PUBLIC TRUST OFFICE.

Press, Volume LX, Issue 18236, 21 November 1924, Page 10

PUBLIC TRUST OFFICE.

A WELLINGTON CRITICISM.

(SPECIAL TO "THX PBESB.") WELLINGTON, November 20. A correspondent writing to the "Dominion" about the recent defence of the Public Trust Office, which was fathered by the Prime Minister, says:—

"Making due allowance for the spirit of loyalty that frequently impels a Minister to stand by the officials of a Department of which he is the political head, it is quite clear that Mr Massey is wholly unaware of the strong current of opinion setting in against the Public Trust Office. Otherwise he would not have been so indiscreet as to shoulder the responsibility for a statement so manifestly that of the Public Trustee ■himself, and such a singularly inadequate and unconvincing reply to the many comments and criticisms that have recently appeared. "The critics have made a strong point with respect to the profits made to the evident detriment of beneficiaries connected : with estates placed in the Common Fund. As regards this I would merely remark, that the Ministerial statement does not clearly refute this contention, and this is peculiar to say the least. It has been stated by parties who ought to know that refunds have had to be made of sums arising from overcharges and mistakes. "It has been asserted by the Department over and over again that on the question of charges the Public Trust Office places clients on a particularly favourable footing. As to that I may cite a case.

"Some years ago an application by the executors in the estate of the late Allan McLean, of Christehurch, for remuneration was referred to the Court of Appeal because the executors, three in number, were beneficiaries under the will to the extent of £IOOO each. The Court had to decide what they were entitled to, if anything, over and above the amount bequeathed. The Court, consisting of the Chief Justice, Mr Justice Edwards, and Mr Justice Sim, after eulogising the work of the executors, fixed the remuneration at £ 750, to be divided the three for four years work, and remarked: '' The last matter to be mentioned is that the amount which would be paid to the Public Trustee under its scale of charges as fixed by the law for the administration of such an estate would be £7793. "It may be that since then the Public Trustee has reduced his scale of charges, but has he done so to sueh an extent as would compare favourably with the amount allowed by the Court to private trustees for similar work? "Another point that is being commented on is the action of the Public Trustee in taking deposits at rates and on terms higher than those obtainable from.the banks. The question arises: What makes it necessary for the Public Trustee to enter upon a line of business quite outside the functions of a trustee? By what ingenious methods will the cost involved in borrowing money in this way be provided for? Again may I ask what kind 6f financing is this which .places the Public Trustee in competition with the banks that have rendered undeniably good iservice in developing the country, and with > well-conducted building societies so useful in assisting thrifty people to .build homes, and further tempts depositors- in the Post Office Savings Bank,!who.are content with rates varying from 4 to 3J per cent, according to the amounts lodgedj to transfer to another .Department? The last is surely a case of robbing Peter to pay Paul."

QUESTIONS IN PARLIAMENT

(SPECIAL TO "THE PBESS.")

WELLINGTON, November 20,

Answers to late questions put during the recent session of Parliament to Ministers made their appearance today.

. Eeplying to a question about the Public Trust Office, Mr Massey states: The Government is not aware that any solicitors or other persons putting in applications to the Public Trust Office for loans on behalf of clients are charging procuration fees for obtaining the loans. The Government was under the impression that the practice had been discontinued, especially since the recent remarks of a Judge of the Supreme Court in Auckland condemning the practice, which by Section 100 of the Public Trust Office Amendment Act, 1921-22, is made illegal. The Government will take all possible steps to deal with any cases which are brought under notice. In any case, where an applicant submits an application for a loan to a branch of the Public Trust Office without the intervention of any solicitor, the application is prepared by the office, and if no solicitor is nominated 'f ot the. purpose the security is prepared by the Public Trust Office. In the circumstances it does not appear that any further arrangements are required. to be made in the direction of having securities prepared by the Public Trustee. With regard to the limitation of solicitors' costs to ' the proper legal charges, the Public Trustee states that he has endeavoured to eliminate the necessity for solicitors charging _ procuration fees by allowing practitioners submitting loans a fair fate of remuneration for the preparation of the necessary securities.' Solicitors are allowed the charge according to the recognised scale prescribed by the Law Society for such work. Moreover, a solicitor, in furnishing his certificate, is required to certify that he has made no charge beyond that prescribed by such scale. The Public Trustee feels that he has done all he can legitimately do to stop the practice- complained of, but if any cases are brought under his notice he will take the necessary action. But so long as solicitors observe the recognised practice and act fairly towards their clients the Public Trustee does not desire to disturb the relations existing between them and' their clients with the object of diverting work to the Public Trust Office.

It may be taken, therefore, that the practice of charging procuration fees is by no means a general, one, though there may be isolated cases. It is" considered that everything possible has been done in the matter by: (a) The passing of legislation making the practice of charging such fees illegal; (b) the Public Trustee allowing a solicitor acting on behalf of a client a fair and proper charge for the preparation of legal documents; (c) the Public Trustee requiring such a solicitor to certify ,in' his certificate as to the amount of costs he is charging his client. THE PUBLIC TRUST COMMON FUND. "TO TOT EDITOB Or "THE PEESS." Sir,—The Right.Hon..the Premier, after reviewing the history and purposes of the Common Fund, has issued a statement upon the matter, which it is superfluous to say has been compiled .by the Public Trust Office itself, and in my opinion, Mr Massey is

in no way accountable for it, except for the fact of issuing this Jpubfic statement. Before proceeding to offer any remarks or criticisms upon it, I would sav that I am unaware that any objection has been raised to the Fund, or the necessity of its inception, but purely and simply with the administration of the moneys which come into it, and I do no propose in this letter to deal .with any matters contained in the comprehensive statement until after that numbered 4.

The investment of local bodies' sinking funds is the concern entirely ' of the trustees of such funds, and * they have the right and power to agree as to the investment thereof and the interest to'be paid thereon, and there ran be no grounds of complaint if they are satisfied. It is. however, an entirely different matter with regard to the beneficiaries of an estate which falls into the hands of the Public Trustee through "the death of the testator and whose estate is invested jn good, sound securities yielding from 6 per cent, to 8 per cent., but which are promptlv realised by the Public Trustee, and the proceeds paid into the Common Fund, the beneficiaries having no say or control in the matter, and receive five per cent., and the Public Trustee equally promptlv reinvesting at 6i per cent., quietly scooping the difference. Complaint is made that the figures quoted by critics of the amount "of interest retained by the office are misleading, the conclusions erroneous, if such is the case I think the critics ure quite excusable and pardonable as I venture to assert the opinion that the accounts as published make it almost impossible to follow, and ascertain accurately the position of any trust or other funds in the hands of the Public Trustee, and will endeavour later to prove this by stating examples. The author of this comprehensive statement later on accuses the critics for failing to give credit for bonuses paid in 1918-1920, presumably to beneficiaries. I think this is rather an unfortunate proceeding of the author, as an examination Of. the published accounts for those veare discloses some very peculiar and interesting characteristics. They disclose that the following allocations from the profit and loss appropriation account were as follows: 1918, £27,000; 1919, £30,000; 1920, £38,000, a total of £95.000, and that on March 31st, 1920, there was a balance to the credit of the account of £7650 2s 2d. In the account for year ended March 315t,.1921, this balance is brought forward as £10,162 18s Bd, and in the accounts as at March 31st, 1922, the amount of £10.525 Is 4d is retransferred to the credit of the Profit and Loss Appropriation Account aB the unexpended balance of bonuses to estates; how it increased from £7650 2s 2d to £10,525 Is 4d, it is impossible from the published accounts to ascertain. Now the total allocations to this account as disclosed by the published accounts are £95,000, and ■ the unexpended balance of £10,525 Is 4d retransferred, consequently the amount paid in bonuses is £84,474 18s Bd, not £92,404 as stated in the statement. Further, it is absolutely impossible to trace to what account these allocations have been credited, and what has become of the money. I will only refer to one other account. Investment Fluctuation Reserve, in the statement of assets and liabilities as at March 31st, 1921, this appears as £43,395 'ss lOd, but in a statement called the balancesheet of that date, it does not appear at all, and if I take up the accounts as at March 31st, 1922, I find that a further sum of £6515 was transferred from the Profit and Loss Appropriation Account to the credit of the Investment Fluctuation Account, making a total of £49,910 5s lOd; yet the amount appearing in the balance-sheet at this date is £49.283 5s 3d' a deficiency of £627 0s 7d. I think that from the above facta it will be conceded; that critics if,' they did err in their statements, are entitled to sympathy and excuse. "Jurist," in his articles, has dealt with the policy of the Public Trust Office, the accounts have been referred to, but no remarks have been made to the general administration of estates by the Office, but if the Premier will appoint a Royal Commission to enquire into this branch of its activities, evidence would be available to prove:—-

. (lj That- higher rates for commission and interest have been charged to estates than he was entitled to charge, and considerable sums had to be recredited.

• (2) That a liigher rate of interest has been charged upon advances to beneficiaries than to the outside public who have borrowed money from the Office, notwithstanding that the Public Trustee held in his own name property belonging to the beneficiaries many times exceeding the amount of any advance made by him. (3) That through the negligence or incompetence of the. Public Trust Office probate duty has been paid considerably in excess of what should' have been paid, and more would have been paid had it not been prevented. Sir, if the Kt. Hon. the Premier, with this knowledge, is satisfied with the comprehensive statement by the Public Trust Office, I shall have no more to .say iinon tba matter.—Yours, etc., ' INTERESTED.