Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  

Connect

    mail icontwitter iconBlogspot iconrss icon

The Pamphlet Collection of Sir Robert Stout: Volume 32

The Water Works Question

page break

The Water Works Question.

As some misunderstanding seems to have arisen in regard to the position of matters between the Corporation and the Water Works Company in the proposed sale of the Works, the Directors of the Company have thought it desirable to put the following facts before the public.

First—With reference to the alleged Contract for sale—or, as it is called, honourable engagement to sell—the facts are these:—

On the 21st June, 1872, at an extraordinary meeting of the Shareholders, Mr. Reynolds moved as follows: "That the Works be offered to the Corporation at £5 per Share premium on 5050 Shares allotted, on the conditions arranged with the Corporation, as per Report, and that the Collector receive six months' salary."

The result of the voting, counting Shares, was 455 as against 305—leaving, apparently, a majority of 150 in favour of the motion, but, in reality, a minority of 115 of the number (three-fourths) necessary to constitute a majority, though this necessity was not known to the Directors at the time. At the same time, it was distinctly promised to the Shareholders that a deed should be prepared, and submitted to the Shareholders for confirmation, before the property actually passed. In pursuance of that Resolution, the Directors entered into a written agreement with the City Corporation, by which they agreed, on behalf of the Company, to sell the Water Works to the Corporation at the price named in the Resolution, subject to certain special conditions, among which were the following: that the sale should be completed on or before the 1st of January, 1873; and that time should be deemed of the essence of the contract.

During the Session of Assembly immediately following this meeting the Dunedin Gas and Water Works Loan Act, 1872, was passed, at the instance of the Corporation. In that Act is the following clause: "Nothing herein, or in the Municipal Corporations Water Works Act, 1872, contained, shall be deemed to authorise the Dunedin Water Works Company to sell the Water Works of such Company, except under the authority of a special resolution of the Shareholders of such Company to be hereafter passed." And in the same Session, another Act was passed, called "The Municipal Corporations Water Works Act, 1872," which contained provisions requiring the Corporation to give three months' public notice of their intention to purchase or construct Water Works, and empowering two-fifths of the Citizens to interpose, and by their veto page 4 prevent the Corporation from entering upon either undertaking. The Directors, neither directly nor indirectly, had anything to do with the insertion of those provisions in the two Acts; but the effect of them was, that, apart from its original infirmity of not having been passed by a sufficient majority, the Resolution of the Company at once fell to the ground, and the Corporation were disabled from completing the attempted purchase within the time purposely limited by the Directors.

At a General Meeting of Shareholders, convened on February 7, 1873, the following motion was made by the Chairman: "That the works and plant be sold to the Corparation at £15 per Share on all the Shares allotted, as per agreement submitted as per Dunedin Gas and Water Works Loan Act, 1872." Before the voting on this motion, the Chairman was asked: "Is it to be part of the bargain that every Shareholder can have the amount due to him in Corporation Debentures at six per cent?" The answer was: "Yes. Any Shareholder can have all, or any portion of his purchase money in Corporation Debentures at six per cent." Another question was: "How long will these Debentures run before they can be redeemed?" The answer was: "Fifty years. The Shareholders will get Six per Cent. Debentures for fifty years." (Vide "Daily Times" report.) The voting upon this motion stood thus: 838 for the motion, and 575 against it—leaving, apparently, a majority in favour of the motion of 263, but, in reality, a minority of 221 of the number (three-fourths) necessary to constitute a majority—though this was not known to the Directors at the time.

The Directors being thus apparently, but, as it was afterwards discovered, not really, armed with authority to revive the former (supposed) contract, placed themselves in communication with the City Council, and then the Corporation found that they could only give thirty years' Debentures, and this fact was communicated by the Mayor, Mr. Fish, to the Chairman of the Company, accompanied with threats of agitation and compulsion, if the Company did not sell to the Corporation and accept of thirty years' Debentures instead of fifty; and subsequently, on the 18th February, the same fact—i.e., the inability of the Corporation—was communicated officially by the Town Clerk to the Directors, and accepted by the latter as an intimation that all negotiations were at an end. Some time afterwards it was discovered by the Directors that a majority of three-fourths of the Shareholders was necessary to pass any such motion as had been proposed, and consequently that there never was any motion whatever passed by the Shareholders which, either morally or legally, bound the Company to sell to the Corporation.

On the 9th May, 1873, the Corporation wrote to the Company, threatening, if the Directors declined taking the thirty years' Debentures, that they would "apply to Parliament at the ensuing Session for the repeal of the Company's rating power, improperly held by a Company which is unable to supply the wants of the inhabitants of the City and suburbs." To this communication the Directors replied by simply acknowledging receipt, considering as they did that the Corporation had thus entered upon a course wholly unjustified by the circumstances—a course which, if persevered in, would disentitle the Corporation to any favour or concession on the part page 5 of the Company, and more than justified the latter in acting upon the rule which usually governs the sale of property—that of obtaining its fair value.

The Corporation proceeded to carry their threat into execution, and by a Petition which contained gross misstatements asked Parliament to take away the Company's right to levy rates, and to withdraw the Government guarantee. The General Assembly threw out the Petition without calling on the Company for an explanation, and thus the Company was left (as in point of fact it always had been, and as the Corporation themselves practically acknowledged, by afterwards making an entirely new offer of £16 per Share) perfectly free to sell at such price, and on such conditions, as it might decide upon; and accordingly, on the 27th October, 1873, the Shareholders, in General Meeting, passed the following Resolutions:—

Resolved—1. That in accordance with the recommendation of the Board, the Works and Plant of the Company be sold to the Corporation.

2. That in consequence of the general rise and increasing value of the Company's property, the sum formerly offered by the Corporation and recently renewed of £15 per share does not represent the fair value of the Shares.

3. That the Directors be authorised to arrange with the Corporation to refer the question of the actual price to be paid for the Shares to a competent arbitrator or abitrators, mutually chosen, of high social position and totally unconnected with this City or Province, both parties to be bound by his or their decision, subject to the conditions formerly contained in the draft agreement. The consent in writing of three-fourths of the Shareholders in number and value to be obtained before signing the submission.

It was during the discussion of these Resolutions that the offer of £16 per Share was made by the Corporation; and after a motion by a Share-holder that the Company should sell at that price had been put to the meeting and negatived, the above Resolutions were carried by the requisite three-fourths in number and value of the Shareholders, and were communicated to the Corporation by letter of November 3rd, in which the Secretary of the Company pointed out the difficulties in the way of any other settlement, assured the Corporation of the sincere desire of the Directors to co-operate with the Corporation in securing the Water Works for the City at their fair value; promised that the Directors would reciprocate a fair and honourable spirit in carrying out the negotiations; and reminded the Corporation that this was the first offer by which the Shareholders were legally bound. This offer the Corporation refused, in terms of marked discourtesy. See their letter of 25th November, 1873. And so the matter now stands.

Second—Objections have been made to the quality of the water supplied to Dunedin. It will be sufficient to say, that not one of the objections applies to the water in the Lower Reservoir, or to that supplied to the City, but to the Upper Reservoir, or settling basin, where all impurities coming down the creek are caught, and prevented from going into the Lower Reservoir, from whence the City is supplied.

page 6

It will be seen from the documents following that Professor Black says that hitherto there was no necessity for filtering the water, and no blame can therefore lie on the Company for neglect. The Directors now, however, on his recommendation, will construct filter beds so soon as the necessary funds can be raised under the Borrowing Bill which the Company propose to introduce at the ensuing Session of the General Assembly, but which the Corporation, with singular inconsistency, threaten to oppose.

The water supply of Glasgow and of Melbourne is not filtered, and the Dunedin water compares favourably with either.

The Directors are making arrangements to have the water periodically analysed by competent analysts, in order that the Citizens may, from time to time, have the most authentic information upon so important a subject.

By order of the Directors,

Thomas Dick

, Secretary Dunedin Water Works Company.