MAGISTRATE'S RULING DISPUTED

Dominion, Volume 13, Issue 311, 25 September 1920, Page 11

MAGISTRATE'S RULING DISPUTED

CIIRISTCIIiIRCH ALARM CLOCK CASES CROWN APPEALS AGAINST DECISION LITIGATION'IN FULL COURT The, Pull Court yf.sterday began the hearing of an appeal against tho judgment of Mr. (3. K M'Oarthy, S.M., in tho reccnt, Christcliurch • profiteering' cases, in which the informations laid. against- six firms ■ werci "dismissed by the ..Magistrate. Tim charges, based on, tho sale of alarm clocks ■at an allegedly high and linfair price, related to the following firms:—Hastie. Bull and Pickering, Ltd., E. Keece, Ltd., A. ,T. White, Ltd. (Sir .John Findlay, KC.).. Mason Struthers and Co.. Ltd., and G. W. Drayton and Co, (Mr. 0. P. Skerrett, K. 0.). nil of Christchurch; and Brown and Bureau,. Ltd. (Mr. M. Myers), of Wellington.- • In the cases of A. J. White and Co., Ltd.. and 13, Keoco and .Co., Ltd., the charges in tho Court below were of "offering to sell" the goods at the xrice complained of. The appellant, G. H. Christie, secretary, to the : Prices Investigation . Tribu - 1.1, flhrlstchurcli, was represented, by the Solicitor-General, Mr.' W. o.' MacGregor. K.C. V ' ' " . . On the -bench were: Their Honours Mr. •Tustico Edwards, Mr. Justice Hordman. and ifr. Justice Chapman. . .The firms .concerned in the apnea! were indicted originally under tlie Board of Trade Act, 1919, • section 32, ' being the bo sis .'of the . prosecution. This clause provides, ; inter aliii,. that ."every person commits an offence who, either us princl vnai or .agent,-.sells or supplies, or offers for sale or supply,'any goods, at- a price which is unreasonably high,". Subsection 1 sets out. that "tho price of any goods shall bo de<!med to be unreasonably. high, if it produces or is calculatt.rt to -produce, more than'a. fair and reasonable rate of commercial profit to tbe perßon selling or supplying . . . or to his principal.". . Im the case of Brown and-Dureau. the information .laid alleged that the defendant compor.at.ion committed an offence under the Act by. asking and,' advising A. Minsan; of Chrißtchurcli, to offer for Sale certain .goods at-a prico which was •Unreasonably'high. :-The cases wore heard in the Magistrates Court, Ohrißtchurch, and the informations ther6,.wero. dismissed,': tho Magistrate remarking ' that' the, nices charged were those current at the time of the sale, while the high profits were earned pursuant' ;to well-recognised commercial Usages,'.which- complied with tests Set oiit. "Further," said Mr. M'Carthy, in his judgment,-: "the increased prices were riot , diio to any: "CBite to exploit, but to economio conditions over which the parities had no control, ■'and suoh profits are therefore based; on' i fair and reasonable rate of profit. It "would save Useless and ' harassing litigation if the local tribunals, before recommending the laying of an information, gave thoso .proposed to be charged, a, chance of making Such explanations, - as" to them migl)t seem expedient, . . .- .It is td. bo hoped if these persons /are subjected to the inquisitorial powers-conferred -by the State on.local tribunals, they will i>ot subsequently complain ■ they ■ were placed, on the-rack by a,-- modern economic-Stfir Chamber. ' : The penaltv uvder tho. Act in .respect of an individual- ir. £200.' arid of a cm■ppfation, .€1000.: ; Tho appeal by .tile tri-bunal-was brought under the Justices of' the Peace Act. Cost of "Big Ben." Evidence-in the fMdrt below showed that "Big Ben" alarm.clocks in". 3911 cost tlid wholesaler Vs.'2d;, arid the retailer Ba. 6d. '.and 9b., less 2}. per cent.,,the public buying at 12s. 6d. The varying price's -charged to. : the".retailer "were to differentiate -he-'tween-saleß of ca'se.lots, aiid what is 'known'as broken lots. .. . In" 1915 anincreaso of 3d; on the landed cost of each clock was made, and .this was not passed ou to the'.general public until 1916, when there was a further increase in .the landed coßt, owing to (1) increase in the price of raw products; (2) increase in wages, (J) increase in transmission,. and M) decline in conversion' rate. This, it waß claimcd, necessitated tho public being charged' iSe. for - a clock instead of 12s. 6d. .. In April, 1910. owing to similar reasons,'further ricreases were made,, recurring in September,: 1919, and Marcb, 1920. when tho nrices were 17s. 6d.,.;20°.. and 25ar-respectively. -. Begarding the sale nt. the clocks by ilastie. Bull, and Pickering, the cost price >f the articlo was lis.' lOd., the '.gross profit or turnover 52 2-3 ner cent., ayd on cost.. 111.26 per cent.; in tho case of . A.. J. White, the figures were 135.,- 48'ner ccnt.i 92.3 per cent-; and in the case of Heere, 15s. 9d., 37 per cent., 58.73 ner cent.: and.in tho case of-Dray-ton, 14s. 3d., 43 per cent., 75.14 per, cent. The sale price, im each ensn was, the current, rate for tlie time being under the fixation of prices en: resale. . .. . The defendant firms firstly mentioned, were bound to sell tbe clocks at rates fixed from timo to timo by the manufacturers. It. was .proved that when there was an advance or decline in prices,, sales ,wer6 effected "at. the rates in -force at, the time of • sale.- this -/practice being known at selling at--replacement values, and being considered sound and honourable business practice. .

■ Reasons for Appeal. Tho Solicitor-General contended that the object of the appeal was to deflne clearly profiteering, as recognised in the Dominion. The accused, with the exception of Brown and Bureau, were charged -with selling at a. high rrice, 'and the latter (the wholesalers) .wero accused of counselling the respondents to sell thb clooka at tho price complained, of.'' It.-was essential that the exact. cost:pricc ot the clocks should be known, and evidence - in the Oourt below showed that'there was a great difference between the buying and selling prices, ' He' 'differed ivith : the verdict of the Magistrate, and ccneidered the Jitng-s-. 'trate should have" entered a conviction on his own- findings. Couneel .alio, criticised the defence set up in the Court below, which maintained that tho Court should be guided by the figure of average profit, and thought that this was. merely "robbin? Peter to pay I'aul." There was no doubt, that Hastie, Bull, and. Pickering were bound bv the - fixation ■of prices by the wholesalers, Brown and Dureau, and hod to fell the clocks at 255. each. "The important questions," said Mr. MacGregor, "aro what did the'a'ticle cont?. At what price' was it Bold? -And what.-waß. the difference between the two prices more than a fair commercial profit? T do not think' that trade usage can affect the result." Mr. Justice Chapman: Whether the fix#.- ' tion of.prices is "ailed compulsion or not the. fact remains that the man who would not keep to.'the agreement'.would not ro'cefve the'articles! ' Mr. MacGregor si l.mit.ted that the.Matriptrate'B docision was in law'erroneous. The case'was a puzzling anil novel one. There lmrt been a similar ease in England, to which be reforred in siirport of the onpeal, It was necessary, in his opinion, to define exactly "commercial profits," which wore "profits made in a commercial trans action-'or ns in Byre v. Glover. excreßccnce on "the valuo of (;oodß, beyond the primo cost." .. HV. Tfrerg: Gross profit I

Mr. 1 Mn eflroror: Kiactly. Profit without n oualifying" word means press .profit. Continuing, hp st-<ted thnt the advnnccs in tho ; prices ofthe foods sold hnd been fn,r beyond. t>e advances in the prices of goods purchased.

.Tho f.thoi* Side. For the respondents, Brown and Durean, Mr. Myors contended thalj the qiletitionn involved in tho inso wero questions of fact, and there wore no questions of law to bo dealt with. This being , so. tho appeal under the Justices.of the Peace Act, wob not allownolc. as the appellant could only, base his claim under the 'Act on questions of law. The 6olicit'or-Gencral had dealt only with questions of-fact. Ho agreed with-this, hut Mr. MacGregor. had raid that tho Magistrato in tho Court below had to determino the question on the cvifloncd of the Crown, There wero different rates of '-'profit'for different goods, such as foodstuffs, bulk Iron, fancy goods electro-plate. Tho llgher Tnte varied according to the clnss of article. The oniv evidence obtainahlo in the' Court below ■was ns to cost, and selling price. It was impossible'to. nsk a Magistrate to. determine a rate of profit, or the cost of operating a business. It amounted to tho same ■thing nB asking a draper to determine points in an ironmonger's business. ■ Mr. Justice Chapman: If tho task was imposed on the Magistrato, ft strengthens yn-Tf, /.Jisp'.

' Mr. Myerß stressed tie point that a business man was not supnosed to. rpII at n, loss. The arenraent had ignored the word "commercial." The rate of commercial profit could not be determined without taking into account commercial practices and 'customs relative to the sale of certain 1 articles. In''the Lower Oourt tho -Magistrate had ruled that the term "commercial" shuild' he definite, l'egulatinn or affecting diftercnt trades. Counsel 'submitted that the Act rccogniscd the existence of usages and customs, and that the "rate of-commcrein)"profit"' "an a "l'ltter of fact, not of lew, A point-of law rnitrM. li? ii\vnU-"rl in the one't'"" whether tbo M°irlptvetn was correi't in ,-|,i int/i i'nns'cWit'on.' lm( (lie . o n'!citoi , -ne»'" , nl had "that, the oniv facU were the anef-rtaiiimpiit of-the buying and. soiling flyices by tho prpaecutlon. No ovidenoo waa oallcd outsid# those two

point* by either the Board of Trade or the Anti-Profiteering Committee, no regard being given to oveihead expenses. The statute; ho suggested, authorised regulations to prohibit commercial practieco, usages, or ouftoms, and these practices undoubtedly a [foci ed the Belling prico as did the fixation cf triceß. Tho object of the Act was, not to ruin industry, but to maintain it. Section 13, authorised iuquirien on prices, etc., and 6ectioii 26 empowered the Government to make regulations affecting competition and prices, nnd the regulation and control of industries. It must have .been Itnown that fixation of prices existed, and that the practice was to pell foods on the basis of replacement value, and this adaption had become important,. <frlng to the present fluctuations of goods' prices, that normally would not fluotuate. Mr. Myers submitted that the case. then, was not appealable, and that, if it was. the construction that the 6olioitor-General bud placed upon snition 32 waa wrong; also that the Magistrate was correct in Baying that increased images. . etc., had to be considered as long as the commercial customs were Imown and fair. Ho considered, and would show that Brown and Bureau were licnost and honourable, and tho charges eticuld never have been laid. Letters dating from 1911 Bhowed t.bat thorn could be no suggestion of'anything having been "got up" for the occn»lon. Be. referred to the promise made by the Prlmo finlrtor that r.o jroeco'itimiß under tJ>" Board of Trade Act would be made until tho facts, of the case were placPd before the board. He contended that the board had never received dftail" 0 f the present case before, the rroseo-ition had taken place. Policy of Prices. Extracts from. lengthy letters included in evidence., iu. the Court below were read by Mr."Myers, l'ho Magistrate', said.counsel, had maintained that tho mca6uro of prices waß duo to tho economic condition coming as an aftermath of .the war. He did 'not think the. Act .was-intended to apply to cases i such 'as the ones under review. The policy of price arranged before the war by the manufacturers, and Brown and- Dureau, had never been changed, and as long ai possible the trader had to absorb part, r.f the lobh, until the tiine came that it was necessary to advance the price. The price-cutter waa not regarded as an honest trader. An alarm clock waß not a. "bread arid butter" line, and the margin cf profit resulting from the fixation of prices, was a fiir one. Hp admitted that there might have been somo two or three clocks of old, stock' which had to be sold at the fixed price. Mr. MacGregor:. The. cases, are, brought solely about the I'alance of'stock. That is where wa accuse profiteering, Mr. Myers said if the Solicitor-General's view of section 32 was . correct, t.hi> farmer, was the worßt profiteer of. ,tbo lot. He referred to the man who bought land twenty years i'go at' a low price, and his neighbour who bought the adjoining section at a big price—both farmers getting tho pamo for their' products. The Solicitor-General could not answer this point. ■ •;

At this stage the licarinE was adjourned until Tuesday morning.