THE FLAXBOURNE ESTATE. A HISTORY OF THE CASE.

Otago Witness, Issue 2660, 8 March 1905, Page 29

THE FLAXBOURNE ESTATE. A HISTORY OF THE CASE.

THE GOVERNMENT SIDE OF THE QUESTION.

Some interesting remarks on the re-cently-heard claim by the Compensation Court in respect to the Flaxbourne Estate were made by the Hon. T. K. Macdonald, who was the Government assessor in tha case, in conversation with a representative of the Wellington Evening Post.

'" It may be convenient for me," said Mr Macdonald, "to recapitulate briefly, the position of the property. The Flaxbou^-ne Estate stands practically alone in the history of the large estates of tho colony from the fact that it is the one estate taken up in 1846 (almost 60 years ago) ly Sir Chai-les Clifford, and heir! by the family ever since. It consisted of 57.199 acres. Under ' The Land for Settlement Claim. Consolidation Act, 1900,' when land is taken by the Crown the owners have the right to take for their own purposes a certain area of laud, and the settlement of this area involved a very considerable amount of discussion. The claim made t/ the owners in 1903, when the Government put the proclamation on the land, was fot a sum of £4-10,000. 'Ihe claimants wer^ Sir George Clifford, W. L. Clifford (Marli borough), F. C. Clifford, and Charle< "William Clifford (England), the shares held by each of the claimants being : Sir Georg-a Clifford thirteen-fortieths, and the othet claimants nine-fortieths each.

"Th& court first sat on 11th December. 1903. A large number of legal points were argued. After sitting for about a fortnight, visiting the property, and hearing a number of legal arguments, it adjourned till Ist December, 19C4-. On reassembling on that date the court made a second inspection of the estate, lasting about a week, and on 17th December, after hearing a considerable amount of evidence as to Me classification of the land and the a^ea which the claimants were desirous of selecting for themselves, the court made an award to tho claimants of a block of 11,688 acres in the north-east corner of the estate, both the Crown and the claimants having come to an agreement on the matter. The claim was then amended, tho , area- so reserved being excluded from the discussion as to the value, and the balance of 45,811 acres was arranged to be tho eubject for investigation and settlement. "The amount claimed for this area was £320,000, and £15,000, afterwards increased to £20,000, for depreciation and loss in connection with the forced sale of live' stock, etc. The case was resumed on We'inesday. Ist February, and lasted until Thursday, 23rd February.. During the investigation from the Ist to the 13th February 33 witnesses were called' lor the claimants. In, the afternoon of the- 13th Crown submitted' its case, '.the first witness cailedl being Mr James M'Kerrow, formerly Sur-veyor-general of the colony, and now acting as chairman of the Land Commission, l.iaeteen other witnesses were also called for the Crown. - " Tho chief feature of the case lay in the unique character of the claim. Usually, in Compensation Court cases the claimants are content to lead evidence showing the value of the property, looking at it from the most optimtistio standpoint. In the Flaxbourne case a departure was made for the first time in the history of such cases in this colony, and, so far as I am aware, in the history o£ such cases as presented to any Compensation Court in the world. The claimants held that they were entitled not only to the value of the property as based on its profit-earning power in 1903, when the _ Government under its proclamation was supposed to enter into possession, but were entitled, to any additional value which the property might have in consequence, of it not having been titilised to its full capacity. In other words, that if the property was earning -a net income of £10,000 per annum, and the owners. "by an expenditure of, say, £30,000, could have raised that income to £20,000 per annum, they could claim from the Compensation Court the capitalised value not only of the actual income earned? but 1 also'of 'the 'income that might have been earned ~by such expenditure. Therefore witness aftef witness was put into the box to prove that position, their first witness (W. T. Robinson, of Cheviot) going so far as to declare that the net earning power of the run when carrying the estimated quantity of stock shown by a return submitted was £24,621, representing an actual value at 5 per cent, of £492,400. This, commented Mr Macdonald. in face of l/he fact that the valuation by the^Land and Ircome Tsx Department of the property at the same period was £112,000. The figures varied, one. witness going as high as £560.000. while the Crown valuations ranged from £130,000 to £146,000, the difference between the. two sets of values being practically a quarter of a million. Some extremely interesting evidence was given as to how the huge values were arrived at. and in one rase one of thp witnesses electrified the courfi by a graphic illustration of what he termed the 'bumning 1 up ' process, of which more will riossibly be heard on some future ocoa-

sion." Mr Macdonald went on to say that the position of the tyro assessors, acting with, a judge of. the Supreme Court, is at all limes an extremely difficult one. Naturally the assessor for the claimants looks at thti case from thp rx>infc of view most favourable to the claimants' interests, and is very d-esirous that those for whom he is acting =hall receive a most liberal compensation. The. assessor for the Ciown lias to guard against giving 1 any amount that represents more 'than the legitimate value of the> i>ropertv. Section 23 of the Land for Settlement^ Consolidation Act lavs down the nrinciplc^ which shall cuide t.he court a? to values. If says: "In determi nras whafi «urn is to be uaiil by way c-f eomysen?atioii in respect nf land taken, or there! y injuriously affcoted. t-hr» cou.-t ■s.lnll liaref r*>sraril only to the value- of ilio land, fine! oUoMihe locs., If any caused fo the claima-

nt's business by the taking of the land.'' "-I was extremely anxious that there should W an agreement, and that tho many weeks of labour which "had been spent upon the fas© should not be thrown away. I therefore asked that a plan should be prepared >howing the subdivisions as laid off by the Government — a t>lan which it was going bo publish with a view to submitting the Sections for rental, and that the rental - Values which were going to bo pla-ced teainst them— should be submitted to me. those rentals, as the public is aware, are "ba6«d at the rat© of 5 per cent, upon the capital value olf the lad. I found that the Government officials who have control of these matters, who are possessed of very ppecial experience and. knowledge, and whose impartiality is beyond question, had fixed Lhe rental values of these subdivisions at from 2b to 50 per cent, higher than the rate at which the adjoining pro-"*»rties of BtarborougJi and Blind River had been leased a few years ago, that excess representing to their mind the reasonable increase in value which had occurred in con»equence of the advance in the price of stock and laaid. I examined the plan and lhe accompanying schedule very carefully, and had' the capital value of the land taken ' out on that basis. I discovered that the capital value was £141,000. The position therefore was this : The._ Crown felt that it was unable to 'get a higher rental for- the land than 5 per cent, on £14-1,000, and if it tad" to pa^ £200.000 for the land there .would 'be a loss of nearly £60,000, which "shortage would have to be borne by the taxpayers of the colony. ""'So far as my judgment went," Mr Macdonald went on to say, "any sum between "3130,000 and 16150,000 represented the real - value of the property, and. any excess over tliat -meant a special burden on the tax- - payer, and. would have necessitated a vote from Parliament to balance the account, end, further, very grave discredit on the whole working of the Land for Settlements Act. The claimants, through their assessor, could not see their way clear to reduce below the sum of £208,00". The judge halted »bout midway, and there was nothing for it Sjttt a disagreement, the rule beisig that if both assessors- ag*««, e-ren if the judge docs not agree, or if the fadge and one assessor *gree, the majority of the court binds the disagreeing- member. In this case an agreement was "impossible, and the long weeks Df labour and .the expense of some 50 witnesses-, with an array of officials, amounting "lo many thousands of pounds, were apparently thrown away. This was not really -to, however, because the court had settled fche~ very important question of the area which should be reserved for the claimants and the question of the- classification of the remainder, po that the issue to be put before lhe new Compensation Court will be merely bare- question of the value of the ~i! 51811. acres.

. " The case far the claimants." Mr Macdonald remarked, ''* was very abTy~ conducted jbyi Messrs C P. Sk-err-ett. H. Johnston and Conolly (Blenheim), and Messrs Sim (Dunedin), _D-~ M. Eindlay (Wellington), - and- -M'Galium (Blenheim), argued: ~th« case with conspicuous ability for the Crown. It, is difficult to conceive that a. case could be presented for the consideration of any court with a greater attention to detail, and with greater industry and ingenuity. Xt was a monument to the skill and- ability of both sides. The impression left upon my mind" at the conclusion of the case (and this impression is the outcome of very wide- experience in such matters) .was that, the whole system of Compensation Courts, with, their array of witnesses and exaggerated views as to /alue. is a mistake. Bom© simpler and more effective means "might to- be discovered for dealing with such important questions of public policy. {The^.root of tho difficulty lies in the fact that thfr valuation of properties is considered by: every landowner too high when he has fco pay taxes ; it is absurdly low when his "property is required for public purposes. X there was some automatic means by which the owner could be- compelled to face the position- of valuing his property at a fair price, with the risk of having it at any moment taken by the State at that valuation, .with a 10 per cent, addition for com.mdsory taking, he would take care that an shonest value was placed upon it, and these expensive proceedines in connection with the Compensation Courts would be a tliinsf of the past. There is another point which should not be legt sight of, they are too -great a tax upon the judges of the Supreme Court. Possibly -no other judgp but Mr •Justice Cooper would have •been, able to have stood* the fatigue of over a week's"severe horseback exercise such as he had to undertake, and" I was-ereatly struct with the patient attention which he gave to the' whote of the case from ifs inception to- the--"end."