FINE OF £50.

Dominion, Volume 10, Issue 2918, 2 November 1916, Page 6

FINE OF £50.

THE SCOULLAR CONTRACT ! ' LIGHT MATTRESSES PROSECUTION UNDER WAR REGULATIONS

Judgment was given yesterday by Sir. L. G. lieid, S.M., in tlio ease in which the Scoullair Company, Limited, wero prosecuted by tlio Crown for an alleged broach of a contract for tbo supply of goods to the Defence Department. Tlio Magistrate 1 recorded a conviction, and imposed a fine of £50, but the defendant company is appealing against tlio decision. Mr. P. S. K. Macasse.v appeared for the Crown, and Mr. T. S. Weston for the Scoullar Company. > Following is the text of tlie Magistrate's judgment. "In this case the defendant company is charged -under section 12 of thoJWar Regulations of November 15, 1915, that the company did wilfully break a contract made by it with tho Crown for the supply of mattresess and pillows by the delivery of goods which were not in accordance with such contract. The Facts Proved. "Tho facts proved before me were that between August 30, 1916, and September _7, 1916, some 2220 mattresses which had been supplied under tlie contract' were examined on behalf of .the Defence Department, and only 182 of tbeso were passed as being in accordanco with specifications, 1839 were rejected as being light in weight (tho average being less than lGlbs., instead of 181bs.), while 219 were rejected as containing rubbish, such as pieces of rope, uriscutchcd flax, dust, paper, sweepings, 'etc. One of these latter mattresses was produced in Court, and showed that a disgraceful state of affairs existed, the rubbisli being plainly visifrlo when tlio mattress was cut open. It was proved by two of tho workmen that they had been instructed to make tlie mattresses up to 161bs. weight only, and that they had also been directed by those in ch'iirgo of tho work to use up the rubbish tlio making of tho mattresses. Tliero is nothing whatever to show that this action was accidental or took place by mere inadvertence on the part of the company's servants. The Question of Liability. "Now as to tho liability of tlio defendant company, it was contended by their counsel that it was incumbent on the prosecution to prove tliat tho manager of the company was awnre of what was going on, and tliat unless tlio acts complained of were done under his express instructions or with his knowledge, then the company could not be convicted. This appeared to me to bo a somewhat startling proposition. But I am satisfied oil consideration of tho matter that it is foo restricted a view *0 take, <*ui(3 that on the contrary, where, as in this case, tho servants of tlio company, acting within the scopo of their ordinary duty, commit a deliberate fraud, ;i wilful breach of the contract is committed, which renders tlio company liable. English Cases Cited. "I have taken somo care to loolc into tho authorities, and tlioso I find most in point arc: "Pearks, Gunston, Ltd., v. "Ward, 2K B. (1902), 1; The Queen v. Taylor and International Commercial Company, 2 Q.B. Div., 1891; Halsbury's Laws of England, Vol. 8, p. 391. "Pearks v. Ouiison was a caeo under the English Salo of Food and Drugs Act. Section 6 of that Act enacts that no person shall sell to tho prejudice of tho purchaser any articlo of food or drug which is not of .tlio nature,' substance, and quality of tlie article demanded by such purchaser, under a licnalty not oxcecding £20. The Justices having convictcd tlio company, the questions stated by them for tho Appeal Court wero as follow:— 'Does tho word 'person'' in Section 6 of Sale of Food and Drugs Act, 1875, include any incorporated company so .as to make tho appellants liablo to tho penalty imposed upon , a person, offending against the said section?,

" '(2) Whether thero was a salo to tlio prcjudico of tho purchaser' within the meaning of Section 6 of tho 6aid Act?'

"11l dismissing tho appoal, tho rcmarksmado by Channel!, J., are vory much iu point. Ho says: 'With regard to the other and important question whether a body corporate can be made liable under Section 6, I agreo with what has been already said, but having regard to tho importance of the question 1 will add a few words. By the general principles of tho criminal law, if a matter is made a criminal offenfio it is essential that there should bo something in the nature of mens ren, and therefore in ordinary cases a corporation cauuot bo guilty of a criminal ofTonco, nor can a master be liable criminally for tin offonco committed by his servant. But there arc exceptions to this rulo in tho case of quasioffenccs— that is to say, where certain acts are forbidden in law under «, penalty finch as imprisonment, at any rate iu default of payment of a fine, nnd the reason for this is that tho Legislature has thought it so important to prevent a. particular act from being committed that it absolutely forbids it to bo done, and if it is done the offender is liable to «■ penalty whether be has any mons rea or not, and whether or not ho intended! to commit a breach of the law. Whore the act is of this character, then tlio master, who in fact has dono the forbidden thing through his servant, is responsible, and is liablo to a penalty. There is no reason why ho should not he, because tho very object of the Legislature was to forbid the thing absolutely. "It seems to ma that exactly tho same principle applies in the case of a corporation. If it does the act which is forbiden, it is liablo. Therefore, when a question arises as in tho present caso ono has to consider whether the question is one that is absolutely forbidden or whether it is simply a new offence created to which tho ordinary principle of mens rea applies. Applying this to Section G of the Sale of Food and Drugs Act, I think tho matter is quite clear, for it has already been decided in at least two cases that there is an absolute prohibition of the particular sale mentioned in the section. Consequently there is no reason why the section should not apply to a corporation. In other words, the word 'perform' includes a corporation because no contrary intention appears. If Section 6 had simply provided that imprisonment should follow a breach of the section, I there might have been some difficulty ' in applying the section to a corporation. Question of Cuilty Knowledge. "The Queen v. IVler and International Commercial Coy. (22 B Div. 1891) was a case under the English Companios Act, and is quoted as bearing dircctly on the question of 'mens rea.' At page 592, Bowon, jj.J,, in his judgment, states: —'Now, J? Section 26 stood alone it could not bo doubted that it created a duty in tho company, and that if the company did not comply with the directions of t'he section, the company would commit a breach of duty. There would be in 6Uch a caso a disobedience of law. It was first contonded on behalf of tho appellant, that no criminal preceedings can bo

taken against, a company, and it'becomes necessary to examine that proposition and see if there is anything in it. It would seem contrary to sound sense and reason if such a. technical objection could succeed. Where, for instauco, a statuto creates a duty upon-individual persons it would be a strango result if tho duty could bo evaded by tlioso persons forming themselves into a joint stock company. Tho point' becomes still more incapable of argument whero tlio statute proscribes tho duty in the company itself. How can disobedience to the qnactmcnt by tho company be otherwise dealt with? The directors or officers of tlio company who are really responsible for the neglect of the company might not be struck at by the statute, and there would be no way of enforcing the law against a disobedient company unless there were, a remedy by way of indictment.' And at nage 595 (per Bowen, L.J.), it is stated: 'It would indeed be a remarkable view for the Legislature to take that the obligation imposed unon a company was of such a nature that its breach bv the companv was not ail offence, and -yet- that a director or manager of the company who stood by and acquiesed in the breach was guiltv of- an offence. Such a reading of tho statute would emancipate the company upon whom the dutv was imnosed from the position of offender nii(l would introduco into tho class of offenders the directors and managers only who stood by and acquiesced. I cannot think that this is the true reading of the sections. It seems to me that why the words 'knowingly and wjlfully' arc introduced into Section 27 as a condition of the directors, and managers' default are omitted in the case_ of the company, is that the duty is imposed on the company. The directors are to be punished if they stand by and nermit tho company to be in default, but the eomnanv is not tlieroby Ipss in default, nor is the character of that default altered, and therefore n. breach of the provisions of Section 26- is an offence, and it is ndne tho less an offence because Section 27 imnosos a pecuniary penalty for tho offence that section gives a summary remedy. Punishments and Corporations. " 'Salisbury's Laws of England,' Vol. 8, page 391, Corporations' Where tho punishment for a crime is death or imprisonment, a corporation cannot be indicted for the crime, for it cannot undergo tho punishment. But a corporation may bo fined; consequently, in the case of quasi-criminal offence's, where certain acts are forbidden by law under a penalty, and possibly even under a penalty such as imprisonment, at any rate in default of payment of a line, and where the offender is liable to a penalty whether he had any 'mens rea" or not ho intended to commit a breach of the law a corporation which in fact has done the act through its servant or agent is responsible, liable to a penalty. Application to Present Case. ' "Regulation No. 12 of the War Regulation of November 15, 1915, is as follows: —'No person shall wilfully break any contract' mado with the Crown in respect or for tho purpose of the present war.' Section 4 of'the War Regulations Act, 1914, provides for a penalty of £100 for breach of any regulation made under tlio Act. It will be. seen that the regulation contains in itself a distinct prohibition. "In view of the facia proved in this case, and of tho law as laid down in tho cases cited, it seems impossible to hold otherwiso than that tho Scoullar Company is liable to n penalty in respect of the fraud perpetrated by its servants. I therefore convict tho defendant company* of wilful breach of contract as charged in the information, and . impose a fine of £50 and costs." Mr. AVesUm, for the defendant company intimated that there would be an appeal to the Supreme Court, and security for costs-was fixed at £10 10s. A MINISTERIAL STATEMENT . ; WHAT THE EVIDENCE HAS SHOWN. By Telegraph— Prows Association. Auckland, November 1. Tho following statement was made this evening by Mr. Arthur Myers:— "Notwithstanding tho prosecutions that recently havo taken place in regard .to ; breaches of military contracts, tiic'ovidenco has mado it very clear that every care and attention was given to tho drawing up of the specification prior to calling for tenders, so as to ensure that articles served out to troops would bo of'the very "best quality. In addition, it has been made clear that tlio vory closest scrutiny and examination was luado on delivery of such articles. Everything specified must bo maintained."