PARLIAMENT

Southland Times, Issue 21659, 22 March 1932, Page 8

PARLIAMENT

MORTGAGORS’ RELIEF SECOND READING OF BILL PROVISIONS OUTLINED (From Otfr Parliamentary Reporter.) Wellington, March 21. A rather dull and spiritless debate characterized the second reading stage of the Mortgagors and Tenants’ Relief Amendment Bill in the House of Representatives this evening but the Bill met with a fair reception. The Prime Minister in moving the second reading confined himself largely to outlining the provisions of the measure and the Leader of the Opposition, who followed, raised no objections to the measure but said it did not go far enough. _ _ The Bill extended the operations existing under which a considerable amount of relief has been given to farmers and others, Mr Forbes said. While there have not been a great number of cases actually brought before the Court, there was no doubt- the Act. had had the effect of bringing the mortgagor and 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 recognized 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. Ihe Court provided the safeguard against unnecessary interference with contracts and arrangements. It recognized in most cases that mortgagees were endeavouring to meet the needs of the mortgagors and the Court offered the machinery for meeting the position in instances where such endeavour was not being made. The mortgagees themselves recognized the country was up against a crisis and it was often in their own interests that the man should be kept on the land. The Primo Minister then outlined the clauses of the Bill. Replying to the Leader of the Opposition, Mr Forbes said the clause of the Bill relating to a review of rentals would apply in the case of residential rents wherever there was some arrangement or document under which 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, Mr Forbes said that, no Government Department was exempted from the operations of the Bill. Personal Covenant. Dealing with the question of personal covenant, Mr Forbes said there had 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 app.y to the court for an adjustment of his obligations under the guarantee. The proposal regarding the personal covenant had been hedged about with safeguards because it was realized action in this direction was interference with the rights of the mortgagee. The court had power to consider whether there was any hardship and determine whether the mortgagee should have the right to proceed under the personal covenant or not. There were many cases where a mortgagee might very definitely take into account the personal covenant. For instiuCe in a case where actual security was not. more than 50 per cent, of the value, the court had been given a fairly free hand in regard to the personal covenant. Mr R. McKeen (L., Wellington South) : The court can only postpone, it cannot determine. Mr Forbes: That is so. Leader Of Opposition. The Leader of the Opposition, Mr H. E, Holland, reiterated what he had said when the Bill was introduced, about the Bill being ; in improvement, although it did not go tar enough. When the Government dealt, with mortgagees it sent them to the court, but when it was dealing with working men it empowered the court to make a general order reducing them 10 per cent. The Government should have done the same tiring with interest and other fixed charges and should have made a statutory reduction all round. The Bill would give the mortgagor the right to move to court without the mortgagee moving first, and that was an improvement, but if tho mortgagor desired to move to court he would have to find the fees. Many working men who had borrowed through the State Advances were not in a position to do that, and that was why the Government should have made a statutory reduction. If there was a reduction in interest there should 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. There was grave need for a reduction in rent, he went on. , He had studied the “To Let” columns in Saturday’s evening paper, and although there were two and a-half columns, the rents advertised were all too high for the working man to pay. Ihe Primo Minister: He’s not paying or those houses wouldn’t be empty. Mr Holland: He’s not paying, but he is owing it and is liable for it. Mr A. J. Stallworthy: Does the hon. gentleman suggest that the rent would pay the landlord ? Mr Holland: I am not suggesting anything. ’The Government knows these facts, but no move is being made to bring down remedial legislation. Continuing, he said the former Act made provisions 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. Adjustment Commissions. Referring to the Adjustment Commissions he said there were 33 commissioners who were to be paid two guineas a day and travelling expenses. ‘That’s better than the number five scheme, n he commented dryly. Ihe Hon. J. G. Cobbe: The commissioners won’t get much out of it. Mr Holland: I’ll get the Minister a host of men in this country who will work for two guineas a day even if it’s only for two days a week. Dealing with the question of the personal covenant, he said that the Court had no power to determine it, but it should undoubtedly have that power. After quoting an Auckland case where the mortgagor had lost his property and was faced with a claim for £7OOO on his personal covenant, he said that that was a case the Bill should meet. There were numerous 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 £5 a week. This man was employing sixteen hands and the increase in rent would probably put hi-m 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 stating that the action of his principal was due to the 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 (1., Egmont) said the Bill might do a little good, but it was not what the country was looking for. Bank Rato of Interest. He endorsed the remarks of the Leader of the Opposition, and said there should be a statutory reduction of fixed charges on a sliding scale. He suggested that the Government should accept any reasonable amendment to the Bill, and said the Bill should go before a committee. Bank overdraft rates should also be dealt with. “I don’t doubt that another measure will come forward, but I’m afraid the Government hasn’t the courage to include the bank rate of interest in it,” he said, and then withdrew the remark about courage. While the measure before the House would do a little good, it did not “fill the bill,” said Mr Wilkinson. The suggestion that mortgages should be extended two years only did not appear to be sufficient. He considered it should be five years. The proceedings before the Court should be made as economical as possible, and no representative of the money-lending class should be appointed a commissioner. Mr W. Nash (L., Hutt) said he thought there were 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 the Government had done the right thing in giving the Court power to review cases. Mr Nash disagreed with the Prime Minister’s statement that the Court had no power to determine questions relating to the personal covenant. As he read the Bill the Court was given that power. Mr W. E. Barnard: Quite right. 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 landlord to appeal to the Court. The debate was continued at a very uninteresting level until 11.40, when Mr J. Hargest (Govt., Invercargill), moved the adjournment. Before the House rose, Mr Forbes said he hoped to complete the stages of the Bill to-morrow to enable it to go to the Legislative Council on Wednesday. The House would probably sit on Thursday /norning to receive the Bill back from the Council, and then adjourn for Easter. The House then rose until 2.30 to-mor-row.