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cheque for the deposit was met out of the credit so established. The minutes do not show that any one had been authorised to draw cheques on the club's account.
Such were the circumstances surrounding the creation of this club and its purchase of a property for the very large sum of £250,000.
To say that these circumstances raise a suspicion of some cut and dried prearrangement between Burke and the vendors is to put things mildly.
This suspicion is by no means removed by the terms of the purchase agreement itself.
At this time the vendors were conducting about fifty-two meetings per annum at Kedron. According to Wren, his firm's annual profits from these meetings were from £9,000 to £10,000. There was no evidence that the promoters of the club were given this information or any examination of the books. No valuation of the land itself was made for the proposed club. No satisfactory evidence was offered that the promoters even made inquiry as to the profits. Burke did state that he and one Maidens had attended a meeting at Kedron and had estimated the profits from the attendance. At first he gave this estimate at £120 per meeting. This would, however, have made only about £6,240 annual profit, with fifty-two meetings. At a later stage, having apparently realised this, Burke amended his estimate to £320 per meeting, or £16,640 per annum. He also then added, although he had at first distinctly sworn that he had made no inquiries, that Austin had told him, in answer to an inquiry, that the profits exceeded £12,000 a year.
The Commission does not accept Burke's evidence on this point.
Even if that evidence were accepted, it is difficult to believe that sane business men, honestly desirous of doing their best for an infant club, could have brought themselves, on such information, to contract to pay a sum of £250,000, of which £229,000 represented goodwill, for a property producing an annual profit of £12,000 or even £16,000. It is even more difficult to understand how they came to agree to pay that amount, out of future profits, by instalments so heavy as £10,000 for the first year and £20,000 per annum thereafter.
At this date, such terms appear so unwarrantable as to justify the gravest suspicion of mala fides.
A further ground for suspecting the genuineness of the sale is raised by clause 10 of Exhibit 23, which gives to the vendors the right to employ or nominate, while any part of the purchase money remains unpaid, the officials and staff of the course, and prohibits their dismissal without the vendors' written consent.
This clause appears directly designed to secure a continuing control by the vendors over the actual operations of racing. It is not such a provision as one would expect to find in the contract of a club proposing to operate its own course and conduct its own meetings.
In its first financial year, ending 30th June, 1924, the club was able to meet its obligations under the contract.
This was largely due to the provision giving the club the profits as from 1st July, 1923, and postponing the payment of the first instalment till 1st October, 1923. This gave the club three full months' profit in hand to help it to meet the deposit, the expenses of the sale, including heavy stamp duty, and the first nine monthly instalments.
