DRAINAGE LOANS.

Hauraki Plains Gazette, Volume XXXX, Issue 5415, 24 April 1929, Page 1

DRAINAGE LOANS.

PLAINS CLASSIFICATION. A COMPLICATED POSITION. RATING FOR SPECIAL LOANS. The question of the rating by the Hauraki United Drainage Board for the old Hauraki loan was discussed at length at last Friday’s meeting, on receipt of a letter from the Undersecretary of the Department of Internal Affair* As the matter is of far-reaching importance the correspondence is given in full. Mr J. E. Green’s letter was as follows :—

“At the last meeting of the board the following notice of motion was moved and adjourned for further consideration for the position to be placed before the Internal Affairs Department for guidance and assistance: ‘That in future all rates in connection with the old Hauraki Board’s loans be levied in accordance with the terms and conditions under which these loans were raised and by the terms and conditions laid down by the Minister when amalgamation was granted ; that classification of the whole United District be reviewed and amended so as to remove the present cases of hardship and unfairness.’ “As a consequence of this I am instructed to write you, and lay before you the details of a difficulty that has presented itself to the board in connection with the raising of special rates in the old Hauraki Board’s district, which board was amalgamated with the old Horahia Drainage Board as the result of the finding of a special commission set up to consider the advisability of the amalgamation of the then two existing boards. “Mr L. B. Campbell, Public Works Engineer, Auckland, was the commissioner, and amalgamation was duly ordered to take place as and from April 1, 1927, and the new board was duly elected to be called the Hauraki United Drainage Board. On amalgamation taking place there was a direction to the Commisioner that the position as affecting the two old boards on the loans should remain intact. “The mover of the moticm was a member of the old Hauraki Board, and it apparently is his contention that the rates on the old Hauraki Board’s loans of £10,500 should be struck and levied on the same terms and conditions and classic cation as they were by the old Hauraki Board, and that that was the meaning of the direction to the commission. “The Hauraki Board has struck the following special rates over the old Hauraki Board area in respect of the £10,500 for the year comencing April 1, 1928, and ending on March 31, 1929 : §d in the £ on A lands ; id in the £ on B lands ; and gd in the £ on C lands on the unimproved value. . The particulars of classification enclosed herewith will show the position of the striking of the rates under the old Hauraki Board and the present board. “The point over which the difficulty mainly arises is the striking and levying of the special rates on the £10,500 loans of the Hauraki Board and the £15,500 loan of the Horahia Board. “The loans of the Hauraki Board, each of £5OOO, and a subsequent £5OO loan, being 10% on the second £5OOO loan raised from the State Advances Department, were raised in December, 1917, and December, 1918, on a classification of A, B, and C lands. On this classification made for the loans, and on a subsequent classification made by the old Hauraki Board in 1915, a considerable portion of the lands were classed D and were therefore not included in the security for the loans, as no rates were struck over D lands.

“In certain parts of the old Hauraki area also the classification was fairly liberal in giving a fair proportion of B and C lands. “On amalgamation taking place the new Hauraki United Board took steps to reclassify the whole of the United district, and the same was classed practically all A, with the exception of a few township sections in the Kerepeehi township and one section of 137 acres in the old Hauraki area and three sections of 178 acres in the old Horahia area, which were classified B. The effect of this classification was to make a practically flat rate over the whole United district. “When the old Horahia Board came into existence the lands were classified practically all A in the same way, and the Horahia Board’s loans of £15,500 were raised on this basis. You will therefore see that the loans of each of the old boards were raised on an entirely different classification, which meant a much more different distribution of the rates levied. “When taking the United Board’s rate over the United area on the existing classification you will realise that the amount of special rates now being levied from the old Hauraki ratepayers is very different and out of proportion to what it was during the existence of the old Hauraki Board. “To show the figures as impartially as possible I enclose a statement herewith of the position of the classification and the valuation of the old Horahia Board for its loan of £15,500 for the last year of its existence, namely, 1916-27, and also a statement of the same position of the old Hauraki Board for the same year (immediately prior to amalgamation). “The present board would like to know how the difficulty can be over-

come without two classification lists,

namely, one for the loan of the old Hauraki area and one for the existing new board, and what they ask is : “ ‘ls the meaning of the direction to the Commission that the loans of the two old boards, on amalgamation, should not be altered, and that the classification lists in force at the time of amalgamation be continued for the purpose of rating for these loans under the new board ; or can the present board now reclassify the lands of the old Hauraki area for the purpose of raising loan rates only and have a separate classification for the United Board for general rates, which, of course, would suffice for the old Horahia area also, as its loan was raised on a, practically all A classification.’ “According to a recent magisterial decision in Hamilton it was held that a drainage board could not have two classification lists in operation at the same time, whereas, I believe, a decision given some time ago by Mr Justice Sim stated that ‘generally speaking there could be only one classification in operation at one time.’ “The diverse positions of the two old boards as to loans and classification at the time of amalgamation has rendered the position very difficult for the board as to the old Hauraki area unless the board is allowed to have two classifications in force at the one time.

“The board would be greatly obliged if you would be good enough to advise it as to what the true meaning of the direction to the Commission was, and whether it was intended to overcome the difficulty which I have tried to explain in this letter, and if not, could you advise the board in what way it might overcome the difficulty.” The statement referred to showed that of the old Hauraki Board’s land at March 31, 1927, 4521 acres, valued at £lOO,OOO, were classed A ; 2900 acres, valued at £59,970, as B ; 1122 acres, valued at £21,895, as C ; and 458 acres, valued at £7590, as I) ; whereas undei’ the Hauraki United Board’s present classification 8924 acres, valued at £187,335, were in class A and 137 acres, valued at £l9OO were in class B.

Of the old Horahia Board’s land at March 31, 1927, 13,986 acres, valued at £275,794, were classed A, and 346 acres, valued at £B6OO, as B ; and undei- the present classification by the United Board 14,017 acres, with a valuation of £274,599, were in the A class and 316 acres, valued at £9515, were in the B class.

The Under-Secretary, Department of Internal Affairs, replied as follows: “I have the honour to acknowledge rceeipt of your letter of the 14th inst. relative to the classification to be adopted by youi 1 board in connection with rates levied as security for certain loans.

“In reply, I desire to advise • you that the Lands Drainage Act, 1908, makes it fairly clear that a drainage board cannot have more than one classification of the whole of the lands in , its district, except in the case of a subdivided district, where in addition to the general classification there can also be separate classifications of the lands in each of the subdivisions. Where a special loan is raised for the benefit of the district or a subdivision thereof, the special rate must be levied in accordance with the existing classification of the district or subdivision, as the case may be. “Notwithstanding the general principle stated in the foregoing paragraph, the considered opinion of this department is that the classification in existence at the time a special loan is raised remains in existence for the purposes of the special rates made as security for such loan until it is paid off. This view is considered by the department as applying generally, and in the particular cases mentioned in your letter it would apply more so, in view of the agreement made by the two former boards before union and referred to in the Order-in-Council effecting union, namely, that all special rates made as security for loans existing at the date of union should continue to be levied only within the area over which they were respectively originally levied. “With respect, therefore, to the two questions on page 4 of your letter, I would answer the first question in the affirmative and the second question in the negative. “Whilst the foregoing represents the opinion of this department, I am aware that views to the contrary are held by other authorities, and I would suggest that the proper course for your board is to be guided by the advice of its own solicitor.” Discusing the letter, Mr Heappey contended that the clause “That all special rates made as security for loans existing at the date of union should continue to be levied only within the area over which they were respectively originally levied," upheld his contention that the board had no authority to rate on an amended classification. The board had no authority to collect those special rates, and those which were unpaid could not be sued for. The board had no authority to make refunds to those who had paid the sum demanded, which was now more than it should have been.

Mi’ Miller contended that the point had not been brought out at the Commision. It was then thought that the question under discussion referred to the area over which the special rates would continue to be levied.

Mr Heappey said that Mr E. L. Walton, solicitor for the Horahia Board at the commission, was conversant with the position, and had therefore not mentioned it, but on appearing for the United Board when opposing objections to classification, he had stressed, on several occasions, that the rate proposed to be raised was to be for maintenance purposes only. On account of this, the question of special rates was not mentioned to the Court. The speaker contended that under Common Law the board had no authority to do anything

which would increase the liability on any man’s land. For instance, if a man agreed to pay a sum of money annually nopo were ould make that man pay more in subsequent years. At the chairman’s suggestion the clerk produced the minute books of the late Hauraki and Horahia drainage boards and showed the resolutions passed precedent to amalgamation, as desired by the Commissioners. These were, inter alia, as follows : — "That the rates for the loans now expended or authorised to be expended in such existing district should continue to be collected over the same rating area as at present.” The chairman expressed regret that a copy of the Order-in-Council stating the terms of amalgamation could not be found at present, otherwise the matter might be cleared up at once. As he saw the position, the doubtful point to be decided was what classification the board should use for the rate for the old Hauraki Board’s £10,500 loan. There were three classification lists involved, namely, those of 1917-18, 1925, and 1927. The 1917-18 list was in .existence when the loan was raised, the 1925 was in force at the date of union, and the 1927 list was the one at present being used. Concerning the 1925 classification, he could not see any reference to it in the Order-in-Council, which merely stated that all special rates should continue to be levied only within the area over which they were originally respectively levied. If it was the intention to use the 1925 classification, which was in force at thd eate of union, the Commissioner should be asked to state the fact clearly, for it had not been clearly stated. If this was the case, then the 1917-18 and the 1925 lists did not enter into the question at all; but if there was no ruling on the point, then the question came back to the other two. In the first part of the Under-Secretary’s letter it was stated that the Act made it fairly clear that a board could not have more than one classification list. This was borne out by the board’s solicitor, Mr Walton, and was the classification on which the board was working. Then the letter went on to say that it was the considered opinion of the department that the classification in existence at the time a loan was raised remained in force until the loan was paid off. If that was so, then the board should be using the 1917-18 list. In reply to the clerk’s letter, in which the question was asked, “Is the meaning of the direction to the commission that the classification in force at the time of amalgamation be continued under the new board,” the Under-Secretary had said that the answer was in the affirmative. Thus it seemed to him, continued Mr Hicks, that the Commissioner should be asked whether he gave or intended to give any ruling with regard to the classification to be used. On the question of the other two classifications, one method of getting a decision would be foi' some ratepayer to challenge the present system, and another would be for the board to state a case and to get the law interpreted by argument in the Supreme Court, with a declaratory judgment. In either case it would be necessary to go to the Supreme Court. Mr H-eappey said that he had discussed the matter very fully with Mr L. B. Campbell, of the Public Works Department, who had been the commissioner, and Mr Campbell had asked whether the United Board was rating the old area for its loan on the present-day classification, and had expressed surprise when informed that it was. Mr Campbell had refused to comment further. He was no longer the commissioner, and it was no use the board referring any matter to him.

Mr Heappey traced the history of the classification of the Hauraki area. The 1917 classification was made prior to the raising of the £10,500 loan, and the 1925 classification was made to give effect to the expenditure of the loan money. Mr F. L. Hamilton pointed out that the matter would probably be cleared up if a copy of the Order-in-Council on the matter was found. He understood the position to be that the Horahia loan was not to be spread over the Hauraki area, and vice versa, but that the special rates were to be collected only in the area over which they were raised. As classification was not mentioned in the undertakings given prior to amalgamation by the two old boards, he was of opinion that the rate could be levied on any classification which may be adopted. Classifications, like valuations, were liable to alteration at any time. After the luncheon adjournment, when discussion was continued, Mr Miller said he understood that it was possible to have one classification for maintenance and one for special rates. To be fair, he was of opinion that the board should rate for maintenance purposes on the existing classification and for the loan on the classification in force when amalgamatoin was effected.

Mr Heappey said, that this was what he had advocated all along, as it was what the Order-in-Council had stipulated. Mr Hicks asked if some settlers would not object to this. Mr Heappey said that they could not object. Mr Hicks argued that all the land in the special rating area had been pledged as security for the loan, and it was his contention that on D class land being reclassified higher class it became liable . This would not be altering the special rating area, in his opinion, as all the land in the special rating area had been pledged. Mr F. L. Hamilton suggested that the Under-Secretary, Internal Affairs Department, should be asked whether the board should rate on the 1917, 1925, or 1927 classification. In reply to the chairman Mr Heappey said he was confident that no objections would be received if the 1925 classification was reverted to. Mr Williams suggested referring the matter to the board’s solicitor. Mr Green stated that Mr Walton had already advised that only one classification list was permissible, and

that classifications were liable to alteration just as were valuations. Mr Heappey strenuously argued that the Under-Secretary’s letter was definite on the point that the old classification had to remain as it was when amalgamation was order, but Mr Hicks could not read classification into the reply, and contended that only the rating area was mentioned. Argument ont his question lasted some time, Mr Heappey contending that the area had been altered by the latest classification, which brought in land previously excluded by reason of having a D classification and thus being not rateable. Mr Hicks contended that if the position under discussion was found to apply to the old Hauraki area it followed that the old Horahia area would be similarly affected.

Mr Hicks moved, and Mr F. Hamilton seconded, that' the clerk procure a copy of the N.Z. Gazette containing the Order-in-Council referred to. Mr Hicks said that he had no objection to the change over, but was only concerned with doing what was right. The motion was carried.