IMPORTANT MATTER FOR LOCAL BODIES

Dominion, Volume 20, Issue 297, 14 September 1927, Page 15

IMPORTANT MATTER FOR LOCAL BODIES

1 EXPENDITURE OF LOAN MONEYS CAN SHOPS BE ERECTED AS PART OF LIBRARY? SUPREME COURT ASKED TO DECIDE A matter of considerable importance to local bodies came before a Judge of the Supremo Court yesterday, when he was asked to decide whether a borough council may erect shops for letting purposes as part of a library building scheme, the whole to be financed out of the proceeds of a special loan sanctioned by the ratepayers, The proposed building was to have been erected cn endowment land, but the Audi-tor-General had vetoed the proposal on the ground that the expenditure of loan money on building shops for letting purposes was illegal. In March last tho Borough of Tauranga held a poll of ratepayers under the Local Bodies’ Act of 1926, and received approval of a special loan of <£sooo for tho purpose of erecting a building comprising a library, public reading room, and two shops. Tho Controller and Auditor -General, however, held that the expenditure of tho loan money on tho shops was illegal, and tho work was unable to proceed. Yesterday the borough brought an action before Mr. Justice MacGregor in the Supremo Court, and asked for an order of the Court on tho point. Mr. T. F. Martin appeared for the borough, and the Solici-tor-General (Mr. A. Fair, K.C.) for the Crown. It was admitted that the shops wore incidental oj- ancillary to tho main purpose of tho building, said Mr. Martin. They were to bo erected in order to lessen the annual charges on the building. There was a special feature in this case, inasmuch that the Tauranga Council was erecting tho building on freehold pro?vty which was an endowment of the corporation, and contended that they had the right to improve this property, but owing to the importance of the case to local bodies, he would ask for a decision from His Honour on both points. It was a general practice on the part of all persons who erected large buildings to erect shops or offices, generally on the ground floor, to help to carry the annual charges on tho building. Drawing The Line, His Honour: You suggest that you should be allowed to erect two shops in order to lighten your annual charges, Mr. Marfin. Would you suggest that you should be allowed to 'erect twentytwo shops, in order to make a profit? .Mr. Martin: We admit that tho erection of a public building must bo the main object.

His Honour: Then where will the Court draw the line? Mr. Martin: Ono can hardly give a verbal definition. It is submitted that tho line would be drawn on the facte. Tho Court would look nt the plan and ask what tho main purpose of tho build, ing.

ITis Honour (examining the plan): It is a very pretty little plan, and T have no doubt that it will be an addition to the public buildings ,of Tauranga. The question is whether it comes within the definition of a library. Mr. Martin: The shons and offices are all in the outer wall of the. buildin™. In the course of time it might bo that the space taken by these shops and will be reouired for the library, so that the local body- might well let part of the building a« shoos and offices until it is wanted. Thera is not much by way of analogy, hut I propose to cite some cases on rating law. His Honour: Aren’t there cases on the Act showing how much you must comply with the terms of the Act? Mr." Martin: I have not found any, Sir. ~ , , His Honour: Don't these two shops constitute a' separate, tenement? Ano won’t they both he rntrnble? Mr. Martin: Oh. they’ll be rateable. It is only by analogy. Your Honour, that I can proceed. A Difference. His Honour: 1 sunpose, Mr. Martin, that there is a difference between a local body improving its property ami erecting a building upon it. Jhe building would hare to be for a particular PU Mr° SC Martin: Then- is a difference, Sir, between land held by a local bony for a particular purpose and land aeld by endowment, which is intended to produce revenue. His Honour: Is that the entire purpose of an endowment —to produce revenue ? Mr. Martin: I suppose so, Your Hon°UHis Honour: They might improve it and leave it for ornamental purposes. Mr. Martin: The Wellington f,ity Council owns the kind .about my office. Mr. Fair: Hut they haven't built on lt ’TTis Honour (to Mr. Martin): You think that the City Council could build shops on this land and lease them. Mr. Martin: We submit that they could, Your Honour. . Mis Honour: The question is whether there is anything to commend it. Is there any authority? Improving the Property. Their submission was that under section 16-4 (F) of tho Municipal Corporations Act, 1920, they were. entitled to improve the property in this way, said Mr. Martin. This section said that a corporation might expond money on tho improvement and development of its endowments. His Honour: But where is there a word about building in the sub-section? Mr. Martin: It mentions improvements, Sir. His Honoyr: Doesn't that mean what it says . . . reading and drainage.? Mr. Martin: Koading is necessary tor improvement. His Honour: And you suggest that you aro entitled to erect a building for commercial purposes? Mr. Martin: Yes. Your. Honour. His Honour: Well, it is a very bold suggestion and shows great possibilities of commercial exploitation in the towns. . To empower them to erect a. new building where tlierj was none before; this places great power iu the bauds of public bodies. No Restriction. There was no restriction of the things for which a local body might borrow money, said counsel. It need not bo a permanent work as long as it was authorised. There was ati impression in certain quarters that maintenance ivork might not bo done out of a loan. The muintenanco which might uot.be done out of loan money was tho maintenance of ll.ie work for which tho loan was raised. . His Honour’s questions had anticipated tho lines of his argument said the when called on to open his case. . . His Honour: It is quite clear that in New Zealand you must be able to point to special provision authorisin'’ a local body to do a work, otherwise they haven't the power. Mr. Fair: What possible benefit to flic readers in tho library can these shops bl His Honour: They might lie employed to refresh the renders. Would Be. Dangerous. Extraordinary results would follow if the construction of the statute suggested

by Mr. Martin were adopted, said the Solicitor-General. It would mean that every loyal body would be able to commence tjie speculative development. of their endowments without restriction. Trustees bad no power to do this, and local bodies with endowments were in the same position as a trustee. When improvements were spoken of in the Act building was not meant. His Honour: Jf tho section had meant building it would have said so. Mr. I'.air: It is to bo noted that this claim has never before been made by local bodies, and there aro on record on Ibo statute book at least two instances where such expenditure has been validated His Honour: 1 have very little doubt what my answer will be, but I shall put my views in writing.