STORY OF HOW RURAL HOTEL WAS SOLD 13 YEARS AGO FOR £400

Wanganui Chronicle, 24 February 1949, Page 4

STORY OF HOW RURAL HOTEL WAS SOLD 13 YEARS AGO FOR £400

How a country hotel 29 miles from Wanganui was sold for £lOO in 1935 was described by Mr. B. C. Haggitt, counsel for the Wanganui Brewery Co., Ltd., when consent to the sale of Ihe Manganiahu Hotel for a consideration of £3OOO was sought before the Wellington Rural Land Valuation Committee at a sitting yesterday, the purchaser being P. H. McDonnell. Mr. Haggitt said that the hotel had a most unusual history over the past few years. After being purchased by the Wanganui Brewery Co., Ltd., it was leased by Mr. 11. J. Archer, storekeeper and carrier, Mangamahu, who used the premises more as a home than a business. As a result no attempt had been made to build up trade. The committee reserved its decision.

Mr. O. N. Campbell presided and associated with him on the committee were Messrs. G. A. Hansen and R. Downes. Mr. S. G. Joll appeared for the Crown, Mr. Haggitt represented the vendors, and Mr. C. P. Brown watched proceedings on behalf of the purchaser. The hotel was a substantial twostorey building which occupied one acre, 16 perches, and was situated at the junction of the Mangamahu and Fordell-Karioi Roads, said Mr. Hargitt. Mangamahu was the centre of a wealthy farming district and this; was the only hotel on the Fordell- 1 Karioi Road. As the committee would see from the application, the vendor company purchased the hotel in 1935 for the extremely low figure of £4OO. This was due to varying circumstances and one which immediately presented itself was the depression. For some time the hotel had been run by a mortgagee company, which was in liquidation. The manager was 84 years of age and the business had gone to nothing. On the day before the hotel was sold in 1935, the bar takings amounted to only 12s 9d. Wet and dry stock in the hotel was taken over at valuation, the amount being £l9. In effect, this was a forced sale by a mortgagee company, which had been in liquidation for the past seven or eight years. Because of the run-down state of the hotel it was necessary for the Wanganui Brewery Company to either lease the hotel or put in a manager. Mr. Archer and his wife were well-known to the company’s managing-director, Mr. F. J. H. Nancarrow, and it was agreed that they lease the hotel for the nominal rental of £2 a week. Their own living accommodation at. the store was restricted and they subsequently moved into the hotel, taking it over mainly as a home. In addition to the hotel and store, Mr. Archer had a transport business and operated between Mangamahu and Wanganui. No attempt was made to build up the hotel trade.

After the Archers had been in the hotel for some little time the rent was increased to £2 10s a week, but no further increase had been made or asked for. “The rental, however, bears no relation whatever to the rental of the hotel,” Mr. Haggit added. “Mr. Archer is not concerned with the sale and as far as we know no separate accounts have ever been kept for the hotel. Even if they had been kept they would be of no assistance to the committee.”

The bulk of the liquor purchases had been made through the Wanganui Brewery and Mr. Nancarrow’s firm and a fist of purchases over the past four years was available.

In this ci?se the consideration was £3OOO and he intended supporting that with the evidence of a valuer and the production of figures, said Mr. Haggitt. Without making any allowance for the licence, which was worth something, a valuer had valued land and buildings at £3235. On the trading basis a statement had been taken and based on certified purchases of beer, spirits, and wines over the past four years, and from this the average gross profits were arrived at, the method adopted being that of the Land Sales Court. Allowing for all proper expenditure, the estimated net profit was £279, which capitalised on a basis of 8 per cent., gave £3487. “The figures given are solely those of the brewery company and Mr. Nancarrow’s company, but we know that purchases were made from other merchants, so that the figures are an under-statement,” said said Mr. Haggit. “However, they are the only ones we can give the committee.” Taking the gross profit as being 50 per cent, of the sales, the average gross profit arrived at was £1622. Overhead expenditure for the fcotel was very low. In reply to Mr. Hansen Mr. Haggitt said that the building was 34 years’ old. Mr. Hansen: How much would it cost to build in 1942? Mr. Haggitt: Mr. Searle valued the building at £2707. That is the 1942 figure. Both the Crown and his own valuer were in agreement with £5O as the value of the land, Mr. Haggitt added, Mr. Joll subsequently called evidence to show that the Crown valuation of the building was £3960. The Crown was not so much concerned as long as the parties could produce figures which were reasonable within the meaning of the Land Sales Act, said Mr. Joll. It was for the committee to say whether 50 per cent, was the correct figure to accept for gross profit. The committee reserved its decision.