ADJUSTMENT OF ACCOUNTS.

Taranaki Daily News, 25 July 1921, Page 6

ADJUSTMENT OF ACCOUNTS.

BETWEEN TWO COUNTY COUNCILS. TARANAKI-INGLEWOOD CASE. SUPREME JUDGMENT. j The reserved judgment of Mr. Justice ! Reed in the case of the Inglewood ‘ County Council v. the Controller and ' Auditor-General and the Taranaki ; County Council, was read by the regisI trar of the Supreme Court at New Plymonth on Saturday morning. His | Honor's decision being in favor of the ilngiewood Council. The action, which ■ occupied two days at the May isecssions of the Supreme Court ,jn New Plymouth, was a motion to set aside an award made by the Controller and AuditorGeneral on an adjustment of accounts between the Inglewood and Taranaki County Councils following the formation of the new Inglewood County. The grounds of the motion were: (1) That the Controller and AuditorGeneral did not himself hold an inquiry as provided by sub-section 3 of section 15 of the Counties Act, 1908. (2) That the Controller and AuditorGeneral delegated hits judicial functions to one G. 11. Richardson and did not perform them himself. (3) That if such an inquiry were held in accordance with the Counties Act the Controller and Auditor-General, or his appointee, was guilty of such misconduct in connection therewith as to invalidate the same because, (I) the inquiry was held without due notice being given to the Inglewood Qounty Council, and without the Inglewood Council being present or represented, or being given an opportunity of being | present or represented, and (2) the award was made without any evidence being heard or any judicial functions being performed by the Controller and Auditor-General.

(4) That the Controller and AuditorGeneral did not completely determine the matters in dispute between the Taranaki County Council and the Inglewood County Council in that he did not adjudicate upon, or make any apportionment of the reserve vested in the Taranaki County Council under and by virtue of the Taranaki County Reserves Act, 1'8'77. The judgment proceeds to say that eliminating all disputed questions the facts may be stated an follows: The Taranaki County Council is an old and comparatively wealthy body. From the area within its former jurisdiction a part has been severed, and from April I, 1920, has been constituted a new county under the name of the Inglewood County. It is provided by section 15 of the Counties Act, 1908, on rhe constitution of any new county the councils of the new, county and of the county of which the new county was heretofore a part shall by agreement provide for the following mutters: (a) What part of the property, real and personal, of the said county or counties shall become the property of the new county; fb) What' part of any rates payable to such county or counties at the date of rhe constitution of the new county shall.be deemed to be rates payable to the new county; (c) WJiat part of the debts, liabilities, and engagements of such I’ounty or counties shall be debts, liabilities and engagements of the new county: (d) What part of the interest and. sinking fund of any loan raised by such coum ) or counties shall be paid by such new ; county. In the event uf the councils ' being unable to agree provision is made for an inquiry and award by the Con-troller-General, or such other person as the Governor may appoint. INGLEWOOD’S CASE.

The councils in this Case were unabh to agree, and whilst the Taranaki County Council applied to rhe Control-ler-General to hold an inquiry the Inglewood County Council the Min ter of Imperial Affairs to set up a commission, alleging that an inquiry by the Audit Department would not be satisfactory. The reasons assigned were set out in a letter from the chairman, of the Inglewood County (ouncil io the Minister in December, the relevant part of which is as follows: "The audit officer has certineu to the Taranaki County’s balance-sheets up to the date of separation. In these balance-sheets the assets in which Inglewood has a large share have been written jdown as depreciating in value each year, in a rule of thumb manner, notwithstanding that large sums have been spent yearly for their upkeep, till now the values shown by the books are not half the true value of the asseto. I may say that the Taranaki County offices would probably sell at nearly twice the balancesheet value. The audit officers will therefore naturally feel inclined to defend their actions and the Inglewood County will suffer. Then there arc endowments vested in the Taranaki County by Act of Parliament for the maintenance of .Junction Road, but the major portion of this road is in what is nfty the Inglewood County. Thereto e the Major portion of these endowments should now be vested in Inglewood County. This may necessitate an amending Act of Parliament to give validity to the proceedings. Then again an item of some £BOO has been wrongly charged to the Inglewood district on account of an accident occurring through the negligence of the Taranaki County Council. Last year the Taranaki County Council became contractors 1o the New* Plymouth Harbor Board and also the Borough Council for the supply of broken stone, making a profit of probably over £lOOO. Although Inglewood district had more than a third share in the value of the plant, and capital employed 10 execute these contracts. yet Inglewood district has not been credited with any portion of ffhe profit. There are many matters requiring consideration when making the adjustments outside, of aecountrs that it .'s not necessary to mention here, and that this council is of opinion that this can only be done by h commission or some impartial person outside the Audit Department who possesses, special qualifications for 1 he task. The law provides that the G-oveTnor may appoint some one outside the Audit. Office to adjudicate on some occasion*. Mr. W. S Short, late of the Public Works Department, would be a Commissioner very acceptable to Inglewood County, on account of his large experience in dealing with such matters.” QUESTION OF ARBITRATION. “In the balance-sheet oi the Taranaki County Council for the. year ending March 31, 1920, the assets referred to in this letter are valued at £10,353 13s Id and represent office buildings and plant. Depreciation is written off each item annually, the amount varying from live per cent in the case of the office build•ings and property to a-s high as twenty per cent in some of the motor vehicles.” Proceeding, the judgment quotes a letter from the Minister of Internal Affairs, who replied that there did pot ap-

pear to bo any power to enable him to interfere, as the Governor-General could only appoint a. person to hold an inquiry regarding the apportionment, of assets and liabilities in cases where the Controller and Auditor-General could not himself hold the inquiry, and in this ease the Controller and Auditor-General had indicated he would hold the inquiry. On February 28 the Controller amj Auditor-General made iuA award. The assets were taken at the book values and the endowments were not. dealt with. The question was as to whether this was 11 valid award.

The Judge remarks? The first-ques-tion to be considered, is, what wae the true position of the Controller and Audi-tor-General? Is he an arbitrator subject to and bound by all the duties and

obligations which attach to a person standing in that position, or is his position such that lie ie given absolute discretion to decide the matter in such wav as he thinks fit, and only responsible to Parliament for its exercise? It is contended for the defendants that the Controller and Auditor-General occupies the latter position, that he is a statutory •tribunal, with absolute powers and discretions altogether outside the Arbitration Act, and that this Court cannot review rhe decision of, or interfere with, such a tribunal.

Numerous authorities are cited by His Honor in reviewing the ease, and he proceeds: “In a very large number of cases the local bodies interested would agree to the book figures being taken and would waive the right to appear. Where, as in the present case, other matters are involved outside the bare figures in the book* if the Controller and AuditorGeneral is unable, personally to hold a formal arbitration, the Governor can appoint some suitable person to do so. There is no trouble or expense to the Audit Department involved in this; the whole of the expenses fall on the contesttng parties in such proportions as ! the arbitrator may fix. The advantages of an arbitration under the Act in such case as the present are obvious. "I am of opinion, therefore, that the Controller and Auditor-General is an arbitrator within the meaning and bound by the provisions of the Arbitration Act, except so far a-s that Act is inconsistent With the terms of section 15 of the Counties Act, 1908. It was. admitted at the Bar that if 1 found that the Controller and Auditor-General was an arbitrator and not an independent tribunal, and that a formal arbitration governed by the Arbitration Act. 1908, was required, then such an arbitration had, not been held. This admission was quit? properly made, as it ds clear: (1) No formal hearing took place; (2) The report by Mr. Richardson was adopted in toto after an informal discussion with him, the award being practically his under a delegated authority from the Controller and Audit or-General; (3) No notice was given to the parties to attend before him: (4) No opportunity was given to call evidence/’

THE DECISION. The judgment proceeds: “It is nor. suggested ihat the arbitrator has. acted otherwise than in good fa-’ith. The Controller and Auditor-General han- simply carried o.it the procedure adopted by him in the past. An order is made setting aside the award and remitting the matters referred to rhe Controller and Auditor-General for his reconsideration.l. adopt, the direction given by Mr. Justice Sim: ‘Before making any award it will be the duty of the arbitrator to' give both parties an opportunity of being heard, and of calling evidence, and, unless the parties otherwise agree, he should deal with the case only on the material put before him by the parties themselves.’ "i think the plainiiff corporation is entitled to costs. Before proceedings were commenced opportunity was given, io the Taranaki County Council to agree io the award being set aside and a commission set up. hut this was declined. I do not think costs should be given ugainst the Controller and Auditor-Gen-eral. I allow the plaintiff as costs £3O and disbursements against the defendants. the. chairman, councillors and inhabitants of the Taranaki County Council”