WHANGAREI LOAN.

Auckland Star, Volume XLIV, Issue 90, 16 April 1913, Page 7

WHANGAREI LOAN.

THE RATE OF INTEREST.

INCREASE ALLEGED ILLEGAL.

(By Telegraph.—Own Correspondent.)

WHANGAREI, this day. In June, 1911, <fche Whangarei Borough Council borrowed an amount of £19,200 from tho Advances Office for road improvements. The Council agreed to pay interest at the rate of 3* per cent, with an additional 1 3-8 per cent for sinking fund, and arrangements were made to obtain the money by yearly instalments of £4,000 for four years, with a final payment of £3,200 in the fifth year. The Council has received and expended the first two instalments of the 'loan, bnt it now finds that, according to the New Zealand State-guaranteed Advances Amendment Act, li) 12, the rate of interest for the remainder of the loan has been increased to 4 1-8 per cent. A 'legal opinion has been obtained that the balance of the loan -was ehnply held in trust, and that the increase in the rate of interest "was illegal, and O\e Municipal Association has suggested that the local body should ask the superintendent of the Advances Office to join with it in obtaining a declaratory judgment from the Court of Appeal. Some time ago the DargaviHe Borough Council fonnd itself in a similar predicament, hut it got over the difficulty by striking a rate to cover the increased interest asked by the Department.