THE PERPETUAL TRUSTEES COMPANY

Otago Daily Times, Issue 21976, 10 June 1933, Page 9

THE PERPETUAL TRUSTEES COMPANY

FORTY-NINTH ANNUAL MEETING

THE CHAIRMAN’S ADDRESS

The forty-ninth annual meeting of the Perpetual Trustees Estate and Agency Company of New Zealand, Limited, was held in the boardroom of the company yesterday. Mr W. E. Reynolds, chairman of directors, presided, and he was supported by the following:—Messrs Edgar C. Hazlett (vice-chairman), James Begg, C. Stanley Smith, R. J. Gilmour (Southland), E. G. Kerr (South Canterbury), and R. K. Ireland (North Otago), directors of the company, and the general manager (Mr A. Ibbotson). The meeting was well attended, and apologies were received from Messrs George Black (Dunedin) and C. H. Hewlett (Christchurch), directors of the company. CHAIRMAN’S REMARKS

a manner as could be expected by either party under present-day unusual conditions. The mortgagee, as a class, has not proved to be the callous, hard-hearted, bargain-driving person that those of a certain political colour have always loudly proclaimed him to be. He has been put to a severe test during the present unprecedented depression and from our experience I feel it must be admitted he has shown reasonable consideration and extended fair • treatment towards those "unable meantime to carry out their obligations to him and he has done so often at considerable, and in some instances great, inconvenience to himself. MORTGAGORS AND TENANTS RELIEF ACT In the opinion of the General Manager and the Executive officers of our Company, ihe law a a it stands to-day in, respect to the workings of the Mortgagors Relief Act is inequitable in its effects. There are three principal parties concerned in the affairs of a mortgagor farmer —viz., the farmer himself, hie mortgagee, and his stock agent. Under the Act as it now stands, the recommendations of the Mortgagors’ Adjustment Commissions and the decisions of the courts effectively bind only two of the three parties—viz., the mortgagor and the mortgagee. As all three are more or less vitally interested, our officers, and also our mortgagee clients, claim (and I think with justification) that all decisions of both the commissions and the courts should apply to and be fully binding upon all of the said three parties. Where the mortgagor’s position has been fully investigated by the members of the commission and adjudicated upon by the court, we find our mortgagee-clients willing enough to abide by such decision, as, of course, they must do, but a good deal of resentment exists and is shown by reason of the fact that only two of the parties are legally bound, whilst the other (the j stock firm) is at liberty to accept or reject,, as it deems expedient, any such decision. Because of this circumstance we find mortgagees in the first stages not quite so ■willing as they otherwise might be to make concessions and to give extended time for payment. There is also the question of nonpayment of rates and land tax and Electric Power Board charges. These, as is fairly well known, are a charge upon the mortgagee’s security and rank in priority to his mortgage. If help is to be extended to the farmer in the way of a reduction in his interest, should it not also be extended to him in respect to his rates and land tax? Should not the adjustment commissions have authority to recommend such reductions and the courts power to order them? Otherwise i the concession is all on the part of the mortgagee. Then again, where the mortgagee has been deprived of his right for the time being to realise on his security, it is surely in the interests of the farmer-mortgagor that the courts should have similar power to prevent the farmer’s property being sold for payment of rates in arrear and also for land tax. If the farmer is in arrear with his interest and requires protection against his mortagee, he is equally in need of protection against the risk of his property being sold because of non-pay-ment of rates, land tax, and Electric Power Board rates and charges for equipment supplied, or any of the foregoing.

In moving the adoption of the report end balance sheet, the chairman said: Gentlemen,—The directors’ report and annual accounts have now been in the hands of shareholders for some days and I propose to take them as read. It will, I think, be readily admitted that since our meeting of & year ago we have been sailing on the troubled seas of uncertainty and unrest. The causes ascribed for thia state of affairs are many and" varied and, in my opinion, the many hurriedly conceived remedies put forward for their i*emoval only lead to confusion, more especially when new and ill-con- * sidered credit aystems are advanced. These latter I am convinced will lead us nowhere. History hag again and again demonstrated the fact that mistakes cannot he rectified by taking the “short /■ cuts,” which such systems in reality advocate. . The problems at present confronting the nations’of the world are of such magnitude and of so complicated a nature that much thought and time as well, as the utmost goodwill must be brought to bear in all endeavours* made to find a satisfactory solution. _ Dealing now with affairs which more directly affect our business I should like firstly to refer to the matter of legislation. LEGISLATION . As was only to be expected, Parliament was, during its. recent sessions, almost wholly engaged in providing legislation* designed to meet the present adverse financial and economic conditions. Relief measures, and amendments of previous relief measures, figured very largely on its programme. Naturally, ' a considerable' part of ‘ the legislation was hovel and experimental, and it is therefore hot 1 surprising that it has sometimes failed in its purpose or has shown /defects early in its history. Numerous judicial decisions have been required to interpret many of the provisions of this legislation, one of the chief difficulties being to place a meaning on the word “chattels” in the National Expenditure / Adjustment Act. ■ ‘ ; Among- the .enactments' affecting our dais of* business were an amendment to the. Nation'al -, Expenditure Adjustment Act dealing principally with rents and . interest reductions, and two amendments to the Mortgagors and Tenants’ Relief Act, 1032, the first of which was chiefly notable for the hopes it engendered that stock and station agents would be bound by court orders made In relief applications, but such hopes have proved to be illusions, and the second df which debarred mortgagors from “contracting out ” of their rights under the relief Acts, and also contained a very awkward provision enabling mortgagors who had already been refused relief to apply to the court for further relief if- the mortgagee had not exercised his powers of sale within three months of the court’s order—an absurdly short period. An amendment to the Property Law Act was also passed. This contained a useful provision empowering a mortgagee jn possession to lease the mortgaged lands for a period not exceeding seven years. / MORTGAGEES’ RIGHTS AND REMEDIES Under this heading I made reference a year ago to legislation which had been enacted in the years 1931 and 1932 and which had very materially affected and curtailed the rights and remedies of mortgagees. There was, as I then pointed out, and there still is, the danger that legislative interference with existing contracts tends adversely to affect the flow of money into mortgage investments. This tendency has. been plainly in evidence throughout the past year, and while it is to be regretted from the point of view of the borrower that such has been the case, yet it is only to he expected that those with money available for investment (and they include persons in almost ' 'all stations in life) should, in the meantime at all events, prefer other forms of investment before mortgage investments. I am, however, of opinion that carefully selected mortgage securities of a first-class nature will always be found to be a sound form of investment for trust and other moneys and that this class of investment will again be sought after, especially when the existing restrictive legislation, which it is to be hoped is but temporary, has run its course. Nevertheless, the enactment of this legislation has had a disquieting effect upon lenders, and the difficulties of those who can offer good securities upon which they desire to raise moneys have been considerably increased. THE FARMER AND HIS MORTGAGEE • In so far as our experience goes, the fears which apparently prompted the passing of restrictive mortgage legislation have not 'been made evident. It was stated by those desiring the passing of this legislation that in the absence of such, farmer and other mortgagors womd be forced off their holdings by mortgagees because of failure to meet their interest obligations. It is, I think, a matter for congratulation, as well as being one of the. few satisfactory features of the present world-wide depression, that the great majority of mortgagees in New Zealand have not desired to dispossess their mortgagors of their propertieg because of their having gone, For reasons over which they had no control, into arrear with their payments. Generally we find our mortgagee clients desirous of extending to his mortgagor reasonable treatment, commensurate with the difficulties of each individual borrower. Of courte the special circumstances and difficulties of each mortgagor require to be thoroughly investigated, but wherever the mortgagor is not hopelessly fin"ahcially involved, and has not lost heart and when he is making every effort to curtail expenditure and keep up production and the security of the mortgagee is being reasonably well maintained. wo have not had over-much difficulty in bringing the parties together and in arranging matters in as satisfactory

BUSINESS CONTROLLED I am not able to give you in actual figures and with any degree of certainty the value of the business now under the control of this company. Some two years ago it amounted to six and a-quarter million pounds, but 1 the downward trend then in evidence in market values of all kinds of assets has continued throughout the year just ended until to-day it is wellnigh impossible to say what is the real value of many kinds of assets. Nevertheless, in so far a« our business as a whole is concerned, the increase in the volume of same must go far towards counterbalancing the decrease in the total value thereof. As I have said on a former occasion, the cost of administering estates has not decreased with their decline in value, but has risen because of the great amount of extra work and time involved owing to altered conditions. It is more necessary to-day than ever before to give great care, thought, and attention to the handling of trust assets in order to avoid ill-timed and unfavourable realisations. Despite the compulsory reduction in the rates of interest on Government debentures and stocks, brought about by the New Zealand Debt Conversion Act, 1932-1933, the market value of these assets has shown little or no decline, and although the share market, after a heavy all-round fall in prices, shows a slight betterment in one or two directions, the market for real estate continues more or less lifeless. While such conditions continue it is imperative to nurse most trust assets until times improve. BRANCHES Our branches continue to make satisfactory headway, and it is pleasing to note from branch returns and results the steady ’increase in the volume of new business.

We may, I am sure, take this progress as a clear indication of the general recognition that the - intricate and technical work which so often falls to be done in the administration and realisation of deceased estates and trusts is more expertly and efficiently performed and completed by trustee companies than by private trustees. In the matter of giving the necessary time and attention as well as bringing to bear the expert knowledge and lengthy experience required to-day more than ever in the past, trustee companies are in an immeasurably better position expertly to control and realise all classes of estates to much better advantage than could he expected of private trustees. Our brnnch managers at Dunedin, Christchurch, Timaru, and Invercargill are officers all of whom have had many years of experience in trustee and agency business, and they can he relied upon to give efficient service and courteous attention to the company’s clients and prospective clients in the different centres. The same may be said of the departmental heads and other members of onr branch staffs. Our thanks are due to onr branch directors. Messrs R.J. Gilmour, of Invercargill: R. K. Ireland, of Oamaru; E, G. Kerr, of Timaru. and C. H. Hewlett and C. J. Eonaldson. of Christchurch, for their interest and help in our work in their respective districts. The chairman then dealt with the annual report and balance sheet and moved their adoption. MR W. DOWNIE STEWART’S SPEECH Mr W. Downie Stewart, M.P., in seconding the motion, said it was unnecessary to make any lengthy observations jn view of the .very dear statement contained in the report and the comments of the chairman. He thought shareholders would agree that the results of the year

were very satisfactory, and must be most gratifying to the directors, to the general manager, and the staff. Considering the adverse factors with which the company had had to contend during the year, some of which had been emphasised by the chairman, the result was remarkably good, and would still further enhance the fine record of the company. It was a company of which not only the shareholders had a right to be proud; but one of which the people of Dunedin and Otago, and, indeed, the people of New Zealand, might well be proud. EFFECT OF LEGISLATION

The chairman had made some interesting observations in connection with recent legislation affecting mortgagors and tenants, and all his remarks were of value, because they represented the experience of the company and of its officers, who had had a very wide experience in the administering of that legislation. He noticed that on one point the chairman stated that the fears which prompted that legislation had not been realised. Mr Stewart thought it was .difficult to draw any conclusion yet as to what would have been the effect if such legislation had not been passed, because they did not know what the course of events would have been. It was very much in the same position as the discussions which arose under the old moratorium which was passed some 10 years or more ago in Mr Massey’s administration. After it had been in force for some years a prominent banker said to him; “ Most people demanded this legislation, and most people now deplore it”; but the fact that they considered that it was necessary, said Mr Stewart, was the greatest tribute to its success, because, had it not been for that legisation, no one knew what sort of downfall might have taken place; but the fact that everybody considered it would have taken place now showed how effective that legislation was. It was very much the same with the Mortgagors’ Relief Act, continued Mr Stewart. The reasons that prompted it in the first place, perhaps, provided fairly narrow grounds. The chairman had said quite correctly that most mortgagees had shown a sympathetic interest in the welfare of their mortgagors, but he thought it was fair to say that mortgagees had learnt by experience, because when that legislation was first promoted it arose from the fact that, again and again, cases were brought before the House where mortgagees were acting harshly and unreasonably towards mortgagors. It was • an old saying that hard cases make bad laws, but, after all, any public assembly seeing cases of obvious injustice and harshness, was bound to act on what one might call human instincts, and seek to prevent such tacti9s being adopted. Naturally the legislation widened itself out and fresh problems arose, but the legislation, so far as New Zealand was concerned, he thought, did not go as far in some directions as was the case in Australia and other countries; but as time had gone on had realised that, in their own interests, they should, if possible, geek to keep the mortgagors on the property and enable them to come through the depression if they could.

LEGISLATION QUESTIONED He did not propose to mention or discuss some of the other matters referred Ho by the chairman, because, while they represented the observations and experience of this company, and for that reason were very valuable, some of them might be somewhat disputed from a certain point of view. But he agreed with what the chairman said concerning some of the later amendments to the legislation. He was surprised when he came back from England that .the legislation had been amended to include contracts and mortgages entered into after the date of the previous Act, and there was no doubt that investors were led to believe that the legislation would apply only to those mortgages then in existence, arid that as little as possible would be done to discourage future investment in • land. The wisdom of the alteration was more than questionable, opening up the subject and creating a feeling of insecurity in the minds of people willing to invest in mortgages. The chairman /had rightly said that the effect of that legislation had been'to discourage investment in mortgages; and. of course, there was also the further factor at work that it was very difficult to persuade people to invest money on security where there would be no clear evidence, owing to the enormous drop in national income and prices of farm products, that the security would he safe. That factor, as well as the legislation, had undoubtedly helped to dry up the source pf mortgagemoney. However, all those questions were very interestingly dealt with by the chairman, and he did not propose to elaborate on any paricular point. He simply repeated that the board was to be congratulated on the results of the year’s work. The reduction in the net profits was remarkably small, and the further addition to the investments fluctuation account, it would be agreed, was a wise measure. He congratulated the board and the management on the.result of the year. The motion for the adoption of the report and balance sheet, was agreed to,

ELECTION OF DIRECTORS Mr J. Sutherland Ross proposed the re-election of Messrs James Begg, R. J. Gilmour, and C.' H. Hewlett as directors of the company, A trustee business, he said, must have a continuity \of policy, and he was certain he was voicing the opinion of shareholders when he said that with their present board they could bo sure of such being the case. There was a sort of conseryative sympathy about the board’s treatment; of its clients —conservatism in respect to sound finapee and undoubted sympathy in cases of hardship. The standing of the company was of the very highest, and shareholders could genuinely express their thanks to the directors and the management for the position of respect the company held in the community.—(Applause.) Mr J. S. M'lnnes seconded the motion, which was carried unanimously. Mr Begg thanked the shareholders for re-electing him a director of the company, and especially did he thank Mr Ross for the complimentary terms in which he had moved the resolution. During the last two or three years the work of the company had been difficult, but thanks to the efforts principally of 'he management —Mr Ibbotson and the staff—they were still showing a profit on their operations, and showing that profit, hp trusted, without inflicting hardship on any of their clients or on the people who entrusted them with their business. He could assure shareholders that he would continue to do his utmost in the interests of the company.—(Applause.) Mr Gilmour thanked the shareholders for their renewal of ( confidence and Mr Sutherland Ross for the terms ,in which he had moved the re-election of the retiring directors. The chairman said he was sure Mr Hewlett would be pleased to learn of his re-election, Mr Hewlett was an excellent man for the board.

AUDITORS On the 7 motion of Mr P. H. Power, seconded by Mr L. Deans Ritchie, the auditors, Messrs William Brown and Co., Messrs G. Blyth and Co. (Dunedin), Mr F. A. Webb (Invercargill), Messrs Leggett and Allport (Timaru), and Messrs W. Ei Best and Wilkinson (Christchurch), were re-elected. Mr J. S. M'lnnes, on behalf of Messrs G. Blyth and Co. and his own firm, thanked the shareholders (or re-electing them as auditors. He wished to say that during the years they had been acting as auditors a high standard of efficiency had been maintained in all the office work.

Mr C. J. Payne proposed a vote of thanks to the directors and’ the staff for their services during the year. It was very, necessary, he said, that in a trustee company the public should have confidence in the directors, and he had no doubt that the directors as at present existing

of this company had the full confidence of the public. The turnover for the year and the wonderful balance sheet reflected the greatest credit on their business ability and judgment. As for the staff, he was constantly brought into contact with them, more particularly in recent times, with respect to mortgage relief matters. In the past he had referred to the competency with which the staff carried out its duties, and he was more and more impressed with that fact as the years went by. This year there had been many intricate and important business matters to attend to in connection with mortgagors’., relief applications, and in this matter, as in others, they had a most conscientious, hard-working, clearthinking staff carrying on the business of the company. In regard to mortgagor relief matters, the general manager had taken particular interest in attending to the interest of clients of the company. No undertaking was a trouble to him, and at all times he set out in the clearest manner the position with respect to mortgagees or mortgagors. The staff as a whole was not only competent, but courteous. — (Applause.) The chairman, on. behalf of his codirectors and himself, thanked the shaieholders for the vote of thanks so generously accorded them for the work they had accomplished in the past year. He would take that opportunity of thanking his co-directors for the ready response they had given to every call made upon them at any time. The utmost harmony ruled at the table in all their deliberations. The board of directors appreciated to the full the excellent work the staff had carried out during what might be termed an irregular and most difficult year.—(Applause.) GENERAL MANAGER’S RESPONSE

Mr Ibbotson said he desired to return thanks for the remarks passed in appreciation of the work of the staff. He would not keep them long a s the present times called more for actions than for words. Business to-day was undoubtedly difficult; he need hardly tell them that, because, doubtless, they had experience of it in their own businesses. He wished to pay his tribute to the members of the staff; they had endeavoured to meet their difficulties as soon as they presented themselves, recognising that difficulties faced squarely and immediately were more easily solved. It was necessary these days to undertake one’s business with cheerfulness. The difficulties were there whether we liked them or not, and they had to be faced, and he thought cheerfulness was a very helpful thing in facing one’s troubles. He was pleased with the work done at the branches. Dunedin branch at the present time had the best business, but Christchurch district was perhaps a little larger than Dunedin, and the business there was promising very well and might some day equal and perhaps exceed the business done in Dunedin. Invercargill, Oamaru, and Timaru branches were showing good results, and the future looked still better.

The stag had had a great deal of extra work by reason of Government legislation, but that was inevitable under present, conditions. When he told them that the Perpetual Company and its clients, taken as an entity, was one of largest holders of Government stocks in New Zealand, they would understand that the work in connection with the conversion of the Government! loans had been tremendous. . They were hoping that the unemployment tax would not last for ever, as such meant a further additional burden upon the stag. Many of the company’s. clients were rather fogged on the subject of Government returns and the making up of same, It seemed almost to be coming to the point when the company would have to keep a special man or men to keep pace with the Government’s requirements in the matter of taxation and so many other returns. They could only hope that as things eased the extra work would lessen and eventually disappear.— (Applause.)