LOAN MONEYS

Dominion, Volume 14, Issue 306, 20 September 1921, Page 6

LOAN MONEYS

ITEMS OF LOCAL BODIES’ SCHEDULES EXPENDITURE OF SPECIFIED , AMOUNTS AN INTERESTING JUDGMENT Local(ttodies, having appropriated to each of the items of a loan schedule the amount set against such item, must spend loan moneys in accordance with such appropriation. This decision was given yesterday in the Supreme Court by His Honour o Mr. Justice Sim, when delivering judgment in respect to the Wanganui Borough Council tramways extension special loan of £140,000. Tho case was heard on Friday last. Briefly, the facts are as follow:—On November 18, 1919, the Wanganui Borough Council resolved to raise a special loan of £T40,000 for certain purposes, under the Local Bodies’ Loans Act, 1913, and on December 19, 1919, the proposal was carried by a. poll of ratepayers. In a notice published in connection with the proposed loan the council specified eight purposes for the loan, under separate headings. The total of the slims required was £140,000. The first of the purposes thus specified was the construction of an electric tramway in extension of the existing electric tramway in the Borough of Wanganui, along certain specified streets, the sum set opp'osite the item being £9275. Other purposes, with the sums estimated for each, were: Street extensions, £9293, £2696, £11,496, and £3lOOl extension of buildings, etc., in relation to the tramways system, £50,053; construction, etc., of trams, £19,551; construction <f poles and plant, etc., £28,086.

The Borough Council, in issuing an originating summons, asked its position in regard to the application of the loan. In tho judgment, His Honour stated: "Portion of the moneys authorised to bo raised has been borrowed and spent, and arrangements have been made for borrtiwing the balance. The amount set against each item in the notice is not sufficient to complete the work mentioned in such item, and if the council must appropriate to each item mentioned in the notice the amount set against each item it will be impossible, even with the additional 10 per cent, authorised by law to be raised, to complete any of the works for which tho loan was authorised. If, however, the whole of the proceeds of the loan can be applied generally for or towards some of the purposes mentioned in the notice, there will be sufficient moneys to complete some, at least, of these purposes. The question submitted by the originating summons is whether the whole of the proceeds of the roan can be applied generally for or towards all or any of the purposes mentioned in the notice, or whether the Borough Council must appropriate to each of the items in the notice the amount set against such item in the notice. ’ Local Bodies Act.

“The answer to this question depends on the proper construction of the provisions of the Local Bodies’ Loans Act, 1913. Section 3 of that Act authorises a local authority to raise a special loan for and in connection with the constructing, providing, or . establishing of any public work, and also for certain other specified purposes. Sub-section 2 of that section is as follows: 'One special loan may ne raised for more than one of such purposes, the. amount applicable to each purpose being stated when submitting the proposal for the loan to the ratepayers as hereinafter mentioned, or in the special order authorising the loan, as the case', may be.’’ Section 8 provides that before raising a special 16'an the consent thereto of the ratepayers of tho district shall be obtained by the local authority. Section 9 provides that the local authority shall publish as therein mentioned a notice setting forth certain specified thinsrs, two of these being the following: '(a) The particular purpose or purposes for which the loan is required, and (b) the sum proposed to be borrowed for each such purpose.’ Section 10 contains directions as to the taking of the poll. Sections 7, 18, and 53 of the Act have some bearing on the quesition under clonsideration. Section 7 provides that if on the completion of the public work for which a special loan is. obtained it is found that any of the money raised is not required for the purpose for which it was raised, the money not so required shall be paid into the sinking fund or otherwiseapplied towards the repayment of the loan. The section concludes with this proviso; 'Provided that where the lean was obtained for the purpose of more than one public work, ‘any surplus moneys remaining after the completion of one of those works may be applied in the completion of any other of the said works if the amount appropriated ’to that work is not sufficient for its completion.’ Section 18 authorises the local authority, in order to complete on undertaking, to borrow without ar.y further poll a further sum not exceeding one-tenth of the amount originally authorised'bv the ratenayers where the amount authorised is found insufficient to complete the undertaking in respect of which it was raised. Under-section 53, if any local authority permits r.ny monev borrowed on special loan to be expended for awy purpose other than that for which it was Iwrrowed (except as provided in section 7), every member of flhei local fmthiirity who consents thereto is liable to a penalty not exceeding £100.” Specification Unnecessary.

Hiv Honour added': 'Hi was contended by Mr. C. H. Treadwell that the council was entitled to treat tlm loan as raised generally for one purpose, namely, the extension of the existing tramway system, and the supply of electric light nnd power to private consumers. It may bn the case that the council, when submitting the matter to the ratepayers, might have treated the proposed loan in this way. There is nothing. I think, in the Act which made it necessary for the council to specify as it did with so much particularity and precision the proposed extensions of the tramway sysVm, and the sum proposed to be. spent on each of t'hem. In my opinion it would have been a sufficient compliance with the of the Act to have said that one purpose was the extension o.f the tramway system, for which a specified sum was proposed to be borrowed, nnd that another purpose was the supply, in connection with tho tramway system, of electric light and power to private consumers, for which I specified sum was proposed to bo borrowed. The council, however, did not submit the matter to tho ratepay-, era in this form. It treated each of the eight separate items specified in the notice as being a separate work, for which a specified sum. and no more, was to be borrowed. Tho council having dealt with the matter in this way, is bound. I think, by the terms of its Qwn notice, and ic, not entitled to say now that the eight purposes specified in the notice are really only one purpose, and that the'loan moneys may be < -nt accordingly without any regard to the allocation contained in the notice. It has been decided that the provisions of section 9 of the Act ore mandatory. The poll wa« taken on the figures contained in tho notice required by that section, and it is onlv on the basis of then-' figures, that the provisions of section lB, and 53 of the Act can be applied in any particular case. Tho council doubtless had good reasons for framing its notice in tho way it did.

The proposal might not have been carried if the sum to be spent on each particular extension had not been specified. To hold that the council is not bound in any -way by its own figures would make the. poll in many cases little more than tin empty formality. It would be merely that if those ratepayers who voted for, say, the St. John’s (Intension on the understanding that it would cost not more' than T 9725, pins ten per cent., are to be treated as having authorised the council to spend .£20,000 or’more on that work. The view taken by Mr. Justice Cooper in the Gisborne Borough case was that the vote of the ratepayers oti_ a. proposal to raise a loan was in the njiture of a mandate, and that the council was bound by the terms of the proposal as carried. In the present case the proposal was that certain specified parts of the loan to be raised were to be spent on certain specified works. This proposal was approved of by the ratepayers, and the council is bound, I think, by the terms of its own proposal. The answer, therefore, to the question submitted is that the council must appropriate to each of the items in the notice the amount set against such item in the notice, and must spend the loan moneys in accordance with such appropriation. The costs of all parties except the Borough Council are to be fixed by the registrar nt Wanganui, and paid by the Borough Council.”

At the hearing, Mr. W. J. Treadwell open red for the Wanganui Borough Council: Mr. C. H. Treadwell for the for Councillor Maunder, as representing one body of ratepayers; Mr. J. I’. W«o for Councillor Maunder, as reprroenting another body of ratepayers; and Mr. Arthur Hair,' few flip Solioitor-Genenal,