PARLIAMENT

Otago Daily Times, Issue 21600, 22 March 1932, Page 10

PARLIAMENT

YESTERDAY’S PROCEEDINGS HOUSE OF REPRESENTATIVES (Peb United Press Association.) WELLINGTON, March 21. The House of Representatives met at T. 30 p.m. SALARY AND WAGE CUTS. Several petitions were presented, some of which were stated to be from business men, asking that there be no further reductions in salaries and wages. PENALTY ON RATES.

Replying to Mr W. Nash (Hutt), the Prime Minister (Mr G. W. Forbes) said it was proposed to re-enact a section of last year’s Finance Act which gave local bodies power to remit or postpone the 10 per cent, penalty on rates. LEAVE OF ABSENCE. Mr M. J. Savage (Auckland West) was granted five days’ leave of absence on account of continued illness. MORTGAGORS AND TENANTS RELIEF BILL. Moving the second reading of the Mortgagors and Tenants Relief Bill, Mr Forbes said it extended the operations of the existing Act, under which a considerable amount of relief had been given to farmers and others. He said that while there had not been a great number of cases actually brought before the court thwe was no doubt the Act had had the effect of bringing the mortgagor and the mortgagee together in a great number of cases. It had been felt that the effectiveness of the measure had been limited by the fact that the mortgagor was unable to approach the court unless the mortgagee had taken some action in regard to the mortgage, and this limitation was removed under the measure now before the House. It was recognised that there should be as little interference as possible with contracts and mortgages. In fact, mortgages had played an important part in the development of the country. There was no doubt, on the other hand, that the position created by the fall in prices had to be faced, and production had to be maintained. It was for this reason that the court was given _ power to review mortgages, and where it considered relief was necessary such relief was granted. The court provided a safeguard against unnecessary interference with contracts and arrangements. It was recognised in most cases that mortgagees i were endeavouring to meet the needs of i mortgagors, and the court offered machinery for meeting the position in instances ! where such endeavour was not being i made. The mortgagees themselves recognised that the country was up against ' a crisis, and it was often in their own . interests that a man should be kept on the land. The Prime Minister then outlined the clauses in the Bill. Replying to the Leader of the Opposition (Mr H. E. Holland), Mr Forbes said the clause in the Bill relating to the review of rentals would apply in the case of residential rents wherever there was some arrangement or document under which a tenancy was agreed upon for a specified period, but word-of-mouth week-to-week arrangements would not come under review. Replying to Mr J. A. Nash (Palmerston North) Mr Forbes said that no . Government department was exempted from the operations of the Bill. Dealing with the question of personal covenant Mr Forbes said there nad been a good deal of criticism on this point. There had been a good many cases of hardship under this head. There was a proposal under the Bill that a guarantor could apply to the court for an adjustment of his obligations under his guarantee. The proposals regarding personal covenant had been hedged about with safeguards because it was realised that action in this direction was an interference with , the rights of mortgagees. The court had power consider whether there was any hardship and determine whether a mortgagee should have the right to proceed under persona] covenant or not. There were many cases where mortgagees might very definitely take into account the pergonal covenant, for instance, in a case where the actual security was not more than SO per cent, of the value. The court had been given a fairly free hand in regard to personal covenant. Mr R. M’Keen (Wellington South): The court can only postpone; it cannot determine. Mr Forbes: That is so. The Leader of the Opposition reiterated his opinion that the Bill was an improvement although it did not go far enough. When the Government dealt with mortgagees it sent them to court, but when it was dealing with working men it empowered the court to make a general ' order reducing wages 10 per cent. The Government should have done the same thing with interest and other fixed : charges. It should have made a statutory reduction all round. The Bill would give the mortgagor the right to move to the court without the mortgagee moving first, and that was an improvement, but if the mortgagor desired to move to the court he would have to find the fees and many

■working men who had borrowed through the State Advances Department were not in a position to find the fees, and that was why the Government should have made a statutory reduction. If there was a reduction in interest there should t also be a reduction in rent, and in his opinion the reduction should not be less than 20 per cent, with the right of appeal on the part of the mortgagee or lessee. Continuing, he said that the former Act made provision for both sides to pay. their own costs, but the measure before the House would empower the court to make an order for costs on certain grounds. “Why has that change been made? ”he asked. Referring to the Adjustment Commissions he said there were 33 commissioners who were to be paid two guineas a day and travelling expenses. 8 That’s better than the No. 5 scheme,” he commented. Dealing with the question of the personal covenant, he said the court had no power to determine, but it should undoubtedly have that power. After quoting an Auckland case where a mortgagor had lost his property and was faced with a claim for £7OOO on his personal covenant, he said that that was a case which the Bill should meet. There were numbers of cases where the provisions of the Bill were being anticipated, and the Government should take action to stop that sort of thing. There was a case in New Plymouth where a man had had his rent increased by 15 a week. This man was employing 16 hands, and the increase in rent would probably put him out of business and throw his hands into the unemployment market. Another man who had received £1 a week discount for prompt payment had had that privilege cancelled. The solicitors for his landlord frankly stated that the action of his principal was due to legislation. Actions of that sort were fairly general, and the Prime Minister should insert a clause in the Bill to meet them. Mr C. A. Wilkinson (Egmont) agreed that there should be a statutory reduction of all fixed charges on a sliding scale. He suggested that the Government should accept any reasonable amendments to the Bill, which he considered should go before a select committee. Bank overdraft races should also be dealt with. “ I don t doubt another measure will come forward, but I am afraid the Government will not deal with the bank rate of interest in it.” he added. Mr Wilkinson said he did not think a two years’ extension of mortgages would be sufficient. He believed the extension should be for five years. Mr W. Nash (Huttl said he thought there wore some cases in connection with workers’ homes where the personal covenant should be completely disregarded, but he agreed that there were other cases where the personal covenant should remain, because in such cases it had obviously been taken very greatly into consideration when the mortgage had been arranged. He considered that the Government had done the right thing in giving the court power to review a case. Mr Nash disagreed with the Prime Minister s statement that the court had no power to determine questions relating to personal covenant. As he read the Bill the court was given that power. Mr W. E. Barnard (Napier): Quite Continuing, Mr Nash said he believed the Government should have effected a general reduction of interest and rental charges and left it to the mortgagee or the landlord to appeal to the court. Mr W. J. Broadfoot (Waitomo) said it was essential that the scales of justice should be held evenly between the mortgagors and the mortgagees. The Government had accomplished a very difficult task in a very fair manner.. Mr W. E. Barnard (Napier) said he was afraid the measure would .fail from »n administrative point of view. He

thought it would be better for the Bill to lay down certain definite limits of relief, leaving it to the court to grant further relief if it thought necessary. Mr W. A. Veitch (Wanganui) said that although the provisions of the Bill were not as broad as he would have liked them to be it would have beneficial effects. The personal covenant aspect of the Bill should be wider in scope. He advocated the elimination of the personal covenant altogether with a proviso that in eases where money had actually to be advanced and where it was well up to the value of the property when the mortgage was made the personal covenant should apply to the extent to which it was intended it should apply under the Bill. Mr H. M. Rushworth (Bay of Islands) said that the Bill contained no definition of equity and one judge might have a different definition from that of another. He did not think a judge should be saddled with the responsibility which should be left to the Minister of Justice. The Bill itself was necessary and before long there would have to be a measure reviewing all contracts. ■Mr F. Langstone (Waimarino) advocated a statutory reduction of rent and interest. He said that the whole problem should be dealt with by Parliament. If the personal covenant were eliminated the money would be lent on a more conservative basis, but the ultimate result would be beneficial. The debate was adjourned on the motion of Mr J. A. Hargest (Invercargill). Replying to the Leader of the Opposition, Mr Forbes said he hoped to complete the passage of the Mortgagors and Tenants Relief Bill to-morrow night, ft would ‘then be dealt with in the Legislative Council on Wednesday. The House would met on Thursday, possibly in the morning, to receive the Bill back from the Council,‘and when that formality was completed the Easter adjournment would begin. The House rose at 11.40 p.m. till 2.30 p.m. to-morrow.