LAW REPORTS.

Dominion, Volume 5, Issue 1431, 4 May 1912, Page 3

LAW REPORTS.

HEAVY APPEAL LISTTHE D.I.C AND CORPORATIONRECLAIMED LEASESMORE ABOUT DOCK CONTRACT; THE MARCONI CASE. ■'A long list of reserved judgments delivered in tho Court of Appeal yesterday occupied the judges practically tho whole of tho morning. Tho first case called for judgmont was that of Pitcaithly and Co. v. John M'Loan and Sons. Mr. Justico Williams announced that the judgments in this case were so lengthy that it was not proposed to read them, but a majority of the Court had decided that the appeal should be dismissed. Mr. Justice Edwards then delivered the Judgment of tho Court in the originating summons in which the Taupo Totara Timber Co., Ltd., and the Kauri Timber Co., Ltd., proceeded against, the CommisBioner of Taxes. This was a fairly lengthy document, but tho decisions that followed were of smaller dimensions, though the last of them, dealing with the Marconi Wireless Company's action Bgainst the Crown was not disposed of until 12.30 p.m. In tho case of Pitcaithly and Co., Ltd., v. John M'Lean and Sons, the appeal was from a decision of tho Chief Justice.. In the original action Pitcaithly and Co. claimed .£20,000 from M'Lean and Sons (contractors for tho Wellington Dock) for alleged breach of contract to purchase gravel and sand required to complete .the dock. Before this action came up for hearing it was agreed to state a special caso to settle the question as to whether M'Lean and Sons had contracted to purchase the full amount of sand and gravel that vrould bo necessary to complete the dock or only such an amount as would from time to time be actually used in tho work. The Chief Justico answered the question in favour "'of M'Lean and Sons, and judgment was entered for them. Pitcaithly's appeal was yesterday dismissed with costs on the highest scale.

In regard to certain city leases (tho D.I.C. blocks in Brandon and Panama Street), tho Court decided that the tiuo basis, on which the valuers must proceed to ascertain the fair annual ground rent of the land, is that fhero are no buildings nor improvements on the land. They must ascertain what a prudent lessoe would give for the ground rent of the land for tho term and on the conditions as to renewal and other terms, etc., mentioned in the lease. They must put out of consideration the fact—-if it no b fact—that there are buildings or improvements on the land.

The Taupo Totara Timber Company, Ltd., and the Kauri Timber Company, Ltd., are not entitled in their assessments for income tax to deduct from the gross proceeds of their business the value of the standing timber cut by them from year to year (as set forth in the special cases stated by them)—so the Court of Appeal nas-ruled.

Two letters found in the house of Martha Jane O'Shaughnessy, at Kingsland, Auckland, were, i.n the opinion of the Court of Appeal, rightly admitted as evidence against her, on a charge of irurdor, and tho"evidence.' of aTMrs'.'.Wliittington was alsorightly admitted. O'Shaughnessy will therefore have to complete her sontence of seven years for manslaughter, on which charge sho was found guilty. For similar reasons, Charlotte Campbell and Mary Hassell, who were found guilty of conspiring to defeat the course of justice; will havo to complete tho term of one year's imprisonment imposed on them. It was held by the Court, that the Marconi Wireless Telegraph Company's petition of right disclosed a cause of action against His .Majesty, lut while tho Supremo Court iad jurisdiction to hear'the petition, it could not:do more than make a declaratory, order as to the user and the right to have compensation assessed.'

DOCK CONTRACT,

. M'LEAN AND PITCAITHLY. . Reserved' decision was in favour of respondents, in the case of Pitcaithly and Co. y. John M'lean and Son—an appeal from a Supreme Court decision m a special case heard in Wellington in November last.

In tho original action, Pitcaithly and Co. claimed Ji20,000 as damages for alleged loss of profit. It had, however, been agToed that, before hearing this case, certain questions of law should bo settled by stating a special case for tho Supremo Court—heard by the' Chief Justico (Sir Robert Stout) in November last. The following facts were at that time admitted, but for argument of tho questions of law onlv: On January 31, 1907, the Wellington Harbour Board accepred M'Lean and Son's tender for the construction of tho graving dock in Wellington, and, on February G,-1907, M'Lean and J'on entered into an agreement with Pitcaithly and Co. for the supply of gravel and sfn'd for the work. In accordance with tho terms 'of this agreement, Pitcaithly and Co. wero called upon to supply all tho gravel and sand for tho' dock until the cessation ,of tho works. They duly supplied it for tho concrete work. On September 28,1910, a deed of release was executed- as between tho Wellington Harbour Board and M'Lean and Son. This was delivered about January 12, 1911, and became effectual, in consequence of tho passing of tho Wellington Harbour Beard Empowering Act, 1910, which came into force on December 3, 1910. Pitcaithly and Co. contended that it was an implied condition of the agreement of February. 6, 1907, that M'Lean and Son should proceed with the erection of the dock and comploto it, and that they should net enter into any arrangement whereby the contract should te determined. In the alternative, they (Pitcaithly and Co.) contended that, if no Biich condition was implied, and if M'Lean and Son had a right to elect (and did elect) to 'detormino the contract with the Harbour Board, M'Lean and Son were, nevertheless, liable to pay to Pitcaithlv and Co., as damages, the whole of tho profit which would have accrued to tho latter if the contract with the Harbour Board had been completed. Defendants (MT.canand Son) made answer to the above conditions, and denied liability. Thev advanced various reasons ns to why they had been prevented from completing the works and compelled them to abandon the contract against their wishes. They contended that tho contract had not boon "voluntarily" abandoned by them. . , , ~ II In the special case, eight questions had been submitted to the Court for/nswers, but after hearing a portion of Mr. Bel s opening argument, his Honour said: J.lie question appears to be simply this: Whether it wns a contract to purchase a certain amount of gravel or to purchase according to requirements?' •_,.,_ In a reserved judgment, the Chief Justice answered the questions submitted to the Court in favour of M'Lean and i-.cn. His Honour at n Inter dato entered up judgment for defendants os asked for, with costs specified, second counsel not being allowed. Pitcaithly and Co. subsequently appealed from the decision of the Chief Justice on tho ground that it was errcneetis in point »f law, and the case then eame en in the Appeal Court. Mr. Jnstiee Edwards, in the course ol o verv lengthy judgment, said:—"lt is clear that the respondents were not bound, bv the terms of the contract, to order from tho appellants any sand or gravel not nctuallv necessary for the construction of tho work as it progressed. Counsel for the. appellants contend, however, that il It is not expressed in the contract still it mu=t necessarily be implied that .the *>e?nondents were bound to order from the Appellants all the Kind and gravel ro-

quired for the complete construction of the work as specified. This contention appears to mo to bo inconsistent with the admission of counsel for the appellants that if tho mode of construction of the dock had been variecj, under the powers given l>v tho respondents contract with tho'Harbour Board, in such manner that loss gravel and sand wero required tor tho construction of tho work as so varied, the appellants could not have complained upon that ground. . . . Whether or not tho fact that tho execution of tho work would have been ruinous to tho respondents is sufficient to discharge them from their obligation to tho appellants to complete the work (if there .is such an obligation) may be doubtful, and I do not express any opinion upon tlmt matter. If tho answer depends upon an implication of tho intention of the parties, it would seem that this question should be answered in the affirmative, lor it js impossible to suppose that it was the intention of the parties that tho respondents should ruin themselves in the execution of a work which had turned out from unforeseen causes to bo for practical purposes impossible in order to enable the appellants to earn tho profits which they anticipated from their subsidiary contract with tho respondents. No case has been cited which deals directly with this question. It is unnecessary to answer it, ana I leave it unanswered. Upon tho other grounds with which I have already dealt the appeal should, in my opinion, be disj missed with costs on the highest scale.. Mr. Justice Chapman concurred in tins view, but Mr. Justice Williams dissented and was of opinion that the appeal should have been allowed. Sir John Findlay was granted formal leavo to appeal to the Privy Council.

, CITY LEASES. D.I.C. AND THE CORPORATION. Important questions as to the construction of city leases were- answered by tho Court of Appeal yesterday in a judgment of the Court delivered by tho Chief Justice (Sir Robert Stout). The parties to tho action were the Drapery and General Importing Co. of New Zealand, Ltd., and the Wellington City Corporation. : The matter had come up previously in tho Supremo Court in the form of an originating summons. By direction of Mr. Justice Sim, the summons had been removed into the Court of Appeal for argument. The reference was to several city sections held by the D.I.C, in Panama Street and Brandon Street, under three separato leases. The parties wcro desirous that tho Court should detcrmino what is the truo basis on which tho ground rents for new terms under the leases should be ascertained, and also whethor tho valuations of ground rents are governed by tho provisions of the Arbitration Act, 1908. The two first leases are shortly to fall due for renewal. At the hearing Mr. C. P. Skerrett, K.C., with him Mr. H. D. Bell, appeared for tho D.I.C, and Mr. T. P. Martin, with him Mr. J. O'Shea, for the Wellington City Corporation. In delivering judgment of the Court, his Honour said:— ' "Tho questions in this summons which the parties desire answered are :— "4. Is tho fair annual value of tho said land to bo ascertained by arriving at its fee simple value as if no building existed thereon, and fixing the fair annual ground rent at some percentage on Buch freehold value without any regard to any valuablo building actually existing thereon, or to the purpose for which any such building is designed suitable and used? "7. What under tho provisions of each of the said two leases is the true basis on which the valuers should ascertain tho fair annual ground rent of the land included in the said lease, only without any buildings or improvements . for the .. renewed term? ....

"As to the third lease there is a. provision ascertaining the proper annual ground rent for a part of the term. That provision is:—'ln ascertaining such new rentals the valuers shall not take into consideration the value of any building or improvements then existing* on tho demised premises, :biit,they shall/value tho full and improved ground rental of the said premises that ought to be payable during tho said new term.' ■ "There is also provision for ascertaining tho ground rent, in the case <jf a renewal, viz.—'ln ascertaining such new rental the valuers shall not take into consideration tho value of any building or. improvements then existing upon the said demised premises, but they shall value tho full and improved ground rental of the said premises that ought to be payable during the said now term. "Paragraph 8 of the summons states:— "8. In the case of tho lease of September 30, 1905, the like questions arise as to the interpretation of the words the full and improved ground rental of ..the said premises that .'ought to bo payable during tho said term.'. ■ ' • "There is this further question:—!). Where tho valuations of ground rents to be made under tho provisions of tho said leases respectively aro arbitrations as opposed to,valuations, and the said loascs are 'submissions' within the meaning ot the Arbitration Act, 1800, and whether the valuers are arbitrators within tho meaning of the said Act? , . "As to question 4, the Court is of opinion that the proper answer is No. The interpretation of the clauses referred to will appear in answer to question i. "As to question 7, tho true basis on which the valuers must proceed is that there are no buildings nor improvements on the land. They must ascertain what a prudent lessee would give for the ground rent of the land for tho terra and on tho conditions as to renewal and other terms, etc., mentioned in the lease. They must nut out of consideration the fact—if it bo a fact—that there are buildings or improvements on the' land. "As to tho questions raised in paragraph 8 we aro of opinion that there is no difference in the mode that has to be followed in valuing the ground rents under the third lease from that of the other W "As to question 9, it was admitted that the provisions as to valuations are submissions in the meaning of the Arbitration Act, 1908."

TAXINQ TIMBER COMPANIES. DEDUCTIONS MAT NOT BE MADE. Mention of a probablo appeal to the Privy Council was mado yesterday, when Mr. Justice Edwards delivered judgment of the Court in the caso in which the Court of Appeal was asked to decide the question as to whether two sawmilung companies were entitled to make certain deductions from the gross proceeds oi their business before being assessed tor income tax. On the Bench at the hewing were the Chief Justice (Sir Kober.Stout , Mr. Justice Denniston, Mr. Justice idwards, and Mr. Justice Chapman. The cases originally came on in the Supreme Court, but were removed by direction into the Court of Appe»l. In ono caso the plaintiff was the Kaur: Timber Co., Ltd., and in the other case tho Taupo Totara Timber Co., Ltd. In both actions tho Commissioner oi taxes was defendant, and as similar points were involved in each, it was agreed that there should bo joint argument. Tho question for the Court was, in what cases (if at all) and to what extent (if at all') wcro tho companies entitled (in their assessment of incomo tax) to deduct from the gross proceeds of the business the value of the standing timber cut, the receipts from which were not divided among the shareholders, but used in the purchase of other timber or timberbearing land, or for other objects of the company's, business. Tho full details of the. caso "have been previously set out. \t the hearing Sir John Findlay, K.C., with him Mr. J. L. Stout, appeared for tho Taupo Totara Company, and Mr. T. Cotter, K.C., of .Auckland, with him Mr. C. J. Schnnuer, of Auckland, for the ■Kauri Timber Company. Tho Commissioner of Taxes was represented by the Solicitor-General (Mr. J. W. Salmond). After reviewing tho facts and the arguments put forward by counsel, Mr. Justice Edwards said: "It appears to us to be clear that the provisions of Sub-Section 12 of Paragraph 66 of the Act of 1900 referred, and that, as reproduced in Paragraph (L) of Section 87 of the Act of 1909, they still rofor, to annual losses, outgoings and expenses. The purchaso moneys of land or of interests in land are not "losses outgoings or expenses incurred in connection with tho ownership and nso of land.' Such <*- nendituro is the cost of acquiring the land, which is quite another matter. In our opinion, therefore, the answer to tho question put bv each of tho cases should bo: The plaintiff company is not entitled in its assessment for income tax to deduct from the gross projjecda of its business tag value of taq,

standing timber cut by it, as set forth in the special case." Sir John Findlay asked for formal leave lo appeal to the Privy Council, 'this was granted. KINGSLAND CASE. CONVICTIONS ALL AFFIRMED. That the convictions should bo affirmed was tho unanimous opinion of the Court of Appeal in connection with the Kingsland case, which caused a sensation in the .Supremo Court, Auckland, last year. At tho hearing tho Bench comprised the Chief Justice (Sn Robert Stout), Mr. Justico Williams, Mr. Justice Kdwards, Mr. Justice Cooper, and Mr. Justice Chapman. The parties most concerned were: Martha Jane U'Shaughnessy, Charlotte Campbell, and Mary Hassell. After two juries had the charge against Mrs. O'Sliaughnessy was tried before Mr. Justice Chapman for the third time at Auckland on November 28 and 2!l, 1011, on the charge of murdering Elsie Alexandra Holland. She was ultimately found guilty of manslaughter, and sentenced to seven years' imprisonment with hard labour. Charlotto Campbell, and Mary Hassell, who had been arraigned as a result of tho charge against Mrs. O'Shughnessy were tried at the, November sitting of the Supremo Court at Auckland on charges of being accessories after the fact to .the crimo of murder, with conspiring together to bo accessories after the fact, and with conspiring to defeat tho course of justice. With them was arraigned James Edward O'Shaughnessy, who was acquitted. . . . The jury acquitted the prisoners on tho first and second counts, but convicted them on tho third. Each of them was sentenced to twelve months' imprisonment with hard labour. . On both trials, Mr. E. A. Singer, counsel for the prisoners, objected to the admission of certain evidence and the learned Judge reserved the point for the Court of Appeal before which it was last month argued. In the Appeal Court yesterday the decision of tho Bench was read by the Chief Justice. Its nature has been sufficiently outlined.

CAUSE OF'ACTION. BUT NO SPECIFIC RELIEF. Whether or not a private company can proceed against vhc Sew Zealand Government for alleged infringement of wireless rights was a question decided by the Court of Appeal yesterday. For the hearing the Court comprised the Chief Justice (Sir Robert Stout), Mr. Justice Williams, Mr. Justice Dcnniston, Mr. Justice Edwards, and Mr. Justice Chapmen. Early in the present year the Marconi Wireless Telegraph Co., Ltd., commenced proceedings by petition of right in the Supreme Court, asking for relief against the Crown in connection with certain alleged breaches of patent wireless rights. The alleged breaches referred to in the petition are in connection with the con-' tract made by the Government of New Zealand with certain persons for the construction and installation of a system ol wireless telegraphy, machinery, and apparatus in the Dominion, and also in connection with the System already installed and in use at the General Post Olhce, Wellington., During preliminary proceedings it ivns agreed that before the case came up for hearing certain law points should bo decided. Tho questions of law referred to and subsequently .removed into tho Court of Appeal for argument were:— Whether the petition discloses any cause of action against his Majesty? . Whether tho Court has any jurisdiction - to grant as against his Majesty the relief claimed m the petition? When 'the ease was heard the' SolicitorGeneral (Mr. J. W.Salmoad) appeared for tho Crown, and Mr. H. D. Bel, K.C., with Mr. C. P. Skerrett K.C., »nd ; Mt. A. ■R. "Meek, appeared for. the Marconi Wire-. ■less Telegraph Co., Ltd. ' , .. V' ! A majority of the Court decided that there was no cause of action as to the threatened inf™^™" 1 was cause of action so far as tho installation at tho General Post Office was. concerned. The Supreme. Court nad jurisdiction to make a declaratory order t.iat the plafntifMiad the right to have tho terms, of it' user settled by tho means provided i (the Minister in charge of tho Department), Tho Supremo Court, however, could not determino tho measure oi SI Tho Chief Justice dissented, and was oi opinion that no cause of action was disclosed against tho Crown. Each party was ordered to pay its own costs. INCOME TAX. Argument was concluded in tho Court of Appeal yesterday in an originating summons—Levin ' v. Commissioner 01 Taxes—heard before the Chief Justice (Sir Robert Stout), Mr. Justice Edwards, and' Mr. Justice Cooper. The summons had been removed, '.from tho' Supreme Court on account of the importance oi the issue involved. The parties to the action were Amy Levin, widow, of Netley Park, Gomshall, Surrey, in England, plaintiff, and the Commissioner of Taxes, defendant. Mr. M. Myers, with him Mr. W. H. D. Bell, appeared for Mrs. Levin, and the Solicitor-General (Mr. J. W. Salmond) appeared for tho Commissioner of Taxes. Particulars of tho summons were published yesterday.' The question was whether the plaintiff is liable to be assessed for and to pay income tax in respect of tho annuity of .£3OOO paid to her pursuant to the will of W. H. Levin, deceased? Decision was reserved and tho Court adjourned- until 10-a.m. on Wednesday next. DECISIONS PENDING. • On Wednesday next the Court of Appeal hopes to be ablo to deliver decision in the following oases:—Public Trustee v. Filkington; M'Kean v. Brice; International Investment . Co. v. Andrews; Schmidt and Bellshaw v. Greenwood; and Dalgety and Co., Ltd., v. SolicitorGeneral.