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GOVERNMENT LOANS.

TO LOCAL BODIES

COUNCIL AND STATE ADVANCES OFFICE.

(Pei' Press Association.,

WELLINGTON, February 10. • A test case affecting some of the municipalities in New Zealand was decided in a judgment delivered by his Honour the Chief Justice (Sir Robert Stout) at the Supreme Court to-day. The action was a special case taken under an originating summons with a view to obtaining the opinion of the Court upon certain questions in the legislation passed in 1912 increasing the rate of interest on loans granted to local bodies. The parties to the action were the Whangarei Borough Council, plaintiff, and the New Zealand State Guaranteed Advances Board, defendant. The facts of the case were that on February 2, 1911, the plaintiff corporation applied for a loan of £19,200 for the purpose of the'forma-1 [ lion and construction of streets and footpaths and for the surface drainage at Whangarei. On February 15 the Board provisionally approved the loan j on terms requiring it to have a currency of 36 years and a half, the rate of interest to. be 3| per cent, per annum. The loan was to be secured by a special rate of 25-30ths of a penny; Acting on the provisional acceptance of its application the Council accordingly duly made and levied the special rate required. Subsequently (on June 1, 1911) the corporation formally applied to the Board for the grant of the loan and asked that it be paid in five instalments instead of in a lump sum as originally proposed. On, June 19 the application for the loan and the application for its .payment by instalments were submitted-to the Minister of Finance and approved by him in writing. ,On the same day the Board passed a resolution finally approving of the loan and granting the application. The first instalment of £4000 was paid to the corporation on September 26, 1911, and the second on October 8, 1912. Upon applying for the third instalment, on February 27, 1913, the Council was informed by the superintendent that in accordance with an amendment to the New Zealand State Guaranteed Advances Act, as the Department was unable to raise the money at the rate I anticipated; when the loan was granted, j it would be necessary to charge the Council a higher rate than formerly, amounting, to .4^ per cent. The amendment, the superintendent stated, applied to all loans or any part of a loan to be paid to a, local. authority after the passing of the amendment whether the application for the loan was finally granted before or after its adoption. After reviewing the legal aspects^ of the case, his Honour in his 1 decision said: "lam of opinion that the plaintiff is without legal redress against the superintendent. No doubt the plaintiff.is not, however, without remedy if he has suffered any injury, as plaintiff can apply to the Legislature which has altered the arrangements made between the corporation and the Advances' Office, and the Legislature has ample power to grant redress. It is not necessary for me to consider the matter from the point of view of the Solicitor-General— namely, that the giving of loans to local bodies is a benefaction and consequently no local body can claim any relief from a refusal, to lend, ,as the loan isa mere "gift. That the Legislature will no doubt consider if the plaintiff seeks relief from it." - _■ '■■ . , . Mr O. P. Skerrett, K.C., with-him Mr G. H. Fell, appeared for the plaintiff corporation at the: hearing, and the Solicitor-General (Mr J. W. ■&almond, K.C.) for the superintendent.

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Permanent link to this item

http://paperspast.natlib.govt.nz/newspapers/AG19140211.2.54

Bibliographic details

GOVERNMENT LOANS., Ashburton Guardian, Volume XXXIII, Issue 8791, 11 February 1914

Word Count
594

GOVERNMENT LOANS. Ashburton Guardian, Volume XXXIII, Issue 8791, 11 February 1914

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