Navigation

Public Trust Article June 1891

The Star, 20th June 1891

THE PUBLIC TRUST OFFICE.
REPORT OF THE COMMISSIONEES. WELLINGTON, June 19

The following is taken from the report of the Public Trust Commissioners, laid on the table of the House today : 

We have the honour to report that having made full inquiry as to the following matters, so far as the time placed at our disposal would allow, we propose to deal with them in the order set forth in your Excellency's commission. Firstly  "Mode of conducting the business of the Public Trust Office in its several, branches, whether at Wellington or elsewhere, by means of the permanent Staff of the said office or by agents or otherwise.
 
Your Commissioners have gone most carefully into this portion of their duties, and it is with extreme regret they feel compelled to state that, so far as the head office is concerned, there has been an ABSOLUTE WANT
of any proper or regular system up to the present time in the conduct of its business. Neither the Public Trustee nor his officers seemed to have acquired the habit of writing courteous and business-like letters that are customary in all well-regulated establishments, but have practised a system of sending formal memoranda and, as a rule giving very limited information to clients and the public who may have had occasion to correspond with the Public Trust Office. On the subject of rendering acoounts by the Public Trustee in connection with many estates under his control, your Commissioners find that this duty has been carried out in a very irregular manner. So much so that the Public Trustee has rarely sent really true and faithful statements of accounts to a beneficiary,in cases where loss or prospective loss has been made on a security. Secondly "The powers, duties, and liabilities of the Public Trustee, and of the officers and agents of the said Public Trust Office, the mode of keeping, rendering, and auditing the accounts of the said office or estates, or the business therein, the charges made by the said office for business done by it, or its officers or agents thereof, the means adopted to avoid inconvenience or delay in winding up, dealing with, or managing estates or property placed in or managed by the said office, or in satisfying the claims of beneficiaries, creditors or persons entitled thereto or interested therein." Your Commissioners are of opinion that the powers of the Public Trustee, or of the management of the Public Trust Office should be of an extensive character, in order to facilitate the conduct of its business management, and should be made absolutely free from any control by the Auditor-General's Department, which hitherto has only served to cause delay in the transaction of business, without having been of the slightest need for purposes of management. But, as to the mode of keeping, rendering and auditing the accounts of the Public Trust Office, your Commissioners were very much surprised when they discovered, during the coarse of their investigation, that the system of Government audit practised in relation to the business ofthe Public Trust-Office  HAS BEEN IN REALITY A DELUSION

In dealing with the charges made in reference to the business done by the Public Trust Office your Commissioners have to point out that these have been excessive. Up to the end of the year 1889 ten percent seems to have been the charge made for the collection of rants, and where an agent was employed he was allowed one half or equal to five per cent. Since the year 1889 seven and a half per cent has in many cases been charged, the agents, whenever employed, receiving two thirds or 5 per cent for collecting. The income charge has been 5 per cent, and where agents have been employed 2 per cent is paid to them; but in all cases where it has not been necessary to employ agents, the Public Trust Office seems to have taken the full benefit of the maximum charge of commission made to clients. Agents, too, are allowed to charge borrowers procuration fees on applications for loans recommended by them for the consideration of the Public Trust Office. The charges of late made by the Public Trustee in respect to intestate estates have been 7 per cent for the first £250 realised, and 5 per cent for all amounts over that sum. For the collection of moneys in the possession of Banks and Insurance Companies involving neither risk nor trouble, the charge has been half of those rates. Since the beginning of October, 1890, there has been a new schedule of charge 3, which is fully set forth in the appendices. Your Commissioners believe that in the interests of the public the charges can be very much modified and lessened in such a manner as to increase the business of the Public Trust Office. As to the means adopted for  AVOIDING DELAY AND INCONVENIENCE
in managing the estates and properties falling into the hands of the Public Trustee, your Commissioners have come to the conclusion that while the Audit Department has had much to do with the causes of complaint in respect to delay, the confused method of book-keeping practised by the Public Trust Office has added to the evils of which complaints have been made. Your Commissioners are of opinion that until a more simple and perfect system of keeping the books, papers and records of the Public Trust Office be adopted, dissatisfaction will continue to be expressed by those who would be likely, under an improved condition of management, to place business with it. On the important point of satisfying the claims of beneficiaries, or persons who may be entitled to participate in estates, the Public Trustee has SELDOM DONE HIS DUTY EFFECTIVELY

So far as your Commissioners have been able to form an opinion, they feel justified , in stating that immediately an estate is entrusted to the control of the Public Trustee little, if any, effort is made to find out the next of kin or beneficiaries entitled to participate therein; indeed, the evidence seems to point to a feeling that obtains in the Public Trust Office that possible beneficiaries ought to find out for themselves by some occult means whether moneys to which they might be entitled were in the hands of the Public Trustee. Nor has the Public Trustee apparently realised the importance of his duty to acknowledge and reply to letters in reference to estates and effects that have fallen into his hands. Long periods of time have frequently passed away, during which THE PUBLIC TRUSTEE AND HIS SUPERIOR OFFICERS HAVE SLUMBERED
over important letters of inquiry as to a deceased person's estate that has been under the care of the Public Trust Office. The result of this course of action has been that many of those interested beneficially in intestate estates, through want of proper information or means, have been deprived of all benefit, the law as it exists compelling the Public Trustee to pay all moneys, the proceeds accrued from the  personalty of intestate estates which have been unclaimed for six years, into the consolidated fund. The consequence has been that many thousands of pounds which, under a system of careful inquiry would have been distributed to beneficiaries have been taken off by the Colony. Your Commissioners desire to draw attention to A SUM OF OVER £30,000 which has been absorbed by the Colony :
from unclaimed funds and balances arising out of the administration of estates vested in the Public Trustee. This sum is exclusive of the £18,000 previously referred to. They strongly recommend that some  earnest efforts of a systematic character should be made periodically by the Public Trust Office to find the owners or beneficiaries of unclaimed estates. Your Commissioners have examined into the circumstances connected with the administration of many estates wherein treatment by the Public Trustee of money and assets has proved to have been imprudent and unwise, and the result appears to show that in many cases the persons entitled to the benefits of such estates have been treated in a somewhat ARBITRARY AND CRUEL MANNER.  

We regret to say that the Public Trustee appears to have displayed a total absence of capacity and knowledge of how these estates should have been managed and controlled, and they have to ask attention to the evidence relating to many such estates, as shown in the statements accompanying this report, more especially to the sad history of the treatment by the Public Trustee of the estates of Mrs Dalton, Hugh Wright, (a lunatic), the Muerant trust, Holmes (a lunatic), Parmenter, Samuel Young, and others. Also, to note the manner of dealing by the Public Trustee with Mr W. F. Ross, who became the purchaser of a certain frontage of freehold land in Lambton Quay, Wellington. A MOST UNUSUAL AND PECULIAR METHOD has obtained with the Public Trust Office, perhaps legally, of keeping its profit and loss account under the heading of "Expenses Account," to which all salaries and charges during the currency of the financial year have been debited, while, at the same time, all commission, interests and fees have been credited to it, and the latter three items of credit being greater than the debit entries, the expenses account holds the anomalous position of always appearing in credit. Your Commissioners desire to indicate this as an example of the INEFFICIENT MODE OF BOOK-KEEPING.

 Thirdly—" The investment of trust and other funds by the said office, whether under deed, will or other instrument, or any other manner authorised by law, general or particular, and the class, terms or mode of investment in all or any of such cases." It does not appear to have been within the province of the Board to inquire into or know anything of securities after loans had been granted, not even to know whether a loan granted had been completed as a security, and whether the value of such security had subsequently fluctuated. In the opinion of your Commissioners this is a most important duty, and ought to have been attended to by either the members of the Board or by the Audit Department, and any loan granted by the Board after its acceptance and completion by the mortgagor, should again have been reported in the minutes of the Board and the date of its completion recorded. The Board of the Public Trust Office is bound by regulations not to advance on mortgage out of the general fund a larger sum than 50 per cent of the valuation of any property offered as a security, but in many instances the evidence discloses the fact that the Board has FAILED TO KEEP WITHIN THE REGULATIONS.  

Neither the Board nor the Public Trustees ever appear to have taken into consideration that they had two funds entirely distinct, out of which they could make advances, viz., the general funds of the office and the special funds arising out of trusts and wills, the first being subject to the regulation as to the fifty per cent margin, and the latter being controlled either by the specific trust or will, or being absolutely free of any restriction. The evidence of the Public Trustee and the returns furnished by him also show that in several instances, moneys have been advanced on mortgages WITHOUT ANY VALUATION of the securities having been made. By way of mortgage securities the Public Trustee has chiefly dealt with what are legally known as contributory mortgages, without having realised the risks and confusion that he might entail upon the Colony and himself. This plan of dealing with the balances at the credit of estates on such a class of security was apparently unknown to the members comprising the Public Trust Board; Fourthly " In what respects (if any) the scope of the powers and duties of the Public Trustee could be enlarged, or whether any class or classes of property now administered by the said office or its agents should cease to be so administered."  Your Commissioners, at the earlier part of this report, have offered the opinion that the powers of the Public Trustee should be OF A VERY EXTENDED CHARACTER, and after further consideration they think that he should be authorised to manage estates for people either resident or nonresident in the Colony ; that, in fact, he should be empowered to become the attorney for the conduct and management of any business pertaining to and within the Colony of New Zealand. Fifthly — "How the law affecting all or any of the several matters aforesaid could or might be amended, altered, reenacted or regulated, and by what means and in what manner and form tbo s»iae should be done." Your Commissioners are of opinion that the LAW SHOULD BE SO AMENDED as to provide the greatest facilities for the Public Trustee carrying on a general financial business, for the values and character of the properties that from time to time may come under his control are so different that one estate or property may require a totally distinct kind of management from another. Sixthly — " And generally into all or any matters or things incident to or arising out of your inquiries into the matters aforesaid, the intent and object hereof being that full inquiry should be made into all the business and operations of the said office." A cause of dissatisfaction has arisen with the clients of the Public Trust Office in connection with PETTY CHARGES. No proper system of keeping an account of postage chargeable to each particular estate has ever obtained in the Public Trust Office, but estates have been at different periods charged according to the caprice of the ledger-keepers. Attention is directed to a return of postages debited to estates in the Public Trust Office during the annual periods of 1888, 1889 and 1890, which shows respectively in round numbers £250, £257 and £165. The annual amount paid by the Public Trust Office to the Postal Department has varied from .£100 to £160. Your Commissioners are of opinion that the commissions and fees charged, by the Public Trust Office in the management of estates are sufficient to cover petty charges for postages, which of themselves when charged to estates direct are very apt to occasion irritation and discontent in the minds of beneficiaries and clients, and for that reason such a system should not be continued in the future, particularly as the rates of postage are shortly to become of a uniform low rate. In respect to telegrams, your Commissioners are of opinion that the cost of these should be charged direct to the estate interested. Your Commissioners draw attention to an interesting return which forms one of the appendices, and relates to LAW CHARGES AND LEGAL EXPENSES incurred by the Public Trustee, and paid largely out of the profits of the Public Trust Office. The total amount exceeds £13,000. A considerable part of these costs has been incurred notwithstanding the fact that a solicitor of experience, subordinate only to the Public Trustee, has been for some years a member of the official staff employed in the head office. Your Commissioners, in examining the methods adopted by the Public Trust Office in tbe disposal of the personalty of intestate estates were very much STARTLED BT THE DISCLOSURES made in evidence. The revelations in connection with the purchases by officers in the highest position in the service of the Public Trust Office were of the most unexpected character. Your Commissioners cannot too strongly deprecate such conduct, not only as being improper and open to grave suspicion, but utterly indefensible and illegal. 

Your Commissioners, in their examination of various lunatic estates, have discovered that the provisions of "The Lunatics Act, 1882," with respect to the maintenance of lunatics out of their estates have not been given effect to. In several instances the greater part of the estate of the lunatic has been used for his maintenance in the asylum, very little consideration being shown for the wants of his wife and family. Your Commissioners are of opinion that the Public Trustee should, in every case where he has to control the estate of a lunatic, make provision for the requirements of the wife and family before disposing of any moneys for the lunatic's maintenance in the asylum. The evidence also reveals the fact that considerable hardship has often been experienced by patients discharged from lunatic asylums without means, their estates having been exhausted during their treatment in the asylum. In all such cases pecuniary assistance should be be given to patients when leaving. Your Commissioners are of opinion tuat the Public Trust Office SHOULD BE MANAGED by a Public Trustee and a Deputy-Trustee with powers almost co-equal, and that they should be men of large commercial and financial experience. The Trustees should have the assistance of an Advising  Board, composed of two commercial men j possessing special knowledge. It would be desirable that one of the Trustees and the Advising Board should meet twice each week in order to facilitate the despatch of important business. Your Commissioners have been unable; to fully investigate the papers and accounts connected with all the estates at the head office, nor have they been able to visit auy branch or agency of the Public Trust Office, for the reason that your Excellency's Ministers throughout the term of the investigation have deemed it advisable to confine the labours of your Commissioners within too limited a space of time, apparently not realising the heavy nature of the task, nor the laborious work involved by its many difficult and technical intricacies. The investigation consequently has not been so thorough as your Commissioners would have desired.

Comments