A DAIRYING CASE

New Zealand Times, Volume L, Issue 11655, 20 October 1923, Page 2

A DAIRYING CASE

SUPPLY TO A FACTORY. LEGALITY OF CLAUSE IN COMPANY’S ARTICLES. An appeal from the decision of the Chief Justice (Sir Robert Stout), which waa in turn an appeal from a magisterial decision, came before the Court of Appeal yesterday. Mr Justice Hosking presided, and the other member® of the bench were Mr Justice Hardman, Mr Justice lteed, and Mr Justice Salmond. The case was of considerable interest to dairy companies. The appellant was Stephen Shaifoon, merchant, of Opotiki, and the appeal was in respect to an action taken aganst the Cheddar. Valley Co-operative Dairy Company. Mr O. P. Skcrrett, K.C.. with him Mr H. F. Johnston, appeared for the appellant, and Mr J. H. Hogben, of Auckland, for the respondents. 'Hie original suit brought against the company by the appellant was for but-ter-fat, and the sum claimed was £ls 12s Sd. This claim was not denied, but the company pleaded a counter-claim for £SO, at the rate of £1 per cow in pursuance of clans* 17 of their articles of association. The object of this clause read: —... to acquire, produce, manufacture, buy, sell, and export cheese, milk, butter, preserved milk, eta. . . . and all other pro-

ducts which can he derived from, produced by or made out of cows, pigs, and law material.” The validity of this clause was contested, various grounds being submitted to show that at least two articles of the company were invalid. The Chief Justice, when tho appeal came before him after the magistrate’s decision, held that this claim was unenforceable on the ground that it -was in restraint of trade; and, secondly, that the claim of £1 per cow was a claim for a penalty, and not for liquidated damages. The appeal was accordingly dismissed by His Honour.

Tlie grounds of appeal from the Chiel Justice’s judgment wa,s that it was erroneous in holding that the effect of clause 17 was to create a contract between tile appellant and the respondent company, and that the money expressed in this clause to be payable to the reRnondcnt company for failure to supply milk or cream to the company was to he treated as liquidated damages and not as a penalty. Tt was also suggested that the judgment was erroneous in Jiolding that clause 17 was not unlawful, and was not. in undue restraint of trade. Argument in the case has not been concluded.