THE £200,000 HSRBOUR BOARD LOAN.

Gisborne Times, Volume XLVII, Issue 4275, 26 June 1916, Page 7

THE £200,000 HSRBOUR BOARD LOAN.

DOES ANY LIABILITY REST ON

WAIAPU COUNTY ?

BOARD CONTENDS COUNTY LIABLE FOR £10,500.

important legal argument

An originating summons under the Judgments’ Act, 1908, was heaul by His Honor Mr Justice Cooper at the Supreme Court on Saturday. Jie plaintiffs were the Gisborne Harbor Board, represented bv Mr Milyers, with Mr T. A. Coleman and the defendants, the Waiapu County Council, represented by Mr O P’ Skorrett, Iv.C., with Mr F. W. Nolan’ the issues the Court was asked to determine were previously published, as follows:

. (1) Is the defendant corporation or is the area under its control,liable ; in respect of the repayment of the •special loan of £200,000 referred to in the Gisborne Harbor Act, 1905, or - any or what part thereof? (2) Is the defendant corporation or the area under its control liable in respect of the payment of sinking fund and (or) interest or any and what part or parts thereof in respect of the said special loan ? (3) In wliat. part share or proportion is the defendant corporation or the .area under it's control liable in respect of the repayment of—(a) The whole of the -said special loan ? (b) The sinking fund and interest thereon ?

. (4) Generally, what are the JiabiU ties of the defendant corporation or tlie area under its control in respect of the said special loan or any part or party thereof and in respect of the sinking fund thereof and the interest thereon? ■

- (5) Generally, what are the mutual relations of the plaintiff and the defendant upon the repayment of the ■said special loan, sinking fund, and interest so far as is necessary for the determination of tlie aforesaid inquiries.

And for such other declaratory order in the premises as in the circumstances may be just.

HARBOR BOARD’S CASE

Mr Myers, in opening for tlie plaintiffs,. said that the object of the proceedings was to ascertain what were th© rights of the Gisborne Harbor Board and) the liabilities of the area within the jurisdiction of the defendant corporation, in respect to the Gisborne Harbor Board loan. Tlie Acts he would particularly deal with were the Consolidating Act of 1905, and the Act of 1913. Originally, when the loan was raised in 1884 the Cook County included the Waiapu and Waikohu areas, b it- in 1890 the Waiapu became a separate county. At a much later date it. was taken out of the harbor area- In 1908 ..aikolili became a. separate county, but it remained in the harbor district, The harbor district in ISS4 consisted of the Borough of Gisborne, and the Cook County, including the W.aikohu ami Waiapu areas. To-day it consisted of the same area with the exception of Waiupu. He did not think there would bp any dispute that up to 1913 tlie Waiapu, to a certain extent, was liable. The dispute was whether the same liability existed now —that liability was a liability to be rated in respect of the interest and -nukeur fund on a ]X>rtion of the new loan raised under the Act of 1913. Under the Act, 1913, a new loan of £200,000 was raised, but £75,000 or thereabouts, he thought it was £77,000, was required for tlie purpose of paying olf the balance of the old loan raised under the Act of 1884. That £75,000 was apart from the sinking Innd held on the old loan. He did not contend that idle Waiapu County was lia 1 le to he rated in respect to the whole of that £75,000 —indeed, lie thought It would bs found that the Waiapu County would be liable to be rated, if his view was correct, for about £52,500 of that. 'That would mean that- if the Waiapu County became liable the approximate amount they would hate to pay would he £IO,OOO or £ 11 Originally tlie loan was authorised for £200,000 but though raised it was not used all at once. The Board in the first place used about £05.000, and in addition arranged with tlie Public Trustee to deposit £25,000 as the basis of a sinking fund. I be Board had no right to make that arrangement, but it was validated by Parliament, and the sum remained in the hands of the Public Trustee, and was available with other sums, who i the new loan was raised in 1913. The figures (£25,000 and £65,000) he bad given made up £90.000 of the original loan, and in the Act of ISB7 tlie Board was prohibited from using any further portions of the- loan without Parliamentarv sanction from time to time. In 1888 the sum of £40,000 was authorised to be used, and in 1890 £15,000 was authorised ; in 1900 £20.000, and in 1910 £26,332. The last oluee sums were not in ativ way—and the balance was not in any way —chargeable against tlie Waiapu County. It seemed to bo only fair that an area which was in tlie original district and benefited by tlie works should pay its portion in the same way as other district, for.the amounts used when it was in. the area. But in 1890 Waiapu became a separate county and the last three sums were authorised after that. There were special features in connection with the sum of £40,000The other three sums were chargeable both for interest and sinking fund, against a special area, which was all the harbor area excluding Waiapu. With regard to the £40,000 the position was a. little strange. By the Act of 1887 the £40,000 was authorised to lie used, and it was enae*eel that interest and sinking fund should be charged against the same special district, excluding Waiapu, but in 1889 the Act was amended and it was provided,that only the interest should be charged against the special area, and bis contention was that the sinking fund became chargeable against the whole area. Sinop ]906 the Harbor Board’s ntercst had been sufficient to meet their expenditure, and no rate had been struck, but no one knew what might happen in the future, and it was necessary to settle the question now, so -that the areas would know their position. The Act of 1913, authorising the raising of the £200,000 loan, only referred to the special district excluding Waiapu, but the Act of 1905 v,as not repealed by the Act of £Uj.cl the Act of 1905 included Waiapu in the rating district to pay oil tlie £200,000 loan.- He submitted that there were two rates, the possibility of which were contemplated .by the Act of LU-j —in other words section 18 struck rate which may or may not be collected for the interest and sinking fund on the loan, hut sections 7 and S reserved the right to the Board to make and lew over the whole area as defined in the. 1905 Act, if required, a rate lor the interest and sinking fund for the portion "of the new loan required to pay off the balance of the old loan. Unless-that was so section 8 might just as well be struck cut of the Act. Thero were two objects m section 8 —first to provide that the Boai--shouid continue to have power to wvy upon the whole 1905 area up to a certain limited extent, and Lie other to n ako it perfectly plain that, so fatty the old district was concerned it should be under no further liability IVlr -Skerrett contended that his view was that section 8 was mainly intended to prevent an implied repeal under tbe Act of 1905 if a new loan was not

raised, but if they raised a :ieiv loan separately and entirely for tho purpose of paying off the balance of the old loan, and for no other purpose, then the right should continue to that loan. Mr Myers’ suggestion, he contended, involved that a considerable area Vici.ld be liable to a double rate. Mr Myers differed from tins, and said that a. double rate could not ho raised. His Honor said that this was one of the rnair ooints involved. Mr Myers would have the right +o reply to Mr Skerrett’s contentions.

WAIAPU COUNCIL LIABLE, FOR £10,500.

'Continuing Mr Myers outlined the Acts from ISS4, when the loan was originally raised. In 1889 the Board was restricted to levy an interest rate only over a special district for the authorised £40,000, and the interest on the surplus of tlie loan over £40,000 was to be charged on the whole area. Coining to the Act of 1905 he said that it repealed all the previous Acts and consolidated tlie Acts under the Gisborne Harbor district, giving a definition of the district, and declaring its constitution on December 13, including alio counties of 'Cook (including Waikolm) and Waiapu, and the Borough of Gisborne. Section 16 set out a special district, excluding Waiapu, for the rate for interest on the £40,0.00, but everything else was to be paid for out of a ratj over the whole district. Ho gave His Honor a note of tlie sums arrived at, which they contended Waiapu. was liable to. First there were three sums £15,000, £20,000 and £26,332. making a. total of £61,332, or approximately threetenths of the whole loan, which Waiapu was not in any way liable for. That left a balance of £140,000 roughly which they were liable for. Assuming that £75,000 of the old loan was paid out of the new loan, and extracting three-tenths which Waiapu was not liable for, it left £52,500 over the whole area. Waiapu was roughly one-fifth of tlie whole area under the old district, and therefore were liable to pay by rating £10,500.

THE CASE FOR THE COUNCIL. Mr iSkerreff, in' opening, said there was no obligation on the corporation lor capital charges on the outstanding portion of £7s,ooo—there could only bo a liability to strike a rate. That was agreed, and further such rate could only be struck when there was a deficiency in the Board’s revenue. That was a rating limitation put on the Board. Those points were common ground He submitted that it' a rate was authorised to be imposed by Statute on a district, that rate must be imposed on the whole district, and no part could be exempted. The debentures for the new loan under the Act of 1913 did not' charge any rate, except the rate under section 18 of the 1913 Act, and there was no statutory charge in the Act of 1913 on any other rate, except the rate authorised by section 18. The two main questions for consideration were: (1) Can the rate under the Act of 1884 be imposed on the original harbor district to provide the interest and sinking fund to repav the balance of the original loan of .£200,000, paid out of the new loan of £200,000, raised by Act of 1913? If that was answered in the negative there was nothing further to come before Ilis Honor. If there, was no authority to rate the original harbor district under the Act ol 18S4 (or 1905), in respect of the £75,000 of the old loan, paid out of the. new loan under the Act of 1913, then no question remained for the decision of the Court. But d HU Honor answered the question in the affirmative, then he had lo answer: (2) "Whether the rates of the old harbor district were liable to be applied to find the capital (or constitute a sinking fund) for the redemption of the sum of £40,000 raised under the Act of 1888?

Mr Skerrett said if questions 1 and 2 were answered in the Harbor Board’s favor there appeared to be no question of the taxation basis argued by liis learned friend, blit if either question was answered in the. negative, it become a question of proportions for the Waiapu area. He desired to argue the second question first. But for want of thought in tho construction of the Statutes there would be no doubt as to the meaning of the £40,000, but lie contended that by a later correction in the Act there could lie no doubt now. When the area, now Waiapu County, was exempted in ISBB from the special area, there was no doubt that the interest and sinking fund annual charges m the. £40,000 were to lie charged to the special district excluding Waiapu. That was common ground, but Mr Myers relied on the Act of 1889 to niter that, as far as the sinking fund only was concerned. Tlie Act of 1888 expressly provided that the sinking fund arid rates should be paid out of the special area, but in. the Act of 1888 there were no expressed provisions for tlie levying of the rate, and accordingly those provisions were provided by the Act of 1889. _ Section 5 of the 1888 Act seemed to imply that the interest cn the' £40,000 was the whole charge, but lie contended that a proviso made it clear that ‘•interest” was treated synonomously with “annual charges.” The Act of I°BB was completely in their favor and everything pointed to the conclusion that the draughtsman intended interest to include sinking fund. Tlie legislature in. substance in that Act trated interest to include tbe annual charges under the loan. The 'muddle, if there was one, erose in the Act ol 1889. II Mr Myers’ contention was correct, there was no provision Ur finding the sinking fund on the £40,000. ' Section 3 of the 1889 Act provided for the raising oi the proportion of interest on the special district, but it was made plain in section 5 that tlie Board could only raise the annual amount for tlie sinking fund on the loan not provided for by tlie special district over the ordinary rating area. The legislature was not using definite language, for if it intended “interest” to exclude annual charges great difficulties would arise. His contention, however, was that the legislature told what “interest” meant in tlio Act of 1896. His contention was that the Act of 1889 did not authorise the separating of the interest and sinking fund over tlie two areas. Dealing with the major question under the Act of 1913 Mr Skerrett said that section S was not an enabling clause, but a saving clause. He submitted a saving clause could never confer rights or obligations, and nothing more could be done than under the Act of 1.905. The statutory security for the loan was not the security under the Act of 1905- r J’he Board were not bound Id make the rate under section. 8, and had no authority to pledge it.. Supposing there was to be a deficit were two rates to be levied ? one over the special district excluding Waiapu and the other over the whole district. If plaintiff’s contention was correct then tlie liability over the new district would be to pay two rates, and ho submitted that was an impossible condition. He again eontended that section 8 was intended to prevent any implied repeal if a new loan was not raised, but if a special loan was raised only for the purpose of paying off tho balance of tho old loan, and for no other purpose, then tho right should continue to that loan.

MR. MYERS IN REPLY. Replying, Mr Myers dealt with Mr Skerrett’s contentions. There was no reason, he said, why, when the Act of 1913 was passed, the liability of Waiapu should not continue to the same extent as had existed; on the contrary there was every reason why it should continue. He submitted that it' could not be contemplated that Waiapu was released from its existing liabilities.. Defendant’s construction of section 8 of the Act, he held, was inconsistent. He said that section 8 was only applicable if a sum of mon-

: ey was raised to pay off the old loan, . namely, £75,000. Clearly from that, Mr Myers held, if the Board had rais- ' cd a loan of £75,000 on one day it I could have rated Waiapu for that, and then if it raised the balance of £125,000 the next day Waiapu would not be rated. But it was absurd to say that because the two sums were raised on the one day Waiapu could not. bo rated on the £75,000 used for paying off the old loan. Clearly, lie contended, section 8 was to keep above the liability of the Waiapu County, •and to keep alive the right of the Board, just as it was before the Act was passed. There was no logical reason why that should not have been the case, and every reason why that liability should have been kept, alive. With regard to the other point Mr Myers said that assuming His Honor ivas in his favor as to the question whether the county remained liable as to rates, then they were at one regarding the amounts, with "the exception of the one sum of £40,000. He contended that, the application of the sinking fund applied wholly to the £4.0,000 as well as the rest of the loan.

His Honor reserved decision, and the Court adjourned till 10 o’clock today.