Hewke's Bay Herald. THURSDAY, JANUARY 24,1895. A CURIOUS MUDDLE.

Hawke's Bay Herald, Volume XXX, Issue 9896, 24 January 1895, Page 2

Hewke's Bay Herald. THURSDAY, JANUARY 24, 1895. A CURIOUS MUDDLE.

A kecent telegram from Oamaru referred to a decision of Mr Jnatice Wil

Hams, in an application of the Oaraaru Harbor Board to create a stnkiog fund nnder the Act of 1877. Thereby hangs a carious tale of n Government muddle. la 1887 great damage was done to the breakwater by a heavy gale, and an Act was passed enabling the Board to borrow £40,000 to make it good. According to the North Otago £Vwes, an Oamaru pnper, every preparation was made for borrowing the money, but the Board was advised that it wonld be injudicious to ro on the Loudoo market at that particular time, as failure would be the result. The Board appealed to tho Government, who, in recognition 01 the urgency of the case, lent the Board, on the security of the debentures, the enm of £30,000, we believe from the funds of the Post-office. Since that time the Board has been able to sell £io(lt> at the debentures at a considerable tliseonnt on par, and the Government still holds the balance as security 'for itm advance of £3C,000. The Governme&t) W anxious that a sinking fond ctould be created, and the Board was 'willing to fall in with thiß request. Accordingly the Board made an appeal to the Supreme CotitG for power to set aaide tfee balance of the collectable rate (some £1100) as a sinking fund In oonneotion with the 1887 loan, but Judge Williams decided that) be could not grant the Board's request for a ourlous reason. The Act under which the laud waa raised says that the proceeds of the rate are to be applied towards payment of interebd tin any loans to be raised nnder the A«6, and towards the payment of any sinking fond whioh may be arranged to bs set aside at the time of tbo floating of the Bald loan or afterwania. The learned Judge held that thfl loan has never been floated, and a staking fund could not legally be created. The Government advance was not In the nature of floating the liftan, but simply as m advance repayable on demand. Tho Understanding with the Government waa that the advance was to bo repaid as soon as the loan was floated. Under the olrcutnßtancea it cannot be said that the loan was floated, and there-, fore a sinking fund oannot be created. According to this decision the IJoVern. ment cannot claim a sinking fund as a right till it has, by legislative enaotment, acquired 6ho power to hold the debentures, as for a loan, for a definite period, nor oan the Board claim it till the loan la floated. The Board oannot float) the loan, and the decision of Mr Justice Williams plaeeß the Government tn any-, thing bub an enviable sltaatton, for inasmuoh aa the Board oannot float the loan ontside tha'Gorernment, and cannttt pay the Government the advatfto made, the advance iB likely, to ba an interminable one. Our Oamaru contemporary darkly hints that there may be still more trouble behind, if, as ia anticipated, the Harbor Board's leasea which fall in next year bring greatly reduced rentala.