PARLIAMENT

Manawatu Standard, Volume LII, Issue 95, 22 March 1932, Page 2

PARLIAMENT

RELIEF FOR MORTGAGORS AND TENANTS.

AGREEMENT ON PRINCIPLE.

Per Press Association

WELLINGTON, March 21. In moving the second reading of the Mortgagors and Tenants’ Relief Bill in the House of Representatives tonight, Rt. Hon. G. W. Forbes said it extended the operations of the existing Act under which a considerable amount of relief had been given to farmers and others. He said that while there had not been a great number of cases actually brought before the Court, there was no doubt that the Act had had the effect of bringing mortgagor and mortgagee together in a great number of cases. It had been felt that the effectiveness of the measure had been limited by the fact that the mortgagor was unable to approach the Court unless the mortgagee had taken some action in regard to the mortgage, and this limitation was removed under the measure now before the House. It was recognised that there should be as little interference as possible with contracts and mortgages. In fact, mortgages had played an important part in the development of the country. There was no doubt, on the other hand, that the position created by the fall in prices had to be faced and production had to be maintained. It was. for this reason that the Court was given power to review mortgages and where it was considered relief was necessary such relief was granted. The Court provided a safeguard against unnecessary interference with contracts and arrangements. It recognised in most cases that mortgagees were endeavouring to meet the needs of mortgagors and the Court offered machinery for meeting the position in instances where such an endeavour was not being made. Mortgagees themselves recognised that the country was up against a crisis and it was often in their own interests that a man should be kept on the land. The Prime Minister then' outlined the clauses of the Bill. RESIDENTIAL RENTS. , Replying to the Leader of the Opposition, Mr Forbes said the clause of the Bill relating to the review of rentals would apply in the case of residential rents wherever there was some arrangement or document under which tenancy was agreed upon for a specified period, but word of mouth and week to week arrangements would not come under review.

Replying'to Mr J. A. Nash, Mr Forbes said no Government department was exempted from the operations of the Bill.

Dealing with the question of personal covenant, Mr Forbes said there had been a good deal of criticism on this point and there had been a good many capes of hardship under this head. There was a proposal under the Bill that the guarantor could apply to the Court for an adjustment of his obligations under the guarantee. The proposals regarding the personal covenant had been hedged 'about with safeguards because it was realised that action in this direction was an interference with the rights of mortgagees. The Court had power to consider whether there was any hardship and der termine whether the mortgagee should have the right to proceed under the personal covenant or not. There were many cases where a mortgagee might very definitely take into account, the personal covenant; for’instance, m a case where the actual security was not more than fiftv per cent, of the value. The Court had been giyen a fairly free hand in regard to the personal covenant. ' , , Mr McKeen: The Court can only postpone. It cannot determine. Mr Forbes: That is so. The Leader of the Opposition reiterated his opiiiion that the Bill was an improvement, although it did not go far enough. When the Government dealt with mortgagees it sent them to a Court, but when it was dealing with working men it empowered the Court to make a general order reducing wages by 10 per cent. The Government should have done the same thing with interest and other fixed charges. It should have made a satisfactory reduction all round. The Bill would give the mortgagor the right to move the Court without the mortgagee moving first and that was an improvement, but if the mortgagor desired to move the Court he would have to find fees, and many working men who had borrowed through the State Advances were not in a position to find the fees and that was why the Government should have made a statutory reduction. \ If there was a reduction in interest, there should also be a reduction in rent, and in his opinion the reduction should not be less than twenty per cent, with the right of appeal on the part of the mortgagee or lessee. Continuing, Mr Holland said the former Act made provision for both sides to pay their own costs, but the measure before the House would empower the Court to make an order for costs on certain grounds. “Why has that change been made?” he asked. Referring to the adjustment commissions, he said there were 33 commissioners who were to be paid two guineas a day and travelling expenses. “That’s better than the No. 5 scheme,” he commented. Dealing with the question of the personal covenant, he said the Court had no power to determine, but it should undoubtedly have that power.' After quoting an Auckland case where the mortgagor had lost his property and was faced with a claim for £7OOO on his personal covenant, he said that was a case the Bill should meet. There were numerous cases where the provisions of the Bill were being anticipated and the Government should take action to stop that sort of thing. There was a cas6 in New Plymouth where a man had had his rent increased by £5 per week. This man was employing sixteen hands and the increase in rent would probably put him out of business and throw his hands into the unemployment market. Another man who had received £1 per week discount for prompt payment had had that privilege, cancelled, the solicitors for his landlord frankly stating that the action of his principal-Was due to legislation. Actions of that sort were fairly general and the Prime Minister should insert a clause in thg Bill to meet them. SLIDING SCALE FAVOURED. Mr O. A. Wilkinson agreed that there should be a statutory reduction of all fixed charges on a sliding scale. He suggested that the Government should accept any reasonable amendments to the Bill, which he considered should go before a select committee. Bank overdraft rates should also be dealt with. “I don’t doubt- another measure will come forward, but I. am afraid the Government will not deal with the bank rate of interest,”’ he added. Mr Wilkinson said he did not think two years’ extension of mortgages would be sufficient. He believed the extension should be for five years.

Mr W. Nash said he thought there were some cases in connection with workers’ homes where the * personal covenant should be completely disregarded, but he agreed there were other cases where the personal covenant should remain because in such cases it had obviously been taken very greatly into consideration when the mortgage had been arranged. He considered the Government had done the right thing in giving the- Court power to review

cases. Mr Nash disagreed with the Pi'ime Minister’s statement' that the Court had no power to determine questions relating to the personal covenant as he read the Bill. The Court was given that power. . , L Mr W. E. Barnard: Quite right. ' Continuing, Mr W. Nash said he believed the Government should have effected a general reduction of interest and rental charges and left it to the mortgagee or landlord to appeal co the court. Mr W. J. Broadfoot said that it was essential that the scales of justice should be held evenly between mortgagors and mortgagees. The Government had accomplished a very, difficult task in a very fair manner. Mr W. E. Barnard said he was afraid the measure would fail from the administrative point of view. He thought it would be better for the Bill to lay down certain definite limits, of relief, leaving it to the court to grant further relief if it - thought necessary. ’• Mr W. A. Veitch said that. although the provisions of the Bill were not as broad as he would like them to be, it would have beneficial effects. The personal covenant aspect of the bill ghould be wider in its scope. He advocated the elimination of the personal covenant altogether' with the Eroviso that in cases where money ad actually been advanced, and where it was •well 'up to the value of the property when the mortgage was made, the personal covenant should apply to the extent to which it was intended it should apply under the lull. Mr H. M. Rushwort said that the bill contained no definition of equity and one judge might have a different definition from that of another. He did not think a judge should be saddled with the responsibility, ■ which shou'd be left to the Minister of Justice. The bill itself was necessary and before long there would leave to be a measure reivewing all contracts.

Mr F. Langstone advocated a statutory reduction in rent and interest. He said the whole problem should be dealt with by Parliament.

Replying to the Leader of the Op-, position, Mr Forbes' said ho'hoped to complete the passage of the Bill tomorrow night. It would then be dealt with in the Legislative Council on Wednesday. The House _ would meet on Thursdav. possibly in the morning to receive the Bill back from the Council and when that formality was completed the Easter adjournment would begin. The House rose at 11.40 till 2.30 tomorrow.