CROWN AND LOCAL RATES

Taranaki Daily News, 10 June 1930, Page 11

CROWN AND LOCAL RATES

FAR-REACHING QUESTIONS LIABILITY ON MORTGAGED LAND. GAN COUNCIL SELL PROPERTY? Questions involving far-reaching consequences for the Government and for rating authorities throughout New Zealand were raised on an originating summons the hearing of which was commenced before Mr. Justice Blair yesterday. Shortly, he was asked to decide whether the Crown as mortgagee is bound by the Rating Act and whether the local body concerned may sell the land after obtaining judgment against the owner. Argument will be continued to-day. The property involved in the case is a farm of 57 acres in the borough of Inglewood. It was owned by W. G. Marshall, the being mortgagee. The rates were allowed to accumulate, and the question of the payment of arrears of rates arose. Later the land was sold by the Crown to W. J. Lile, who, as purchaser, is concerned as to his liability, if any, for rate arrears. Judg.ment for rates was obtained by the council against Marshall. The council proposed to proceed to sell the property under the provisions of the Rating Act in order to reimburse it for the arrears, and the present proceedings are to determine whether the council is entitled to go on with the sale. Mr. 0. H. Weston is appearing for the Crown and Mr. L. M. Moss for the Inglewood Borough Council. Mr. Weston said he was concerned with the defence of three of the ancient prerogatives of the Crown —its immunity from, rates; the right of priority of payment as between a subject and the Crown; the freedom of Crown property from forfeiture. The main question appeared to bo whether the Rating Act pf 1925 bound the Crown. ACCUMULATION OF RATES.

His Honour said it appeared there were arrears of rates on the property in question before 1928. The case seemed to be that in January, 1928, the

Crown let the grazing rights and they * had been let more or less continuously ever since. In this way the Crown was trying to make some return from the property pending its sale. ■ The Crown was doing its best to sell, and he did not know that it could be said to have become. mortgagee in possession. Mr, Weston said the Crown had since sold the property. Lile, the present owner, wished to be indemnified against any claim for arrears of the rates the Borough Council might have on the land. The question before the Court was one of great importance as similar positions were arising all over New Zealand in connection with discharged soldier, settle- ’ ment.

His Honour: It seems strange the Court has not been asked to decide it ■before. As lawyers we always look to the mortgagee for rates in such cases. Mr. Weston said that so far the Crown had been following the practice of giving the purchasers an indemnity against a claim by the local body. • Mr. Moss said he thought that in some instances the Crown had made payments. His Honour: Probably in those cases the price paid for the land permitted that being done, Mr. Weston said he would like to impress on the Court that the attempt to settle returned soldiers was not a gratuitous incursion into the realms of finance, but was distinctly a war measure. He did not think this affected the case materially, but he would like to mention that aspect to the Court.- The purchase of the land for soldier settlement was really part of the war expenses of the country. Mr. Weston then proceeded to quote extensively from authorities in common and statute law in support of the three propositions he had mentioned. QUESTIONS FOR. THE COURT. Ho placed the following questions before the Court for answers:— Can tho council sue tho Crown, as first mortgagee, for rates? Can the council sue the Crown as owner and occupier in respect of rates that became due before the King became owner and occupier? Can the council cause the registrar to sell land owned by the Crown in respect of rates that became due before the Crown became owner and occupier ? Can the council cause the registrar to sell land that is subject to tho Crown’s mortgage, as if free from encumbrances, or as subject to the Crown mortgage; or could the council take any action at all under section 79 when the land is subject to a Crown mortgage? Can the council strike a rate on property, (1) owned and occupied by the Crown, (2) under mortgage to the Crown, (3) of which the Crown is mortgagee in possession ? . Can the Crown as mortgagee sell land free from encumbrances in respect to rates ? If it can, must it account to the council as regards arrears of rates for any surplus moneye? If the council cannot strike a rate when the Crown is owner and occupier or mortgagee, cither in possession or otherwise, can the council, (1) strike a rate on the land for part .of the year upon the purchaser entering into possession, or upon' the Crown’s mortgage being realised, whichever event shall first occur; or, (2) can the council strike a. retrospective rate on the land when a purchaser from the Crown enters into possession, or upon tho Crown’s mortgage being released, whichever event whall first occur?

To what extent do the provisions of section 123 of the Local Bodies Loans Act, 1926, affect the answers to the foregoing questions? Mr. Weston maintained that the Crov/n could lend money on property without being bound to tho payment of rates that had accumulated on the property.. Ho submitted that the (.’curt was not concerned whether in that way an injustice was being done to tho local body concerned. That was legislature to decide. The legislature had had its opportunity to give freedom from Much an injustice but had not done so. ARGUMENT FOR THE COUNCIL.

Mr. Moss placed the following facts before the Court: Marshall had teen on the rate roll since 1020. He paid rates up. to Mareh 31, 1925. He left the property in December, 1927. On March 27, 1928, the local body obtained judgment for three years’ rates, 1925-28. 'The mortgagee’s attempts to sell commenced jn January, 1928, and the mortgagee flist granted grazing rights ■ the same month. There were now. due.rates for twQ.addL. I::l d; Oi 'll 'ld! vml

tional years. In June, 1929, the local body took action under section 79 of the Rating Act and the registrar served the notice. His Honour: The Crown agreed to sell the land to Lile in September, 1929. Mr. Moss said he proposed to arrange' his argument first to deal with the question in its relation to general rates and secondly in relation to special rates. He suggested the provisions of local body legislation established a serious difference between the two. Dealing with general rates, he submitted they were payable and could be recovered by the borough council - under the machinery clauses of the Rating Act, unless the Crown proved, (1) that it was land vested in the King and that there was no owner or occupier other than the King; (2) that the council was prevented from pursuing its remedies under the Rating Act because it might affect property belonging to or vested in the Crown in accordance with section 384 .of the Municipal Corporations Act; (3) that the council was barred by section 5k of the Acts Interpretation Act; or (4) that over and above any statutory provisions he had referred to, and apart from special rates, the Crown’s prerogative prevented recovery. Counsel submitted that Marshall wap and always had been the legal owner of the property. He was in occupation till December, 1927, and therefore at the date of judgment for rates (March 27, 1928) the Crown was neither owner nor occupier. In answer to His Honour Mr. Moss maintained the Crown was in possession of tho property as an ordinary mortgagee and that it was “deliberately keeping off the grass.” According to section 350 of the Municipal Corporations'Act an owner remained on the rating roll until the contrary was proved. Counsel submitted that Marshall was now and always had been the owner. Section 67 of the Act rendered the occupier liable. Marshall as owner had an equity of redemption in law. He suggested that the protection the Crown sought was protection not so much for itself as for Marshall, its subject. The Rating Act and any exemptions, whether statutory or in common law, were not to be construed to give personal protection to the owner. Much of the Crown’s case was based on a suggestion that there was no equity in its land over the mortgage. Marshall, continued Mr. Moss, could pay off the Crown’s mortgage that day if he wanted to and the property would be his in every sense of the term. This was not Crown land in every sense of the term; it was private land. His Honour: Shorn of unessentials, what happened is that the Crown lent money on it. Mr. Moss maintained that was as far as the Crown case could go. He quoted authority for his' contention that the term “ vested in the Crown” had no technical meaning in the. Rating Act. The land must actually be in the name of the Crown. Exemptions under the Rating Act should be construed strictly as they imposed burdens on other people. At this stage rose till today.