SUGAR DISTRIBUTION

Evening Star, Issue 15064, 21 December 1912, Page 2

SUGAR DISTRIBUTION

Sfeg . ‘COMMERCIAL TRUST* ACT. DEFENDANTS FINED £I.OOO EACH. CROWN FAIL IN SECOND ACTION. As slated in. .portion of our last night’s “ Stop Press,” the Chief Justice delivered his reserved judgment at Wellington yesterday in the case the King v. the Merchants’ Association and others. His Honor reviewed the evidence at length, and found the following facts to be proved: 1. That scales [of discount] 2 and 3 were made to prevent competition hi the sale and’disposal of sugar. 2. That they- were mado to enable a commercial trust or association or group of buyers to get the control of the distribution of sugar. 1 5. That they were made so as to prevent Fairbairn, Wright, and Co. or other persons purchasing sugar and giving certain discounts to purchasers from them. 4. That the defendants were acting in concert or conspiring together to get this control. 5. That they were made so as to ensure a profit that might otherwise not have gone to the members of the trust going to the members of the trust. He finds also the paragraphs of the statement^ of claim in the first action that were admitted by some of the defendants —namely, paragraphs 5, 6, 7, 8, and 12 to 28 inclusive—proved. Dio question then arises : Have any offences against the Commercial Trusts Act been proved? It was argued that the Commercial Trusts Act is a penal statute, and that consequently it must be strictly construed. All the Now Zealand statutes, as their Lordships of the Privy Council have pointed out, are remedial. Paragraph 1 of section 6 of tire Acte Interpretation Act, 1908, says: “ Every Act and every provision or enactment thereof shall bo deemed remedial where its immediate purpose is to direct the doing of anything Parliament deems to be for the public good or to prevent or punish the doing of anything it deems contrary to the public good, and shall accordingly receive such fair, large, and liberal construction and interprets ■ .tion as will best ensure the attempt of the objects of the Act and of such provision or enactment, according to its true intent, meaning, and spirit.” His Honor continued: The statute appeare _to me to be clear and precise, and it is not really necessary to rely on any interpretation Act to explain its meaning. It is said this is a new law, and a very stringent one, and thus necessitates a stringent construction. Die law is new in a sense, but it must not be forgotten that before English industry was developed as it is now there were many laws that infringed individual liberty in the buying and selling of goods more than this statute does. There have been many laws in recent years passed to supervise and control monopolies, .the aim being not to limit liberty, but to promote true freedom. I apprehend such is the aim of our many labor laws. That there are vast and difficult industrial problems before all civilised communities is admitted by all who have studied our preset Ijty industrial conditions. Die has been considered in the United States, in Australia, in the Continent of Europe, and in New Zealand, and the question really is: Is the State to be dominant and to see that such liberty is granted as makes for the liberty of all, or must the State be placed under the control of large industrial organisations? There have been in the past between the State and various organisations. At one time they dominated the State, and there have sprung up in the development of industries, in the concentration of industries, and especially in the growth of capital and the easy mode of transportation, huge combinations, recently termed trusts, and the question really is: Ought the State to interfere with these trusts? Tins is really for the Legislature to answer, and not for the Courts. It maybe that the present law may fail, or it may be that the present law only touches the fringe of the question. It is not the province of this Court to criticise the method the Legislature has adopted In dealing with industrial questions. The duty of the Court, as welt as of all good Citizens, is faithfully to obey the provisions of our statutes. If the statute is ineffective or wrong in principle, the appeal must be made to the legislative power to alter it, and not to the Courts to construe it so as to set it aside.

1 proceed, therefore, to inquire first whether the facts I have found point to an offence having been committed by one, any, or all of the defendants. I propose to' refer first to the offence charged in paragraph 37 of the statement of claim in the first action —namely, the charge of conspiracy as defined in section 5 of the statute. The fact that the defendants agreed together to raise the scales, and that it was agreed that Levin and Co. should be treated as a purchaser for the company alone and as a _ principal, when, in truth arid in fact. Levin and _ Co. was a mere agent for the members of the association whe desired to purchase sugar, and bound by its tariff and by its directions, cannot, m my opinion, be disputed. It was contended, however, that this combination was lawful, and not an offence under section o, as the monopoly or control was not contrary to the public interest. It was urged that to get a fair price and to prevent wholesale merchants such as Pairbairn, Wright, and Co. giv eg larger discounts than the memboi s of the association had sanctioned was n< t against the public interest. What is meant, it must be asked, by the public Suppose tho price were Kept an, would this be against the public interest? It was contended that the mere keeping up of a price or tho non-reduction of a price to an amount at which merchants could sell sugar would not be an offence under the statute, and as an authority for this proposition what is called tho Coal Vend case, decided by the High Court of the Commonwealth of Australia, was invoked. I am of opinion that the Court must hold that keeping up the price of goods or not reducing them when they could be reduced if there was free competition is contrary to the public interest. To say that a difference of 4 or 4£ per cent, on goods will not affect prices was not proved. The only evidence on the subject was that it would affect the prices to the consumer, and as tho defendants called no evidence to contradict the statement of Mr Pairbairn, the Court must assume that no such evidence could have been called. To hold that vThen the price of articles is lowered by the manufacturer or importer the consumer will get no benefit if the hovering of price is only a matter of 4 or 5 per cent., and if there is free competition in sales, would be to ignore what is the universal belief of all political economists. T : t assumption made in our laws- is that ibe benefit of lowering prices goes ultimately to the consumer. This is also the evidence, and. as I have said,, it has not been contradicted. If the monopoly or control keeps prices up, I am of opinion that the doing so is contrary ot the public interest. Tho judgment in the Coal Ahmd case does not appear to me to be of any value in discussing this question. The High Court was dealing with a diffcrently-worded statute, and dealing with different circumstances, and with an industry that had quite a different history from that of the Sugar Company in New Zealand. The wording of the Australian Industries Preservation Act, 1906, is narrow and limited compared with our commercial trusts statute. Its very title shows the- difference in the attitude, towards monopolies that the Australian Legislature had assumed from that of New Zealand. Its title is “ an Act for the preservation of Australian industries, and for the repression of destructive monopolies.” The title of our Act is “ an Act for the repression of monopolies in trade or commerce,” and if sections 4 and 5 of _the Australian Act are compared with sections 3 and 4 of our statute the difference in tho legislative provisions will he seen to bo very great. In every clause in the Australian Act dealing with- acts done there are the words “ to the detriment of the public.” Those words show what has to be proved before an offence can be deemed to be proved It is not so in- our statute. The phrase “public interest” is found only in section 5. Tho..

Commercial Trusts Act is for the repress monopolies. Monopolies, therefore, /'j demand, and price of .certain' goods—of supr-«re thought to bo'things, that should be repressed. That must mean thaWhey are deemed by the Legislature to contrary, to the public interest.” further, if the sugar company carries out or arranges to carry out schemes that the t> a ute declares to bo offences, such schemes must be deemed to be contrary to the pubic interest. • \V hat, then,- was the aim of the defendants in altering the scales? There can, in my opinion, be only ono answer. wag to prevent persons who' were not members of the commercial trust getting goods at the same prices as persons who ■were members of the commercial trust. It was to arrange a discount for a class, and I °k another class—to arrange a discount for a class that ■would obev a. conimercial trust, and to give another discount to a class that would not obey a commercial trust. buck conduct is, in mv opinion, distmctly prohibited by section 5. If it is prohibited by section 5. it must be assumed that all the acts declared offences under section 3 are acts done contrary to the public interest. It is unnecessary'! thereforo, to rely upon the raising of “the prico J h .® lowering of the price as evidence that the acts done by the sugar company and the other defendants were contrary to the public interest. What they conspired 1 ,. to violate the provisions of section o of the statute. I am therefore of opinion that an offence was committed. Was there ail offence committed under (d} or (e) ot section 5 by the sugar company. It was contended that it must bo proved, before an offence can be shown to have been committed under sections 3 and 4, that.tho acts done were contrary to the public interest. I do not think so. The words of the statute arc plain. If a person, m respect of dealings in the goods mentioned in the schedule to the Act, gives a discount to a purchaser for the reason, or upon the implied or expressed condition, that the latter person is a member of a commercial trust, or intends to act in obedience to a tariff fixed by a commercial trust, that is all that is necessary to bo proved to constitute an offence. The statute considers such an act by a person an offence, and the Court has not to inquire what injury, if any, this act does to the public. This is not a case to which the doctrine of mens rea or guilty knowledge applies. Is the act prohibited by statute and declared an offence? If it bo so, then it is an offence whatever its effect pn the public may be. Were auy other interpretation, accepted in Acts similarly framed, there are scores of offences that it might be impossible to prove. For example, we have a Shop Hours Act. Before an offence is proved under that statute it is not necessary to show that keeping shops open on the half-holiday or for, say, half an hour after the closing hour is against the public interest. If not necessary” how can it be said to be necessary in dealing with sections 3 and 4 of the statute. The fact that in section 5 the Legislature has inserted the words “against the public interest, ’ and omitted such a condition in sections 3 and 4, is strong evidence, were that necessary, that no such limitation can be put on sections 5 and 4. Another, and perhaps the main contention, was that the acts done by the sugar company were to protect its trade, so as to prevent the importation. of foreign sugars and to give the discount arranged for to wholesale merchants, so as to propitiate them and ges them to act as distributors of the sugar company’s products and of the products of no one else. The way to test this argument is to ascertain what was the immediate cause or reason for iho company’s action. The answer must be that tliey gave the discount because the purchaser was a member of a commercial trust. The ultimate and final end of an action is not to he sought for. It is what led immediately and directly to the act done. A person who breaks into another person’s chop and takes some food that does not belong to him might, if this argument were sound, say his final end or aim was not to take food that did not belong to him, but it was to save himself from starvation. _ Hoes the end justify the means? This would open a question of casuistry that this court is not, in my opinion, called upon to discuss. The eugai company mado_ its seeks and gave its discounts to Levin and Co. for the reason that Levin and Co were members of a commercial trust. If the company had not been such a member it would not have got that discount, and the whole arrangement or conspiracy had the giving of such discounts m view. It was also because Fairbairn, Wright, and Co. were not members of the commercial trust that the companv raised its scales and made it impossible for Fairbairn, Wright, and Co. to get their discount. Ibis offence was committed under section 4. It was said that the Court should look at the real aim of the sugar company, and not at a mere phase of the question. No doubt the Court should, in every transaction, try to ascertain what the truth is. independently of the mode in which the transaction may have been carried out. The Court ought not to let sham documents, drawn up for the purpose of evading an Act of Parliament, prevent it from getting at the truth oi the matter. That the documents may appeal- innocent is not enough. What was the true transaction? Here the Court has to discover wdiat is the true transaction, but I do not think that in discovering the true transaction it can ignore—that is practically what the Court Is asked to do —the moans that were employed to cany out the aim in view The means employed were, in my opinion, contrary to the statute. Although there was an aim beyond, , that is not what the Court had to look at. It ivas urged that this case should be treated as a case of fraudulent preference under the Bankruptcy Act is treated. I do not see the analogy." AH that can be urged is that the sugar company did in fact prefer a member or members of a commercial trust, but for an expected reward—namely, that those members would not purchase foreign sugars and would be the distributors of its sugar. The reason that the discount was given to Levin and Go. and to the other members was, therefore, that they were members of a commercial trust—no membership, no discount. If this contention is to prevail—that the giving of some reward were to be an excuse for the company’s action—then it would have to lie held that the company could dictate as its terms the carrying out of the behests of a commercial trust, and the Act would be reduced to impotence if this suggestion were listened to. It was urged, further, that there was nothing wrong in making scales which gave a large purchaser an advantage over a small purchaser. It may be that the statute docs not provide against such a differentiation. Such a differentiation of rates has not been allowed in England and in the United States, nor hi New Zealand, in reference to public utilities such an tho transportation of goods on i ail ways. It may be that such cannot lx- permitted under this Act. It is not,_ however, necessary to consider this question, as the- raising of the scales was done for a definite purpose—to give a concession to members of a, commercial trust, which is an offence under section 5. It was not a bona fide exercise of any jowor the company had, and I doubt also it fixing the scales, as was done in this case, would not he an offence under unction 6 ot the Act. The offences, therefore, which I find proved are:— 1. All the defendants are guilty of the offence charged in paragraph 37 of the statement, of claim in the first action, being an offence under section 5 of the Act,

2. The Sugar Company is guilty of an offence under section 3 (d) in giving the discounts given to Levin and Co. (Ltd.), as charged in paragraph 31 of the slatemerit of claim in the first action. 3. 'Die Sugar Company is guilty of the offence under section 4 fc), charged in paragraph 32 of the statement of claim in the first action. 4. The defendants other than the Sugar Company are guilty of the offence under section 9 of the Act, charged in paragraph 54 of the statement of claim in the first action-

As to the second action, I am of opinion that Levin and Co. were not a in the transaction of giving discount's to the persons mentioned in paragraphs 28 and S9 of the statement p! claim in the second action, and they were not agents of the Sugar Company. They were agents of the members to whom the discounts were distributed, and I read the word “ agents ” as meaning agents of the vendors. lam therefore of opinion that the plaintiff cannot succeed in ' tho second action.

Regarding tho penalties to bo imposed, I am of opinion, (a) looking at tho magnitude of the transactions,.that every one of tho defendants should be liable to a penally of £SOO for tho offen.ee committed mentioned in the foregoing paragraph 1, (b) that for the offence mentioned under paragraph 2 the Sugar Company should be liable to a penalty, of £250, (c)' that for the offence mentioned in paragraph 5 the Sugar Company, should bo liable to a penalty of ■ £250, (d) that for the offence mentioned in paragraph 4 everyone of the defendants save the Sugar Company should be liable to a penalty of £SOO. Judgment, therefore, will be for £I,OOO against every one of the defendants in the first action, with costs of issuing writ and statement of claim and preparation for trial'according-to the scale of £1,000; extra counsel for five days at £8 Bs. per day, £ls 15s for second, third, fourth, fifth, and six days of hearing, also witnesses’ expenses and disbursements; all these costs to be added together and divided into five parts, and every one of the defendants to pay one part, the cost of hearing jo bo paid by cadi as on the scale of £I,OOO. As to the second action, I give judgment for the defendants, with £8 8s to every one of the defendants, and any disbursements in. that action.

After tho judgment had been delivered Mr Skerrett, for the Merchants’ Association, asked if'judgment was for the defendants in the first action in respect to the charges under section 4. . His_ Honor : T have picked out the sections in which I consider judgment should be given for-the Crown. Air Skerrett : And those yon have not mentioned you do not consider have been proved ? His Honor ; That is so. In answer to tho Attorney-General, His Honor said ho would allow 15 guineas costs in respect to the interlocutory proceedings. Air Skerrett: I apply for a stay of proceedings pending the determination of tho appeal. The Crown is willing to consent on the understanding that security be found for the amount of the judgment and costs by January 21, the appellants to undertake to proceed with the appeal at the April sittings of the Court of Appeal. A stay of proceedings was granted on these terms. . Air Hcrdraan ; We claimed an injunction, hut your Honor did not mention it. His Honor ; That is a matter you can move for if you wish. I think it is a mater there is no need for. I will reserve the question of an injunction, and you can make application. THE DEFENDANT'S AND THE CHARGE. The case was. heard at Wellington before Sic Robert Stout, Chief Justice, last month. Tho Hon. A.. L. Herd man conducted tho proceedings on behalf of tho Crown, and tho principal counsel for tho defendants were Messrs C. P. Skerrett, K.C., and Treadwell (Wellington), J. H. K.C. (Dunedin), H. P. Riclimoriel. (Auckland), and Myers and Young (Wellington). The defendants were : The Merchants’ Association of New Zealand, the Colonial Sugar Refining Company (Now South Wales sugar refiners and sugar merchants of Auckland), and Levin and Co., William Bannatyne and Co., and Joseph Nathan and Co., all merchants of Wellington. There wore two cases. In the first the statement of claim alleged that the three merchants’ firm defendants are members of tho Merchants’ Association, whose 'objects and business include restriction of competition among its members in tho sale of merchandise, tho controlling, determining, and influencing of the supply and price of merchandise, and' the creation and maintenance of monopoly, and that in these respects tho association constitute a. commercial trust within the meaning of the Commercial Trusts Act, 1910. The statement further alleged that the ihrea last-mentioned defendants were members of a ring or combination of sugar buyers, (including 83 firms, companies, or persons, 55 of them members of the association and 28 non-members; and that the members of this alleged ring had entered into an agreement among themselves as- to the prico and terms on which they would resell sugar purchased from the Colonial Sugar Refining Company. The offences charged which have been found proved : (a) That all tho defendants conspired to monopolise and control tho supply and price of sugar, such monopoly and control being of a nature contrary to the public interest. * ■

(b) That the Sugar Company, by ite scale of October, 1011, granted discounts to Uie.se sugar buyers for the reason that they, were members of tho trust ot ring or obeyed it® rulings (sec. 3). (c) That the Sugar Company refused to supply Fairbairn, Wright, and Co. with sugar on equally favorable tonne for the reaeon that they were not members of tho trust or ring or would not obey ite rulings (eec 4). fd) That all tho other defendants aided and abetted tho Sugar Company in committing offences (b) and (c).