PRICE OF BUTTER

Dominion, Volume 10, Issue 2914, 28 October 1916, Page 10

PRICE OF BUTTER

THE ATTEMPT TO CONTROL

SCHEME'S VALIDITY CHALLENGED

A TEST ACTION

INTERESTING COURT DISCUSSION

Yesterday, the Full Court commenced the hearing of a caso which, in addition to being considered of very'great importance, is one of the most interesting beard in the Dominion. It all arises out of the Government's attempt to control tho prico of butter, but the discussion embraced so mauy phases of the case, that even the Constitution, came into the- matter. The Government's scheme to prevent local butter going beyond Is. 7d. per lb. starts out by prohibiting the export of all butter and cheese unless the factory has an export license. Tho Order-in-Council published on this subject continues :—

"5. An export liconse; shall bo granted only on the terms that the licenseholdor undertakes to pay to the Crown tho charge hennafter specified on all buttor-fat consumed by the licen6oliolder in the manufacture of butter or cheese at any factory or factories during the continuance of his license, and also on all buttor-fat which has been already consumed by the licenseholder in the manufacture of butter and cheese at any factory or factories in the interval between August 31, 1916, and tho first grant to him of an export license. T, 6.' The aforesaid charge shall bo at tho rate of three-farthings per pound of butter-fat, or at such great or smaller, rate as may from time to time be determined by tho licensing authority with the approval of the Board of Trade established' under tho Cost of Living Act, .1915; provided that any such alteration of the charge shall take effect only with respect to buttorfat consumed after the date on which such alteration has been notified by the publication thereof in "the Gazette by the licensing authority. ' \ '' ' ■

"7. Tho said charge shall be payable to the licensing authority on behalf, of the Crown at such times and in such manner as may So prescribed by thjs export license. "8. (1) 'All moneys paid by way of the charge aforesaid shall be credited to a. deposit account by the licensing _ authority, and shall be available in the hands of that "authority for expenditure, with the approval of the said Board of Trado, on the following purposes : — (a) The payment from time . . to time of the expenses incutred by tho licensing authority or by any Department of the . Government, or by the Board of Trade, in administering the ■■ system of export licenses hereby established. (b) The distribution from ' lime to time, among the soveral holders of export licenses of such sums as may be deemed justly payable in order to compensate those holders for any loss incurred by them in disposing of butter, of their own manufacture for homo con- ," I sumption instead of for export, during any period in - respect of which tho aforesaid charge on butter-fat has been paid by them. , (o) In refunding to the payers of tho charge all sums not expended for . the aforesaid purposes. "(2) Tho determination of the Board of Trade as to the expenditure of such moneys shall for all purposes be final and conclusive." ' Some of tho dairy companies have challenged the validity of this Order-m-Council. Briefly,, their main contention is that the Jd. chavge is a tax, fchaf the power of taxation. lies m Parliament alone. The Crown say the charge is not a tax, but a condition, compliance with which will ensure license to export. ,•,.„., The Court consists of the Chief Justice (Sir Robert' Stout), Mr. Justice Edwards, and Mr. Justice Chapman. Tho Solicitor-General (Mr. J. W. SaVmond) represents the Crown, and Mr. M. Myers is counsel for the dairy companies. The companies whoso names figure in the proceedings are the Tara-

tahi Company (near Carterton)_ and the Utangorei Company (Taranaki). The case proceeded all yesterday, and will be continued tliis morning. The court's Task. The questions set for the Court were:— \ ■■ 1. Is the Order r in-Council valid at all, and if so to Vhat extent? 2. Is the Order such an order as the Governor-in-Council has power, and authority to make,under the statutory provisions under and by virtue of which the Ordcr-in-Council purports to bo made or otherwise? 3. Are : Clauses 5 and 8 of the Order- . in-Council valid ? i 4. Has the Governor-in-Council power ' to compel manufacturers of butter for export to pay a charge on the butterfat used in the manufacture of such butter for the purpose of distnbtuinj; the moneys collected by means of such charge amongst the manufacturers of butter sold for Itome consumption in Now Zealand at a less prico than is obtained for tho exported butter, and are tho provisions of Clauses 5 and 8 of the Order-in-Council valid in so far as tliey purport to impose such charge?

5. Has tho Govcrnor-in-Council power to compel manufacturers of cheese for export to pay a charge on. tho butterfat used in the manufacture of such cheese for the purnose of distributing the moneys collected by moans of such charge amongst manufacturers of butter sold for home consumption in New Zealand at a less price than is obtained for exported butter? And are the provisions of Clauses 5 and 8 of the 6rder-in-Council valid in so far as they purport to impose such charge? 6. If Clause fi of tho Order-in-Coun-cil is valid at all. is it valid in so far as its operation is retrospective, that is to say, in so far as it purports to impose a. charge in respect of butterfat used in the manufacture of (a) bubtar and (b) cheese, between August 31, lfllG. and October 14, 1916. tho date of tho coming into operation of the Order-in-Council?

7. Is Clause 5 of the Order-in-Council valid in so far as it purports to imposo a cjlargo in Tospe<:t of butter-fat used in the manufacture of (a) butter and (b) choose, manufactured and sold for consumption in New Zealand as well as in respect of butter and cheese manufactured for export and exported? 8. Is tho Order-in-Council valid in so far as it purports to impose a charge on manufacturers whojlo not manufacture butter, but who manufacture cheese? ■• 9. Is tho Order-in-Council valid in so far as it purports to impose a charge on manufacturers who do not manufacture cheese, but who manufacture butter: (a) For,export only, and who do not sell locally at all; (b) for export and homo consumption', and who export portion of their output and sell portion locally? 10. Is the Order-in-Council valid in so far as it purports to impose a charge on manufacturers who manufacture both butter and cheese and export portion of their output of both articles and sell portion locally? 11. Is it valid in so far as it purports at all to impose the' charges mentioned? Some Facts About Dairy Produce. An affidavit was filed by J. G-. Harkness, secretary of the National Dairy Association, in which he said that tho 3d. charge on all New Zealand butterfat would amount to £300,000 in a year. The affidavit added:—"Butter manufactured in New Zealand for export is packed differently from that intended for consximption in New Zealand. The butter manufactured for export is packed in bulk packages containing 561b..cach net-weight, while tho butter for local consumption is made up either in pound, or half-pound pats. Cheese manufactured in New Zealand' for export .is manufactured in different sizes from that which is made for local

consumption. ... The proportion of butter-fat to . the manufactured article is: One pound of butter-fat makes about one -and a sixth pound of commercial butter. As to cheese, one pound of butterfat makes about 2}lb. of cheese." About onfrlbird of the butter and 3 per cent, of the cheese maae'in New Zealand was used for homo consumption, and the balance was exported to the United Kingdom. Mr. Myers, opening bis case, said the object of the proceedings was to test the validity of the Order-in-Council. As a matter of fact the Order did not impose what in the largest, sense was a prohibition, but imposed a number of restrictions, the principal of which waa that no butter or cheese was to be exported unless the exporter paid a tax of Jd. per lb of the butter-fat used in his factory, and- it did' not "matter whether the butter or cheese was sold in New Zealand.- ' . The Chief Justice: AYhat clause is /that? • , Mr. Myers: Clause 5. He may have two or three factories. Hemay be exporting from ono and selling to the local market from tho others, and yet

he has to pay the Jd. charge on all his butter-fat.

Mr. Justice Edwards: He gets again? Mr. Myers: No. Mr. Salmond: Yos.

Mr. Myers: No, .that is one of tho iextraordinary features •. about ' this Order-in-Council. . . , Ho does not get back one-sixth of what he pays. The distribution is made amongst those wno sell butter in New Zealand. See olause 8.

The Chief Justice: Let me under- ' Stand this 1 Who is the licensing authority?

Mr. Myers: Mr. Triggs is. The Chief Justice: Ho holds the money for the Crown. Mr. Myers: Clause 8 prescribes what ne has to do with it.

Mr. Justice Chapman: He-is a trustee for the Crown, for the regulations. Mr. Myers: No doubt; but ho is really a. trustee for certain persons to be ascertained afterwards. , - It' does not go to the Consolidated Fund. The Chief Justice: I want to know who it goes to. .

Mr. Myers: Clause 8 states the position. If the money went to the consolidated revenue it could not be paid out in this way.. ■ The Chief Justice: Why.notP Mr. Myers: Because consolidated revenue can only bo paid out under an Act of Parliament.

Mr. Jnstice Edwards: You call this a tax?

Mr. Myers: I don't care what it is called. I submit it ib quite beyond the powers of the Governor-in-Council.

The Chiof Justice: However, you say jthat none of this monoy goes back to the people who paid it? , Mr. Myers: It may not. ' ' The Chief Justice: Unless they sell in New Zealand.

Mr.'Justice Edwards: Butit.is a very sensible and just scheme, is.it not?

Mr.,-. Myers: Very ingenious, no doubt. But take the individual who has manufactured, and may got nothing at' all; The Chief Justice:- I don't understand this! '•-.'•• :

Mr. Myers: The probability is that there will -bo about £300,000 collected Under the Order. .

Tho (Jhief Justice: That' money is held by Mr. Triggs. Ho has first to bay oat expenses incurred by himself, the Board of Trade, and so on. How is. the balance distributed? ' Apparently, amongst the men who sell for home consumption. , If a man has no license at all he doe's .not pay anything. . ■'. -

Mr.' Justice Chapman: I suppose tho point is. that this Government assume that unless there is somo such regula-, tion people will not sell. hero, but abroad..

Mr.,Myers: Maybe,,but that is'quite fallacious. :

The Chief Justice: The exporters may be gainers in the net. Tho people who pay the three-farthings .may; get 2s. per lb. . ' Mr. Myers: They take the risk'. " Mr. Justice Edwards: But in any case.they cannot got.less than the people who sell for home consumption. Mr. Myers: Oh, yes, they .can. .. Mr. Justico Edwards: How? ..',' , Mr. Myers: The markot at Homo is a fluctuating one. , The Chief Justico: However, we are J»t concerned with the ethics - of the situation, but with whether this Order-in-Council is authorised by New Zealand Statute. Tour strongest point is that you will havo to show that this is a tax. - ■ .-'•-.■

Sir.- Justice CbaDman: Can you call «■ license fee a tax?

' Mr. Myers: This is not a license fee. It is more..

Mr. Justice Edwjrds: It-is an equitable thing as far fl_sT"cii3i see. Your only objection I heliove to be a farcical one. --'

Mr.; Myers: Not only are they to-pay !& tax on butter, but on cheese, too, and .cheese- manufacturers got -nothing »ack. . -.- ;.- .y - •' ~v.-..;. ■ .- ■', Mr.;. Justice Edwards:,;The.,principle of that .is.made quite-clcar-in this-re-port,.-and-the principle seems to me'W ibe quite: just. ( Mt.-Myers: The principle is fanciful. 1 "Lurid Colour of a War Measure."

The Chief Justice:' The only question seems to me to bej Is jhis a tax or a charge, and is there power to levy it, and power to distribute this money t which seems to me to bo Crown funds? Mr. Myers: No doubt that is tihe position. This' Order-in-Council purports to be made iinder Section 47 of the Customs Act of 1913, as extended by Section 24 of the Regulation of Trade.and Commerce Act of 1914. 1 submit that the section you really havo to interpret as 47 of the Aot of 1913 Mr. Myers added that Section 47 provided that the Governor may prohibit the exportation .o£ arms, explosives, goods for war, things necessary for the preservation of the. flora, affecting the wvenno, impure goods, and sources ot danger to life at sea. Section 24 of tho Regulation of Trade and Commerco Act, 1914, extended those powers to other goods. .-■■.;■ • Mr. Justice Chapman; But tho lalet •act is a war measure. l .■„■■'

Mr.: Myers: Still, the powers of tho prohibition are not extended.

Mr- Justice Chapman: Tho Act of •1914 was passed in a period of war, and has the. lurid colour of a war 'measure.

Mr. Myers: My point is that yon nave to look at the provisions of Section 47 of the Act of 1913 which are the governing factor. The Chief Justice: No doubt, that is the section which shows: how the prohibition is to be made, and section 24 of the Act of 1914 only says that instead of being confined to one class of goods it applies to all classes. If this could be done to other goods it could bo done to butter.

Mr. Justice Chapman: The Government is the sole judge. .Mr. Myers: I agree with His Honour the Chief Justice's point, but I submit the converse also applies. If it could not be done under section 47 it cannot be done now. .

Mr. Justice Edwards: Not with a measure passed expressly as 'a war measure?

Mr. Myers* No, it does not extend (the powers in any way. Mr. Salmond: It does not alter the jobject in any way. Mr. Myers: No.' Just let us see to .What an extent an order of this kind can be extended. There is nothing to prevent the Governor-in-Council saying to the exporters of hemp: "You will • not export unless you contribute (to the butter people." .The Chief Justice: That mighk be none to induce them to produce butJer instead of flax.

Mr. Justice Edwards: Does not •it came to this: There is an absolute arbitrary power to prohibit the export of anything. How can you say there is any limit to the conditions to be imposed? • . .

Mr Myers: There is a principle of one hundred- years' standing that moneys cannot be taken from the people except through an Act of Parliament.

The Chief Justice: Your point must be that they may prohibit the export, but have not right to put on a tax. iney may make conditions, but there as nothing to show .that Parliament intended to leave it to the Government M put on an export duty. Mr. Myers: That is so. ■ Mr. Justice Edwards: You will have to show, also, that this is an export duty. , %

_ Mr.' Myers: Could the Government increase the Customs duties? Mr. Justice Chapman: It can prohibit merchandise.

Mr. Myers: Yes; but it could not hdd to the duty. Surely not!

"Export or Excise Duty,

Mr. Myers: Prior to this Order-in-Council there had been others. , . ■.

Ttion came the trouble lately. Persons soiling butter locally thought they were not doing so well as the exporters, and they wanted to increase the price in New Zealand. Tho Board of Trade made an investigation and reported. Tho'next thing Uone was that an Or-der-in-Council was made under the Regulation of Trade and Commerce Act, WI4, fixing the maximum price of butter in New Zealand. . . . Contemporaneously came the Order-in-Council imposing what is in effeot an export duty or an excise duty. In an indu-ect way the Order-in-Council is not fixing a maximum price, but limiting the maximum price of the exporter. The Chief Justice: I don't see that. It merely says you must pay 3d. a pound. I'ou may get Is. 6d., or even 25., for your butter.

Mr. Myers: In addition to what Mr. Harkness says in his affidavit, it appears that'there are some' factories whioh produce exclusively for the local trade.

The Chief Justice observed that there was no need to take out an exporter's license at all. The produce could be sold locally. Mr. Myers: No doubt they could avoid it in that way. Mr. Salmond: The license is not obtained by the exporter, but by the factory, and no one can put aboard a ship | even a ton of butter unless it comes from a licensed factory. Mr. Justice Edwards: Surely it is a contribution to a fund in which the contributor may participate. ; Mr. Salmond;;lt is their own fault if they don't. Mr. Myers: It'is nothing less than an excise tax—something they have to pay for the privilege of making butter. Mr. Justice Edwards: No, it is' not. Mr ; Myers: It is a'tax. .1 Mr. Justice Edwards: It is a contribution to a fund, surely! Mr. Myers.-Tho main point, however, is the validity of this charge. The Chief Justice: We have to consider only: Is this a tax, a charge, and can ■ the, Government impose it! ; Mr. supposing there is an absolute prohibition. These butter people say: "If"charges are to' be imposed on us, do it legally." They contend this has not been done legally. Mr. Justice Chapman: That carries a suggestion that it can only bo done by Parliament itself.

The Chief Justice.: Does Parliament delegate its power'to the Government to levy taxation?

. Mr. Myers: I don't know that it can/ " Mr. Justice Edwards: This is an Act which is passed obviously.for the general welfare - of the people of New Zealand, so- that the people can get their butter at a price which is not outrageous.

. Mr. Myers: Some.things may be done which are really for the public beuefit, but which are .very improper all the same. I hope.to show that there, is no power to do, this. I was saying that -this is in part an excise tax; and I desire to oniphasiso the point that the man who exports pays and gots nothing hack. \_The Chief Justice: There is no doubt aiSout that. '.•■'■ .1 .Mr. Myers: And the same applies to cheese made for export, and also cheese sold partly here and partly abroad. Unless, of course, there is something left after the > butter people have been satisfied. Mr. Justice Edwards: But there is no limit to the price of cheese. Ho may charge up to half a crown a pound. , ; Mr. Myers: But to-morrow the price of cheese may bo fixed. I say again it is in the nature of a tax. The Chief Justice: Well, there is the very old saying wo have heard in other times: "A rose by any other'name would smell as sweet." What does it matter whether you call it a chargo or a tax? -

Mr._Myors: It is about as good au illustration as you can get of robbing Peter.to pay Paul Mr. Justice Chapman; It is compensating Paul for having already robbed him. '~ -

'"'■Mr. Myers: 'But it is not tho same robber. .

King's Power of Taxation Cone,

~ Mr. Myers: Tho underlying principle may bo very excellent. But it and drastic, and an order to justify it the power must be expressed.' Authority is not necessary to show thai taxation cannot be levied without the authority of Parliament. Dicey, on the Constitution, says that no one ■oan be forced to pay a shilling which could not be shown to the'satisfaction of the Judges to be due under an Act of Parliament.

The Chief Justice: You • say the wording is not sufficiently wide to empower a charge. '

Mr. Myers: Yes; it will be futile to suggest -that it gives power ato tax. Take the Timber Export Act, 1908! Mr. Justice Chapman: I supposo the oldest export duty is the.gold duty. Mr.: Myers: Yes; there is. timber, tobacco, and gold.

Mr. Justice Chapman: There is nothing so extravagant in the idea that Parliament is capable of handing over powers to the Government. Parliament may be expected to hand over, extensive powers to the Government during a war. ( Mr. Myers: Could it be said that the timber.duty could bo.increased?

The Chief Justice: That does not absolutely determine this question, because tiie Legislature has expressed its opinion aB to what' the export duty should be.

'Mr: Myers: Well, take the Tobacco Ack Can it be said that the provisions of that Act would authoriso theMinister to impose a charge such as this? . . . You will find that right through our legislation, where it is intended that a lioense fee is to be charged it is to be fixed by legislation. •Mr. Justice Edwards: But this i 6 in time of war!

Mr. Myers: Even in time of war taxation cannot bo imposed except by Parliament.

Mr. Salmond:' There are several cases in which the Government has power of taxation.

Mr. Myers: It may have certain express powers, but that is another mat-

Mr. Justice Chapman: The Government has powers in time of war that we never think of in ordinary times.

Mr. Myers: Yes. But the King's power of .taxation has gone long ago.

Mr. Myers: Then, Mr. Justice Chapman referred to the gold dnty. Can it be said there thjt the Government had power to impose any charge similar to that now to he made?

Mr. Justice Edwards: But there is no absolute power of prohibition there. Mr. Salmond observed that thp Gold and Tobacco Acts were not war measures.

Mr. Myers: If the Government intended to give power of taxation, it would have done so in express terms. Mr. Justico Chapman: This is not an ordinary matter of taxation. It is in tho nature of a trade regulation. A Government's war-time Powers. Mr. Myers: You can't lose sight of the fact that Parliament has been sitting recently, and it is common knowledge that all these questions of trade regulation and fiscal proposals wore considered and a Finance Act was passed. Mr. Justice Chapman: Common knowledge! What is the common knowledge of Wellington may not be tho common knowledge of Auckland.

Mr. Justice Edwnrds: It is not my knowledge. I don't suppose anyone except those interested read anything about it. We are all interested now in the salvation of the Empire. Mr. Salmond: Thoy took a largo r oart of the mercantile marine without any authority nfc all.

Mr. Myers: But paid compensation for it.

Mr. Salmond: It was not necessary to do so.

The Chief Justice: It is only by the grace of the Crown. Mr. Myers said that under Section 46 of the Customs Act there was provision to prohibit importation, but the powers differed from those regarding exportation: Mr. Justice Chapman: Could he say that certain goods could not be imported except on a license issued by a functionary of tho New Zealand Government in England? Mr. Myers: May be. Mr. Sahnond: That is done now. Mr. Justice Chapman: And could not a fee be collected? Mr. Myers: You will also; see that the Dairy Produce Act in New Zealand which with the. export of produce. The Chief Justice: What year? Mr. Myers: 1908. And all fees received under .that. Act .must be paid into the Consolidated Fund. If this Order-in-Council were made under'that Act it would be in conflict with it. "Under that Act regulations have been made. Mr. Justice Edwards: How does that affect the question ? . . . How does all ''this pre-war legislation help us? Conditions are totally changed. Mr. Myers: In this way. The Dairy Act says the. fees collected are to be ,oaid into the consolidated revenue. .

Mr. Justice Edwards: That might be an argument if the Oipvernment were endeavouring to use thjo. powers of that Act, but they are not. They are acting under the War Regulations.

Mr. Myers: No. Under the Customs Act.

Mr. Justice Chagman: Is not'that a rather narrow interpretation? Mr. Myers: War measure or no war measure there is no 'power to make a tax outside Parliament.

Mr. Justice Chapman: In war time a free community surrenders a great oeal to the Government.

Mr. Myers: But one of tho things it does_ iiot surrender is tho right of taxation. .

Mr. Justice Chapman.: h> surrenders a great deal. I suppose the Government could now suspend tho Habeas Corpus Act.

Mr. Salmond: It has dono so to an extent.

Mr. Myers: Well, can it be said that Section 47 of the Act of 1914 gives the I Government power to bring in regulations in contravention of ■ the Dairy Aot?

Mr. Justice Edwards: Until' the Act of 1914, you could not prohibit export. Now you can. That is the whole thing. Taking the Customs Act, Mr. Myers asked: Could it be contended that a tonnage rate could bo imposed as a condition or restriction?

Mr. Justice Chapman: This is not a license fee in the ordinary 6ense. It is something for the purpose of regulating this particular trade. Teetotalers Might Tax Whisky. Mr. Myers: Turning to Section 24 of tho Trado and Conunorco Act, it is submitted that tho only possiblo object 1 of this section is to enable the Governor-in-Courioil to either totally or partially prevent the exportation of any particular class of goods where the prohibition of the exportation is in the public interest. Supposing it were thought that'all the butter mado in New Zealand was required here, and that_ the exportation was not in the public interest tho exportation of butter could bo totally prohibited. But the Government goes far boyond that, aiid requires the payment of "this, per lb. ratoon all butter-fat, whether manufactured, for uso hero or for export.- His Honour Mrl' Justice Edwards put it to mo that even if the charge is bad the prohibition still stands. But I say the prohibition is with a liceii6o, and if the charge is had the license is struck out.

The Chief Justice: What are tho functions of the Board of Trade?

Mr. Myers: Merely to inquire and report to • the' Government. I submit that this clause: is bad, and that'the; Government' cannot delegate''power! to impose conditions I submit that the id. may bo. increased. Supposing tho value of. butter on the English market increases, the licensing authority and the Board of Trade may say: In order to bring the price here and in England on a parity; we are going to double this three-farthings. To talk of this as a war Order-in-Gouncil is absurd. One would have thought that if it was necessary to limit or restrict the ■ price of butter the place was at tho other end, and not here.

. Mr. Salmond: We cannot do that. Mr. Justice-Edwards: How would that help the peoplo of New Zealand to get their butter at a reasonable price?

Mr. Myers: I say that a charge is not legitimate • as it is not expressly authorised. _ , Mr. Justico Edwards: Tho power is givon generally, subject to any conditions thought fit. It seems to me that where you get an absolute power to prohibit tho conditions must be in tho discretion of the authority. I don't think it. Ie taxation. '

The Chief Justice: It is a charge. Mr. Myers: If you are taking the money but' of tho pocket of the exporter and saying: "You are not going to get a license unless you pay this." .Mr. Justice Edwards: He is not entitled to a license as a right. He need not take it unless he likes.

Mr. Myers: He is entitled to export. . . . I submit that this is contrary to the principles of our English law. If these fees can be imposed in regard to exports the samo applies to imports. Mr. Justice Edwards questioned this contention.

Mr. Myers: They could take some of the biggest lines of imports The Chief Justice: If he was a teetotaller he'could'tut a tax. on whisky, i suppose. ...

Mr. Justice Edwards (hurriedly) Oh/ nol

Mr. Myers: There is one, other thing I this Order-in-Council does. It makes a, retrospective charge. It affects goods already on the water. Mr. Justice Chapman: That is not contrary to our law—making a retrospective charge.. : '■' ' Mr. Myers: But what power has the Governor-in-Council to impose a charge on goods already on the water? Mr. Salmond: This is not such a charge.

Mr. Myers: Then what is it? Mr. Salmond: A condition of license. Mr. Myers: But you say if you don't do this you will not get a license. Mr. Myers repeated that those who exported got nothing back at all. Mr. Justico Edwards: Why do vou say that? J

Mr. Myers: Well, unless there is something left over. Mr. Justico Edwards: Exactly. Mr. Justice Edwards: The cheese people will get nothing back. Mr. Justice Chapmau: The whole fund is disposed of. Mr. Myers: Yes. Now, is not this the imposition of an export tax in the guise of a license fee? Mr. Myers said that ono had not the least doubt that if the Order wore held invalid some other restrictions would bo devised. Mr. Myers' case. THE CROWN'S CASE. IMMENSE POWERS DURING EMERGENCY. Tho Solicitor-General said that before dealing with the particular Order-in-Counoil ho desired to call attention to tho immense powers entrusted to tho National Government during the grave national emergency which now existed. Theso powers existed partly by way of tho Royal perogative, the Common Law, but to a. large extent through special _ legislation. They amounted to nothing more than a constitutional rovolution. To put the

matter quite simply, in large parts by our national life we were living under a despotic Government. It was the easiest thing in tho world for anyone, to call attention to the grave evils that might result from the undue exorcise of these arbitrary powers. it would not be a service, but a dis-ser-vice, to the country to in any way re-strict-the powers wnich Parliament had seen fit to repose in the.executive during these times. Practically what the Synod had long ago done in Rome was being done here to-day. ~ The Chief Justice: They had tue power of life and death. You don b suggest that power is here.' Mr. Salmond: Yes. They hove taken power of court martial and the deatn penalty. ._ „ Mr. Salmond: The plaintiffs have protested that there wjis no power to make this charge. The Government has tar greater power. It has power not only to tax, but to confiscate. The Chief Justice: Taxation is a very different thing to confiscation. ine Government in. time of war can take a man's land or Ms goods. , Mr. Salmond: And pay noihmg *° r 'it- ' , «,- Mr. Myers: In the Now Zealand Statute there is a power to recover. Mr. Salmond: So there is in the English Statute, hut the Government took an aeroplane, factory and, considering he did not get enough for it, the former owner sued, and .the Court of Appeal held that he was entitled to nothing. The Chief Justice: Quite so. Mr. Myers: But hero there is a provision for recovery. Mr. Salmond: So there is in England, but it was'held that that did not affect the Royal TjrerQ£ative. ■ Mr. Myors: Then what is the use or the Statute?

Mr. Salmond said that in various way the Executive had acquired enormous powers since the outbreak of war. It had power to over-ride any Act on tho Statute. The Chief Justice: Surely you don't say that? Mr. Salmond: I am.only going on the wording of the Act. The Chief Justice: Would you say it ovor-rides the Constitution? Mr. Salmond said tho Executive had npwor to regulate shipriing, and stop any ship leaving the country. Mr. Myers: Is that by Act? Mr. Salmond: • No., by . regulation. Only a fow months ago the —— came into port and an officer of tho Crown went aboard her, handed an authority to the captain, and she has been a transport ever since. Mr. Salmond said the Executive had also wide powers to control trade, and had prohibited trading with numerous persons. Then there wero its powers regarding finance. Never in tho history of the country had there been such wide''powers of appropriation. _ The Chief Justice observed thai Section 54 of our Constitution Act was still law, and that section, was ono of tho sections even tho Parliament of New Zealand could not alter. No Obligation, So No Taxation. , Mr. Salmond said that as to the Act in this case it conferred a power of absolute prohibition, and therefore , every thing that was less than, absoluto prohibition was/a privilege to the exporter, not a restriction. It was something given to him—a concession. What, the Ordor-in-Council did was to prohibit subject to certain conditions. It had done exactly what tho Act said. Tho Chief Justice: Who do you say is to niako tho regulation? Mr. Salmond" The Govemor-in-Council. Tho -Chief Justice: That is not the lease hero. It is the licensing authority. Has ho power to do that? Mr. Salmond: .Certainly. The Chief Justice: Can you show me anything where the Governor-in-Coun-cil has that, power—jiower to say that what somebody elso thinks should be the law shall bo tho law? Where is his power to. that authority? tj i almond: Wll y» oven a local body s. by-law has somo such power. ... And if there is no such power, then all the- regulations made since the beginning of the war are bad. both here and in England. The Chief Justice: Ob, that may be. Mr. Salmond dealt with Mr. Myers's contention that tho 3d. charge was a tax. Tho essence of taxation was obligation. There was no obligation in this case. No one 'need conform unless he pleased. No ono could'he sued if he did not pay. If J, e chose not to pay, lie would simply not be permitted to export. This charge is a pure and simple condition. "'Then, I never, before heard of a. tax where tho money did not go into tho publio revenue." ■'

The Chief Justice: Where does tho money go?

Mr. Salmond: Into a trust account. The Chief Justice: It goes to the Crown.

, Mr. Justice Edwards: But tho Public Trustee holds money in trust, and not for the Crown!

Tho Chief Justice: But this money is to be held in trust for the Crown. Mr. Salmond: Anyhow, this is merely machinery. The Crown need not be tho trustee, and if there is any objection to that clause we will soon find another trustee.

The Chief Justice: The Court, though, is only dealing with the Order-in-Counoil as it now sands, not as 0/ may stand afterwards.'

Mr. Salmond: But it is very important that this Court should say distinctly what it thinks.

The Chief Justice: Oh, I don't know.

Mr. Justice Edwards: Yes. If the Court holds the clause bad, it must say why, • . .

Tho Chief Justice: Just so; but it need not say what is good. The Chief Justice asked why the Executive did not simply take enough butter to supply the local market by making every factory contribute a proportion of its output. Then there would have been no charge, no staff of officers, no friction, no trouble, and everything quite simple.

Mr. Salmpnd said that had evory"Ehing h'een so simploj that line would have b"een adotped. But the matter was highly complicated. ' Tho case stands adjourned till 10 o'clock this morning.