HARBOR BOARD AND ARBITRATION

Gisborne Times, Volume VI, Issue 223, 27 September 1901, Page 3

HARBOR BOARD AND ARBITRATION

BOARD ADVISED TO AVOID LITIGATION. At the meeting of the Harbor Board yesterday, Mr Chrisp, solicitor to the Board, gave a written opinion in regard to freezing works’ lease arbitration. The main portion of the opinion is as follows : “ As the umpire beyond doubt was placed in possession of every fact possible to put before him, I do not advise that the award be questioned on this purely technical ground, more especially as the .Board practically gave its arbitrator a free hand as regards matters of procedure, so that in all probability it would be held to have waived such legal requirement, and more especially as no harm was done by adopting such a course. For several reasons, I do not think the Court would set it aside on such grounds. Mr Grant, in arriving at the conclusion that .£l5O per annum was a fair rent, stated that he considered he was not to base his valuation on any improvement made by the Company. This ii a question of law on the construction of the lease —somewhat doubtful but I think he was right in the construction. The intention was, I believe, that the Company’s improvements were not to be taken into consideration, and it must be ! borne in mind that all such improvements become the property of the Board at the end ot the first term ; but that the Board shall not, for rent assessment purposes, value such improvements at more than 1 XSOOO. The courts of law will always construe awards with a desire to sustain the judgment of the tribunal which the parties have selected (Templeman v. Reed, 0 Dowl, 96*2). An award good on its face cannot be set aside for an erroneous judgment of the arbitrators or umpire on a question of law ; nor will the Court review their decision as to the facts or allow the merits of the case to be gone into (Lancaster v. Herrington, 4 A and E, p. ;>45). It is not shown how Mr Grant arrived at his figure, nor is it legally necessary that he should do so, and on that point I can have nothing to say. As before stated, wc cannot review his decil sion on that head, except for grounds of I corruption, which, of course, do not exist. I am forwarding you all documents which the umpire and arbitrators had before them, and if the Board will peruse them as carefully as 1 have done, it will be seen that nothing was 'eft undone or unsaid on behalf of both parties which could have been done or said. In conclusion, I cannot advise the Board to take any steps to set the award aside, as in my opinion, whether it be much against the Board or not, there are no proper legal grounds for doing so, and any proceedings of such a nature would, I am convinced, be unsuceessful.”

“Query?” ejaculated Mr Sicvwright at the point stating that the Board had given the arbitrators a free hand. After reading the opinion, the Chairman said that the advice was against attempting to upset the award. They had tlie evidence before them, which was very voluminous. Mr Malthewson said it would be satisfactory to the public to know the grounds ol the award. The Chairman said no doubt the press would give the main points. It was dillicult to upset any arbitration. Everything seemed to have been fairly done, and lie thought the best thing they could do was to let the award stand, especially after the recent experience in the Supreme Court, when the Judge showed a strong disinclination to open up the subject oi the award. The difference in the three years would be AIJO. Mr Sicvwright said that he did not advise they should do other than accept the award, hut lie could not help saying that lie thought there had been a miscarriage of justice. It had seemed to him that the arbitrators proceeded on imperfect evidence, but lie would not advise that they should fly in the face of their solicitor, who had put before them many facts that they had not previously been aware of. The Chairman said that he was glad Mr Sicvwright had moved for an enquiry into the matter, as it had brought out facts previously unknown to them. They had been previously advised to go to law, and had lost. Now they were advised not to go to law, and should accept the decision. Mr Sicvwright: It should teach us to

be more careful next time. The Chairman said it was clear that the Board's arbitrator had dono all he could in the interests of the Board. Mr Sievwright said that he was not blaming the arbitrators. Fie had never been satisfied that such a system was the best way of settling disputes. Mr Matthowsou said that in the face of tlie solicitor's opinion lie would not favor going any further, but they should look into the point as to the powers of the lease, and not acquiesce quiotly. It was an absurd and ridiculous award. Recently a quarter-aero section near at hand, with not one tithe of the slapping facilities, had been sold for .£1250. Fie moved that the papers he handed to the press. The Chairman said that by placing it on the table it would he open to the press. Captain Tucker said that ono arbitrator said that .£SO a year would he sufficient. They could consider the subject at their leisure and might express an opinion later on. They had hardly got over their astonishment yet. The Chairman : I take it that wo agree that we will not go to law on the subject. Captain Tucker : There is no motion to that effect. Mr Sievwright; I would not propose to go as far as that. It was agreed that the papers should lie on the table.

In his statement to the arbitrators Mr Shelton said that the matter had been considered at a special meeting of the Board on the 6th November, 1895 ; a committee was appointed to go into details, an I on their reporting to the Board, unanimously agreed to lease the property for the purpose proposed at a rental of £IOO per year. There being no time to advertise the property in accordance with the Act, the Board granted the lease from year to year, and on the strength of that position the company proceeded to erect buildings. At the end of the lirst year Captain Tucker raised the rent for the spring by £23, which was added to the rent. In 1898, in consequence of the very large improvements put on the property, and in order to find security for the debenture holders, it was found necessary to have a legal lease instead of trusting to the Board from year to year. The Board, because the Company had put up valuable buildings, took advantage of this to charge £'2oo a year, for that which they were only too willing to get leased at £IOO a year; but, as .there was a clause in .the proposal that this rent should be the arbitration rent for three years on the actual value of the land, in order to get the legal title established, we took the land on those terms. We claim that the fair rental for the property was more than covered by the amount we were previously paying—-viz.,£IOO a year. In support of this statement, the following arc facts : The land consists of two acres. The land immediately adjoining it. being the property of Captain Tucker, is leased by Mr Shelton at the present time at thirty shillings an acre. A section on the fiat between the works and the bridge, consisting of a quarter of an acre, was purchased this year by Mr E. ,T. Chrisp, for the sum of £SO. We put in as an exhibit a copy of the lease granted by the Napier Harbor Board to the North British and Hawke's Bay Freezing Company. The site is almost identical with the site of the Gisborne Freezing Works, excepting that the Napier site leased is five acres instead of two in Gisborne, and in Napier there were no buildings at all. The rent paid by the Napier Company for 42 years’ lease is £SO for the first twenty-one years, and £IOO for the second twenty-one years. These facts show plainly that the Gisborne Harbor Board made a very good deal indeed in getting a tenant for their premises, which were fast falling into disrepair. The trade carried on there has been a most useful one to the district, and we consider the Harbor Board have treated us very unfairly indeed in attempting to charge more than the original £IOO, and we claim the rent should not exceed £IOO per annum, which is far in excess of what any land over there is worth. I think, taking the whole circumstances into account, the value of the land with the value of the Board’s buildings, which were

going into disrepair, that XSO is adequate rental for the property. But for the use that the Freezing Works have converted the property the land is not as valuable there as the section bought by Mr Chrisp. Two acres at the same price would cost X4OO. The interest on X4OO at 4 per cent is Xl6. The buiicil ■:s that were on the property when it v -s leased from the Harbor Board were, 1. all practical purposes, worth about X. . These, if not

maintained, would have been valueless by t now. but allowing their value at ,£7OO. at • i per cent is A'thS a year. The Board has : ai.-o been relieved of paying insurance and j rates, so that the total capital value of the j Board's property should not be assessed 1 at more than £'lloo. and at £'o a year , the Board is getting a fair rental for their j property. In Napier they are getting it tor that amount lor twenty-one years ; without any trouble, and the people in j Napier were only too glad to assist, the industry being established in the position . it was. ‘

Mr J. \Y. Witty, secretary to the Board, stated that from his own knowledge the value of the property had increased since the lease was granted. The annual rental value when the lease was granted was £3OO. Last year this was increased to £4OO. The capital value was £3300, and this year the district valuer was increasing it by £ISOO. Additions had been made to the buildings during the currency of the lease to the extent of about £ISOO.

By Mr Coleman: The additional £3OOO refers only to the bloekyard in 1898. John Clark, a member of the Board when the negotiations were first entered into with the Board for the bloekyard site, said that the reason the lease (at £100) was granted for a year only, was because the Board could only grant a lease from year to year without calling for tenders, lie distinctly understood that arbitration could only affect the land and the buildings erected bv the Board, and should in no way include the improvements made by the Freezing Company. " When the Board was first approached by the Freezing Company," said the witness, " had thev had the' power I believe they would have granted a lease for 21 years at £IOO a year, and been delighted to get it.” In reply to Mr Shelton, Mr J. Coleman said that the price paid by Mr Cbrisp for section 51, Haiti, one rood, within the last six months, was £OO.

Mr F. J. Shelton deposed that the only buildings on the land when the company first entered into occupation were the cement sheds, engine shed, workshops, and the Board office, which was afterwards shifted to its present site at the wharf. The total cost of those buildings new would be about £1000; they had been built in ISSG, and were getting into

a bad state of repair. AVlien . the lease was granted considerable additions to the buildings had been made by the company.

about £3OOO in value. When the company accepted the lease lie understood that the improvements put upon the land during the first 21 years would not be considered in the question of rental, but that the rent should he for the ground

only, together with the building originally put upon the land by the Board. Was not aware that the borough rental had been increased during currency of the lease from £3OO to £4OO. Did not know that statement in Gisborne Ti.mks oi the volume of business being done and that the company was doing more than when the lease was granted was correct. He said most distinctly they were not. Mr W. O. Sheet said he erected the Board’s buildings, except the office, in 1886, the price being : —Cement shed, £y7)i 15s t)d: workshops, £351 10s ; engine shed. £IOO. The face value when the Company took them over would be about £930 ; they would only be useful for storage purposes, and he did not think more than £SO a year could be got for them.

Captain Cbrisp said that he considered this evidence irrelevant, as the ascertained value was fixed at £3,300. Mr J. W. Bright was of opinion that the arbitration should be based on present value of the land, plus value of buildings .in 1895. He generally confirmed M/Shelton's statement, with certain qualifications. From what took place at the original granting he considered the Board was prepared to grant the lease for 21 years at £IOO. He did not remember Mr W. F. Crawford proposing that it should be £IOO for first year, £l5O for second, and £2OO for third, fourth and fifth years. If ho (witness) was reported when applying for the lease to have said, “ If the trade were in a better state I would not object to a higher rent,” the statement must have had reference to the £IOO. Trade was not now in a better state than when the lease was granted. Captain Tucker, a member of the Board, said his opinion of clause S of the conditions was that it referred to the event of some outside person being the lessee. Ho held the lands adjoining the works : the flat was let for about £2 per acre, and the hill for a third less. In 189-1, lie had sold half-an-acrc to Mrs Boylan for about £IOO. Within the past two months, he know of two people who would have leased the property occupied by the freezing company. Ho did not consider that for leasing purposes it made much difference as to which side of the river it was on. As showing the value, Mr Sheridan had assigned his lease of a little over a quarter of an acre for £6OO, and the Public Works Department had an offer of a similar area at £IOO. The annual rateable value adjacent to the works had doubled lately. He had objected, but without much success. The Government value of land thereabouts was £lO to £3O per acre for llat, and £lO for the hill (unimproved). Mr Witty, recalled, said that when the lease was granted the Board estimated the value of the property at £3300, and the district valuer had since increased it by £1500: the borough value had increased from £3OO to £4OO. Each arbitrator made a statement to submit to the umpire. Captain Cbrisp, for the Board, referred to the minute book to contradict the statement that the Board were glad to accept any offer, and held that an increase was always contemplated by the members. He contended that the improvements immediately prior to the lease wore the property of the Board, and not of the company. He then showed how in his opinion the company’s trade had increased; that Mr Shelton had not objected to the borough increase of annual value ; that land values in the district had advanced fully 33 per cent; that the advantage in shipping facilities was vastly superior to almost anything in the colony ; that the Board had spent from £3OO to £4OO at the Kaiti wharf at i

ilic request of the company ; that the company had started additional industries since the lease was granted ; that £IOO per annum was about a fair rent ; and

that the general increase in values should make the property worth at least £OSO a ye ar, Mr Coleman, arbitrator l'or the com-

pany, also made a statement. He referred to the fact that the buildings were useless to the board, were deteriorating in value, and were a constant source of expense for

repairs, etc. He detailed the circumstances under which the company secured the properly until 1897, when the lease was put up for public tender. He suggested that the Board, in fixing the upset ..entq.l for the first three years at £2OO, took an unfair advantage of the company's position in the face of the improvements they had made, and left no option but for them to tender at the upset price and trust to the arbitration clause for an adjustment on a fair basis at the end of three years. Tile company claimed that the fair rental would be based on the value of the property in the condition it was when the company took it over in l.S'jy, before they had given it any special value by improvements or otherwise. Mr Coleman dealt a{ length with the evidence as to improvements and submitted that this showed that no buildings or improvements made either before or after the present lease should be included in estimating the rental. As to the rental, all the increases made by the Board had been arbitrary acts taking advantage of the position of the company, and the fact that they had to pay such increased rentals was no evidence of their being fair and reasonable. As one of the members expressed it, they “ bad the

company by the wool.” Now for the first time disinterested parties were asked to

settle wuat was a fair rent. He -.vent on to deal with the evidence on that point, holding that the evidence for the Board in that respect was tor the most part irrelevant. If the £3OOO was taken as the basis of the .£2OO rent then the present rent, on the same basis, would roughly be £l4O, and he suggested that out of that some allowance must be made for the company's improvements, which become the property of the Board at the end of the term of the lease ; £4O per annum would bo a fair reduction for that, leaving the annual rental at £IOO. He thought the North British Company’s lease of £SO a year was the best evidence as to what the rent should be,