INTEREST PAYMENTS

New Zealand Herald, Volume LXXII, Issue 22145, 26 June 1935, Page 13

INTEREST PAYMENTS

LOANS HELD IN VICTORIA MOUNT ALBERT COUNCIL DEFENDANT IN TEST CASE An explanation of Mount Albert's position in the test action which is being brought in connection with the payment of interest on Victorian loans was given yesterday by Mr. 1?. Ferner, Mayor of the borough. Mount Albert was nominally defendant in the action, he said, but it would be contested, probably in the Court of Appeal, on behalf of, and at the expense of, all the local authorities and boards in New Zealand who had loans of the type concerned domiciled in the State of V ictoria.

"The action is being instituted by the Australasian Temperance and General Mutual Life Assurance Society, Limited, to determine certain questions relating to the payment of interest on the debentures of New Zealand authorities which are domiciled in Victoria." Mr. Ferner said. "Under the Financial Emergency Act, 1931 (Victoria), a reduction of interest was decreed, of 4s 6d in the pound, but so that the rate did not fall below 5 per cent. The question is whether this reduction applies in the case of New Zealand local authorities where payments require to be made in the State of Victoria. "The life insurance offices in New South Wales have met New Zealand local authorities regarding interest payments, and have shown a disposition to effect conversions in line with the present-day trend of interest. However, the life offices in Victoria have declined to consider any conversion scheme. It is claimed by them that as trustees for their policy-holders they have no right to agree to a voluntary conversion. The same stand has not been taken by the New South Wales life insurance offices, who apparently appreciate the fact that the protection of the goodwill of their businesses in New Zealand is of great importance." The Mount Albert Borough Council decided last February to take action regarding payments on the lines of recommendations of counsel to the Municipal Association. The result was that the council refused to pay interest above 5 per cent on certain of its loans held at £5 13s 9d per cent. Counsel's opinion was that the Act applied to New Zealand municipal debentures providing for payment in Melbourne.