£.—9.

an instalment basis has ensured that ample provision is made for the depreciation of buildings, which constitute a substantial part of the security for loans on city and residential properties, and has also afforded a safeguard against the general reduction in value of rural securities which has taken place in recent years. It has been the general practice of private trustees to advance moneys up to two-thirds of a valuation made by a private valuer, as compared with the maximum of three-fifths of a Government valuation adopted by the Public Trustee. It has been generally recognized that Government valuations have been made on a more conservative basis than those made by private valuers, so that it will be seen that special steps have been taken to ensure the prudent investment of moneys belonging to the Common Fund. 40. Mortgagors Relief Legislation. —The legislation affording relief to mortgagors was further extended by the Mortgagors and Tenants Belief Act, 1932, which came into operation as from the 31st March, 1932, and which gave a mortgagor the right to apply to the Court for relief in terms of the principal Act and amendments. Hitherto this right was available only after the mortgagee had given notice to exercise certain powers under the mortgage. A further amendment to the legislation was effected by the Mortgagors and Tenants Further Relief Act, 1932, which took effect from Ist December, 1932, and which authorized the Court to join the mortgagee of the stock as a party to an application for relief by a mortgagor of farm lands. This authority is limited, however, in that it does not permit the Court after investigating the position to go further and bind the stock mortgagee to comply with the provisions of the Court order. The Mortgagors and Tenants Relief Amendment Act, 1932-33, conferred on a mortgagor a right to apply for relief where the mortgagee having received from the Court authority to exercise his powers has failed for three months to exercise them, and made a further important addition to the legislation by debarring a mortgagor from contracting out of the benefits provided by the principal Act. The difficulties experienced by the Public Trustee in administering the investments of the Common Fund and of the special funds under his control have been greatly accentuated during the year through the operation of the legislation, particularly where the security is a rural property. While it is inevitable that in the readjustment necessitated by the present economic conditions some measure of sacrifice on the part of all must be expected, yet the operation of the legislation in its present form does not ensure that the sacrifice required is borne equitably. 41. The deficiencies in the legislation, which operates to the great detriment of the Public Trustee and other mortgagees of land, are particularly noticeable where security is held by the Public Trustee over farming-lands the stock on which is mortgaged and accordingly the stock mortgagee is in a position to control the whole of the mortgagor's income. In these cases it is the practice of the Public Trustee to press for an arrangement under which the mortgagor's income shall be shared on a pro rata basis between the Public Trustee and the stock mortgagee after provision has been made for reasonable living and working expenses and for rates and taxes on the security. However, a number of stock mortgagees are not prepared to enter into these arrangements ; and while the legislation empowers the Court to join the stock mortgagee in proceedings for relief under a mortgage over land, this provision is of no practical benefit, as the Court has no power to make an order binding on the stock mortgagee in those proceedings. The result is that a number of stock mortgagees do not hesitate to take advantage of the absence of the necessary provision binding them to observe the terms of the Court order, and to ignore the order of the Couit, notwithstanding the fact that the whole position has been fully reviewed by the local Mortgagors' Liabilities Adjustment Commission and the Court (generally the Supreme Court), and the terms of the pro rata arrangement have been approved by the Court, which considers the arrangement equitable in the interests of all parties concerned. In cases such as these the stock mortgagee under the existing legislation has unrestricted control of the whole of the mortgagor's income and is free to make full provision not only for payment of interest on the stock mortgage, but for the application of any surplus in reduction of the principal of the stock account,

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