ANTI-TRUST CASE.

Dominion, Volume 5, Issue 1504, 29 July 1912, Page 6

ANTI-TRUST CASE.

i SUGAR MONOPOLY ALLEGED. i CROWN SEEKS DISCOVERY OF ;' DOCUMENTS. :'; INTERESTING ARGUMENT"I venture, to suggest that Hie Holy ! Office-in Spain never exercised such in- . (jiiisitorial' power as is asked for here," ■:_ -'Mid Mi;.. .C. ( p. Skerrett, K.C., iu tho ■'■ .Supreme Court on Saturday, when opposing an application by tho Crown for ;■■•■•- production of the minute-book of the j '.' ■' ■'.*'wcJiants* _ The application ;....- was iv preliminary proceeding, in conneeC■■■:■ tjou with' the first case under the New '. ■•;- Zealand Commercial Trusts Act, 1910, and was.heard in Chnmbcre bcforo the Chief ■•• Jnstico (Sir Robert Stout).. In February i'■ Jast > - Jniormation was laid against' the Colonial 'Sugar Kenning Company, charging the company with having given preI : icrential terms to a number ot merchants, ''•' and-with having established a table of |, . discounts under which only purchasers of ■unusually large quantities of sugar could • benelit. The Merchants' Association of Now Zealand was joined with the com- ." pany as defendant for' allegedly aiding ;,. ; mill abetting a breach of the Act. As a ,\ 'tost.of individual position of members.of the;association, th> Crown selected and ' Jirosccutcd leading Wellington wholesale i firms,, namely, .Levin and Co., W. M. !.■ . Bannatyne'aud Co., and Joseph Nathan and Co. ' ,"' ■'. 5;. Sir John Findlay, K.C., with Mr. H. H. Ostler, appeared'for the Crown; Mr. C. 1\ Skerrett, K.C., with Mr. C. H. Trcadi well, appeared for thy Merchants' Associa- .-. ; tion; and. Mr. M. Myers, with Mr. T. , ! Neavc, appeared for Levin and Co. ■ There were., two matters, before the t Court—a summons for further discovery, arid a motion for production of minutebuok<Vof letters referred'to in Mr. Ostler's ! affidavit, and of" tho whole of the letters ; .already produced and part sealed up. It was agreed that.-the matters should be I taken together. ; Alleged Sugar Ring. Sir John, Fi'udlay, in opening, said that it was not disputed that there was an incorporated body called tho Meri, chants' Association of New, Zealand. Ac- ; cording to the articles and rules of the association, tho membership was under the control of the association, and a ma-jority-could refuse to admit to-nioniier-I. ship .anyone they pleased. There were j- about'3s members of the association, and one of ,their„objects was to prevent, so far as was legally.possible, unnecessary coinpetition among its members. -The"Grown ■ said that, in addition to the objects dis- ' closed in its memorandum,' ; tho associa- ! tion aimed at'controlling,■ determining, and influencing the supply and "price of goods, and so creating a , monopoly. in " the,'.sale.,of.gpods ,in', which ithey dealt. 1 Further, the - Crowiv said .that./tho_assoi ciation was'a conunerciiir, trust within '•'. • the definition/ of "a commercial trust" iu Section 2 of the.Act. Regarding Levin and Co v Bannatyne and. Co., and Nathan and Co., it was alleged that, they, with a,number of others totalling 83, wero ; '•■ (parties to what, might be called, a ring 'of'sugar-buyers. The purpose of this com- '■ binafion was to buy sugar and to con- • trol its price and supply, and thus there ihad been created a monopoly in sugar, i The Crown accused the 83 members of i this ring of entering into 'an agreement ! ; as to the price and terms upon which , the sugar' bought was to be retailed. The 'Ting taken as a whole was'.' a commercial , 'trust. Most, of the sugar, consumed in ! .the Dominion was supplied, by the Colonial Sugar Kenning Company. Before January 1, 1»11, the company's method was to grant a bonus to .purchasers and ~. allow discounts according to the quantity purchased, but alter January 1 the company adopted a/new system of discounts, of which admission was made in tho pleadings. System of Discounts. ; Describing tho system- recently in vogue. Sir John'Findlny said-that a purchaser of .CoOO'worthibf.sugar.per month i was granted a discount, of 1 • per cent; i of ,£11)00 worth, li per cent; and rising; i gradually until the purchaser of worth per month got 3 per cent, and tho purchaser of .£25,000 worth per month, I the.maximum discount of 5 per cent. Thus to get the maximum discount, the puri "chaser had to take .£'300,000 worth of sugar i during the year. The system of'discounts ; had (the Crown alleged) been arrived at ", by concerted action on tho part of tho sugar compauj-, the : other defendants named'in the proceedings, and tho ring i to which refcrenco had been made. The discounts'were illegal under Section 3 of , the. Act. By an agreement, not in writ'ins, and entered into about MaTch, 1911, j-Uvm-and Co. (the Crown alleged) had , been deputed to buy all tho sugar rei. .quired by members of the ring and distribute tho discounts in proportion to the individual purchases. • Aiding and Abetting. Counsel submitted that it was clear that ao purchaser could get the maximum discount unless he wero a member of tiie ring, which undoubtedly existed to create u monopoly, and to exclude from dealing in sugar all those who refused to become members of tho riiip or who declined '■ to conform to the regulations in respect to sugar. ' It was submitted that the agreement entered into was to nay I a discount because the members had agreed to become parties to a ' trust or because they had agreed to obey tho directions oithe trust. Under Section 9 ot the Act they were quilty of aiding and abetting;. in the commission of the offence. J.n tins class of case, the Crown must necessarily got much of the required iuioniiation from the defendants themselves • Not only here, but in Australia and America, it had been found that, in .pursuing, the matter, the Crown had to rely Jargely upon what could bo obtained from the other side. It was consequently a ; case in which the Court should exercise Us discretion to give assistance. If the ; . Crown could show tho methods of the association with regii-d to a number of ; other -articles- Jfot in tho ' schedule of the Act, then, it could prove that the action regarding sugar was a mere phase ' of tiie operations. To resist the motion lor discovery, the doi'trndanfe must provp one of four grounds: (1) That thev would • be incriminated (expressly provided against by Section 15);■ {>>) that tho documents contained legal privileged matters: (3) that they disclosed evidence; and'(l) that the production would be injurious to the public. To find that a monopoly existed, the Court must bo allowed to examine the methods of the association in regard to other matters. Sir John therefore contended fh-«t the Crown was entitled to go through the association's minute-book to ascertain what portions of the bookwere required. It was not only permitted to tsk? r'ptnils of the 'a<rreemeut as to nugar, but »lso .of other commodities which would tend to show monopolies. Section 15 of the Act was framed to give the Court the widest power in compelling production of documents by third parties. Five Actions Rolled Into One. Mr. Skerrett, in-reply, said that whore ■ there was an affidavit, madeon behalf of .the person from' whom discovery was fought, to (he. effect that the matters asked for were not relevant, that affidavit was final unless the statement it contained could bo controverted. Sir John l'indlay had entirely mistaken the nature of the statement of claim, and the offences created tinder the Act. The present proceedings were five actions,rolled into one. •The statement of claim had been con..■'luvedf.aud there was no attempt to par- ■ 1 ficularise the persons or to dissect the charges. Counsel went on to say that a commercial trust was not in itself illegal. People might form them and , commit no crime, and be liable to no penalty under this Act. Further, no commercial trust could exist in respect Of anj e|p<=s of goods' not mentioned in th« .schedule. After inferring to particular clauses oi the Act, Mr. Skerrett analysed the state ii'.ent of claim, and pointed out thai tho association's participation -in th« - ofi'enco was only as counsellor, procurer, or aider.- He submitted ' that evidence ' of all of tho transactions was wholly irre levant., and did not relate to matters be fore the Court. Mens rca was not iii yoked, and similar facts wore not vele vant to prove commission of other facts Discovery, therefore, could only'be nskee in respect of such documents as relate! to charges against the Sugar Company am the other companies, or showed that thi Merchants' Association aided and abetted

The wide powers given under Section l.i could mil}- be exorcised by tlio Judge presiding at tho tviul. "Floodgates of Oppression." Preliminary'steps to get such evidence coiild not, counsel contended, be enforced. It would be ii piece of gross injustice if a Judge, sitting on ordinarv interlocutorv proceedings, could force the production o'f documents which nniy afterwards lie held to he not admissible. The mutter must in fact lx> pertinent to some issue or cause of action in the claim. If this application were granted, the floodgates of oppression would be opened, and his clients could be forced to throw open the whole of their books. According to the ordinary law of the land, these things were not relevant until I lie Judge at tlio trial admitted them. "I smigest," continued Jlr. Slcenett, "that this application is n mere fishing application." His Honour: They won't denv that, but they say they can see the fish. Mr. Skerrett: They have n license to catch fish, but they want to catch coarser fish. If this application is grunted, great harm will be done. His Honour said that whatever evidence, was discovered, would be. confidential. It would be ((uife improper to publish anything before the trial. Sir John Findlny agreed with this. Jlr. Skerrett declared that they dare not publish it, but nevertheless the harm would be done. Counsel could not let the matter rest there if it went against him. It might mean the commencement of many prosecutions .against his clients on matters of no great importance to' thepublic. Section lu did not prevent them from taking advantage of the plea that tlia documents might incriminate them. It was submitted that tlio SolicitorGeneral had already been given greater discovery than he was entitled to. With regard to the minute-book of the Wellington Merchants' Association, counsel pointed out that the association was no-party to the action, as it was not in any way connected with the New Zealand Asso- ' ciation. No order should therefore be made. Mr. Trcadwell, in his address, enlarged upon Jlr. Skerrott's contention in regard to Section 15 of the Act. The hearing was then adjourned''until 2 o'clock this afternoon, when. Mr. Myers will address the Court. "^