Harbour Leases

Daily Telegraph (Napier), Volume 58, Issue 214, 10 October 1929, Page 5

Harbour Leases

TERMS 0F REVALUATIONS Mr W. J. Lyon's Motion Defeated IMPROVEMENT QUESTION. After an extremely lengthy debate the Napier Harbour Board yesterday decided to take 110 action in regard to varying the terms for revaluation of harbour leaseholds. A proposal that the valuation for computing rents for tlie renewai of the leases should be based on a fair grouiid rental Vas crlticised and witlidrawn before it could go to tbe vote. An alternative of' computing the rent at five per cent of four-fifths of the ireehold value was freely debated and finally tlirown out by eight votes to six. It was explained duriug the discussion, however, that the uinpire's awards iu many cases now approximated to i'our-fifths of tlie' ireehold valuq and it was stated that the vaiuers did not eni'orco the full i'reeiiold value at present. The board brieily discussed tbe question of securing to the tenant tho value of his improvements 011 relinquishment of tbe leabe, but this matter was fiinally deferred till the solicitor could put proposals in legal form. The whole matter was introduced by Mr W. J. Lyon moving that the memorandum of lease be amended to define the annual rental as five' per cent of four-fifths of the freehold value of the section. MR LYON'S ARGUMENTS. Iu nioviug his motion, Mr Lyon congratulated the board on its fuji attenclauce — apparently tlie whips had been busy. Mr Lyon commented that the question was a most important one. He remarked that there was a generally current feeling of uneasiness amongst ihe boayd's tenants over the question of the basis of valuation of their leases and liis motion was an effort to establisli a definite hasis on which to detennine rents in future. Mr Lyon said that in the recent Supreme Court caso the board was told that the umpire must compute tlie rental on revaluation on the hasis of 5 per cent oi' the freeliold value, and that placed the tenant in the position that the board could go to the court and enforce 5 per "cent of tlie full freehold value as the rent. Mr Lyon said that he thought it would he generally admitted that a leasehold section was not as valuable to the tenant as a freehold one, and for that reason it was not fair and equitable to base the rental 011 the freehold hasis. He was suggesting that the hasis for computing rents 011 revaluations should be four-fifths of the full freehold value. Five per cent on that, he thought, would be a reasonahly fair rent to ask of the tenant. HTS BEST ARGUMENT. The ehairman had said that the board had not enforced that 0 per cent 011 the freehold value and that was one of the finest arguments in favour of the motion. He quoted cases whero four-fifths of the freehold value had been agreed 011 by the umpire and the board as the baSis for computing the rents and commented that that substantiated tjie proposal he was advanc' ing. He was anxious to preserve ihe board's endowments, but as long as the board had to enforce its five per cent of the freehold value it would have discontentcd tenants. The board had to create a contented tenancy, so that it could generate a good demand for .its future leases. Mr Lyon weut 011 to say thai the tenants could not get cheap nioney on the security. of the leaseholds, but other members said that was not so. He vent on to say that the ehairman said tliat his proposals would mean a 20 per cent reduction to the tenants, but he urged that it would only mean the confirmation of the present method of valuing. Mr Jull: Then wliy go anv further with it? » Mr Lyon': I want to safeguard the tenants againsUthe five per cent the Sunreme Coui"t gives us the power to enforce. Mr Lyon said that he did not wish the position discussed from the point of view of the Breakwater or inner harbour, or Napier and country. "I do -not want apy cracking of whips or anv blind following into camps," he said. Mr Jull said that Mr Lyon was not entitled to refiect on members and for ihfit reason he must withdraw that remark. Mr Lyon : Oh. I withdraw it, sir, but T still say tliat I want this subjert debaWl on its merits and voted 011 its merits. Mr Jull : That's wha't' will he done, of rourse. Mr T. von, in concluding, pointed out tlint at the present time, by tbe time tbe valuer for tbe lossee liad mnde his valuation and tho valuer for the board had made lus Valuation and tbe umpire had arrived at sometbing between tho two it was on four-fifths of the freehold valuo that tlie hmrd was now collectinrr rents. The balf a dozen cases he had quoted proved that and he was simplv seeking to.affirm it as a definite principle for tbe future. Mr .T. C. Biwant seconded Mr Lyon's motion. AN AMENDMEMT MOVED. Mr P. Higgins said that he supported the motion so far as it went, but he feared that to tio the vaiuers down to a hard and fast percentage might be disadvantageous. He thought tliat the board was not entitled to force tbe freehold value on its tenants. Tbe board, in giving tho tenants leases, maintained only a restricted freehold interest subject to a perpetual lease- The tenant secured a right to live oh and in.the land, subject to periodical revaluation. The tenant's riglit to tbe land had to be admitted and considered on revaluation. In niaking tbe land usable tbe ■tenant had to spend money and the lessee was entitled to consideration for 'that on revaluation. He quoted legal authority in eupport of this contention and went on to sav tbat tbe vaiuers should then determine a fair ground revenue. Mr Higgins said be was strongly of tbe opinion that it was unfair to determine the value for rent for leasehold on the freehold value. He quoted legal authority in support. which said that it had to he remembered. that the matter wa* Jargely one for tlie opinion of arhitrators. That was his objection to Mr Lyon's motion in that it fixed the percentage. Mr Higgins remarked that it seemed to he Mr Jull's opinion that the values finally arrived at wero fourfifths of the board's valuer 's value," » *

\ which was the freehold value. Mr Higgins then moved an amendment in the direction of making the rental based on a fair ground rent. Mr Higgins commented that that was practically the present clause, exccpt tliat it eliminated any percentage and included the term "fair" in regard tj the annual ground rental. He belxeved tliat liis amendraent would give freedom to tlie vaiuers, protect tlie board's interest s and give the tenants security. Mr Higgins believed that "his motion would removo uneasiness amongst ic-ssees, and the board sliould do all it could, as loug as its rights vere protected, to give all tlie protection to its ieuants it could. He remarked that his amendment covered practically all that the land agents asked for and he understood that it would he satisfae-9 tory to the lessecs. Mr N. P. Eriksen seconded the anicndment, skviiig that he wished to &ee the tenant have "a fair go." He did not think the liard and fast rule provided hy Mr Lyon would be any good to the board. MR JULL'S REPLY. Speaking to the amendment, Mr Jull" said that there was 110 proposition that would be so pro^ocativc of dissension amongst tbe board and its tenants as this particular proposition. It would he an entirelv revolutionary jnetliod of valuing and in any case, except for tlie case tliat came before the court, tliore was no eviclence of dissension hctween the board and its tenants. Mr Jull said that this specious proposed amenclment would he irksome to the board. clissatisfying to tlie tenants and leacl to in-ancl-out valuing through tlie valuer liaving nothing tangilile to go on 111 the form of "fair annual grouiul rental." At tlie present time the vaiuers had the freehold value to go 011, and though opinions might vary, there was somcthing tangible. Mr Iliggius took exception to the use of the teiin "specious," but Mr Jull did not withdraw. , Mr P. \V. Peters agreed that Mr Higgins' amendment might open up dissension, and lie supported the motion moved by Mr Lyon. He thought that the board sliould make everv effort to restore every conlidenee with its tenants. Mr Jull : But in what way is dissatisfaetion shown ? Mr Lyon : AYe have a petition from 132 leaseholders. hlr Peters : And the opinion of land agents shows it. People will not look at harbour leases. Mr Peters remarked that the board hacl to make its endowments attracti ve to the tenants, and he thought the motion would do that. At the same time he thought tliat lhuch of the dissatisfaction was due to the lessees not fully understanding the leases when they took them up. Mr. J. H. Joll said that he could* view with favour neither the amendment nor the motion. Mr Jull said that the leasehokler was enjoying a privilege compared with tbe freeholder, as tbe rnetal was cheaper at five per cent tban interest at six per cent. He did not know of any better basis for valuing than tbe present basis. He thought the second part of tbe motion, if tfarried on its own, would make tlie leaseliolder tlie most contented person in tbe world. Mr Higgins at this stage withdraw his amendment and Mr Bryant, in supporting the original motion, said he was snrprised at Mr Joll's remarks, as everyone knew that a leasehold was not as clesirahle as a freehold. Mr Joll overlooked the fact that in leaseholds the improvements reverted to the other fellow. Mr Joll : Oh,I support the second part of the motion, which does away with that. Mr Bryant said that he thought no leasehold was as valuable as freehold, and for that reason he siyiported the valuing on four-fifths of tne freehold basis. The trouble was that it was all a matter of the vaiuers' opinions as to whab' was freehold value, though that was not so difficult with freeholds near to leaseholds. Mr- 13. B. Creagli also supported the ntoiioh, saying tlie hasis of valuation proposed was a fair and equitable one. The board was the owner of vast areas near to Napier and it could make or mar Napier. It was tlie board's duty to make those lands attractive and put every possible facility in tlie way of their development, for the benefit of the town, for the benefit of the people and for the benefit of the board. MR JULL'S OBJ EGTIONS. Speaking to the motion Mr Jull said that tlie purpose of endowing the board with areas was to facilitate revenue production for expenditure on harbour works for the benefit of the people of the whole of the district. So far as he knew there was no discontented tenancy through the board's making. There had heen no outcry against the board. Tliere had been a case in court, but only seven leages were involved, and the boaid had sinCe adjusted the valuation to the iimpire's opinion. The board was always open to make those adjustmei;ts in that direction. That was one of the benefits of having a local body landlord, for the tenant could approach it for redress. Mr Jull said that he had spoken to the solicitor and he had been told tbat the board had 110 power to go to the court to ©liforeo fivp per cent. or the freeliold value, and, he said in reply to Mr Higgins, tliat the board had never sought to enforce the last pound of flesli in that direction. The tenant had nn equal right witli the board through liis valuer to determine the value, and if there was' a difference an^umpira decided. A local body leanecl toward its tenants and there was 110 case where a leasehold had heen valued equal to a freehold nearby. Mr Lyon had said that the values before the board hoxe out his motion, and then he suggested a further onefifth reduction. It had beeh said that the board must have a contented tenancy. He claimed that they had a contented tenancy. There had been isolated cases of protest, but tbere would always be irregularities and inequalities, and tliose would always be remedied by tbe board. He claimed tbat, tbe board's generosity in putting low upsets in the first place when tlie sections were first out up was now being used against tbe board to secure a reduced rent. The proposal made would seriously liamper tbe board's finailces. be said. Tbe present rental >was £8000. and a 20 per cent. reduction would decrease tliat by £1:600. Mr A. E. Goodger: But are the present valuations based. on the freehold? Mr Jull : I am satisfied that they are not. Mr Lyon: Well, then .there won't be tbe 20 per ceut. reduction. Mr Jull repeated tbat tbe board had never sought to exact the last penny and he believed that it never would. The only result of the motion would he that a selected sct of people would rpceive a gift at the expense of the rest of the district. . MOTION DEFEATED. Mr G. MrNay urged that a leasehold was preferable to a freehold to a L |

working man, as instead of having to put capitai into the land he had it to make improvements. . He thought that if the question of improvements was settled the board could not do better than leave tlie matter of the basis of valuation alone. Mr E. A. Goodger said that Mr Jttll's remarks had convinced him that he must support Mr Lyon's motion. Mr Jull had said th'at the board did not receive the full freehold value and it seemed that the board now seemed to be gettihg a rental on four-fifths of the freeliold value. Tliere was a danger tliat tlie Supreme Courc fudgment decreeing that the rental should be based on tlie full freehold value by the valuer and he thought tbe proposal would put tbe matter 011 a much more definite basis and one fairer to tbe tenants. • The board was now getting rentals on valuations that, after the umpire had given liis award, amounted to fourfifths of the freehold value. Mr Jull: Then vhy give another 20 per cent. reduction. • Mr Goodger: You misunderstand the proposal, sir. It is to give a 20 per cent. reduction on tbe full freehold value, not on tbe values adopted now. EVIDENGE TO THE CONTRARY. Mr Lyon, in replying to the various speakers, dealt witli Mr Jull's remarks tliat there was no evidenco of discontent, and be quoted that the petition signed by 132 people as evidence to the contrary. He added that lessees had held meetings and had >appointed an executivo to make representations to tlie boavd if it did not improve the terms of the revaluations. Mr Lyon said that' his proposal would not haniper the board's linances, as it would result in the board getting revenue 011 the same rental as «t present — four-fifths of tho freehold value. Ou Mr Lyon's motion being put, it was lost by eigbt votes to six, the voting being : — Against: Messrs Jull, ^Langridge, Eriksen, Jones, Lowe, McKay, Anderson. For: Messrs Lyon, Higgins, Bryant, Peters, Goodger, Creagh. QUESTION OF IMPROVEMENTS. Tbe board tlien went on to consicler Mr Lyon's second motion, suggesting the amendment of tbe memorandum of lcasq to secure to the tenant tbe value of liis improvements subject to the relinquishment of the lease, the value to be paid over on tlie securing of a new tenant. Mr Lyon urged tbat it was only fair that some provision should be made aud commented that he thought the majority of the members agreed. He thought his motion would cover that and would safeguard the board. Mr Jull: I think you liad better ask the solicitor about that. The solicitor, Mr M. R. Orant. said that the clause held no difficulty as long as the valuations and the auctions were held duriug the terrn of the original lease, so tliat the tenant was still the tenant of the board. If, however, that was not done the board would become the trustee of the tenant as far as tlie improvements were coucerned, and would he subject to all the legal provisions regarding trusteeships. Mr Lyon said that all he was endeavouring to do was to affirni a principle and the details could be worked out. Perhaps the tenant could make a contract with the board to cover the position. At Mr Jull's suggestion he agreed to defer his motion till he had time to confer with the solicitors on the legal aspeet of the matter. The solicitor was also instructed to draft' speeimen clause of alternative proposals for securing the value of the improvements to the tenants. DEGISIONS IN COMMITTEE. In addition to the discussion on the general leasehold policy in. open board mdividuai cases were considered by the board in committee. The Napier Soutli Presbyterian Church Trustees wrote regarding renewai of the lease of Napier Soutli sections, stating that they , realised that the new rental based on existing land values was not excessive but asked for a reduction as the property was not being used for conmiercial purposes but as a site for a place of worsbip. Tbe solicitors, Sainsbury, Logan and Williams fonvarded an opinion in conncction with the application for reduction of rent from Napier South Presbyterian Church Trustees, and it was decided to reduce the rent payable from £39 10s to £25 per annum. _ ' Seven lessees affected by the.decision of the Supreme Court in the case, Napier Harb"q.ur Board v. Faulknor, applied for fednction of rent in apcordance with Mr Renouf's suggested amendment to his award, and'it was deciled to agree to the request. On the same matters W. J. McCorrnick, J. Snaddon and W. G. Johnson, wrote applying for a reduction of the rent on the revaluation of their leaseholds, tbese being deferred for consideration at the next meeting. A petition from 132 persons, requesta revision of tbe terms of leases, was considered in committee and deferred till Mr Lyon's notiee of motion is fully dealt witb, as it covers some of tbe ground mentioned in the petition. Tlie board also decided that applications be invited for the position of valuei- to tbe board and that Mr Cameron's preseut term be' extended until such applications are dealt with. The reserves committee were instmct'ed to consider and r-eport to tbe board as to what improvement should be effccted to the dwellings qn unleased land, tbe majority of wbich are at present occupied on weekly tenqncies. and that estima^tes be obtained as to the cost of such improvements. _ It is also decided tlrt tbe actingsecretary be instructed tbat failing payment of rent by tbe weekly tenants tbat proceeding be taken to eject defaulting tenants from the buildings.