APPEAL COURT

New Zealand Times, Volume LII, Issue 12200, 27 July 1925, Page 8

APPEAL COURT

THE FLOURMILLING CASE A BENEFICENT MONOPOLY THE CASE FOR THE MILLERS The South Island flourmilling case, in whfch the Crown appeals .against the-judgment of Mr Justice Sim in the action heard in Dunedin in,December last, where the Crown sought to recover penalties of £SOO under the Commercial Trusts Act, 1910, from the. Crown Milling Company, Ltd. (Invercargill), Otago Roller Flour and Oatmeal Company, Ltd. (Timaru), and Wood Bros., -. flourmillers (Christchurch), and Distributors, Ltd., ,-flourtaillers agents (Christchurch), which companies- are respondents in the present case, was continued in the Appeal Court on Saturday. The judgment o.r Mr Justice Sim was to the effect that the combination was justifiable and not contrary to the public interest. .* The court is composed of the Chief Justice (Sir Robert Stout), Mr Justice Hardman, Mr Justice Reed, Mr Justice MacGregor, and Mr Justice Alpers, both divisions of Court of Appeal being present in Wellington for the case. - - ■ v Counsel for thp Crown are the At-

tomey-General (Sir , Francis Bell, K.C.), the Solicitor-General (Mr A. Fair, K.C.), and Mr F. Adams, Crown Solicitor of Dunedin. , For the respondents Messrs C. P. Skerrett, K.C., Mr Myers, K.C.,_and W. E. Leicester are appearing. AGENT OR PRINCIPAL Mr Myers continuing his. argument for the Crown on'Saturday, held that section 3of the Commercial Trusts Act, 1910, had no hearing whatever on the case. The Attorney-General had held that the Distributors, Ltd., were to all intents and purposes the purchasers'of the output' •of the various flourmillers. He (counsel) held that neither in fact nor in appearance was this so, since the goods were in all cases sold by Distributors, Ltd., on behalf of'the millers in whose name the goods rergsided at all’ times. Mr Fair: The agent here 'fixed the price. . Mr Mydrs: I submit that that had no more to do with the case than the table at which I.am standing. We most look at the legal aspect of the agreement. -. . Mr Fair: I contend that it is very important Mr Justice MacGregor*: Was this company not formed for the express purpose of buying and selling flour?, Mr Myers: No Your Honour, the millers are dealing in flour; the Distributors are merely acting for them. Mr Justice MacGregor: *But in the recital of the company’s powers, it says'that they have power to boy, sell, or deal in the goods. That makes a distinction between buying and selling, and dealing, and absolutely upsets your argument.. - Mfl Myers: I''do not think bo, Your Honour. Proceeding,'M)r Myers held that if his argument was right that this agreement was not contrary to section 30 of the Commercial Trust Act, and was not governed by American authorities, then the. only remaining point to consider was whether the monopoly or control, was of such a nature as to- be contrary to the nublic interest. The Chief Justice: If we decide that the combine is contrary to' the public interest, then you must fail: Mr Myers: Precisely. , But our strong-point is that, the whole of the facts .and circumstances must he- considered. r Mr Skerrett: When ednsidering this 1

point the fact to he kept in view is that’-if an agreement like the present. When carried into effect is found not to be detrimental to the public interest, then -lie inference is that the combination is not contrary to the; public interest. ,

Mr Justice MacGregor 1 : We have not tp consider only that point; we have to consider if there was a conspiracy; to consider the facts when the scheme wgs evolved, during its operation, and after it - was r evolved. STABILISING PRICES ,

The combination, was, and is, Mr Myprs proceeded, necessary for the salvation of several important'industries, i.e., the flourmilling, the wheatf rowing, and in a lesser degree, the airying. and fowl-farming industries, for- the reason that it stabilised the price of an important article of food. The flourmilling industry, for the-pur-pose of ihis case could not. he considered by- itself. *' He quoted' Aus-

tralian wheat and flour prices to show that during the period January to November' 1923, there were fluctuations of from 4s 8d to 6s lOd per bushel of wheat, representing a difference oi £2 16s per ton of flour. It was generally admitted that a difference of 27s 6d per ton in flour represented a fluctuation- of in the 41b loaf, so that this meant in the case under review, Id per loaf—a very big thing to the working-man. Had New Zealand , been dependant on foreign wheat -she would have been subjected to the same fluctuating prices. Mr Justice Reid: What price was wheat in New Zealand at that time? Mr Myers: From 5s Id to 5s 7d. Mr Justice Reid: Then the workingman would have had the benefit during part of that time at least. Continuing, Mr Myers pointed out that the big effect of these fluctuations was that when Australian wheat was low, merchants in' that country, might; swamp the New Zealand markets at such times with cheap wheat, with the result that it might conceivably happen that some mills might, have sold out their whole supply and others might hot, with the -result that these latter having to meet the whole competition, would be ruined. The combine had obviated that risk by decreeing that such loss would be spread over the whole of the millers. More than that the combine could not do. Even with the, duty and freight there were times when Australian wheat- could be landed profitably in New Zealand, so that it could not be said that the combine regulated supply: it merely regulated Ipss arising from that outside suppty. Mr Justice MacGregor: If this comKne goes, out of existence do you con-

tend that all the millers will go out of business? • - * Mr Myers: The risks of the business Mr Justice MacGregors You are: not answering my question, Mr Myers. Mr Myers: I submit that that will be the effect. Mr Justice MacGregor: They have kept going for the past 80 years under open competition. ( Mr-Myers: At-one time the farmers Were prepared to take the risk of growing wheat. Now they require first that they be assured a fixed price before they can do so. Assuming, he continued, that it was m the best interests of the country that wheat should be grown in New, Zealand, aiid ti nt the country should be in as far as possible self-contained. Mr Justice MacGregor: We have to consider the benefit- of the and not the policy of the Government. Do yon Contend'that it is to the benefit of the people that they should'pay £lB per ton for inferior New Zealandflour, when they can get-good Australian flour for £10? Mr Myers: I contend that the bene- . fit of the country as a whole must be considered. If we are not to have adequate protection of ■" the growerls adequate protection of the growers do will be to import all our wheat, from abroad.-. The result will-be that with the disappearance of the millers and wheat growers, the pig-raising, and poultry industries will-be. pttt in o. very parlous position. Further, with the unavoidable fluctuations in the price of'bread the Country will be faced with all-kinds of wage difficulties consequent thereon. I hold that the basic factor ’or the court 'to consider is that it is -necessary to grow wheat in’Now Zealand. If that principle is not accepted,, then my argu--ments -are valueless. Mr Justice MacGregor: Bbt it is common ground that the world’s parity always been below that of New: Zealand. Mr Myers: That is, so, save for a short period in 1924. But the price _ of bringing it tp the Country must' be taken into-account.

The court adjourned at l p'.m. until to-day.