LAW REPORTS.

Dominion, Volume 6, Issue 1726, 17 April 1913, Page 6

LAW REPORTS.

COURT OF APPEAL.

SUGAR CASE UP AGAIN. MERCHANTS APPEAL. COMMERCIAL TRUSTS ACT. HISTORY OF ACTION. Sugar and the, sugar case have been much discussed in tho. New Zealand Courts since July of last year, wlic'n preliminary proceedings in connection 'with tho first case under the Commercial Trusts Act, 1910, cam© before tho Supremo Court. Subsequently this preliminary matter was referred to tho Court of Appeal, and'then in. November last tlio main action was heard in; the Supreme Court before the Chief Justice (Sir Robert Stout). The learned, judge heid all the defendants to be: guilty of certain offences under the Act, and imposed penalties totalling ,£SOOO. Ilis Honour's decision .is now 'being appealed from, and the Court of Appeal commenced its iiearing yesterday morning, when the Bench was occupied by Mr. Jus- ' tico Williams, Mr., , Justice Denniston, Mr. Justice Cooper, and Mr. Justice Chapman. Tho appellants wero the Merchants' Association of New Zealand, Incorporated, a trade protection society, Wellington; the Colonial Sugar Refining Company, Ltd., incorporated in New South Wales, sugar refiners and sugar merchants, Auckland; Levin and Co., LM., W.- M. Bannatyns and Co., Ltd., and Joseph Nathan and Co., Ltd., .all merchants of Wellington. Tho respondent was his .'Majesty the King. Mr. C. P. Skerrett, K.C., with Mr. T. Youlij, is appearing for the Merchants' Association, and for W." M. Bannatyno and Co., Ltd:, rind Joseph Nathan and Co., Ltd. Mr. J. H. Hoskinft, K.C., of Wunedin, with Mr. 11. P.' Richmond, .of Auckland, represents tho Colonial Sugar Refining Company, ' Ltd., while Mr., M. Myers is 111 the caso as Counsel for Levin and Co., Ltd. Tho Attoi'ney-General (the Hon. A. L. ITerdmah), is appearing ,for the Crown, and lie has with him Sir Johii Findlay, K.C., and Mr. 11. H. Ostler, of the Crown Law Office.

I Original Proceedings. As far back as February, 1912, the Crown commenced the prosecution leading up to the present appeal. In that month ini'or--1 matipn ivaslaid against the Colonial Sugar Refining Company, charging them with having givon'preferential terms to a number of merchants, aijd with having established a tablo of discounts under which only purchasers of unusually large quantities of sugar could benefit. . The Merchants' Association of Now Zealand was joined with tho company, as defendant for allegedly aiding and abetting a breach of the Act. . It was alleged by tho Crown (in the statement, of claim) that the Merchants' Association. was: in reality a commercial trust within the meaning, of tho Comriiercial Trusts Act, 1910. There aro fifty-five members of tho association, including-Levin and Co., Bannatyne, and Co., and Natjian and Co., who. were also made defendants in the action. Tho Crown also alleged that there existed: a ring of sugar buyers established for tho purpose of buying.sugar in concert or arrangement from tho Colonial Sugar. Refining Company (another of the defendants), and of controlling, determining, and influencing the price of sugar in tho Dominion. , |i , *.Altogef.)iEi' l ';:fhore aro some pightj'-thj^e'■ inefnbers Of this ring—fiftyfive of them being members of the Merchants' Association of New Zealand — am! Levin and Co. (so the statement of claim alleged) acted as agents .for all members of. the ring in dealing with tho Colonial Sugar Refining Company. Before January 1. 1911 (the date of the coming into operation of the Commercial Trusts Act, 1910), the Colonial Sugar Refining Company was,in the habit of allowing a bonus of 10:. per ton to all purchasers, of sugar who agreed to deal exclusively with the. company, and it also allowed certain discounts varying with the amount purchased. When the. Act canio into' force, the company abolished the bonus system and established a sliding scale of. discounts.. .This, scale .was .revised on more 'than one occasion, and finally, in OcfolKT, 19)1, a. revised scale was adonteil by the company (so the Crown alleged) at the suggestion and request of the Merchants' Association, and the "ring" of sugar buyers already referred to. The purpose of th<> Colonial Sugar Refining Company and of- the Merchants' Association and of the "ring." in adonting this system of discounts is (it was alleged) to secure a monopoly in tho sale of susrar in. New Zealand, and to enable the Merchants' Association and the members thereof to fis, control, and determine the price of sugar in New Zealand. and to exclude from the business of dealing in sugar all persons who refuse to become' members of tho association or "ring," or to conform to the conditions imposed by that association or "ring" in respect of.- the sale of sugar..

\Tho Breathes Allerjed. As regards the definite, breaches of the Commercial Trusts Act,' 1910, tho statement of claim alleged that in the month of October, 1911, tlio Colonial Sugar Helining Company (in breach of Section 3, Paragraphs (d)aud (e) of tho Act) agreed to give Lovin and Co. the maximum discount of 5 per. cent, on all purchases. Similar breaches of the Act were committed by the company . making similar agreements with the ptlier defendants (Bannatyne and Co./iiud Nathan and Co.). In October, 1911, also, the, company, committed a breach of Section 1, Paragraphs (b) and (c); in refusing to supply sugar to Fairbairn, Wright, and Co., of Christcburcli, except on conditions relatively disadvantageous as compared to the. coriditions jon which it was .supplied..to members of the Merchants' Association. All the other defendants were charged w'itli "aiding or abetting, counselling, and. procuring" tho commission of these offences. Again, Leviri arid Co; were charged- separately with a refusal to supply Fairbairn, Wright, arid Co., and all the other , defendants with "aiding and abetting" this offence. Finally, the five defendants wero charged with a breach of Section 5 of the Act, in that they conspired together to creato a sugar monopoly in New Zealand. ,

What the Crown Claimed. . The Solicitor-General therefore claimed 011 bebulf of. the King— ' (a) Judgment for. a total sum of £15,000, made up of penalties of .£SOO against each of the defendants in respect of caob of tho breaches of the Act alleged. ' (b) An injunction against each of tho defendants prohibiting each from continuing or repeating any such breach. (c) Tho costs of the nction. The Defence a Denial. Separate defences were filed . in every case, and ever/ defendant separately denied every breach of the Act alleged, and denied that, thero had been any .conspiracy to create n monopoly. Moreover, on behalf of tho- Merchants' Association, it was said that it is, and always has been, open to any persons to join, in wholesale purchases for . the purpose of obtaining the maximum wholesalo discount, and that it is lawful, proper, and customary to do so. This statement was also repeated in' tho defcnce of the other defendants. Decision of the Chief Justice, In a lengthy-considered judgment delivered on December 20, the Chief Justice (Sir Robert Stout) found the iollowiug tacts to be proved:— "That the revised scales of .discouutfi were mado to prevent competition in the , sale and disposal of sugar. "That they were made to enable a commercial trust or ; association or group of buyers .16 get tho control of the distribution, of sugar. "That, they were mado so as to. prevent Jfairbaun, Wright and Company or other persons from pnrchasim;. sugar' aiid giving certain discounts lo pur- j chasers from (hem. '

"That the defendants were acting in consent or couspiriug together to got this control. "That they were made so as to ensure ff profit that might otherwiso not bav«j polio to the members of the trust go* _nig to tho members of the trust. . V? honour next proceeded to inquire! whether those {acts pointed offence haying been committed by one, auy, or all of-Iho defendants.. - After lengtliy, consideration lie found that offences' had' been committed- as follow-—. 1. Ail tiie defendants vero guilty of the offence charged in 'Paragraph 37 of the Statement of. Claim in the first action, beins an offence under Section 5 of tho Act. 2. The .Sugar Company was guilty of an offence under Section .8 (d) iu givine tlio, discouuts given to Levin an d •Company, Limited, as charged in Paragraph .29 of the Statement of! ■ Claim in the first action. : 3. The Sugar Company was guilty of the oftenco liuder Section 4 (c), charged ■ in Paragraph 32 of tho Statement ofClaim in tho first action. i. Tho defendants: other thin the. Sugar Company were guilty of the offence under Section 9 of. the Act, charged in Paragraph; 34 of the Statement ol Claim in the; first action. The Penalties. Regarding the : penalties to be imposed,! his. Honour was of opinion. looking at tho I '' magnitude of .the transactions:— Tliat every ono of the defendants should' be liable .to a penalty of i'sofl for the offttico committed mentioned in , tW foregoing Paragraph (1). Tliat for the offeiicc mentioned under." Paragraph (2) the Sugar Company.! should bo liable to tho • penalty oil. ■£25.0. , . That'lor tho offence mentioned in Para-i! graph (3) the Sugar Company should' 1 be liable to- the penalty ot .£250. That for tho offence mentioned in ,Para« graph (41 every one of tho defendants \ ' save the Sugar • Company should bd liable to the. penalty of .£SOO. | Judgment, therefore, was given' foil' .£IOOO against every ono of . the ants in tho first action, with oosts .of! issuing writs, and Statement of Claim and' preparation for trial,, according- to the' scafo of ,£IOOO. Extra counsel for five days at Bs, per day; <£15 15s.- for ECoond, third, fourth, fifth, and sixth' days' ofi hearing. Also witnesses' expenses and disbursements.- All these costs to bo added together and divided, into fivo parts, and every ono of . tho defendants to pay 'ono part. Tho cost, of 'hearing to be paid by each as on .tho scale of' .£IOOO.

There was a second action . in. which! Levin aiitf Co. were treated as principals ulid in which pfinalti,es totalling JC412.5Q0 ! were claimed. lii this, his Honour, was of opinion that Lcvia and Com'pany was not a principal ,in the transaction of rivj ing .discounts to tile pfrsohs, mentioned inParagraphs .28 . and; 29 of tho State, irient of Clhim in tho. second, acfion,: and the.v were liot agents of tho Sugar Com-" paily. ' They- were agents of the jnetnbera lo whom tho discounts were distributed On this claim liis.Honour therefore gavd judgment for tho,. defendants, with 8' guineas costs to every one of the defend-", ants, and any disbursements in that aw tion. Grounds of Present Appeal. , ! On the.application.of Mr. Skerrfttt, Ws Honour granted a stay of proceedings, pending: the appeal, which was brought.. on. for nearing yesterday. Tho.grounds of'' appeal were that tho decision of tho Chief Justice was erroneous in i law, and fact., Tho argument promises to lx> lengthy,;' Mr. Skerrett was ■ first to •, address tho Court/and he had not completcd his argm,' ment at 4.30 p.m. yesterday, when th«|' Court adjourned until 10.30. a.m. to-dajv