TAIHAPE BOROUGH'S LAWSUIT.

Taihape Daily Times, 11 October 1918, Page 4

TAIHAPE BOROUGH'S LAWSUIT.

FULL COURT'S JUDGMENT. J? On Wednesday, at Wellington, the! Full Court gave judgment in the case}, of Robert Joseph Collins, of Welling- \\ ton, Comptroller and Auditor-General. against Arnold Louis Arrowsmith, Mayor of Taihape, and seven others. On the bench were His Honour Mr Justice Cooper, His Honour Mr. Justice Chapman, and His Honour Mr Justice ,Sim. His Honour the Chief Justice (Sir Robert Stout) was unable to be present owing to being laid up with influenza. The judgment of His Honour the Chief Justice, in which the other learned Judges concurred said. "The whole questions is: Was this payment made for the purpose of a supplementary plant for the Taihape water supply and electric lighting? The loan was sanctioned by a poll of the ratepayers taken on February 21. For what purpose, then was this money paid to Mr Loughnan? The answer is that he entered into a contract with the corporation of the Borough of Taihape on November 26, 1915, to supply certain buildings and plant (fully set forth in the written judgment), the total cost not to exceed £3500. The council had the right of purchase, and in any oase was to pay Loughnan by way of hire 8 per cent, on all payments made by him on account of the works. The council or corporation is not bound unless a contract has been made as required by the statute. There is no contract that ' can be produced made by the corporation for the purchase of this plant prior to the sanction of the loan. The Solicitor-General contends) however,, that even if there is no contract, and. therefore no liability on the part of the borough, yet that the contract made with Mr Loughnan was a mere pretence because the machinery was erected on the corporation's property, and would pass to the corporation if ; fixed to their freehold. It is to be observed, however, that the machinery was fixed to the freehold of the corporation under a (contract —not a contract of purchase, but a contract of hire. The corporation agreed to pay rent for the use of the machinery brought on to its land. They did not thereby become the owners of the plant 1 .. It' would {be inequitable and fraudulent for tEem to claim the property as their own when they had licensed M.'r Loughnan to use the land '■ for the purpose " mentioned in the* contract. I fail to see how it, can be contended that the corporation' was paying Mr Loughnan's liability without consideration. They were paying Mr Loughnan loan moneys that were raised for the express purpose;.of pur- 1 ; chasing the supplementary plant, and the supplementary plant was purchased from Loughnan. The relationship be—tween him and the borough was that of a contractor, and the borough had no liability, to the manufacturers, nor, it is admitted, to the bank. The mere fact that the plant was '.erected on corporation property under an agreement or license with the corporation, would not authorise the corporation to seize the property and Hreat it as its own. It would under its contract have been bound to pay money for the hire or use of the plant. If it was bound to pay for the hire, then the subsequent purchase of the plant cannot be said to have been in violation of section 53, already referred to. The money that was borrowed was expend- . ed for the purpose for which it was borrowed, and for no other purpose. If the corporation had not paid Mr Loughnan's account they would have had to pay hire. The property- would not have become vested in them. His Honour held that the case brought against the defendants did not come within section 53 of the Loans ' to Local Bodies Act, and judgment w«s accordingly given for the defendants.

At the hearing Sir John Salmond, K.C., Solicitor-'General, appeared for the Auditor-General, and (Mr C. P. Skerrett, K.C., with him Mr 0. B'eere, for the defendants.