OAMARU HARBOUR BOARD

Otago Daily Times, Issue 14703, 10 December 1909, Page 3

OAMARU HARBOUR BOARD

AUTHORITY TO EXPEND £12,800 WANTED. . Application was made to his Honor Mr Justice Williams in the Supreme Court yesterday by the Oamaru Harbour Hoard for authority to expend £12.800 on harbour improvement;. The poeilion ap|»ars to hi! thai, ihe board in all owes eomethiiif approaching £400,000, and in 1894 London debenture-holders, who had lent £100,000 in 1879. and who are now owed in interest £96,000. pul in a receiver. Before ihe moneys required by the board can Ix, paid it is necessary to obtain this receiver's consent—in fact, lo show that the proposed expenditure would be in the interests of Ihe debenture-holders.

Mr llcsking, K.C.. with him Mr CreaMi, of Oamaru, appeared for the. Harbour Hoard, and Mr Wocdhoiisa for the London debenture-holders.

Mr Ilosking explained Ih a t the points of proposed expenditure were the furniti" of the existing hopper dredge into a sta°tionary dredge, Iho dredging of a harbour area of 30 acres lo a depth of 20ft, the berths to a depth of 23ft o r 24ft, and an application for authority to expend about bew for docking Ino drake. His Honor said he bad "looked through !he papers, and what puzzled him w a°.supposing the court authorised the expenditure, where was the money to come

Mr llc.,k,ng went „ u t <> explain the financial pos,Hon. The board had over £6000 in hand, and the cost of convertumIhe dredge into a, stationary dredge and plant according to a contract conditionally accepted, was under £5000. The rest of cxee'7% 0 f lH 7 x r''«l in dred B»'ff except £200 for docking ,|, c p ro "rc°s dredge. The £6000 „-«ild ouite my requisite expenses „p to six months f on prose,,t t,.ne. The ret of the exp ,T----ure would bo about £7000, which wo ild bo spread over a period of wo „l ll ExSb \r mm \ morc «»« £2500. expenditure on dredging was essential because of the shoaling thai is go], li „„ constantly Sincc 1908 £6000 ft/^ the board would spend that sum on the eSitur ts r^ 1 - Tl » sul *« expenditure would be met by income of WT" 1 rr- Tlto board's "Sion hud somewhat improved i„ K ,L t 0 ro-.ee ,it a. very large incroase of rent of'th? , tO , *>, iB) o «* « shiee fIT ' T' Ved b ? tlle oama "< Board since the first one of 1876. The second was ,n 18 9, for £100,000, and oHra second lean the only interest paid s j ncr , the receiver was nut in in 1893 L£1750 A totaUum of £96,000 was owing on his co}lap w "° nor: H ° W M ih ° and the differential railway rate. Counsel «>nt. nU cd that in 1833 a loan was ,ai"e< on special rates for £50,000, and in 1887 which £30000 wan spent at the time. In ""V , i Cr ,oan of £I °, ( "W was authobe J" /° ihs was a<ldc(l £7000 from Tit W T, °! H «P«w!o« Joan. •S , !? MS llatl £300,000 which wrth ho £96,000 due for into ,3 » total indebtedness 0 f close on £400 00 ihe position m regard to holders ,„ respect 0 r the second loan . ight tZ™TL " p as ,lopclHß ll " less s °'"° arrangement was come to between the boa.nl and tho debenture-hoiders for a c-ai-rangement of matters. Mr Hosking replied that there would 1,1 l b ° i" 1 cnt,roly ncw if the an I with the second loan within a rcasonoml f nC M l , thea ' , " licatio " Wore tie eouit faded the chance of any payment would h i.nfinite y removed, and iven the m»t debenture-holders would not be w„T U f w"" ln t crest The Proposal va.s put before the court because bv 1 t0 b( > tllc only method by which the port of Oamaru could ema.nta.med for oversea shipping, and unless H was put into adequate condition to meet the requirements of this trad© the ports sources of revenue would gradually dim, ush and vanish. Up to 1903 tho haibour had been gradually shoaling, and cws.il sups had gradually got larger? with tlie result that the oversea trade was rapidly becoming a thing 0 f u lc mst . ' i Mr Woodhouse, in reply to a. question from his Honor, said that he proposed to siow that even supposinjr (he board had the right to havo this dredging done at the expense of th 3 bondholders, it was asking lor lar too much. The board itself was divided on the subject. A largo proiwrtion of the board thought the sum proposed to be spent was too much, The board had a scheme which would cost less and some of the members thought it should be carried out. Further than all this, a great deal of the position was imaginary. The chairman of the board c-poke most hopefully of the prospects of the board. Die revenue had increased. The necessity fcr tno proposed scheme was exaggerated, and what wa 5 really wanted was exaggerated In any ease he would contend that this was an expenditure which should' not come out ot the bondholders' pockets. There was nothing in the scheme which was in tho nature of maintenance. It really was creating a new harbour. Last year there was a proposal to raiso loan of £50.000 to carry out this very scheme, and tho Oamaru ratepayers would not havo it.

• Mr Hosking continued his address, and reviewed the history of the matter in detail. As regards the division of opinion amongst the board, members, lie said there was only one member who opposed the scheme, and the cvidenco would show that tins member opposed everything. Counsel filially dealt with tho position of the bondholders in London who lent the £100,000. He said that negotiations had been made to come to an arrangement by which the financial position might bo met, Mr Beckwith Smith (chairman of the London bondholders) had written saying that if the ratepayers guaranteed the interest for the future he wculd recommend that the receiver be withdrawn, and that new bonds be issued subject to the security remaining mlact, and possibly a sinking'fund being inaugurated, and also subject to the board improving the harbour so that oversea vessels cojld berth there, go that the bondholders themselves were quite alive lo the necessity of tho harbour being kept up to date if they wore to have a chance of getting their interest.

His Honor: Yes, but Mr Smith does not recommend that he should pay for the improvements.

Mr Hosking, having added that if someIhink were not done thev might, bo deprived of the berthing of the vessels which at present called, went on to analyse the various schemes which had been suggested, including one which the public endorsed by a majority of 300 (or very little under tho 25 per cent, majority required) and the present proposal, which was really an extension of the Holmes wharf scheme. Robert Milligan, chairman of the Oamaru Harbour Hoard (called by Mr Woodliouse), gavo evidence The masters of oversea vessels had no!; actually refused to come info port, but tl-cy had made grave complaints. Tho depth of water at tho entrance was 17ft 6in, or thereabouts.

J. Blair Mason, secretary and engineer to the Otajo Harbour Board, said be considered it was wise and prudent to deepen the Oanini-ii Harbour to 20ft. There was a tendency for shijw of increased size to visit our ports. In this scheme for dredging Oamaru harbour with a stationary dredge ho thought he worked out the cost." at 6d or 7d a yard.

To Mr Woodhouse: He did not see that any good purpose would be served by dredging to 25ft, even if money was plentiful, but shipmasters liked to'havo nleniy of water under their ships' bottoms. He knew somo of the ships that came into Oamaru harbour, but could not. say how they earned and how they got out. The average ship that came there was up-to-date. Recurring dredging would be required if his scheme was carried. The scheme would concentrate siltration, and tho cost would not be so great after the first operations. There would be very little difference in the cost cf dredging at 12ft and 20ft. .lames M'Nichol Ramsay, harbourmaster at tho port of Oamaru, said thev had been in trouble with two ships, which "had got on the bank. There was not room to swing. He had tried to do with what they had. but it was necessary to increase the area.

To JJr Wcodhouse: He had not reported adversely to tho board on Mr Forrester's scheme as being insufficient in its provisions. He considered there was too much risk in taking vessels in at present.

Te his Honor: He had refused to bring the Opawa in because- he eoukl not swing her.

To Mr Hosking: The Union Company's boats were increasing in size all the time.

Mr Woodhousj said he did not propose to call any evidence. He wished to nut Hip case before his Honor from' the homthoioVrs point o( view. His Honor had HA faw«< placed before liiin, and it was ehvr. mid it v.Ts not disputed, that. th»vc was the whole fn-incipal sum of £ICO.OOO ©win* to the ■IS bondholders, aiid there was another

£96,000 added to it !>y this time. It had almost basil put to his Honor as if the bondholders were objecting to the board expending its own funds. What they were objecting to was the board spending their If ho bandholders'l funds. TTiat was the reason for this objection. Ho wished to put it that the bondholders had put in a receiver to retrain, unnerevsary expenditure, not. to paralyse the actions of the. hoard. Public bodies of this kind should learn that if they had got into debt they could not, take money which should go to their creditors, and use that money in improving their inilitutions. He qui'liD agreed that the working expenses and maintenance should be paid out of the funds that came into the hands of a receiver, but what was asked for hero was to make a harbour quite different, audi much boiler, by increasing its depth and area, and to do it. at Hie expense practically of the 79 bondholders whose interest ms so greatly in arrcar. It, was clear from the report tliat the harbour was going on all rigid. It was carrying on its work, its revenue was increasing, and it was doing very well, [n order to moke Ihe harbour one of the very best the hoard wisM to take money that should go to its creditors and u*e it to imnrovc ils harbour, and he submitted thai Ihe court should not allow the board to do that. The bondholders had j. charge upon the rates of the \mn], and lent th?ir money ii|>on the faith of that, and of that, money the bondholders were now the mortgagees. It might. Im quite right and proper to keep the harbour up. but when it came to making it as good as the other harbours it would not be allowed to be tk»,« with iihe bondhodlers' money. Tho whole object of Iho application was lo preserve Iho iul crests of residents in tho district, Ihe very persons who should pay, and tho persons the Legislature had decided from lime to lime, were the proper person.-; 'o pay. Tli« bondholders did not consider the position a fair que, and be (Mr Woodhouse) submittal (hat the court would take the same view. What was wanted to he dene was to make the harbour a far better ono than it was when this money was raised, and the persons to do that were (he persons interested—the persons who wore goiiig to benefit, by it—and not the creditors in the concern, and the court would not, as a matter of principle, allow this expenditure to be made at liie expense of the bondholders. They were told that their security had been increased by the adventitious fact of tho board's rating power, but bis Honor would see that very little had been received. There was also the question as to whether the work was absolutely necessary, Mr Hosking said) his friend's great point i'.as that tho board wa-s trying to do this at the expense of the bondholders, but it was boin.g dono to protect the bondholders.

Mr Woodhouse: You want a harbour at our expense.

Mr Hosking, continuing, said there was not enough in tho rates and so on to pay, and fchoy could not shut up tho 'harbour altogether. His friend's concern was really thus: that tile bondholders misconceived (he nature, of the security they were lending upon, and put their security 100 high. They had lent, possibly, on there being a surplus after tho board had exercised its functions in any year. Tho receiver, he contended, was controlled by (1) the duties and functions of tho board with respect to the particular class of harbour needs there were; (2) in having regard to the fact that no manager was appointed by the act; (5) in having regard to tho apparent necessity of the work as disclosed by the evidence; and (4) in having regard to tho probability of the expenditure being for tho benefit of all concerned.

His Honor said it was a very difficult question. Ho would lake time to consider his decision and would give it before January 7.