TOWN COUNCIL LOAN

Southland Times, Issue 17305, 29 March 1913, Page 6

TOWN COUNCIL LOAN

AN ORIGINATING SUMMONS. JUDGMENT OF SUPREME COURT. The case submitted to his Honour Sir Joshua Williams for written argument between the Mayor, councillors and burgesses and Thomas T. W. Walker, Town Clerk, of Invercargill, has been decided. The summons was an originating one, under the Declaratory Judgments’ Act, ■to determine whether by sub-section of section 23 of the Local Bodies Loons 'Amendment Act, 1908, the Corporation could borrow a sum of £IOOO without notice and without a poll of the ratepayers. The main points In his Honour's decision *are:— ■By section 3 of the Local Bodies Loans Act, 1908, a local authority may from time to time raise a special loan for the undertaking, providing or establishing any public work. By section 7 before raising a loan the consent of the ratepayers is to be obtained by the »local authority In the manner prescribed by the Act. By section 8 the local authority has to publish a notice setting forth (a) The particular undertaking or undertakings proposed to be engaged In. I.b) The sum proposed to bo borrowed 3for such purpose, (c) The proposed -security and the provision for repayment of the loan, (d) A statement whether or not it Is proposed to pay out of the loan the cost of raising the loan, or the interest for the first year. Sections 16 and 17 of the Act relate to the security for the loan. The summons v states that upon a poll of the ratepayers a loan mf £75,000 for the purpose of constructing and equipping electric tramways was authorised and raised. It was ■found, however. -In June, 1912, that the loan would be insufficient, and a special loan of £15,000 was duly authorised. It ;ls now found that the total amount of the loans Is Insufficient and that a further loan of £4OOO Is required. The question is whether the Council can raise It by virtue of section 23 of the !Local" Badies Loans Amendment Act, 3908. His Honour’s judgment goes on to say that the object of the section was In cases where the cost qf the work bad been slightly underestimated, to allow the local authority to raise without further procedure up to one-tenth of the amount of the original lean in order to complete the work. The Council could by virtue of section 23 have •: raised a loan up to one-tenth of the (£75,000. but In raising a special loan of -£15,000 for the same punpose the Corvporatlon has abandoned the right to borrow up to one-tenth of £75,000 without the consent of the ratepayers. It’ (that were not so the ratepayers would be misled, and the lenders of the £15,000 (Would als° have been misled. The only question really open Is whether the £15,000 loan can now be said to be the Original loan within the meaning of section 23. so as to allow up to one-tenth of it to be borrowed. What is certain Is that the two loans of £75,000 and £15,000 cannot be treated as one original loan. It may be, though I doubt if It Is the case, that the raising of the loan of £15,000 was a fresh departure, and that Hhat loan can now be treated as the i original loan. As, however, £4OOO is Iwanted, and as £ISOO is the utmost that v Jcould be raised under section 23 if the *05,000 could bo treated as the original loan, it is unnecessary to decide this question. The only question in the summons which it is necessary to answer Is opiestlon 3, ‘‘Can the Council legally borrow the sum of £4OOO without any notice further poll for the purpose of completing the undertakings aforesaid?" Jfbe answer is “No.”