LOCAL BODY LOANS

Hawke's Bay Herald-Tribune, Issue 51, 16 March 1937, Page 12

LOCAL BODY LOANS

Test Case To Go Before Privy Council H.B. INTERESTED As the result of a decision made at a meeting of interested local bodi'ea at Timaru last week during the conference of the Municipal Association of New Zealand, the Wellington city solicitor, Mr. John O'Shea, is to leave for England by the Rangitata on April 7th. His mission will concern the amount of interest that should be paid on certain loans raised by local bodies in New Zealand, most of which are covered by debentures for over £1,000,090 held by fche Temperance a-nd General Mutnal Life Society of "Victoria (Anstralia). tt was decided to take a test case of one debenture of £1000 issued by the Mount Albert Borough Council. These local bodies, under the debentures, agreed to pay a certain rato of interest on the money borrowed from the society. Legislation was subsequently enacted in the State of Victoria reducing the rates of interest on loans from whatever it was originally to 5 or 4% per cent. as the case may be. The New Zealand local bodies concerned are of opinion that, like others, they were entitled to the benefit conferred ,by the interest-reducing legislation, :but the society concerned thinks otheriwise. In short, it considers that the

local bodies to whom they advanced the money should pay the rate of interest they originally agreed to pay. It will be seen that a very considerabla amount of money is involved when it is mentioned that the amount on which interest is payable exceeds £1,000,000. The case has been before the Supreme Court, which, after referring certain law points for the Court of Appeal, found in favour of the debentureholder. Still unconvinced that they should be excluded from the advan- - tages bestowed by the Victorian legis ! lation, the local bodies concerned in tend to carry the case to the Privy lCouncil, and have come to an agreenent with Mr. John O'Shea, of Wellington, to represent them before that »ody. ■ The local bodies chiefly concerned sre the Mount Albert Borough Couneil, the Hawke's Bay Power Board, j end the Grey Power Board. The Wellington City Council is concerned only In a very minor degree9