LOAN MONEYS

Dominion, Volume 14, Issue 304, 17 September 1921, Page 3

LOAN MONEYS

A WANGANUI PROBLEM IMPORTANT QUESTIONS RAISED An important case, brought under the provisions of the Declaratory Judgments Act, 1908, and the Local Bodies’ Loans Act, 1903, was argued in the Supremo Court yesterday, before His Honour Mr. Just:-.,. Sim. An originating summons was issued by the Mayor and Councillors of tho Borough of Wanganui regarding a special loan of £140,000 (known as the Wanganui Borough Council tramways extension special loan), authorised to be raised by the Wanganui Borough Council. The applicants asked for an order determining—(a) Whether* the special loan, duly authorised by tho ratepayers of Wanganui on December 19, 1919, waa ono loan for a sum of £140,000, raised in connection with a general tramway and electrical supply scheme, for purposes mentioned in the Mayor’s notice, published in the New Zealand Gazette of January 23, 1920; and (b) whether tho whole of the proceeds of the loan could be applied generally for or towards all or any of the purposes mentioned, or whether the council must appropriate to each of tho items mentioned the amount set against such item. Mr. W. J. Treadwell appeared for the council, Mr. C. H. Treadwell for the Mayor of Wangnnui, Mr. J. Watt for Councillor Maunder (ns representing the minority of the council), and Mr. Arthur Fair for the Solicitor-General.

Great importance was attached to the case by virtue of the fact i hat the construction of no portion of the work was possible from tho funds raised by way of loan, the additional cost of each extension and of each particular work largely exceeding the 10 per cent, margin allowed by statute. The council asked for authority to divert the whole of the loan to a limited number of purposes, so as to enable these to be wholly completed. Mr. C. H. Treadwell and Air. W. J. Treadwell contended that the matter would not have to lie referred back to tho ratepayers for their consideration. The proceeds of tho loan, they thought, could bo applied generally to any of the purposes specified. Air. Watt maintained that the provisions of the Local Bodies’ Loans Act insisted that moneys raised should lie expended upon the works set out in the loan schedule. Had the council wished to carry out a general .expansion of the tramway system, it need not have specified particular portions of the work at nil, but might have expressed its desire to raise moneys totalling £140,000 in "round and general” terms. That practice had not been followed, but estimates had been placed against particular sections of the work. The council wnn bound by tho procedure it had taken. Counsel contended that sections 6 and l < of the Act (imposing a penalty of £lOO on persons who allowed the expenditure of moneys for purposes other than those for which they were raised by special loan), showed clearly that tho Legislature took a serious view of the ’"otter. By section 18 it was provided that if tho sum raised proved insufficient for the purpose, tho local body might raise further moneys up to 10 per cent without being compelled to approach the ratepavers again. In the present case, he thought, as tho 10 per cent, increase would not be sufficient to allow the completion of the work, the council wouM bo unable to complete its programme unless it referred the matter back io the ratepayers for a fresh Imm. Ihe oouncillors wished that the council shou d be "kept on the Tails, and should not embark upon illegal borrowing Tho council should again go before the ratepayers to obtain opinions as to the advisability of going on with the works. Mr Fair contended that the total amount raised could not be applied to the carrying out of any one section o the work. A general statement of tne manner in which the moneys were to foe expended was not sufficient, ho thought, to meet the requirements of the Act, which provided that "sufficient particularity” should be given to enable ratepayers to exorcise judgment in marking their loan schedule. The fact that the different items wore of like type did not make the loan general; but actually there were three distinct types of work in the proposals, although all were to proceed to one public work. Mr. Fair agreed that the council was. bound’ by the procedure it had taken in itemising” works "If bodies were not bound gtrictlv bv tho Act,” he said, "an unscrupulous body might place upon the proposals works which it has no intention of carrying out, merely to placate ratepayers.’’ After counsel had replied, His Honour reserved his decision.