NO REDUCTION.

Auckland Star, Volume LXVIII, Issue 248, 19 October 1937, Page 8

NO REDUCTION.

LOCAL BODY LOANS.

PRIVY COUNCIL DECISION.

OVER £1,000,000 INVOLVED.

Twenty-three local bodies in Hew Zealand, with, collectively dobentees issued for £1,185,000 at varying- rates of interest from 5i per cent to 61 per cent are concerned in the judgment by the Privy Council in England against the appeal of the Mount Albert Council from a decision of the Xe\r Zealand Court of Appeal. A brief history of the was outlined this- morning by the Mayor of Mount Albert, Mr. H. A. Anderson. He *;aid the Mount Albeit Borough Council had_. in 1926, issued debentures amounting to £130,000, bearing interest at £3 13/9 per cent, to the Australasian Temperance and General Life Assurance Society, Limited, in respect of money advanced by the society for carrying out certain works. "At the time, 1932-1933, when local body loans were being converted in New Zealand," continued Mr. Anderson, "the council approached the T. and G. Society regarding a conversion of its loan from the society, eince the New Zealand *tatutee gave no authority for local bodies to convert loans domiciled out of Now Zealand, as was the case here, principal and interest under thie loan being payable in Melbourne. No progress was made in this direction. Legaa Opinion Given. "At the beginning of 1935 Mr. John O'Shea, counsel to the Municipal Association of New Zealand, submitted an opinion to the effect that the Financial Emergency Act, 1931, Victoria, and other Victorian statutes relating to the reduc-, tion of interest, were applicable to these debentures," said the Mayor. "The Mount Albert Borough Council, acting on this opinion, in 1935, paid interest at a reduced rate of 5 per cent, and aleo withheld payment of an amount which it claimed had been overpaid for interest from October 1, 1931, the date on which the above-mentioned Act came into force."

Mr. H. A. Anderson.

Many other local bodies lad issued debentures to lending institutions in Victoria, and these authorities, acting on like advice, adopted Mount Albert's attitude in connection with interest payments. By amicable arrangement, the T. and G. Society commenced an action against the Mount Albert Borough Council as the nominal defendant, in the Supreme Court of New Zealand, to decide whether the Victorian Financial Emergency Act was applicable. Other local bodies co-operated with the Monnt Albert Borough Council in the defence of this action, and judgment was given for the society, but leave to appeal to the Privy Council was obtained. "At the Municipal Conference held in Timaru in March, 1P37."' said the Mayor, "it was decided that Mr. O'Shea. who was proceeding to England, should appear before the Privy Council on behalf of the Mount Albert Boronjrh Council and the other associated local bodies, to conduct the appeal. Effect of Decision. "Tn the case of Mount Albert if the appeal had succeeded it would have meant an annual saving in interest charges of £1.">43." continued Mr. Anderson. "The effect of the judgment means that the council will have to eontinwe paying on these loans at a rate of £5 13/!) per cent, whilst all loans domiciled in Xew Zealand have been converted under statutory authority to 4} per cent, and new money has been raised at 3 J per cent. "The case throughout has been handled by Mr. O'Shea. and he has'had associated with him Mr. A. E. Hurley, of Wellington, secretary to tlio Municipal Association of Now Zealand. The Mount Albert Borough Council, and I am sine all other local authorities interested, acknowledge their deep appreciation of the excellent services and devoted attention given by Mr. (VShea to the whole subject throughout the entire period the litigation hae been proceeding. Mr. Anderson explained that to appreciate the full effect of the appeal, had it succeeded, the actual amount by which the council could have reduced the rates payable on the average household projM'rty in Mount Albert would hiive been between .">.' and <>•' per year. Personally he ft-It indebted to Mr. Raymond i-Vrner. S.M.. his immediate predecessor in otiiee. for the manner in which he had devoted his time and thouuht to the matter. Other local bodies concerned in the decision included the Auckland City Council (£'.11.000). Hawke'* Buy Power Board (£200.000). fiivy Power Board (£S;U)l)0). Lower Fhift Boronah Council (£."".<).301M am! Wellington City Council (-1-2.300).