 May 1924 page 11 MALAYAN COLLIERIES At the tenth annual general meeting of Malayan Collieries, Ltd., which will be held on may 13, the following business will be transacted: - (1) to receive and consider the balance sheet and accounts to Dec 31 1923, and the reports of directors and auditors; (2) to declare a final dividend; (3) to declare director’s remuneration;(4) to elect directors in place of those retiring; (5) to elect auditors for the coming year. The retiring directors are Mr Alexander Grant Mackie and Mr. J. A. Russell, the former of whom is retiring from the country at an early date and does not seek re- election. Mr. J. A. Russell being eligible offers himself for re-election. The Hon. Mr. D. H. Hampshire, having been invited to join the Board, offers himself for re-election.

The Straits Times, 12 May 1924, Page 12
, also printed in the Malayan Tin and Rubber Journal Vol. XIII No 10, 31 May 1924. p. 627 and 628. MALAYAN COLLIERIES LTD. Directors' Report for the Past Year. The directors of Malayan Collieries, in the course of the tenth annual report and statement of accounts, for the year ended December 31, 1923 state: - Property. - The position remains the same as reported last year. No title has issued by the F.M.S. Government to the company for its extra 100 acres at Kundang. Kundang Sand Pits. - The company continued to win tin ore from this property, which ore to some extent off-set the cost of sand-stowage. Batu Arang. - Operations at this colliery functioned smoothly throughout the year. The property is in sound condition and well maintained; while the problem of underground fires, which at one time threatened its existence, seems to have been effectively solved. The colliery is capable of a considerably increased output should a local demand for more coal arise. Labour Trouble. 0. Pamoekan Bay. -The operation of this colliery unfortunately sustained a very serious set-back during the year, due to an incident arising out of friction between the Chinese Underground miners and the Javanese surface labour, which antagonism culminated in a grave disturbance attended with considerable loss of life to both parties. Owing to the request of the Dutch officials to the effect that the Chinese labour concerned in the riot be deported, unskilled Javanese had to be drafted into the underground workings. These men being unused to underground work, the output of the mine was most adversely affected, being temporarily reduced to small proportions incidental to the initial stages of development. Although the Javanese at present being employed underground have gained in experience and are showing improved mining capacity, it is evident that they are not entirely suited to work of this specialized character and picked Chinese underground Miners are therefore gradually being shipped across to Pamoekan Bay. To avoid further disagreement, the present plan is to open two mines, operating the principal one with Chinese and the other with Javanese miners. The stoppage and subsequent diminution of coal production had a two-fold adverse effect upon the company’s profits. Not only did the reduced output produced by the unskilled labour remaining on the mine cost more to win, but the curtailment increased the overhead charges per ton, and, what was far more serious, rendered idle for some time the company’s fleet of three colliers, the liability for charter money upon which vessels (an exceedingly heavy item) continued to accrue. In consequence of this fatal riot, the year’s operation of the Pamoekan Bay Colliery resulted in a trading loss of $76, 089.56. It is the more regrettable because the virtual stoppage of output occurred at a time when, the quality of Pamoekan coal having been established, the demand for it had considerably increased and still is increasing, a demand which the mine can as yet only partially supply; but it is hoped that it will shortly be able more fully to meet. Pamoekan Bay Option. Your Board has recently considered an offer made to it to acquire from the company for the sum of $60,000 an option to purchase the Pamoekan Bay property at the price of $4,000,000. Your board, however, does not consider the offer to be sufficiently attractive. Should an offer be received which in the opinion of your board it might be desirable to accept, this offer, together with the board’s recommendation, would be submitted to the shareholders for their consideration. It should, however, be stated that your board is not contemplating disposing of the property, and no sale at any price would be entertained unless the purchaser bound himself and his successors not to compete with Malayan Collieries, Limited, within the area of the F.M.S. Local Coal market. - Although the year opened badly it closed firmer and with greater demand, due mainly to the improved conditions in the tin mining industry. Guilder Fluctuation. - The company’s average rate of exchange for the conversion of Straits Dollars to Dutch Guilders for 1922 was Straits $100,00= guilders 134.19, while the average rate for 1923 has been $100.00= guilders 140.02. This depreciation of the Dutch guilder, it will be observed from the accounts, has been written off. Suit by Mr. Peck. - This case has now been heard and is still sub-judice, judgment having been reserved.. Profit. The profit for the year under review, subject to directors’ fees, and audit fees, amount to $871,193.19, to which is added the unappropriated balance from the previous account of $148,347.63, totalling $1,019,540.82. Two interim dividends of 5 per cent and 7 ½ percent respectively, were paid during the year, absorbing $387,500 and leaving $632,040.82. You will be asked to sanction fees to the directors in respect of 1923 $12,000, the Auditors have rendered their account for $2,000, leaving available $618,040.82, which your directors recommend should be dealt with as follows: - Payment of final dividend of 10 per cent (making 22 ½ per cent for the year) $310,000, write off mine development account $155,457.02, balance to carry forward to next year’s account $152,583.80 (Subject to an appropriation for staff bonus, to be left as formerly to the discretion of the board.) 0. Directors. - The retiring Directors are Mr. Alexander Grant Mackie and Mr. John Archibald Russell. Mr. Alexander Grant Mackie is retiring from the country at an early date, and does not seek re-election. Mr. John Archibald Russell being eligible offers himself for re- election. The Hon. Mr. Dugan Homfray Hampshire, having been invited to join the board, offers himself for election. Auditors. – Messrs. Evatt and Company retire, but being eligible offer themselves for re-election. (885 words)

The Straits Times, 14 May 1924, Page 9, and the Malay Mail, (with slightly different wording) of Wednesday May 14, 1924, ps. 9 and 16. Also covered in the Malayan Tin and Rubber Journal Vol. XIII No. 10, 31 May 1924, p 625-628. Malayan Collieries. Proceedings at the Annual Meeting. (From Our Own Correspondent.) 0. Kuala Lumpur, May 13 0. The tenth annual general meeting of the Malayan Collieries, Ltd., was held at noon to-day, at the offices of the secretaries, Messrs. J. A. Russell and Co. There were present Messrs. J. A. Russell, (in the chair), A.A. Henggeler, R. P. Brash, Chew Kam Chuan, (directors), N.E.S. Gardner, F. C. Peck, J. Bligh Orr, Russell F. Gray, H. Hopson Walker, F. Cunningham, E.E. Deacon, B.J.P. Joaquim, F.B. Ivens of Bannon and Bailey (Company solicitors), by attorney: H. N. Ferrers, Mrs. F. G. Boddington, Mr. H. D. Brown (Representing the Secretaries J. A. Russell and Co.). F. Thorogood, attorney for Mr. H. N. Ferrers. The notice convening the meeting was read by Mr. Brown. 0. The Chairman addressed the meeting as follows: The Report and Accounts having been circulated I am assuming that you will accord me the customary permission to take them as read and I will therefore, proceed to make a few remarks upon the Balance sheet before you. Taking first the left hand side of the Accounts, you will see that the Capital issued and subscribed remains the same as formerly. With a larger turn over the amount due at the end of the year to sundry creditors stands at $251,645,59, showing an increase over the previous year of $13,815.15. The whole of the sum due to sundry creditors has since been discharged, with the exception of a liability to the Netherlands East Indies Government in respect of Government Royalty, the exact amount of which has not yet been definitely ascertained but has nevertheless been fully provided for. The warrants represented under the heading “Unpaid Dividends” have also since been practically all presented and paid. Reserves remain at the same figure except for an increase of $37,500 to mine amortization and of $2,500 to Staff Leave and Passage Reserve. The Total of Reserves now stands at $1,308,750 but this does not include the Bad Debts Reserve of $75,000. Turing to the assets side of the balance sheet, our lease-hold property remains at its written down figure of $1,000,000, which sum, however, does not contain the book value of the Pamoekan Bay lease. The Dutch Government leases of the Pamoekan Bay Colliery and the adjoining timber concession are comprised under the heading Investments, being shown there as being the whole of the Share Capital at cost of the Mynbouw en Handel Maatschappij Goenoeng Batu Besar, the company holding these leases. The book value of this investment being $1,600,000, the total value in the Company’s books of its landed property is consequently $2,600,000. 0. Comparative Statistics. 0. Development Account amounts to $530,457,02 as against $499,472.44 for the year 1922. Railway sidings are written down to a round figure of $100,000. Our buildings, after being depreciated by $25,481,19 stand at $300, 877 as compared to with $289,815,75 for the previous year. After allowing for depreciation, wharf and harbour Account has increased from $31,235,17 to $59,721. During the year $95,316,91 was spent upon additional plant and machinery, $85,019,26 has been written off by way of depreciation, and the total account now stands at $835,800 as against $ 825,502 for 1922. An extra $19,035,85 has been spent upon the Steam Launch account, but the sum of $24,035, 85 having been written off it, the balance at $25,000 is less by $5,000 than the former total of this account. The aggregate of all sums of depreciation written off assets for 1923 is $139,768,47 as compared with $121,956 written off assets for 1922. This depreciation figure does not include the sum of $35,118,18 written off the Guilder Fluctuation Account. The mining and other stores and requisites carried by the company to facilitate its operations have been valued on a conservative basis at $229,478,12. The stocks of unsold coal on dumps and afloat at the end of the financial year were valued at $117,923,26. Sundry Debtors at the end of the year owed the company a total sum of $476,160,74, which sum is shown in the Balance Sheet as an asset worth $401.160,74, the ample reserve of $75,000 having been allowed for contingency of bad debts. At the close of the previous year the sum due to the company was $417,984,37 and the reserve allowed for bad debts was $60,000. Out of this reserve for $60,000 the sum actually written off for bad debts during 1923 was $8,381,90 or less than one quarter of one per cent. of the Company’s revenue for that year. 0. It was considered the wiser course to write off the amount of depreciation incurred upon Dutch Guilders rather than to carry the same to a suspense account until such time as the conversion rates improves. 0. At the end of the year the company had cash in hand and at Bank to the extent of $109,302,26, having just disbursed a Dividend on December 21. 0. The Year’s Profit. 0. Looking at the profit and loss account you will see that the cost of operating our Collieries during the year was $1,813,960,26. Of this amount $230,984,58 was spent on Development, leaving $1,582,975,68 as the actual cost of winning the coal. We paid a further sum of $741,159,07 in transporting the coal and $138,833.23 in royalties upon it. These three items, less the money spent on Development amount to $2,462,967,98. The corresponding figure for the previous year was $1,977,570,85. Our total revenue was $3,576,681,63 as against $2,999,923.59 for the previous year, and our net profit is $871,193.19 as against $764,869,65 for the previous year or an increased profit of $106,323.54. To the above profit has to added the balance brought forward from the previous account of $148,347,63 making a total of $1,019,540,82. Out of this latter amount the Company has already paid two interim dividends totalling to 12 and a half per cent, absorbing $387,500, - and leaving available a balance of $632,040,82. Your Directors recommend the distribution of a final dividend of 10 per cent for the year, which final distribution will absorb $3,100,000, - and that the sum of $155,457,02 be written off Mine Development Account reducing this item to a round figure of $375,000. 0. The auditors have rendered their account for $2,000 and you are requested to sanction a sum of $12,000 as directors’ fees. These appropriations will leave a balance of $152,583,80 which amount, subject to payment of a bonus to staff, your Directors recommend should be carried forward to the 1924 account. As in previous years, the amount of the staff Bonus your Directors ask you to leave to them to fix in consultation with the General Manager. 0. I do not think there is need for me to add much more to what I have said, as such general information as I could give you is already contained in the Directors’ Report and the General Manager’s Mine Report before you. The consumption of Batu Arang Coal continues to expand, even if only slowly so. On the other hand the demand for the product of our Pamoekan Bay Colliery has increased greatly and, could we but supply it, we could sell more of this fuel than we can of Batu Arang Coal. Unfortunately, our output at Pamoekan Bay has not yet recovered from the disastrous episode of last year referred to in the Directors’ Report. The result of the repatriation of the original force of skilled Chinese Miners, entailing as it did, the training of a new underground gang of Javanese operators and the re-constitution of a fresh force of Chinese miners, has been far reaching in its consequences and, temporarily, economically detrimental in its effects. This re-organization of the whole labour force has been a slow process and is even not yet accomplished. I fear I must confess that the Javanese have been most disappointing as underground workers and that there seems to be little chance of any marked improvement in outurn until we have again several hundred Chinese, this time men of selected character, upon the Mine. More of such men are being sent to Pamoekan Bay each month, and before the end of the current year we ought to have quite as many skilled miners of this nationality as we possessed on the mine before last year’s calamity, Our output is once more creeping up, in another two or three months’ time we trust that it will have arrived at the daily figure to which it had obtained when the trouble occurred, while before the completion of the year we hope it will have greatly surpassed that figure. With this contingency in mind, we are now negotiating further charters and hope shortly to be able to supply our customers with greater quantities of coal. 0. Changes in Staff. 0. Certain changes have also been made to the European staff at the mine, the services of five members of which have been discontinued, and new men have been or are being engaged to replace them. 0. During the year one of your directors, the Hon. Mr. R. P. Brash, upon behalf of the Board, visited Pamoekan Bay, and inspected the Company’s property there. Incidentally Mr. Brash was present on the mine when the riot took place. 0. The lower seam of better coal which I mentioned last year is still untouched, as it would be unwise to embark upon additional workings until our old ones are again on a stable basis. 0. Reference is made in the Directors’ Report to the Company having been approached for an option over the Pamoekan Bay Colliery. I think that may be no harm in my saying that the offer comes from one of the Company’s customers who has been unable to obtain the quantities of Pamoekan Bay Coal for which he requisitioned. He has indicated that he is willing to pay $60,000 for a three or four month’s option, giving him and his backers the right to purchase for $4 million. Your Directors consider the property to be worth more than this sum and have written declining the offer. Despite the labour troubles, your Directors are not at all anxious to dispose of the property; they do not forget the obstacles encountered during the first four years of the Batu Arang Collieries’ existence, troubles which at the time seemed far graver than anything now afflicting Pamoekan Bay. 0. I wish in conclusion on behalf of the Company to thank the General Manager, Mr. Barr, the Manager and staff at Batu Arang and the Manager and such of the staff as are remaining at Pamoekan Bay for their work during the year, and in this I am sure you will heartily join me. 0. I now beg formerly to move that the report of the Directors produced, together with the statement of the Company’s Accounts as at December 31, 1923, duly audited, be now received, approved and adopted, which motion I will ask Mr. A. A. Henggeler to second; but before putting it to the meeting I shall first endeavor to answer, if I consider that I can and should properly do so, questions upon the Report and Accounts which shareholders present may care to put. 0. Mr. Henggeler seconded the motion. 0. Mr. Peck Speaks. 0. Mr. F. C. Peck said he would like to propose that such business as would not likely to be controversial be dealt with at the meeting and that the meeting should then be adjourned until after the judgment in the case. In the present circumstances, he could not speak freely with regards to the suit and other matters which were directly or indirectly connected with it. One of his reasons was as to the advice which would be given on the question of appeal. He certainly had no wish to speak on a matter which was sub judice. 0. The chairman thought it would be better to deal with each item as they came along, and Mr. Peck could if he desired object to each item at the proper time. 0. Mr. Peck asked whether by that the chairman intended to object to his proposal. 0. The Chairman: Will you form a proposal that the whole of this meeting stands adjourned. 0. Mr. Peck said that the general matters as to the directors’ remuneration and election of directors should be considered after the suit. 0. The chairman said that if Mr. Peck was not prepared to propose that the whole meeting stand adjourned they would have to continue. 0. Mr. Peck then agreed to the Chairman’s suggestion. 0. Mr. Peck: There is another little matter. I notice that on the agenda there is no item of “ general”. That item had always appeared in previous reports. It is a small matter and no doubt a slip. 0. The Chairman said that the meeting had been called only for the particular purposes mentioned on the agenda. 0. Mr. Hopson Walker said it was usual to have another item on the agenda. It had always been there before. 0. The Chairman inquired what the item was. 0. Mr. Hopson Walker: To transact any other business which might arise. 0. The Chairman replied that there was no justification to have any special item. 0. Mr. Peck then said that it was only right that that company should have absolutely independent legal advice. He did not intend to say anything against Mr. Ivens but Messrs Bannon and Bailey, who had been appointed as the company’s solicitors in connection with his suit, had previously been consulted by Mr. Henggeler and perhaps by others in the matter of his suit. In the circumstances he thought they should have another firm of solicitors. 0. Mr. Peck was speaking further on the point when the chairman interrupting, said he could not allow him to go on speaking further. If Mr. Peck desired to discuss such a matter he could call a meeting of his own, but that meeting had been called to discuss the balance sheet and accounts before the meeting. 0. Mr. Hopson Walker said that this agenda differed from those issued in other years. 0. The Chairman: The item was left out deliberately because that company had been called for those particular purposes and not to give a chance to Mr. Peck for a little propaganda. 0. Mr. Peck next inquired with regard to the 51,000 shares which were admitted to have been in fictitious names and deposited with the company’s solicitors, whether he was right in thinking that they had really been issued. It was a small point, but it seemed to him a difficult thing to decide on. 0. The chairman: Those shares have been allotted. 0. Mr. Hopson Walker: In accordance with the enactment? 0. The Chairman: Yes. In accordance with the enactment. 0. The proposal for the adoption report and accounts was then put to the meeting and carried, there being three dissentients. 0. The Chairman proposed the payment of a final dividend of 10 per cent making 22 and a half percent for the year. 0. The Hon Mr. R. P. Brash seconded. - Carried. 0. Mr. Deacon proposed the payment to the directors of $12,000 as fees to be divided amongst themselves as they may agree. 0. A member (Mr. Cunningham according to the M.M.) seconded. 0. Mr. Peck thought that no fees should be paid to the directors at the present time. This, he thought, was one of the controversial matters. 0. Mr. Hopson Walker agreed with Mr. Peck. He thought this matter should stand over. 0. The resolution was put to the meeting and carried with three dissentients. 0. Mr. Deacon proposed the re election of Mr. Russell as director a shareholder (Mr. Cunningham M.M.) seconded. 0. Mr. Hopson Walker: I propose that this be allowed to stand over. It is a matter which should be held over for the present. 0. Mr. Peck seconded. 0. Mr. Deacon’s proposal on being put to the meeting was carried with two (three according to the M.M.) dissentients. 0. Mr. Henggeler proposed and Mr. Russell Gray seconded that D. E. Hampshire be elected as a director. 0. Mr. Peck said that he had that morning attended a meeting of the Utan Simpan Rubber Company when Mr. Russell was re elected to that board of which Mr. Hampshire was chairman. In those circumstances he did not think Mr. Hampshire should be allowed to come to the board. (From M.M. Mr. Peck: “ Sir, this morning I attended the meeting of the Utan Simpan Rubber Co., at which Mr. Hampshire presided, and at which he proposed the re-election of yourselves to the board of that company. Under those circumstances Mr. Hampshire’s election should not be approved” 0. Mr. Hopson Walker thought this was another of the matters that should be held over. He did not oppose Mr. Hampshire joining the board, but he thought it should be held over for the present. 0. The original motion on being put to the meeting was carried two voting against. 0. The Chairman, in reply to Mr. Peck, said that all the items on the agenda having been dealt with there was no reason why the meeting should be adjourned. But if desired another meeting can be called and no doubt would be called. Mr. Peck can always call a meeting and the directors were always willing to give him every facility. He further explained that as certain matters were sub judice it was desired to confine that meeting to the five items on the agenda. 0. Mr. Hopson Walker: Do I take it that this meeting is adjourned sine die? 0. The Chairman: No, this meeting is concluded. 0. A vote of thanks to the chair terminated the proceedings. 0. (N.B. Slightly different wording for last section of meeting in “Malay Mail” and “Tin Mining and Rubber Journal”) (2824 words)


The Singapore Free Press and Mercantile Advertiser (1884-1942), 14 May 1924, Page 1 THE DAY'S NEWS. Malayan Collieries meeting evoked protests from Mr. Peck.- page 6

The Singapore Free Press and Mercantile Advertiser (1884-1942), 14 May 1924, Page 6 Mr. F. C. Peck arrived in Kuala Lumpur on Sunday to attend the general meetings of Malayan Collieries, Ltd. and Utan Simpan Rubber, Ltd.

The Singapore Free Press and Mercantile Advertiser (1884-1942), 14 May 1924, Page 6 MALAYAN COLLIERIES. MR. PECK INTERVENES. (From Our Own Correspondent). Kuala Lumpur, May 13.. The general meeting of Malayan Collieries was held to-day, Mr. J. A. Russell presiding. The Chairman exhaustively reviewed the past year's working, resulting in a net profit of $871,193. A dividend of ten per cent, making…. (etc.) (523 words)

The Straits Times, 15 May 1924, Page 3 UTAN SIMPAN RUBBER. . Position of the Company at Close Of Last Year. At the annual meeting of the Utan Simpan Rubber Company, Ltd., held on May 13, in the offices of the secretaries Messrs. Boustead and Co., Kuala Lumpur, the chairman, the Hon. Mr. D. H. Hampshire…( Summary: reports accounts… In the worst of the slump this company had some difficulty in carrying on as it was impossible to borrow any money. I trust we shall not go through such difficult times again…dividend declared… company incorporated in 1910.. area planted.. advice from restriction committee.. production figures…Mr. R. C. Russell seconded… dividend of 12 and half per cent passed. The next business was the election of directors. Mr. F. C. Peck inquired whether the directors recommended the re election of Mr. J. A. Russell as a director. The chairman replied in the affirmative. The chairman then proposed the re election of Mr. J. A. Russell. Mr. Fallen seconded and the resolution on being put to the meeting was carried with one dissentient- Mr. F. C. Peck…. (769 words)

The Straits Times, 15 May 1924, Page 9
 Peck-Russell Case. Judgment Delivered at Kuala Lumpur To-day. (From Our Special Correspondent.) Kuala Lumpur, May 15. Judgment was given in the Supreme Court, this morning, by Mr. Justice Whitley in the Malayan Collieries case, in which Mr. F. C. Peck, Singapore, sued Mr. J. A. Russell, Messrs. Russell and Co., and Malayan Collieries. Plaintiff had claimed $1,720,000 damages and interest thereon, alleging that this amount was profit, which Mr. Russell and his firm wrongly made out of a deal with Malayan Collieries over the Goenoeng Batu Besar coal-mine, situated in Dutch Borneo. The plaintiff was represented at the hearing by Mr. Roland Braddell, of Singapore, and Mr. W. G. W. Hastings, of Kuala Lumpur; the first and second defendants (Mr. Russell and Messrs. Russell and Co.,) by Mr. M. J. Upcott and the Hon. Mr G. S. Carver, both of Singapore, and Mr. E. D. Shearn, of Kuala Lumpur; and Malayan Collieries by Mr. F. B. Ivens, of Kuala Lumpur. In his judgment, his Lordship said that the balance of the finding on fact was in favour of the minority shareholders. The question of relief would be further considered. (188 words)

The Straits Times, 16 May 1924, Page 8
. On Other Pages. Malayan Collieries Judgment p.9

The Straits Times, 16 May 1924, Page 9 Malayan Collieries. Judgment in the Peck-Russell Case. (From Our Special Correspondent.) Kuala Lumpur, May 15. Judgment was given in the Supreme Court, this morning, by Mr. Justice Whitley in the Malayan Collieries case, in which Mr. F. C. Peck, Singapore, sued Mr. J. A. Russell, Messrs. Russell and Co., and Malayan Collieries. . Plaintiff had claimed $1,720,000 damages and interest thereon, alleging that this amount was profit, which Mr. Russell and his firm wrongly made out of a deal with Malayan Collieries over the Goenoeng Batu Besar coal-mine, situated in Dutch Borneo. The plaintiff is represented by Mr. Roland Braddell, of Singapore, and Mr. W. G. W. Hastings, of Kuala Lumpur; the first and second defendants (Mr. Russell and Messrs. Russell and Co.) by Mr. M. J. Upcott and the Hon. Mr G. S. Carver, both of Singapore, and Mr. E. D. Shearn, of Kuala Lumpur; and Malayan Collieries by Mr. F. B. Ivens, of Kuala Lumpur.. The judgment is a very lengthy one covering 60 pages. 0. His Lordship, in the course of the judgment, after setting out the facts at length said that the issues being so numerous and the evidence so voluminous he proposed to take the issues separately. The first issue was based on the allegation by the plaintiff that the second defendants commenced to negotiate for the option over Goenoeng Batu Besar on behalf of the company, but subsequently changed their intention and fraudulently took the fruit of these negotiations for themselves. The answer of the defendants, of course, was that at no time during the negotiations did they act on behalf of the company. After dealing at considerable length with the facts his Lordship found that the plaintiff’s case on this issue rested solely on the documents. His conclusion was that the plaintiff had not proved the allegation that the second defendants commenced negotiations for this option on behalf of the company and plaintiff failed on the first issue. 0. The second issue was whether the first defendant enabled Hong Guan to obtain the option by utilising the name and authority of the company and also by utilising the first defendant’s known position as chairman of directors of the company. On this issue too his Lordship was of the opinion that plaintiff must fail. 0. His Lordship then dealt with two minor issues. The first was whether the $60,000 deposit required by the option of October 1 and 5, was in either case or in both a deposit at risk. On this issue his Lordship held that neither option required that the $60,000 should be a deposit at risk; in other words they were free options. 0. The other minor issue was whether the expedition fitted out by the company for the purpose of examining another property was diverted by the second defendant in their own interest to Goenoeng Batu Besar. After going fully into the facts his Lordship found that the second defendants did in fact divert the Soebokoe expedition to their own interest and that in effect the one property was substituted for the other and this was done at the sole cost of the company. 0. His Lordship then went on the deal with what he considered to be the principal issue in the case, viz., whether whatever intention the second defendants may have had they must be held to have acquired the option on behalf of the company. On this issue the judge held that the acquiring of the option was within the scope of the second defendants’ agency, but that thy were under a duty to refrain from acquiring the option for themselves. It, therefore followed that they must be deemed to have acquired it as agents for the company and to have held it as trustees of the company. 0. The next issue which he proposed to consider was whether, assuming the rights evidenced by the options belonged both in law and in equity to the second defendants, the first defendant and the second defendants in beach of their duty as a director and as managing agents respectively, failed to make a sufficient disclosure of the circumstances of the transaction when they sold these rights to the company. On this issue his Lordship was satisfied that that the second defendants sufficiently fulfilled their duty in the matter of disclosure. 0. The Judge then dealt with the question as to whether the plaintiff was entitled to sue and came to the conclusion that the plaintiff was entitled to maintain the action. In conclusion, his Lordship said: I have now dealt with all the issues which I think are material except that which relates to the relief to which the company is entitled. At the request of counsel on both sides that issue has been reserved for further argument. I therefore conclude my judgment at this point. There will be no order as to costs until the remaining issue has been determined. 0. (A fuller report of the judgment will appear in a later issue of the Straits Times, as copies of it will not be available at Kuala Lumpur until Monday. - Ed. S.T.)

The Straits Times, 16 May 1924, Page 9 Malayan Collieries. Judgment in the Peck-Russell Case. JUDGMENT FOR PLAINTIFF? (From Our Own Correspondent.) Kuala Lumpur, May 15. Mr. Justice Whitley this morning delivered a lengthy judgment which took an hour and three quarters to read, in the case of Peck vs. Russell and vs. the Malayan Collieries. His Lordship dealt exhaustively with the facts of the case. On some of the issues His Lordship held against the plaintiff; on others against the second defendants. On the principal issue, whether the buying issue was within the scope of Russell and Co’s agency, His Lordship held that it was. At the conclusion of the judgment nobody was definite as to its effect. His Lordship remarked that it was only part of his judgment, the more material part, meaning the question of damage, was still to come. (The Straits Times telegram is “ that the balance of the finding on fact was in favour of the minority shareholders. The question of relief will be furthered considered”)

The Singapore Free Press and Mercantile Advertiser (1884-1942), 17 May 1924, Page 8, copied from the Malay Mail, Thursday, May 15, 1924, ps. 9 &16. COLLIERIES CASE. MR. JUSTICE WHITLEY'S JUDGMENT. Who Wins? Mr. Justice Whitley delivered judgment this morning, says Thursday's Malay Mail, before a crowded court, in the action Peck vs. Russell which was heard last month, 0. His Lordship began by reciting the facts of the case, the relationship of the defendants to each other, and the position of the plaintiff. 0. His Lordship proceeded to discuss the issues regarding Batoe Besar, because it was most likely that the directors of the Company would depend more on Mr. England’s inspection, who has spent the whole of his life in coal mines, than on Hastings’, who had contradicted himself in the box. On this minor issue His Lordship held that the second defendant diverted the expedition from Seboekoe to Goenoeng Batoe Besar property on behalf of the Company. 0. His Lordship next dealt with the principal issue in the case, and that was whatever these foregoing matters might be, was the property acquired by the first and second defendant on behalf of the Company? 0. His Lordship, in dealing with this issue, went into the relationship of Messrs. Russell and Co. to the Company and dealt with speeches made by the Chairman, Mr. J. A. Russell. In this connection his Lordship held that a formal mandate to the chairman, or to the agents and secretary, was necessary. How could the company acquire coal properties other than through the second defendants? His Lordship held that the acquisition of coal properties was within the scope of the second defendants’ agency, and that the acquisition of this particular option was within the scope of the agency. 0. His Lordship also held that the deposit of $60.000 made by Mr. Russell for the exercise of the option was in fact not at risk. In other words, the option was a free option. 0. Referring to the Borneo expedition, consisting of England Brickman and Hastings, his lordship had no doubt that the first defendant instructed England definitely before they started to inspect Goenoeng, the first question being whether the defendants acted on behalf of the Company in securing the option over the Goenoeng Batoe Besar property. In this connection His Lordship referred to the part played by Hong Guan, who he had no doubt acted as the personal friend of the first defendant (J. A. Russell) and not as a servant of the Company. In his Lordship’s opinion, the language of the option was not to be constructed as meaning that the first defendant dealt on behalf of the company. Regarding the letter to Hong Guan, the fact that it was written on the Company’s letter paper and found in the Company’s file was not, in his Lordship’s opinion, in itself of very great importance. The fact that the letter of October 1, after that, was written in the same manner, was in the defendant’s favour, because if the first defendant developed fraudulent intention between September 22, the date of the first letter, and October 1, the date of the second, after he knew the option had been fixed up, he would have taken pains to conceal the fact that he had anything to do with the Company. 0. His Lordship’s conclusion on the first issue was that the plaintiff had failed to prove that the first defendant acted on behalf of the Company in securing the option. 0. On the second issue also his Lordship held against the plaintiff. 0. His Lordship held that not only was the acquisition of this option within the scope of Russell and Co’s agency but they were precluded from refraining to acquire such options. His Lordship held that the second defendants dealt with the option as trustees of the Company. Reasons for this were found, His Lordship pointed out, in the circulars issued to shareholders. Both by word and action they affected to act on behalf of the Company. They could not therefore be heard to say in court of equity that they acted on their own behalf. 0. Dealing with the question of disclosure, His Lordship said that, according to Mr. Henggeler, Russell and Co. placed before the directors the price at which they were prepared to sell, and indicated a “take it or leave it” attitude. The question was whether this was sufficient disclosure, whether it was made to the shareholders. 0. In this connection His Lordship referred to certain authorities quoted by the plaintiff, which he held did not cover his contention. 0. His Lordship held there was sufficient disclosure, and that it was not the duty of the second defendants to disclose the price of purchase. He was satisfied that the second defendants made sufficient disclosure. 0. On this part of the case, His Lordship held that the plaintiff failed to establish misrepresentation on the part of the first and second defendants. 0. His Lordship next passed on to the question whether the defendants were in a majority at the meetings of the Company and whether their action was ultra vires.

Malayan Saturday Post, 17 May 1924, Page 9 . SPARKLES. . Being Smiles of the Week, . By Quiz. The Peck v. Russell affair has reached the end of another chapter. When (and whether) another one will begin is in the lap of the gods and the stubborn dispositions of the litigants. Or perhaps the lawyer gentlemen will not be too ready to relax their hold on a “good thing” yet awhile. And who shall blame them? Mr. Peck has had another little jaunt up to K.L. for the Collieries annual meeting, on his unending quest after the blood of directors and after his Utopian schemes to run public companies in the interests of shareholders- ridiculous man! One of these days he will find himself saddled with a public testimonial and a monument. Serve him right, too. Of course, the best way to punish the fellow would be to work him into the Birthday Honours. With an O.B.E. thrust upon him, he would be like that Prince we used to read about at school- he would never smile again. And Sir (shall it be?) J. A. Russell will feel like declaiming that closing passage in the memorable Mutiny proclamations: “ This Justice is done!”

The Singapore Free Press and Mercantile Advertiser (1884-1942), 22 May 1924, Page 12
 EASTERN MINING CASE. FURTHER CLAIMS. AGAINST POEY KENG SENG. Who had the Flying Fish? Further allegations against Poey Keng Seng, formerly managing director of Eastern Mining and Rubber Company, are made in the action which commenced in the Supreme Court yesterday, before Mr. Justice Acton, the Company being plaintiffs and Keng Seng defendant. (Summary: details of claim including a motor boat called the “Flying Fish”. Details for the defence…) “The last coal which was taken into stock was on February 1st., which was the day Malayan Collieries took over”..Company’s support to Mr. Peck… “ All these actions against Poey Keng Seng commenced after Mr. Russell got himself appointed Director of the Company? asked Mr. Braddell in cross examination. “Quite so” witness (Tang Chong Chew, the manager of the Company) agreed. And he got himself appointed Director at the time your Company was supporting Mr. Peck in his action against Mr. Russell? - Yes. . “After he was appointed director your Company withdrew its support to Mr. Peck in his action against Mr. Russell? - Yes.. Your principal directors were your father, Lim Boon Keng, Tan Way An, and Poey Keng Seng. Lim Boon Keng gave evidence for Mr. Russell in Peck’s action against him? - Yes.. And Tan Way An? –Yes. Who was it pledged support of the Company to Mr. Peck? Poey Keng Seng.. He did that alone, didn’t he? – Yes”…… “Mr. Russell was appointed a director and at the next meeting Poey Keng Seng was ousted from his managing directorship.. in May 1923.” (Mr. Birnie, being sued by Poey Keng Seng for shares, who got the motor boat in 1920.) (2389 words)

The Singapore Free Press and Mercantile Advertiser (1884-1942), 23 May 1924, Page 12
 EASTERN MINING CASE. DEFENDANT IN WITNESS BOX. The hearing of the action brought by the Eastern Mining and Rubber Company against its former managing director, Mr. Poey Keng Seng, concluded before Mr. Justice Acton in the Supreme Court yesterday morning, judgment being re- served. (Case for the defence) “Mr. Braddell said the case was a peculiar one, the claim seeking to open accounts which had long been stated and until Mr. Russell started this litigation apparently had been accepted by the directors” (“Mr. Braddell case, and evidence from Mr. Poey Keng Seng, Mr. Carver’s response.) (1522 words)

Malay Mail, Tuesday, May 20th, 1924 THE COLLIERIES CASE Mr. Justice Whitley’s Judgment SOME INTRICATE ISSUES Ownership of the Option The following is the judgment of Mr. Justice Whitley in the above case, delivered on Thursday last: - The Plaintiff in this action is a shareholder in Malayan Collieries, Limited, a company incorporated in the Federated Malay States. He sues on behalf of himself and other, the shareholders in the company other than the 1st defendant. The 1st defendant was at all material dates a director and chairman of directors of Malayan Collieries, Limited, (hereinafter called “the company”). He was also at all material dates the senior and managing partner of the 2nd defendant firm. The 2nd defendant firm were at all material dates the managing agents and secretaries of the company. The company itself is the 3rd defendant. It had been joined, not because any relief is sought against it, but because it is a necessary party to an action brought in this form. The company was incorporated in the year 1913 with an authorised capital of $2,000,000 divided into 200,000 shares of $10 each. Its primary object was to purchase and develop certain coal bearing land situated in the State of Selangor and known as “Batu Arang.” The 1st defendant was the vendor to the company of this property. From the time of the inception of the company, and always, the 1st defendant was a director and chairman of directors, and his firm the managing agents and secretaries. He was by far the largest shareholder. His co-directors, and the shareholders generally, reposed great confidence in him so that he acquired a dominating influence in the affairs of the company. Though of course subject nominally to the control of the Board, he and his firm were allowed practically a free hand as managing agents. During the first seven years of its existence the company made no attempt to acquire any new property. It limited its activities to the practical business of coal mining at Batu Arang. The venture was a success. The company owned the only coal deposit in the Malay Peninsula which was being worked, and though the coal which it produced was not a bunkering coal and therefore unsuitable for many important purposes, it commanded a ready sale locally. In the latter part of the year 1920 only 150,000 of the company’s shares had been issued. Of these the first defendant held between 52,000 and 53,000, or a little more than one-third of the total capital. The shares were easily saleable in the local market at a price considerably above $20. Profit on the Option. In the month of October 1920 the 2nd defendants acquired an option to purchase a certain coal bearing property situated at Pamoeken Bay in Dutch Borneo and known as “Goenoeng Batoe Besar.” On Nov. 23. 1920 they sold, or purported to sell, this property to the company for a consideration consisting partly of cash and partly of shares of the company. The profit which they took upon the transaction was not disclosed at the time but amounted in fact to 80,000 shares of which 8,000 were to go to a broker and the balance of 72,000 were to be retained by themselves. The sale was completed. In due course, the company took possession of the property and began to produce, and are still producing, coal from it. The plaintiff alleges that, both in the acquisition of the option and in the subsequent sale or purported sale to the company, the 1st and 2nd defendants committed breaches of duty and in certain respects acted fraudulently. He does not pray for the recission of the sale, but he seeks to recover on behalf of the company the profits which the 1st and 2nd defendants made in the transaction. So numerous are the issues and so voluminous the evidence, that it would, I think, be inconvenient to attempt to set out a general narrative of the facts. I propose, therefore, in discussing the issues severally, to recite in each case those facts which seem to me to be relevant to the particular issue under consideration. I shall take the issues in such order that the sequence of the narrative may be as far as possible chronological. The first issue which I propose to discuss is based on an allegation of the plaintiff that the 2nd defendants commenced to negotiate for the option over the Goenoeng Batoe Besar property on behalf of the Company, but subsequently changed their intention and fraudulently took the fruit of those negotiations for themselves. The answer of the defendants of course is that at no time during the negotiations did they act on behalf of the company. This is an issue of fact. Inasmuch as the 2nd defendants did take the option for themselves, the question resolves itself into whether they began the negotiations on behalf of the company. The previous history of the Goenoeng Batoe Besar property so far as it is relevant is this: - It consisted of a “Concession” or lease granted by the Dutch Government for a term, of which in the year 1920 there still remained some sixty years unexpired. Its owners then were a Dutch Company, by name the Telok Pamoekan Company. In June or July 1920 that company contracted to sell the property to the Eastern Mining and Rubber Company, which is a company incorporated in the Straits Settlements and possessing a registered office at Singapore. This latter company, however, found itself unable to pay the purchase money—the vendors were pressing. It then decided to resell and employed brokers to find a purchaser. One of the brokers so employed was a certain Ng Hong Guan. This man was married to a niece of the wife of Dr. Lim Boon Keng, who was the chairman of directors of the Eastern Mining and Rubber Company. Hong Guan’s Debt. From the year 1913 onwards Ng Hong Guan had had business relations with the 2nd defendants, in the course of which he had become indebted to them in a sum of $6,000. On the 2nd September 1920 the 2nd defendants addressed to him a letter demanding payment. In consequence of this Ng Hong Guan, who ordinarily resided in Singapore, came to Kuala Lumpur and had an interview with the 1st defendant on 5th or 6th September. Either at that interview or at others which took place shortly afterwards he gave the first defendant information regarding Goenoeng Batoe Besar and the 1st defendant intimated that he would like to obtain an option to purchase that property. There is no doubt, I think, that Ng Hong Guan opened this matter to 1st defendant in his personal capacity, not as an officer or servant of the company. On the 27th September Ng Hong Guan brought 1st defendant an option dated the 25th September and signed by the managing director of the Eastern Mining and Rubber Company. It was addressed to Ng Hong Guan and offered him the alternative of a sale of the concession or of a right to work it on royalty. In either case one-half of the price was expressed to be payable in shares of the company at par. The period of the option was fourteen days only from the 25th September. It was what is termed a “free” option. This offer the 1st defendant at once rejected, because the period was much too short. He intimated also that the prices asked were too high. On the same day the 1st defendant wrote out and handed to Ng Hong Guan a document of which the following is a copy: - Malayan Collieries, Limited. Agents & Secretaries, J. A. Russell & Co. Kuala Lumpur, 27th September 1924. To whom it may concern. This is to authorise Mr. Ng Hong Guan to apply for options over coal properties in the Dutch East Indies. For Malayan Collieries, Ltd. J. A. Russell & Co. J. A. Russell Managing Agents & Secretaries. This document was admittedly given on behalf of the company. I shall refer to it hereinafter as “the Authority of the 27th September” On the same day the 1st defendant addressed a letter to Ng Hong Guan which I shall refer to hereinafter “as the letter of the 27th September.” It was written on the company’s note paper and the office copy was afterwards filed on the company’s correspondence file. The object of this letter was to create the impression that 1st defendant was not very anxious to obtain an option over Goenoeng Batoe Besar, but was willing to take one on favourable terms. The language of the letter admittedly suggests that the 1st defendant was negotiating on behalf of the company. He refers to an option which the company had secured over another property as one which “I” have just secured. He states that in developing that other property “we” should have to spend more money. He describes the company’s coal as “our” coal and concludes the letter with the remark that “we” should want an option for at least six months. After further interviews and correspondence Ng Hong Guan telegraphed on the 1st October, to 1st defendant, that he had fixed up the option. The 1st defendant replied on the same day both by telegram and letter confirming the arrangement. This letter is written on the company’s stationery. On the 3rd October, Ng Hong Guan came to Kuala Lumpur and brought with him an option dated the 1st October. This document is in his own name and is signed by the Managing director of the Eastern Mining and Rubber Company. It provides inter alia, that a deposit of $60,000 shall be made “as a deposit of good faith” in the Hongkong and Shanghai Bank “in the joint names of Mr. J. A. Russell and Messrs. Eastern Mining and Rubber Company, Limited,” and that a portion of the purchase money, that is to say the sum of $600,000 shall, if the option be exercised, be payable in shares of the Company at $30 per share. Portions of the document are ambiguously worded, and 1st defendant, although throughout the negotiations he had always insisted that the option must be a free one, states that he formed the opinion that this option was not free. Nevertheless, he took a transfer of the rights, whatever they were, from Ng Hong Guan and agreed that, in the event of the option being exercised, he would pay to him the sum of $100,000 in shares of the Company at $30 per share. Hong Guan’s Undertaking Ng Hong Guan on his part undertook to give to 1st defendant the benefit of any better terms which he might obtain from the Eastern Mining and Rubber Company. Partly in order to obtain an extension of the period of the option to six weeks and partly he alleges in order to determine the question whether it were or were not a free option, 1st defendant prepared a draft of a letter addressed to Hong Guan which he says he requested him to put before the Eastern Mining and Rubber Company for signature. A copy of this draft was admitted in evidence. There is not proof that the original was ever shown to the directors of that company. On the 4th October the 1st defendant out of his own monies placed the sum of $60,000 on deposit with the Hongkong and Shanghai Bank in the names of himself and the Eastern Mining and Rubber Company and caused the deposit receipt to be endorsed with the words “to be cashed by endorsement of J. A. Russell.” On the 6th October Ng Hong Guan again visited Kuala Lumpur. He then produced a new option over the same property dated the 5th October. This differs in several particulars from the option of the 1st October. It is sufficient at this stage to observe that the option period is increased to five weeks, that the provisions relating to the deposit, though expressed in other words, are still ambiguous and that the transaction is stated to be “subject to the approval of the shareholders.” The anticipated payment of part of the purchase money in shares is described as an “allotment” and the stipulation is made that the vendors shall have the right to nominate a director to serve on the board of the company. This second option was accepted in writing by the 1st defendant “with the exception of the clause relating to first obtaining the sanction of the shareholders.” On the same day, October 6th, 1st defendant handed to Ng Hong Guan the bank receipt for the $60,000 deposit. There is evidence that the directors of the Eastern Mining and Rubber Company or some of them, were under the impression that they were dealing not with the 2nd defendants, but with the company. There is also a letter written to them by their Solicitors, Messrs. Sisson and Delay, under date the 22nd November which contains these words: “The Malayan Collieries, Limited, provides….” The writer is there referring to the document of the 30th October. I will deal with the last point first. It is clear from the evidence of Dr. Lim Boon Keng that Ng Hong Guan, although the nominal option holder, was nothing more than a broker in this matter, or, as plaintiff’s counsel put it, merely a conduit pipe through which the negotiations passed. The directors of the Eastern Mining and Rubber Company must have known that they were dealing with a principal of some kind at Kuala Lumpur. If prior to the 1st October, the date on which the option was fixed, those directors believed that they were dealing with the company and not with the 2nd defendants, that belief, or rather the grounds upon which it was founded, would be relevant to the present issue. But I can find do definite evidence on the point. The two persons best qualified to speak on this subject are probably Ng Hong Guan and Poey Keng Seng, the managing director. But neither of them was called as a witness. Evidence of any such belief existing subsequent to the 1st October is, in my opinion, of no value, because a wrong inference may have been drawn from the mention of the company’s name in the options (this, indeed, appears to be the explanation of the phrase which I have quoted from the letter of Messrs. Sisson and Delay) or from the fact that it was the company and not the 2nd defendants who ultimately exercised the option. For this reason I think that the plaintiff’s case on this issue rests solely on the documents to which I have referred. The Option Documents. In considering the option document themselves, the first question that arises is why it is stipulated that part of the purchase money shall be payable in the form of shares of the Company? The explanation given by the 1st defendant is that, owing to his very large holding and to the obvious disadvantage of placing any considerable number of shares on the market, it was most important to him to have the right to pay in shares. I regard that explanation as reasonable. The options were drawn up by a board of Chinese gentlemen, acting personally and without professional advice. I am satisfied that the word “allotment” in the document of the 5th October is not used in a technical sense. I am also satisfied that the stipulation that the vendors shall have the right to nominate a director on the board of the company means no more than that the 1st defendant shall use his influence in the company to procure the appointment of a director nominated by the vendors. In my opinion then, the language of the options does not necessarily point to the conclusion that 1st defendant negotiated them on behalf of the company. The explanation which the 1st defendant gives of the authority of the 27th September is that it does not relate, and was not intended to relate, to Goenoeng Batoe Besar. He was at the time instructing Ng Hong Guan to make enquiries for other coal properties on behalf of the company, and had in mind, in particular, a property in Dutch Borneo known as “Tehweh.” The authority would serve to introduce Ng Hong Guan to persons having control of such properties. It is clear, I think, that this authority has no significance as far as the present issue is concerned, unless it was intended by 1st defendant to be used in respect of Goenoeng Batoe Besar. It is argued on behalf of 1st defendant that inasmuch as the parties were already in contact, as appears from the option of the 25th September, there was no necessity for Ng Hong Guan to have any such authority to show the Eastern Mining and Rubber Company, and that if an authority had been considered necessary, it would have been addressed to that company and it would have expressly mentioned Goenoeng Batoe Besar. There is much force in that argument. Moreover there is documentary evidence that 1st defendant did instruct Ng Hong Guan to make enquiry as to Tehweh. It is to be observed also that there is no evidence that the authority ever was shown to the directors of the Eastern Mining and Rubber Company. On the other hand, booth Dr. Lim Boon Keng and Tan Cheng Chew, the Secretary of that Company, declare that they never saw it. In my opinion it would be unsafe to infer that this document was intended to be used in respect of Goenoeng Batoe Besar and therefore no weight should be given to it in determining this issue. It is the letter of the 27th September which affords the main support to the Plaintiff’s plea. The facts that it was written on the Company’s stationery and that the copy was filed on the Company’s file do not seem to me to be in themselves of very great importance. A clerical error might account for the use of the paper and the heading of the paper might have determined on which file the copy was to be placed. The 1st defendant explains the language of the letter in this way, he says that his interests and those of the Company had been so long and so closely bound up together that he had become in a sense identified with the Company. People sometimes spoke of Batu Arang as his mine and he sometimes spoke of it in that way too. When therefore, he wrote this letter he expressed himself carelessly as he sometimes spoke, but with no intention of implying that he was writing on behalf of the Company. The following facts are in the 1st defendant’s favour. On the 17th September he, when writing to Mr. Henggeler, a director of the Company, in order to communicate certain unsatisfactory rumours regarding another property over which the Company was seeking to secure an option, made no mention of Goenoeng Batoe Besar. The negotiations with Ng Hong Guan were already in progress. If they were in fact being carried on for the benefit of the Company, it is strange that the letter is silent upon the matter. Another fact is that between the 29th September and the 2nd October, the 1st defendant despatched five telegrams in respect of Goenoeng Batoe Besar and in each case at once debited the cost against his own firm and not against the Company. It is argued, I think with truth, that it is most improbable that a man of business would pay out of his own pocket even small sums such as these, if they were properly chargeable to others. Finally the fact that the letter of the 1st October, addressed by the 1st defendant to Ng Hong Guan immediately after he had received the news that the option was fixed, is written on the Company’s stationery is much in 1st defendant’s favour. It was undoubtedly written on the 1st defendant’s own behalf. If there had been a fraudulent change of intention between the 27th September and the 1st October, 1st defendant would have been alert to suppress anything which might tend to show that he was acting for the Company and it is unlikely that he would have failed to notice that the letter in question, when brought to him for signature, had been typed on the Company’s paper; on the other hand, if there was no such change of intention between those dates, the letter of the 1st October deprives that of the 27th September of much of its apparent significance. My conclusion is that Plaintiff has not proved his allegation that the 2nd defendants began the negotiations for these options on behalf of the Company. It follows that the Plaintiff fails on the first issue. The second issue is whether the 1st defendant enabled Ng Hong Guan to obtain the options by utilising the name and authority of the Company and also by utilising the 1st defendant’s known position as Chairman and Director of the Company. This issue arises alternatively to the first, that is to say, the Plaintiff relies upon the same evidence as he adduced in support of his case on the first issue, and in particular upon the documents of the 27th September. It is, I think, a sufficient answer to Plaintiff that there is no evidence that these documents in any way influenced the minds of the directors of the Eastern Mining and Rubber Company, or, indeed, that they were ever seen by these directors. Nor is there any evidence that the 1st defendant’s position in the Company was ever taken into account by them. There was no previous dealing between the two companies to support any inference relevant to this issue. It was submitted on behalf of Plaintiff that the Eastern Mining and Rubber Company would prefer to sell to the company rather that to the 2nd defendants, because the latter would be likely to pass the property on, whereas the former would not. There is, of course, no evidence of such a preference. What did concern the Eastern Mining and Rubber Company was that the purchaser should be a substantial person who would fulfil his engagements promptly. It would require very little effort to ascertain that 1st defendant was a man of considerable financial resources. That information would probably satisfy them. I hold that plaintiff fails on this issue. I propose next to discuss two minor issues. The first of these is whether the $60,000 deposit required by the options of Oct. 1 and 5, was in either case, or in both, a deposit at risk. Those portions of the option of Oct. 1, which are material are as follows: - “Eastern Mining and Rubber Co. Ltd.” Singapore, 1st October, 1920. Option of Oct.1. Option to Mr. Ng Hong Guan on consideration that this $60,000 is placed in the joint names of Mr. J. A. Russell and Messrs. Eastern Mining and Rubber Company Limited. This cash is to be deposited in the Hong Kong and Shanghai Bank as a deposit of good faith, and after a fortnight after the arrival of the representative of the option holder at the mine at Goenoeng Batoe Besar. The said $60,000 must be paid to the Eastern Mining and Rubber Company Limited as option money for the exercise of the option to acquire the following rights: - d. The completion of this transaction is to take place two months after the exercise of option by the payment of the $60,000 as mentioned above. e. Should the option holder fail to complete the purchase within the time specified and time being in the essence of the contract, the said $60,000 should be forfeited to the Eastern Mining and Rubber Company Limited. The language of this document is obviously much confused. The words “on condition that” are contradicted by the words “after a fortnight.” It would appear that a portion of the first sentence of the second paragraph has been omitted. Contention of the Defence. Counsel for the defendants contends that in order to construe the second paragraph, the full stop following the word “Besar” should be deleted and the whole paragraph be converted into one sentence. The meaning he urges, is this: -The $60,000 was to be put up at once; “good faith” means that the 1st defendant was to have the opportunity of seeing if a mine existed and if there was some kind of title; fourteen days after the representative arrived at the mine the money was to go to the Eastern Mining and Rubber Company as option money and it would not be returnable; if the option were exercised, but there was a subsequent failure to complete, the $60,000 would be forfeited, because it would have ceased to be option money and become a deposit of part of the purchase money. Apart from the violence done to the punctuation, there are several objections to this construction. The words “good faith” cannot have the meaning suggested, because they undoubtedly refer to the good faith of the depositors, not of the Eastern Mining and Rubber Company. The object of this condition, I take it, was that 1st defendant should furnish proof that he had money at his disposal and meant business. Secondly, if the money was to become “option money” fourteen days after the representative arrived, there is no apparent reason why it should not have been treated as option money from the start. Thirdly, if the money did become option money and non-returnable, what sense would there be in changing it again into a forfeitable deposit? The suggested solution seems to me to be more involved than the problem itself! The fact that the words “on condition that” are in conflict with the words “after a fortnight…….” is not, I think, material to the point under discussion, because the ambiguity relates not only to the time when the deposit is to be made, but to the character of the transaction. The words “option money” are not used in their ordinary sense. This is shown by the words which immediately follow. The draftsman provides his own dictionary and defines “option money” as “money for the exercise of option.” My Construction. According to my construction, then, the $60,000 remains a deposit until the option holder has decided whether he will exercise the option or not. If he does exercise it, the deposit becomes a payment. On completion it is taken into account as part of the purchase money. On failure to complete, it is forfeited. If, on the other hand, the option is not exercised, the deposit never becomes a payment, but must be returned. This option was, as I have stated, replaced by the option of Oct. 5, the original deposit remaining. The material portions of the later option are as follows: - Option of Oct. 5. Eastern Mining and Rubber Company Limited. Singapore, Oct. 5. 1920. This option is given to Mr, Ng Hong Guan on condition that he deposits the sum of $60,000 in the joint names of Messrs J. A. Russell and Eastern Mining and Rubber Company Ltd., for the exercise of the option to acquire the following rights: - (d) The completion of this transaction is to take place two months after the exercise of the option by transferring the above mentioned $60,000 to the credit of Messrs. Eastern Mining and Rubber Company Ltd. (e) Should the option be exercised the sum of $60,000 shall be deducted from the price of the lease consideration, and should at the end of this further period of two months the option not be exercised the above-mentioned sum shall be forfeited. Here again the language is much confused, but this much at any rate is clear, the $60,000 remains a deposit until the option is exercised, when only it becomes transferrable to the Eastern Mining and Rubber Company. The second sentence of paragraph (e) is meaningless, because the period of two months does not begin to run until the option has been exercised. The intention probably was to provide for forfeiture in default of completion. But, however that may be, the only forfeiture contemplated is subsequent to the exercise of the option, or, if the second sentence of paragraph (e) be read literally, at the end of a period of two months after the free period has expired. In the meantime it is recoverable. For the reasons given I am of opinion that neither of the options required that the $60,000 should be a deposit at risk; in other words, these were free options. The other minor issue is whether an expedition fitted out by the Company for the purpose of examining another property was diverted by the 2nd defendants in their own interests to Goenoeng Batoe Besar. On the 31st August 1920 Mr. Henggeler received from a Mr. De Stoutz, who wrote from Sourabaya, a letter which referred to a previous conversation and set out terms on which the writer was prepared to sell a coal bearing property situated at Seboekoe in Dutch Borneo. A free option for the period of one month was offered, in order that the property might be inspected. At this time there were five directors of the Company, one was absent in England and another in China. The remaining three were 1st Defendant, Mr. Henggeler and Mr. Grant Mackie. It is doubtful whether Mr. Grant Mackie was consulted, but at any rate 1st defendant and Mr. Henggeler decided to try to obtain on behalf of the Company a free option for a longer period than one month over this property and if they were successful, to send Mr. England, who was the Company’s manager at Batu Arang, to inspect, to bore and to report upon it. The 2nd Defendants then entered into correspondence with Mr. de Stoutz. They obtained for the Company a free option for the period of two months, with a right to an extension on payment. This arrangement was concluded on the 22nd September. It was decided that the party which was to examine the property should consist of Mr. England, Mr. Brickman, who was an engineer employed by the company at Batu Arang and a gang of Chinese labourers. The party was to take with it boring tools: in particular, a diamond drill and accessories belonging to the company. Neither Mr. England nor Mr. Brickman had been long in the country, it was therefore arranged that a Mr. Hastings who was employed by the 2nd Defendants and could speak Chinese, should organise and accompany the expedition. On or about the 3rd October the 1st Defendant having obtained the first option over Goenoeng Batoe Besar intimated his intention of withdrawing Mr. Hastings from the Seboekoe expedition and sending him to Goenoeng Batoe Besar. Mr. England is said to have protested very vigorously. Both Seboekoe and Goenoeng Batoe Besar are situated on or near the south-west coast of Dutch Borneo, and are no great distance apart. A person travelling from Singapore to Seboekoe would ordinarily have to tranship once or twice before reaching the port of Kota Baroe and from there he would proceed in a steam launch or other vessel of small draught to Seboekoe. If, however, his destination were Goenoeng Batoe Besar, the same vessel which had brought him to Kota Baroe would probably continue her voyage as far as Pamoekan Bay, which is the port of Goenoeng Batoe Besar. There was therefore no reason why Mr. Hastings and the company’s expedition should not travel together so far as Kota Baroe. The Eastern Mining and Rubber Company had chartered a steamship by name the Nanyo Maru No. 1 for the purposes of the mine at Goenoeng Batoe Besar. The vessel was to sail from Singapore to Pamoekan Bay early in October, and it was arranged that Mr. Hastings should take passage in her: indeed, the option of the 5th October was to run from the date of her arrival. Sometime between the 29th September and the 4th October it was also arranged that she should take Mr. England and his party as well. The vessel sailed on 16th October; in addition to those I have mentioned there travelled in her a native demarcator and two Chinese kapalas, the latter of whom were sent on the expedition by Ho Man, who is a tin miner on a large scale. She called at Bandjermassin and at Kota Baroe and ultimately arrived at Pamoekan Bay on 25th October. At Kota Baroe the agent of Mr. de Stoutz went on board to meet Mr. England and his party who, he expected, would disembark. Mr. England, however, told him they were all going on to Goenoeng Batoe Besar, but that he would visit Seboekoe on the return journey. The story is that, having reached Goenoeng Batoe Besar, three separate investigations were undertaken, one by Mr. Hastings and the demarcator on behalf of the 2nd defendants, another by Mr. England and his party on behalf of the company and a third by the Chinese kapalas on behalf of Ho Man. The reason why the kapalas went on the expedition was because 1st defendant had told Ho Man that he would give him the opportunity of sharing in the venture, if the company refused to buy. The departure of the ship on her return journey was delayed for two days at Mr. England’s request. She actually sailed on 1st November but took in her only Mr. Hastings, Mr. England and the two kapalas. Mr. Brickman and the rest of the party remained behind to complete certain boring operations then in progress. A day or two earlier Mr. Hastings had sent a telegram by native boat to Kota Baroe to be despatched to 1st defendant. It was in these words, ”England and self expected arrive Singapore Saturday all satisfactory Hastings.” When the ship reached Kota Baroe the agent of Mr. England was going straight on to Singapore on urgent business. The party arrived at Singapore on 6th November and at Kuala Lumpur on the day following. Some days later Mr England wrote a report on Goenoeng Batoe Besar. It has been put in evidence. It is unsigned and possibly the whole of it has not been produced. The document, however, is sufficient to show that Mr. England made a careful investigation. On 19th November Mr. England received a telegram from Mr. Brickman stating that the bore had struck a seam nine feet thick at a depth of 49 feet. Mr. Brickman did visit Seboekoe on his return journey, but by that time the company had decided to take over Goenoeng Batoe Besar. It was not until 23rd November that the directors other than the 1st defendant knew that the Company’s servants had been to Goenoeng Batoe Besar and had not been to Seboekoe. Mr. Henggeler naturally asked Mr. England to explain. He stated that he had started with the intention of going to Seboekoe and had changed his plans, because on the journey he had heard good reports of Goenoeng Batoe Besar and bad ones of Seboekoe. In the course of his evidence, taken on commission in London, he declared that the 1st defendant did not know he was going to Goenoeng Batoe Besar: that, in fact, he had acted entirely on his own initiative. When asked how it was that in these circumstances he came to make an examination of the property, he replied that he took the opportunity “as any mining engineer would in the near vicinity of a neighbouring concession.” Mr. Hastings gave evidence at the trial. He first stated, ”It was arranged between me, Mr. Russell and Mr. England that the whole party should go to Goenoeng Batoe Besar in the Nanyo Maru and that Mr. England would inspect Goenoeng Batoe Besar. Apparently distressed at having let the truth out, he at once corrected himself and said that he was to see whether he could not tranship Mr. England at Kota Baroe for Seboekoe. It was left to his discretion. It was then put to him that in that case 1st defendant did not know whether Mr. England would be going to Goenoeng Batoe Besar or not. All he could answer was that he did not know. The version of the 1st defendant is that when the party started he understood that Mr. England would inspect Goenoeng Batoe Besar en route to Seboekoe. It was left to him how much examination he would make. When the 1st defendant received the telegram which Mr. Hastings sent from Kota Baroe and learnt that Mr. England was not going to Seboekoe at all, he was surprised. Now it must have been obvious to 1st defendant from the outset that, before his co-directors would consider the purchase of this property, they would require a report upon it by someone other than Mr. Hastings. The man in whose opinion they would (be) likely to place most confidence was their own Manager Mr. England, who had spent his life in practical coal-mining, I have no doubt, therefore, that 1st defendant definitely instructed Mr. England to go and make a careful examination of the property. If the result were satisfactory, it was necessary that Mr. England should return to Kuala Lumpur at once, in order that he might explain his views to the Board in person and in order that the matter might be considered and decided in sufficient time for the first defendant to make other arrangements, in the event of the board rejecting his offer. I have no doubt, again, that Mr. England received definite instructions in that sense. At the same time both Mr. Hastings and Mr. England were told to conduct themselves so that the expedition should appear to be a dual one. This is the reason why both of these gentlemen have had so much difficulty with the truth. The 1st defendant was not so surprised as he pretends when he received Mr. Hastings’ telegram. It is convenient here to refer to two other matters. The expedition brought back samples of coal from Goenoeng Batoe Besar. Some of these were analysed by the Municipal Analyst, Singapore, at the request of the 2nd defendants. In a circular letter to the shareholders, dated the 23rd December, 2nd defendants refer to these analyses as having been made for the company. The cost of them was paid for by the 2nd defendants out of the company’s funds. The other matter is this. Before the expeditions started cash advances to account of its expenses were drawn both from the funds of the Company and from those of the 2nd defendants. On April 2, 1921, the 2nd defendants repaid themselves out of the Company’s funds for the advance which they had made. The result was to debit the Company with the whole cost of the expedition, which, incidentally, included the salary of Mr. Hastings for one month. The repayment was by cheque for the sum of $1,850 signed by the 1st defendant. He declares that he signed it unconsciously, although he placed his initials on the butt of the cheque immediately below the words, “Refunding to J. A. Russell and Co. the amounts advanced on Borneo account to Hastings.” No explanation was given as to why the cheque came to be prepared in the first instance. In the year 1922 after plaintiff had begun his attacks on 1st defendant, the 2nd defendants repaid to the Company a portion of those expenses. On this minor issue, then, I find that the expedition fitted out by the Company to examine Seboekoe was diverted by the 2nd defendants in their own interests to Goenoeng Batoe Besar, and that in effect the one property was substituted for the other. This was done at the sole cost of the Company. I pass now to what I consider to be the principal issue in the case. It is whether, whatever the intention of the 2nd defendants may have been, they must be held to have acquired the options on behalf of the Company. The first question is whether the obtaining of the options was within the scope of the 2nd Defendants’ agency. There was neither written agreement nor minute of the Board defining the duties of 2nd defendants as the Company’s managing agents. In the circumstances these duties were, in my opinion, to pursue, subject to the control of the Board, the objects, both primary and subsidiary, for which the Company was established. The 2nd defendants constituted the active element of the Company. If there was anything to be done, it was for them, and no one else, to do it. If the Board came to a decision on a matter of policy, it was the duty of the 2nd defendant to give effect to that decision. Among the many diverse objects for which the Company was established is that of acquiring and dealing with options over land. From its inception until the latter part of the year 1920, a period of seven years, it had been no part of the policy of the Company to acquire any option over land. The Company’s energies were concentrated on the single purpose of developing the coal field at Batu Arang. During that time the 2nd defendants, with the knowledge and approval of the Board, carried on their own business. This included the obtaining of options over land. For the period of those seven years the obtaining of options on behalf of the Company was, I am convinced, not within the scope of the agency. In the year 1920, by reason of the fact that the Company’s coal was not a bunkering coal, the policy of the Board underwent a change. The Board formed the intention of acquiring a property which would produce a coal possessing the qualities which their own coal lacked. This was announced at the annual general meeting of the Company’s shareholders on October 15, 1920, the day preceding that on which the expedition for Goenoeng Batoe Besar left Singapore. The 1st defendant was in the chair and in the course of his address made the following remarks: - “It is probably the intention of your Board shortly to ask you to sanction an increase of the Company’s authorised capital from $2,000,000 to $4,000,000. It is not proposed immediately to issue any of this further capital, but your Board has under consideration the strengthening of the Company by the possible acquisitions of other properties. The Company’s representatives have inspected coal deposits in China, Siam and the Dutch Indies but hitherto with negative results. Two properties are now under examination which may prove as unsuitable as the one previously visited, but to be ready with the power to raise more capital in case a good property be obtained, we propose asking for the sanction I have mentioned.” The statements that coal deposits in China, Siam and the Dutch Indies had been inspected by the Company’s representatives is a gross exaggeration, but it is admitted that the “two properties” were Goenoeng Batoe Besar and Seboekoe. That the Board did in fact desire to acquire further property is evidenced by their instructions to 2nd defendants to secure an option over Seboekoe and by the action which they took to increase the Company’s capital. An extraordinary general meeting was held on Nov. 2 at which a resolution was passed to increase the capital to $4,000,000. The 1st defendant moved the resolution and contented himself with referring the shareholders to his speech of Oct. 15 for the reasons why the resolution was put forward. At a further extraordinary general meeting held soon afterwards this resolution was confirmed. Now, as I view the matter, when the office of Chairman of the Board is held by a partner in the firm of the Company’s Managing Agents, there is no need of any formal mandate by the Board, in order to bring acts necessary to give effect to the policy of the Board within the scope of the agency. In the present case, sometime in the year 1920 and certainly not later than the day on which the negotiation regarding Seboekoe began, it became the duty of the 1st defendant as Chairman to instruct himself as managing agent to endeavour to obtain options over coal-bearing properties suitable for the Company to acquire, and it became the duty of the 2nd defendants to receive those instructions and to act upon them. The 1st defendant might no doubt have gone through the routine of calling a meeting of the Board in order that a formal direction might be given to his firm, but it was not the practise of the Board to hold unnecessary meetings; there were, indeed, only four meetings between Sept. 1, 1919 and Sept. 21, 1920, inclusive. If he thought that a formal mandate was needed, it was his duty to see that one was given. But he did not think that one was needed. This is evident from the authority of Sept. 27 which I have already set out in full. This document was obviously and admittedly given on behalf of the Company. Some attempt was made to explain it away on the ground that it authorised Ng Hong Guan merely to apply for option, not obtain them. It is true, of course, that the authority of the sub-agent was limited to applying, but that does not warrant the inference that the authority of the agent himself was so limited. How could the Company acquire an option other than through the 2nd Defendants? They were the sole means whereby the policy of the Company could be carried out. I regard this authority of Sept. 27 as decisive upon the point now under consideration. I hold, then, that the acquiring of options over coal bearing properties was, subsequent to the 1st September, 1920, within the scope of the 2nd Defendants’ agency. But, it is argued, it was not within the authority of the 2nd Defendants to acquire such an option as this, because the sum of $60,000 was at risk and the 2nd Defendants were not empowered to pledge the Company to such an extent as that. They were not authorised, it is said, to acquire “blind” options. In anticipation of this argument I have given reasons why I think the options in question were not blind options. If I am right, there is an end of the matter. But, even if I am wrong, I doubt if the position of the 2nd defendants is bettered. From the outset of the negotiations 1st Defendant has insisted that only a free option would be of any use. I have no doubt that he, in spite of his evidence upon the point, believed that both the options were free. The actual deposit which he made was, by virtue of the endorsement upon it, never at risk. If, therefore, the question had been raised and it had been ultimately decided that these were blind options, the fact would still remain that the transaction had been carried through on his part at least on the understanding that these were free options and therefore as I have found, within the scope of the agency. I hold then that the acquiring of these particular options was within the scope of the 2nd Defendants’ agency. Ordinarily such a finding would involve as a necessary corollary, the further finding that the 2nd Defendants owed a duty to the Company to Refrain from Acquiring such options for themselves. It was contended, however, on their behalf that no such consequence follows in the present case, because, inasmuch as 2nd Defendants acted as Managing Agents or Secretaries to several other Companies and were permitted to carry on a business of their own as well, they were not whole time employees of the Company. Prima facie they were entitled to do what they like during the unemployed portion of their time, and that would be so, even if they were engaged for part of their time to negotiate contracts relating to coal concessions on behalf of the Company. I find myself quite unable to adopt that view. In practise it would be (im)possible to determine what was the “Unemployed” portion of their time. They were there, so to speak, to attend to the Company’s business at all times. Is it suggested that, if a broker brought an option into the 2nd Defendants’ office (which was also the office of the Company and several other Companies), it would be appropriated to the Company or to the 2nd Defendants according to the hour of the day? Or is it suggested that during the (un)employed portion of time they would employ broker A to find options for the Company and during the unemployed portion broker B to find options for themselves? Upon what principle would A be selected to work for the Company rather than B? Consider the facts of the case. The Company required a property of a certain type situated in the Dutch Indies. These territories are no doubt rich in coal properties of various types. Some of those properties have been alienated in the form of concessions by the Dutch Government. In 1923, the Dutch Government had decided to grant no more coal concessions as appears from a letter addressed on the 15th September 1920 by Mr. de Stoutz to 1st Defendant. The field in which search was to be made was, therefore, restricted to concessions already alienated and among them to properties of a certain type. Into this very limited field come the 2nd defendants on their own behalf and on behalf of the Company, and they proceed to employ one broker to act for both parties. They therefore deliberately placed themselves in a position in which their private interests were palpably in conflict with their duty to their principal. It is of course in order to obviate just such a situation as this that the rule exists which prohibits an agent whose duty it is to acquire property for his principal from acquiring it on his own behalf and reselling it to his principal. For these reasons I hold that the 2nd defendants were under a duty to refrain from acquiring these options for themselves. It follows that they must be deemed to have acquired them as agents for the Company and to have held them as trustees for the Company. If, however, I am wrong in these conclusions, there is still another aspect of the matter which must be considered. The 2nd defendants being the only agents whereby the Company ordinarily acted and knowing that the Company required a coal property of a certain type, obtained an option over a property of that very type with the intention of reselling to the Company. In pursuance of that object, the 1st Defendant represented to the shareholders at a general meeting that the properties, of which this property was admittedly one, were then under examination, implying that the examination was being conducted on behalf of the Company and implying that the Company was negotiating with strangers. Acting upon this representation the shareholders at subsequent meetings passed and confirmed a resolution which had the effect of doubling the Company’s authorised capital. At this time the 2nd Defendants well knew that the second property (Seboekoe) would almost certainly prove unsuitable. The increase of capital, from their point of view, was intended for the purchase of Goenoeng Batoe Besar and for nothing else. The 2nd Defendants, being under a special mandate to send a party consisting of the Company’s engineers and labourers and equipped with the Company’s tools to examine Seboekoe, in breach of their duty used their position as Agents to divert that party from its proper objective and caused it to examine and report upon the property over which they themselves held an option, to the exclusion of Seboekoe. All this was done at the Company’s sole cost: then the samples of coal which the party brought were analysed at the Company’s expense. The conduct of the 2nd Defendants in the matter of this episode was dishonest, unless they were acting as the Company’s Agents. Up to the 23rd November the 2nd Defendants concealed from the Board and from the shareholders alike the fact that they themselves were interested in the negotiations which they were conducting in respect of coal properties, and in particular they concealed from the Board that the expedition fitted out for Seboekoe had not been sent to that place. Concealing the Facts. Even after the sale of the 23rd November the 2nd defendants continued studiously to conceal the true facts from the shareholders and to pretend that they had acted throughout the transaction merely as the Company’s Agents, as the following extracts from a circular letter issued by the shareholders under date the 23rd December 1920 show: “We are instructed by your Board of Directors to say that you will no doubt remember that the Chairman at the last Annual General Meeting informed shareholders your Board had for the past three years been actively searching for and investigating other likely coal properties………………. “The Chairman added however, that your Board were at last engaged upon investigating a property of considerable promise, and it was therefore proposed to double the authorised capital of the Company, thus providing for the possibility of the deposit under examination being acquired. “We have now to announce that by Special Resolution the authorised capital of your Company has been duly increased to $4,000,000, a figure much in excess of any issue necessary to make in order to meet the amount required to acquire and finance the coal bearing property hereinafter referred to, and which we are now instructed to inform you, your Board has after full consideration, and as a result of favourable reports made, duly entered into an agreement, to purchase. “The mine which is known as the Batoe Besar Concession, is situated at Pamoekan Bay in Dutch Borneo, and has been thoroughly examined and reported on by Mr. B. England, your Colliery manager, who from surveys made and diamond drill holes sunk under his direction by Mr, Brickman, also of your Company, estimates the valuable coal in sight at 40,000,000 tons………. “A private analysis made for your Company on the moisture-expelled deal from this sum gives the calorific value as………… A second analysis made for your Company by the Government Analyst, Singapore, on the coal in its natural state gives its calorific value as……………..” The significance of the facts to which I have referred is this. The 2nd defendants, both by their words and conduct, affected to have acted in this transaction as the Company’s Agents and therefore, in my opinion, they cannot be heard in a Court of Equity to say that they acquired the options otherwise than as agents. On this ground, too, I find that the 2nd Defendants must be deemed to have held the options as trustees for the Company. (To be continued.)


Malay Mail, Wednesday, May 21st, 1924 THE COLLIERIES CASE (Concluded from Yesterday’s Issue.) The next issue which I propose to consider is whether, assuming that the rights evidenced by the options belonged both in law and in equity to the 2nd defendants, the 1st defendant and the 2nd defendants in breach of their duty, as a director and as managing agents of the Company, respectively, failed to make a sufficient disclosure of the circumstances of the transaction, wherein they sold those rights to the Company. About the 80,000 Shares. The price demanded for the property by the Eastern Mining and Rubber Company was $600,000 in cash, 20,000 of the Company’s shares and certain royalties. When Ng Hong Guan purported to transfer to the 1st Defendant the option of the 1st October, together with the benefit of any better terms which he might subsequently secure, he obtained as his consideration, in the event of the option being exercised, the promise of $100,000 in shares of the Company at $30 per share, or in other words, 3,333 shares. When the 1st Defendant decided to exercise the option he determined to offer the property to the Company at the price of $600,000 and 100,000 of the Company’s shares, plus the royalties. He was exceedingly anxious to conceal the profit which he expected to make and with that object had resort to the device of fictitious transfers. Accordingly on the 19th November Ng Hong Guan, at the instance of the 1st Defendant, purported to transfer the option of the 5th October to one Khoo Wee Chuan for the price therein mentioned, plus a profit of 4,000 shares. And on the same day Khoo Wee Chuan purported to transfer the same option to the 2nd defendants at the price at which he had bought plus a further profit of 76,000 shares. The difference between the price which the Eastern Mining and Rubber Company were receiving and that which the Company was to be asked to pay, namely, 80,000 shares, was thus falsely accounted for. Mr. Henggeler’s Inference. On the 23rd November when the 1st Defendant offered the property to the Company he made it clear that his firm were the only people interested in that which he was offering. He said that he had obtained an option over Goenoeng Batoe Besar and had given instructions to exercise it. Neither the options themselves nor the fictitious transfers were shown to the Board or even mentioned. They were at the time in the hands of the 2nd Defendants’ Solicitors in Singapore. Mr. Henggeler inferred that the option had been exercised and that it was the property, not merely an option, that was being offered to the Company. Particulars of the property were disclosed and Mr. England personally made a report. No mention was made of the profit which 2nd Defendants proposed to take. In effect the 1st Defendant said to the Board: “The thing which I offer to sell to you belongs to my firm and to no one else. We are sole vendors. Our price is so much. Take it or leave it. If you don’t take it we shall keep it.” On Disclosure. There are two questions involved here in respect both of the 1st and of the 2nd Defendants, namely whether there was a sufficient disclosure and whether the disclosure was rightly made to the Board and not to the shareholders. To take the case of the 1st Defendant, that is to say, as director, the special disability which rests upon persons so situated is thus stated by Jessel M.R. in Albion Steel and Wire Co. v. Martin (L.R.1 Ch. D at 595). “Whether you look upon a director as a trustee or as an agent he cannot take the benefit of a contract entered into between himself and the Company, because he is not to make a profit in the case where he is both buyer and seller.” But it is competent to a Company to remove this disability by including in its articles a stipulation to the effect. In the present case there is an article, No. 92, which is designed to enable directors to contract with the Company. The material portions of it are as follows: - “92. No Director……..shall be disqualified by his office from contracting with the Company…….as vendor……by reason only of such Director holding that office, or of the fiduciary relation thereby established; provided always that each Director shall forthwith disclose the nature of his interest in any contract……..in which he is interested and shall not vote in respect of such contract……..A general notice that a Director is a member of any specified firm……..and is to be regarded as interested on any transaction with such firm……shall be sufficient disclosure under this article, and after such a general notice it shall not be necessary to give any special notice relating to any particular transaction with such firm…..as aforesaid.” It is contended by Plaintiff that, inasmuch as this article does not specify as to whom the disclosure is to be made, it must be made in accordance with general legal principles, and these require that it should be made to the general body of shareholders. In support of this contention he cited General Exchange Bank v. Horner (L. R. 9 E9. 480) and In re Oxford Benefit Building and Investment Society (L. B. 35 Ch. D 502). Both of these authorities however, deal with the liability of a Board of Directors as a whole and therefore are easily to be distinguished from the present case. Further, the following passage from Gore Browne’s Hand Book on Joint Share Companies (27th ed. 117) is against the Plaintiff: - “At Common law a director could not take a secret profit from his Company; but if there were independent directors, disclosure to them was a sufficient disclosure to the Company.” On the other hand it is submitted on behalf of the defendants that the language of the article itself implies that the disclosure is to be made to the Board. The words “forthwith disclose,” it is said, are totally inappropriate, if they are intended to refer to a general meeting of the company. It would be rare that there would be such a meeting, because articles 119 and 120 provide for the making of contracts without general meetings. Such a construction would involve a serious diminution of the powers of the Board. Moreover, the disclosure and the voting apply to the same class of meeting. But there is no legal principle to prevent an interested director from voting at a general meeting. If, therefore, Plaintiff’s contention is correct, this article which is clearly intended to increase and not to restrict the liberty of the director, would indirectly deprive him of an important common law right. The True Construction. I am satisfied that the construction suggested by the defendants is the true one. I hold that the independent directors were the proper persons to receive on behalf of the company a disclosure made under the article. Upon the second question, whether the disclosure was sufficient, plaintiff argues that the words “the nature of his interest” must be constructed to include the amount of his profit. He relies principally upon Dunne v. English (L. R. 18 E9 524) and Imperial Mercantile Credit Association v. Coleman (L R. 6 H. B. 189). In the former case the defendant, being the agent for the sale of property belonging to a partnership of which he himself was a member, purported to sell to himself and others. A sale in such circumstances involved a duty on the part of the agent to make the fullest disclosure, but a disclosure merely to the nature of his interest. That case, I think, is not really in point. The latter case, however, is. There the defendant who was a stock broker by business and a director of the plaintiff association had entered into an arrangement with another firm to “place” the debentures of a railway company for a commission of 5 per cent. He subsequently, without mentioning this arrangement but merely declaring that he had an interest in the transaction, agreed with his co-directors that the association should undertake to place the debentures at a commission of 1 ½ per cent. Among the articles of the association was one which corresponds to some extent to article 92 in the present case; it required a director contracting with the association to “declare his interest,” But did not include, as article 92 does, provision as to what should be sufficient disclosure. It was held that “declare his interest” meant declare the nature of his interest, that he had failed to do that and must account to the association for his profits. In that case I do not think it was possible for defendant to have stated accurately the nature of his interest without at the same time disclosing his profits. However that may be, the judgements, as I read them, do not go to the length of holding that defendant’s duty extended to the disclosure of profits. The following two sentences taken from the judgement of Lord Cairns support that view: - “His interest might be anything from the absolute ownership of the property sold, down to a right of a nominal charge on or payment out of it. “The interest therefore, of Mr. Coleman, according to his own view, might have been a 50 per cent., 40 per cent., 30 per cent. or any amount of interest in the property in question.” I infer from these extracts that the opinion of Lord Cairns was that if a director selling to his company could truthfully state “I am the absolute owner” or “the amount of my interest in the property is 100 per cent.” that would be a sufficient disclosure of the nature of his interest. For these reasons I do not think that the authorities cited by plaintiff establish his proposition. Article 92. But the matter does not rest there. The final sentence of article 92 provides that a general notice that a director is a member of any specified firm and is to be regarded as interested in any transaction with such firm will be sufficient disclosure. It is not disputed that the company had general notice that 1st defendant was a member of the 2nd defendant firm and was interested in all the transactions of that firm. It would seem therefore, that the article itself furnishes a complete reply to the plaintiff upon this point. Plaintiff, however, retorts that, if the mere giving of the notice is sufficient, the earlier provision as to the “nature of his interest” will be nullified. The answer to that, I think, is that the object of the final sentence of the article is to lighten the duty where the director is interested simply as a member of a firm, leaving it unaffected where he is contracting individually. The earlier clause is to that extent modified, it is not nullified. For these reasons I hold generally that the case of the 1st defendant is covered by the article, but that if it be not so covered, nevertheless the disclosure which he made was sufficient in the circumstances of the case. The position of the 2nd defendants in respect of the questions now under consideration is widely different from that of the 1st defendant. Whereas the company has a right to the advice of every director upon matters which come before the Board, it has no such right in the case of the 2nd defendants. The functions of the 2nd defendants are executive, not advisory. The managing agents were, nominally at any rate, under the Board’s control. If, then, the obtaining of options on behalf of the company was outside the scope of the agency, I cannot see that 2nd defendants owed any general duty to the company in respect of this particular matter, provided as Kekewch. J. put it in Williamson r. Hike (1891 1 Ch. D 390), the transaction was fair and above board. There was nothing in the immediate circumstances of the sale which was not fair and above board. In my view, therefore, it was not the duty of the 2nd defendants to disclose to the company the price at which they had agreed to purchase. It was strongly urged on behalf of the plaintiff that the 2nd defendants stood in a fiduciary relationship to the company and owed to it the special duty which such a situation involves. But, great as was the confidence reposed in them, and wide their powers, I am of opinion that no such relationship in fact existed. Obligations as to Disclosure. If, however, the plaintiff’s contention is right, the obligation as to disclosure which rested on 2nd defendants was that which is thus expressed by Jessel M.R. in Emma Silver Mining Co. v. Grant (L.R. 11 Ch. D. at 937). The moment a man is in a fiduciary position, however that fiduciary may arise, before he can retain a profit to himself he must deal with his principal on the footing of making a full and fair disclosure of everything material in relation to the dealing or transaction in which he acts in a fiduciary capacity. The question as to what things are material in relation to any transaction must depend upon the nature of the transaction. In the simple case of vendor and purchaser it is of course necessary that the vendor shall make it clear that he is dealing in that capacity, so that the purchaser may understand that the parties are at arm’s length. Secondly, it is necessary that the vendor shall withhold no information touching the property itself which might affect the purchaser’s judgement in that matter. But I know of no authority which declares that the purchaser is entitled to be informed of the profit which the vendor expects to make. On principle I should regard such information as not material. The purchaser is to be put into a position in which he has a perfectly fair opportunity of exercising his own judgement. He cannot claim the benefit of the vendor’s skills. In the present case there is no suggestion that any material information as to the property itself was withheld. The principal source of information for both parties was Mr. England, the company’s own manager. That the 2nd defendants were the vendors was abundantly clear. That they intended to take a profit was obvious. The price which the Eastern Mining and Rubber Co. were prepared to take might have been dictated by the necessities of their financial position, and so formed no true guide to the property’s value. How could it then be material? I am satisfied that the 2nd defendants sufficiently fulfilled their duty in the matter of disclosure even on the footing on which plaintiff has put it. Further, inasmuch as they were in a position subordinate to the Board, I am of the opinion that the disclosure was properly made to the Board and not to the shareholders in general meeting. Relying upon an entry appearing in the minute book of the Board, plaintiff pleads that the 1st defendant represented to the directors on the 23rd November that the fictitious transfers of the 19th November were genuine and bona fide transactions. The evidence of Mr. Henggeler proves that this entry is misleading and that no such misrepresentation in fact occurred. It is unnecessary to discuss the plea further. But a somewhat similar plea was put forward in the closing stages of the case. It is based on the evidence of Mr. Henggeler, who said that at the Board meeting of the 23rd November he inferred from statements made by 1st defendant that the company was buying a property not an option. The 1st defendant did not specifically say that the option had been exercised, but he spoke of keeping the property for himself. Counsel for plaintiff contended that this amounted to misrepresentation on the part of 1st defendant. I am quite unable to take that view. There was perhaps some misunderstanding as to the subject matter of the sale, but I cannot see that the company was prejudiced. In my opinion the plaintiff establishes no claim to a relief on this plea. To sum up this part of the case, I find that, assuming the rights evidenced by the options belonged both in law and equity to 2nd defendants, the plaintiff has failed to establish that, in the sale of those rights to the company on the 23rd November, there was on the part of the 1st or 2nd defendants either misrepresentation or material nondisclosure. Defence Issues. I pass now to consider issues raised by the defence. It is contended that, granted the 2nd defendants were trustees of the options for the company, plaintiff is precluded from maintaining this suit, unless he can establish one of two things: either that it would be ultra vires the company to condone this transaction, or that 2nd defendants owned or controlled the majority of the shares at the date of the beginning of the suit. The law applicable to this part of the case is thus stated Burland v. Earle (L.R. 1902 A.C. at 91): - “It is an elementary principle of the law relating to joint stock companies that the court will not interfere with the internal management of companies acting within their powers, and in fact has no jurisdiction to do so. Again, it is clear law that in order to redress a wrong done to the company or to recover moneys or damages alleged to be due to the company, the action should prima facie be brought by the company itself. These cardinal principles are laid down in the wellknown cases of Foss v. Harbottle and Mosley v. Alston, and in numerous later cases which it is unnecessary to cite. But an exception is made to the second rule, where the persons against whom the relief is sought themselves hold and control the majority of shares in the company, and will not permit an action to be brought in the name of the company. In that case the courts allow the shareholders complaining to bring an action in their own names. This, however, is mere matter of procedure in order to give a remedy for a wrong which would otherwise escape redress, and it is obvious that in such an action the plaintiffs cannot have a larger right to relief than the company itself would have if it were plaintiff, and cannot complain of acts which are valid if done with the approval of the majority of the shareholders, or are capable of being confirmed by the majority. The cases in which the minority can maintain such an action are therefore confined to those in which the acts complained of are of a fraudulent character or beyond the powers of the company. A familiar example is where the majority are endeavouring directly or indirectly to appropriate to themselves, money, property or advantages which belong to the company, or in which the other shareholders are entitled to participate, as was allowed in the case of Menier v. Hooper’s Telegraph Works.” The passage was cited with approval in Dominion Cotton Mills Company Limited v. Amyot (L. R. 1912 A.C. 546) where their lordships also stated: - The principles applicable to cases where a dissentient minority of shareholders in a company seeks redress against the action of the majority of their associates are well settled. Indeed, they were not contested at the Bar. In order to succeed it is incumbent on the minority either to show that the action of the majority is ultra vires or to prove that the majority have abused their powers and are depriving the minority of their rights. In neither of these cases was it established that the act complained of was fraudulent or ultra vires or that the majority had abused their rights. In Brown v. British Abrasive Wheel Co. (1919 1 Ch. 290) the defendant company was in financial difficulties and required further capital to avoid liquidation. A majority consisting of 93 per cent of the shareholders were prepared to make further contribution, but the 2 per cent minority were not. The majority desired to alter the company’s articles in order that they might have the power to expropriate the minority. They were ready to adopt any method of assessing the fair value of the minority’s interest. It was held that, although the proposed alterations of the articles were ultra vires the company, they would be oppressive to the minority and ought not to be permitted. In that case there was no suggestion of fraud or bad faith. The minority were to receive full compensation. It cannot be justly said that the majority intended to benefit themselves at the expense of the minority. To apply these principles to the present case, the first question is, was the act complained of beyond the powers of the company…… …….That is to say, was the act of the 2nd defendants in taking a secret profit one which the whole body of shareholders could not condone, even though each individual shareholder might desire to condone it? The plaintiff argues that it was such an act. He maintains that the company has no power to allow its servants to take the assets of the company and keep them. In support of this proposition he cited Cockburn v. Newbridge Sanitary Steam Laundry Co (1915. 11r.R. 237). Unfortunately no report of that case is to be procured in this country. It is referred to in Melus Digest (1911-15 Col. 252) where the facts are they summarised: “The managing director of a limited company carrying on a laundry business entered into contracts for laundry work in his own name, on behalf of the company, with a customer. The work was done by the company, and the director received the amounts due under the contracts and paid over a portion to the company, but did not account for the amounts received by him. This was in consequence of an alleged arrangement with his co-directors that he was not to account for profits. The company declined to call upon the director for an account, whereupon two shareholders brought an action against the company and the directors, held that the transaction was illegal and ultra vires and the action was maintainable.” This case is also cited in Stiebel’s Company Law and Precendents’ as authority for the proposition that “a company cannot condone defalcations and allow the guilty party to keep the money he has taken.” If that is a fair description of the act, it would seem that the act was criminal in character. At any rate in the absence of a full report, it is impossible to place reliance upon that authority. On the other hand, Clarkson v. Davies (L. R. 1923 A.C. 100) is against the plaintiff. In that case there was a sale of all the assets of one company to another company. At the same time the sum of $30,000 was paid by the latter company to the directors of the former company. The transaction was not disclosed to the former company or to the shareholders of either company. The $30,00 was of course, in equity, the property of the latter company, as in the present case the options were the property of the company, but it was held that the transaction was not ultra vires, and if the facts had been disclosed to the shareholders of either company they would have been entitled to approve of the payment. On principle it is difficult to understand why the company should not have power to permit the 2nd defendants to retain their profits. The company might hold the view that the 2nd defendants had rendered very valuable services to it in procuring the options and might be desirous of rewarding those services by granting a special remuneration, even to the extent of the whole of those profits. In my view then, it was not beyond the powers of the company as a whole to condone the act. Secondly was the act “of a fraudulent character” within the meaning of the judgement in Burland v. Earle? It was, per se, no doubt, of a fraudulent character, but fraud does not of itself preclude a majority of the shareholders from condoning. Many authorities might be cited in support of that proposition. It is sufficient to remark that Foss v. Harbottle was a case of fraud. On the other hand, the example given of a majority appropriating to themselves the property of the company is expressly stated to be merely an example and is clearly not intended to cover all the possible cases. The present case does not fall within that example. Can it be held to fall within the exception at all? No case has been cited to me which establishes or from which I can infer, that this particular type of fraud is not condonable by a majority. On principle I should incline to the view that it is, because to overlook the taking by a director or by a firm of secretaries of secret profits, particularly if it were on a small scale, might not unreasonably be regarded as a matter of internal management. I do not, however, propose to discuss that point further, because I think the real issue on this part of the case is not so much whether the act per se was fraudulent, but whether to condone it would be, on the words of the judgement in Dominion Cotton Mills Co., Ltd., “depriving the minority of their rights.” The immediate and direct consequence of the transaction was to increase the number of the company’s issued shares from 230,000 to 310,000 that is to say, by more than one-third. This extensive watering of the capital necessarily involved a serious and permanent diminution of every shareholder’s interest. Its effect was that of a capital levy. Has a majority power to compel a minority to acquiesce in an exaction of that kind? Granted that a majority may condone a fraud upon the company, granted that in principle they may make a present to a director of his secret profits, even of a very substantial sum, still their powers in this respect must have some limit. There must be a point, difficult no doubt in some cases to determine but none the less existent where, by reason of the magnitude of the transaction, to condone the fraud would be to oppress the minority. That point has, in my opinion, been passed by a long way in this case. Condonation here would, in my estimation, be a far more oppressive act than that which the majority contemplated in Brown v. British Abrasive Wheel Co. For these reasons I hold that this case is within the exceptions to Foss v. Harbottle and that Plaintiff is entitled to maintain this action. Entitled to Sue. Assuming that the views which I have just expressed are wrong, plaintiff may nevertheless sue in his own name, if he can prove either that at the time when the action was begun the 2nd defendants held or controlled the majority of the voting power of the company, or that, before the action was brought voting in fact took place in which the votes of the 2nd defendant turned the scale, so as to convert an independent majority against them into a minority. Before plaintiff was permitted to institute this suit, it was necessary for him to obtain an order granting him permission to sue on behalf of others besides himself. He obtained that order on the 23rd August, 1922. He presented the plaint to the Registrar on the 15th September, 1922. It was accepted and thereupon the suit became instituted. At that date the 2nd defendants held or controlled 126,644 votes out of a total number of 310,000. That of course did not constitute a majority. Plaintiff, is therefore, compelled to bring his case, if possible, under the second of the above alternatives. It was at the ordinary general meeting of the company held on the 4th May, 1922 that plaintiff opened his attack on the 1st defendant. He moved an adjournment of the meeting but the motion was defeated. Subsequently he addressed himself to certain of the independent directors, but obtained no satisfaction. Correspondence ensued in the public press. Ultimately by notice dated the 19th July the Board convened an extra-ordinary general meeting for the 16th August for the purpose of considering and, if thought desirable, passing a resolution that the charges against the 1st and 2nd defendants should be referred to three referees who were named ”for enquiry and report as to whether further steps should be taken.” On the 4th August plaintiff, through his solicitors, addressed a letter to the company’s secretaries stating that he desired to propose at the meeting a substantive resolution, the terms of which he set out. It was to the effect that the meeting approved of the action which he had begun, or was about to begin, against the defendants and authorised the directors to cause the company to be joined as a plaintiff in the action. Owing to the intervention of public holidays this letter arrived too late to enable the seven days clear notice of the proposed resolution to be given to the shareholders as prescribed by the company’s articles. At the meeting of the 16th August Mr. Henggeler took the chair. He referred to the resolution which plaintiff desired should be put to the meeting and explained the reason why it could not be put. He added, “the proper course for those in favour of the resolution referred to in Messrs. Sisson and Delay’s letter is to vote against the resolution upon the agenda. If they are successful in defeating it, ample facilities will be afforded, after proper notice, of putting forward Mr. Peck’s resolution. The resolution upon the agenda was put and carried by 157,834 against 82,512. Of the votes cast for the majority 126,644 were owned or controlled by the 2nd defendants. If these had not been cast, the resolution would have been defeated by 82,512 to 31,190. Before the meeting, plaintiff had deposited with the company proxies for 82,156 votes. Of these 537 were rejected by the chairman, leaving 81,619 at the plaintiff’s disposal. If plaintiff’s resolution could have been put, then eliminating all other votes cast against the resolution on the agenda, and of course the votes controlled by the 2nd defendants, the majority in favour of plaintiff’s resolution would have been at least 81,619 as against 31,546. The question is whether these facts are sufficient to give plaintiff a status to sue. It is contended for the defence that the proceedings at the meeting of the 16th August were inconclusive, because the only resolution put to the meeting was whether the Referees should or should not be appointed. To that it is answered that in effect the Chairman put before the meeting a choice between appointing Referees and taking part as plaintiff in the action. So far as the actual voting is concerned, I think the defendants’ contention is correct, because a vote cast for the resolution on the agenda would not necessarily be a vote cast for plaintiff’s resolution had it been put. But the fact that plaintiff had at his disposal 81,619 unchallenged proxies puts it beyond all question that had this resolution been put, it would have been carried by a majority approaching three to one, if the votes controlled by the 2nd defendants had not been used to turn the scale. In my opinion, there was on the 16th August, 1922, an independent majority in favour of joining the company as plaintiff in this action. I find then, that on this ground also plaintiff is entitled to maintain this action. I have now dealt with all the issues which I think material, except that which relates to the relief which the company is entitled. At the request of Counsel on both sides that issue has been reserved for further argument. I, therefore, conclude my judgment at this point. There will be no order as to costs until the remaining issue has been determined. Sd. Malayan Collieries, Ltd. H, Whitley Judicial Commissioner F.M.S. Kuala Lumpur, 15th May, 1924.


The Malayan Saturday Post. May 24, 1924. The Collieries Judgment. “Who wins?” was a headline befitting the impatiently awaited judgment in the Malayan Collieries case. It is a duty incumbent upon judges to state their findings in a clear fashion which can be comprehended by the man-in–the-street. Yet in this instance even trained lawyers were considerably mystified. The upshot of it all appears to be, however, that Mr. Peck has won on the most important points at issue and Mr. Russell is under the painful necessity of disgorging. The obvious comment is: “Three cheers for Peck!” he has valiantly fought a difficult and expensive battle, and has earned in Malaya the renown that the notorious Bottomley won in England- that of being “ the greatest lay lawyer in the country”. Let us hasten to add that in no other respect do we see the slightest resemblance between the characteristics of “F.C.” and the mercurial Horatio. A Cause Celebre. We do not claim to be competent to discuss the legal issues. Nor, in view of the fact that certain important matters remain to be resolved, has the time yet come to comment on the judgment as a whole. It may just be said that the case now concluded is one of the greatest in the annals of the Malayan Courts, and it may be that its effects will be far-reaching in a sense that no other case has been. Leading counsel on both sides achieved noteworthy feats. The judge was to be sympathised with in the almost appalling task that confronted him. 0. The public have read every word of the reports of the proceedings, and some of them have had a little “flutter” in the Collieries shares on the strength of the conclusions so formed. It has been a very diverting entertainment, apart form its serious aspects. Anyone is to be thanked who introduces a little variety and excitement into this dull life which we lead in Malaya- which some of us would not change for the life anywhere else. Hence Messrs Peck and Russell have almost earned a public reception, at which they would- of course- shake hands and vow eternal friendship. One development we entreat them to spare us- lecture tours in which, at three dollars admission fee, they would tell us, and take about a couple of hours to do it, “ How I won” and ‘why I lost” respectively. We prefer our bridge or snooker pool.

Malayan Tin and Rubber Journal Vol. XIII No. 10, 31 May 1924, p. 629-631 Selangor Miners’ Association. The Annual Report. Protest Against Increased Rates and Charges. (Summary: Report for year ended Dec 31 1923, tin slump, appeal to members for extra subs, draft labour code affecting miners, control of tin prices to stop them going down, contracts with coolies, new land enactment, increased government charges on exports and imports, new railway tariff, charges on mining land, forfeiture of leases, price of tin, cost of production, rice, labour, workmen’s compensation. General outlook, “ Visits to the mines. - Visits to the Malayan Collieries together with its Match Factory, the Rawang Tin Ltd., and Yukon Gold Company’s Mines Ampang, were arranged by the F.M.S. Chamber of Mines, and the members, who visited these mines, enjoyed it immensely and came away much impressed with the up to date machinery and the hospitality of their hosts” (Summary cont. Visit to H.M.S. Hood and Repulse. Membership, meetings presidency.)

Malay Mail, Monday, June 2nd, 1924 PECK V. RUSSELL The Form of the Decree LENGTHY ARGUMENTS BEFORE MR. JUSTICE WHITLEY. Mr. R. St. J. Braddell, with Mr. Hastings for the plaintiff, the Hon. Mr. G. S. Carver, with Mr. Joaquim for the first and second defendants and Mr. F. B. Ivens for the third defendant company in this case again appeared before Mr. Justice Whitley in Kuala Lumpur on Saturday and argued several points in connection with the form of the decree to which the plaintiff is entitled under the findings of his lordship’s judgement which was delivered recently. Mr. Braddell said that he and Mr. Carver had in Singapore got together the framework of the decree proposed by them, which at that moment, of course, did not bind either of them but which would facilitate the arguments which they proposed to address (to) his lordship, and which he hoped would not be very long. This draft decree he had submitted to the company’s lawyers and certain alterations required by them had been made to which he had no objection at all. He handed a copy of this draft to his lordship. The first declaration in the decree he said endeavoured to give effect to the first part of his lordship’s judgment which was that the 3rd defendant company was on the 5th October, 1920, and at all material dates thereafter owners of the option of Oct. 5. That was what they all understood from his lordship’s judgment and he hoped he was right. His lordship agreed. Mr. Braddell continued that the second declaration was that the third defendant company is accordingly entitled to the return by the first and second defendants jointly and severally of 80,000 fully paid shares in the third defendant company. On this point, counsel said, that the number of shares would have to be adjusted in accordance with what he expected to be the only argument before his lordship that morning. Mr. Carver suggested to Mr. Braddell that each declaration should be taken separately. Mr. Braddell agreed and went back to the first declaration which in the original draft read as follows: - Declaration that the third defendant company was on the 23rd day of November, 1920, the owner of the option of 5th October, 1920, in the pleadings in this suit mentioned. Mr. Carver pointed out that the date had been altered now from Nov. 23 to Oct. 5. He suggested that the original date should be adhered to. His lordship pointed out that the words “at all material dates” covered the date of Nov. 23 because it came after Oct. 5. Mr. Carver agreed and the first declaration was adopted. The Requisite Order. Mr. Braddell said that the remaining declarations should be taken together because if one figure was to be altered all the others would have to be altered. That figure of 80,000 was the object of the argument. Paragraph 3 of the decree, counsel proceeded, dealt with the order and was as follows: - Order that the first and second defendants do surrender to the third defendant company the following shares now registered in the name of themselves or their nominees, that is to say: - (a) 3,518 in the name of Khoo Wee Chuan. (b) 8,000 in the name of Poey Yek Teck. (c) 8,000 in the name of Poey Yew Bee. (d) 6,500 in the name of Lim Gee Soo (e) 1,500 in the name of Yeo Boon Hap (f) 500 in the name of Lim Low Neo (g) 12,000 in the name of Tan Hong (h) 15,000 in the name of Tan Hoe Soon (i) 3,000 in the name of John Archibald Russell and do execute or cause to be executed such necessary transfers thereof as may be required by the third defendant company. Referring to the first part of this paragraph Mr. Braddell said that the original word used was return but the company’s solicitors had suggested surrender and he wished to know whether Mr. Carver had any objection to that. Mr. Carver said that he had no objection but mentioned the fact that the company could not acquire its own shares. Mr. Ivens said that he preferred the word “forfeited” because if those shares were forfeited to the company they could be dealt with as the company wished, either reissued or distributed in the shape of bonus shares or application could be made to court to have them cancelled so that the capital of the company could be reduced by that amount. His lordship enquired whether Mr. Ivens contended that there was a difference between “surrendered” and “forfeited”. Mr. Ivens replied in the affirmative. He added that if the shares were forfeited then it would facilitate matters considerably. Mr. Carver thought the proper thing to do was to keep the shares in such a position where the company could get at them. Mr. Braddell liked the word “surrender” or “return.” It was quite clear that these shares must go back to the company and it was then for the company to deal with them. It would entail a special resolution or an application to the court for an order. Personally he liked the word “return” but he did not like the word “forfeiture.” His lordship said he liked the word “surrender” himself but whatever word was used the company would have to take some action. Mr. Ivens pointed out that there might be some difficulty with regard to certain shares which were not in Mr. Russell’s own name. He could see some difficulty with regard to those shares. But if they were forfeited to the company then that would be done by order of the court. The 57,518 shares. Eventually it was agreed to leave the word “surrender” in the text. Continuing to refer to the rest of paragraph 3, Mr. Braddell said that a correction had to be made to the number of shares in (i) which would be 2,500 and not 3,000 and the total would thus be 57,518 shares and not 58,018. Mr. Carver said counsel, had a comment to make under that, namely, that saving words should be included making it clear that Mr. Russell is not directed to deal with shares which are not within his power. Mr. Braddell said that Mr. Russell had admitted that he owned all these shares. Therefore Russell could execute these transfers or cause them to be executed. As to the shares under (a) held by Khoo Wee Chuan, Mr. Russell stated in the witness box that he had received the dividends on those shares. There was nothing to prevent his lordship making an order to execute these transfers. He contended that all necessary transfers as might be required by the third defendant company should be executed. Mr. Carver said that so far as Khoo Wee Chuan’s shares were concerned he could not obviously execute a transfer. If his lordship made an order asking him to execute transfers as might be required by the third defendant, then they might ask him to sign Khoo Wee Chuan’s name to a transfer. He was quite willing to try his best to get Khoo Wee Chuan to sign a transfer. It was quite possible that Khoo Wee Chuan might refuse, at any rate as regards the 500 shares which Mr. Russell said he promised to Khoo Wee Chuan. As regards the other shares Mr. Russell had already told them that they were nominee shares. They had already been deposited with the company and they were quite secure. It seemed rather a peculiar thing if the court could order Mr. Russell to sign these people’s names to the transfers. Mr. Braddell said that nobody asked Mr. Carver to do anything of the kind. The words “execute a transfer or cause to be executed” referred to the shares in (a). As regards the other shares it would entail an application to the court to rectify the register. Nobody asked Mr. Carver to transfer those shares. Mr. Carver suggested the words “to execute, cause to be executed, or so far as he is able cause to be executed.” His lordship: Having reverence to Khoo Wee Chuan’s shares only? Mr. Carver: With reference to the whole of the (a) shares. His lordship: The transfer of the shares from (b) to (h) is not asked for. Mr. Carver: Then those words are applicable only to the shares under (a) and (i). Mr. Braddell suggested the word “proper” to be used before the word “transfer”. Some Difficulty. Mr. Ivens said that it was owing to this difficulty that he suggested the word “forfeiture.” His lordship asked whether he could order the cancellation of any shares at all. Mr. Ivens remarked that what was required was not cancellation but forfeiture and there was a big difference between the two. His lordship remarked that he saw no difficulty with regard to Mr. Russell’s shares but he saw some difficulty with regard to Khoo Wee Chuan’s shares. Mr. Carver said that the trouble was that Khoo Wee Chuan was not here. He suggested that his lordship should say that as between the parties certain of these shares were to be returned to the company. His lordship said that he wished, if possible, to avoid any further reference to the court on this point. Mr. Carver said that they had the scrip of the shares under discussion. Mr. Braddell asked then what the difficulty was with regard to his words. If Mr. Carver wished, he had no objection to adding the words, “or as ordered by the court.” Mr. Carver suggested adding the words “so far as he was able.” His lordship said that they could not leave the order so vague. If there was any difficulty in the matter they must come to court. Mr. Carver then suggested that the words to be added should be, “or in case of dispute as may be ordered by the court.” This was agreed to. The Claim for Damages. Mr. Braddell next went on to paragraph 4 of the decree which was as follows: - Order that the first and second defendants do jointly and severally return to the third defendant company 21,982 fully paid shares in the third defendant company or in lieu thereof do pay to the third defendant company damages at the rate of £21.50 per share together with interest at the rate of 8 per cent. per annum from the 1st February, 1921. Mr. Braddell said that they did not want that now. He had had a discussion with the company’s solicitors and they did not ask for that. What the company’s solicitors asked for was the return of the shares. They would much prefer to get back the shares, but if the shares could not be got then they wanted payment at the market rate ruling today. It did not want interest. That was a reasonable request for the company’s solicitors to make and he supported it. Originally they asked for damages and interest. If they could not agree in court as to what the market price was they might have to refer it to the registrar. They might well take the middle price between Fraser and Co.’s buying and selling price yesterday. Mr. Carver said that what the company really wanted was not damages but the shares. These 80,000 shares were issued in order to get this concession, but the company did not want such a large number of shares out and they did not want to go on paying dividends on them. He submitted that the logical result of his lordship’s findings on the facts was that the first and second defendants would return the 80,000 shares to the company and not cash in lieu thereof. If any shares could not be returned, either because they are hypothecated or for some other reason, then obviously the company was entitled to payment at the current market value. At any rate they were entitled to the present market price and not to $21.50, otherwise the court would be sanctioning a breach of trust. He thought it should be left to Mr. Russell to say whether he would prefer to return the shares or pay cash for them. His lordship said that there must be something definite in the order. Mr. Braddell said that they need not worry about the hypothecation of any shares because in the case of such shares the company had a prior lien on them. The Market Price. Mr. Carver said that the plaintiff set out his measure of damages at $21.50 per share. The defendants did not in any way challenge that. That was the price of the shares when the case started. Since then there had been considerable speculation in the shares and they had run up on hearing what his lordship’s judgement was going to be. The present market price was due to the speculative element. Counsel submitted that the originally pleaded figure of $21.50 should remain. The plaintiff was bound by his pleadings. Mr. Braddell on the question of pleadings, quoted an authority to show that even after the final judgment there was room for an order to be made to amend the pleadings with reference to the measure of damages. His plaint was drawn up in July 1922. Now Russell was solemnly claiming to make a profit of $5 per share on what the court had held was a breach of trust. His lordship: I am of the opinion that this is covered by the pleadings and I do not think it is necessary to have any amendment. Mr. Braddell suggested the amendment of paragraph 4 as follows: - Or in lieu thereof pay to the third defendant company damages at the marker rate ruling on the 30th day of May. 1924. He enquired whether Mr. Carver would accept the middle price in Messrs. Fraser and Co.’s list of that date. The Measure of Damages. Mr. Carver said that accepting his lordship’s ruling the damages should be based on the true value of the shares, not necessarily the market rate. The market rate might or might not have some relation to the true value of the shares. His lordship said that they could take the evidence of actual transactions. Mr. Carver said that it would only indicate what the public thought. His lordship asked whether that was not the market price. Mr. Carver said that normally the public estimation of the shares would be a true indication of their value. In any case this suggestion was an entirely new one. He could not say what his client would say and he would have to put the suggestion to him. But if the suggestion was that he should commit himself to some market price, that was a thing which he could not do without instructions from his client. He suggested that an enquiry should be made as to the value of the shares. His lordship said that the measure of damages would be the market price. Mr. Carver submitted that it need not necessarily be so. His lordship asked Mr. Carver what alternative he would suggest. Mr. Carver suggested an enquiry into the value of the shares. His lordship said that perhaps it would be better to leave the point for further consideration. It seemed to him impossible to avoid a further inquiry. They did not know how many shares could be surrendered. It was agreed to leave paragraph 4 for further argument to-day. Mr. Braddell next dealt with paragraph 5 which read as follows: - Order that the first and second defendants do jointly and severally refund to the third defendant company all dividends paid upon all shares returned by them under this decree together with interest at the rate of 8 per cent. per annum on such dividends from date of their payment to date of refund. Mr. Braddell said that the company would be entitled to all the dividends paid on these 80,000 shares. If the capital had not been raised the shareholders would have got the extra dividends. During the course of the argument on this point Mr. Braddell remarked that if they stuck to the value of the shares at $21.50, charged eight per cent. interest and made the defendants return all the dividends, then they might be able to refrain from a reference to the registrar. Plaintiff’s disbursements The next point considered was the question of costs, the paragraph 6 dealing with it being as follows: - Order that the first and second defendants do jointly and severally (do) pay the taxed costs of the plaintiff and the third defendant company including the costs of the commissions directed to London, Amoy and Soerabaya, and doth direct that upon such taxation the plaintiff shall be allowed for two counsel at the hearing of this action and shall also be allowed his disbursements in going to, staying at, and returning from Amoy and Soerabaya. His lordship remarked that there was a commission directed to Singapore too and Mr. Braddell amended the paragraph including Singapore after Soerabaya in the first part of the paragraph. Mr. Carver agreed to this clause. Paragraph 7 of the decree was then discussed. It read in the draft as follows: - Declaration that the plaintiff has a lien or charge over all the shares and moneys recovered by the third defendant company under this decree for the reimbursement to him of the expenses, disbursements and costs of himself, his solicitors, counsel and agents properly incurred in and about this suit. Mr. Braddell said that the ordinary position of affairs would be for the plaintiff to receive the ultimate benefit of what was recovered to the company. In this case they were asking for the court to hand over everything to the company whom Mr. Peck fought to recover what was due to him. Mr. Ivens suggested certain alterations to the paragraph which as finally drafted read as follows: - Declaration that the plaintiff is entitled to the reimbursement to him of expenses, disbursements and cost as between solicitor and client of himself, his solicitors, counsel and agents properly incurred in and about this suit, and order that sum when ascertained be paid by the third defendant company. His lordship asked whether it was the usual practice to make the defendant pay the costs of the plaintiff. Mr. Ivens said that that was not to recover costs but of disbursements. This clause of the decree as altered was agreed to. Hong Guan’s Services. Mr. Braddell said that next they came to the claim by the first and second defendants to deduct from the 80,000 shares 8,000 shares. He submitted that they were entitled to no deduction whatsoever. If they were entitled to any deduction at all it would only be such amount as the court considered reasonable remuneration for Hong Guan’s services. Even accepting the arrangement, which was alleged to have been made, counsel submitted that they could not deduct 8,000 shares but only 3,333 shares. Counsel wished to remind his lordship of the findings in the judgment with regard to Hong Guan as counsel understood them. They were as follows: - (1) That Hong Guan was the broker of the vendor company; (2) That Hong Guan was broker of Russell: Counsel submitted that, although not actually stated the effect of these findings was that Hong Guan was never employed on behalf of the third defendant company. If Hong Guan had been employed on behalf of the third defendant company then they would have succeeded on the first issue. Usually a broker was entitled to his commission from the vendor. If a broker had nothing in writing and he claimed commission he could only claim from the vendor. Where he acted for both the vendor and purchaser he could only get half the commission from each party. Hong Guan had never claimed any brokerage from the third defendant company. His claim for brokerage was against the Eastern Mining and Rubber Co. So far as Russell was concerned he did not claim any commission because he alleged that he was not Russell’s broker but his partner in the transaction. Mr. Braddell then discussed the only two authorities on the point, both of which were promoter cases where the court had allowed the promoters to deduct legitimate and bona fide expenses which they had incurred in the course of the promotions. In this case Russell never gave anything out of his pocket. He used Hong Guan as a tool to get the option intending to sell it to the company. The arrangement which Russell made with Hong Guan was an arrangement for the purpose of a breach of trust. Hong Guan was employed for Russell’s purposes and not for the purposes of the company. The utmost which he was therefore entitled to deduct would be such amount as the court held was reasonable remuneration for Hong Guan. But counsel contended that he was entitled to nothing. Mr. Carver said that although Hong Guan was in a sense a broker he was not a broker in the ordinary sense of the term. He was in a position to pass on this property himself. There was no doubt that a broker in such a special position dealing with commodities such as coal mines expected to make big profits. He asked his lordship to hold that the arrangement of Oct. 3 contained nothing more than a perfectly normal arrangement which Mr. Russell made with Hong Guan in order to secure this option. Mr. Russell had explained why he had to give the larger consideration to Hong Guan. If he had not increased Hong Guan’s remuneration Hong Guan might have gone away and taken other action. He submitted what Mr. Russell actually did was prima facie evidence that it was necessary. He therefore asked his lordship to hold that the whole of the 8.000 shares should be deducted from the 80,000 shares. Surrendered Rights. There was a further matter which he wished to bring before his lordship. If his lordship looked at page 103 of exhibit B 2 of the case his lordship would recollect that after long correspondence an arrangement was made under paragraph 1, of which Mr. Russell gave out the right to subscribe for certain shares at $16 per share to the Eastern Mining and Rubber Co. That latter company it would (be) remembered claimed for rights and bonus shares. The rights were in respect of 4,000 shares and Mr. Russell gave up those rights. Counsel suggested that in the money part of the judgment Mr. Russell should be credited with those 4,000 shares at $16 per share. His lordship inquired whether there would be any money judgement at all if Mr. Russell returned the shares. Mr. Braddell said that if there was a money judgment Russell would only be entitled to the value of rights which he surrendered. That would avoid any complicated deduction of shares. They were in that case in the extraordinary position where a director for his own purposes entered into a lot of transaction unknown to the company at all. It was a difficult position and they had to face it. So far as these rights were concerned he submitted that there was no need to give out any rights at all to these people. The contract was quite clear. His lordship asked Mr. Braddell whether his point was that there was no evidence that he gave away any rights at all. Mr. Braddell said that on the other hand Russell had stated that neither morally nor legally was the E.M.R.C. entitled to any rights. With regard to the other point Mr. Carver could not get away from the fact that Russell obtained this option on Oct. 3 for 100,000 Malayan Collieries shares at $30 per share. Not only had he pleaded that as a genuine transaction but he even went to the trouble of getting the document stamped after paying a fine. Counsel submitted that there should be no deduction at all from the 80,000 shares, but if his lordship gave him an allowance at all it should be a cash allowance. If Russell got credit for the shares then they were going to have this trouble about the dividends. No company in the world would agree to increase its capital to pay its broker. As far as the company was concerned there was no benefit, as far as Russell was concerned there was a benefit. Russell had stated in the box that he had a big holding in Malayan Collieries shares and that as far as he was concerned it paid him to pay in shares. They could not take into account what he did in breach of his duty. His lordship said that they would have to meet again on Monday on this point too. Stay of Execution. Mr. Carver said then there was the question of stay. Mr. Braddell said that as far as the judgement was concerned Mr. Carver was not entitled to ask for any stay. His lordship said that there would have to be an order for the retention of the shares now held. There would have to be an order to the company not to pay dividends in respect of those shares. Before he made his application regarding the stay of execution Mr. Carver asked his lordship to have the market rate, which was suggested, cut out and also the date 30th May suggested by Mr. Braddell, because that was a date after his lordship’s judgment. His lordship said he had not yet completed his judgement. Mr. Carver said that a definite date should be fixed and that should be a date before the trial began. Mr. Carver next applied for stay of execution of the decree. It was still in the air, he said, how much Mr. Russell would be asked to pay in cash. If he had to produce large sums in cash he should be given time to do so. If the court decided to grant time the court would require some form of security, but the matter was within his lordship’s discretion. Counsel was not at that moment in a position to place before his lordship a scheme for securing any money judgement that might be passed, but he asked his lordship to grant such reasonable time as would enable the scheme to be examined. His lordship said that all this would be avoided if the shares could be returned and the money part of the judgment would then be comparatively small. Mr. Carver said that at that moment he was speaking in the dark. His lordship said that there should be some good reason for not giving back the shares. He asked Mr. Carver whether there was any reason. Mr. Carver said that the reason might be that he had not them, excepting the shares which were in the name of the first and second defendants. He asked his lordship to grant stay of execution and time for putting forward a scheme for the money part of that judgement. Mr. Braddell said that he admired the courage of that application but he contended that no stay should be granted except under exceptional circumstances. Mr. Carver came to court and said that he did not know his client’s position and asked his lordship time to put forward some sort of scheme which the registrar was to examine. Russell did not take the trouble to come to court and instruct his counsel. They were certain of one thing. So far as the shares were concerned the company would undertake to hold those shares. So far as the money was concerned that money should be paid within a reasonable time, say within 14 days or whatever the period in practice in the F.M.S. was, to the company. This man was a defaulting trustee, said counsel, and such persons could expect no sympathy from this court at all. If he wished to appeal he could, but that was another matter. Counsel submitted that the usual order be made, namely judgement to the successful litigant and upon that the court might grant a stay of execution afterwards, meaning thereby that money could not be distributed pending appeal or further order. On behalf of Mr. Hastings and himself he would give an undertaking to return the whole of the costs. Mr. Ivens gave a similar undertaking on behalf of the company. Mr. Braddell said that the first defendant had ample time to put his house in order. He must have thought that he might lose the action, and he never heard of such an application as the one that had just been made. Further argument was then adjourned till 11 a.m. to-day. Judge’s order on Wednesday. Mr. Justice Whitley heard this morning further argument, with a view to clearing up certain points which were held over. Mr. Joaquim, for first and second defendants, gave the number of shares that could be delivered at 61,162 shares. His lordship intimated that unless Mr. Joaquim could make it easy for the court immediately, he would not be disposed to grant a stay of execution. At the request of Mr. Hastings for the plaintiff, and Mr. Ivens for the third defendant company, Mr. Joaquim gave an undertaking on behalf of first and second defendants that they would not deal in any way with the shares they had, nor register any transfers already executed. His lordship will give his written order at 10.30 a.m. on Wednesday.

The Straits Times, 2 June 1924, Page 8 On Other Pages, Malayan Collieries Proceedings 9

The Straits Times, 2 June 1924, Page 9 Malayan Collieries. Counsel Argue Question Of Relief. (From Our Own Correspondent). Kuala Lumpur, June 1

Malay Mail, Wednesday, June 4th, 1924 PECK V. RUSSELL Question of the Decree DELIVERY OF SHARES Mr. Justice Whitley heard further argument in this case on Monday. Mr. Hastings appeared for the plaintiff, Mr. Joaquim for the first and second defendants, and Mr. Ivens for the third defendant. His lordship remarked that certain points in Clauses 4 and 5 of the draft decree had been reserved. Mr. Joaquim, referring to Clause 4, said that they did not come armed with the necessary information on the previous occasion because they did not know that the information would be required. Clause 4 as it stood appeared to be sufficient. He had now got the information. Taking the headings on paragraph 3 of the draft, counsel pointed out that there were 3,518 shares in the name of Khoo Wee Chuan. The defendants had the scrip but not the transfers. There were 280 shares in the name of J. A. Russell and Co., which did not appear in that list but which were free and unencumbered. With regard to paragraph 3 (i) the number of shares originally put down was 3,000, later altered to 2,500. The total number of shares registered in the name of J. A. Russell, the first defendant, was, 8,778. Of these shares 2,914 had been mortgaged or pledged, that is to say the share certificates had been handed over with transfers and mortgage deeds had been executed. The first defendant was not in a position to deliver these shares. They were not in his possession and he did not think it would be easy to secure possession of them. The position then was that there were the shares in the name of the nominees delivered to Messrs. Bannon and Bailey, there were 3,518 shares in the name of Khoo Wee Chuan of which they might or might not get a transfer. They had asked for a transfer of these shares and did not anticipate any trouble in getting them. Then there were 280 shares in the name of J. A. Russell and Co. and 5,864 in the name of J. A. Russell which he could deliver. The total number of these shares was 61,162. Question of Stay. His lordship: Have you got anything to add on the question of stay? Mr. Carver said that he would like to have time to prepare a scheme. I do not think I can agree to that suggestion at all. Mr. Joaquim said that the difficulty with which he was faced was this. His client had assets which might not have the ordinary face value. He could bring them to the court if that would be of any use. His lordship said that there would probably have to be an inquiry as to the price, although he thought that the price might be agreed upon. His lordship’s present difficulty was that in so far as shares could not be delivered damages would have to be paid in a sum to be ascertained by the Registrar, and that sum would have to be deposited with the company. His lordship did not see why the defendant should have the use of this large sum of money for perhaps a year. Mr. Joaquim said that the payment of the money by the defendant could not benefit the company so long as that money was secured. Of that money part might be capital and part profit. In any case the company could not use the money. What was capital could not be distributed until the case was settled, nor could anything be done with what was profit. They could only put the money in the bank and they could not be prejudiced if security was deposited. His lordship said that he did not want to be harsh to the defendants in any way, but he must have something definite. Pressed for Time. Mr. Joaquim said that supposing he gave his lordship a list of the properties that would not help the court. What he thought Mr. Carver asked was that the question of security should be decided by the Registrar. They could then put the matter before the Registrar at some length. His lordship would see that they had been somewhat pressed for time in that matter. His lordship could not see how they had been pressed for time. They asked for an indulgence and unless they were prepared to make it easy for his lordship he was not prepared to saddle the Registrar with a decision in the matter. His lordship added that he himself ought to decide it. He did not know whether the company’s solicitors were prepared to meet Mr. Joaquim in the matter in any way. If they were not his lordship did not think he would be in a position to grant any indulgence. Mr. Joaquim said that he was not in a position at that stage to put up any definite scheme before his lordship. He did not think that a scheme could be prepared in less than two or three days. His lordship pointed out that after his judgment was delivered it would have been obvious what number of shares the defendants would have to deliver. He did not think more than a few days would have been necessary to prepare something definite to put before the court. Mr. Joaquim said he had nothing more to urge. Mr. Ivens then stated briefly the position of the company in the matter as stated on the previous occasion. His lordship said that what he intended to do was to put into writing what he had to say and give his order on Wednesday dealing with all the points raised. Two Undertakings. Mr. Hastings pointed out to his lordship that the second defendants were still the managing agents of the company and he wished to have an undertaking from Mr. Joaquim on behalf of his client that none of the shares standing in the name of J. A. Russell and Co. or J. A. Russell would be dealt with. His lordship: With the exception of those shares which are pledged. Mr. Hastings wished all the shares to remain as they were. His lordship did not see how he could bind them. Mr. Hastings said that all he asked was an undertaking that there would be no dealings in these shares. His lordship asked what Mr. Joaquim had to say. Mr. Joaquim said that he could give this undertaking, that his clients would not dispose of any shares that were now in their possession or deal with them in any way. There had never been any such intention on their part. There were those shares which had been pledged in respect of which he was not certain whether transfers had been executed. He could advise his clients not to execute any transfers but for any transfers which had already been executed he could not, of course, take any responsibility. Mr. Ivens wished to have a further undertaking from Mr. Joaquim. He referred to Article 28 of the Articles of Association of Malayan Collieries Ltd., which reads as follows: - The company shall have a first and paramount lien upon all the shares registered in the name of each member (whether solely or jointly with others) for his debts, liabilities and engagements solely or jointly with any other person to or with the company whether the period for the payment fulfilment or discharge thereof shall have actually arrived or not, and such lien shall extend to all dividends from time to time declared on such shares unless otherwise agreed. The registration of a transfer of such shares shall operate as a waiver of the company’s lien, if any, on such shares. Mr. Ivens wished to have an undertaking that the defendants would not register any transfers. As the company’s solicitor he could, of course, direct the secretaries but he could not control them. Mr. Hastings supported that application. Mr. Joaquim said that it appeared to him quite unnecessary to give an undertaking of that kind but if his lordship desired one he would do so. His lordship could not see any difficulty in giving such an undertaking and requested Mr. Joaquin to do so. Mr. Joaquim gave an undertaking on behalf of his clients that they would not register any transfers in respect of the shares in dispute. The court than adjourned until 10.30 a.m. to-day. SUPPLEMENTARY JUDGMENT. Company entitled to 76,667 shares The 1st and 2nd defendants were ordered to refund to the company all dividends paid upon the 76,667 shares, plus 8 per cent per annum from the date of payment to the date of refund. The defendants were also ordered to pay all taxed costs, including the costs of all Commissions, the plaintiff being allowed two counsel, and being also entitled to his disbursements. His lordship also made an order for an unconditional stay for a period of 14 days from to-day. On Mr. Hasting’s motion his lordship added the following order: “I order further that during the stay 1st and 2nd defendants are not to be permitted to record votes at the meetings of the company in respect of the shares deposited by them with the company under this order.” In conclusion his lordship said: There will be an unconditional stay for the period of 14 days from to-day. If within that period notice of appeal be given the stay will be continued until the determination of the appeal or until the further order of this court, provided one or other of the two conditions are fulfilled.

The Straits Times, 4 June 1924, Page 9
 Malayan Collieries. Judge's Finding as To Compensation. (From Our Own Correspondent.) Kuala Lumpur, June 4.

Malay Mail, Thursday, June 5th, 1924, and The Straits Times, 5 June 1924, Page 9 MALAYAN COLLIERIES. Court's Findings Regarding Compensation. Full Text of Judgment. (From Our Own Correspondent.) Kuala Lumpur, June 4. RUSSELL JUDGMENT CONCLUDED 76,667 Shares to be returned. FULL COSTS FOR PLAINTIFF The following is the text of Mr. Justice Whitley’s supplementary judgment In the Peck v. Russell case, which was delivered yesterday: - In the course of the judgment which I delivered in this case on the 15th May, 1924, I stated that the issue as to the relief to which the company is entitled was, at the request of counsel, reserved for further argument. I have now heard such further argument and proceed in this additional judgment to set out particulars of the relief which I decree. In the first place, there will be a declaration that the company was on the 5th day of October, 1920, and at all material dates thereafter, the owner of the option of the 5th day of October 1920. It follows that the company is entitled to recover from the 1st and 2nd defendants the difference between the price received by the Eastern Mining and Rubber company for the Goenoeng Batoe Besar property and the price paid by the company for it, less the expenses properly incurred by the 1st and 2nd defendants in acquiring it. That difference was 80,000 fully-paid shares of the company. The question then, is what deduction if any, is to be allowed on account of expenses? Hong Guan’s Commission. It is argued on behalf of the 1st and 2nd defendants that the whole of the commission given to Ng Hong Guan, that is to say, 8.000 shares should be deducted. On the other hand, counsel for the plaintiff maintain that, inasmuch as the company was the purchaser, Ng Hong Guan had no claim upon it for commission; that if he had, then the amount of it ought not to exceed the figure originally arranged between him and the 1st defendant, namely $100,000 in shares of the company at $30 per share; and that, in any case, the remuneration, if any, should be assessed in money, not in shares of the company. Now, on the evidence I must take it that the whole of the 8.000 shares were given to Ng Hong Guan for his own benefit and in respect of this transaction only. The first option which he brought was altogether unacceptable. In the subsequent negotiations it was in his power to render the defendant valuable service, notably by procuring a long free option period, it was also in his power to cause the negotiations to break down, if he was dissatisfied with the manner in which the 1st defendant was dealing with him. In a transaction of this character I think it reasonable and proper that the purchaser should pay commission to the intermediary. That the 1st defendant found it necessary is sufficiently evident from his conduct. The services for which he promised to pay the sum of $100,000 in shares of the company at $30 a share, that is to say, 3,333 shares were not merely the acquisition of the option of the 1st October, 1920, but included also the obtaining of any better terms which the Eastern Mining and Rubber Co. might be persuaded to grant. They covered therefore, the acquisition of the option of the 5th October, 1920. So that when he raised the figure to 8,000 shares he was simply making a present to Ng Hong Guan of the excess over 3,333 shares. For these reasons I am of the opinion that although the 1st and 2nd defendants are entitled to claim a deduction on account of commission paid to Ng Hong Guan, that deduction must be Limited to 3,333 Shares. It is certainly handsome remuneration, but in all the circumstances I do not regard it as unreasonably high. I do not attach much importance to the contention that the commission ought to be assessed in money rather than in shares because operations of this magnitude are ordinarily financed by the issue of new shares and it seems to me to be immaterial whether such new shares are issued direct to the persons who render such services or to other persons whose subscriptions are to be are to be appropriated to payment for those services. Commission on such a transaction as this is properly chargeable to capital. It is claimed also on behalf of the 1st and 2nd defendants that a deduction should be made to the extent of 4,000 shares which they transferred to the Eastern Mining and Rubber Company over and above the 20,000 shares which formed part of the consideration paid upon the sale of the property. The company had granted to the shareholders the right to take up new shares at $16 per share, limited in the case of each shareholder to one share for every five held by him. This right came into existence subsequent to the exercise of the option. The Eastern Mining and Rubber Co. claimed the right in respect of the 20,000 shares. The 1st defendant took legal advice and was informed that the Eastern Mining and Rubber Co. had no good claim in law, nevertheless he transferred to it 4,000 shares of his own. I am of the opinion that, since the 1st and 2nd defendants did not transfer these shares in discharge of any legal obligation resting either upon the company or themselves, they cannot be given credit for them in their account with the company. My conclusion, then, upon this point is that the only deduction which can be allowed from the 80,000 shares is the 3,333 originally agreed to be given to Hong Guan. Company gets 76,667 Shares. There will be a declaration that the company is entitled to the return by the 1st and 2nd defendants jointly and severally of 76,667 shares of the company. There are 51,500 shares which the 2nd defendants have caused to have registered in fictitious names, as follows: - 8,000 in the name of Poey Yew Teck 8,000 in the name of Poey Yew Bee 6,500 in the name of Lim Gee Soo 1,500 in the name of Yeo Boon Hap 500 in the name of Lim Low Hee 12,000 in the name of Tan Hong 15,000 in the name of Tan Bee Soon. The certificates of these 51,000 shares have already by order of the court, been deposited with the company’s solicitors. In addition there are 3,518 registered in the name of Khoo Wee Chuan, who admittedly is the 1st defendant’s nominee. Counsel for the 1st and 2nd defendants states that in all probability Khoo Wee Chuan, who of course is not a party to these proceedings, will execute such transfers of these shares as the 1st defendant may direct. Unencumbered Shares. Counsel for the1st and 2nd defendants further states that there are in all 8,778 shares standing in the name of the 1st defendant but 2,914 have been pledged and so are not at the 1st defendant’s disposal. Deducting them, there remain 3,864 unencumbered. There are also in the name of the 2nd defendants 280 which are unencumbered. Omitting, then, the shares which have been pledged, there are in all 61,162 which the 1st and 2nd defendants are apparently in a position to return. It is ordered, therefore, that the 1st and 2nd defendants do surrender these 61,162 shares to the company and do execute or cause to be executed such proper transfers or other instruments in respect of them as may be required by the company or, in case of dispute, as may be directed by the court, so that effect may be give to this order. Deducting these 61,162 shares from the total to the return of which I have declared the company to be entitled, there remain 15,505, still to be accounted for. It is ordered that the 1st and 2nd defendants do jointly and severally surrender to the company further shares to the number of 15,505, or, in the event of the surrender of any of the aforesaid 61,162 shares being beyond their control, then such further shares as will with those surrendered under the preceding order make up the full number of 76,667. Measure of Damages. In default of the surrender of any of the 15,505 shares last mentioned, or any portion of them, or in default of the surrender of any of the aforesaid 61,162 shares for any reason beyond the control of the 1st and 2nd defendants, damages shall be paid to the company by the 1st and 2nd defendants jointly and severally. The question as to the measure of such damages has occasioned me no little difficulty. I am satisfied that the current market rate is not the proper measure, because the price of the shares has lately advanced in the market in a manner which leaves no doubt in my mind that the appreciation is due in part, if not entirely, to the anticipation of an order similar to that upon which I am now engaged. I have decided for this reason to adopt a suggestion made by counsel for the 1st and 2nd defendants and to direct that the damages be calculated at the market price ruling on the first day of the trail, that is to say the 17th March, 1924. If the parties cannot agree as to what that price was, there must be an enquiry before the Registrar to determine it. It is ordered that for every share directed to be surrendered which is not surrendered damages shall be paid by the 1st and 2nd defendants jointly and severally to the company calculated at the rate which I have indicated. Damages under this order will bear interest at the rate of 8 per cent per annum from to-day until payment. Dividends to be Refunded. It is further ordered that the 1st and 2nd defendants do jointly and severally refund to the company all dividends paid upon the 76,667 shares to the return of which the company is hereinbefore declared to be entitled, together with interest at the rate of 8 per cent per annum from the date of payment to the date of refund. It is further ordered that the 1st and 2nd defendants jointly and severally do pay the taxed costs of the plaintiff and the company, including the costs of the commissions directed to London, Singapore, Amoy and Sourabaya. Upon such taxation the plaintiff shall be allowed for two counsel at the hearing of this action and shall also be allowed his disbursements in going to, staying at and returning from Amoy and Sourabaya. Lastly, there will be a declaration that the plaintiff is entitled to reimbursed by the company for his expenses, disbursements and costs, as between solicitor and client, of himself, his solicitors, counsel and agents properly incurred in and about this suit. Defendants’ Undertaking. Counsel for the 1st and 2nd defendants, in order to avoid an injunction, has given on their behalf an undertaking that pending the further order of the court none of the shares in their possession will be transferred or dealt with in any manner, that no transfer of any shares owned by them, but not in their possession, will be executed, and that, as the company’s secretaries, they will not register any transfer of the shares registered in the name of either of them. Counsel for the 1st and 2nd defendants have applied for a stay of execution pending appeal, and has asked for an indefinite time in which to prepare a scheme whereby the benefit of the judgment may be secured to the plaintiff and the company. There has been ample time, in my opinion, to formulate such proposals as the defendants may desire to put forward. A Stay of 14 Days. In the circumstances I make the following order on the application. There will be an unconditional stay for the period of fourteen days from to-day. If within that period notice of appeal will be given, the stay will be continued until the determination of the appeal or until the further order of this court, provided one or other of two conditions be fulfilled. Either, certificates for the whole of the 76,667 shares ordered to be returned must be delivered to the company together with such transfers or other instruments as may in the opinion of the company’s solicitors be necessary to give effect to this judgment, such certificates and instruments to be held by the company by way of deposit, and security must be furnished to the satisfaction of the Registrar for the payment of all monies ordered in this judgment to be paid by the 1st and 2nd defendants. Or, in the Alternative, certificates for the whole of the 61,162 shares which the 1st and 2nd defendants are said to be in a position to return, together with certificates for the 2,914 shares which are said to be pledged by the 1st defendant, together with transfers or instruments as aforesaid, must be delivered to the company to be held by way of deposit, and security must be furnished to the satisfaction of the Registrar for the payment of the damages decreed in lieu of so many of the 76,667 shares as shall not be surrendered and for the payment of all other monies ordered in this judgment to be paid by the 1st and 2nd defendants. There will be no stay as to costs, counsel for the plaintiff and for the company having given undertakings to refund, if so ordered. I order further that during the stay the 1st and 2nd defendants shall not be permitted to record votes at the meetings of the company in respect of shares deposited by them with the company under this order.

The Straits Times, 7 June 1924, Page 8 Editorial. The Straits Times SATURDAY, JUNE 7. COMMERCIAL MORALITY IN MALAYA. Our readers are now aware of the, precise result of Mr. Justice Whitley's judgment in the great Malayan Collieries case. The actual question of whether J. A. Russell and Co. have to disgorge or not may be said still to be sub judice, in that an appeal is threatened, but we fear that certain aspects of the case call for comment as affecting the common weal of Malaya. Malaya needs capital and, if capital is to be attracted, it must be sure that honest men can be found to guard it and courageous men to protect it. There is, however, in this country a pernicious system whereby cliques composed of managing agents and their puppets look after many of our largest companies. The law requires an agent not to enter into a transaction where his personal interest is in conflict with that of his principal and it scrutinises with jealousy all dealings between him and his principal. But in the case of a limited company the principal for all practical purposes is the board of directors and, if they are in the closest business relations with the managing agents, is their judgment not likely to be warped? And will that not be even more the case when the managing agents hold a controlling interest in the company? The position which may arise out of this local system of managing agents, Mr. F. C. Peck has most courageously exposed in his recent litigation. Here we have a firm of managing agents making gigantic profits out of a sale by them to the Company whose business they are paid to manage; we have their senior partner in the position also of chairman of directors of the Company and in the possession of what, for all practical purposes, was a controlling interest in the Company. When Mr. Peck sought for justice, the case was kept out of court for as long as possible. When finally it came to Court the following things, among many others were proved and admitted: - 0. (1) That shares had been allotted to Russell and Co. and their nominees in connection with the sale without any return of allotments being filed with the Registrar of Companies as required by the enactment within the time required. 0. (2) That when a return of allotments was finally made it was a false one, its object being to hide profits. 0. (3) That the Companies Enactment was therefore broken by no annual general meeting being held for eighteen months, the law requiring it to be held within a lesser period. 0. (4) That J. A. Russell, in order to conceal his firm’s profits, caused proxies to be prepared and signed, the said proxies being in the names of non existent persons. We are not lawyers, but during the trail, counsel for the plaintiff characterised the action of Mr. Russell in this connection as forgery. 0. (5) That such proxies were used to outvote Mr. F. C. Peck when it was being considered whether action should be taken or not. 0. (6) That in connection with the sale to the Company whereby they made gigantic profits, J. A. Russell and Co. addressed to the shareholders circular letters containing falsehoods 0. (7) That, in the same connection, Mr. J. A. Russell as chairman made a speech to the shareholders also containing, to say the least, gross exaggerations. 0. (8) Finally that when Mr. F. C. Peck had partially exposed what had been going on, J. A. Russell and Co. addressed to the shareholders a long letter of explanation teeming with inexactitudes. 0. “We are none of us out here for out health” is a wide enough excuse, but it will not cover this sort of thing. How is the ordinary shareholder to be protected if things like this are to be winked at? We may further point to the fact that at the last meeting of the Company, held before judgment is given, but after all the above facts have been given in evidence, Mr. J. A. Russell is again appointed a director, having been proposed by the Manager of the Hong Kong and Shanghai Bank at Kuala Lumpur; and a member of the Federal Council agrees to join the Board at the same meeting. If Mr. Russell and his firm can do things like these with impunity, what will happen to the investments of the holding shareholders in these and other companies? And, above all, what will the great outside world that watches us think of commercial morality in Malaya? Is the Companies Enactment of the Federated Malay States the mere tool of rich men, to be broken at their pleasure? Are leading men in Malaya careless with whom they sit on the boards of public companies? Is the Almighty Dollar the only measure of our conscience? Have our law officers and registrars not got the powers to stop such things? Or, if they have, are they afraid to use them? We understand that the Articles of Association of Malayan Collieries Ltd., contain the usual provision that a director can be removed from office by an extraordinary resolution, but, as every one knows, such a resolution must be passed by a three fourths majority of the shareholders present in person or by proxy at a meeting called for the purpose of passing it, and in cases like the present, where it is clear, that not withstanding revelations such as have taken place in the recent trial, a director still retains the support, if not the confidence, of influential shareholders, it would be quite likely that shareholders would be too apathetic to call a meeting for the purpose above referred to, and even if they called it, it is unlikely, in view of the above facts, that they would be able to command a sufficient majority to pass such a resolution. It appears to us monstrous that the ordinary shareholder should not be fully protected and, if any amendments of company law are necessary to meet the state of affairs referred to above, then we call for the law to be amended. We fail to see the necessity for managing agents in a company such as Malayan Collieries. Why can it not be managed like the Straits Trading Company, the Cold storage company or other big companies?

Malay Mail, Thursday, June 19, 1924. p.9 PECK v. RUSSELL Period of Stay Expires. NO APPEAL ENTERED The stay of execution, for a period of 14 days from date of judgment, granted by Mr. Justice Whitley in the Peck v. Russell case, expired yesterday, no notice of appeal having been lodged during the period. In concluding his judgment Mr. Justice Whitley said: There will be an unconditional stay for a period of fourteen days from to-day. If within that period notice of appeal be given stay will be continued until the determination of the appeal or until further order of the court provided one or other of two conditions be fulfilled. Either, certificates for the whole of the 76,667 shares ordered to be returned must be delivered to the company together which such transfers or other instruments as may in the opinion of the company’s solicitors be necessary to give effect to this judgment, such certificates and instruments to be held by the company by way of deposit, and security must be furnished to the satisfaction of the Registrar for the payment of all moneys ordered in this judgment to be paid by 1st and 2nd defendants. Or, in the alternative, certificates for the 61,161 shares which the first and second defendants are said to be in a position to return, together with the certificates for the 2,914 shares which are said to be pledged by the first defendant, together with transfers or instruments as aforesaid, must be delivered to the company to be held by way of deposit, and security must be furnished to the satisfaction of the Registrar for the payment of the damages decreed in lieu of the 76,667 shares as shall not be surrendered and for the payment of all other moneys ordered in this judgment to be paid by the first and second defendants. There will be no stay as to costs, counsel for the plaintiff and for the company having given undertakings to refund, if so ordered. I order further that during the stay the 1st and 2nd defendants shall not be permitted to record votes at the meetings of the company in respect of shares deposited by them with the company under this order.

The Singapore Free Press and Mercantile Advertiser 26 June 1924 page 6 THE COLLIERIES CASE RUSSELL LODGES AN APPEAL ( From Our own Correspondent) Kuala Lumpur, June 25 Just before noon today, Pooley and Co., solicitors for Mr. J.A. Russell and the Russell Company, lodged notice of appeal in the Collieries case. The appeal will be heard before a full court in December

The Singapore Free Press and Mercantile Advertiser (1884-1942), 3 July 1924, Page 6 Mr. J. A. Russell is going Home by the Morea on Saturday. The Straits Times, 3 July 1924, Page 8 SOCIAL AND PERSONAL. The Malay Mail states that Mr. J. A. Russell is going home by the steamer Morea on Saturday. The Straits Times, 4 July 1924, Page 11. Passengers. The following passengers were booked to leave for Europe today by the Morea, which sailed at 11 a.m…. Mr. J. A. Russell…

The Straits Times, 15 July 1924, Page 8 SOCIAL AND PERSONAL. Messrs. J. C. Benson, H.B. Egmont Hake and D. Topham have been appointed members of the Railway Board vice the Hon. Mr. V. Gibbons, and Messrs. J. A. Russell and G.E. Teale.

The Straits Times, 21 July 1924, Page 7
,Page 16 ] and The Straits Times, 23 July 1924, Page 16 . MALAYAN COLLIERIES, LTD. NOTICE OF DECLARATION OF DIVIDEND No. 14 & CLOSURE OF SHARE REGISTERS. NOTICE is hereby given that the Directors have to-day declared a First Interim Dividend of 5 per cent. in respect of the year ending December 31, payable on the 31st inst.

The Straits Times, 7 August 1924, Page 8
 On Other Pages. Malayan Collieries and Mr. Peck p. 9

The Malay Mail, Saturday, August 9, 1924.Page 9 and The Straits Times 7 August 1924 page 9 MALAYAN COLLIERIES LTD. Proposed Appreciation Of Mr Peck’s Services Malayan Collieries, Ltd., have circulated among their shareholders the following letter, dated August 6: - “It has been decided by the Board of Directors to convene extraordinary general meetings of the shareholders (A and B) to consider and if approved to pass the accompanying Resolutions. The Board are of the opinion that the shareholders owe a debt of gratitude to Mr. Peck for the time, energy and industry he has displayed in obtaining judgment on behalf of the Company against J.A. Russell and Messrs. J. A. Russell and Co. to the extent of the 61,162 shares and $785,865,26 in cash in connection with the Pamoekan Bay Property. These shares have been surrendered to and the money portion of the decree has been received by the company but Mr. J. A. Russell and Messrs. J.A. Russell and Co. have appealed against the judgment and the appeal will probably be disposed of by the Court of Appeal in December next. In the meantime the Board feel that Mr. Peck should be relieved of the burden of the expenses of the litigation whatever the result may be. The Board also feel, if the judgment is substantially maintained, that the Company should show some expression of appreciation of the services rendered by Mr. Peck and therefore ask the shareholders to approve of a sum of money being voted to Mr. Peck by way of remuneration. A second Extraordinary Meeting has been convened for the same day for this purpose. Messrs. A.A. Henggeler, D. H. Hampshire, R.P. Brash and Chew Kam Chuan, Directors,