TRUSTS IN NEW ZEALAND

Press, Volume LVIII, Issue 11108, 29 October 1901, Page 3

TRUSTS IN NEW ZEALAND

CASE BEFORE THE APPEAL COURT. (PBSSS ASSOCIATION* TKLEGBAM.) WELLINGTON, October 2a The Court of Appeal was engaged to-day in the consideration of an important cast, j involving fche legality of trusts or trade com-1 hinatioiiß in New Zealand. This is the ac- j tion of the New Zealand Flour Millers* Co- | operative Assfviation, Limited, v tJieTimaru Milling Company, Limited, in which the plaintiif association seeks to recover from j the defendant company of £150, payable ou allotment to the defendant company of 150 shares in the plaintiff association. The directors of the deiendtvnt company agreed that the company should become a shareholder in the association, and applkd for shares, subject to certain conditions being complied with. Th« directors also executed an agreement with the association, drawn op with the object of regulating the output and the prices of flour throughout New Zealand. An agreement on the same terms has been executed by all other millers joining the association. Subsequent to "applying for ! shares, and executing the agreement, the directors of the defendant company w«re ad vised that the taking of such suares,"and entering into such an: agreement, were ultra vires of the defendant company, and they, therefore, repudiated the whole transaction on behalf of the company, lhe association, nevertheless, proceeded to comply with the conditions on which tho company had applied for the share*, and subsequently allotted the shares, and registe>red tire company as a shareholder." The company having declined to pay the allotment moneys, the association commenced this action ior their recovery. A special case was, hereupon, stated In the action, and removed for argument into the Court of -Appeal. Two questions are raised for consideration. First, wbetlier the agreement between the association and the Associated Millers' and Milling Companies regulating the prices and output, is void, and unenforceable, as being contrary to public policy, and in restraint of the track ; and, secondly, whether, assuming the agreement to be valid in iteelf, it was within the powers of the defendant company and its directors to enter into the same. Messrs Sim and Kinnerney are appearing for the plaintiff association, arid Messrs H. D. Bell and Skerrett for defendant company. The case is being heard by the Chief Justice, and Justices Williams, Denriiston, Connolly, and Edwards. Counsel for the plaintiff Association contended that the agreement between fche Association and the defendant Company was a good and valid agreement, being founded itpctn valuable consideration, and the restraint imposed not going further than was reasonably necessary for protecting the interests ot fche parties concerned. Th* object of the agreement was merely to put an end to the ruinous competition and detrimental system of carrying on business, and the circumstances of the colony were such, especially with regard to the demand for and the available sources of supply of flour, that there is no reasonable probabdity of public interest being prejudicially affected by such an arrangement. Unless an agreement imposed so great a restriction on the trade that it must necessarily prejudicially affect the public, Ihe onus was on the other side to establish that it will do so. On English authorities, counsel submitted that the agreement may be good, though in partial restraint of the trade, and though the result may possibly be to enhance priws. Counsel further submitted that the Trade Unions Act of 1878 contained a recognition of the right of employers as well as workmen to combine for the purpose of protecting their interests, and that th 6 effect of the Industrial Conciliation and Arbitration Act, 1900, js to enable Associations to be, formed for toe purpose of regulating the mode in which businesses shall be carried on, and to provide for tbe enforcement of agreements for that purpose. Dealing with the question of the power of the defendant Company to take shares in the Association, and enter into an agreement;, counsel contended that this was plainly authorised by a clause of the memorandum of Association of the defendant Company, empowering it to purchase any share or interest in .an undertaking of any other company, asssociation, or person carrying on a similar or analogous business. The. other clauses emnower the Company to deal in flour in such a manner as the directors may from time to time determine, and; to establish.and maintain-such agencies as may be necessary for successfully carrying on. the business arid object? .of the. Company.. The arrangement , entered into .with the Association amounted, counsel argusd, to no more than the appointment of the'Asroriatiou'us agents of tne. Company for the sale of flour in New Zealand during a period of two years. It could not he contended that the Company had not power if it chose to enter into a contract in the ordinary way of business to .forward the sa'e of ite whole output for two years*. That being m,, there could be no objection to the arrangement entered into with ths Association. Counsel thereby mibmirted lhat the whole transaction waV valid and binding, and capable of being enforced against the defendant Company. Counsel for the .defendant Company, in opening, stated that the Company's "main reason for defending the action was that it had been advised that the transaction was not within its power*. -The; directors as trustees, for tbe*dhareholdere had,;therefore, conceived that,they were bound to withdraw from it., They ,eufcnifct«4 that every decided ease was against the agreement in question being enforceable. * v The law against trade combinations had never been altered, exoept by the Trades Union Acts, which- had'inerelv provided that such combination should no longer be unlawful or criminal. The Trades union Act itself; however, hoth in. England and in New Zealand, contained; an express provision that no such agreements should bp enforced by the Courts. This connsel contended, had not been repealed by the Industrial Conciliation and Arbitration Acf. . '- ■■ -

Argument for the defendant Company had not concluded when che Court rose for the day. ; . . . .-