Adelaide Steamship Company Limited v R (Cth) [1912] HCA 58

High Court of Australia|1912-07-01

THE ADELAIDE STEAMSHIP COMPANY | LIMITED AND OTHERS . raves DEFENDANTS,

HIS MAJESTY THE KING AND THE ATTORNEY-GENERAL OF THE; ReEsponDeENTs. COMMONWEALTH . ¢ . 's

Trusts and combines - Combination or agreement in restraint of trade - Monopoly H. C. oF Ac

of proof as to intent - Australian Industries Preservation Act 1906-1909 (No.9 = ~ -

of 1906 - No. 26 of 1909), secs. 4, 7, 154. SYDNEY, August 26,

In order to establish an offence under sec. 4 (1) (a) or sec. 7 of the 27,98, 29, 30; Australian Industries Preservation Act 1906 there must be proved, not only September 2, an intent to restrain trade or commerce or an intent to monopolize some part $1 42, 9:.) 9» of the trade or commerce with other countries or among the States, but also 16, 17,26.

Griffith C.J., 'The term "the public" in those sections is not limited to the consumers of giounor JJ.

any particular commodity, but includes olso the producers of that commodity.

'An agreement in restraint of trade is not necessarily detrimental to the public within the meaning of the Act, and,

'The intent contemplated by those sections to cause detriment to the public is a real intention and not a mere constructive intention imputed from an intent to restrain or monopolize trade.

'A mere combination of the producers of a commodity with the intention of raising the price of that commodity is not necessarily detrimental to the public.

It first provided for the appointment of a Board to carry on the affairs of the Association. Clause 9 provided that in order to supply the inter-State trade the Board should appoint a repre- sentative who should allocate to the particular collieries the pro- portions of such trade to be fulfilled by them respectively, and that the members of the Association should abide by such allot- ment, Clause 19 provided that the share of each of the original mem- bers in the aggregate trade of members in each year during the continuance of the agreement should be in accordance with a percental allotment stated, subject to a pro rata reduction or increase consequent upon the admission of other mines or the - cessation of membership of any member, or upon a strike or 4 lockout in any colliery. Clause 21 provided that the members" should not open up new mining shafts, pits or adits unless they were unable to maintain the allotted output with those then existing. Clause 22 provided that the Board should from time to _ time fix and determine the prices of sereened and unscreened and _ small coal the produce of the mines comprised in the agreement, - which were to be divided into four classes, A, B, C and D, so that the price of coal from mines of class B should be 9d. a ton less than that from mines of class A, and that the price of coal from mines of classes C and D should be fixed at lower prices to be - determined from time to time. 'The selling price of unscreened coal was to be in classes A, B and C, 1s. less, and in class D, 6d. _ less, than that of screened coal. 'The several mines were classified in a schedule. Clause 25 provided that members might nevertheless dispose of -

the coal from their respective collieries without restriction as to H.C. or A. quantity or manner, but that "as an inducement to the parties we whose trade fell off not to endeavour to increase it by underselling Apyrame or other act contrary to the spirit of this agreement" any party ST#4NSHIP Y "Co. Lav.

whose sale exceeded his allotted share should pay a contribution ae per ton at a rate set out into a common fund, from which fund Fes Tan,

parties whose trade was less than their allotted share should eee receive compensation at the same rate. The rate specified was tHE Com- not in fact observed, but was varied from time to time, the rate ashe

The draft contained other subsidiary provisions ancillary to its main purpose.

It is very important at this point to remember that the selling price to be declared was not limited to sales for inter-State trade, but was to apply equally to foreign and home trade, in both of which the element of very real and active competition was undoubtedly present. It was, therefore, clear that the Board would have no inducement to fix prices which would enable

_ competitors in the foreign trade or the home trade seriously to underbid them, and would not be likely to do so.

Although the agreement as drawn up was not to come into force until 1st January 1907, the terms of it seem to have been practically observed during the remainder of the year 1906. The selling price, i.e. for best coal, was taken at 9s.

The negotiations with the Shipping Companies continued, and were not finally concluded until September 1906, when a draft agreement in writing, in which the then members of the Vend, described as vendors, were expressed to be parties of the first part, persons to be afterwards named as vendors' trustees to be parties of the second part, the four appellant Companies together with the Melbourne Steamship Company Ltd., James Paterson & Co, and J. & A. Brown, described as "purchasing agents," to be parties of the third part, and other persons to be named as their trustees to be parties of the fourth part.

According to the terms of the draft the vendors agreed to sell to the purchasing agents the whole of the coal which might be required by them to supply the trade of the States of Victoria, South Australia, Western Australia and Queensland, which coal

H.C. or A. was to be purchased from all the collieries mentioned in the iss schedule (which is not in evidence), or from some of them, and Aprrare should be of the quality usually obtained from them. Srramsir 4 week before the beginning of each month the purchasing agents' representative was to intimate to the vendors' representa- tive the approximate quantities required for the ensuing month, Gowns), The vendors undertook as far as practicable to forward coal from tue Com- the particular colliery required, and failing that colliery from MONWEAT™™ another or others of the same class, but so that they should not be called upon to deliver coal from any colliery that had reached

its limit of output under any agreement existing between the -

collieries. The reference is, of course, to the Vend agreement, -

If, however, the purchasing agents had with the vendors' consent _

contracted for the supply of coal from a particular colliery it

was to be supplied accordingly unless conditions rendered it impossible.

The vendors agreed not to sell coal for consumption in the

States mentioned except to the purchasing agents or their

nominees, and they agreed to buy from the vendors all the coal -

which they might require for their inter-State trade, and not to

carry or deal in any other coal, but with a proviso that they

might buy from the Southern Collieries and resell 186,000 tons

per annum, to be increased or reduced in proportion as the total - inter-State export from New South Wales might exceed or fala

The purchasing agents agreed not to resell any of the coal

purchased from the vendors at higher prices than certain prices i;

specified as cif. prices, which varied with, but not in exact proportion to, f.0.b. prices, that is, the declared selling prices of

the Vend, with a proviso that such prices might be exceeded to

the extent of 3s. per ton in the case of coal bought to supply

small contracts not exceeding 10,000 tons in any one year, and

also to the extent of charges actually incurred by the purchasing

agents for lighterage, wharfage, railway freight, cartage, bagging,

If the purchasing agents violated these provisions they were to

account to the vendors for any excess "it being the intention of

this agreement to place the purchasing agents in the position of

agents only, but clothed with a liability for all coal ordered at the rates agreed upon, and that the difference between such rates and the prices on resale set out in clause 8 shall represent com- pensation for freight and remuneration to agents for work of realization, See Couaioapeieley gi clatentims cuclir|ts _ Provided that if the purchasing agents shall sell at prices in excess of the said maximum prices with the prior consent of the vendors in writing then the amount of such excess shall be divided equally between the vendors and the purchasing agents."

The term "purchasing agents" may be inaccurate, but it seems to be one in common use, and its actual signification is plain enough.

The schedule of c.i.f. prices appears to have been very carefully framed, different increases upon the f.o.b. prices being fixed according to the varying conditions applicable to the different ports of destination. We will take Melbonrne, to which much more than half of the coal was likely to go, as an illustration. The scheme was to fix as the maximum cif. price a rate which would enable the shipowners to share in the advantage of a rise in the

_ f.o.b. price of the coal. The hypothetical f.o.b. price varied from 7s. to 12s., which is probably accounted for by the original idea of making a seven years' agreement. If, for instance, the f.0.b. price was 9s., the permitted addition was 5s., if 10s., 5s. 3d., if 11s., 5s. 6d., and if 12s., 5s. 9d. The increase in the c.if. prices of coal for other ports varied to the same extent in each case.

The terms of the draft, although it was never signed, seem to have been substantially observed by the intended parties to it, although it does not appear that J. & A. Brown ever carried any but their own coal.

The charge made against all the defendants to the suit, includ- ing the appellants, is founded entirely on this agreement, which is alleged to be a contract or combination entered into with intent to restrain trade or commerce to the detriment of the public.

It was intimated from the Bench at a very early stage of the argument that the Vend agreement and the intention with which it was made were very material in determining the intent with which the agreement impeached was made.

_ If the Vend agreement was itself a lawful and even laudable

H.C. of A. transaction, it was also lawful to give effect to it by all legitimate

means, and, so far as the appellants are concerned, they cannot be Aprramr Convicted of an offence for agreeing to do so.

Seu eenTe The first contention put forward by the Crown was that the

shipping agreement is unlawful on its face, as disclosing an ° intent to restrain trade to the detriment of the public. This ar Fc ae ment was partly based upon the suggestion that under it b rae Com- the coal-owners and also the shipowners as coal merchants mig MONWEAMTE- exact unreasonable and exorbitant prices, and partly on the sug gestion that it tended to create a "monopoly" or to enable the creation of a monopoly, and that at common law all mono polies are regarded as necessarily detrimental to the public. -

We have found it difficult to apprehend the real attitude of the - Crown towards the Vend agreement. Many of the arguments - addressed to us by Mr. Wise and Mr. Starke would prove, if the prove anything, that that agreement was on the face of it unlawful agreement, being an agreement to do acts which are necessarily detrimental to the public. The statement of claim contained an allegation which is capable of being construed as charge of an unlawful combination constituted by the Vend agreement alone, and of another unlawful combination amongst - the appellant Companies alone. But the learned Judge has vee judgment for the defendants on these allegations. j

If the Vend agreement was unlawful, it is sufficient to dispose of the case, for the appellants, who knew of its nature, w doubtedly combined with the other defendants to give effect to it.

If, however, it was lawful, and the objects aimed at in it wei innocent, it is difficult primd fucie to see why the members of - the Vend should have combined with the shipowners for purpose of enabling the latter to injure the public without any - corresponding advantage to themselves. The criminal intent

charged must, of course, be a common intent, and we think that, Ee

in reason, the common intent must be taken to be to do some- - thing from which both parties would derive advantage. Pri facie the shipowners would derive no advantage from a mere rise in the fo.b. prices, for they would have to pay more for their coal. On the other hand, the colliery owners would derive no

advantage from a rise in the prices charged by the coal merchants to their customers, unless in certain exceptional cases with which we will afterwards deal. The common intent must be established against both parties to the combination.

First, then, as to the Vend agreement. We have already stated the facts as we find them to have existed when it was entered into. In our opinion it was, under the circumstances, a lawful and even laudable transaction, which was intended to operate and did operate to the advantage and not to the detri- ment of the public at large, notwithstanding that it was intended to operate and did operate to raise the price of coal.

It would be absurd to attribute to the members of the Vend purely altruistic motives, but a desire to promote a legitimate enterprise from which you desire to obtain pecuniary advantage is not incompatible with an absence of desire to injure the public.

When a man enters into an agreement which can be carried out by lawful as well as by unlawful means the Court will assume primd facie that he intended to do so by lawful means. This has been many times laid down by this Court.

In our opinion the fair inference to be drawn from the tenor of the Vend agreement itself is that the intention of the parties was to put the Newcastle coal trade on a satisfactory basis, which would enable them to pay adequate wages to their men and to sell their coal at a price remunerative to themselves, having regard to the capital and risk involved in the enterprise. It may also, we think, be fairly inferred that they intended to ask as high a price as they could get in the market without running the risk of being underbid by other competitors in Australia or abroad and so losing the trade. This is not, in our opinion, an intention to cause detriment to the public.

So far as we can see, all the terms of the agreement were reasonably necessary for securing this perfectly lawful object.

We turn now to the shipping agreement. There is nothing in the evidence to show what were the terms of the arrangement (if any) between the shipowners amongst themselves as to the division of the trade between them, or as to the prices (within the agreed limits) which they might individually ask from their immediate customers, except. that it appears that on some occa-

H. C. or A. sions two or more of them joined in tenders for the supply of

wah, large quantities of coal with deliveries extending over lon

Avrrae periods. We have already referred to an allegation in the statement o claim which was capable of being construed as meaning that the

Tur Kine |). ' ey p axp Taz Shipowners entered into an unlawful combination amongst them-

ArroRNEY- 2 fl 'i : ve 4nd Gunotar ov Selves, and on which, so construed, the learned Judge gave jud;

tHE Com- ment for the defendants. eens, AWE pause for a moment to consider the position of the Vend at _ that time, starting with the assumption that the Vend agreement was a lawful one which might be carried into effect by any legitimate means. The members of the Vend enjoyed a large share of the inter-State trade in coal, but did not deal directly with consumers in the other States, the business of coal mer. chants in those States, so far as regards Newcastle coal, being in fact substantially carried on by the shipowners and the Browns, The Vend desired, of course, to maintain their existing trade and : to extend it on terms advantageous to themselves, and also t have the advantage of being able to command the services of thi shipowners' ships for the carriage of any coal they might sell for the inter-State trade. We do not know of any rule of right : cognizable by a Court of Justice under which they could be blamed for such a desire. They also desired to be able to obtain in that trade such prices for their coal f.o.b. as might be fixed under the Vend agreement. Under these circumstances if the - shipowners, who actually had in their hands the substantial part - of the business of coal merchants, were to be free to buy from other coal-owners in New South Wales, such as, eg.. the Wallsend - Colliery or the Southern or Western Collieries, at lower rates ; than those fixed by the Vend, and to carry the coal so bought, the - object of the Vend agreement might be frustrated in whole or part. If, on the other hand, the coal merchants who bought from the Vend were to ask for the coal prices so high that other collieries could underbid them, the interests of the members of the Vend might be seriously affected. We approach, then, the shipping agreement with these facts ' before us, and, putting ourselves as far as we can in the place of the parties, we ask ourselyes - Was the agreement in question on -

the face of it made with intent to cause detriment to the public or with intent to create a monopoly to the like detriment ?

On the face of the written draft it is a bargain by which a lawful association of coal owners agree to conduct a portion of their trade through the exclusive medium of certain shipowners, who are also in fact the principal coal merchants engaged in the trade, and who agree on their part not to buy from any other coal owners. The intention apparent on the face of the draft is to secure for the " Vendors" a continuance of a convenient and tolerably certain outlet for their coal in the inter-State market, and also to secure that the continuance of that outlet shall not be endangered by their vendees demanding such high prices for their coal as to create a risk of their being underbid by other com- petitors. There is nothing on the face of the agreement itself to show that the additions to the f.o.b. prices allowed by the agree- ment to be made on resale were unreasonable. This is, indeed conceded.

It was suggested, indeed, that the fixing of maximum prices to be asked on resale was a mere blind, and that these prices were intended to be a minimum as well asa maximum. It was also suggested that this view is supported by the provision that the shipowners should account to the Vend for any excess price demanded and received, and for a division of the excess in the event of sales at larger prices by mutual consent.

The plain and obvious meaning of the first of these provisions is that it was a sanction for the stipulation that the maximum prices should not be exceeded, so that the coal merchants should have no inducement to exceed them, while the plain and obvious intention of the second was to provide for unforseen cases, analo- gous to strikes.

We decline to draw the inference that these provisions indicate a sinister intention.

An agreement between a single producer of commodities and another person to sell all his products to the latter on the terms that the latter shall not deal in any other products of a like kind is not prima facie to the detriment of the public. It does not necessarily become any more detrimental if, instead of one pro- ducer, several producers join in agreeing to sell to him alone, nor

~~ ADELAIDE SreamMsHip Co. Lrp. v Tue Kine AND THE ATTORNEY- GENERAL or THE Com- MONWEALTH.

if, instead of agreeing to sell to one person only, the agreement to sell to a group of purchasers - see Mogul Steamship Co, y, McGregor, Gow & Co. (1). Evidence of detriment to the public must therefore be looked for elsewhere, and a fortiori evidence of intention to cause such detriment. Whatever may be the efi of the Statute now in question, it did not in our opinion ma it unlawful for a trader or group of traders to push his or th trade by all fair means, or to desire to keep up and even to the prices to be obtained for his or their commodities.

For these reasons we come to the conclusion that the ship agreement does not on its face disclose an intention either to restrict trade to the detriment of the public or to monopolize the inter-State trade in Newcastle coal to the like detriment. terms do not appear to us to be obviously unreasonable as reg the interests of the parties themselves, or obviously or probably likely to affect injuriously the interests of the public. It is not therefore in our judgment unlawful on its face.

Whether the powers conferred by it could be exercised in such a manner as to cause public detriment is at this stage unimpo tant, since an actual intention to cause such detriment must shown. We cannot (as seems at one time to have been done England) infer an intention to do evil from a mere power to do so.

The intention may of course be shown aliwnde. If the powers conferred were in fact exercised to the detriment of the public it would not be an unreasonable inference that they were intended to be so used. It may be also that, if the actual effect of the agreement was to cause such detriment, a like intent may 1 inferred. But here it is necessary to distinguish. In order that the actual effect may be invoked for this purpose, it is, we think, necessary to show that such effect was one which may reasonably 5 be imputed to the parties as contemplated by them when the agreement was made. An injurious effect causing inconvenience or loss to the parties themselves as well as to members of the public stands on a very different footing from an effect beneficial only to the parties themselves, and cannot reasonably be thought | to have been contemplated. -

We proceed then to consider whether an intention to caus

detriment to the public should be inferred from the acts of the defendants consequent upon the agreement.

The detriment primarily relied upon by the Crown is what is

'called an "unreasonable" increase in the price of coal in the

inter-State market; and the suggested intent is an intent to obtain arbitrary and unreasonable prices for coal for the benefit of both the Vend and the ship owners. The term "arbitrary" is a mere epithet and means nothing. Every fixation of price by a seller is in one sense arbitrary. The term "unreasonable" is the only one with which we need concern ourselves. The term "yeasonable," which is of common use in many branches of the law, always connotes a consideration of all the circumstances of the case, time, place, subject matter, persons concerned, their relations to one another and a thousand other matters. When applied to price it connotes a regard for both producer worker and consumer. We have already called attention to the recog- nition of this fact in sec. 4 (1) (b) of the Act. A producer is not required by our law to limit himself to such a price as will barely recoup his actual outlay, but may ask for something more by way of reward. It cannot be doubted that it is for the public benefit, perhaps especially in a new country, that the persons who engage in new enterprises should be encouraged by the hope of larger profits than those who confine themselves to the older grooves. Under ordinary circumstances the selling price of a commodity is governed by what is commonly called the law of supply and demand, so that if a seller asks too much he will not be able to sell, and if a buyer offers too little he will not get what he wants. At the same time it must be recognized that in the case of necessary commodities a seller having a complete or practically complete control of supply may be able to extort exorbitant or unreasonable prices, i.e., prices beyond all reason, which, as we understand the term, means prices such as to shock the ordinary sense of fair play.

In considering then whether a price asked is unreasonable in the relevant sense of the term, regard must be had to all these matters. Attempts to do otherwise and to fix prices at an arbitrary rate, having regard only to the consumer, are not unknown in history. An instructive instance of such an attempt

H.C. or A. is narrated in Ch. 28 of J Promessi Sposi, when the price 1912. grain and flour was fixed (in 1629) by the Government of Mil Apetare at a low rate to the great joy of the consumers. The results Sreamsurr disastrous, being, as Manzoni says, the inevitable consequence o

Co. Lr. > oe wey v. the first mistake, " which fixed for bread a price so far awa

pec pmo from the price which would have resulted from the real conditi

IDENT: of things." Similar attempts with similar results were made ENERAL OF F

the Vend for coal f.o.b. for the year 1907 and following yea were in fact unreasonable and exorbitant, from which we a asked to infer detriment to the public, and also a common intent to cause such detriment. The production of coal is an enterprise which involves unde actual conditions the provision of capital, sometimes to a large amount, and considerable delay before obtaining a return. Pe sons who engage in such an enterprise are entitled to look for a reasonable return by way of profit for the use of their capi The price at which they sell must therefore cover not only the cost of work but interest. Allowance should also be made to cover the risk of fluctuations of trade, as well as to provide for the development of the mines and an eventual recoupment of | capital after the exhaustion of wasting property. Similarly, shipowners may reasonably expect something more than the bare cost of running their ships, and coal merchants may expect something by way of profit upon their trading operations after defraying their actual cost. What then is the standard of unreasonableness ? Producers are not under the present law regarded as trustees _ for consumers. Yet this notion seems to have underlain a good deal of the argument addressed to us. Price is a resultant of many variable forces, of which wages constitute one, but only one, element. To take one of these variables, as found existing at one time, as the sole basis of what is a reasonable price at a future time is obviously wrong and misleading. Yet in this case we have been asked to assume that all the variables except the cost of extraction of coal remained -

stationary, although no evidence was offered on the point, and H.C. or A.

the assumption is notoriously contrary to the fact.

In the Mogul Company's Case (1) Lord Watson said:- - "I apsrame

cannot for a moment suppose that it is the proper function of * English Courts of Law to fix the lowest prices at which traders

can sell or hire, for the purpose of protecting or extending their 4yp Tar

business, without committing a legal wrong which will subject

them to damages." In this case, however, the Court is asked to 118 Com-

perform the somewhat analogous task of saying what is the highest price at which coal could be sold without causing detri- ment to the public, with the result that if its ew post facto opinion should differ from that of the sellers they are liable to heavy penalties.

The argument on which the Court is asked to infer that the fob. prices fixed by the Vend after 1906 were unreasonable appears, when carefully examined, to be based on the following assumptions : -

(1) The price at which a commodity sells in any year is primé facie a price actually remunerative to the producer :

(2) That price is primd facie a reasonably remunerative price, ie. affords a remuneration with which the producer ought to be contented :

(4) All conditions affecting prices are to be taken as remaining stationary until the contrary is shown.

(5) Any rise of prices is primd facie detrimental to the public.

Tn onr opinion none of these assumptions is well founded. As to the first it is obvious that many circumstances must be taken into consideration before you can say that any particular year affords a fair basis of comparison, and as to the second that many industries are in fact carried on under conditions which afford a bare subsistence to the persons engaged in them, both employers and employees, and with which neither party is or ought to be contented. As to the third, it has been already pointed out that the term " unreasonable" price does not mean a price larger than a particular price which is not unreasonable, but means a price exceeding the limit of prices which are reasonable. The fourth

H.C. or A. assumption is contrary to notorious facts. With the fifth we 1912. have already dealt. The whole basis of the argument therefore Avetae fails. Srsamsmr The learned Judge took as his basis for ascertaining a Co. Lev. ae . 3 v. able price f.o.b. the conditions existing at and immediately befo pen 'The the formation of the Vend, and came to the conclusion that ee is 1907 a price of 9s. 1d. per ton would have been extremely profit "rae Com. able, and in the succeeding year 9s. 8d. equally so. From this he woxwrale™® inferred that the prices fixed by the Vend were unreasonable. It is worth while, apart from the fallacies which we hay pointed out, to call attention to the actual facts as disclosed by the evidence. At the end of 1906 the Vend fixed the selling price for 1907 at 10s. per ton f.0.b. This entailed a consequent addition of 4d. to the hewing rate, which was then notoriously inadequate. At the end of 1907 they fixed the selling price for 1908 at lls, and afterwards fixed the same price for 1909 and following years. When in 1907 they fixed the price at 11s. for 1908, the miners - struck, demanding, amongst other things, that the price should be raised to 12s. on the ground that the 4s, 2d. hewing rate, attribu- table to an 11s. rate, was insufficient. The Vend, however, | adhered to the 11s. rate. It is admitted on all hands that 4s. 2d. was then and afterwards the lowest hewing rate that coul fairly be fixed having regard to the interests of the miners. Mr. Wheeler, the principal witness for the Crown, admitted that with a 4s, 2d. hewing rate he could not afford to sell coal f.0.b. at a less price than 11s. i: Moreover, it appears that during 190$ and 1909 the declared - price, and sometimes more, was obtained in the foreign market, subject, in some cases, to an allowance of a customary commission - of 24 per cent. Under these circumstances it seems strange to contend the rate of 11s. was fixed with intent to cause public detriment. We find as a fact that the f.o.b. prices of 10s. a ton fixed for 1907 and 11s. a ton fixed for 1908 and afterwards are not only P not shown to have been unreasonable rates, but are shown affirm atively to have been reasonable. No inference of intent to cause _ public detriment can therefore be inferred from them. The next point made is that the prices at which coal was sold

by the ship owners as coal merchants were in fact unreasonable and exorbitant, from which we are asked to infer detriment to the public and an intent to cause it. This argument is based upon the same foundation as that with regard to the f.o.b. price. The prices obtained in a particular year (1906) are taken as the basis, and it is sought to be inferred that any increase in them in subsequent years is primd facie unfair and unreasonable and necessarily detrimental to the public. We have already said that we cannot find anything on the face of the shipping agreement itself to show that the specified prices cif., were unreasonable. It is not in our opinion unfair that the merchants who pay a higher price for coal should ask on re-sale a price higher than a sum representing the exact equivalent of the increase in cost price. Nor can we see any reason to suppose that the cost of sea carriage remained stationary for several years. We all know that not only the wages but the conditions of seafaring men have been greatly improved of late as the result of benignant legislation. We decline to affect to believe that these changes did not affect the outlay of the coal merchants. Again we decline to assume that the cost of conducting the retail trade at Melbourne, Adelaide

_ and other ports remained stationary. We cannot shut our eyes

to the fact that wages have of late progressively risen all over Australia. We think that the coal merchants are entitled to some remuneration in respect of their outlay and trouble expended in respect, for instance, of such matters as the establish- ment and maintenance of coal yards and the payment of the wages of salesmen, clerks and workmen, ordinary trade risks, and retail profit. The sum of three shillings per ton was specified in the shipping agreement as the maximum sum to be charged to cover these and other contingencies in the case of what were called small contracts. It is conceded that it is not on its face unreasonable, and we can find no basis for holding that it was unreasonable in fact. It was not always exacted, and it does not appear that it was ever exceeded except, perhaps, but not

. certainly, in a few cases of sales of small quantities of coal

which, as Mr. Starke very properly conceded, could not affect our conclusions. In this ease, therefore, as well as that of the f.o.b. prices we

Tue Kine AND THE ATTORNEY: GENERAL OF THE Com- MONWEALTH.

H.C.or A. find no foundation in the evidence for the conclusion that the 1912. prices asked and received by the coal merchants were unreason- -

Paaene The foundation of the argument being gone, all the super- - y. | structure so elaborately raised upon it falls with it.

The burden of proof is on the Crown, and we cannot assent to the argument that the burden is shifted by merely showing an

Generator 8 A tHE Com- increase of prices. : 'tu Gace Apart from this conclusion, which is one of fact, there is the further obstacle, to which we have already adverted, that, even if E the coal merchants intended to sell at unreasonable prices, it cannot reasonably be imputed to the other members of the combination - that there was a common intent to cause such a result, a result from which they would not derive any benefit. And we have already pointed out that the intent to cause detriment to the -

public contemplated by the Act is an intent common to all the -

The next point made was that detriment to the publie was caused in some instances by short delivery of coal or non-supply of a particular kind of coal desired by a customer. There is, in fact, no evidence that any actual detriment followed from any such causes, though there was in some instances fear of it. It is contended that this alleged detriment was a natural consequ- - ence of the combination. As a matter of fact it appeared that - the alleged (apprehended) short delivery arose partly from a mis- - calculation by the coal merchants of the quantities of coal - required, and their consequent failure to give sufficiently early notice to the Vend, and partly from an unusual congestion of ships at the port of Newcastle. It may be conceded that some : such difficulties were not unlikely to arise under the Vend agree- ment, having regard to the possible error of human foresight, and to the probabilities that the demand of customers for coal from a _ particular mine might exceed its allotted output. But all this - must stand or fall with the Vend agreement itself, and is in no . way dependent upon the shipping agreement.

Moreover, it would be absurd to suppose that the parties when - they entered into the shipping agreement intended that the coal -

merchants should disappoint their customers and break their agreements with them.

The only other instance of actual detriment relied upon was inconvenience, and possibly pecuniary loss, sustained by the Broken Hill Proprietary Company by reason of the short supply of what is called " Roasting Coal" under a contract entered into by a firm called Scott Fell & Co. in 1906. The actual facts are that this contract was entered into a few days before the begin- ning of the negotiations for the formation of the Vend. By it Scott Fell agreed to supply coal from particular mines without having previously arranged to buy it from them. The owners of one of the mines had indeed already refused to supply him. It is impossible to trace any connection of cause and effect between this breach of contract by Scott Fell and the shipping agreement. The Broken Hill Company, however, did not hold him to his bargain, but agreed to accept other coal. Apart altogether from the particular case, owners of a commodity are not bound to supply it to a person who has, without first buying it from them, entered into a contract to sell it to another person with whom they prefer to deal directly.

With regard to the argument that the natural effect of the arrangement impeached was to exclude competitors in the inter- State trade in Newcastle coal, and, therefore, necessarily tended to create a monopoly, two answers may be made. The first is that already given, viz., that an agreement to create a monopoly is not unlawful under the Act unless it is made with intent to cause detriment to the public. The other depends upon the facts. The suggestion is that this alleged monopoly has in fact kept the price of coal unreasonably high. We have already given reasons for thinking that this is not proved. No doubt the shipping companies retained what they already had, ie. the substantial control of the inter-State trade in Newcastle coal.

It is manifest that the only way in which they could exclude competition was by selling at such prices that it would not pay anyone else to sell at a lower rate. The Vend never included all the owners of mines at Newcastle. The Newcastle Wallsend Mine, with its great output, would of itself be a formidable com- petitor, to say nothing of the Southern and Western Mines, and

ADELAIDE STEAMSHIP Co. Lrp.Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH.

H.C. or A. other mines that might be opened in the Newcastle and Maitland a

ADELAIDE SrEAMSHIP Co, Lrp. v THE anp TH ATTORNEY- GENERAL OF THE Com- MONWEALTH.

districts, It is absurd to ask us to believe that sufficient steam tonnage could not be readily obtained in Australia to carry the

coal of all possible competitors. Probably the immediate effect of -

such competition would be to lower the prices asked by those in

possession of the trade, if only to drive out the intruders, and a

combination for such a purpose might or might not be unlawful. But, if it was, it would be as a combination to lower prices. A combination to drive out competition by reducing prices is one thing, a combination to keep out non-existing competition by asking excessive prices is quite another. Indeed, the mere state- ment of such a combination sounds anomalous.

The only other point with which it is necessary to deal is the argument based upon sec. 15a of the Act, which provides that in prosecutions under the Act the averments of the prosecutor con- tained in the claim shall be deemed to be proved in the absence of proof to the contrary, but so that an averment of intent shall not be sufficient to prove such intent.

We express no opinion on the point taken by Mr. Mitchell that such a provision, read literally, is an attempted interference with the judicial power of the Commonwealth, by seeking to impose upon the Courts the duty of passing sentence without trial. Assuming that objection to be out of the way, we think that the term "avyerment " must be confined to pure allegations of fact, and does not include an allegation of a conclusion of mixed law and fact. It is settled law that the question whether an agree- ment in restraint of trade is unenforceable on the ground of being unreasonable is a question of law. The question whether a price is unreasonable for the purpose of the inquiry in which we are engaged would seem to be a mixed question of law and fact. In such a connection the mere allegation that a price is unreasonable

is no more conclusive than a mere allegation that an act is -

fraudulent, to which, as has often been said, no Court will pay any attention. The word "arbitrary" is open to the same comment.

But, in any view of the matter, we are of opinion that the section has no application when the prosecutor elects to put the actual facts of the case before the Court.

We are, therefore, bound to decide the case upon the evidence, H. C. or A. and upon that evidence we are of opinion that the Crown has a failed to proye any intent on the part of the appellants to cause aperare detriment to the public. This disposes of the case as regards aaa penalties. °.

We are also of opinion that the Crown has failed to prove any re ee actual detriment to the public. This disposes of the claim to an ATTO#N?Y-

The result is that the appeal must be allowed, and judgment belie = entered for the appellant defendants with costs, and with the

Appeal allowed. Judgment for the appellant defendants with costs. Respondents to pay the costs of the appeal.

Solicitors, for the appellants, Malleson, Stewart, Stawell & Nankivell, Melbourne, by Macnamara & Smith. Solicitor, for the respondents, C. Powers, Commonwealth Crown Solicitor. Bai.

At a glance

Court

Decision date

Source

Judgment (148 paragraphs)

Cited By (1)