SPECIAL EATING AREAS.

Press, Volume LIV, Issue 16359, 2 November 1918, Page 6

SPECIAL EATING AREAS.

ACTION AGAEfST TRAMTW AY

BOARD

I An important case concerning trami wav special rating areas came before his Honour Mr Justice Herdman, fitting in Banco at the Supreme Court yesterday when the Attorney-General, ex relatione "William Hinells VTinsor, builder and contractor, Spreydon (Mr A. F. Wright), sought an injunction against the Christchurch Tramway Board CMr S. G. Raymond, K.C., with, him Mr J. J. Dougall): (1) Restraining the defendant Board from tho keeping of separate accounts in respect of the tramway in the Hackthorne spccial ratin"" area; or, if the Court held that the Board is legally entitled to keep such separate accounts, then (2) for an injunction restraining the Board trom charging the revenues of such for depreciation and renewals in priority to applying such revenues to the payment of iuterest and sinking fund on. the special loan raised in connexion with such tramway, (3) for such further or other injunction as to the Court might seem meet; and (4) for an order directing tho defendant Board to pay tho costs of these proceedings.

The statement of facts detailed the circumstances in which the Hackthorne line was prompted and constructed. Respecting the Riccarton sub-district, the statement set out that by the Christchurch 3>istrict Tramways Amendment Act, 1903, tho boundaries of tho C'hristdiurch tramways district were modified and extended by bringing in the ;i rea called the Ri cca rton-Sock bum sub-district; that sub-district was given the right to elect a member to tho Board, and provision was made as to the separate working of the tramway and for keeping separate accounts in respect thereof. Respecting the Hackthornc lino it was set out that from 1912 to March 1918, it showed a profit, year by year, over working expenses (excluding interest and sinking fund) aggregating for the period £352S 16s -id; the interest and sinking fund debited to the line for the same period aggregated £5343 12«; gjid the amounts carried to tho renewal fund and to the depreciation fund for the period aggregated £4600 os lid. From 1912 to March 31st, 1917, special rates were levied and collected aggregating £4069 7s 1 Od; no rates were collected for tho year ended March 31st, 1918. Tho statement of defence denied a number of the allogations made in the statement of facts. It also set out that the request for the construction of the Hacktliorne road tramway was made by the committee of ratepayers as for a separate and distinct undertaking on the same lines as the Riocarton-Sock-burn line, and such request was received by the Board upon that footing, and the proposed line was eventually constructed upon that basis, and the Board) had, under section 50 of the Christchurch Tramways Amendment Act, 1906, from the time of the construction, of the said lino, kept the accounts of such line distinct from those in tho main area, and in the same manner as the accounts of the Riccarton-Sockburn line arc kept. The Board had never levied any rate upon the Hackthorne road( special area except for the purpose of paying interest and sinking fund of the said special loan for £24,000.

Mr Wright, in lengthy argument, submitted that the Board had no right to keep a separate account in connexion with the Hackthorne road tramway, ■which was part and parcel of the Board's tramway system, and not a. separate and entirely distinct undertaking from the rest of the Board's system. Assuming that tho Board had a legal right to keep a separate account, in respect of the Hackthorne road tramway, it was submitted that it had kept such _ separate account incorrectly in that it set aside tho reserves (depreciation and renewals) before debiting the capital charges (interest and sinking fund). .In the Wadestown case tho Solicitor-General had argued (and it had been accepted by the Court of Appeal) that no provision for depreciation could be made unless it were made out of what he (the Solicitor-General) called "free assets" —that was, assets not stamped with a statutory charge. After dealing; with tho constitution of tho Board, and emphasising the fact that by statute it became tho authority empowered to construct tramways in and about Christchurch, depriving twelve local bodies of such power, counsel went on to show that in respect of the Riccar • ton sub-district special statutory power was cgiven (in the Amendment Act of 1903) for keeping separate accounts in connexion, with the tramway in that sub-district, and also making that tramway a separate and distinct entity. There had been no such statutory provision made in respect of the Hackthorne road tramway, or special rating area ; A portion of the Hackthorne special rating area was in the original Christchurch tramway area, just as the whole of what is now the Dallington special rating area was in tho original area, and the part of tho Hackthorne area in the original tramway district was liable to bo rated in respect of tho original tramway area. Counsel contended that the statutory authority under which the Board considered it possessed 'the right to keep a separate account in respect of the Hackthorne road tramway, applied only to tramway undertakings controlled and managed by the municipalities, the object of the separate accounjt being that any profits on the municipal tramway undertaking could be transferred to the district fund, and so relieve the rates. In connexion wilh the Christchurch Tramway Board there was no statutory provision that the profits should bo set aside in mitigation of tho general rates of any of the local bodies comprised within the-, tramway district. The Hackthorne road tramway wn-s so interr woven with the whole of the Christchurch tramway system that the most competent accountant would find it impossible to construct a separato account dealing with it. Counsel showed.that the Order-in-Council . authorising the construction of the Hackthorne road tramway did not differ in its wording from tliose authorising other parts of tho system. He also submit/ted that so long as there was a profit over the whole undertaking tho ratepayers of the Hackthorno special rating area j could not' be called upon to pay even j interest and sinking fund out of special ratos—they wero in the position of guarantors, and they only entered into that obligation to enable the Board to borrow the money for the construction of the line, the Board being the principal debtor, not tho ratepayers. In support Mr Wright quoted the word- i ing of the. debenture issued in con- ] nexion with the loan for the construction of the Hackthorno road line, those debentures being secured "on the tramwav undertaking and works in that portion of the Christchurch Tramway district known as the Hackthorne special rating area, and the revenue received therefrom (but subject to all charges in favour of- existing debentureholders), and also by a special rate to cover interest and sinking fund upon the rateable property, according to the capital value thereof in the Hackthorne i tramway special rating area." Coun- | sel further submitted that the Board was piling up its reserves at a perfectly extraordinary rate. The Board was a most wealthy institution, and could pay off almost the whole of its loan liabilities: it had carried to reserves between £800,000 to £400,000. Counsel dealt at some length with the Board's published accounts for several years past. Mr Raymond .intimated that he would like to have an opportunity to consider opposing counsel's elaborate arguments, and tho matter was adjourned to some day next week, to be fixed. i