POWER BOARD CASE

Manawatu Standard, Volume LIV, Issue 297, 13 November 1934, Page 2

POWER BOARD CASE

CHIEF JUSTICE’S DECISION. EXERCISE OP’ POWERS. Full information concerning the decision of His Honour the Chief Justice, Sir Michael. Myers, who, it was announced in the “Standard” yesterday, had granted to the Palmerston North City Council an injunction restraining the Manawatu-Oroua Power Board from imposing a special rate over Palmerston North, is contained in the written notes of the lengthy reserved judgment which His Honour delivered at Wellington yesterday. During the course of his review of the evidence, the Chief Justice comments on the actions of the board. “MUST ACT REASONABLY.”

After dealing with the particular sections of legislation involved in the litigation, and discussing legal points raised by both sides, His Honour states : •

“The real question in the case as I view it is whether the plaintiff city is entitled to an injunction to restrain the board from levying, enforcing, or collecting the separate rate imposed upon the city of Palmerston North. The principle of law to be applied is laid down by the House of Lords in Westminster Corporation v. London and North Western Railway Co., which was applied in this Dominion in Palmerston North Borough v. Palmerston NorthKairanga River Board. In the Westminster Corporation case Lord Macnaghten said: ‘There can be no question as to >the law applicable to the case. It is well settled that a public body invested with statutory powers such as those conferred upon the corporation must take great care not to exceed or abuse its powers. It must keep within the limits of the statutory authority committed to it. It must act in good faith. And it must act reasonably. The last proposition is involved in the second, if not in the first.’

“I am satisfied, upon the evidence, and applying the principle laid down by the House of Lords and by our own Supreme Court and Court of Appeal that the majority of the members of the board did not act reasonably or in good faith, and in the making of the separate rate the powers of the board were both misused and abused. 1 cannot impute to the Legislature the intention to authorise a board, after entering into an honourable commercial agreement, by means of a deliberately self-imposed rating power, to take away the benefits conferred by the agreement because it finds the agreement somewhat unsatisfactory and objectionable to some of its constituents.

SALIENT FEATURES. “I do not propose to traverse in detail all the facts of this case or the different meetings of the various bodies —the defendant board, its executive committee, and the Manawatu-Oroua Electricity Consumers’ Association—all of which are so voluminously dealt with in the affidavits and the exhibits. I do not consider it necessary to do more than indicate certain salient features. I have already said that agreements were entered into from time to time between the city of Balmerston North and the Electric Power Board. The last of these agreements, which is still in existence, is dated February 17, 1931. The board was to give and the city to take a supply of electricity at the point of supply, namely, from the Electric Power Board’s lines at the city’s power station at Terrace End. In effect the city was to obtain its power at the same price as the Electric Power Board itself paid •to the Government, plus a service charge of £2OO per quarter with certain additions. The effect of this agreement and of the previous agreements between the two bodies was that the City Council of Palmerston North was able to supply electricity to the inhabitants of the city at lower prices than those which the board charged to consumers within the other portions of the board’s area. Be it remembered that the city had its own plant, which was still required for standby purposes, and its own reticulation system within the city, the whole of the cost of which had of course been borno by the ,city. “As far back as May, 1926, the Electric Power Board (as then constituted) made certain proposals for. the purchase of the whole of the city’s electrical undertaking, but the city was unwilling to dispose of such undertaking and thereby compel the citizens—for this would have been the result—to obtain their individual supplies of electricity from the board at a higher price than they were required to pay under existing conditions. “The advantageous position of the citizens of Palmerston North under the agreement gave rise, to dissatisfaction in other portions of the board’s district where a certain number of persons seem to have thought that—agreement or no agreement-—the consumers of electricity in Palmerston North should be forced into the same position as regards price as the consumers in other parts of the hoard’s district. They brought about the formation of an association called the Manawatu-Oroua Electricity Consumers’ Association, formed for the purpose of forcing the city to abandon its rights and advantages under the existing agreement and of bringing about the consequences desired by the promoters of the association.

THE METHODS EMPLOYED

“The methods whereby this result was to be attained were delightfully simple. In the first place _ an endear vour was to be made to induce the city to sell its undertaking to the board and join in the board’s scheme so as that the inhabitants of Palmerston North would have to pay the same price for their electricity as was paid by the hoard’s country consumers. If that endeavour failed, then there was to be an effort made to obtain legislation, if possible, to achieve the desired result. If that, too, were unsuccessful, then a separate rate was to be levied on the city. “Then came the election of seven country members of the hoard in May, 1932, and a number of candidates were nominated by the association pledged to support its aims. They were Messrs Dernier, McElroy, Bickers, Boyce, Bond, McKay, and Campbell. Needless to say, these candidates were elected. Mr Boyce does not seem to have been nominated by the association, but I cannot in other material respects differentiate him from the other six I have just mentioned. Of the other five members of the hoard, three were representatives of Palmerston North. One (Mr Guy) representing Feilding, was a sitting member, having been elected in 1931; and the remaining member (Mr Batchelar) was a country representative. An affidavit has been filed by three members of the board who were elected in May, 1932—Messrs Dermer (chairman) Boyce and McElroy, in which thev say: ‘We deny that any pledges were given to the organisation known as the Manawatu-Oroua Electricity Consumers’ Association, and we tor ourselves say that we are not now and have never been in any way hostile to the city of Palmerston North “I am unable to accept this denial. The facts nil show that the. deponents were pledged to the association and its aims,” states His Honour, who, in discussing the evidence of Mr_ Dernier, adds:—“Eor myself I feel bound to say that I can see no difference between the written and the spoken pledge. Mr Dermer’s view was fairly

well expressed by another statement that ho made in his cross-examination as follows: ‘My View is that city people should not get their light and power at a cheaper - rate than country people. That inequality was, in my opinion, wrong, and an injustice to be righted if possible.’ A MAJORITY EXECUTIVE. ' “After the election in May, 1932.” continues His Honour, “one of tho first things that the board did was to appoint an executive committee, consisting of seven, which constitutes r majority of the board, and ol those seven, five were persons who had just been elected pledged to the association’s aims. One was the Feilding representative (Mr Guy), who was one of the promoters and organisers and an executive officer of the association, and the seventh was a Palmerston North representative. - “It is not unworthy of notice that in the ordinary course the annual estimates would come before the executive prior to going before the board, so that their recommendations were a foregone conclusion. I may add that the idea of constituting an executive consisting of a majority of the board was quite a now one. The result would almost inevitably be that whatever decisions or recommendations the executive or a majority of its members would practically with certainty be confirmed or adopted by the board. REFERENCE TO AGREEMENT. “The next event was that on June 13, 1932, the board passed a resolution requesting a meeting with the Palmerston North City Council to discuss the question of the purchase of the council’s electrical scheme by the board,” His Honour adds. “The town clerk replied by direction that the existing agreement would not expire until March 31, 1935, and that the-council was of opinion that unless the board had an offer of an exceptional nature to submit which would warrant the council terminating the existing contract no good purpose would be served by a conference. Thus the failure of the first attack.

“There is evidence that the question of obtaining legislation was considered by the association and members of the board, but not, so far as the evidence shows, at any meeting of the board itself. Evidently the conclusion was come to that that course would not be successful.” Comments made by various members of the board during the election campaign are quoted by His Honour as follow :

“Mr Campbell at Whakarongo: ‘He believed some show of force would have to bo made before the city would consider coming into the scheme.’ “Mr Bond at Rangiotu : ‘They were trying to right what they considered a grievous wrong. Their object was to bring Palmerston North into the board’s area even before the expiration of the contract if that were possible.’

“Then there was the evidence that, at a meeting of the board held on July 11, 1932, when the town clerk’s letter of June 21 was received, resentment was expressed by those members who were pledged to the association, and Mr Guy said that ‘otlier means would have to be found to bring Palmerston North to heel.’ SOLICITOR’S ADVICE.

“Foiled in their first two attacks,” continues His Honour, “the majority of the board, according to programme, proceeded in .June, 1933, and the following months with the third. 1 may say here that just as in Palmerston North Borough v. Palmerston Nortli-Kairanga River Board, the board (through the chairman) took legal advice and the advice was on similar lines. The first opinion was obtained prior to the meeting of the board of June 12, 1933, and apparently before the meeting of the executive in May. The opening sentence of the solicitor’s opinion is illuminating. He says: ‘The question has been put to me as to whether the board can reduce its tariff of charges over the whole district, strike a uniform rate, and then strike a rate over a defined portion of its district in order to provide moneys for any resulting deficiency to the board.’ The solicitor in his opinion referred to the Westminster Corporation case, and the effect of his advice was that the board had the power but must act reasonably and in good faith. “The opening sentence of the opinion is illuminating because the question suhmitted to the solicitor involved the full proposal of the association, and in fact at the meeting of the executive in May some of its members wanted to increase the estimated deficiency on the year’s operations by making a general reduction in the price of electricity supplied to all the board’s consumers, the object being of course to increase very largely the separate rate which, according to programme, would have been imposed on Palmerston North. This course was not adopted, no doubt because of the solicitor’s opinion and because some of the members of the executive were wise enough to see that the scheme would be too . transparent. Then followed the decision to recommend the reduction in price of power supplied to milking motors, and the consequent special iate struck against Palmerston North to meet the deficiency and the costs of collecting the rate.

MILKING MOTOR CHARGES

“An effort has been made In some of the affidavits, and by the two members of the board who were crossexamined at the hearing, to show that the reduction made in the charge for power supplied to milking motors was made merely to retain the board’s customers and not in any way to interfere with the Palmerston North agreement or force the city into the board’s scheme. In this connection it is to be observed that although it is true there had been an annual decrease during the two, or three previous years in the aggregate return for power supplied to milking motors the number of milking motors had substantially increased, and the board’s secretary in cross-examination said that in his view at least the decrease in the aggregate return had been arrested. Be this as it may, there was an obvious explanation for the decrease in that the dairy farmers had met with difficult times and were economising in all directions. They were still using electric power for their milking machines, but they were careful to use no more than was essential for their purposes. “It was not reasonable, in my opinion, to assume—nor do I believe that the members of the hoard did honestly assume—that the revenue from milking motors was during the year for which the estimates were prepared likely to decrease substantially, if at all. It may be quite true that the hoard’s, charge for power supplied for milking motors was in excess of the price chgj-ged to its consumers by one or two neighbouring boards, but that observation does not apply to all neighbouring boards. However this may be, I am forced to the conclusion, and I find on the facts, that the alleged reason for the reduction of the price for power supplied to milking motors was merely colourable. “NOT FAVOURABLY IMPRESSED” “I regret to say that I was not favourably impressed by the members

of the board who were cross-examined at the hearing. As Mr Justice Richmond was constrained to say of the members of the licensing committee whose conduct ho was considerering in Isitt v. Quill, I am constrained to say here that all the facts taken together lead me irresistibly to the inference that in acting as they did the majority of the board did not fairly exercise their jurisdiction and their powers. “Again adopting the language of Mr Justice Richmond, I cannot accept the deponent members of the board who are responsible for what was done as satisfactory expositors of their own motives and grounds of action. Their acts—and, I may add, their prior statements—weigh with me more heavily than their present declarations in so far as those declarations are made by way of attempted exculpation.”