ON LEGAL ADVICE

Evening Post, Volume CXVI, Issue 2, 3 July 1933, Page 10

ON LEGAL ADVICE

CITY COUNCIL'S POSITION

INDEMNIFIED BY BOARD

(By Telegraph;— Press Association.) AUCKLAND, This Day. ' Statements concerning interest payments on Auckland loans are made by the Mayor (Mr. G. W. Hutchison) and the chairman of the Transport Board •(Mr. J. A. C. Allum). Tho position is that the City Council issued debentures, for a £ 1,200,000 loan which was raised for the purchase of the tramway system. Approximately £960,000 of this is domiciled in London. When the board'took over the tramways the debentures were retained by tho council, which makes the interest payments by coupon and is indemnified by the board.' The Mayor said- that after tho judgmont in the Broken Hill Proprietary case tho. Transport Board notified the City Council that it had been advised, that in : consequence of the judgment future payments must be made in NewZealand currency. The City Council | referred the matter to its solicitor, who advised the council that it had no power to object as, long as the board indemnified the-council against any loss or action" that might ensue. "It is unfortunate," said Mr. Hutchison, "that the original debentures remain in the name of tho City Council, although the liability was taken over by tho Transport Board. What has happened is a direct result of the raising of the exchange rate by the Government. The City Council is powerless in the matter. 'In my opinion the whole responsibility must be accepted by the Government, which should grant an indemnity to enable tho amount to be paid in sterling pending a final legal decision." Mr. Allum said t.hat the Transport Board was compelled by law to pay in Uew Zealand currency, and that view

was 'upheld.by the Audit Department. He had not heard of similar complaints being mado with respect to the Broken Hill case,.and he did not see why his board should be singled out. "As a matter of fact," ho said, "the wider issue has not yet been decided. The law at present stipulates that New Zealand currency must be used in paying interest' on loans raised in New Zealand such, as this tramways loan, but the Southland Power Board is now applying i'oi* a declaratory judgment which, if it is obtained, will compel it and other local bodies to employ New Zealand currency in paying interest bu loans raised in London with the optional domicile of London or New, Zealand. '