TRAMWAY LOAN

New Zealand Herald, Volume LXXIII, Issue 22349, 21 February 1936, Page 13

TRAMWAY LOAN

PAYMENT OF INTEREST THE CURRENCY DISPUTE PLANS FOR TEST CASE Authority for the city solicitor, Mr. J. Stanton, to defend the action being brought against the Auckland City Council in respect of the Tramway Loan debentures by representatives of the English debenture-holders was given by the City Council last night. Mr. Stanton reported that the writ issued by the Alliance Assurance Company, Limited, against the council to determine the question of currency in respect of this loan had been served on him and by arrangement a third party notice was being served on the Auckland 'transport Hoard. It would be necessary for an appearance to be entered by the council and he submitted, for execution by the council, an authority in his favour fo defend the action.

The council decided to execute the authority, the Mayor, Mr. Ernest Davis, Mr. E. J. Phelan and Mr. N. V. Douglas being chosen to sign the document. Reporting further Mr. Stanton said that the Alliance Assurance Company had asked the council and the Auckland Transport Board to sign an agreement in connection with the costs of the action. So far as. the council was concerned the only reason for joining it in the document was that the proceedings were in the first instance against Uio council and the company desired an undertaking from the council that it would not claim costs against the company. He submitted the agreement for execution by the council, this having already been executed by the Transport Board. Mr. Stanton added that the Transport Board had also executed a deed of indemnity indemnifying the Council from all liability in connection with the action.

It was decided to sign the agreement, the Mayor and Messrs. C. Bailey and A.. Rosser being chosen to complete the document. The action referred to is the test case which has been arranged to determine whether interest on the English portion of the Auckland tramways loan of £1,250,000 shall be paid in sterling or New /Zealand currency. Under an agreement readied between the Auckland City Council, the Auckland Transport Board and a representative of the London debenture-holders, the interest instalment due on January 1 was paid in sterling on all but one debenture of £IOO, and it was arranged that this should be the basis for a friendly action in the New Zealand Courts to settle the position.

The City Council is interested in the matter, as it controlled the tramways system when the loan was raised and the debentures are in its name. When the agreement was made it was stated that the Transport Board was anxious that the issue should be determined before July 1 of this year, when the next interest payment will fall due.