GROWN PRIVILEGES

Waipa Post, Volume 48, Issue 3482, 21 June 1934, Page 5

GROWN PRIVILEGES

IN TRADING ACTIVITIES. UNFAIR ADVANTAGES. A new and unobtrusive clause tucked away in the recently revised Companies Act will prevent any recurrence of a proceeding- followed not long ago by a Government department, which in a letter to the liquidator of a company in Christchurch, brought into use the privileges «v. the Crown in claming the payment of three sacks of seed potatoes in priority to the other debts of the company (says a statement by the Associated Chambers of Commerce). IMPORTANT PRINCIPLE. This is an undignified, if not grotesque, instance of the use of the Royal prerogative, but the principle is a most important one as involving the privileges of " the Crown," which latter is the State in its corporate capacity. The clause in the Companies Act already referred to now binds the Crown to the winding-up provisions of the Act relating Lo letmedies against the prope.'ty of a company, the priorities of debts, and the effect of an arrangement with cred tors. This goes cne step in the direction of disposing of the complaint that State trading departments in New Zealand, because of unfair advantages given them over private traders, are beingcarried on under conditions which are not in the best interests of the country.

For instance, same only of the provisions of the Bankruptcy Act bind the Crown, and il; has been held theref'oie that a Government department is entitled to retain a payment which, if made to any other creditor, would be set aside as a fraudulent preference. Another commercial advantage enjeyed by the Crown is in relation to patents. If an ordinary trader w shes to use a patented invention, he must obtain permission from the patentee. A Government department, however, is by Statute entitled to use any patented invention, leaving the compensation payable to the patentee to bte settled afterwards either by agreement or by arbitration. This privilege may be reasonably necessary in connection with the wag'img of war or, the administration of justice, but there appears to be no justification for conferring it on the trading departments of State. The Cvown is exempted from much industrial legislation, such as the Factories Act, the Shops and Officeji Act the Harbours Act, the Inspection of Machinery Act and the Stone Quarries Act. It is exempted, when a ship-owner, from, the stringent provisions of the Shipping and Seamen Act with regard to manning and equipment requirements, and the provision concerning registration feeand other dues. It is free from almost the whole of the legislation relatingto local government, and it is not slow to take advantage of the fact that it need not pay rates, and is net bound by the by-laws of local authorities. It is also exempted from taxes, stamp duties (other than on interest) registration fees and annual license dues. PRIVILEGE IN LAW.

In regard to primary functions such as war and the administration of justice, the privilege of the Crown is reasonably necessary, in order; that it may fully utilise the resources and energies of the State, and that it may have full and unquestioned freedom in enforcing the law, respectively. Very different considerations apply, however to the trading act'vities of the State. The trading departmentis have acquired enormous privileges, not by direct legislation, but by the indirect method of establishing ti'ading activities in the name of the Crown.

Regarding lit'gaticn involving State trading departments, under the Ci|own Suits Act, the Crown is not bound by the same laws and rules that operate between subject and subject. Private citizens are seriously limited in the actions they -may bring against the Crown, and are also limited as to the time w'thin which actions may be bfioughi; and the amount that may be claimed, while the Crown is not bound to pay on a judgment, and has undue advantages in certain other directions.

The late Mr Justice Alpers spoke pertinently on the subject of the Crown Suits Act when he said: "A gentleman does not plead the Statute of Limitations to escape payment to his jupt debts; nor does he, one hopes, invoke the Statute of Funds to evade the obligat'cns of a contract "binding on his conscience. The King i s the first gentleman in the realm, and yet he may at any time be made to appear to do such things, or their equivalent, under the Crown Suit? Act, and that in distant Dominions, by administrative officers who are zealcus only to make a profit or avo'd a loss for their particular department. How much more to be deplored i's the position when the Royal prerogative is invoked to seize the whole assets of an insolvent company that a trading debt due fto the King may be paid, though his liege subjects in competition with him may go wanting." The commendable start made by cur legislators in binding the Crown under the Companies Act, could well be followed up by a review of the whole position with regard to the Royal prerogative in order that the following principles may be carried into effect:—(l) That State trad/ng should be allowed no unfair advantage in law over p'rivate traders in competition with the State; (2) that State trading should be so carried on that its results are capable of accurate comparison with competitive private enterprise—a comparison which cannot be made when State departments are endowed with so many privilege- prerogatives and exempt'ons; (3) that, the Crown should be subject, in legal proceedings by or against a Government department, to the same rulcls of procedure as govern litigation between subject and subject, this necessitating amendments to the Crown Suits Act.