NOT ENTITLED TO EXEMPTION

Sun (Auckland), Volume 1, Issue 82, 28 June 1927, Page 13

NOT ENTITLED TO EXEMPTION

RATES ON ST. CUTHBERTS COLLEGE TO PAY OUT £3OO Whether St. Cuthbert’s Ladies’ College, situated in the One Tree Kill Road Board district, was en- j titled to exemption from the pay- j ment of rates as being a school “not carried on exclusively for gain or profit,” was the subject of of a judgment given by his Honour Mr. Just ce Reed this morning. The action was brought by the One Tree Hill Road Board for the recovery of the sum of £299 16s 3d rates owing by the Auckland Presbyterian College for Ladies, Ltd., proprietors of the St. Cuthbert’s Ladies’ College. Mr. Rogerson appeared for plaintiffs and Mr. Stanton for the defendant company. His Honour said that the school was carried on as a boarding and day school, and at the begining of 1926 there were attending it 314 day scholars and 116 boarders. The proprietor of the school was a limited liability company registered under the Companies Act, 1908. It had Its memorandum and articles of association, and from these it could be definitely ascertained the objects of the company and to what purposes its profits were devoted. In the forefront of its objects was the establishment of a. Presbyterian school for girls. It was not, however, confined to girls of that denomination, it being provided that “full facilities shall be granted for the scholars of any ether denominations to attend their respective places of worship.” There were no free scholars, but the usual concession of half fees was made tc the daughters of ministers, as well as in the case of two or more sisters. Shareholders were entitled to dividends out of the profits, continued his Honour, it being provided that “no dividend shall be declared or paid which will yield to the shareholders a greater rate of interest than six pounds per centum per annum. Counsel for the defendants had submitted that if instead of the money required for the school being provided by shareholders in a company, the money had been advanced on debentures carrying six per centum per annum interest, that exemption would apply. INTO WHOSE COFFERS? The importance of the Court of Appeal Judgment, said his Honour, is that the answer to the question, “into whose Coffers would the sum go which is saved by the non-payment of the. rates?” is laid down as a fair test as to whether a school came within the exemption. The real transaction in the case could in no respect be held to place shareholders in the position of debentureholders who have lent their money to the school. No doubt the movers in the project to found the school were actuated by the best of motives, probably purely altruistic, and, he had no doubt, that could the necessary capital have been raised by voluntary subscription, that would have been done. As it is, however, the scheme cf finance is indistinguishable from that of any ordinary commercial concern With the one exception that the amount of interest is limited. “Nor,” added his Honour, “does the fact that the whole of the profits do not go to the founders and managers, but are limited, affect the position.” He thought the spirit of the Act, as interpreted by the various cases, was that no school was entitled to exemption under the section where any part of its profits went to private persons, particularly if those persons were the proprietors and governors of the school. If it were considered expedient that such a school should be exempt it would have to be done by legislative enactment; it was not, in his opinion, exempted under the present legislation. Judgment was given for plaintiffs for the amount claimed, with costs according to scale.