COMPLEX SYSTEM

Evening Star, Issue 21992, 30 March 1935, Page 19

COMPLEX SYSTEM

STAY ORDER PROVISIONS RURAL MORTGAGORS RILL (From the Associated Chambers of Commerce.) The hopeless complexity of the “ stay order ” provisions of the Rural Mortgagors’ Final Adjustment Bill has something akin to a jungle which becomes more impenetrable the further it is explored.

These “ stay order ” provisions will have effects hardly contemplated by the framers of the Bill. The effect of clause 35 of the Bill is that, for a period up to five years, practically no creditors of a mortgagor who is working under a “ stay order ” can take any action whatsoever in respect of their debts. If the Bill is passed, then for twelve months afterwards (this being the period in which an application for a “ stay order ” may be made) the following disabilities will operate:— (1) No investor can risk lending on mortgage, as the mortgagor may get general relief by applying under another mortgage respecting rural property.

(2) No one can advance money on stock with safety, as the lender’s rights under any bill of sale may bo affected. (3) No firm can sell with safety any farming implement or other implements under a hire purchase agreement, as the ordinary actions at law are precluded under the Bill where a stay order operates. (4) The authority of rating bodies to sell or lease under the Rating Act, 1925, in respect of unpaid rates will also be taken away. Up to Tuesday it was also correct to say of the Bill that, until it was known whether “ stay orders” were likely to bo granted, no storekeeper or other person would be safe in giving credit to a mortgagor, and that payment for manure for topdressing, or for any similar goods, might be withheld for five years, or possibly lost altogether. The Minister of Finance on Tuesday introduced an amendment providing that any distribution of income made during the operation of a “ stay order ” may be made on account of indebtedness incurred by the mortgagor before the commencement of the budgetary period.

This amendment has been introduced in an attempt to preserve the farmer’s credit, but it is a question whether it will allay the fears of the unsecured creditor, when he is ignorant as to the manner in which the Adjustment Commission, after dealing with the farmer’s living expenses under its budgeting system, and with statutory charges such as rent, rates, and taxes, will then determine the question of precedence as between secured and unsecured debts. This appears to be one of the blind alleys into which the whole unwieldy procedure of “ stay orders,” as provided in the Bill, inevitably leads. Numerous other matters arise in connection with the “ stay order ” provisions. Section 49 of the Bill restrains a rural mortgagor from disposing of any “ property ” (as defined by clause 2 of the Bill) during the currency of a “ stay order;” If such a rural mortgagor happened to bo a storekeeper as well, presumably he would he prevented from disposing of any of his stock-in-trade during this period without the specific consent of the Adjustment Commission. Such a provision would make trading virtually impossible. / Similarly, a rural mortgagor would be unable, during the currency of a " stay order,” to dispose of any farm stock except with similar consent.