Valuation Of Goodwill

Northern Advocate, 30 May 1949, Page 7

Valuation Of Goodwill

WELLINGTON, Mon. (F.A.). A deputation from the New Zealand Business Protection Association, headed by the president (Mr Norbert G. Foley), waited upon the Minister of Labour (Mr McLagun) to discuss the operations of section 19 of the Tenancy Act, 1948, dealing with the valuation of goodwill. A report supplied by the association says it was submitted that insofar as the legislation was retrospective it was bad legislation. When the control of prices and profit margins in 1939 was effected the 1939 margins were adopted. When property values were stabilised in 1942 such prices were stabilised at those ruling at the time of the legislation. However, instead of goodwill valuation being stabilised at the dale of the introduction of the Tenancy Act in 1948, the net effect was to reduce goodwill to pre-war valuations. NOT CARRIED OUT If it were Parliament’s intention to stabilise goodwill at ruling valuations, then it appeared from such valuations that had been made to date that the intentions of Parliament were not being carried out, the report states. If, however, it were the intention of Parliament drastically to reduce such goodwill to pre-war valuations, which was what was actually happening under the present procedure, then the effect was bad legislation opposed to the principles of sound political science and thought, which, if carried out to any extent, would create confusion and undermine confidence in the country. Many anomalies had arisen through drastic reductions of goodwill valuations. Owners of businesses that had been purchased on borrowed money and now had to resell for private reasons found themselves with no business, but with money still owing on it. EFFORT AND WORK No account was taken of the effort and work involved in establishing a new business to the time when it was a paying proposition. There were different methods of valuation adopted by different Valuation Courts. The statement says that the Minister agreed that if possible ; t would be desirable to lay down guiding rules to assist Land Valuation Courts to ascertain goodwill, and to this end officers of the association are to confer with executive officers of the Minister’s de- ; partment. After a two-day sitting in concilia- |; tion council in Wellington the assessors ; of the fire brigade unions and fire boards were unable to reach any

8 agreement regarding claims for new >s- awards. The conciliation commissioner, q’ I Mr A. B. Rigg, will decide the future ’ I proceedings in the dispute.