MAGISTRATE'S RULING UPHELD

Dominion, Volume 14, Issue 18, 16 October 1920, Page 7

MAGISTRATE'S RULING UPHELD

CHRISTCHURCH ALARM CLOCK CASES

APPEAL BY CROWN DISMISSED

JUDGMENT OP FULL COURT

Tho Full Court has dismissed the appeal against- the judgment of Mr. S. E. M'Carthy, S.M, in the alleged profiteer- ( ing cases recently heard at Christcliiireh. The appellant Wns George Hart Christie, ' secretary of the Prices Investigation Tribunal, Christchurch. The charges which _ were made against the firms, and disimissed by the Magistrate, were based on the sale of alarm clocks at an allegedly ;' nigh price,. -and related to the following firms:—Hastie, Bull, and Pickering, Ltd., E. Reece, Ltd:, A. J. White/Ltd. (Sir John Findlny, K;C.)j Mason, Strutters, and Co., Ltd., and G W. Drayton and

'.'..C0., Ltd. (Mr. C. P. Skerrett, K.C.), all 'of ■'Christchurch.; and Brown and Duncan, . . Ltd, (Mr. M, Myers), of Wellington. The ' Solicitor-General (Mr W. C. MacGregor) represented the Crown, ■ . Judgment of the Full Court, consisting of Their Honours Mr. Justice Edwards, Mr. Justice Chapman, and Mr. Justice . Hordman, was delivered yesterday by Mr. .. Justice Edwards.. \ ... Inter alia, the judgment states: • _.- "There is no need to consider what r .' were the. respective firms' respective aver,'age gross profits or expenses on turn-..,.-,over or, cost,-or what their" average diyi.','.(lends on capital were (luring a' series .. of years-, or what amount had been car. -i.'ried to reserve. The case-each company has. made out .is .that,it was bound to • sell at certain fixed .prices, and a ma- . ferial 'question for consideration is ■ ' whether, Having, bought whilst the clocks were cheaper in price, they ought net ' to have sold to' the public at prices corresponding fo the prices at which thoy 'had respectively bought. One must not • overlook the fact that some of the firms charged with selling tho decks are whole- ■■.-■' salers as well ns retailers. These firms ■ buy at -the rate 'for wholesalers find i then, selling, retail, wero bound under the agreements to. charge the general public the respective' retail i'ntes fixed ' from time to time. It was proved that, npart from the' Board of Trade Act, 191!), it had,'been the general and uniform practice in the -.mercantile world for dealer* carrying on both, branches of trade to charge the usual retail price to the general public,„buying'on a retail' basis, notwithstanding the dealers had bought as wholesalers and not as retailers. It was also proved that when there is an advance or decline in prices,,sales nro effected at the rates in force at the time of sale. This practice is known as selling at replacement values, and is general and uniform, and is considered sound-and honourable business practice We shall find ihat both these practices are reasonable" ■ ' Tho judgment outlines the first four subsections of section 32 of the Board of Trade Act, 1919, under which the prosecution was made and, the Bench said that "in determining -the question before us, we-have therefore to consider not merely the. words of this Act of " Parliament, but the interest of the Lcgis : "hture, to lie collected from the cause -and necessity, of the Act'being made, from a comparison of its several parts. " and from foreign (meaning extraneous) circumstances, so far as they can justly be considered to throw light upon the subject."-- . ,_*',: t. There was ho prior law affecting the questions involved in the case except section 21 of the War Legislation and Statute Laws Amendment Act, 1918, which was not the subject cf any judicial .decision, and was< repealed by the Bnnrd of Trade Act. The. judgment con- -, (ihiied:;.."As''to',.the third ."matter, the reiredy which Parliament has resolved and appointed is that it has been made an offence to charge .prices which produce mors than a fair and reasonable rate of 'commercial profit' to the person selling or supplying the goods. By tho .-.• uso of tho words 'commercial profit' it • ' appears to us that the Legislature did not intend to disturb established cus- • toms or usages cf trade It did intend to prevent the abnormal conditions following the war from being used by to ders for their own aggrandisement. In ■a word, it intended to prevent what is , now known as profiteering. .The cus- • toms and usages of trade havo been reached by experience which has shown them to be most to the advantage of tho . public, otherwise competition would bring them to an end."

Meaning of "Commercial Profit," • The judgment further slates: "If under the customs and usages of trade a higher percentage of profit- has- been charged in respect'of some commodities than in re- . spect of others, it does not appear to us that the continuance of that practice is an. offence under the. statute: 'Comnier- ■ cial profit' must mean, with respect lo each nrcticle, such profit as was considered fair and reasonable by-reputable traders before the abnormal conditions resulting from the war arose, or such further profit as may be found by reputable- traders to be fairly necessary in a free market. To put Another meaning upon the words would be to leave it to each Magistrate to say-what, in his opinion, would be 'a fair and reasonable rato of commercial profit,' and would involve the whole question in inextricable , doubt and difficulty. Obviously no Magistrate, and no Judge, could determine such a. question -unaided by evidence. ...... The legislature considered it to bo necessary to make special provision ' to prevent the abnormal conditions fol-< lowing the war being nsed'bv traders as the means of aggrandising themselves at the expense of the public. In our opinion it was not intended' to go further than this: and any attempt to do so could no>. really benefit the public" Proprietary Goods. ' -"The alarm clocks in question in the pri-sent proceeding are proprietary goods " continues the judgment. 'That. is to . say, they are the gcods of a particular . manufacturing company (in this case an American company), and aVosold under a special name recognised 'in commerce. Ihc manufacturers have fixed not merely the prices at which they will sell the goods to traders, but the prices at whichthose traders must sell to the public. J ins is a well-known commercial usa"e common in many trades, and the Solici-tor-treneral does jiot dispute its validity. But the prices fixed by tho manufacturers to be paid to them for their goods and. at which they may be resold by purchasers from them may be, and liavo been, varied from time to time, and always with an upward tendency. It seems tli.it after the prices had been raised, the respondents had in their stcck a certain number of these clocks purchased by them when the fixed prices were lower. The established usage of the trade is that in such case the traders who sell (o the public must sell at the increased prito ruling at the time.of the re-sale. ' This, the Solicitor-General claims to be an offence against tho Act. The trader must, ho contends, sell at tho lower price fixed when he purchased tho.goods from the manufacturers. This construction of the Act would lead to the most extraordinary results. For example, n trader who had upon his shelves say a dozen of theso clocks which he had purchased when the fixed retail price was 20 shillings-, and others which he had purchased when the fixed retail price was 25 shillings, must soil those first purchased at five shillings less ihan those which lie had purchased at the higher price, although (he intrinsic value of both clocks was actually identical. Jf he did not do so, ho would be liable to a fino not exceeding .£2OO, or imprisonment for a term not exceeding three months. If he did so, -the manufacturers would not supply him with any more clocks, and his trade in that article would bo gone .... In charging the increased price to his customer tho finder is doing an act which is strictly necessary for the, preservation of his business. This is not profiteering." "To hold that such'a. course of business is unlawful would ineroly result in the 1 exclusion from New Zealand of proprietary goods) sold tho manufacturers, under ..such conditions. This certainly would not benefit the public The. more traders there are in! any class of goods tb.9 moro Jiioly. it ia that goods pf that

class will be purchasable at reasonable prices. It is by no moans clear that the prices fixed by the manufacturers of tho B'.g Ben alarm decks are unreasonable." A Specific Case, "Take the case of the trader who had purchased goods for ,£IOOO and could only resell at a price based upon that cost; although the value .in a free market hud risen to JiloOO. The persons who purchased from that trader .would obtain their goods under the market value. But, as the market value is fixed by tho public demand for tho goods, it necessarily follows that the great body of tho public must be purchasers at the higher price Those- only would benefit, at tho expense of the trader who had purchased before tho price rose. These persons must necessarily be merely an insignificant portion of the public." "An objection made by counsel for the respondents that an appeal does not lio to this Court from the decision of tho Magistrate on the grounds that the Magistrate's decision was as io facts, nnd that no appeal lies to Ibis Court in such case at tho instance of (lie informant, is really answered by the conclusions which we have arrived at. Those conclusions are based upon points of law arising on the construction of Statute. There can therefore lie no doubt that this Court lins jurisdiction to enttiiain tho appeals." Upon the grounds given each of the appeals was dismissed.