EMERGENCY LEGISLATION.

Southland Times, Issue 22217, 9 January 1934, Page 10

EMERGENCY LEGISLATION.

To the Editor.

Sir, —I wish now to deal with the working and effects of Mortgagors’ and Tenants’ Relief legislation prio.' to the time the Hon. J. G. Cobbe’s biased Bill alarmed a number of lessors and mortgagees of land and threatened the greater part of their livelihood. I am hopeful that the Statutes Revision Committee removed a lot of the bias before Parliament passed the Bill. If you, sir, can publish a summary of this new legislation you will oblige persons vitally concerned. The previous legislation did not operate fairly. The relief possible under the Act of 1932 included postponement, reduction or remission of interest on mortgages; also reduction or remission of rent; further, a postponement of the right to sue on personal covenant for payment of principal and interest, which would permit of default with impunity. (I suppose “remission means writing off, and “personal covenant” private contract). So far as I can understand the legislation, the Court or commission could make such reductions to mortgagors or tenants as it though, fit, but seemed unable to ensure the payment of even the reduced dues as some of us found to our loss. There have been numerous investments through trustee companies. Here is a quotation from the address of Mr G. R. Ritchie, chairman of directors, at the last annual meeting of the Trustees, Executors and Agency Co.:—“Lenders and others who are assisting to keep many on the land are sympathetic and anxious to help in every way possible, and here I must put in a word for the lender, as often as not a widow or elderly person who cannot go out and work even if work were offering—they suffer a very depleted income in silence, and in very many cases they deserve sympathy as much as, if not more than, those on the land.” Here, I may say, the law requires a 20 per cent, reduction in rent on land and a reduction to 5 per cent, interest on land mortgages even before commission or Court intervenes and probably makes further reductions. Some mortgagees are making concessions beyond what the law requires, but others simply cannot afford to do so—the compulsory cuts are more than enough for the latter. It is common talk that some defaulters are keeping up a higher standard of living than are their creditors. Another retired man of 70 and I were comparing experiences. We each had a mortgagor not paying interest to us. I said mine nevertheless was running a motor car. He replied:—“My man has two motor cars. . . I have another man who is paying up, or I could not carry on.” It should not be allowed that one man on the land is cutting a dash and defaulting while another is carrying on sensibly and paying his way. Moreover, one default may lead to another. For instance, a man may have retired from his farm, having sold it with most of the purchase money remaining on mortgage or having leased it at a fixed rental. Relying on the contract being kept, he may have made commitments accordingly. If the purchaser or tenant fails to pay, how can the retired man meet his liabilities? Or he may have bought a house in town with what money he had, and so has a home to live in, without the means to live on. Likely as not he has an aged wife and former help-mate to share the privation. Take another kind of case, which is more real than imaginary. Suppose that a man on a 300-acre farm raised a mortgage of £3OOO on it through a trustee company and that 10 clients lent the amount among them. Suppose that instead of receiving "in aii average £l5 a year of interest, those small investors are getting nothing in the meantime. Are they being treated fairly? I assert that before a Court or commission grants such a mortgagor relief the circumstances of all the ten mortgagees should be considered. They should at least have an equal share with stock mortgagees of any money available. Let us now consider the case of the stock mortgagee. Mr W. E. Reynolds, chairman of the directors, when presiding at the annual meeting of the Perpetual Trustees Company, said: “In the opinion of the general manager and the executive officers of our company the law as it stands to-day in respect to the workings of the Mortgagors’ Re-

lief Act is inequitable in its effects. There are three principal parties concerned in the affairs of a mortgagor farmer—viz., the farmer himself, his mortgagee and his stock agent. Under the Act as it now stands the recommendations of the Mortgagors’ Adjustment Commission and the decisions of the Courts effectively bind only two of the three parties—viz., the mortgagor and the mortgagee.” Mr Reynolds went on to say that a stock firm therefore has an unfair advantage, of which the officers of his company disapprove, and which has caused resentment among clients and made them less willing to make concessions. In my opinion the Bill recently sponsored by the Minister of Justice if passed as presented to Parliament would have given stock firms still greater advantage, indeed allowed them to “scoop the pool.” Mr Reynolds adversely criticized the fact that rates and taxes are a charge upon the land and are given priority to the mortgagees’ rights. It is a queer state of affairs that a lessor or mortgagee of land in case of default by tenant or mortgagor may have to pay rates and taxes on land from which he himself is receiving nothing. Does the State pay rates on Crown lands if clients default? I think not. If it will not be too great a tax on your space, I should like you to publish another letter from me, the main subject to be the Hon. J. G. Cobbe’s Bill.—l am, etc. “SEVENTY.”

[We hope to be able to publish this week a summary of the new legislation relating to mortgagors’ and tenants’ relief. Ed. S.T.]