ROAD SERVICE

Evening Post, Volume CXXVII, Issue 59, 11 March 1939, Page 14

ROAD SERVICE

PURCHASE BY STATE

COMPENSATION CLAIM

The inquiry into the price to be paid by the Government for taking over a road service operated by the Ashburton Transport Company between Timaru and Christchurch was concluded yesterday afternoon when counsel addressed the tribunal. The report of the tribunal, which consists of Sir Francis Frazer (chairman) and Messrs. L. H. Heslop and W. Bishop, will be submitted to the Government.

Dr. N. A. Foden appeared for the Government Purchasing Officer (Mr. H. Valentine), and Mr. H. F. O'Leary, K.C., with him Mr. R. E. Tripe, for the company.

Addressing the tribunal on the evidence that had been placed before it, Mr. O'Leary submitted that reliance could not. be placed on the Department's assessment of the value of the business. Mr. Valentine had had every opportunity to make a minute examination of the business and had an opportunity to reach a decision on the exact value of the business. He had not done that, and Mr,. O'Leary submitted that Mr. Valentine's evidence was useless. On the other hand the chartered accountant, Mr. R. A. Glen, had secured his information on the premises and had submitted them to the tribunal in a way that, Mr. O'Leary submitted, must carry conviction. Mr. Glen's computations had not been challenged, and Mr. O'Leary invited Dr. Foden to prove that they were wrong. He reviewed the evidence in support of this contention.

Mr. O'Leary said that if there was an element of monopoly in the business the assessment should be made on a five-year basis. He submitted there was a substantial claim for compensation for the severance of the route business from the area business. The Ashburton 'Transport Company must lose business through the severance because there would be competition by the other area carriers for the delivery of the goods when they were transported by the railway. Even if the area business remained the indirect expenses would be proportionately greater. Mr. O'Leary concluded by saying that he stressed that the Purchasing Officer's computations were worthless. On the other hand the computations of the company were as correct as it was possible to make them. He submitted the assessment should not be made on Mr. Valentine's figure at all, and a half-way house would not be fair. THE TRIBUNAL'S METHOD. Sir Francis Frazer said the tribunal did not split the difference. It made its decision on the whole of the evidence. Dr. Foden said the fundamental assumption upon which Mr. Glen's computation was made was wrong. The fundamental assumption was that the route portion of the business could be segregated and the present volume of business would be maintained. He submitted neither of those assumptions was possible. Arithmetically, Mr. O'Leary's results were correct, but a transport business did not run in that way. In the district where the service operated there was the transport of wool and grain, and that was not spread. Dr. Foden said Mr. O'Leary seemed to think that the figure taken should be slightly below the vendor's claim. He submitted that the starting point in such negotiations should be a figure within the bounds of reasonable business. Would a purchaser contemplating the purchase of the business consider paying the large sum claimed? Dr Foden submitted that it might be worth that to the company, but no business concern would risk giving, so much for it. The company had Certainly earned large percentages of profit, but he submitted such profit could not have been earned without protection. . Mr, Valentine's view of the business was considered by the Department to be right for various reasons, Dr. Foden said. There were very wide daily and seasonal variations on the route and that called for a large reserve of men and vehicles and increased costs. An ideal picture had been presented for the company. The business could not be conducted in that ideal way and allowances should be made for interruptions and losses. Competitors had been eliminated by the licensing system, and as a result there had been super-profits. Mr. Valentine claimed there could be no super-profits without protection, and consequently values could not be assessed entirely on those profits. Dealing with the severance of the route service, Dr. Foden said severance must place the company in the same position as all other area operators, but he submitted the protection the company had received had enabled it to build up the area business and the severance loss should be offset by the benefit gained by protection. It could be assumed that the control' of transport would assure the company of a reasonable return in its area in the future. _______