THE BUTTER CASE

Dominion, Volume 10, Issue 2915, 30 October 1916, Page 6

THE BUTTER CASE

HEARING ENDS

ARGUMENT AGAIN INTERESTING

DECISION RESERVED

Hearing of- the butter test case in the Full Court was concluded on Saturday. The Court has reserved its decision.

The action arises out of fho Government's attempt to regulate tho price of butter in Now Zealand. The soheme begins with tho prohibition of tho export of all butter and cheose. Then it provides that a right to export may bo obtained by thoso who procure a license. The export license may bo obtained by those factories which agree to pay a chargo at tho rate of Jd- per lb. of butter-fat produced by them. Tho money collected through tho charge is to go into a fund which is to be U6cd mainly to compensate those who, by selling locally, reap a lesser-gain than those who export. Tho scheme has been launched under an _ Order-in-Council. Tho dairy companies havo taken action in tho Court to test the validity of the Order, and their main contention is that the -Jd. chargo is a tax, that Parliament lias not given tho Executive express powor to levy this tax, and that in Parliament alono rests tho power to tax. The Crown argues that the chargo is not a tax, but a condition upon complying with which the factories may obtain an export license. Tho Court consists of tho Chief Justico (Sir Robert Stout), Mr. Justico Edwards, and Mr. Justico Chapman. Tho Solicitor-General (Mr. J. W. Salmond). appeared for tho Crown, and Mr. M. Myers for tho dairy companies. Tho companies whoso names appear on the originating summons aro tho Taratahi Company (near Carterton) and the Mangorei Company (Taranaki). Mr. Salmond said that on tho opening day ho had 'submitted that tho Order-in-Council conformed to tho preciso words of tho Act, and if it wore held to bo invalid it was only because of somo implied qualification road into tho meaning of tho Act, but which was I not thero. '

The Chief Justice said that the moaning of tho word "condition" had to bo ascertained.

Mr. Justice Edwards: It must bo a condition to do with tho regulation of the trade, do you say ? Mr. Salmond: Yes. Mr._ Justice Edwards: And you say that if itj is concerned*with the regulation of trade it is a good condition? Mr. Salmond: Yes, that is my submission.

Mr. Justico Edwards: That scorns roasonable.

Mr. Salmond: Tho Ordor-in-Council in no way departs from the Act. It is a bona-fido attempt to carry out the very purposo of tho Act Thero is no ulterior motive. It is. bona fido in its whole scope —a bona-fido ondeavour to rotain an adequate amount of but-ter-fat in tho country. Mr. Myers: Not butter-fat. Butter.

Mr. Salmond: If you prohibit the export of butter, you prohibit, I think, butter-fat.

Mr. Myers: Tho prohibition is on butter, not on the raw material.

Mr. Salmond: If you said "butter" and not butter-fat, tho butter-fat would got out of the country in the form of cheese.

Tho Chief Justice: You say it is for tho purpose of retaining an adequate amount of butter in the country. If that is the purposo of the Order-in-Council, why not do that? Why not sijuply retain an"'adequate amount?

Mr. Salmond: Sinco Your Honour mentioned that yesterday I have been advised .by the Board of Trado in the matter. They explained that , that scheme had been considered! and aba.idonod on expert evidonco as unsatisfactory. It would involve so much interference to the detriment of the factories that it would be incomparably worso .than tho present, and unworkable. The' Board of .'Trado advises mo that if this order were found bad, and it wore found necessary to adopt somo such scheme as suggested by tho .Chiof Justice, the dislocation' of trade would 1 •be incomparably greater. The Chief Justice: I am not competent to make suggestions to the Boaa'd of Trade, but 1 think there are half a dozen ways of doing it instead of this. ... I don't soo why £300,000 has to be taken from the people engaged in this business —— Mr. Salmond: Thore will bo no accumulation of money. Chief Justice: That is what I understand it will am&jjnt to in a year. Mr. Salmond: But it • will bo distributed from month to month . Mr. Myers: That could not bo dono. The Chief Justcio: I don't think it could be done. Mr. Salmond: What is there unreasonable in this Order-in-Oouncil? What is the complaint, the grievance of these people? Tho Chief Justice: I don't tbnk that is fo. - us to answer. Mr. Salmond: I don't supposo the bulk of the farming people have, any grievance. I think' too highly of theirpatriotism to beliove that I think they would bo glad to co-operate with the Government.

Mr. Myers: Theso are representative men who aro bringing this action.

Mr. Salmond:'lf Mr. Myers..assures mo of that, I accept his statementhut I regret it. Mr. Myers: I can only say that I am instructed that these two factories who havo brought 4 tho action (Taratahi and Mangorei) were selected as representative of practically the wholo. Mr. Salmond: Well, what is their position? They have made profits beyond their wildest dreams. Mr. Myers: But they have to pay the excess profits tax. Mr.- Salmond: The expenditure ' of untold millions by the British Government and by this Government-; — The Chief Justice: Surely this is not law. We are not dealing 1 with the merits of the case sot, but with the constitutionality and tho legality of

Mr. Salmond: Yes, -well one of the objections is that the order is unreasonable. I desire to answer that ground. Mr. Justice Chapman: 1 don t say we can consider the question of unreasonableness. I am not speaking for the CouTt, but for myself. Mr. Salmond: Very well. I will be content not to discuss it. The Chief Justico: There is not a single question in the originating summons dealing with unreasonableness. Mr. Justice Edwards: Thoy don't put all their arguments into an originating summons, of course. Question of the Trust Money. Mr. Salmond: I pass from that matter, then, to the question of tho authority for tho expendituro of this money. The Ordcr-in-Council provides that tho money shall bo paid into a deposit account. The reference is to the deposit account provided lor by section 28 of the Public Revenue Act, 1910, and also by section 31. lhcsc two sections make provision for the cases in which moneys are received by the Government which are not Government moneys—which are trust moneys, or moneys received in behalf of other persons. The Chief Justico: Do you suggest that is this caso? Mr. Justico Chapman: 1 supposo that whon a man pays money into a Court that is trust money. Mr. Salmond: There are numerous

casos in which Government officers receive money which is not Government monoy, but trust money. The Chief Justice: These are moneys received by the reoeiver for tho Crown to bo disposed of in a special way. Mr. Salmond: Tho trust intercepts them before tho Crown gets them. The Chief Justice: The Government receives tho money, and part of the money is paid out for Government purposes. Mi-. Salmond: This trust is constituted by the agreement between the Government and tho factory-owner.

Tho Chief Justico: No. They say: "If you don't pay this, wo will confiscate your goods."

Mr. Salmond: But they are not bound to pay this charge They can sell in tho colony..

TBe Chief Justico: That is not voluntary. Mr. Salmond: But a shopkecpor says: "If you come into my shop for a watch, and don't pay the money, you won't get my watch." The Chief Justice: But that is -tho shopkeeper's watch. It is not the Government's butter-fat.

Mr. Salmond: It is the Government's license.

The Chief Justice: That analogy won't stand. They aro not the Crown's goods, and the analogy is false. Mr. Salmond: Wo can't compel them to take out a liconse.

The Chief Justice: You do compel them with a most terrible compulsion. Mr. Salmond: So does the man who has bread tho public want. Mr. Myers: It is a sort of "Money or you life!"

The Chief Justico: Anyhow, I always understood that an agreement was a thing in which tho will operated freely. You can't call this an agreement.

Mr..Salmond: I have to pay a portion of my salary every year' to buy food. I don't liko having to do it, bub still 1 have to. I would much prefer that tho butcher and the baker would give it to mo for nothing. But no. They say, in effect: "This is our price. You can 1 take it or leavo it; But if you don't take it you will die." How Courts Should Construe War Legislation, Mr. Justice Chapman: Take tho case of an army—a typical army, tho German army. Thoy take men to service under a form oi : conscription. If men don't volunteer tliey take thorn for three years instead of one. Yet .there is some voluntary element there. Mi\ Salmond: fee. I should say so. MrJ Justice Chapman: .When you go aboad a ship you get a ticket with a lot of writing on tho back, and you don't know what is on it till you loso your luggage. You may not agree with it,, willingly, but you havo to, hecauso if you don't you wont'got to Lyttelron.;. . .

The question, of tho trust fund was again mentioned, and Mr. Justico Chapman drew this illustration to show that the Government holds money in trust tor individuals: "When a prisoner goes into gaol tho gaoler empties his pockets and pays the money into an account."

The Chief Justico raised again the question of the Govcrnor-in-Council's powor to delegato authority. , Mr. Salmond submitted there was authority for the delegation, and said that if it was not so many things done here and in England were bad. The Chief Justice: Maybe, but wo aio not concerned with that.

Mr. Salmond: I merely wish to say in conclusion that this war legislation ought to be judicially construed in a wide and Imperial sense; conformable with, tho extraordinary nature- of it. The- standards of judicial interpretation which are reasonable in time of peace are not necessarily .applicable to tho legislation of an unprecedented kind in an unprecedented time. The standard of what' is reasonable is differcent in time of war. The considerations of tho public interest arc very different. The legislature has entrusted such powers as were never heard of before to tho executive. It lias entrusted those powers without express limitations or qualifications, and mtendod thoso powers to be exorcised to the full. 1 respectfully submit, therefore, that the Courts will not conform eithor to the public interest or tho intentions of tho Legislature by reading restrictions and limitations into thoso powers. Tho Legislature, when it entrusted thoso enormous powers, entrusted them fully and absolutely, relying on that effective control which is exercised by public opinion and not relying on minute distinctions which might be made by this Court.

Tlio Chief Justice: I don't know how public opinion can control! Mr. Salmond: It controls Parliament.

The Chief Justice: If public opinion controlled, we v«rald need neither Government nor Parliament. "You Have Not Shown This is a Tax." Mr. Myers &aid that he did not dispute that tho Legislature had chosen to confer on the Government very wide powers during this war, but those powers had been given under express statutory authority. The • SolicitorGeneral had said that very drastic things had been dono under Order-in-Council. If they wore dono without statutory authority they .might ho bad. Parliament also, no doubt, had passed a special section each session validating - the things' done. Taxation would be impossible without Parliamentary sanction. If there was - one doctrine well hold in English law it was that. Upon the Solicitor-General's construction of tho Ordor-in-Couucil there was nothing to prevent the Government in not only saying a license was required to export butter and cheese, but ako to export wool and hemp, and this for the purpose of giving the money obtained! through the license to the butter producer. Mr. Justice Edwards: Thj answer to that is that it would not be a rcgulaI tion of tho trade.

Mr. Myers: The Act, though, is to regulate "trade and commence." Mr. Justice Edwards: The meaning of the Act is tho regulation of the particular trade. The regulation of the importation of oggs from China could not apply to the butter industry. Mr. Myers: I am obligod to Your Honour for giving mo that illustration. For, could the Govornmont say to tho importers of eggs from China: "You will not got a licenso to import unless you pay so much to the producers of eggs in New Zoaland?' ; Mr. Myers: Supposing Clause 8 were different altogether, and that the threefarthings simply had to be paid to tho Crown, and nothing mcie. I submit that it would be illegal.

Mr. Salmond: Because it would be for a wrong purpose.^

Mr. Myers: It is.a tax. Mr. Justico Edwards: You have not shown that this is a tax. You have said so.

Mr. Myers: Well, I am arguing that it'is.-This is an imposition imposed by authority, and any chargo imposed by authority is a tax. 'Phis is a charge imposed on a holder of a license, and if it is not a tax it is difficult to say. what is a tax. Mr. Salmond: Do you suggest that an authority which has no taxing power cannot impose a liconse fee ? The Chief Justice: This is not a license fee on tho goods Tho peculiarity of tli9 caso is that the goods 1o be oxported aro butter and cheese, hut there is not tax on butter and cheese, but on the raw material.

Mr. Justico Edwards: It is not a tax. Mr. Myers :• It is a tax. It comes within the definition of a tax.

Mr. Justice Chapman: It is not intended :is a tax. Is not a lax something which is intended to enrich the Treasury?

•Mr. Myors: Where a governing authority takes monoy from 'A' and gives

it to B, I don't know what that is unless it is a tax on A.

Mr. Justice Edwards: Why call it a tax? Why !put up a. bogey to knock it down? | Mr. Justico Chapman: Why givo it a name? 1

Tho Chief' Justice: It is described as a charge. Mr. Justice Chapman referred to tho authorities Mr. Myers had quoted in bis endeavour to establish that the charge was a. tax. "All those authorities concern different conditions," he observed. "All thoso are charges to enrich, tho Treasury, are they not?" Mr. Myers: Yes. ■ Mr. Justico Chapman: They aro tho very highest authorities, no doubt, to i whioh wo bow, but have tliey any referonce to this particular case? Mr. Myers: They are authorities to show_ that this is a tax. .... When tho Solicitor-General was asked yesterday if he contended that Parliament knew' it was conferring such powers on tho Executive, he did not hesitate to say: "Certainly. not in 1913, but in 1914 they may have." "Well, I submit that if this could not bo done in 1913 it cannot be done now. ' The Order of 1914 did not alter tho law. The Closing Stages. Mr. Justice Edwards said that he did not think that Mr. Myers was right in his contention respecting tho Act. Tho Government had simply invoked the machinery of tho Act of 1913. The Chief Justice: Tho Court has to give the meaning of the word "condition" in tho Customs Act. Tho Solici-tor-General suggests that in 1913 it meant something, and in 1914 it meant something else..

Mr. Myers: That is what he says, and if he is Tight, the Governor-in-Council would have tho power to impose anything without the sanction of Parliament.

Mr. Justice Edwards: The whole of this argument, in 'my view, only becomes possiblo because the draughtsman, instead of draughting the conditions, has gone the short way to the Customs Act. I think it is a great pity.

Mr. Myers: If the section cannot bo used for the purpose of raising money for the Government itself, it cannot be used for the purpose of raising revenue for other people. Mr. Myers observed: "Wo are not Bound to take out. a license."

Mr. Justico Edwards: Then ' what havo you to complain about?

Mr. Myers: We have this to complain about. We bare to export.

Mr. Myers referred to the powors of Parliament alone which had long been jealously guarded. Mr. Justice Chapman: Nothing has been more jealously guarded than;the liberty of the subject, and we have consented to givo that away for tho tinio being. Mr. Myers: But this was done expressly. This concluded tho argument. Tho Court reserved its decision.