Ape ee a "i Ar om Cons ka Sat — VR y Meats] Re pacsey VA Siclaide > an Ae ite, fay EM oe fee Sel eg" 14C.L.R.] OF AUSTRALIA. 387 THE KING AND THE ATTORNEY-GENERAL THE ASSOCIATED NORTHERN COLLIERIES {HIGH COURT OF AUSTRALIA.} PLAINTIFFS ; OF THE COMMONWEALTH } AND DEFENDANTS. AND OTHERS } Trusts and monopolies—Inter-State trade—Contract in restraint of—Combination H. C. or A. in restraint of—Detriment to public—Monopoly—Proof of conspiracy or 1911. combination—Penalties—Injunction—Australian Industries Preservation =$ —— Act 1906-1910 (No. 9 of 1906), (No. 29 of 1910), secs. 4, 7, 9, 10, 14a, 4c, S¥DNEY, l4p. April 13, 18- 21, 24.98; (4). Comox Law Rures or Evivence. At common Jaw and apart from any statutory provisions— June 7-9, ee (1) Acts of one defendant, however numerous and however pointedly 16, 19-21, 2 in furtherance of a prohibited purpose, are not admissible in evidence as 30; gaas a RS) overt acts of offence against a co-defendant charged with conspiring at 24.2 with the first, unless the two defendants are shown to be associated for August 7- 12, that purpose, so as to make the purpose common to both. He AB oa 23: (2) Community of purpose may be proved by independent facts, but December 20, not necessarily so. If the other defendant is shown to be committing other acts tending to the same end, then though primarily each set of | teaace J. acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that such separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a com- bination to effect the one object towards which the separate acts are found to converge. (3) An unlawful conspiracy may be inferred from the conduct of the parties, and if several men are seen taking several steps, all tending H.C. or A. 1911. eS Tue Kine AND THE ATTORNEY- GENERAL oF THE Com- MONWEALTH v AssocraTrD NorTHERN Coxrrertigs, HIGH COURT 1911. towards one obvious purpose, and they are seen through a continued por- tion of time taking steps that lead to one end, it is for the jury to say whether those persons had not combined together to bring about that end which their conduct appears so obviously adapted to effectuate. (4) Once the combination and its purposes are proved, the acts of any party to it in furtherance of those purposes are attributable to all, as being within the scope and in execution of their common agreement. No act which is not done in furtherance of the common purpose comes within that principle of admissibility. (z.) Statutory RutEs or EviDENcE. Sees. 14c and 14p of the Australian Industries Preservation Act 1906- 1910 which make certain minutes, records, hooks, letters, documents, ete., evidence against defendants in proceedings for an offence against Part II. of the Act are procedure provisions and are applicable to the trial of proceedings instituted before the passing of those sections by the legislature in 1910. 'The sections referred to do not create any new liability or lessen am old one. They leave the rights and liabilities of the parties exactly where they were ; but they lay down rules respecting the mode of proof at the trial. The said sections apply to offences originally created under Part II. - of the Principal Act of 1906 although material alterations with respect to such offences are made by the Act of 1910, and the sections apply as to the proof to be given as to such original offences as well as to the new offences created by the Act of 1910. Sembie, that sec. 15a of the Act which provides that in any proceeding for an offence against Part IT. of the Act, any indictment, etc., shall suffice if the offence is set forth as nearly as may be in the words of the Act is valid. Sec. 15a is a stringent provision casting the initial burden of proof upon the defendants in certain cases, but nothing more. It still leaves it to the judicial tribunal to determine on recognized principles the issue of guilt or innocence having regard to any evidence that may be adduced. It is not applicable where the affirmative evidence covers the whole ground. (c). Distryction BETWEEN Contract AND COMBINATION. 'The offence under sec. 4 of the Act of making or entering into a con- tract in relation to trade or commerce with other countries or among the Scates with intent to restrain trade or commerce to the detriment of the public is complete at the moment the contract is formed. The offence, however, under the same section, of being or continuing to be a member of or engaging in any combination for a cimilar purpose continues so long as the combination exists. The combination may be the pure result 14C.L.R.J OF AUSTRALIA. of the contract, or may exist without any contract at all, or may originate in a contract and afterwards seriously depart from its terms and take on new or modified purpose or method of action sanctioned by the conduct or acquiescence of the parties. Queere, whether see. 14 p does anything more than formulate a rule of common law leaving the effect of the document made evidence there- H. C. or A. 1911. —— Tae Kine AND THE ATTORNEY- GENERAL OF THE Com- under, when admitted, exactly what it would be apart from the Statute. MONWEALTH (p). Invent. The intent necessary for the commission of an offence under sec. 4 must be real and not merely imputed. It must be the actual intent of the defendant, and not that which might, without regard to the true condition of his mind, be deduced simply from the construction of his words used perhaps for another purpose. It is not the intent expressed in a contract to restrain trade or commerce to the detriment of the public to which the defendant is alleged to be a party—if such contract be the act complained of—but the actual intent of the defendant, of which the contract may, however, be evidence. To ascertain the defendant's intent, the Court may go behind the contract altogether, and in cases where the defendant's alleged connection with a combination to so restrain trade or commerce is complained of the Court may, by every lawful kind of testimony, search out the true state of the defendant's mind. Such intent, in the absence of direct evidence given by the defend- ant, may be proved from his declarations or conduet. (e). Test or OrrENce. It is the duty of the Court under see. 4 to enquire by a course as direct as circumstances will permit as to whether a contraet in restraint of trade is to the detriment of the public and not to substitute an enquiry as to whether the contract is unreasonable as between the parties as an equiva- lent test of legality. The aim of the Statute is to protect the public at large and to give the publie the power to prevent injury to the body politie by individual members of the community, and not to protect private individuals from unreasonable contracts into which they have voluntarily entered and which they may lawfully decline to fulfil or from equally unreasonable combinations from which they can at any moment retire without legislative or judicial assistance. (r). Test or REASONABLENESS. 'The reasonableness essential at common law to the validity of a con- tract, which is in fact in restraint of trade, is reasonableness as regards both the private interests of the parties and the interests to the public outside those private interests, but affected by their individual arrange- ments. If unreasonable towards the party bound, the contract is void ; but, even if not so, yet if it results in a pernicious monopoly, which is unreasonable toward the public, it is equally void, unless the objectionable part is severable from the rest. e. ASSOCIATED NorrHern COLLIERIES H.C. or A.<a THe Kiva AND THE ATTORNEY- GENERAL or THE Com- MONWEALTHE vw AssOcIATED Norrmern Cortrerres. (c). Pusric Derrrment. "Detriment to the public" consists in whatever is to its loss or dis- advantage or prejudice or puts it in a worse position, eg., a higher price, 'a worse quality, a restriction in choice, a more precarious supply or delay in delivery of a commodity or commodities. The question of detriment under the Act must not be determined upon any narrow grounds. The mere fact that prices are raised, though prim@ facie a detriment, is by no means conclusive, and may be shown by other circumstances not to be so. Prices may he reduced so low as to work injury to Australian industries by unfair competition and a combination to restore to a fair level prices that had been reduced to a dangerous limit would not for that reason be regarded as contravening the law. The real substantial effect upon the public must be considered. That which appears at first sight and standing alone to be a prejudice may when considered in conjunction with other circumstances prove to be the means, and the only means, of ultimate and lasting benefit. An apparent advantage may, when properly examined, be seen to be merely temporary and the prelude to severe public loss. Competition un- restrained may drive fair-minded and useful servants of the public off the field, bringing disorganization of labour in its train, and leaving the community at the mercy of those who risk a passing concession for @ permanent control. 'The Court, having regard to such considerations, must look beyond the surface and investigate causes and effects ; it must regard not merely one or more isolated incidents, but the combined circumstances of the situation so far as they are ascertainable before it can pronounce whether upon the whole detriment has arisen, or is likely to arise, and whether the intention to which the law attaches culpability was present in the minds of those charged with contravention. 'The various parts of the contract or combination when considered separately may be lawful; but the scheme when examined as a whole may be found unlawful. The public may justly be called upon to pay for a commodity whatever price is necessary to provide an adequate remuneration to both employer and employé; but where the employés wages are justifiably increased, the employer is not justified, when raising the price, in adding to such increase of wages a further bonus for himself at the expense of the public, where he is already receiving not only a fair, but a good profit, and a custom to partition the sale price of the commodity between the employer and employé is no excuse for the employer demanding such extra bonus for himself from the public. No rigid standard can be adopted by the Court in determining what is a reasonable price ; but, having regard to all the circumstances, it is q HIGH COURT fell. 14 C.L.R.] OF AUSTRALIA. 391 the function of the Court to guard the community from the artificial H.C. or A. maleficence of combination or monopoly. Profit is one practical con- '1911. sideration in the calculation of a reasonable price, but is not the sole or | —— governing test. The nature and extent of the competition, actual and T#= Krxe ores : ; A AND THE possible, in the business are also material factors in the problem. AmrvomeEe- GENERAL OF (1). Monoroty. Tam COM: ; z __,. MONWEALTA The Act does not strike at monopoly of production, but at monopolisa- 2 tion of trade and commerce. ASSOCIATED NortHern So long as a trader increases his business by legitimate means and in CoLtrerrEs. the ordinary course of business, even although he may attract the whole of the trade in any particular direction, he does not offend against the law of monopoly contained in sec. 7 of the Act. When, however, he forsakes his quality of competitor and sets himself to stifle or strike down effective competition, which stands as a commercial protection between himself and the community at large, so as to substantially gather into his own hands the power of dictating the terms upon which the public needs may be satisfied, he does, within the meaning of the section, monopo- lise or attempt to monopolise. 'The mere fact of his allowing some other people to come into the arrangement does not take the transaction out of sec. 7. The prevention or destruction of all reasonable and effective competi- tion—the natural commercial safeguard of the public—is at the root of the conception of monopoly within the meaning of the Statute. (1). Pewauttes. Under secs. 4 and 7 of the Act as originally enacted one penalty only is enforceable against each defendant for a continuing offence. Each defendant convicted of a joint offence under the Act is also liable to a separate penalty. (3). Frsprxas anv Jupesenr. Held, first, that inasmuch as the affirmative evidence covered the whole ground of complaint, sec. 16 (a) was unnecessary and was not to be applied, and then on the facts so affirmatively appearing, held that the defendants had made and entered into a contract and were and continued to be members of and were engaged in a combination with intent to restrain the inter-State trade and commerce in Newcastle coal to the detriment of the public and that they had also monopolised and combined or con- spired to monopolise the said trade with intent to restrain to the detri- ment of the public the supply and price of the said comméility within the provisions of sees. 4 and 7 of the Act and that the defendants had aided and abetted one another under sec. 9 in the commission of the said offences and penalties inflicted on the individual defendants and an injunction granted against the further carrying out of the unlawful contract or combination. H.C. or A. 1911. Tae King AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw. ASSOCIATED Norraern CoLLIERIES. HIGH COURT (911. | Synopsis To JUDGMENT. PAGE Parties and Nature of Action . m . 396 Common Law Principles of Evidence as to Combination . Pe) Statutory Provisions as to Evidence 5 402 Validity of Sec. 15 (a) Z 3 - 404 Section 15 (a) not Applied where Affirmative Hividense' OSverntnm Whole Ground. : ° =i * + 405 Membership of Colliery Group of Detenfianta'® és : + 405 Membership of Shipping Group of Defendants 411 Distinction Between Contract and Combination " . 413 Defendants' Silence as to Existence of Contract * 413 Contract Charged Originally Made in 1906 and Continued to > End of 1907, 5 : ' eae Contract Renewed in 1908, 1909 and 1910. Z + 434 History, Formation and Objects of Coal Vend é = . 434 Beginning of Combination Charged =. . . : = Concealment by Defendants of Fact of Combination . 3 - 442 Replies to Scott Fell & Co.'s Requests for Coal 4 ~ 442 Combined Objects of Defendants to exclude Scott Fell & Co. from Competition : : ¢ : - ~ 4S Defendants' Reasons for Secrecy : : : . 449 Combination Continued to end of 1909 : * . - 450 Combination Continued 1910 . 5 A " . 453 Connexion of Melbourne Steamship Co. and James panes & Co. with Charges : ' : i 'i . 458 Position of J. & A. Brown » « * . . - 469 Law astoIntent =. - ; 3 2 - 460 Law as to Contracts in Restraint of Trade e < " ~ 462 Law as to Detriment to the Public. 2 . - 470 Various Classes of Detriment Relied on by ere 2 . 416 Facts Relating to Detriment as to Price é i 2 aears Intention and Effect of Provision for Mutual Exclusion of Outside Competition 482 Increased Prices to the Publie Mekie Gamaed oy Shipping cae panies after Defendants' Combined Agreement - 487 Effect of Non-production of Further Contracts and Dealings ne Defend- ants = . . r . ott OF Primé Paci Efiect of Peceeieaaeay B ' 508 Defendants' Suggestion of Prior Ruinous Gaaneer ea sl rscontl a for Advanced Prices, Ete. E 5 ' ore SUL Provision in Vend Agreement for Penalties aa Compensation . 524 Funds of Vend and Inference Therefrom b 2 + 529 Defendants' Suggestion as to Foreign Trade Prices for Vendicsaiaeg Justification = 6 = ¥ +7 829 Defendants' Suggestion as ¢a Adlvance in Mineo? eapsaeitss @oaae ane 14 C.L.R.) OF AUSTRALIA. Defendants' Suggestion as to Recoupment for Past Losses as Justifica- tion Conduct of Defendants indicating f.o.b, Priee for 1907 Gas High 3 Further Increase of f.o. afk, Price in 1908 Agreement of November 19, 1909 General Conclusions as to pre-Vend Price s Effect of Combination on Prices in Australia by Excluding Competiti- tion Responsibility of Shipping @anits for eaeriitaio of Vend Prices Shipping Companies' Additional Excessive Charges and Advantages Pre-Combination Freights Early Combination Freights : Inferences from Shipping Defendants' eran Lane's Testimony as to Freights Cant's Testimony as to Freights 'Some of Defendants' Freight Calculations Contrast Between Shipping Companies' Business ond that of Kethel & Co. g 7 4 . er eee eto Dita) candi ctiovialendl: Cox férencoe as to Yardage Difficulties of Delivery Difficulties of Supply Arising ieaen arconiumendh Question of Fair Freight if Yardage were Allowed 'Summary of Shipping Companies' Allowable Deductions for Gaaat Expenses 'Crosby's Guarantee to Kethel & Co. : Excessive Prices Charged by Shipping Companies 'Total Yearly Over-Charges 9 'How Fer Pre-Combination Prices are a Guide 'Conclusions as to Publie Detriment with Respect to Prices Public Detriment from Restriction upon Choice of Coal Public Detriment Arising from Shortage of Supply x Shipping Companies' Admissions of Public Injury from Short Eerie Vend's Own Recognition of Injury from Shortage Public Detriment Arising from Inferiority of Coal Other Coals Potentially Competitive New South Wales Railways Prevented from Getting ieee salted Coal Short Summary of Detriment Already Dealt With Public Detriment from Arbitrary Discrimination of Prices Intent Inferrable from Probable Results Intent Inferrable from Actual Effects Intent Inferrable from Pre-Combination Conduct: Intent Inferrable from Conduct during Combination as— (a) Victorian Railways Contract 1906. PAGE 539541 548556561562567573 H. C. or A. 1911. ~~ 'THe Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTIC w. ASSOCIATED NortTHERN COLLTERIES. H.C. of A. 1911. aS Tue Kina AND THE ATTORNEY- GENERAL oF THE Com- MONWEALTH ». AssocIaTEeD Nortuern Cortrertss. HIGH COURT f1911. PAGE (6). New Zealand Business : " - 635 (c). South Australian Railway Contract 1908 ' - 636 (d). Vend Complicity in Haynes' Articles 4 J Pa: (e). Form of Sydney Contracts = < . + 640 (/). Repression of Kethel & Co. * Z - 641 (g). Suggestion in Correspondence as to Mristéaeda Expenses . 645 (h). Sham Tenders : J - 646 (i). Conduet Towards Non- Vand ColliertaaS ak J - 648 Law as to Monopoly ; ' z : : . 650 Actual Intent to Monopolise . E ' : i - 6Bk Effect of Defendants' Silence . a 5 i E - 655 Formal Findings on Statement of Claim " ee , . 656 Decision on Findings . a 3 5 3 é - 660 Injunction. , s 7 5 i 6 - 666 TRIAL of action. An action was brought in the High Court by His Majesty the King and the Attorney-General of the Commonwealth against the Associated Northern Collieries, which was an association of a number of companies and individuals carrying on the business of colliery proprietors in the Newcastle and Maitland districts of New South Wales ; those companies and individuals ; certain individuals who were the representatives of those companies on the board of members of the Associated Northern Collieries; four companies carrying on the business of shipowners ; the Associated Steamship Companies being an association composed of those four companies ; and the four managing directors of those four companies. By the statement of claim the plaintifis claimed :— (1) A declaration that the defendants and each and every of them had been guilty of each and every or some of certain specified offences against Part II. of the Australian Industries Preservation Act 1906-1909, and that they and each of them should be convicted thereof. (2) An order that each and every of the defendants, for each and every of such offences of which he or they respectively might be convicted, should pay a penalty of £500, or such other penalty as to the Court might seem proper. (3) An injunction restraining the defendants and each and every 14 C.L.R.] OF AUSTRALIA 395 of them and their servants and agents from repeating or continuing H. ©. or A- such offences or any of them. pea = (4) A declaration that the defendants and each and every of them, Tue Kina after the commencement of the Australian Industries Preservation ,\™b Onn. Act 1906, had made and entered into a contract or contracts, which Sela oar were specified, which was or were in restraint of trade and com- monweatrH merce among the States to the detriment of the public, and had Wegrers ; a ' NortHERN since carried out and were then carrying out such contract or Gotrierims- contracts. (5) A declaration that the defendants and each and every of them, after the commencement of the Australian Industries Preserva- tion Act 1906, formed and entered into and engaged in a combina- tion or combinations, which were specified, which was or were in restraint of trade and commerce among the States to the detriment of the public, and had since carried out and were then carrying out such combination or combinations. (6) An injunction restraining the defendants and each and every of them from carrying out the contract or contracts and com- bination or combinations referred to in the last two preceding paragraphs. H (7) Such other declarations, orders and injunctions as might be necessary or proper. The defences of all the defendants were, so far as is material, a general denial of the facts alleged in the statement of claim. The facts are fully stated in the judgment hereunder. The action came on for hearing before Isaacs J. Wise K.C., Shand K.C., Starke and Bavin, for the plaintiffs. Knor K.C., Lamb K.C., and H. Milner Stephen, for the defendants the Associated Northern Collieries, the colliery proprietors and their representatives on the board of members of the Associated Northern Collieries. Mitchell K.C., Broomfield, and Ham, for the defendants the com- panies carrying on the business of shipowners and their managing directors. 396 HIGH COURT pou. H.C.orA. J. L.. Campbell K.C. and Blacket, for the defendants J. & A. Brown 1911. —_ and John Brown. Tne Kine ~ Cur. adv. vult. AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH = Parties AND Nature oF Action. eee This action has been instituted by the King and the Attorney- Coutrentes. General of the Commonwealth against forty defendants of whom sixteen are individuals, twenty-two are ordinary corporations, and two are named as commercial trusts within the meaning of the Australian Industries Preservation Act 1906-9. The action is brought for various alleged violations of that Statute between 24th September 1996, when it commenced, up to 4th June 1910 when the writ was issued. The defendants consist of two main groups, colliery defendants and shipping defendants. The first group comprises substan- tially all the proprietors of coal mines in the Newcastle and Mait- land districts of New South Wales, together with persons who are directors or otherwise are charged as having taken an active and representative part in the transactions which are said to involve the corporations. The Associated Northern Collieries is the concrete body formed by the Association of the colliery proprietors. The defendants in this group besides the Associated Northern Collieries, are :—Corporations : Abermain Colliery Company Limited, Aus- tralian Agricultural Company, Caledonian Coal Company Limited, Central Greta Colliery Limited, Dudley Coal Company Limited, East Greta Coal Mining Company Limited, Heddon Greta Coal Company Limited, Hetton Coal Company Limited, Lymington Collieries Limited, Newcastle Coal Mining Company Limited, New Lambton Land and Coal Company Limited, Pacific Coal Company Limited, Scottish Australian Mining Company Limited, Seaham Colliery Company Limited, South Greta Colliery No Liability, Stockton Borehole Collieries Limited, Wickham and Bullock Island Coal Company Limited and William Laidley & Company Limited. Individuals: J. & A. Brown, Isaac Chapman, Henry Frederick Chilcott, Frederick R. Croft, George Frederick Earp, Henry Skinner Isaacs J. read the following judgment :— 14 C.L.R.] OF AUSTRALIA. Forsyth, Frederick Livingston Learmonth, Leslie Herbert Lewing- ton, Frederick William Newman, James Ruttley, Francis Sneddon and Daniel Sneddon. The second group, besides what is called the Associated Steam- ship Companies, comprises four shipping companies and their respective managing directors. These are: Adelaide Steamship Company Limited and Edward Northcote its managing director, Howard Smith Company Limited and Charles Morton Newman its managing director, Huddart Parker & Company Limited and William Thomas Appleton its managing director, and McIlwraith McEacharn & Company Pro- prietary Limited and David Hunter its managing director. The charges laid against all the defendants conjunctively number nearly thirty, and each set of defendants namely, colliery pro- prietors, shipping companies and the individuals are separately charged with aiding and abetting. The multiplicity of charges arises from the endeavour to exhibit the facts so as to satisfy the varied language of the statutory descrip- tion of offences, and for the present I shall not do more than state in general terms the nature and substance of what is alleged as contraventions of the Act. Sec. 4 provides that: "Any person, who, either as principal or agent, makes or enters into any contract, or is or continues to be a member of, or engages in any combination in relation to trade or commerce with other countries or among the States (a) with intent to restrain trade or commerce to the detriment of the public is guilty of an offence." Sec. 7 is in these terms: "Any person, who, monopolizes or attempts to monopolize, or combines or conspires with any other person to monopolize, any part of the trade or commerce with other countries or among the States, with intent to control, to the detri- ment of the public, the supply or price of any service, merchandise, or commodity is guilty of an offence 5 sad Sec. 9 provides: '' Whoever aids, abets, counsels, or procures, or by act or omission, is in any way, directly or indirectly, know- ingly concerned in or privy to (a) the commission of any offence H. C. or A. 1911. —— Tue Kixe AND THE ATTORNEY- GENERAL oF v AssOcraTED NortHERN CoLireries, H.C. oF A. 1911. <7 Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NortHern COLLIERIES. HIGH COURT [1911. against this Part of this Act . . . . . shall be deemed to have committed the offence." Now, broadly speaking, the allegations against the defendants amount to this: First that very shortly after the Act came into operation a complete express contract was entered into between the collieries owners of the first part, and the shipowners of the second part, in relation to Inter-State trade and commerce in Newcastle and Maitland coal, that this contract was renewed and continued to exist and operate with some intermediate modifications down to the commencement of this action, and was then still in force, and that it was entered into and at all events was renewed with intent to restrain that trade and commerce to the detriment of the public. In other words the contract itself is relied on as constituting an offence against sec. 4. Next, it is said that there existed during the period mentioned a combination between the two sets of proprietors—coal and ship- ping—created by the conduct of the parties, that conduct consisting of concerted business action carried on upon certain recognised lines Jaid down probably by some contract in the nature of that already referred to, or, if not, then by some understanding or practice of a similar tendency and effect and that during the greater part of that period two other shipping firms, not defendants, were added to the combination, the Melbourne Steamship Co. and James Paterson & Co. This combination, it is averred, was maintained with the like intent to restrain the Inter-State trade and com- merce in Newcastle and Maitland coal to the detriment of the public. The defendants concerned are said to come within the ambit of sec. 4 as to combinations—in three different ways—inasmuch as each of them was, and continued to be, and was engaged in the combination. Next, it is charged that the business conduct of the defendants and their established relations with each other amounted to monopolizing or attempting to monopolize, and to a combination and conspiracy to monopolize the trade and commerce in Newcastle and Maitland coal, with intent to control to the detriment of the public the supply and price of the coal. 14C.LB.] OF AUSTRALIA, 399 And lastly as to those who might be considered as merely assist- H.C. oF A. ing others to effect the prohibited acts, it is charged that they come gb ~ within the provisions of sec. 9 as aiding, abetting, counselling or Tue Kiva procuring and are therefore to be deemed to have committed the ecu) we GENERAL OF principal offences. reid , pee The detriment to the public which is alleged to have arisen wonweavrn and to have been intended, as a result of the matters complained Associarep fi F " eer . NoRTHERN of, consists in the practical and persistent annihilation of competi- orients. tion on land and sea, excessive, arbitrary and capricious prices charged to consumers, restriction of their opportunities of choice, difficulties in obtaining particular classes or grade of coal desired, substitution really compulsory of other coal for coal preferred, and delays in obtaining delivery. The defence is in effect a denial of all that is charged by the plaintifis. An objection raised on the ground of the Statute of Limitations (31 Eliz. c. 5) has not been persisted in, and need not be considered. The trial lasted seventy-three days, and besides its duration, was exceptional in its character, partaking necessarily to a great extent of the nature of an investigation. All the defendants named were represented, except three col- liery defendants, namely, the South Greta Colliery No Liability, Central Greta Colliery Limited and Lymington Collieries Limited, the action being discontinued as against them, and except one ship- ping defendant, namely, the Associated Steamship Companies. Common Law PrinciPtes of EvIDENCE AS TO COMBINATION. It is proper before entering upon a discussion of the facts to state some legal principles by which I am guided with respect to the evidence on the subject of combination. The first is a common law principle. In support of the case as to combination, evidence was in many instances given and admitted which primarily and taken by itself affected only one or some of the defendants, and then the Crown tendered it or argued or assumed its admissibility as against the other defendants, relying on the ordinary practice and tules relating to common law cases of conspiracy. Authorities were cited and arguments advanced on both sides, the discussion of which H.C. oF A. 1911. sas Tne Kine AND THE ArroRNEY- GENERAL oF THE Com- MONWEALTH v AssociaTED NorTHERN COLLIERIES. HIGH COURT (1911. will be found in the official record of the proceedings. I shall here merely state the rule which in my opinion is the law applicable to this question. Two things must be carefully kept distinct, viz., the fact of com- bination, and acts done in pursuance of the combination. There is a tendency to confuse the two, because in many instances acts of individual defendants may be regarded as evidence of the first as well as of the second. But it is an error to say that acts of one defendant, however numerous, and however pointedly in furtherance of the prohibited purpose, are necessarily admissible as overt acts of offence against a co-defendant charged with conspiring with the first. They are not so admissible unless the two defendants are shown to be associ- ated for that purpose, so as to make the purpose common to both. Community of purpose may be proved by independent facts, but it need not be. If the other defendant is shown to be commit- ting other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, char- acter, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge. For instance, the Crown relies upon the contract alleged, as both an independent ground of offence, and as evidence of the com- bination. In the latter aspect, if it be established, sthen separate acts of the several defendants in furtherance of those purposes of the con- tract which are part of the common plan may affect the liability of the other parties to the contract; but if it be not established then those separate acts may have first to be examined in order to deter- mine whether they indicate or form a combination, before the acts of one person can be allowed to affect another. Then I wish to say a few words with regard to the manner in which I propose to regard these separate acts as bearing on the ; 14 C.L.R.] OF AUSTRALIA. 401 common purpose. The Judges in advising the House of Lords in H. ©. or A. Mudeahy v. The Queen (1), say :—" And so far as proof goes, con- —_1®11- spiracy, as Grose J. said in R. v. Bussac (2), is generally 'matter Tur Kiva . i ear «AND THE of inference deduced from certain criminal acts of the parties .W ny. accused, done in pursuance of an apparent crimiaal purpose i or THE Com- common between them.' The number and the compact give weight, monweavrr and cause danger." Both the passage quoted and the added Magn asian words are valuable guides here. as eee: I quote as apposite to the present circumstances, and as expres- sing my opinion on arguments addressed to the Court, a passage from Russell on Crimes, 7th ed., vol. 1., p. 191. "The evidence in support of an indictment for a conspiracy is generally circumstantial ; and it is not necessary to prove any direct concert, or even any meeting of the conspirators, as the actual fact of conspiracy may be collected from the collateral circumstances of the case. Although the common design is the root of the charge it is not necessary to prove that the defendants came together, and actually agreed in terms to have the common design, and to pursue it by common means, and so to carry it into execution, for in many cases of the most clearly established conspiracies there are no means of proving any such thing. If, therefore, two persons pursue by their acts the same object, often by the same means, one performing one part of an act, and the other another part of the same act, so as to complete it, with a view to the attainment of a common object they are pursuing, the jury are free to infer that they have been engaged in a conspiracy to effect that object. It is not necessary to prove the existence of a conspiracy before giving in evi- dence of the acts of the alleged conspirators, and isolated acts may be proved as steps by which the conspiracy itself may be established. In RB. v. Duffield (3), Erle J. directed the jury that it does not hap- pen once in a thousand times when the offence of conspiracy is tried that anybody comes before the jury to say that he was present at the time when the parties did conspire together, and when they agreed to carry out their unlawful purposes; that species of evidence is hardly ever to be adduced before a jury ; but the unlawful con- (1) LR. 8 HLL., 306, at p. 317. (2) 4 East, 171. (8) 5 Cox, 404. VOL. XIV. 26 402 HIGH COURT iet H.C. or A. spiracy is to be inferred from the conduct of the parties; and ; 1911. several men are seen taking several steps, all tending towards Tne Kixe obvious purpose, and they are seen through a continued portion of D THE ORNEY- pallets whether those persons had not combined together to bring al monwearrH that end, which their conduct entre so obviously adapted v. ' Assocrarep effectuate." ORTHERN Coutreis, Once the combination and its purposes are proved, the acts time taking steps that lead to one end, it is for the jury to say GE any party to it in furtherance of those purposes are attributable to all, as being within the scope and in execution of their common agreement. And no act which is not done in furtherance of the common purpose comes within that principle of admissibility. a case of R. v. Blake (1), exemplifies this point. Srarurory Provisions as To EvipENcE. The next is a statutory matter, and I repeat what I definitely stated toward the close of the argument namely, that, after consul- tation with the learned Chief Justice, I hold that secs. 14 (c) and 4 (d) of the Act are procedure provisions and as such are applicable — to this case, notwithstanding the fact that the action was instituted before those sections were enacted. They do not create any new liability or lessen an old one, they leave the rights and liabilities of the parties exactly where they : were, but they lay down rules respecting the mode of proof at the trial. - This is undoubtedly procedure. See Lord Halsbury's Laws of England, vol. xu., p. 419, par. 581, and the Colonial Sugar Rejin- ing Co. v. Irving (2). Those sections then are not to be rejected for retrospectivity. Then it was said they are expressly made _to apply only to a proceeding for "an offence ayainst this part of the Act " that is Part II. of the Act; and as the Act of 1910, in which they are found, altered secs. 4 and 7 of the Principal Act by materi- ally modifying the description of the offence, the old offences with which the defendants are charged were not any longer offences against Part II. of the Act. I can only say, if they are not, tl i are no offences at all. They are not, and never were, offences (1) 6Q.B., 126. - (2) (1906) A.C., 360, 14 C.L.R.] OF AUSTRALIA. 403 against any other Act or Part of an Act; and, if they were imme- H. C. or A. diately before the 1910 Act offences against Part IT. of the Principal _!®1!- Act, the mere fact that subsequent conduct may be more stringently Tue Kina visited does not destroy the character of the former conduct or ,*\P ou ArToRNEY- efface the fact that an offence against Part II. of the Act had ee been committed. po SER v. SOCIATED RTHERN SOLLIERTES. It is quite true that if no statutory provision were made for punishment, a difficulty might arise, but that is met by sec. 8 of the Acts Interpretation Act (No. 2 of 1901). The legislature there- fore intended that offences already committed against Part II. should remain offences against that Part; that, for the future, certain conduct not previously amounting to an offence against that Part should be such an offence; that an offence against that Part, whether committed before or after the new Act, should be proceeded for; that when any such offence came to be tried, a further rule of evidence should prevail; and, to make it quite clear that no dis- crimination in this respect was to be made between the old offence and the new, the later procedure rule was inserted as part of the old Statute. No satisfactory reason can be imagined why a simpler method of proof introduced, as we must assume, because Parliament thought it conduced to the elucidation of truth and the effectuation of justice, should be excluded where the case is more difficult to prove and apply only where the means of proof are comparatively light. The argument may be further tested by having regard to sec. 14 (a) which provides that in " any proceeding for an offence against this Part of this Act" the process shall suffice if the offence is set forth as nearly as may be in the words of this Act. If then the day after the Act was passed a document was drawn describing in the terms permitted by that section an offence committed a week before, could it be maintained that the process was not protected ? I should say clearly not, and, if not, the same result must flow from 14 (c) and 14 (d). The fallacy of the defendants' position really is that it assumes "any proceeding for an offence against this Part" means "any proceeding for a future offence, &c." whereas, being procedure, it applies to any such offence whether committed before or after 25th November 1910 for which a proceeding is on foot. H.C. op A. 1911. ——- Tue Kixe AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v ASSOCIATED NortHERN CoLtieries. HIGH COURT (911. These sections are consequently applicable to this case. The Crown however has contended that its case has been proved by ordinary common law methods, and without the necessity of resort to those sections at all, and has strenuously pressed that view upon me. I have accordingly considered the facts, first altogether independ- ently of those sections, and next with their aid, and will state the — conclusions to which the separate methods of approach have led me. Vauipiry oF Sec. 15 (a). I have not acted upon sec. 15 (a) at all, and will shortly state my reasons. So far as its validity is concerned, though not finding it necessary to decide, or to invite the Full Court to decide the question, it is desirable to state that I do not abstain from acting upon it, from any present doubt as to its constitutionality. It is a stringent provision casting the initial burden of proof upon the defendants in certain cases, but as I read the section that is all. It still leaves it to the judicial tribunal to determine on recognised prin- ciples the issue of guilt or innocence upon any evidence that may be adduced. Indeed I am acting in the present instance upon the basis of that interpretation, by disregarding the provisions of the section altogether. Similar enactments have been held valid in America as for instance by Marshall C.J., in the case of " The Thomas and Henry in v. U.S. (1), and by Gray C.J., in Holmes v. Hunt (2), where a number of authorities are collected. See also Li Sing v. United States (3), citing with approval Holmes vy. Hunt (4) and applying the rule of competency to a very strongly worded section; and again Ah low v. U.S. (5), see also Craies on Statutory Law, 2nd ed., p. 471, and Cooley's Constitutional Limitations, 6th ed., p. 452. My experience in this case has convinced me that justice might often be frustrated in the absence of such a provision to meet « condition of affairs where it was morally certain that, at least, a prima facie contravention of the Statute had occurred, but had been (1) 1 Brock., 367, No. 13919 Fed. (8) 180 U.S., 486. Cas., vol. 23, at p. 990. (4) 122 U.S. (2) 123 Mass., 505, at p. 519. (5) 193 U.S, 14. C.L.R.} OF AUSTRALIA. so carefully masked that tangible proof of a strict character was unavailable. Section 15 (a) Nor APPLIED WHERE AFFIRMATIVE EvIDENCE Covers THE WHOLE GRouND. Two considerations however appeal to me in this connection. The first is, that the section itself applies the presumption only in the absence of proof to the contrary and it is immaterial by ~ whom that contrary proof is supplied. The plaintiff may fur- nish it in his own case, and the defendants contend that has happened here. The other is, that once there is actual affirmative evidence covering the whole ground it is, to say the least, more satisfactory to the Court to deal with the case irrespectively of any presumptions which might otherwise be necessary to start it. I find that the evidence before me, to whatever conclusions it may justly lead, whether upon the whole it establishes the guilt or manifests the innocence of the defendants, does in effect cover the entire ground of complaint and therefore I concern myself only with the facts as they have been proved directly or by inference, and not with the statutory presumptions arising under sec. 15 (a) which accordingly I lay aside as unnecessary. Mempersuip of Cotiiery Group or DEFENDANTS. I proceed now to examine the facts. Whether we regard the con- tract or the combination as the cause of the offence, the primary step is to ascertain the constituent membership of the two groups who form the respective parties. As to the colliery group—the body styled the Associated Nor- thern Collieries is avowedly an entity; it has appeared, its exist- ence has been acknowledged, and its ownership of minute books and its employment of a secretary formally admitted by all the defend- ants. As to its membership, I should have thought no time would have been wasted over that. And yet an extraordinary position exists with reference to this apparently simple matter. The minute books, admittedly the property of the Association—or Vend as it is usually termed—disclose the names of its members; those names correspond—with perhaps some immaterial exceptions—with the H. C. or A. 1911. Tue Kine AND THE ATTORNEY- GENE or Ti 'oM- MONWEALTH SOCIATED ORTHERN LLTERIES. H.C. or A. 1911. w~ Tue Kine AND TH ATTORNEY: GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NortHern CorrierrEs. HIGH COURT (on. names of the defendant colliery owners, it is not suggested that any error has arisen in the repeated references to its members, the same learned counsel appear for the Vend and its alleged members—except . J. & A. Brown—and yet from beginning to end the defendants have contested the colliery owners' membership of the Association, and raised objections of the most technical character, necessitating the wasteful consumption of hours and days in argument and the laborious piecing together of detached fragments of evidence in order to meet the requirements of technical proof as to this elemental fact. : T have, of course, to be careful to see that even the most technical tules are satisfied, and to refuse to be judicially convinced of any contested fact that is not so established. But I feel bound to say a that the defendants' attitude in persistently denying the Vend mem- bership, and in insisting that the Crown ata great cost of time, money and energy, should pursue with necessary minuteness the multitude of documents and circumstances requisite to connect the various colliery owners with that Association admits of no reason- able excuse. The Crown, however, has succeeded in connecting all the colliery defendants with the Vend. With regard to some of the defend- ants, the evidence is voluminous, as to others it is less abundant, but as to all it is clear and unmistakeable, and, as none of them has given a syllable of evidence in negation, there is not the least doubt that every one of them was a member or the active representative of a member of the Vend. The Vend minutes begin 5th January 1906 and immediately before the first page of the minutes are seventeen names corres- ponding to seventeen of the colliery defendants. Other defendants appear later on in the records of the Vend. But, as was argued, and I agree with the argument as a legal proposition, the mere fact that these names appear in the minute book and correspond with defendants' names is not at common law any evidence against the defendants. In the list there are other names, including the Walls- end Coal Company, its named representative being John Wheeler. Mr. Wheeler related the genesis of the Association. At present I refer only to his testimony in relationship to membership. He said, at the first meeting of the proprietors there were present Mr. Lear U4 CLR.] OF AUSTRALIA. - 407 month, Mr. Brown, Mr. Keightly (since dead), and one or two others, H- ©. oF A- and at a later meeting there were pretty well all the colliery pro- ee prietors. Coming to particulars, he named specifically as present at Tue Kixe meetings, Mr. Learmonth of the Australian Agricultural Co., Mr. Pes, Brown of J. & A. Brown, Mr. Chilcott of the Scottish Australian @PNPRAE OF THE Com- Mining Company, Mr. Keightley of the Newcastle Company, Mr. Moyweaton Chapman of the Seaham Company, the Caledonian Company by Assootax=p various representatives, including Mr. Newman, the Pacific Com- jem LA pany and the Co-operative Company by their representatives, the East Greta Company by Mr. Earp, the Wickham Company—he thought about 30 companies in all. He recollected Mr. Simpson, the representative of the Pacific Company and afterwards one of the Vend's solicitors, producing at a meeting about the end of March 1906 a document similar to Ex. 8. which was printed and that it was discussed as the proposed Vend agreement. Reference to that Exhibit shows that 16 of the defendants are named as members. The minutes of 30th March (Ex. F., p. 37) contain the actual signatures to a resolution of ten of the defendants, seven being coal proprietors, and three being representatives. On April 24th 1906 a written agreement was entered into with reference to the tenders called by the South Australian Government Railways, and it recited the contemplated formation of the Associated Northern Collieries. By this agreement a number of collieries—twelve of which are defendants—guarantee some of their number in respect of the supply of coal under those tenders at prices determined. The agreement has importance in another direction, but its materiality now is as to the parties and signatures. By October 1906 the As- sociation had been formed, and in that month a regular account in the name of the Associated Northern Collieries was opened with the Union Bank of Australia at Newcastle where Mr. Ford was maneger. He produced a copy of that account extending from October 19th ' 1906 to 25th April 1911 and various authorities in connection with it. These are Exhibit C. An authority dated 31st October 1906 is signed by Learmonth, Keightly, John Brown, Chapman and Forsyth, all of whom are described as the Committee of Management, and by Lewington as Secretary. Another document appended dated 13th March 1907 was on letter paper with printed heading " Associ- H.C. or A. 1911. Tue King AND THE ATTORNEY- GENERAL or THE Com- MONWEALTH v. AssocraTeD NorrHern CoLLieries. HIGH COURT isl. ated Northern Collieries," and signed by Learmonth as Chairman, sending forward the signature of the Secretary, A. R. Cant. Another document is attached, dated 16th December 1909 signed by Lear- month as Chairman, and forwarding Lewington's signature. A large number of vouchers for debits and credits in connection with the banking account are contained in Exhibit E. Everyone of the colliery defendants—except Chilcott, Earp, Newman, and Stockton Borehole Company—is brought into direct connection with the Associated Northern Collieries by means of the very practical test of receipts or payments or both evidenced by these decuments, and the bank account of which they are the vouchers. The Aber- main Company paid moneys to the Association twice in 1906, six times in 1907, and once in 1908. The Australian Agricultural Com- pany paid twice in 1906, ten times in 1907 and once in 1908, and received moneys from the Association three times in 1907, three times in 1908, twice in 1909, six times in 1910, one of those occasions being before the date of the writ, and the others evidencing intention to continue, and once in 1911. Brown paid to the Association twice in 1906, nine times in 1907, once in 1908, once in 1909 and twice in 1910, once before and once after the writ, and received once in 1907. The Caledonian Company paid once in 1906, ten or eleven times in 1907, once or twice in 1908, once in 1909 and twice in 1910, once before and once after the writ, and received three times in 1907, once or twice in 1910 after writ and once in 1911. Chapman was a member of the Committee of Management and as such signed cheques. Croft paid once in 1906, eight times in 1907, twice in 1908, and once in 1909, and received once in 1910 after the writ. The Dudiey Colliery Company paid twice in 1906, eight times in 1907, twice in 1908, and received once in 1906, five times in 1907, twice in 1908 and once in 1909. The East Greta Company paid twice in 1906, nine times in 1907, and once in 1908, and received once in 1908, once in 1909 and once after writ in 1910. Forsyth was a member of the committee and signed cheques. The Heddon Greta Co. paid twice in 1906, nine times in 1907 and once in 1908, and received once in 1908, once in 1909, and once in 1910, after the writ. The Hetton paid twice in 1906, eight or nine times in 1907, twice in 1908 and once in 1909. Learmonth was Chairman and a member of ae 14 C.L.R.] OF AUSTRALIA. Committee and signed cheques and moneys were frequently paid into a Learmonth trust account. Lewington was for a time Secre- tary and was a member of Committee and signed cheques. He also received moneys as on 29th January 1908, 13th January 1909 and 24th February 1910. The Newcastle Co. paid three times in 1906, eight or nine times in 1907, once in 1908, once in 1909 and once in 1910, and received once in 1906, six times in 1907 and four times in 1908. The New Lambton Co. paid twice in 1906, four times in 1907, twice in 1908 and once in 1909, and received once after writ in 1910. The Pacific Co. paid twice in 1906, nine times in 1907, twice in 1908, once in 1909, and received once in 1909, and once after writ in 1910. Ruttley paid twice in 1906, four times in 1907, once in 1908, once in 1909 and once in 1910, and received once in 1908. The Scottish Australian Mining Co. paid twice in 1906, eight or nine times in 1907, twice in 1908, once in 1909 and once in 1910, and received once in 1906, five times in 1907, and twice in 1908. The Seaham Colliery Co. paid twice in 1906, and ten or eleven times in 1907, once in 1908 and once in 1910, and received once in 1906, four times in 1907, once in 1908, once in 1909, and once in 1910. Sneddons paid twice in 1906, nine times in 1907 and twice in 1908, and received once in 1910 after the writ. The Wickham and Bullock Island Co. paid once or twice in 1907 and once in 1908. William Laidley & Co. paid twice or more in 1906, nine times or more in 1907, twice in 1908 and once in 1909, and received once in 1906, three times in 1907, twice in 1909 and twice in 1910 after writ. The nature of the Association as appears from its minutes— admitted on all hands—is such as to preclude any idea of these pay- ments and receipts being otherwise than as by and to the members of the Association itself. With regard to Chilcott, he assisted, as Wheeler has stated, at the early meetings held to form the Vend, he as manager of the Scottish Australian Mining Co. signed the minutes of 30th March 1906 and the guarantee agreement of 24th April 1906 and the letter of the next day, Ex. B5, to Scott Fell declining to supply coal for the South Australian Railway requirements. It is also admitted (Ex. V5), that he has been continuing since 24th September 1906 H. C. or A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssocraTeD NorrHern COoLLrERIES. H. C. or A. 1911. Ce: Tue Kine AND THE ATTORNEY- GENERAL oF THE Com- MONWEALTH v. ASSOCIATED NortTHERN COLLIERIEs. HIGH COURT (19. the Sydney manager of the company, and the person appointed by 7 the company to carry on its business in New South Wales. G. F. Earp signed the resolutions of 30th March 1906 for the East Greta and Heddon companies, and in the same capacity signed the guar- antee of 24th April. He is admitted (Ex. V5) to have been continuing since 24th September 1906 the manager of the East ; Greta Co.,.and three letters in Ex. X, viz., two of March 18th — 1907, and one of 6th September 1907 with its enclosure, are evidence — that he on behalf of Heddon Greta Co. was acting as a member of the Association. F. W. Newman, as appears from Wheeler's — evidence, attended meetings of the projected Association as repre- sentative of the Caledonian Co., it is admitted (Ex. V5) that he has since 24th September 1906 continuously been manager of that — company, and as coal manager of the company he endorsed for the company the only two cheques to order paid by the Association to it, as already mentioned, namely, those dated 9th May 1907 and 24th July 1907. He also for Howard Smith signed the letter dated — 12th December 1908 on behalf of the Caledonian Co., addressed to the Secretary of the Association (Ex. U). The Stockton Bore- hole Collieries Limited was formed about 1909 (see letter 24th March 1909 in Ex. U) to open up the Borehole Colliery at Teralba, formerly worked by the old Stockton Company and by that letter _ the new company asked Huddart Parker & Co. to list their coal so as to get a proportionate part of the railway trade in Victoria and South Australia, as well as of the general trade (see also p. 219 of the proceedings). The Vend, by letter of 6th April 1909 (Ex. U), permitted this request to be acceded to. The common law evidence as to this company is more slender than in the case of the others, arising largely from the lateness of the formation of the new com- pany. But in the absence of any contradiction which would have been the work of a few minutes, I am satisfied this company from April 1909 was a member of the Vend, just as its predecessor clearly was. Besides these evidences of connection there is in most cases abundant proof of other kinds that the defendant colliery owners were the constituent members of the Vend. 'Thus in the case of the Australian Agricultural Co. there are the letter of 30th March 1907 — MCLR] OF AUSTRALIA. 411 (Ex. 01), the telegrams of 15th and 16th May 1907 and the letter H- ©. oF A- of 16th May (Ex. X), and the correspondence contained in facie' Ex. Z6 between that company and Kethel & Co., in which I do not' THe Kixe include the document dated 19th June. fete), Brown's continued connection is also shown for instance by their pepe letter of 17th August 1908 (Ex. U), and their telegram of 6th monweaurn November 1908 (Ex. 08). As to the Caledonian Co. there are the huneniies letters of 27th November 1906 (Ex. X); Newman's latter of 12th aon cing December 1908 already mentioned; and Howell's letter of 10th March 1909 (Ex. Ol). Chapman appears constantly in the corre- spondence and notably the part he took inthe Haynes' article. With respect to the Dudley Oo., there are also the letters of 26th and 28th May 1908 (Ex. U), and that of November 22nd 1907 (Ex. Ol). Forsyth is continually a party to the correspondence. The Heddon Greta Co. expressly admits its connection in the letter of 12th August 1907 (Ex. X). As to the Hetton Coal Co. there is the letter of 23rd December 1907 (Ex. X); Learmonth, like Forsyth, is visible throughout and Lewington frequently so. The Pacific Co. wrote the letters of 22nd and 25th February 1907 (Ex. Ol); the Seaham Co. is affected by the letters of 20th, 22nd. 23rd and 26th November 1906 (Ex. X) and 31st March 1908 (Ex. O01); William Laidley & Co. wrote the letters of 5th April 1906 (Ex. T4) and of 25th March 1907 and 10th December 1907 (Ex. O1), and there is the correspondence of 22nd and 23rd April 1908 (Ex. U. p. 6), and also the letter of 7th October 1909 (Ex. 8). Mempersuie or Surpprnc Group oF DEFENDANTS. Besides direct evidence which impliedly recognises the existence of the Vend, and its connection with the shipping defendants' affairs, the correspondence of the shipping companies enumerates several defendant colliery companies in a way which indicates the shipping companies' knowledge and recognition of these coal com- panies being members of the Vend. Howard Smith & Co. by C. M. Newman, its managing director, signed on behalf of the Caledonian Co. the guarantee of April 24th 1906. On 29th January 1907 it wrote by C. M. Newman to Chap- man as the acting-Secretary of the Vend, on 4th March 1907 a 412 HIGH COURT (19. H.C. or A. similar letter to Murrell as Secretary of the Vend (Ex. Ol), on S 1911. 93rd April to Cant as Secretary of the Vend (Ex. X). The last- — rasan mentioned Exhibit contains constant instances of recognition of the — Aiwonsey. Vend and members of the Vend, and particularly the letter of 9th GeNeRAL OF August 1907, which refers to a printed agreement containing a list wonweeern of the members. On 29th June 1908 they paid (Bx. B) to the Assoourep Vend £3,132 11s, 3d. pctaeen As to Huddart Parker—the guarantee of 24th April 1906 was on the basis of this company and the Adelaide Steamship Co. receiving the quotations agreed on, and becoming the contractors to the South Australian Government and this happened. By letter of 21st May 1906 (Ex. Ol), these two shipping companies acknow- ledged the guarantee arrangement and the acceptance oi their tenders. On 31st August 1907 they paid into the Vend £44 14s, (Ex. E). Finally Appleton's letter of 21st January 1908 (Ex. U) contains a list of pits. As to MclIlwraith McEacharn & Co. reference may be made to the letter of November 1906 to Chapman as Secretary of the Vend enumerating the pits (Ex. O1) and the company's letter to Chapman of 9th January 1907 (Ex. X). ; The various tenders and contracts in evidence and the general method of dealing together with what I have specifically mentioned Fo gaa see leave no shadow of doubt that the shipping defendant companies and individuals had the most complete acquaintance with the membership of the Vend and knew that this embraced the defendant colliery proprietors. Viewing this issue, from the strictest aspect of common law requirements, the proof of the Crown's allegation as to membership of the Vend is overwhelming, and leaves no shred of justification for the deplorable waste of time the persistent denial has occasioned. I have been greatly tempted to deal with the issue by dismiss- ing it as too absurd for serious treatment in the face of the evidence poured upon it, and the knowledge of the truth that the defendants one and all undoubtedly possessed. But as it was solemnly main- tained to the end, as if it were a real and substantial contest, I have felt it my duty after all to treat it seriously. Calling in aid sec. 14 (c) the matter is much simplified. The 14 C.L.R.] OF AUSTRALIA. 413 minute books of the Vend disclose the presence of the defendant H.C. or A. 1911. — occasions of representatives of the shipping defendants. The issue Tur Krs Thave just dealt with is a signal proof of the value of such a provision collieries, communications to them and the presence on various in the interests of justice and economy. THE Com- Distinction BeTwEEN ConTRACT AND COMBINATION. See ee Having identified the personnel of the two groups, the next issue NE is as to the alleged contract between them. "Contract" and COMtRrES. ' in sec. 4 are alike in having agreement as their " combination ' basis. But an important distinction exists. The offence which one commits who makes or enters into any contract, etc., is complete at the moment the contract is formed. That definitely ends the con- travention, and the act constituting the offence cannot be prolonged beyond that point. But the offence which a person commits, who, "is or continues to be a member or engaged in any combination " has no definite stopping place short of the termination of the com- bination itself, or his connexion with it, and so long as the objects are persevered in and its purposes are adhered to the persons associated are and always continue to be members of and engaged in the com- bination. The combination may be the pure result of the contract— it may exist without any contract at all, it may originate in a con- tract, and yet seriously depart from its terms and take on a new or modified purpose or method of action sanctioned by the conduct or acquiescence of the parties. Derrenpants' SILENCE as TO ExisTENCE oF ConTRActT. First as to the contract. Ordinarily. when litigation brings into controversy the existence of an alleged bargain, its nature and terms, and the circumstances leading to its adoption or indicat- ing intention or effect, the parties themselves offer direct evidence. Here the position is different. The defendants are the only persons who could furnish direct and absolute testimony and they have advisedly abstained from doing so. I do not doubt they have been well advised in adopting that course, but it carries with it certain consequences. Two reasons were advanced by the learned counsel for this abstention. One is the insufficiency of the Crown's evidence to make a prima facie case. That, if sound, would of course end the H.C. or A. 1911. — Tue Kine AND THE ATTORNEY- GENERAL OF ASSOCIATED NorTHERN CourrertEs. HIGH COURT f19L whole matter. The other is, that it would have occupied much time — and involved considerable expense. This, in the view of the issues involved, their pecuniary importance to the defendants, the signifi- cance of some of the evidence touching the honor and probity of the defendants or some of them and the course pursued at the trial, strikes me as a reason without any reality behind it. In the first place if the evidence, however lengthy, sustained the innocence of the defendants, it is not they, but the Crown, that, in the absence of special circumstances, would have to bear the cost of its produe- tion, as well as the rest of the costs of these proceedings. Contract CHARGED ORIGINALLY MapE In 1906 anp ConTINUED to Enp or 1907. The agreement alleged in par. 41 of the statement of claim is substantially founded on the authenticity of a document part of Ex. $8. That document was produced on 9th June 1910 to Mr. Hudson, Customs Officer, by Mr. A. R. Cant, the Secretary of the Vend, as a fair copy of the agreement between the Associated Nor- thern Collieries and the Shipping Association under a demand upon him as such Secretary. As Cant was clearly for this purpose the representative of the then existing members of the Vend, sec. 14 (d) in itself would make that document admissible as evidence against all the defendant colliery owners, and by connection with them the colliery managers would be affected. But even that section would not carry the evidentiary effect of the documents so far as to reach the shipping defendants. And, although it is not necessary to decide it, it may be that sec. 14 (d) does nothing more than formulate a rule of common law and leave the effect of the document, when admitted, exactly what it would be apart from the Statute. At all events, I shall deal with this matter outside the statutory force of sec. 14 (d}. Cant was the Secretary of the Vend and the natural custodian of its papers, was found in official pos- session of them, and delivered them up in pursuance of a lawful demand upon him as representative of the Vend, made under a statutory power. On the occasion when production took place Mr. Rankin the Vend's solicitor was present, and the occasion was a continuation of the original demand of 18th May, when 14 ¢.L.R.] OF AUSTRALIA. Messrs. Forsyth and Learmonth were present and when Forsyth said "Mr. Cant will offer no factious opposition to your demand for documents but we must protect ourselves before answers are given." Learmonth also said " Yes." By protecting themselves they meant consulting Rankin, which they did. The production was in the strictest sense official and representative by the Secretary with the sanction of two members of the Executive Committee, one being Chapman, and under the guidance of the Vend's solicitor. The presumption then is that the document was not held by Cant otherwise than as such representative. It is the same as if found in and produced from the actual possession of all who con- stituted the Vend at the time. These, as already stated, were the defendant colliery owners. In the natural course of affairs such a document in the mature condition of Ex. 8. would be the product of previous discussion among the colliery proprietors, and of negotia- tions with the persons therein described as the other contracting party, and this is confirmed by the minutes of the Vend. Conse- quently, as against all the colliery defendants, I take it, that Ex. S is prima facie proof that negotiations between them and the ship- ping defendants had reached a certain stage—namely, that embodied in the document, which was preserved unaltered in the condition in which it was found. It presents all the form and substance of a definite agreement and accords with the surrounding circumstances. If it bore signatures it would of course be complete and definite and the proof would be direct. But it is not signed and consequently the mutual assent of the separate groups is open to dispute, and has been disputed. The want of formal signature is in itself a cireum- stance in favor of the defendants, and tends so far to show the negotiations stopped short of contractual relationship. There is, however, other evidence having an opposite tendency either as explaining the absence of signature consistently with assent otherwise given, or as affording circumstantial proof of assent in some way communicated. This evidence is of more or less con- vineing force in proportion to the strength of probability of the subordinate facts to which it is directly applicable being more or less likely to exist in the presence or absence of assent. When the negotiations started between the two groups in the H. C. or A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v. AssOcIATED /RTHERN ULIERIES. H.C. or A. 1911. Tue Kine AND GENERAL OF THE Com- ASSOCIATED NorrHern CoLtrerres HIGH COURT (igi. early part of 1906 there were no statutory impediments to a bargain of the nature herein complained of, and had the law remained go, _ the want of signature to a document apparently intended to be signed would be a more formidable obstacle than itis. The Principal — Act however was assented to on 24th September 1906 and it maybe assumed that, for some days before that date, the passage of the Bill — through both Houses had actually occurred or was or to be reason- ably anticipated or apprehended as a matter of common interest and what is more of special interest to the parties in negotiation. There appears on the Vend minutes of 13th September 1906 (Ex. F, pp. 140, 141), a relevant and significant entry. The passage is as follows :—" Agreement. Mr. Simpson pointed out that any agree- ment that might be signed would bring the proprietors under the provisions of the Australian Industries Preservation Act 1906, and in his opinion it would be more advisable to carry on our operations on the lines of the agreement already decided upon but without any signed document." I agree with the suggestion that this refers directly to the Vend agreement, and not to the combined agreement. But if danger was apprehended from the formal signing of the first to which the collieries alone were parties, and if prudence dictated assent by "understanding " without visible evidence of the fact, there is nothing surprising to find the same policy extended to the wider and infinitely more questionable arrangements in which both collieries and shipping companies were included, and which were proceeding concurrently with the Vend agreement. Thus we find in the minutes of September 25th 1906, the day after the Act came into operation (Ex I, p. 1), the following entry :—"S.S. Owners' agreement. Mr. Simpson reported that he had gone through this in Melbourne with the S.8. Owners and there were a few matters that still required to be settled as follows—Right of §.8. Owners to take 180,000 tons per annum Southern coal, this must be the total quantity including bunker coal. Right to take Brisbane coal up to 200,000 tons per annum. The quantity taken from Wallarah not to exceed that purchased during 1905. A fair _ copy of the agreement when finally settled to be handed to the members for guidance." 14 C.L.R.] OF AUSTRALIA. 417 T have then to look at the surrounding circumstances for enlight- H. C. or A. ment as to the fact and time of assent. With regard to the colliery fee defendants there is very distinct testimony. The colliery pro- Tux Kiva prietors adopted temporarily on 3rd April (F. pp. 49 to 51), sivounny- a scheme which included the following :—* That no coal will be sold Gexensr or by the Association in the Commonwealth (New South Wales ex- woxwrarrn cepted) except to the steamship companies, set forth in the proposed oes NortHEern eas agreement for carriage. Counted. It is to be noted that Captain Webb and Appleton were present, and that Appleton was in the Chair. Wheeler (at p. 327) proves that on 12th April 1906 (F. 57), there was a meeting of the colliery proprietors at which " the proposed agreement between the Associated Northern Collieries and Steamship Owners' Association was read by the Acting-Secretary, the clauses discussed seriatim, and that amendments were noted by Mr. Rankin for reference to the Steamship Owners' Association." On the same page of the evidence Wheeler proved the accuracy of the minutes of 24th April 1906 (F. 65). These minutes are of extreme importance respecting several matters, but on the present point it may be observed that amendments in what is called the Steamship Owners' agreement were considered and the terms apparently settled. The full person- nel of the contracting parties for the shipping side was left in doubt and the following resolution was passed (see at p. 69) -—'* Resolved, that in connection with the admission of James Paterson & Co. and the Melbourne Steamship Company into the agreement with the steamship owners the contract with the coal proprietors shall be signed by all the steamship companies including the Melbourne Steamship Company and James Paterson & Co. and Mr. Hunter gives his undertaking that immediately on his return to Melbourne he will endeavour to make arrangements with the companies men- tioned, and in the meantime the Association proceeds to complete its scheme of amalgamation, it being understood that, if the Mel- bourne Steamship Company and James Paterson & Co. will not accept the proposals submitted by Mr. Hunter to give them at least the trade which they had before retiring from the Steamship Owners' Association, then the coal proprietors will enter into agreement with VoL. XIV. 27 H.C. oF A. 1911. es; Tue Kine AND THE AvTTORNEY- GENERAL OF THE Com- MONWEALTH vw AssociaTED NorTHERN ConLiERIEs. * HIGH COURT [191 . the four steamship companies alone, subject also to a proper agree- ; ment being entered into with Mr. John Brown." I defer 1909 and 1910 for the present, they were working together — under some agreement of the nature of the copy agreement con- — tained in Ex. S and having terms apparently well defined. As _ regards the colliery defendants, the evidence teems with unquestion- able proof of this. Frequent references to an existing combined agreement are made in the correspondence for instance by Newman on 18th December 1906 (X. p. 18), where he says :—''The steamship companies' agreement with the collieries further protects both parties in this direction;"? by Chapman on 9th January 1907 (X. 23); 16th January 1907 (X. 31); Cant 1st August 1907 (X. 124); Cant on 16th April 1908 to Appleton (U. 66), where it is styled a "com- pact," and on 10th June 1909 (U. 135), where it is referred to as "the general arrangement between us." These are only some of the very many references to a well recognised agreement between the two sets of defendants. No formulation of terms was suggested other than the copy in S—except Y, which was, as I find, an earlier draft, and superseded by S. I have therefore to inquire on the "contract " charge, whether the evidence shows to my satisfaction that the agreement which the parties recognised and acted on is correctly represented by the unsigned but carefully preserved docu- ment in Ex. 8. The Newman and Appleton correspondence (Exs. X and U) are highly important. From the Vend's standpoint it needs no further consideration to affect the defendants. The letters were in every case by or to the Vend Secretary or Acting-Secretary, so inferences may as legitimately be drawn against the colliery defend- ants as in the case of mutual correspondence found in an ordinary merchant's office. But as regards the shipping defendants, further considerations are necessary. First as to Newman and Appleton themselves, of course they are affected, each by his own correspondence, and it is admitted that the shipping companies are equally affected by ; : : 14 O.L.R.] OF AUSTRALIA. whatever affects their respective managers. Consequently Ex. X is evidence against C. M. Newman and Howard Smith Co. and Ex. U against Appleton and Huddart Parker & Co. Nevertheless it was not admitted—but on the contrary strenuously denied— that Newman or Appleton respectively was in any way shown to have had authority to represent the three shipping companies other than the one of which he was manager. The facts however Jeave me in no doubt at all that as a medium of written communica- tion with the Vend Newman first and Appleton afterwards were the duly authorised representatives of all four defendant shipping com- panies, and I am constrained with regard to the objections raised in respect of their representative character, and the wasteful con- sumption of time and money in contesting what is almost a patent fact, to make the same condemnatory observation as I have applied to denial of membership of the Vend. At the same time, Mr. Mitchell, so far as his clients were concerned, stated that he did not dispute that in 1907 and 1908 there was an arrangement that the shipping companies should carry exclusively and deal exclusively subject to the modifications for Southern and other coal, and that they did that. He also admitted that the four defendant shipping companies were in the arrangement from the first, and the other two, either at the same time or afterwards. An admission was made by Mr. Mitchell (p. 187) with respect to Newman upon which the Crown is as a matter of strict right entitled to rest for reasons I gave during the course of the trial (see also Sarai Chunder Dey v. Gopal Chunder Laha (1). But though that is so, yet in view of the way in which the admission was made, and of the application to withdraw it, I prefer, so far as I am con- cerned, to examine the evidence apart from that admission, and my conclusions are reached as if it had never been made. The 'resolution of 24th April above quoted formally recognised a Steam- ship Owners' Association from which two companies had withdrawn. Then a mass of business operations extending over two years, which will be more appropriately detailed at a later stage, lead me unhesi- tatingly to the inference that the shipping companies were so far acting in concert with one another and with the Vend, that some (1) LR. 19 LA, 203, H. C. or A. 1911. — Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v AssocraTED NorTHERN CouurERIEs. 420 HIGH COURT 1911. sary or in the highest degree convenient. And when we find es 3 Tue Kixc men like Newman and Appleton—not together but in reg Agnoaxee. Sequence—themselves managers of companies concerned, take u Gum Cow, themselves to conduct lengthy and continuous correspondence, on: THE Com- ' monweaurn basis of being duly authorised representatives of all four compani Assoctarep in close business interest with each other, when they assert pone ine, these four companies are in association for the purpose, and when they purport to convey information to and fro on that basis it wo be imputing to them gross dishonesty and wilful deception b towards the other shipping companies and to the collieries to beli they were not really in the position they assumed. I do not b they were saying and acting thus contrary to what they cons was the truth. That strictly speaking does not make their acti evidence against the other companies; these business men acti successively as the sole channel of communication between. two hi groups of business operators, when some such channel was obvi necessary, still leaves open the technical objection that their actic may have been the result of fraud, negligence, or error, long tinued, systematically pursued and wholly unexplained. and negligence so profound and extensive and unnatural are to m incredible ; fraud would there have been so comprehensive and so senseless, useless and disloyal to all concerned that I de to entertain it. The objection is left so frail that it needs but tl slightest touch to overturn it. The repeated movements of the companies in accordance with the statements in the com spondence, and often with no other rationally assignable cau or source of activity than the correspondence itself, are in # circumstances sufficient, and as I consider solid and satisfactory indications of connection—particularly in the absence of contrar evidence, where explanation, if possible at all, would have been so easy. It is incredible that the Vend could have been deluded long and so successfully by any false pretence of Newman's or Appleton's authority, or that they could as late as 5th Det 1907 (X. 194) have addressed Newman as "The Chait Inter-State Steamship Companies' Association," and that sever letters would have followed on that footing unless the fact were 4C.L.RB.] OF AUSTRALIA. 421 so. And if some other channel of communication had ever been H- C. or A. provided, that fact is one not likely to have been concealed from as ~— the Court. Tar Kine Where for instance the medium of communication changed .\\oupy- from Newman to Appleton that fact is shown. Appleton took up AL OF the correspondence substantially where Newman left it. In "o» Com- LTH Newman's letter of 31st December 1907 (X. 210), there is a state- AssocrateD ment " We confirm wires exchange &c." Appleton, on 20th Janu- Pokies ary 1908 (U 30), refers to this as "our offer of 31st December." He conducted exactly the same class of correspondence and what is important is that so far as the evidence discloses no one else did. As before, the conduct of both sets of defendants where it can be traced answers the course of the correspondence down to the end of the chapter. Looking at the objection from a legal standpoint and as a part of these proceedings the obstruction to the recognition of Newman's and Appleton's representative character as amanuenses of the four shipping companies in the correspondence with the Vend must be designated as frivolous in the extreme, and as delaying and impeding and obscuring the consideration of the real merits. Whether it was worthy of the defendants having regard to their actual relations to the community, and the nature of the charge they have been called upon to meet, is beyond my province to in- quire. I take the correspondence contained in Exs. X and U as being communications between the associated collieries on the 'one side and the associated shipping companies on the other, and as being together with the proved acts of the parties proper materials by which to ascertain by common law rules of evidence whether there was an agreement between the two groups and whether that agreement is correctly represented by the document part of Exhibit 8. There was undoubtedly an association of shipping companies in connection with the inter-State coal trade, and the four defend- ant shipping companies were members of that association, and Newman and Appleton were. successively not only the media of communication with the Vend, but were naturally the custodians of records of the association in relation to its common business. These records, unless communicated to or acknowledged by the 422 HIGH COURT et H.C. or A. Vend, I do not on common law principles read so as to affect a latter body, any more than I would affect the shipping compa Tue Kine with purely Vend records. Ames As to the shipping association records, there is for instance p a Gime oF duced by Newman a document headed : (Exhibit X, p. 100 and fo : eet ame lowing pages) '"' Precis of meeting of the representatives of the New- Associaren castle Vend and shipowners held at the offices of the A.S.0. A. een Melbourne on Tuesday 23rd July 1907." There were presen Hunter, Northcote, Appleton, H. B. Howard Smith and Hamilton these represented all the four defendant shipping companies. The Vend representatives were Forsyth and Howell. Without descend- ing to particularities in this connection, excepting in one instance, i is sufficient to say that the whole line of discussion recorded would be inconceivable and absurd unless underlying the proceedings there was some definite arrangement in the nature of a contract. That exception is the passage on page 110 as follows :—" Discussion here ensued regarding construction to be placed on a section of the agree-_ ment." Hunter's letter of 25th July 1907 addressed to Forsyth and — Howell (Ex. X, p. 114 and U, p. 19) confirms the understanding verbally arrived at at that meeting and records in formal terms the views there expressed. That letter corresponds to the expressed — expectation of Forsyth at the end of the conference. Cant's letter of Ist August 1907 addressed ""H. B. Howard Smith Esq., The Howard Smith Company Limited," refers to the conference. The correspondence after 13th April 1907 was so addressed in pursuance of Newman's letter of that date (Ex X 62), in which he stated that during his absence in England " the correspondence as between the Associated Steamship Companies and the Associated Northern _ Collieries will continue to be conducted from this office." I refer — also to Ex. X, p. 86 (6th July 1907), Ex. X, p. 94 (15th July 1907), Ex. X, p. 95 (16th July 1907), Ex. X. 198 (9th December 1907). The last-mentioned letter merits special reference because it is headed " Associated Northern Collieries," signed " A. R. Cant — Secretary," and addressed to " C. M. Newman Esq. Chairman Inter- State Steamship Owners' Association," and contains the following passage :—" These rates will of course be subject to the terms of the agreement between your Association as the purchasing agents ~ 14 C.L.R.] OF AUSTRALIA. 423 and my Association as the Vendors." It enclosed a resolution of H- ©. or A. the Vend continuing their arrangement with the shipping com- poe panies during 1908. It is acknowledged with thanks on 12th Tue Kia December 1907 (X 201). I refer also to X 205 27th December 3x? ou" ATTORNEY- 1907, X 216 and U 149 headed " Minutes of Meeting held at Offices Crxmnan OF of the Australasian Steamship Owners' Federation, Steamship moyweavra Buildings 509 Collins Street Melbourne on Friday 23rd April 1909." associaren It was called for the purpose of considering the suggested allotment pia detent proposed by the colliery proprietors of coal for the steamship com- panies' requirements 1909. Appleton was in the Chair. As to this conference, see with regard to the Vend their Minutes of 5th May 1909 in Ex. J, at p. 215. The correspondence, negotia- tions, and the course of business in 1910 lead me to the inference the agreement was in substance renewed in and for that year. This will be more particularly considered presently. Then as to the identity of the terms of the agreement with those in S, which was modified as to some of the parties after being drawn up, see Cant's letter of 12th August 1907 (Ex. X, p. 235) and Ex. I, pp. 49 and 79). Clause 1 of that document says :— " The vendors agree to sell to the purchasing agents the whole of the coal which may be required by the purchasing agents to supply the trade of the States of Victoria, South Australia, Western Australia, and Queensland. Such coal shall be gotten from the collieries mentioned in the Schedule hereto or from some of them, and shall be of the quality obtained from such collieries respectively." And clause 2 (c) provides that the " purchasing agents' representa- tive shall where practicable at least once a week before the beginning of each month during the continuance of this agreement intimate to the vendors' representatives the approximate quantity of coal and the particular class of coal which the purchasing agents shall require during the ensuing month, and the vendors' representatives shall arrange to supply to the purchasing agents suitable coal in fulfilment of the purchasing agents' requisition " &c. In Newman's letter to Chapman of 29th December 1906 (X. 18), reference is made to the quantities required by the steamship com- panies for the Commonwealth market and with specific relation to the Victorian Railways and this passage occurs :—'* The steamship H.C. of A. 1911. "SH Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw ASSOCIATED NortHern CoLuierties. HIGH COURT [191 companies' agreement with the collieries further protects both parties in this direction." In Lewington's letter to Chapman 16th January 1907 (X 31) connected with the shipping defendants by — Newman's letter of 30th January 1907 (X 34), reference is made — inter alia to arrangements made at a conference for proper notice _ of requirements and for allocation of coal and generally working _ such clauses as Nos. 1 and 2 (c). Then the document in S$ provides in clause 2 (a) :—' The coals obtained from the various collieries shall be divided into the classes mentioned in the schedule at foot." Q The coal supplied was always graded and priced accordingly, — see for instance annexure to letter of 9th December 1907 (X 200). Clause 2 (b) says :—" The Vendors and the purchasing Agents shall during the currency of this agreement from time to time appoint each a representative for the purposes hereinafter appearing." As to this, see X 19 (29th December 1906), X 23 (9th January 1907), X 31 and 32 (16th January 1907), X 34 (30th January 1907), X 169 (23rd September 1907). Clause 2 (c) further provides :—"' The vendors recognising that the purchasing agents have to satisfy the demands of the con- sumers will so far as practicable forward to the purchasing agents the coal from the particular colliery required by the purchasing agents and, failing that, then coal from one or other of the collieries of the same class as that named in the requisition. Provided how- ever that in no case shall the Vendors be called upon to deliver coal from any colliery that has reached the limit of output assigned to it by the Vendors under any agreement existing between the collieries. Provided further that in any case where the purchasing agents have entered into contracts with the consent of the Vendors for the supply of coal from any particular colliery or collieries then in such case the said purchasing agents shall unless conditions render this impossible be supplied with the specific coal required for the due fulfilment of such contract." There are obvious references to this sub-clause in Newman's letter to Learmonth of 16th May 1907 which same contains a hope that modification of the provision has been agreed to. But that modification had not been agreed to as appears from the report of 14C.L.R.] OF AUSTRALIA. the conference of 23rd July 1907 (X pp. 108 and 109), and as late as 23rd April 1909 the Vend proposition was to be adhered to as far as possible (X p. 219). Clause 4 runs thus :—' All coal shall be delivered by the Vendors to the purchasing agents f.o.b. at the usual place of loading coal from such colliery. And the prices to be paid for the various classes of coal shall be fixed by the Vendors annually in the month of November in each year during the currency of this agreement, such prices to take effect from the first day of January following for the then ensuing year. The prices so fixed shall be communicated to the purchasing agents by notice in writing to their representative appointed as hereinbefore mentioned. The Government weights at Newcastle shall be taken as final and conclusive and no allowance shall be made for wastage." A red ink line is drawn through the words " the Government weights at Newcastle shall be " but that is a slip and means nothing. On the basis apparently of this clause were written the follow- ing letters :—Howard Smith & Co. to Cant of 13th June 1907 (X p. 81), Howard Smith & Co. to Learmonth of 6th July 1907 (X. p. 85), Howard Smith to Cant 25th July 1907 (X 113), Hunter to For- syth and Howell of 25th July 1907 (X. p. 114), Howard Smith to Cant of 13th August 1907 (X p. 136), same to same of 21st September 1907 (X p. 168), Cant to Newman of 9th December 1907 (X p. 198) and annexures (X. p. 200) and the reply of 12th December 1907 (X p. 201), Cant to Appleton, 16th April 1908 (U p. 66). Clause 5 is in these terms :—'' The Vendors agree not to supply any coal for consumption in any of the States mentioned in clause One hereof except to the said purchasing agents or their nominees in terms of this agreement." This is an important clause, the existence of which is manifested by the business conduct of the defendants with respect to Scott Fell, Kethel & Co. and others, con- duct which I shall refer to specifically further on. Some of the letters appear to me to assume the existence of such a clause—such as, Chapman to Hunter 9th February 1907 (X. p. 40), Chapman to Newman 11th February 1907 (X. p. 42), Cant to Howard Smith Ist August 1907 (X. p. 124), Beckett to Cant 12th August 1907 (X. p. 139) enclosed in letter Cant to Howard Smith of H. ©. or A. 1911. = Tur Kine AND THE ATTORNEY- GENERAL OF vHE Com- MONWEALTH w AssocIATED NORTHERN ConrIERIES. 426 HIGH COURT H.C. or A. 15th August 1907 (X. p. 138), Newman to Cant 27th December I 101l (X. p. 205), Appleton to Cant 16th January 1908 (U. p. 26), Cant t Tae Kixc Appleton 24th January 1908 (U. p. 34). 4 patty By clause 6 the purchasing agents agreed to purchase from GENERAL oF vendors all coal they require for the inter-State trade and to pay THE Com- monweattn the prices fixed from time to time and then the clause proceeds :— Sica " And shall not purchase, sell or deal in, directly or indirectly or ene engage directly or indirectly in, or share the profits of the carriage — of any coal other than that purchased by the purchasing agents from — the Vendors." Then comes a proviso allowing the purchasing agents _ to purchase for their own use for bunkers of 186,000 tons Southern — coal, with increase or reduction proportionate to increase or decrease of inter-State trade over or below 1,500,000 tons per year and with a further proviso that with the vendors' consent to be given if the — trade of Newcastle is not prejudiced, a larger quantity of Southern — coal may be taken. Brisbane coal may be taken up to 150,000 tons a year (the pencil figures 1,500 being evidently a slip) as in 1905 with increase or decrease relative to Commonwealth trade in Newcastle coal, but not beyond 200,000 tons a year. Wallarah coal of 50,000 tons may be taken by Huddart Parker Co., and it was agreed that any breach of this clause by the purchasing agents meant pay- ment to the vendors of 4s. for every ton of coal purchased in violation of the agreement. As to this, see letter Cant to Howard Smith 6th July 1907 (X. p. 86), reply 9th July 1907 (X. p. 87), Howard Smith to — Cant 16th July 1907 (X. p. 95), Howard Smith to Cant 27th July 1907 (X. p. 119), telegram Cant to Howard Smith 31st July 1907 (X. — p. 120), letters Howard Smith to Cant 31st July 1907 (X. p. 121), Cant to Howard Smith Ist August 1907 (X. p. 124), Cant to Appleton 31st January 1908 (U. p. 39), Appleton to Cant 7th February 1908 (U. p. 47). Clause 7 relates to time of payment and is immaterial. Clause 8 provides :—* The purchasing agents shall not resell any of the said coal so purchased as aforesaid at any higher prices per ton than the cif. price mentioned in the following scale namely," and then follows a scale—specifying that if sold for delivery at Melbourne when the purchasing price f.0.b. at Newcastle for best coal was 7s. " the c.i.f. price mentioned " was 10s. 10d. and similarly c.if. 14. C.L.R.] OF AUSTRALIA. 427 prices were fixed for Geelong, Adelaide, Wallaroo, Port Pirie, Port H- ©. oF A. Augusta, Albany, Fremantle, Geraldton, Rockhampton, Cairns, ah Mackay and Townsville. Separate schedules are added to apply Tue Kine when the f.0.b. Newcastle price alters to 8s., 9s., 10s., Ls. and 12s. y\vonwey- The clause proceeds :—'" The provisions of the above clause shall pei apply also to the small coal purchased from the Vendors, but in lieu Monwraurn of the maximum reselling prices mentioned in the above scale the Assoctarep following shall apply to small coal namely "—then follow similar Aoeneaes scales. There are four provisos to this clause—Proviso (1) is " That the above-mentioned prices may at the discretion of the said pur- chasing agents be exceeded by 3s. per ton on large, where such coal has been sold to supply any contract or contracts with any one consumer not exceeding 10,000 tons in any one year, but this pro- vision shall not apply to the bunkering trade." Proviso (2) is:—''That whenever the f.o.b. selling price of screened or small coal respectively shall be fixed by the Vendors at any sum less than the f.0.b. selling price for the time being fixed for best screened or best small coal respectively then the c.i.f. prices above-mentioned in the above scales shall be reduced by an amount equal to the difference in such f.0.b. prices, it being the intention of the parties hereto that the freight or other compensation pay- able to the purchasing agents in respect of such coal shall be regu- lated by the f.o.b. price for the time being of best screened coal and best small coal respectively." Proviso (3) is:—'' That where any coal purchased from the Vendors and resold by the purchasing agents for delivery in any of the said States otherwise than c.if. at any of the ports therein the maximum price of re-sale may be increased by the addition of the following charges when same are actually incurred—Lighterage for bunkering steamers at the Semaphore, South Australia, not exceeding 7s. 6d. per ton, at Albany and Fremantle not exceeding 5s. per ton, and at Melbourne and Port Adelaide not exceeding 2s. 6d. per ton, at Mackay not exceeding . . . per ton and at Townsville not exceeding . . . per ton. "Wharfage: Actual charge made by the wharf owner. Rail- ways: Freight when incurred. Cartage: Actual cartage charged 428 HIGH COURT (1911. . by cartage contractor. Or where the purchasing agents employ — their own carts the current rate of cartage. Bagging: 9d. per ton. Screening : 1s. per ton. Dues: Any dues imposed by the various — : Governments or Municipal Authorities." Proviso (4) is :—' That the schedule of prices referred to in this uoxweavr clause shall not apply to large contracts which may be secured by Assoctaren the said purchasing agents at special prices with the consent in NortTHERN CoLiiertEs. writing of the said Vendors." That there was a provision in the shipping agreement regu- lating the selling price of coal with freight and other charges appears clear from the letter of Lewington to Chapman 16th January 1907 (X. p. 32) already referred to. See also letter Howard Smith to Learmonth 6th July 1907 (X. p. 85), Webb to Appleton 19th July 1907 (X. p. 98), conference of 23rd July 1907 (X. pp. 102, 107, 108, 109), Cant to Howard Smith 1st August 1907 (X. p. 124), Cant to Howard Smith 26th August 1907 (X. p. 147), telegram Howard Smith to Cant 7th September 1907 (X. p. 157), letter Cant to Newman 9th December 1907 (X. p. 198) with annexures (X. p. 200), reply 12th December 1907 (X. p. 201). Clause 9 deals only with the mtermediate prices of purchase from the vendor and provides that the maximum reselling price shall be proportionate. Clause 10 is as follows :—'' If the said Vendors and the Pur- chasing Agents shall in the event of war strikes or lockouts agree toa reselling price in excess of the price hereinbefore referred to, the Vendors and Purchasing Agents shall share equally in the amount of any such excess."" Clause 11 is as follows :—* In the event of the Purchasing Agents, without the Vendors' consent, reselling any coal at prices in excess of the maximum prices fixed for the time being in terms of this agreement they shall account to the Vendors for the difference between such maximum reselling price and the actual price at which any such coal shall be resold, it being the intention of this agree- ment 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 re-sale set out in clause 8 shall represent compensation for 140LR.] OF AUSTRALIA. freight and remuneration to agents for work of realisation and the purchasing agents and each of them shall at all reasonable times give to a duly qualified Accountant to be appointed by the Vendors full access to their books and documents to enable him to ascertain whether any breach of this clause has been committed. 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." Clause 17 is as follows :—" In the event of war strikes lockouts or inevitable accidents which shall interfere with the carrying out of any of the engagements of the vendors or purchasing agents or of any of them such parties respectively shall to the extent of such inter- ference be freed from compliance with the engagements embodied herein but the purchasing agents shall not without the consent of the vendors resell at a higher price than that provided herein and in the event of their reselling at any higher price the provisions of clause 11 hereof shall apply to any excess." As to these three clauses I refer to the conference of 23rd July 1907 particularly pp. 102 and 107. On the latter page Mr. For- syth says :—' If you sell coal over the agreed prices we are entitled to participate." Mr. Hunter observed :—' Mr. Forsyth is right in stating that if under special circumstances we get higher prices the collieries are entitled to share in the excess." The mode in which coal was supplied to inter-State consumers through the intervention of the shipping companies only, with the occasional exception of Brown, who is shown to have had a collateral agreement, is a circumstance applying to both sets of defendants which strengthens my view that some agreement of the nature of that contained in Ex. S. was in operation between the parties. This was in marked contrast with the method of conducting the supply for New South Wales. For instance on the 23rd January 1907 (X. p. 30), Hunter telegraphed to Chapman that the Western Australian Government were calling for tenders, 1, 2 and 3 years and giving certain particulars, he added " Please place us in position, quote for full period as well as shorter." On the 24th a reply was sent giving certain directions and making suggestions (see Ex. X. 29-30). On H. C. or A. 1911. Pea, Tue Kine AND THE ATTORNEY- MONW w AssociaTED Nortuern CoLrierIEs. H. C. or A. 1911. —) Tue King AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v AssocraTED NorTHERN COLTIERIES. HIGH COURT 4th May 1907 Newman wrote to the Vend (Ex. X. 64), "T have to inform you that the contract of Messrs. McIlwraith McEacharn & Co. on behalf of my Association has been accepted by the Western Australian Railways for 12 months from the 14th March 1907 on the basis of 10s. per ton cost of coal f.o.b. Newcastle." The letter — gives information as to approximate quantities the form of the : specification, and states "the Western Australian Government, — as your Association is already aware does not specify in their con- _ tract any quantity of coal to be taken from any particular col- liery. It will therefore be necessary for your Association to protect us for supplies to the Western Australian Railways as specified above." There are other instances the contents and nature _ of which fall better under the subject of combination, which also g to support the conclusions I have arrived at, and, also taking into consideration the way in which in fact the coal was dealt with at. Newcastle, and there taken charge of by the shipping companies and distributed by them exclusively (with the exception of Brown, as — already mentioned) and the resentment on the part of the Shipping Association of Vend interference with consumers as in the case of Forsyth with the Victorian Railways in November 1909 (X. pp. 7 221-222), I feel no doubt that such an agreement as the one in S. was the basis of mutual relations. There are many items of evi- _ dence applicable primarily at all events to the two Associations separately, and I need not for this purpose extend their application to the other Association. For instance as against the Vend it is recorded in the minutes of 24th April 1906 (F. 71), that Mr. Simpson stated he would have fair copies of the draft agreement prepared and circulated among the members prior to the next meeting. Apparently this was done, because in the minutes of 9th May (F. 95) it appears that the proposed agreement of the steamship owners was considered, and amendments agreed to, and it was arranged to send a copy to Mr. Hunter for con- sideration by the steamship owners. Again in the Vend minutes of 25th September 1906 (I. p. 1), there is the reference already given that a fair copy of the steamship owners' agreement when finally settled was to be handed to the members for guidance. There — had been a draft which is marked Ex. Y, which I am clear was an 14 C.L.R.] OF AUSTRALIA. early draft and was abandoned in favor of S. It included ship- ping companies who were not ultimately parties to the combined operation, the subject matter of these proceedings. These were Archibald Currie & Co., The Australian United Steam Navigation Co. Limited and British India Steam Navigation Co. Limited. It had a provision continuing it in force for seven years, probably dropped in view of the passing or probable passing of the Act. The Vend certainly altered the tenure of their own organization from seven years to twelve months in September 1906. See letter Cant to Howell 17th February 1908 (0. 1). Its general tenor was not substantially different from that of the draft in Ex.S. Mr. Mitchell contended that there was a material difference in respect of one of the provisos to clause 8. I have already stated sufficient material to indicate why I am satisfied that Ex. Y was abandoned. There is, however, additional material referable to the Vend indicating that Ex. S. contains the actual agreement come to. It appears from the minutes (Ex. J. p. 77), that a conference was held between representatives of the two Associations on 16th December 1907 as to which the following record appears :—" The existing arrangement was then reviewed and the following alterations effected :— "(Clause 1.—The second sentence to read' . . . such coal shall be purchased from all the collieries . . . " etc. instead of « |. . such coal shall be gotten from the collieries . . . ete." "Clause 2.—(Section a) to be governed by clause 12. "Clause 4.—The 'rise and fall' clause to be included in all future contracts. The price of coal to be fixed annually no particular month to be specified. "(Clause 6.—The proportion of Southern coal to be allowed to 1,500,000 tons of Newcastle coal to be 186,000 tons. The quantity of Queensland coal not to exceed 200,000 tons and of Wallarah coal not to exceed 50,000 tons. The steamship companies to furnish a quarterly statement showing the respective quantities of coal lifted from these districts. "(Clause 8.—The steamship companies to have the right to increase the freights mentioned in the schedule by 10 per cent. to cover any increased cost as regards extra wages etc. H. C. or A. 1911. —— Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v. ASSOCIATED NorTHERN CourrERIEs. 432 HIGH COURT H.C.or A. «Clause 10.—To be eliminated. z ae "Clause 13.—The steamship companies considered that 1] Tue Kixe should receive an allowance of 1% for wastage and it was agreed th an? Aut. the matter should be referred to the full meeting of the prop ATTORNEY- GENERAL OF to be held next day." THE Com- moxwearrx Tt also appears that it was ultimately determined that the Associsre elimination of clause 10 should be conditional on a new clan AOEHENS Heing granted to take its place (Ex. J. 89 and 93). That new does not appear to have been drafted, or at all events agreed and so the old clause apparently stood. The alterations agreed in December 1907, when carefully examined, are very strong show that Ex. S. was the existing arrangement which was th reviewed. First of all, there is no mention of the elimination from list of purchasing agents of those shipping companies mentioned Ex: Y, and not afterwards co-operating with the collieries. N one of the alterations is to fix the maximum quantity of Queen coal which the shipping companies might purchase at 200,000 tons. In Ex. Y. there was no express saving of Queensland coal, in Ex. there is, the quantity being originally left blank. In Ex. Y, schedule of prices under clause 8, no Queensland port is mentior there being, after enumeration of ports elsewhere, a general note a foot " Queensland rates to be arranged." In Ex. §. a further stage was reached by inserting the four Queensland ports in every sched together with amounts inserted for c.i.f. price in the first sche of the best and the small coal respectively in type similar to the of the document. There is a pencil note alongside and in front 0 those figures in these words " Queensland freights not yet arranged and alongside and after those figures is a pencil note of interrogat and a similar pencil note of interrogation before the names of th ports in each first schedule. Then in other schedules the c.i.f. pri is left blank for Queensland ports; but the inference to be dray from inspection of both documents, and the nature of the alteration is that, when S. was typed, arrangements had progressed so far at al | events as to enumerate Queensland ports, tentatively fix some c.i.f prices, for those ports conserve the shipowners' rights as to Qui 14C.L.R.] OF AUSTRALIA 433 land bunker coal, and at a later stage the peut agreed upon the H. ©. or A. maximum so conserved. 1911. ae I therefore find, apart from the application of the new statutory Tus Kixe tules of evidence that the defendant colliery proprietors made 4\vonwuy- with the defendant shipping companies the contract in terms shown Ganaaaice by Exhibit S., beginning "Memorandum of Agreement made this wonwravra . day of . . . One thousand nine hundred and six"; that is Aiieciiii to say the contract set out in paragraph 41 of the statement of a claim. Bringing into operation sec. 14 (c) of the Act the case is made much stronger against the defendants. By force of that section the Vend minutes and the record of joint conferences are evidence against all the defendants. That does not mean that the liability of any defendant is increased or that he is made responsible for any act for which he would not otherwise be responsible. It affects only the mode of proof, and leaves the relevancy and legal effect of the matters proved exactly as they would be if the proof were given by a witness who had been present at the meeting. It makes those records admissible in evidence against all the defendants, but only that the persons purporting to have been present at the meetings were present, and that whatever appears to have been done by any of the defendants was so done. So far for instance as it is necessary in order to affect the ship- ping defendants that the membership of the Vend should be proved, the minutes of the Vend recording the presence of the colliery defendants establish the fact with respect to the shipping defendants as well as to the colliery proprietors; the minutes of the Vend of 23rd April 1906 (F 59 and 61) are evidence against both sets of defend- ants that both were represented and discussed the question of South Australian railways contract, and the minutes of 24th April (F. 65 to 69) are evidence that both parties were represented and discussed the proposed combined agreement and the records of conferences between the two Associations, produced out of the custody of C. M. Newman and Appleton respectively, are evidence against all the defendants as to the persons present and the transac- tions of the conferences. These are examples, and I need not pursue that point in further detail. VOL, XIV, 28 434 HIGH COURT H.C.orA. J find that the contract was originally made probably in ree last week of September 1906 between all the defendant shipping 'Tux Kiya panies with the aid of the individual shipping defendants on the Anonxny. side and all the defendant colliery proprietors now proceeded ag pepetereitced except the Stockton Borehole Collieries Ltd. as in Ex. S., and tha monwraura contract so made lasted down to the end of 1907, modified | Assoviaren described in December 1907. NorrHern CoutrerrEs. Conrract RENEWED In 1908, 1909 anp 1910. Tt was renewed for 1908. It was at some time renewed for I! but whether before or after the formation of the Stockton Borehole Co., I am unable to say. That company was already in exist on 4th March 1909, but as the contract was renewed for 1910 th Stockton Borehole Collieries Ltd. must be taken to be a party | it for that year. I therefore hold that the charges in paragray 41 and 42 of the statement of claim are established against defendants, so far as concerns the actual making of the conti therein referred to, but modifications were introduced before 1! I now come to the question of combination. If the contract taken as existing, of course there was a combination, but assun the formal contract alleged did not subsist between the parties still remains the question whether a combination was mainta between them as averred in the statement of claim. From aspect I have to consider the relations of the parties as evident by their conduct examined by the light of surrounding stances. As before, I shall consider this question in the first place according to the common law rules of evidence. History, Formation AnD Opsects or CoaL VEND. The defendant colliery proprietors were free by law to deal, so far as appears were unhampered by any contractual obliga in dealing separately and individually with any member of the pu b who desired to purchase their coal. They were free to bargain as t personnel, price, place, quality and any other term or condition supply. In fact, so far as inter-State trade in Newcastle co concerned, the defendant colliery proprietors have rigidly confin their inter-State operations to selling to the defendant shij 14 C.L.R.] OF AUSTRALIA. companies, and have refused to supply the public or any member of it direct. The history of the colliery proprietors' position is important for several reasons and it will be convenient here to relate it as it is disclosed by the evidence of Mr. Wheeler, principally at the following pages, 257, 293, 306, 313, 314, 3284. During the last = 20 or 30 years the Northern collieries have in one way or another acted in concert. For instance, there has always been a declared selling price for the purpose of regulating the hewing rate to be paid to the miners. There was a formal agreement, referred to by Mr. Wheeler as the old Vend agreement, and which originated a good many years ago—according to the Vend minutes of 15th February 1906 it bore date 12th February 1891. It established a Vend: under that system a selling price was fixed, an allotment was agreed to, and a provision made for paying penalty for any excess and receiving compensation for any deficiency. But, says Wheeler, "there was no restriction of trade or taking away of individual control," by which I understand him to mean that each colliery could sell to whom it pleased. For some reason not disclosed, the Vend agreement, though faithfully carried out for a number of years, had for some considerable time before 1900 become entirely obsolete. A coal owners' Association was then formed and continued until the end of 1902. Its objects were merely to fix a selling price so as to preserve a uniform f.0.b. price, unaffected by competition among themselves, and to give mutual advice. It was not a Vend; that is, there was no allotment of output. But by 1903 it became apparent that two or three of the other col- lieries had begun to give rebates again, and that broke up the Associa- tion, though some of the collieries remained firm to the arrangement for another year. The Coal Owners' Association of 1900 did not com- prise all the mines, there were eight or ten in it ; the leading collieries were in it, though some larger ones as the A.A. Company were out- side it. Those within it included J. & A. Brown, Scottish Australian Mining Co., W. Laidley & Co., West Wallsend and Killingworth, and Newcastle Wallsend and others. The withdrawal of members at the end of 1902 left the Wallsend colliery, J. & A. Brown and the New- castle Wallsend Company the sole adherent members of the Associa- tion, and they continued until about the end of 1903. H.C. or A. 1911. os Tae Kine AND THE ATTORNEY- MONW3 v AssocIaTED Nortuern COLLIERIES. 436 HIGH COURT H.C.or A. It is necessary to observe in order to understand the rise es fall of prices over the period covered by the evidence and mate! Tae Kixe to this case, namely, the latter part of 1900 to the end of 1904, th Awronsny. a8 I find to the end of 1903, and beyond all question up to the begin GENERAL OF ning of the year 1903, there was not open competition with THE Com- fs monweaurx to f.0.b. price. There was always a declared price, and a deel einai price means, if faithfully adhered to, absence of competition b CowTHERN 'that price. Departures from the settled price were surreptitious, and though their existence was felt by those who maintained the declared figures, they were unacknowledged. While the original Vend was adhered to all-round competition in regard to price was of course absent. By 1898 however, I do no know how much earlier, competition appears to have increased toa uncertain extent, but sufficiently to induce the collieries to reg the old Vend agreement as abandoned, and restore in 1900 firm exclusion of competitive prices, while leaving output From 1900 to 1902 the prices as declared were equally suppo to be non-competitive, but Wheeler's evidence shows there was st some internal competition and that rebates were in fact allowed, so : that it is impossible to regard the declared prices relied on as the true measure of competitive values. The amount of rebates gi at that time was, according to the evidence, Is. 6d. The only period that can be relied on as one of really competitive Vend prices was that beginning 1904 and ending the early part. of 1906. The present Vend was proposed in the beginning of 1906. . Wheeler describes the condition of affairs after 1903 as "go as you please till the invitation of 1906 to try and bring about some understanding."' The invitation, to which he refers, was given to him by the Superintendent of the A.A. Company (Mr. Hall) and he — met several colliery proprietors about February 1906. Several meet- ings took place and as I have already mentioned, many, nearly all, of — the colliery defendants attended. Schemes were suggested to bring — about an agreement between the colliery proprietors of the Northern — district for the purpose of regulating the selling price. Ata meeting: in March Mr. E. P. Simpson, a solicitor, and who then represented the Pacific colliery, produced a document as a suggested agreement. It 14 C.L.R.] OF AUSTRALIA. 437 was produced at half a dozen meetings. This document was called H. ©. or A. for by the Crown, but the defendants have not produced it to the 1s Court. No doubt it was modified from time to time, and ultimately Tae Krxa took shape as the draft in Ex. S. that I have found to be the con- \\\ouwav- tract entered into. Wheeler says it bore date April 1906, and he GENERAL OF THE Com- saw it as late as last year. He says that the proposals made included moxwranrH one for an allotment of the trade to each of the collieries as well as AssoctaT=p the regulation of the selling price. An understanding was arrived at aes that the collieries would not cut one another in prices, but would agree to a price. The first Vend minute (F. 1) 5th January 1906 records a resolution that "it was desirable to form an Association to raise and maintain the price of coal.'' It was carried unanimously. All members of the Vend, those who were present at that meeting and those who subsequently joined it and do not prove actual ignorance, are affected by a declared recorded and fundamental object. The declared price was fixed price f.0.b. at Newcastle. From Newcastle sea carriage is necessary for all inter-State and foreign trade as well as for a considerable part of the New South Wales supply. The distance from Newcastle to Sydney is only 60 miles, so that the requirements in respect of sea carriage for local supply stand on a somewhat different footing from those for inter-State trade, though some of the difficulties of the latter trade inherently exist in the former. The inter-State business had for some considerable time been mainly conducted by the defendant shipping companies, the Melbourne Steamship Co. and James Paterson & Co. Notwith- standing the declared fixed price, the shipping companies in deal- ing with the several collieries separately had obtained the usual rebate of 1s. 6d. and sometimes no doubt further concessions in price. Wheeler says:—'They asked for quotations from the different proprietors and then made arrangements. Undoubtedly they got the coal as cheaply as they could." The expedient therefore which had in practice been followed by the collieries of substantially confining their sales inter-State to the shipping companies leaving them to make any bargain they chose with the public was not effective to maintain intact the declared selling price, and during the negotiations for the formation of the 438 HIGH COURT H.C. or A. Vend a further expedient was apparently thought necessary. bea what point of time or by whom it was suggested I do not know. Tur Krxe_ is left undefined by the evidence. The defendants alone could hay AND THE ArrorNey- Comets or have preserved silence. I do not think it necessary to make a THE Com- MONWEALTH conjecture as to the source whence the various parts of the schem ne afforded enlightenment, but in this instance, as in many others, they Decent ultimately adopted originated. I concern myself only with the fa NortTHern Cotttrries, 20d the application of that scheme to existing circumstances. weak spot in the colliery proprietors' arrangements with regard to raising and maintenance of price was the internal competition among themselves for the business with shipowners ; and the expedient hit upon as a remedy, wheresoever it emanated, was that individual negotiation, whether by colliery owners or shipowners, should be eliminated. In future no single colliery was to treat with shipowners — and no single shipowner was to treat with collieries. That this was one of the results achieved by their arrangements is manifest from the correspondence. It is made specially clear by two letters, one from Appleton to Cant 20th January 1908 and Cant's reply of 24th January 1908 (Ex. U. pp. 30 and 34). In the latter communication - Mr. Cant says :—" With regard to individual contracts being entered — into between members of your Association and ours, I quite agree _ with you that this is not in accord with the understanding between ; us, and we will do all in our power to prevent this being done." He — then refers to a contract which Sneddon made with the Melbourne — Steamship Co. as having being made by Sneddon in ignorance of the ; position, and that Sneddon is prepared to cancel the contract. He then adds :—" It might be as well perhaps if you on your part would — see that your members do not in future make any negotiations with individual collieries for direct supplies." Larlier evidence is contained in letter 26th February 1907 from Murrell, then Secretary — of the Vend (see Ex. I. p. 79), to C. M. Newman (Ex. X. p. 49), and — letter Howard Smith & Co. to Cant, 13th August 1907 (Ex. X. _ p- 136). As against the colliery defendants, the entry in the Vend book (Ex. I. p. 45, 3rd December 1906) is evidence of the same fact. 3 That entry shows that interviews had taken place between the Vend- committee and Mr. Hunter representing the steamship owners followed by correspondence with a view of ascertaining their require- U4C.L.R.] OF AUSTRALIA. 439 ments for 1907, including requirements for James Paterson & Co. H. ©. or A and the entry states :—" We are also informed that James Paterson ee & Co. and the Melbourne Steamship Co. are in line and that their Tax Kiva requirements are included in the above figures. As you are aware, \vvonwey- however, no contracts will be made directly with the individual G&NE&4" OF steamship companies, but the trade will have to be dealt with as a » whole by the joint representatives of the steamship companies, Pere NortTHEern Bae ae and your Association. Commarea This then was the construction which the colliery owners placed upon the arrangements whether they amounted to a contract or not which were to govern their relations for the year 1907. How had those arrangements been arrived at? On this point I may again refer to the Vend minutes of 24th April 1906 when the colliery pro- prietors met representatives of the shipping companies and agreed upon a resolution already set out in full. As to this I need only now observe that Hunter pointed out that it was necessary that the agreement between the Association and the steamship owners should be entered into with the four defendant steamship companies leaving out James Paterson & Co. and the Melbourne Steamship Co. in the meantime ; those companies either to come in later or make an inde- pendent concurrent agreement. The resolution already quoted indicates on its face that the colliery Association had not yet com- pleted its scheme of amalgamation. I have no doubt therefore that the Vend agreement that is for the formation of the Associated Northern Collieries and the combined agreement or as it is some- times called the shipping agreement proceeded concurrently, and that the shipowners knew before they entered into the combined agreement, or before they made their business arrangements with the Vend for 1907, that one of the purposes and objects of the for- mation of the Vend was to enter into the class of contractual or business arrangements with the shipping companies, which in fact ensued. By the 13th September 1906 the terms of Association between the Vend members were decided upon as already stated, and the col- liery proprietors were advised to carry on on those lines without any signed document. Those terms are contained in an unsigned docu- ment part of Ex. S. commencing :—'' This Indenture made the . . . H.C. or A. 1911. ee Tue Kine AND THE Arrorney- GENERAL or tHE Com- MONWEALTH ca AssociaTED NortHERN CoLLiERIEs. HIGH COURT day of . . . One thousand nine hundred and six and purpo to be made between various coal proprietors mentioned of the firs part . . . trustees of the second part and the several persons and bodies corporate thereafter becoming parties of the d part." By its terms a Vend is established, that is, an allotment to the several members of a proportion in the aggregate trade in each — year. The Board is to fix the selling price from time to time of all _ coal raised from the mines, members being forbidden to dispose of the coal at lower prices than those fixed and forbidden also to — make any allowance directly or indirectly to any purchaser, as commission, discount or otherwise. A penalty is imposed for selling in excess of allotment and compensation is given for deficiency in disposal of produce below allotment. Other provisions, some of which are important in themselves, I pass by as irrelevant to the ; issues raised in this case. BrcinninG oF CoMBINATION CHARGED. The proposed agreement with the steamship owners was, as I have indicated, still in process of negotiation on 25th September 1906 in respect of the quantity of outside coal the shipowners — might take, and it is admitted (paragraph numbered 39 of Admis-— sion of Facts by the defendants) that the shipping companies prior to 24th September 1906 carried on the inter-State business — independently and in competition with each other, and with exceptions therein, previously expressed, did carry coal from all or any of the New South Wales mines to any of the other States. Mr. Wise has said that the words of this admission confine him more rigidly than he intended, and unduly restrict the plain effect of some of the evidence. But, though probably the Crown did not forsee the full use to which this admission could be put, I have applied to it the same rule as I did at the trial to Mr. Mitchell's admission respecting Mr. Newman's representative char- acter as regards the correspondence. Consequently, I assume that up to 24th September 1906 there was no combination as alleged; — but from 25th September 1906 onwards the facts convince me _ that the parties did act upon the lines and in accordance with the terms contained in the document in Ex. S. with the modifi- 14C.L.R.] OF AUSTRALIA. cations I have previously stated. A very terse and distinct expres- sion of this fact is found in the letter of Mr. Cant to Mr. Apple- ton dated 31st January 1908 (Ex. U p. 39) in these words :— "We act together for our mutual benefit." Instances of this joint action are numerous, commencing very shortly after 24th September 1906. On 27th September 1906 it appears from the minutes (Ex. Lp. 7) —"It was arranged that the committee meet the steamship owners on Thursday next 4th proximo at 10.15 a.m. at these rooms to arrange prices &c. for various contracts." On the 4th October 1906 (I. p. 9) it appears they did meet, and agreed as to prices and proportions of coal for Victorian Railways contract. Those references affect only the colliery defendants. In Mr. Lewington's letter to Mr. Chapman 16th January 1907 (X. p. 31), it appears that in consequence of a conference between Mr. Hunter and the Vend committee it was arranged that a joint committee of steam- ship owners' representatives of Newcastle and the Vend committee of Newcastle were to meet as often as necessary to arrange for the shipment of coal. It also stated that it was " agreed that specific contracts should be entered into for special requirements such as railways, gas and Broken Hill. Other trade to be covered under the shipping agreement." The same letter referred to the suggestion that the various col- lieries should appoint, different steamship companies as agents for the collieries and a specific distribution of agencies was included in the suggestion. J. & A. Brown were suggested as inter-State agents for their own mines, McIlwraith McEacharn & Co. for some other mines, Huddart Parker & Co. for others, Adelaide Steamship Co. for others, Howard Smith & Co. for others, and, what is some import- ance in determining the personnel of the combination, the Melbourne Steamship Co. for Heddon Greta and Sneddon's, and Paterson & Co. for Newcastle Mining Co. The letter goes on to say, before definitely agreeing to the suggestion it was decided to refer the matter to Mr. Simpson for advice, and that the steamship companies had been advised not to take action in reference to any outside enquiries referred them by the companies pro tem. As to this, if the col- lieries and shipowners were acting independently of each other, it is hard to imagine why such advice as this should have been given ; H. C. or A. 1911. — 'Tue Kine AND THE ArroRNEY- GENERAL OF tHE Com- MONWEALTH v ASSOCIATED NortTHERN COLLIERIES. 442 HIGIL COURT H.C. or A. for surely no doubt can exist as to the innocence of a person y mise merely acts as bona fide agent for a colliery. The rest of the Ik Tue Kine contains further indication of joint action. F AND THE bs ATTORNEY- ConcEALMENT BY DeFENDANTS OF Fact or COMBINATION. — GENERAL or THE Com- Onthe 30th January (X. p. 34) Mr. Newman communicated to. MONWEALTE 4 ee es Chapman the fact that the proposal for agencies has bey conside Nortaers by the shipping Association. He adds that some inquiries had ae made from Scott Fell & Co. to which "non-committal" replies h been given, and until Mr. Simpson's advice be received noth further would be done in respect of agencies. On 7th February 1! (X. 44) Minter, Simpson & Co. advise the Vend that by adopting course proposed "the collieries will not in our opinion be prejudicing -their position in the event of any steps being taken to charge with any violation of the provisions of the Australian Industries servation Act." Had there been no combination in fact one wo have expected an answer of a totally different nature. On I) February (X. p. 42) Chapman in letter to Newman communicates Simpson's advice and asks for shipping Association's views. On March (X. p. 51) Newman writes to the Vend Secretary agreeing the agency proposal and to the list previously sent " except that order to keep matters on a uniform basis I have to request you transfer Heddon Greta to say Huddart Parker & Co., Sneddon's &e. to Messrs. Mellwraith McEacharn & Co: and Newcastle Howard Smith & Co. or otherwise as those collieries may desire." Further on he says "I think it will be as well for each colliery co pany to now formally appoint its agent in writing." This pro bears the appearance not of an ordinary business transaction but of a device to conceal the true state of affairs or facilitate the operatit of some unusual arrangement. On 28rd April 1907 (X. p. 63) the shipping Association informed Mr. Cant that in order to meet the wishes of Mr. Sneddon it would concur in the appointment of the Melbourne Steamship Co. as their inter-State agents. Repiies to Scorr Fett & Co.'s Requests ror Coat. Some of the enquiries made by Scott Fell & Co. which have been referred to were communicated by Mr. Northcote to } 14C.L.R.] OF AUSTRALIA. Chapman on 23rd February 1907 (Ex. Ol). The letter suggested the correspondence should be brought up at a meeting of the coal Association. It is remarkable that W. Laidley & Co: Ltd. as early as 14th Janu- 443, H. C. or A. 1911. Tae King AND THE ATTORNEY- ary referred Scott Fell & Co. to the Adelaide Steamship Co. as GPNeRar or their inter-State agents who would be pleased to quote for either Rhondda or Co-operative coals, that is to say, two days before Lew- ington's letter to Chapman, and a considerable time before the Steamship Association had consented to act, and not only so, but at a time when, as Mr. Lewington stated, they had been definitely advised by Mr. Simpson not to act in reference to any outside enquiries referred to them by the companies pro tem. The Adelaide Steamship Co. was obviously one of the companies to which Newman, in the letter of 30th January above quoted, referred, when he said enquiries had been made, non-committal answers given and that pending Simpson's advice nothing further would be done. Yet, on 29th January that company asks Scott Fell for further information and then says will be " pleased to give a quotation with the object of fixing up a contract." After the advice is given the company gives quotations, but on a c.i.f. basis only, and refuses to give any other, alleging as a reason in the letter of 23rd February that " We undertake all the carrying on behalf of the collieries mentioned, thus avoiding delays to collieries or clashing of steamers and I therefore regret we cannot give you a f.0.b. quotation." 'This correspondence, linking the Adelaide Steamship Co. on the one hand with the Vend, and on the other with Newman writing for the shipping Association, is clear evidence of the Adelaide Steamship Company's membership of the Association, and its co-operation with the Vend. But it is more. It affects the company whose act it is, it affects the whole shipping Association, because that Association's letter of 30th January (X. p. 34) exhibits full knowledge and adoption of the course taken by Northcote, and it affects the Vend because the combination is established, with this overt act of pursuing its purpose. Northcote's statement of the reasons for not quoting a f.o.b. price is distinctly untrue. In a casuistical sense it possesses some foundation. In one way, and one way only, his company had THE Com- MONWEALTH: v. ASssociATED NorrHEern COoLLreRtEs. Add H.C. or A. 1911. et Tue Kine AND THE ATTORNEY- GENERAL OF j THE Com- MONWEALTH vw ASSOCIATED NortHern COLLIERIES. HIGH COURT undertaken the carriage of Rhondda and Co-operative coals, but that was not the sense in which his words would naturally be unders or were obviously intended to be understood, by Scott Fell & His company had undertaken the carriage of coal for every c Rhondda and Co-operative coal as much as Northeote's com For all practical business purposes, the reason given was mislea and untrue. But it was apparently thought desirable to give it, for Mr. Northcote would not have so far paltered with truth without some belief in its necessity. His company was named as agent for the two collieries, prima facie this meant an agency to sell coals £.0.b. because the collieries were not carriers. Some reason had therefore to be given why this was not possible. The true reason, namely, that _ the collieries were contractually forbidden to sell to outsiders at all, and that the so-called agency was a sham, could not be given witho ut disclosing the combination, and so the actual state of affairs was distorted. But W. Laidley & Co. and the Adelaide Steamship Co. were not alone in this attitude. The simultaneous conformity of action on the part of several other defendants, the concurrence of the — shipping Association and the Vend in non-committal replies, testify unmistakably to a concerted plan. The other replies to Scott Fell & Co. accord with wonderful unanimity, always in effect, and some- times even in mode of expression, with those of W. Laidley & Co. a the Adelaide Steamship Company. In order to appreciate them itis necessary to quote Ex. D4, the letter which Scott Fell & Co. addres- sed to the Newcastle Coal Co., which was a circular letter addressed to various colliery defendants, about twelve in all. It ran thus:— _ "Commonwealth Line of Steamers, Sydney, December 18th 1906. We shail feel obliged if you will give us a quotation for 5-25,000° tons of your best screened coal, in quantities to be mutually agreed on for shipment during the year 1907." Of course every one of the defendants to whom it was addressed _ and the shipping companies knew that Scott Fell was doing or trying | pe do unics State business. They ey it in January Hen in connec- MOLR.J OF AUSTRALIA. the joint meeting of representatives of colliery proprietors and ship- ping companies, when the proposed South Australian railway con- tract of 96,000 tons was considered. In presence of all, Mr. Simpson for the Pacific company and Mr. Laidley for Rhondda, stated that H. C. or A. 1911. —— Tue Kine AND THE ATTORNEY: they had already given quotations to Scott Fell & Co. for a supply of G®N®R4 oF THE Com- a portion of the contract, and eight collieries agreed to supply the wonwrarrn Steamship Owners' Association for two years for the South Aus- aan Getaies tralian railway contract at prices named, and undertook not to supply coal for this contract except to the Steamship Owners' Association, compensation was arranged for, and the guarantee of 24th April 1906 was the outcome of this undertaking. The meeting of 24th April was apparently the one deposed to by Wheeler (at p. 259) who gives a short account of it, and states that Hunter expressed the fear that Scott Fell would probably form part of the outside competition which it feared would take the South Australian railway contract away from the steamship owners. Compinep Opsecrs or DEFENDANTS TO EXCLUDE Scorr Fe. & Co. FROM COMPETITION. These are only specific instances, but there cannot be any doubt every one of the defendants knew Scott FeM was trying to get a footing in inter-State coal supply, and what is very important to observe to do it by means of their own carrying. In September 1906 (F. 141), the Vend abstained from sanctioning Laidley & Co. supplying Scott Fell & Co. with coal to fulfil some partly per- formed contracts, notwithstanding idleness at Rhondda. That brings us very close to Scott Fell & Co.'s circular letter and we have now to see the responses other than those I have mentioned. The East Greta Co. on 19th December 1906 (F. 4) for New Zealand and inter-State trade referred Scott Fell to McIlwraith McEacharn & Co., their "agents." On 19th December 1906, the Caledonian Co., as I gather from G4 and H4, and the absence of evidence to show the contrary, telephoned that on no considera- tion would they supply Scott Fell for the inter-State trade. Mr. Lane gave evidence (p. 470) of a memo on p. 4 initialled by W. H. Dawson, deceased, in the course of his duty, which would cor- roborate the inference I have drawn from G4 and H4. But NortTHerN CoLLIERIES. H. C. or A. 1911. ne) Tue King AND THE ATTORNEY- GENERAL OF Lane and Dawson. G4, unanswered, is quite sufficient, as THE Com- MONWEALTH o. AssocraTED NortHEeRN COLLIERIES. HIGH COURT though I think the memo perfectly admissible as against the | donian Co. in the first instance, and—the combination being pre —against the other defendants also, I arrive at my conclu independently of the memo, and of any communication be says on 20th December :—" We also understand you to say tha on no consideration would you supply us for the inter-State trad Please inform us whether we are correct in this assumption." 27th December (H4) Scott Fell press for a reply to G4 and a on 10th January 1907 (also H4), but apparently none The inference of absolute refusal is therefore irresistible. On December (P4) the Australian Agricultural Co. referred Scott Fe & Co. to their "agents " Huddart Parker & Co. 7 J. & A. Brown on 20th December 1906 (E4) affected to stand the enquiry as limited to foreign trade alone, and r Scott Fell to their London House for fear as they said of disturbing their arrangements. : The Dudley Co., 20th December 1906 (N4), quoted, but it must be understood the coal was not to be delivered inter-St New Zealand, Manilla or Hong Kong, "as we are not in a pos to sell Dudley coal for consumption in the places named." On 21st December 1906 (K4) Sneddon's quoted, but on understanding it was not for Commonwealth ports. There must hay been some coercive reason for this refusal, because the letter 0 cludes with thanking Scott Fell & Co. for past favours and trus for a continuance of their esteemed orders. The Newcastle Co. on 22nd December (04) replied that # whole of their output for next year had been sold. The amount of output for 1907 was 283,459 tons, the exact quantity was of cour unknown at the time of writing, and though it might be true in a strained sense to treat the combined agreement as a sale prospec ively to the shipping companies of the whole of their inter-State output, that is not the sense the words would convey to the eng uit and in no other sense was there any inter-State sale, so far as tl evidence goes. The Scottish Australian Co. on 24th December 1906 (LA) quo for foreign shipment, and on 28th December said that, whil 14 C.LR.] OF AUSTRALIA. prepared to sell for New South Wales, they referred them as regards H. ©. or A. the other States to MeIlwraith's. The Seaham Co. on 21st December (I4) said the whole of Abermain output for 1907 was disposed of. As to Seaham they had agencies for inter-State and some foreign places named, but their © paements precluded their quoting. With qualifications they quote » 1911. = THe Kine AND THE ATTORNEY- ENERAL OF tHE Com- Ss for " elsewhere," offer to remain open till 28th. On 28th December jcsoctarep they said they were prepared to sell for inter-State markets, but they themselves would quote for consumption in New South Wales only, and, if quotations were wanted for other States, they referred Scott Fell to Mcllwraith McEacharn & Co. Having been thus referred to the shipping companies, Scott Fell addressed them accordingly. On 27th December they asked MeIlwraith McEacharn for quota- tions for say 25,000 tons of East Greta coal ; on the 28th they asked them for quotations for 25,000 tons Seaham coal; on 29th Decem- ber for a quotation for 25,000 tons Scottish Australian coal, all for the inter-State trade. On 11th January a reply came, which I imagine the Associa- tion regarded as one of the non-committal replies. It asked for the quantities required at the various inter-State ports. Of course on the assumption that MclIlwraith & Co. were only agents for the respective collieries, and with the knowledge that Scott Fell & Co. were themselves carriers of coal, the reply was not too highly colored, it being termed " non-committal." However, on Mth January 1907, Scott Fell reply ; they desired quotation for 25,000 tons from the three mines respectively, 25,000 from each mine for Victoria, 25,000 tons from each mine for South Australia and 25,000 from each mine for Western Australia. The only reply, which is sent on 23rd January, is to enquire whether MclIlwraith McKacharn & Co. are correct in assuming Scott Fell wished to make a contract for a total quantity of 225,000 tons. Obviously this letter was insincere, and was only a roundabout and disingenuous, but perfectly transparent method of saying No. The Exhibit is M4. On 27th December 1906 (P4) Scott Fell addressed Huddart Parker & Co. as agents of the A.A. Co. On 2nd January 1907 a reply NortHERN 'OLLTERIES. 448 HIGH COURT H.C. or A. came asking, in striking unanimity with other replies, for what por eon places they required the coal delivered. On the 4th Scott Fell Tue Kine itis for inter-State trade. To this no further reply was vouchsafe svonwev. On 10th January 1907 (R4) Scott Fell request the Pacific Co. ATTORNEY- Sara return an answer to their circular request of 18th December 1906, monweartnx But no reply is evoked. v. Assocraren Altogether the batch of correspondence referred to at almost Norrie Very threshold of the defendant's combined operations, when ri COLLIERIES. in connection with the facts as now known, not only manifests the existence of a combination, but, in addition, leaves a most unpleas: nt impression relevant to its character and objects, an impression which the defendants have not attempted to remove. There is one letter which may be independently referred to as extremely potent to show the illusory character of the "agency " created. It is Appleton's letter to Cant of 21st January 1908 (U. 32) in which he says :—"I now beg to hand you list of agents for the various collieries for 1908. The only change is that Mi Huddart Parker & Co. have handed over the Seaham and Abermain to the Adelaide Steamship Co., who have handed to Huddart Parl & Co., Dudley, Co-operative and Rhondda. I trust the list will m¢ with your approval, in which case, when advising me, you might — also advise Captain Brown, as we are sending a copy forward for information of Newcastle manager. The list is enclosed." : Usually principals select their agents, but here the so-called "agents " select their so-called " principals." The "handing," as Appleton terms it, of collieries, by one ship- ping company to another on their own initiative is significant of the connection of their interests in relation to the inter-State coal — business and of their true position as principals so far as the public — are concerned and not as agents, except in the way specially pro- vided by clause 11 of the combined agreement. : If they were really agents in the ordinary sense, the contracts they made would really have been between the purchaser on the one hand and the colliery on the other. But that we know was not to be the case. The arrangement was plainly—that is, on the facts ~ as we see them now, an expedient for cloaking a scheme, and if s what scheme ? 14 C.L.R.) OF AUSTRALIA. 449 Derrenpants' Reasons For SECRECY. H.C. or A. There is no doubt the Vend considered secrecy necessary as a appears by their minutes of 24th April and 8th May 1907 (I. 105, THe Kixe 111, and 113) in which the chairman impressed upon the members the \yonnuy- absolute necessity of taking steps to prevent any information respect- eee OF ing the business transacted at meeting of Association reaching those monweanrn outside. Of course, in the case of an ordinary trading company it Assoctarep would not be expedient to placard all their transactions, but after Pike making due allowance for legitimate guarding of business determina- tions, the nature of this Association, its purposes and its actual reso- lutions and transactions, make it more probable that the desire for secrecy was impelled, if not by an uneasy conscience, at all events by a fear of the consequences of publicity. There are letters and telegrams strongly indicative of this position, thus when Howard Smith on 21st May 1907 telegraphed the Vend Secretary (X 74) referring to Vend allotments and Hetton coal for Gas Co., and saying " Kindly give us your Association's assurance we shall get all coals our requirements call for ;" Mr. Cant replied on 23rd by letter (X. 75) saying that at a committee meeting "members expressed surprise that you should have allowed information of the character contained in your messages to pass over the public lines. You can easily understand that such information if it chanced to get into the hands of outsiders might lead to complications. Kindly in future write me in connection with matters of this nature." It will be observed what the Vend feared was euphemistically termed "complications." Competition was out of the question, and in the absence of any other explanation of this expression I can only attribute to it the fear of legal proceedings or legislative inter- position. On 20th April 1907 Howard Smith telegraphed to Cant (X. 143) in terms which will have to be referred to in connection with another branch of this case but which include the following pas- sage :—' There is reason to fear that as soon as the general public knows the present state of affairs indignation meeting likely to be held and will probably result in deputations to Government seeking hostile legislation." This telegram was coded, apparently in pur- suance of the suggestion made in the letter of 28th May 1907 (X. p. 78). Vou. XIV. 29 450 HIGH COURT H.C. or A. CoMBINATION CONTINUED TO END OF 1909. 1911. — 'Tur Kixe nature is found in the correspondence, for instance Howard seme. letter to Cant of 27th July 1907 (X p. 119) written as it states Further evidence of the continuance of the combination a ATTORNEY- Samara or " At the request of the other members of my Association," vue Com- monwnarrn to the fact that enquiry had been received from the Mount Mor NortHEeRN Couttenirs, tons of Lymington coal from Newcastle to Rockhampton and for thi carriage of 500 to 1,500 tons of Southern coal from Mount Keml to Rockhampton. The letter states:—'"In conformity with sidered dangerous to maintain this course in view of the facility wit which the Mount Morgan Coy. could provide either by charter purchase their own tonnage." It will be noticed that the quotat asked for was for carriage merely, a matter with which norm the collieries were unconcerned, but which was part of the ordinar business of the shipping company. The " arrangements " theref must have been restrictive of the shipowners' right to carry and the coal referred to was non-Vend coal the conclusion is inevital that one of the terms upon which the combination proceeded was the the shipowners carry none but Vend coal, except possibly Queensl: coal to Queensland ports and the stipulated maxima of bunker The letter proceeds to say the position is an extremely difficult on and asks the question, " Practially are we to consider ourselves b red from carrying any coal for delivery at Queensland ports from collieries outside your Association?" A further letter of 31st confirmed a telegram of same date explaining that in fact Adelaide Company's agents had given a quotation which accepted by the Mount Morgan Company, performance being post- poned pending reference to the Vend. It suggested as a solution 0 ; the difficulty "' Vend allows us fulfil this order conditional that : further quotations made c.i.f." Two points present themselves—first the word "us" in telegram sent by Howard Smith, which identifies his Company that transaction with the Adelaide Company which alone has the quotation ; and next that "all further quotations made would in the circumstances imply that only Vend coal was to b 14 C.L.R.] OF AUSTRALIA. 451 carried. The answering telegram of the Vend was as follows :— H.C. or A. "« Agree to your fulfilling 500 tons only, distinct understanding only aout our coal quoted and always c.i-f." Cant's letter of Ist August 1907 Tue Kiva : i AND THE (X. 124) already referred to for other purposes contains a resumé of \\onney- this transaction. The restriction mentioned is correlative to the pea oF THE Com- understanding which is styled in Beckett's letter of 12th August 1907 monweavrH to the Vend Secretary (X. p. 139) :—" The rule of the Association to pore sell the inter-State steamship companies only." As a matter of foes acl machinery, in order to prevent an unintentional breach of mutual arrangements Howard Smith's letter of 16th August 1907 (X. p. 140) to Cant asks for prompt notification of any withdrawal or addition to the membership of the Vend. Cant's letter of 9th December 1907, Newman's letter of 27th December (X. p. 198), Appleton's of 16th January 1908 (U. p. 26), Cant's of 24th January 1908 (U. p. 34) and 31st January 1908 (U. p. 39), 6th August 1908 (U. 85), Howard Smith's letter of 20th August 1908 (U. p. 87), Cant's letter of 21st September 1908 (U. p. 98), Cant's letter of 28th September 1908 (U. p. 103) are equally evidentiary of the continuation during 1908 of the combination as well as of the contract. Similarly the minutes of the meeting of 23rd April 1909 (X. p. 216), (U. p. 149), which teem with evidence of continuance, Cant's letters of 7th May 1909 (U. 160) referring to contracts '"'in their names," 24th May 1909 (U. p. 131), 10th June 1909 (U. p. 134), and the minutes of the conference of 30th Novem- ber 1909 (Ex. X. p. 221 and Ex. V) are evidence showing the com- bination was preserved throughout 1909. On 18th January 1909, Melbourne Steamship Co. tendered to the Melbourne and Metropolitan Board of Works 2,000 tons of coal for the Pumping Station at 22s. 6d., deliveries to be made not less than 100 tons a week or as ordered. On the 29th April Mcllwraith McEacharn & Co., Melbourne Steamship Co. and J. & A. Brown ten- der for 3,000 tons, the same place at 22s. 6d. separately but uni- formly, and obtained 1,000 tons each. On 21st September 1909 Mcllwraith McEacharn & Co., J. & A. Brown, Melbourne Steamship Co. and Howard Smith & Co. tender separately but uniformly at the same place at 22s. 6d. They obtained 750 tons each. On 23rd November 1909 McIlwraith McEacharn & Co., Howard Smith & 452 HIGH COURT H.C. or A. Co., Melbourne Steamship Co. tendered separately for 1,000, 191. uniform price of 22s. 6d. —— Tue Kixa It is not likely that this wonderful unanimity would have be AND THE ATTORNEY- GE or without some pre-arrangement. It is not unworthy of notice th que Com- monweaurn J. & A. Brown stood in a more advantageous position than the Wie ena tenderers in respect of the f.o.b. cost of their own coal. Their f.0 A eae cost was his f.o.b. cost plus the collieries' profit and yet his di price and theirs happened to be fixed at the same amount. | continued time after time. So we have the collieries acting cert with each other and the carriers including J. & A. Brown a in concert with each other, and no change visible in the 2 which they acted. The only apparent difference was less regu and definiteness in stating and recording their understanding. V. abovementioned shows that on 24th November a code tel was sent from Cant to Appleton stating " Decision of Board to authority given to you to tender all inter-State contract one including Railways upon understanding that each colliery will p ticipate in total yearly requirements Northern coal to the extent of their respective percentage on the basis of our Association a ment. Committee has been appointed meet shipping compani during next week Newcastle when can you meet?" Later 0 the same day, and apparently immediately after the first ano code telegram was sent from the same to same: " Stopping M wraith's Metropolitan Gas contract and forbidding any new cont except railways." On 25th and 27th further telegrams passed wl eventuated in the conference of the 30th. Mr. Hunter admitted ! had arranged for 140,000 tons a year from the Hetton Co. for Gas Company. Forsyth asked if that were "in order." Hun said he held the Gas contract for 25 years and refused to allow ' Vend or any other party to interfere between them. Forsyth ' it was understood that the Gas Company would require an additi 60,000 tons a year and asked for an assurance that no contract would be entered into with an individual member of the Vend for the quantity until the matter had been discussed by the co proprietors for the reasons already stated. Hunter refused to this assurance and further stated something which Mr. Mite > 14 C.L.R.] OF AUSTRALIA. 453, relied on as showing that in 1909 there was no combination. The H.C. or A- statement was that " he would be no party to any understanding or 19Hs agreement which in any way restricted trade or was in contraven- Tux Kixe tion of the Anti-Trust Act." This laudable sentiment was mani- sy? vey. festly evoked by the pressure of the combination arrangements GENPRAL OF THE Com- on Mr. Hunter's particularly tender trade spot. It is the first monweavre declaration by any member of the combination of allegiance to the pes jee «|. NORTHERN law. It comes on the last day of November 1909, after the parties Qo) ierirs. have been doing for years what is now admitted by him to be a breach of the law. It is limited to Mr. Hunter and apparently even by him in practice to gas coals as will presently be seen. And how far was it in fact observed? When the general supply for 1910 was discussed objection was taken to the allotment basis on the ground of what I may shortly describe as public injury. The Vend adhered to its proposal, the matter was not decided there and then and it was arranged that representatives should meet later. In Ex. V will be found several telegrams ultimately arranging the meeting for Sydney on 17th December at two o'clock. What took place at the meet- int there is no record to show. We can only infer it from subse- quent conduct. I should think that no definite conclusion had been. arrived at as to whether the allotment basis was to be adhered to. However, that was at the end of the year 1909, and the strike was still proceeding. As against the Adelaide Steamship Co. Ex. R8 is an admission of the renewal of the agreement for 1909. It is a telegram from Cap- tain Brown (Newcastle) to Northcote (Melbourne) dated 22nd January 1909 and contains these words :—"' Coal agreement fixed for this year. Terms my letter nineteenth." The letter was called for, but not produced. Comprnation Continvep 1910. As to 1910 direct proofs are less plentiful, but the circumstantial evidence leaves no doubt in my mind there was a continuance in fact. There is not a fragment of evidence to show the previous course of conduct was definitely broken off and the combination abandoned. The public had to be supplied and of course were supplied while the parties were struggling about strict allotment. H.C. oF A. 1911. ATTORNE GENERAL THE Com- MONWEALTH v AssocraTEeD NortHern CorLiErtes. HIGH COURT In January coal was for instance raised to 46/- to the retail d in Adelaide (N5) because the strike was still on, and this n immediate settlement of allotment less urgent. The strike contin till 24th March 1910. Can it be believed the shipowners got the profits of the strike prices or was it not rather that clause of the agreement was brought into operation, the price fixed agreement, and the profits divided? Unless the contrary is s and it is not—I infer that latter course was pursued, though syllable has been produced to record it. On 10th February 1910 (U. p. 140) Cant wrote to Appleton as for a meeting between " your members and a committee of association " to discuss matters generally in connection with inter State supplies of coal. The letter refers to a meeting of the Ve held on the preceding Tuesday ; but no Vend minutes have b produced later than Friday, October 8th 1909 (Ex. J. p. 263), withstanding the fact that later minutes were specifically deman in writing by the Comptroller-General (Ex. Q.) 16th May 19 and a few days later by Hudson verbally. The sudden termit tion of the minutes, the last entry of which is the record of the decision to call a full meeting of the members for the 14th October at 9.30 in the morning, is remarkable, and like many other inci requiring explanation by the defendants has been left unexplaint On the side of the shipping Association the correspondence on the subject goes on up to 26th March 1910 (U. p. 148) when the whole correspondence between the two bodies so far as disclosed abi ends. But for one circumstance this fact would be not only sin but scarcely susceptible of reasonable explanation, because mutt business operations certainly did not terminate and up to date mentioned there is no indication of any approaching ch from the customary mode of transacting that business. The o suggestion of a reason for not holding the conference asked for i statement by Appleton, in the latest letter disclosed, that he had expressed to Forsyth and Learmonth the opinion that " it would better to let matters settle down for a time." Now what mat were there which the parties thought had better settle down for time? The strike was over two days before the letter was writ That was past. But coming events frequently cast their shad 14CL.R.J OF AUSTRALIA. 455 before, and, when legal proceedings are in course of preparation by H- ©: oF A- one party, steps have frequently to be taken which bring more we than a premonition to the other ; whether this was so or not in the Tur Kine AND THE present case it is difficult to say with certainty, but the fact appears that, within a very few days of 26th March 1910, active and open ® steps were taken by the Government to obtain information from some of the defendants in connection with the alleged combination. Assocrarep Norriern Hudson proved (p. 111) that on the 15th April 1910 he saw Mr. Cant Gorirerres. at the latter's office Newcastle when the books were produced which are now in evidence (F. I. and J.). Mr. Hudson identified a letter dated as appears in the notes 15th April 1910, which must be an error for the 13th April 1910, because it can have no reference to any letter other than that marked Ex. G., for identification (see p. 109). The words " for identification" were inadvertently left on that document and Hudson's mistake as to the date was left uncorrected. I therefore base no inference on Ex. G. although in effect it was identified and so treated. Apart then from that document it is clear that on the 15th April a letter having reference to the pro- duction of the books had passed. A person in Mr. Cant's position was not likely to produce, and in similar cases (see p. 113) did not produce Vend documents without prior authority. The probability then, from the fact of production on 15th April and the existence of the letter, is that there had been a prior request and the con- sideration of that request by the Vend, authority being given to Cant to produce the books. Consequently it does not require a very strong effort of imagination to see why formal records, in the shape of correspondence after the end of March, have not been produced. Business however had to go on and did go on after 26th March continually. The interviews Moorehead had with Appleton were four, namely, 26th and 27th May, when documents contained in Ex. U. were handed over ; 1st June and 28th June 1910. Instances of business done may be found in the letter of MeIlwraith McEacharn & Co. with Metropolitan Gas Company, 16th May 1910; the same Company's tender for general stores to Melbourne and Metropolitan : Board of Works, 17th May 1910 (BS). Huddart Parker & Co.'s H.C. or A. 1911. = Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWFALTH v ASSOCIATED NorrHern CoLLIFRIES. HIGH COURT (lou. tender for general stores same date (B8). There appears in fact to be no break in the method of dealing with the public. The defend- ants' silence in regard to this period does not of course supply any want of Crown testimony, but it is a circumstance proper to be considered wherever there are any facts tending to show a con- tinuance of the former course of conduct, or from which such a continuance in the absence of contrary proof might be presumed. — So considered, it detracts from any observation as to the meagreness q of the evidence; or as to its unsatisfactory character, or as to injustice of the inferences which the Crown invites the Court to draw. The circumstances appeal to my mind as immensely strong to show a continuance down to the commencement of the action ; and, although no liability in this action attaches to the defendants for what they have since done, their subsequent conduct may show an intention to preserve the combination unbroken, and therefore be inconsistent with its termination in 1910. This is, in my opinion, the effect of the evidence. One instance may be mentioned at this : point, viz., Ex. 18, which represents tenders of the four defendant — shipping companies and J. & A. Brown, dated 1st May and 2nd May : 1910, for general supplies for the South Australian Government for two years ending 30th June 1913. Those tenders include items of coal, some best screened and others small coal, one item being for Southern coal, in divergent quantities, from 20 tons to 3,000, deliver- able at eight different places, some in bags and some not, some new items, some old. It isa most remarkable fact, buta fact nevertheless, that there is absolutely no difference in any of the five quotations ; as to one item there are two tenders only, and as to two others there are three tenders only, but as to eleven items, the prices, varying of course as to the items themselves, do not vary one farthing as between the tenderers. Other instances are to be found in Ex. B8 Melbourne and Metropolitan Board of Works. Huddart Parker & Co. on 10th June 1910, J. & A. Brown on the ith, the Melbourne Steamship Co. on the 11th, McIlwraith McEacharn on 11th, and Howard Smith & Co., on the 11th, tender for 1,000 tons engine coal, ~ at the Pumping Station, all separately and all at the one price 22s. 6d. For coal at the Farm in May 1910 Huddart Parker & Co., Melbourne Steamship Co. and Mcllwraith McEacharn & Co. all tendered for 14 C.L.R.J OF AUSTRALIA. 457 50 tons at the one price 27s. 3d. Later on, in the same month, H. ©. or A. tenders were sent in for engine coal for the Farm, and as required He from Ist July for two years by the following :—Huddart Parker & tae Kine o., McIlwraith McEacharn & Co., James Paterson & Co. and AX? THE ATTORNEY- Melbourne Steamship Co., all tendered separately, and at the one boi or tHE Com price, 27s. 3d. Evidently a truce was observed on the question moswraurn of rigid allotment and subject to that and the strike, matters went shied on by tacit understanding substantially as before. I will here Pasar ee quote a few words from the recent American case of United States y. American Tobacco Co. (1), White, C.J., in delivering the judgment of the Court said :—" Coming, then, to apply to the case before us the Act, as interpreted in the Standard Oil (2) and previous cases, all the difficulties suggested by the mere form in which the assailed transactions are clothed become of no moment. This follows because, although it was held in the Standard Oil Case that, giving to the?Statute a reasonable construction, the words 'restraint of trade' did not embrace all those normal and usual contracts essential to individual freedom, and the right to make which was necessary in order that the course of trade might be free, yet, as a result of the reasonable construction which was affixed to the Statute, it was pointed out that the generic designation of the 1st and 2nd sections of the law, when taken together, embraced every conceivable act which could possibly come within the spirit or purpose of the pro- hibitions of the law, without regard to the garb in which such acts were clothed. That is to say, it was held that, in view of the general language of the Statute and the public policy which it manifested, there was no possibility of frustrating that policy by resorting to any disguise or subterfuge of form, since resort to "reason rendered it impossible to escape, by any indirection, the prohibitions of the Statute." This completes the enquiry as to the fact of a combination and its continuance down to the commencement of the action, and the statutory effect of sec. 14 (c) would simplify the approach to this result which so far has been affirmed at common law. The basis of the combination was undoubtedly the set terms appearing in the (1) 221 U.LS., 106, at p. 178; 81 (2) 221U.S., 1. S.C. Rep., 632, at pp. 648, 649. 458 HIGH COURT e H.C.or A. document contained in Ex. S. and its modifications. In o a words, even if the document in S. and its modifications are Tax Krxc_ technical process of reasoning or rule of law to be taken, AND THE be Arrorney- CODS! Gamera °F bond of union and the basis of common action between the Vend MonweaLTH every member of it for the time being, on the one hand, and Assoorammn shipping Association and every member of it for the time bei aa the other. Leaving aside for the present the question of intent: detriment I find the allegations of fact in pars. 43, 44 and 45 of statement of claim are proved. tituting a formal contract, they do, as I find, constitu ConNEXION OF MELBOURNE StEamsuip Co. AND JAMES Pa' & Co. with CHarcEs. The Melbourne Steamship Co. Limited and James Paterson 4 Co. were not, I think, originally parties to the agreement. But ve soon afterwards they cast in their lot with the four defen shipping companies, and were in some partly unexplained perfectly certain manner assisting the combination and sharin, the profits. As regards the Vend, their minute of 13th Nov 1906 (I. 37) says :—" Melbourne Steamship Co.—Mr. Hunter vised were in line." As against the shipping companies, the of D. Y. Syme, manager of the Melbourne Steamship Co. to Apple dated 17th January 1908 (U. p. 28), Appleton's answer, 20th ary, are in point with respect to the same Company. As agains all the defendants see Chapman's letter to Newman, 29th Decem! 1906 (X. p. 16); Chapman to Hunter 9th January 1907 (X. p. 21) Newman to Lewington 11th January 1907 (X. p. 26); Lewin reply 14th January (X. p. 28) ; Lewington to Chapman 16th Janu 1907 (X. p. 31); Chapman to Newman 31st January 1907 (X. 36); Newman to Lewington 26th March 1907 (X. p. 55); Hunter to Forsyth and Howell 25th July 1907 (X. p. 114); Newman Learmonth 15th November 1907 (X. p. 171); Newman to month 27th November 1907 (X. pp. 181 and 184); Earp's lette to Cant 7th September 1908 (U. p. 97) communicated to Ap on the 10th as to the Melbourne Steamship Co. and Cant's lette 28th September 1908 (U. p. 103) to Appleton, and its enclos Reid to Greaves; letters 20th March 1909, Appleton to Car ue 14.C.L.R.] OF AUSTRALIA. 459 Cant's reply 30th March and the enclosed letter from H. McLachlan, H © or A. Secretary to Chief Commissioner of Police of New South Wales to heap Cant 23rd March 1909 (U. pp. 120, 121, 122); also minutes of Tue Kixe Conference 23rd April 1909 (U. p. 149). eee The fact that these two shipping companies were active and © Es recognised members of the combination is proved, and it makes mo: ME ALTHL no difference that they were not directly and as between them and the aman NorTHERN Vend parties to the combined agreement, or that they stood in Goytirnrms. some sort of dependent or subsidiary relation with respect to the defendant shipping companies. They had their function to per- form in the arrangement, and they performed it, and participated in the results. Position or J. & A. Brown. The position occupied by J. & A. Brown is a little complicated. They are colliery proprietors and members of the Vend, and it is in that quality only they are sued by the Crown. But they are also shipowners and carriers of their own coal. Apparently, and not unnaturally, they were not expected to surrender and they did not surrender their carrying trade. Some special arrangement was consequently necessary to meet this exceptional situation and it appears to have been made. As to its actual terms, the defendants J. & A. Brown have maintained consistently the general attitude of the defendants, by preserving silence. There are some few refer- ences to the arrangement which permit us to obtain some idea of its general nature, though not of its stipulations. When the ship- ping companies attended the Vend meeting on 24th April 1906 they arranged for the agreement between the coal proprietors and the steamship companies, but "subject also to a proper agreement being entered into with Mr. John Brown." That gentleman was present at the meeting. The amount of inter-State trade which J. & A. Brown did for the year 1906 was 36,624 tons cargo, and 4,250 tons bunker, in all, 40,874 tons, out of a total inter-State trade in Newcastle coal of more than 1,500,000 tons. Their subse- quent inter-State exports may here be added. In 1907, they were 47,619 tons cargo and 4,600 bunker. In 1908, they were 62,150 tons cargo and 5,975 bunker. In 1909 they were 68,200 tons cargo A60 HIGH COURT H.C. or A. and 4,860 bunker. In 1910, they were 65,110 tons cargo, bunk 191). unknown (Y9). At the conference of July 1907, some que: — Tux Kine arose as to payments to be made by the shipping companies to Festeel & A. Brown. It appeared that the companies were now ready pees .°* willing to make the adjustment, and it was left in Mr. Appleton' monweattu hands to make it immediately subject to audit. The agree Assoctatep between the Associated Steamship Owners and J. & A. Brown can Per sa up for discussion in January 1908 (X. p. 214), what the trouble or how remedied does not appear. From Ex. U. pp. 132, 149, 150, it would seem there was some provision to keep Brown's coals apart from other coals shipped in the same vessel, but that othe there was no special stipulation as regards the coal; they shared in the general Vend allotment as appears from Ex. U. p. 158. At the E conference of November 1909 observations were made by Mr. Hunt to the effect that while the other shipowners were expected take each and every class of coal, Browns were at liberty to take and — did take only Pelaw Main coal, and a lot of trade had been gaine by Brown in consequence of this. He asked Mr. Forsyth if the — Vend intended to place Brown on the same footing as other carriers, | and allot them the same percentages of all classes of coals as ot] carriers. Mr. Forsyth did not answer this question. This indicates _ that although the Vend still continued in full force and the old exclusive arrangement between Vend and shipowners still went on — including the allotment stipulation, yet for some reason the Vend — permitted J. & A. Brown collaterally to break through their internal Vend agreement. Brown's special agreement is left indistinct as_ to terms but certain as to existence (see also Exhibits 08 and P8) These considerations then establish the combination as well as the contract, but before the substance of paragraph 46 of the statement of claim can be pronounced upon it is necessary to enquire as to the intent of the defendants with regard to both the contract and the combination, and as to the alleged public detriment. There is no offence under sec. 4 unless the act complained of is done with oo a certain intent. Law as to Intent. The material words here are, " with intent to restrain trade or — commerce to the detriment of the public." I apprehend the inten' 14. C.L.R.] OF AUSTRALIA. 463 must be real and not merely imputed. It must be the actual intent H. C. or A. of the defendant, and not that which might, without regard to the 1). true condition of his mind, be deduced simply from the construction Te Krve of his words used perhaps for another purpose. The intent aimed ,4y ony. GENERAL oF at is not the intent expressed in the contract—if the contract be the act complained of—it is the actual intent of the defendant, of which the contract is excellent evidence to begin with, because a eusccaes man's real intent may generally be gathered from what he says as (NORTHERN: well as from what he does. But to ascertain the defendant's intent, © ——- the Court may have to go behind the contract altogether, and, in the case of combination search out, by every lawful kind of testi- mony, the true state of the defendant's mind. Proof of intention does not involve direct evidence. The person whose intention is in issue may give direct testimony on the point, but, apart from that, the only means of establishing his intent is by proving his declarations or his conduct. Wills on Evidence, 1907 ed., pp. 63 and 64, contains a passage which accurately states the position :—"In one class of cases circumstantial evidence must from the nature of the case be given. They are those where the state of mind of a particular person is in issue, as, for instance, where it is alleged that a party did a particular act with a fraudulent purpose, or where, to establish the commission of a particular crime, it is necessary to prove that the prisoner, when he committed the physical act, did so with some particular guilty intent. In these cases no one save the party charged can, strictly speaking, give direct evidence of his mental state ; and, when he denies the charge, it has to be proved by inference from his conduct." The authorities are collected and the law summarised in Lord Halsbury's Laws of England, vol. 1x., p. 236, and vol. xurr., pp. 448 and 449. In this case the defendants and those for whose acts the defendants are responsible were mute, and so the matter rests upon the infer- ences to be drawn from their declarations and conduct on the well- known principle, acta exteriora indicant interiora secreta. We start with a presumption of innocence: but there is also another presumption usually made, and which is 2» i ble to the present case, that a person intends the natural anu | 1 »le conse- H.C. oF A. 19ll. Tue King AND THE ATTORNEY- GENERAL OF words and acts; and the evidentia rei would therefore be sufficient THE Com- monweautH without other proof of intention." In South Wales Miners' Federa- v AssoctaTED NorTHERN COLLIERIES. HIGH COURT (191 quences of his acts (see Lord Halsbury's Laws of England, vol. x, p- 389, and vol. xumr., p. 499). , In Coaks v. Boswell (1), Lord Selborne says :—'' A man is pre-_ sumed to intend the necessary or natural consequences of his own tion v. Glamorgan Coal Company (2), Lord Halsbury L.C., said :— "Tt is further a principle of the law applicable even to criminal law that people are presumed to intend the reasonable conse quences of their acts." His Lordship doubtless in using the word "reasonable " meant " natural," and he went on to say :—"It is not perhaps necessary to have recourse to such a presumption where, as upon the facts stated, it is apparent that what they were doi must necessarily cause injury to the employers." I quote the last — passage because the Crown has urged that upon the facts in this case it was apparent from the beginning and at all events very soon afterwards, that injury must necessarily have been caused to — the public. Then as to the nature of the necessary intent. It must be (1) to , restrain trade and commerce; (2) to the detriment of the public. — In view of the argument I shall deal with these two parts separ- ately. Law as to Contracts IN Restratnt OF TRADE. Mr. Mitchell advanced an argument which may be stated, as I i apprehend it, in the following four propositions :— (1) The legislature has penalised only those contracts intended to be in restraint of trade and commerce which are to the detriment of the public. (2) It could not have been intended therefore to penalise any — contract which the common law at the time of passing of the Act would regard as enforceable, because not detrimental to the public. (3) That contracts though in restraint of- trade are, according — to the common law, not detrimental to the public, and are conse- quently enforceable, provided only they are reasonable. (4) That reasonableness has reference only to the parties them- selves, the common law in that connection disregarding any element (1) 11 App. Cas., 232, at p. 236, (2) (1905) A.C., 239, at p. 244. 14 CLR OF AUSTRALIA. 463 of raising prices to the public and regarding as invalidating circum- H.C. ov A. stances only such as vitiate any other contract, as for instance some _—'1911- proposed illegal means of performing the contract or some con- py King templated breach of positive law, outside the mere restraint of ANP THE ATTORNEY- trade. GENERAL OF . _ THE Com- The argument may be effectually answered in two ways. First, yoxweaurn : ae " : v. the legislature has not left the limitation on the words " restraint 4 ..4°).nep of trade or commerce" to be implied. Sec. 1 of the American Act pened of 1890 used those words without qualification. For many years dicta had fallen from the American Courts to the effect that these words were to be taken in an unqualified sense, and that all such contracts were stamped with illegality whether reasonable or un- reasonable, whether beneficial or detrimental to the public. In a later case, The Standard Oil Co. of New Jersey v. U.S. (1), confirmed in the subsequent case of U.S. v. American Tobacco Com- pany (2), the Supreme Court has held, upon a consideration of the whole Act and its relation to the common law, that the legislature had not rigidly invalidated all contracts in restraint of trade, but intended that the standard of reason which had been applied at common law and in America, in dealing with subjects of the char- acter embraced by the Statute, was intended to be the measure used for the purpose of determining whether in a given case a particular act had or had not brought about the wrong against which the Statute has provided. The Commonwealth legislature, having before it the American Statute and the earlier judicial expressions of interpretation which had fallen from the American Courts, inserted in the Australian Act its own express limitation on the words referred to. When the legislature has turned its mind to the consideration of a subject and expressly stated its will as to the limits to be observed, it is beyond the province of the Court to further extend those limits. The qualification of the phrase "in restraint of trade" found by the United States Court to inhere in the Actas a whole was adopted as that which Congress would have expressed if it had preferred to record its intention in definite words, which it had not done. That qualification may be found to be just what has been inserted (1) 221 U.S., 1. (2) 221 U.S., 106, 464 HIGH COURT H.C. or A. in the Australian Act. But in any case, our own Parliament h aiid thought fit to clothe its intention in express language, and Tue Kixe language must be taken to be the measure of its intent. Mzpres: AND THE ATTORNEY- epee ov It is not as if the phrase "restraint of trade" or its equi THE Com- a i monweartn " to restrain trade and commerce " were in itself ambiguous. ®. facit cessare tacitum. Assocraten In the Ipswich Tailors' Case in 1615 (1), the Court spoke NonrHERN Parliamentary prohibition to use more than one trade as a " rest CoxurerrEs. YP of trade and traffic"; it also said it appeared by the Statute | Elizabeth that " without an Act of Parliament none can be in manner restrained from working in any lawful trade." It is el from this, and from the way in which the phrase " restraint of trade" is used in the classical case of Mitchell v. Reynolds (2), that restraint spoken of is simply a restriction in fact. The restra may be good or bad according to circumstances. It may be re able or unreasonable, it may be productive of injury or of benefi to the public ; but the expression " restraint of trade " means same thing in each case. So when the legislature says that the kind of restraint of trade or commerce, which it seeks to suppress i certain cases, is where there is detriment of the public," I conceive is not open to the judiciary to add a further condition, or apply a different or additional test. The duty set by the Statute is to enquire, by a course as direct as circumstances will permit, as to detriment of the public, and not substitute an enquiry as to whether the contract is unreason-_ able as between the parties as an equivalent test of legality. The common sense of the matter makes this obvious. For with — what was Parliament concerning itself when it forbade certain con- tracts and combinations under penalties of fine and imprisonment? _ Was it undertaking to protect private individuals from unreasonable. contracts into which they had voluntarily entered, and which ex hypothesi they might lawfully decline to fulfil; or to protect them from equally unreasonable combinations from which they could ¥ at any moment retire without legislative or judicial assistance? Assuredly not. Such matters called for no repressive legislation. The aim of the legislature, as is apparent from the ordinary natural (1) 11 Rep., 53a. (2) 1 P. Wms, 181. 14 C.L.R.] OF AUSTRALIA. 465 meaning of the words of the Statute, as well as the reason of the H.C. or A. matter was to protect the public at large. The community had no ee voice in the making of such contracts or combinations ; it was no Tur Kiso party to them, it could by its Courts refuse to enforce them to its Apabewee own detriment, but, if the parties found it to their mutual advantage CPNPRAL OF tHE Com- to proceed with them, the public had only to submit to the conse- monwravrnt quences, however disastrous. This is the mischief the Statute was designed to meet, by giving pias the public the power to prevent injury to the body politic by in- dividual members of the community ; and it is precisely the mis- chief which the argument of defendants' counsel would allow to escape, by leading the Court along a road it was never intended to travel, and which, so far as the Statute is concerned, leads nowhere. And if Parliament was looking to the safety of the contracting parties, it would certainly be a quaint method of protecting private interests to do so by compulsory Crown intervention, subjecting all the parties to the compact, to fine, or fine and imprisonment. For what it is worth as a legislative guide to intention, it may be added that in sec. 2 of the amending Act, No. 29 of 1910, the defences of "not to the detriment of the public " and " not unreasonable " are treated as separate defences. The second answer to the argument is that it is inherently unsound at common law because it rests upon a fallacy. The fallacy lies in assuming that reasonableness as dealt with in the decisions has reference only to the parties themselves, and their private individual rights and interests. On the contrary, the reasonableness that is essential to the validity of a contract, which is in fact in restraint of trade, is reason- ableness as regards both the private interests of the parties, and the interests to the public outside those private interests, but affected by their individual arrangements. If unreasonable as to either it is invalid. If it is unreasonable towards the party bound it is admittedly void, and, if though not open to this form of unreason- ableness it results in what Lord Lindley has termed a pernicious monopoly, it is unreasonable toward the public, and equally void, unless the objectionable part is severable from the rest. The authority chiefly relied on for the defendants was Collins v. VOL. XIV. 39 H.C. or A. 1911. See Tue Kixa AND THE ATTORNEY- Genera oF THE Com- MONWEALTHE °. AssociATED NortTHEern Cormrerres. HIGH COURT (191, me Locke (8), and the passage most pressed upon me was the last paragraph on p. 685, which is as follows :—" The objects which this agreement has in view are to parcel out the stevedoring business of the port amongst the parties to it, and so to prevent competition, at least, amongst themselves, and also, it may be, to keep up the price to be paid for the work. Their Lordships are not prepared to say that an agreement, having these objects, is invalid if carried _ into effect by proper means, that is, by provisions reasonably ; necessary for the purpose, though the effect of them might be to create a partial restraint upon the power of the parties to exercise their trade." It could not in my opinion be disputed that some cases of preven- tion of competition between the contractors, and some cases of keep- ing up prices would not be objectionable. Competition though stayed as between the parties might still be open to others. Certain competition unrestricted might be of the nature forbidden by the second part of paragraph 1 of sec. 4 of the Act ; and the agreement would be a laudable one which would restore it to a normal condi- tion. The prices that are kept up by an agreement might be quite fair and reasonable, and nothing more than would exist under healthy competitive conditions. Their Lordships of the Privy Council did not I apprehend intend to lay down a rule of law, that prevention of competition and maintenance or increase of prices are under all circumstances legal and enforceable objects. There was nothing in the contract then under consideration to show any intention to prejudice the public, except in the covenant at the end of the first clause. In all but that the contract appeared to be a mere distribution amongst themselves of work on terms not shown to be unreasonable or exacting. Nothing was said in it about prices and although probably the arrangement would prevent competitive cutting it did not appear that the parties when they made their contract intended to use, or did at any later period in fact use, their power so as to treat the public unfairly as to prices or otherwise. But as to the covenant at the end of the first clause the Privy Council held that it made the contract illegal because it provided that if the merchants loading ships did not chose to (8) 4 App. Cas., 674. 14 C.L.R.] OF AUSTRALIA. 467 employ the party to the agreement, who between themselves was H- ©. or A. entitled to do the stevedoring, no party to the agreement could ie a do the work; and their Lordships said (1) :—" The combination Tus Kina they have thus entered into is obviously detrimental to the public." ,vonsnv- Tn that case a passage from the judgment of Tindal C.J. in Horner pec vy. Graves (2), was expressly quoted with approval. It is important wonwravrH v. because it lays down the test of reasonableness and contains the Assoctarep c NorTHERN common law answer to defendants' argument. I will not stay Go, g' ConriErtEs. to quote it now because it comes in more clearly in connection with the next case cited. The leading case on the subject is Nordenfelt v. Maxim Nordenfelt Co. (3). In that case Lord Herschell L.C. said :— "JT would adopt in these cases the test which in a case of partial restraint was applied by the Court of Common Pleas in Horner v. Graves, in considering whether the agreement was reasonable. Tindal 0.J. said :—' We do not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favour of whom it is given, and not so large as to interfere with the interests of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either ; it can only be oppressive, and, if oppressive, it is in the eye of the law, unreasonable.' The tendency in later cases has certainly been to allow a restriction in point of space which formerly would have been thought unreasonable, manifestly because of the improved means of communication. A radius of 150 or even 200 miles has not been held too much in some cases. For the same reason I think a restriction applying to the entire kingdom may in other cases be requisite and justifiable. "T must, however, guard myself against being supposed to lay down that if this can be shown the covenant will in all cases be held to be valid. It may be, as pointed out by Lord Bowen, that in particular circumstances the covenant might nevertheless be held void on the ground that it was injurious to the public interest." Lord Mac- naghten (4), laid down the law clearly and succinctly in a notable passage which states the rule together with its reason and its mean- ing. He said :—'' The public have an interest in every person's (1) 4 App. Cas., 674, at p. 688. (3) (1894) A.C., 535. (2) 7 Bing., 735, at p. 743. (4) (1894) A.C., 535, at p. 565. 468 HIGH COURT H.C. or A. carrying on his trade freely; so has the individual. All en ference with individual liberty of action in trading, and all r Tur Kine of trade of themselves, if there is nothing more, are contra ae nay. Public policy, and therefore void. That is the general rule. ArroRNEY- GENERAL OF there are exceptions; restraints of trade and interference owes individual liberty of action may be justified by the special Assocraren cumstances of a particular case. It is a sufficient justification, (peas indeed it is the only justification, if the restriction is reasonal reasonable, that is, in reference to the interests of the parties cerned and reasonable in reference to the interests of the p so framed and so guarded as to afford adequate protection to party in whose favour it is imposed, while at the same time it in no way injurious to the public. That, I think, is the fair of all the authorities." The result of Nordenfelt's Case and authorities of that thus stated by the Judicial Committee in United Shoe Machine of Canada v. Brunet (1) :—' In each of them the person restra from trading had granted, presumably for adequate considera the restraint upon him, and, in order that the latter might re without injury to the public, that for which he had paid, the con tract imposing the restraint was held to be valid only where t restraint was in itself reasonable in reference to the interests bo of the contracting parties and of the public." It is therefore plain beyond possibility of doubt that the test reasonableness is not confined to a consideration of the mat as it affects the protection of the parties to the contract. In that would be beginning at the wrong end, and mistaking incident for the rule. Bramwell B. in R. v. Druitt (2) said: "The public had an interest in the way in which a man disp of his industry and his capital." The test of whether the contract is fair and reasonable is always and from first to last whether is prejudicial or not to the public interest ; "it is" as Parke said in Mallan v. May (3) " on grounds of public policy alone that these contracts are supported or avoided." eo (1) (1909) A.C., 330, at p. 344. (3) 10 Cox C.C., 592 (3) 11M, & W., 653, at p. 685. 14 C.L.R.] OF AUSTRALIA. 469 Where they are upheld, it is as that learned judge said " not H.C. or A. pecause they are advantageous to the individual with whom ties, ae contract is made, and a sacrifice pro tanto of the rights of the com- Te Kine AND THE munity, but because it is for the benefit of the public at large that sqrornny- they should be enforced." Mallan v. May (1) was approved in pepe an Collins v. Locke (2). MONWEALTH: These considerations justify Sir Frederick Pollock's view in his iaiaoorasceD NortHERN Principles of Contract (8th ed., 1911, at p. 374), and are confirmed Goprrrres. in Nordenfelt's Case (3) by the observations of Lord Watson at p. 552 and of Lord Macnaghten at p. 566; and in Russell v. Amal- gamated Society (4). Parker C.J. in Mitchel v. Reynolds (5) summed up the common law attitude of the Court in these terms : "In all restraints of trade where nothing more appears the law presumed them bad ; but if the circumstances are set forth that presumption js excluded, and the Court is to judge of those circumstances and determine accordingly and if upon them it appears to be a just and honest contract it ought to be maintained." That reasoning was followed by Parke B. in Mallan v. May (6) and holds at the present day as is seen from the citation made from the judgment of Lord Macnaghten whose words were followed in £. Underwood v. Barker (7) by Lindley M.R. (8) and Vaughan Williams L.J. (9). See also per Collins M.R. (10) and Mathew L.J. (11) in Dowden v. Pook (12); Russell v. Amalgamated Society of Carpenters (13). Even at common law therefore the Court is bound to consider whether the contract is reasonable from the standpoint of the public. Since writing the foregoing observations there has come to hand Vol. 220 of the United States Reports. It contains the case of Dr. Miles Medical Co. v. Park & Sons Co. (14) decided in April of the present year. At p. 406, the judgment of the Court contains this passage :—'' With respect to contracts in restraint of trade, the earlier doctrine of the common law has been substantially modi- fied in adaptation to modern conditions. But the public interest (1) 1M. & W., 653. (8) (1899) 1 Ch., 300, at p. 304. (2) 4 App. Cas., 674. (9) (1899) 1 Ch., 300, at p. 312. (3) (1894) A.C., 535. (10) (1904) 1 K.B., 45, at p. 3 (4) (1910) 1 K.B., 506, at p. 516. (11) (1904) 1 K.B., 45, at p. 53. (5) LB. Wms., 181, at p. 197. (12) (1904) 1 K.B., 45. (6) 1M. & W., 653. (13) (1910) 1 K.B., 506, at p. 520. (7) (1899) 1 Ch., 300. (14) 220 U.S., 470 HIGH COURT H.C. or A. jg still the first consideration. To sustain the restraint it m 1911. be found to be reasonable both with respect to the public and t 'Tue Krxe_ the parties and that it is limited to what is fairly necessary in Amonwey. circumstances of the particular case, for the protection of Gane race covenantee." Among other citations in the judgment is the pa: monweartx I have quoted from Lord Macnaghten's speech in the Nordenfelt Assoctaren Case (1). NorruekN therefore reject the defendants' contention both because the CoLLieriEs. reasoning by which it is supported is unsound at common |: and because even if sound it would have to give way to the express tule laid down by the Statute. Law as To Derriment To THE PUBLIC. This brings me to the question of "detriment to the publi As the circumstances appear, including the terms of the contra the course of dealing, the partial character of the restraint, and on, I am not to make any presumption of illegality against defendants—that is excluded—but I am to judge of the cir "um stances set forth in evidence, and determine accordingly as public detriment. And further, the law as I understand it requit me to arrive at that determination, approaching the considera' of those circumstances with the initial presumption of defend innocence, and requiring the Crown to bear the burden of sai ing my mind not by conjecture but with moral certainty Y on proved facts and proper inferences, that the defendants hay offended against the Statute. " Detriment " carries its own meaning upon its face. Whate is its loss or disadvantage, or prejudice, whatever puts it in a_ worse position is to the detriment of the public. A higher price, a worse quality, a restriction in choice, a more precarious mold delay in delivery, are instances. é As Fry L.J. points out in Mogul Steamship Coy. v. McGregor (2), the ancient common law of England—as well as some ancient Statutes—referring to forestalling, regrating and engrossing re garded certain operations in goods which interfered with the more ordinary course of trade as "injurious to the public" ; and those — 1) (1894) A.C., 535, at p. 565. (2) 23 Q.B.D., 598, at p. 628. \ 1H C.L.R.] OF AUSTRALIA. 471 Statutes made them criminal. Blackstone in his Commentaries H.C. oF A. (18th edtn.) (1830) Vol. 4, pp. 189, 190, observes that forestalling 19! among other things enhances the price ; so does regrating. Engros- Tum Kine ' tee f a E AND THE sing was the getting into one's possession, or buying up large sironnny- quantities of corn or other dead victuals, with intent to sell them Nee! again, that is at monopolising prices. Says Blackstone :—' This monwraurn must of course be injurious to the public, by putting it in the power AssoctareD é ' i ee A NorrHern of one or two rich men to raise the price of provisions at their own Goyrserins. discretion." And he adds "so that the total engrossing of any other commodity with intent to sell it at an unreasonable price, " See also is an offence indictable and finable at the common law." Russell on Crimes (7th edtn.) (1909) at p. 1919. As Fry L.J. observes the Act of 12 Geo. III. c. 71 repealed the other Acts and left the common law to operate. It recited the tendency of the former Statutes to "enhance the price." In 1844 the common law itself was altered by 7 & 8 Vict. c. 24, which abol- ished the offences of badgering, engrossing, forestalling and regrating, but provided as the learned L.J. says that "nothing in the Act con- tained should apply to the offence of knowingly and fraudulently Spreading or conspiring to spread any false rumour or with intent to enhance or decry the price of any goods or merchandise " &c. In Scott v. Brown (1) Lopes L.J. refers to R. v. Berenger (2) in which Lord Ellenborough says of a conspiracy to raise by false rumours the price of public funds :—" The purpose itself is mis- chievous, it strikes at the price of a vendible commodity in the mar- ket, and if it gives it @ fictitious price, by means of false rumours, it is a fraud levelled against all the public." In the Termes de la Ley under title " Forestaller " the definition is "he that buyeth corne, or other merchandize whatsoever is saleable, by the way as it cometh to markets, Faires, or such like places to be sold, to the intent that he may sell the same again at a more high and deer price in prejudice and hurt of the common- wealth and people." There are some definitions which I shall give in their proper place under the head of monopoly very much to the same effect. Forestalling, and regrating and engrossing are only slight variations (1) (1892) 2. Q B., 724, at p. 730. (2) 3M. & S., 67. 472 HIGH COURT fon, H.C. or A. of each other; and condemnation of one frequently implied con- — ae demnation of the others. There is nothing technical about the Tue Krxe injury to the public, and never was. When Bishop Latimer Atrorney- 1550 besought King Edward VI. to appoint promoters—i.e. infor- i GENERAL OF THE Com- " 3 : monweattH extortioners, bribers and usurers, he instanced the case of regrating — mers —against various oppressors of the poor as rent-raisers, Assoviaren and he said among other things :—"' Yea and (as I hear say) alder- _ ae. men now-a-days are become colliers; they be both woodmongers — and makers of coals . . . There cannot a poor body buy a sack of coals, but it must come through their hands." : After allowing for differences of modern commercial life that — and the citation from the Termes de la Ley bear a considerable analogy to the position as put by the Crown in this case. The passages I have quoted abundantly testify to the recognition by English lawyers of the fact, which no ordinary individual would deny, that raising prices to a height, variously characterised as — unreasonable, fictitious, monopolistic, exorbitant, oppressive, or by some similar adjective, must be a prejudice to the public. The Supreme Court of the United States in the Standard Oil Case (6), reaffirmed last May in the American Tobacco Company's Case (7), based their decision on the principle that the American Act was intended to repress the evils produced by the common law offences which unreasonably restricted competitive conditions, of which a monopolistic increase of price was recognised as one. In the celebrated case of monopolies, Darcy v. Allen (8), Popham C.J. said the sole trade of any mechanical artifice or any other monopoly is a damage and prejudice to those who exercise the same trade, and he referred to three incidents of a monopoly against the Commonwealth which the Court there considered inseparable, viz., 1. "that the price of the commodity will be raised, for he who has the sole selling of any commodity may and will make the price as he pleases; 2. that the commodity will not be so good and merchantable as it was before; and 3. it tends to the impoverish- ment of divers artificers and others who before by their labour had maintained themselves and their families." (2) 221 U.S, 1. (2) 221 U.S., 106 ; 31 Sup. C.R., 632. (3) 11 Rep., 845. J4C.L.R.] OF AUSTRALIA. He also referred to a case of Davenant v. Hindis (1) in which an ordinance made by the Merchant Taylors Company, under their charter, was held void. The ordinance was that every brother of the Society putting cloth to be dressed by any clothworker, not being a brother of the Society, should put one-half of his cloths H.C. or A. 1911. "— Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- to some clothmaker who was a brother of the Society under penalty monwrautH of 10s. The ground of the decision was that the ordinance was v, AssociIATED NortTHERN against the common law, as it was against the liberty of the sub- Gorriertes. ject, to get his cloth dressed by whom he pleased, and cannot be restrained to certain persons, "'for"' said the Court "that would be in effect a monopoly." It is interesting to see that even at that early date the Courts applied to what was "in effect a monopoly," the same rule as to a monopoly strictly so called, that is, one granted by the Crown. See also Pollock Principles of Contract, 8th Edition, p. 374. I by no means regard as inseparable the incidents referred to by Popham C.J. but I refer to them because, when they do occur, they are regarded by the law as prejudice or detriment to the public; and further though not inseparable they are not unlikely to occur. 'The Crown asserts that they have all occurred in the present instance. I am distinctly of opinion that this question of detriment must not be determined upon any narrow grounds. The mere fact that prices are raised is by no means conclusive. And for this, there is strong judicial warrant. For instance in Hearn v. Griffin (2), there was an agreement between two coach proprietors that each should charge the same price to passengers. Lord Ellenborough O.J. said that it was merely a convenient mode of arranging two concerns which might otherwise ruin each other. Collins v. Locke (3) in the passage quoted is clear on the point. The Act under which these proceedings are taken, as I have already pointed out, indicates that prices may be reduced so low as to work injury to Australian industries by unfair competition, and a combination to restore to a fair level prices that had been reduced to a dangerous limit could not for that reason be regarded as contravening the law. (1) (1599) (2) (1818) 2 Chitty, 407. (3) 4 App. Cas., 674. H.C. or A. 1911. ~ Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NorTHERN CoLiiertes. HIGH COURT In Hare v. London and North Western Railway Co. (1) Wood V. said :—" It isa mistaken notion that the public is benefited by pi two Railway Companies against each other till one is ruined ; th result being at last to raise the fares to the highest possible standard 7 It is the real substantial effect upon the public that must b sought after. That which appears at first sight and standing alon to be a preiudice may when considered in conjunction with other circumstances prove to be the means, and the only means, of ultimate and lasting benefit. t An apparent advantage may, when properly examined, be seen to be merely temporary and the prelude to severe public loss. | Competition unrestrained may drive fair-minded and useful ser- risk a passing concession for a permanent control. The Court then is bound to look beyond the surface, and im gate causes and effects ; it must regard not merely one or mo isolated incidents, but the combined circumstances of the situati so far as they are ascertainable before it can pronounce whe' upon the whole detriment has arisen, or is likely to arise, and whether the intention to which the law attaches culpability was present _ in the minds of those charged with contravention. The particular application of these general principles to the several incidents of detriment complained of by the Crown will be madi E as these are in turn considered. I could well have wished to state my views in a very much briefer _ form than that in which they will be presented. The enormous mass of evidence, the separateness of the transactions which compose i their varied nature, and individual peculiarities, the numerous attendant circumstances proper to be looked at before some of them — are, so to speak, reduced to a common denominator in order to be correctly estimated and justly compared, preclude anything like a generalisation unless preceded by a detailed examination. The novelty of the enquiry, the importance of the issue to both the defendants and the public demand the best and most anxious _ scrutiny I can give to the matter, and I have thought that after (1) 20. & HL, 80, at p. 103, 14C.L.R.] OF AUSTRALIA. 475 all it would be a mistake to sacrifice precision to conciseness, or to H. C. or A. deprive anyone concerned of the opportunity, if he so wishes, of pane following my steps upon the long and often thorny path that has Tux Kixe led me to my conclusions. Pettit At this poi ity ssi GENERAL OF t this point I take the opportunity of expressing my sense of ae OE obligation to learned counsel, who, from their respective standpoints, wonwearra conducted the case with so much ability and skill. Of those having paneer ] Normern the responsibility of leadership I need say no more, but a special Gort teries. word of appreciation is undoubtedly due to the junior counsel all round. I say this because, in addition to their other specially laborious duties, they so readily and so admirably responded to the requests I made to summarise and systematise the enormous and intricate mass of transactions that otherwise would have been most difficult to follow, and would have prolonged the case beyond all reasonable compass. Although I have found it necessary to examine the original records of those transactions for myself, the summaries prepared on both sides not merely expedited the progress of the trial itself, but have been welcome guides to the contents of the documents, and tests of my own examinations and comparisons. Varrous Crasses OF DETRIMENT RELIED ON BY THE Crown. The first and the main detriment relied on is the excessive chara- acter of the prices charged, the excess being neither natural nor uniform, governed not by legitimate business considerations, but dictated by the necessities of consumers, their artificially increased difficulties in obtaining other supplies, and by favouritism or other erratic causes. Other grounds of detriment, all serious, are urged—as restriction upon the public choice of transportation and of the pits, and in the total quantity from permitted pits, restriction upon the quantity of small coal, short deliveries of coal contracted for, and substitution of other coals, some inferior. The Crown says that the contract and the combination alike gave power, and each was intended to give power, to the defendants to create all these prejudicial circumstances, and particularly to artificially raise the price of coal the public would have to pay ; A76 HIGH COURT (1911. H.C. or A. that they at once commenced to do so, and have ever since con- 1911. 'tinued to maintain and, where opportunity offered, to advance their artificial and unnatural prices still higher. Facrs Retatine To DetrIMenT as TO PRICE. Looking to the terms of the contract itself, no price, either to gia acai) shipping companies or to the public, is fixed. Clause 6 binds the come shipping companies to pay whatever price the collieries may fix COLLIERIES. from time to time as their f.0.b. price Newcastle, and clause 8 pro- vides in the first instance for the maximum prices to be charged by the shipping companies to the public ; additional stipulations being added by later clauses. The contract specifies in the schedules 7s. as the lowest and 12s. as the highest f.o.b. price apparently within the contemplation of the parties for best coal apart from circumstances such as war, strikes and lockouts, and 5s. and 6s. as the corresponding limits for small coal. The collieries are left by the contract entirely at large to fix whatever prices they choose, certainly within those limits. If the agreement consisted of nothing more, I think the proper rule to be applied in the absence of actual abuse or of some exceptional circumstance, as where the limits are palpably excessive or some outside event makes it probable that abuse will arise, is to assume, as I think the Privy Council assumed in Collins v. Locke (1) that no unfair advantage will be taken of the power. But there is strong common sense in the view that when the whole of an agree- ment is looked at one part presumably innocent when considered separately may give rise to a strong probability of danger. The idea was well expressed by Mr. Justice Holmes in Swift v. United States (2). That was a case where a charge of combination was made against a dominant proportion of the dealers in fresh meat through- out the United States not to bid against or only in conjunction with each other, to fix prices at which they would sell, restrict shipments of meat when necessary, and charges of intent to monopolise, &e. The learned Judge said :—"' The scheme as a whole seems to us to be within reach of the law. The constituent elements, as we have stated them, are enough to give to the scheme a body and, for all (1) 4 App. Cas., 674. (2) 196 U.S., 375, at p. 396. 14C.L.R.] OF AUSTRALIA. 477 that we can say, to accomplish it. Moreover, whatever we may think H. ©. or A. of them separately, when we take them up as distinct charges they a are alleged sufficiently as elements of the scheme. It is suggested Tan Kiva that the several acts charged are lawful and that intent can make no 4vronwny- difference. But they are bound together as the parts of a single GPNPRAL oF plan. The plan may make the parts unlawful. Aikens v. Wis- : consin (1). The Statute gives this proceeding against combinations Assoctarep in restraint of commerce among the States, and against attempts Cone to monopolize the same. Intent is almost essential to such a combination, and is essential to such an attempt. Where acts are not sufficient in themselves to produce a result which the law seeks to prevent—for instance, the monopoly—but require further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probability that it will happen. Commonwealth vy. Peaslee (2). But when that intent and the consequent dangerous probability exist, this Statute, like many others and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result. What we have said disposes incidentally of the objection to the bill as multi- farious. The unity of the plan embraces all the parts." In conjunction therefore with the stipulation as to price, there are found the stipulations which I have, in the earlier part of this judg- ment already quoted—clause 5 binds the collieries not to sell for inter-State trade except to the shipping companies ; clause 6 binds the shipping companies not to purchase any coal for inter-State trade except from these collieries, and binds them further not to carry or have anything to do with the carriage of any other coal. I have referred to the exceptions made in favour of the shipping companies and which are negligible in this connection. There is thus erected a ring fence in connection with the public supply of Newcastle coal as it may be shortly termed. The domin- ant proportion of colliery proprietors in number and in quantity of coal produced thereby agreed with the dominant proportion of shipowners that not an ounce of Newcastle coal shall be supplied inter-State except through the shipowners and that whatever (1) 195 U.S., 194, 206. (2) 177 Mass., 267, H. C. of A. 1911. as Tue Kine AND THE ArTORNEY- GENERAL OF THE Com- MONWEALTH vw AssocIaTED NorTHERN COLLIERIFS. HIGH COURT poll. ptice may be demanded for Newcastle coal, none other shall be — obtainable by inter-State consumers by means of the shipping companies. Further the agreement provides as already pointed out that as a rule the collieries need not deliver to the shipping companies coal from any colliery that has reached the limit of out- put assigned to it by the collieries under any agreement among themselves. If the consumers object not only to prices but also to the nature of the coal supplied through the shipping companies, their opportunities for obtaining supplies elsewhere are immediately, that is, directly, curtailed. Two opposing suggestions were made as to the intention of the combination in stipulating for a maximum c.i.f. price. The Crown suggested that the collieries imposed a maximum limit so as to guard against the probability of the shipping companies demanding such high prices as would drive the trade to other collieries. The idea contained in the suggestion is that the parties arrived by cal- culation or estimate at the highest price which the public would consent to pay rather than go elsewhere. This seems to me highly improbable. It would involve among other things some estimate of the lowest prices at which other collieries could afford to sell. It would further connote that the shipping companies would not be alive to their own interests, but would pursue the fatal policy of driving trade not only away from the Northern collieries, but also from themselves, because they had undertaken with minor excep- tions not to carry other coal. Somewhat to alter a homely adage that would be not to kill the goose that laid the golden egg, but to drive it away that it might lay the golden egg on other persons' premises. Such reckless altruism is not to be imputed to the shipping companies. I do not accept the Crown's suggestion. Equally unable am I to adopt the view suggested by the defendants. That view is that the maximum c.i.f. price was fixed in order that the public might be protected against the rapacity of the shipowners. It was argued that if no maximum had been imposed the agreement might have been open to the objection that the exclusive purchasers of the Vend coal were left at large to charge what price they wish ; and that the fixation of the maximum exhibited a laudable solicitude for the welfare 14 C.L.R.] OF AUSTRALIA. 479 of the public on the part of the Vend, and a corresponding recogni- H. ©. oF A. tion of the propriety of such fetter upon temptation on the part of auN the shipping companies. There are several difficulties in the way Tue Kino of accepting this suggestion. First of all—there is no corresponding 3.) ny. fetter placed by the shipping companies on the possible rapacity oa ofthe Vend. At any time without rhyme or reason, the f.o.b. price wonweantH could be raised from 9s. or 10s. to 12s. at least which would mean 'Agsterees an automatic advance of the maximum c.if. price from 14s. or QOvTEnrs, 15s. 3d. at Melbourne to 17s. 9d. and from 15s. 6d. or 17s. at Adelaide to 19s. Again there is no indication in the agreement of any special consideration for the public. The tendency of the whole agreement is self-interest, and if there had been any desire to guard the public in the way suggested I should have expected to find some distinctive provision in regard to it. For instance, there would in all likelihood have been some condition providing that if there were any attempt to extort higher prices from the public, the agreement might be terminated, or the collieries should be at liberty to sell to the public direct or to other shipping firms ; nothing of the kind appears ; on the contrary there is a distinct provision made of a wholly different nature as to what is to happen where excess prices are charged. Clause 11 already quoted makes that provision, which is that the whole excess if without the consent of the collieries is to go into the pockets of the Vend, and what is extremely important is, that the reason for this stipulation is expressly given. That reason says nothing whatever about protection of the public; the reason given being that it was the intention of the agreement to place the shipowners, who are called the purchasing agents, in the position of agents only, with a liability to pay for all coal ordered at the rates agreed on ; and it is stated as will be seen on reference to the clause that the maximum c.i-f. prices set out in clause 8 are to represent the shipowners' compensation for freight and remuneration for their work of realisation. The further provision in the clause that the shipowners are bound to give full access to their books and documents to the Vend's accountant to enable him to ascertain whether a breach of the clause has been committed emphasises the previous words regarding agency. The collieries it appears are 480 HIGH COURT H.C. or A. ag between themselves and the shipowners to be deemed to 1911. —) Tue Krxe clause 11 indicates the intention of the agreement to unite the Avronsy. groups by constituting the shipowners pro hac vice the ex ree agents of the Vend, forbidding them to act for the benefit of monweatrH collieries other than those of their principals and stipulating as_ Meiatites, the application of the purchase money received from the pul Pe cea The further proviso in clause 11 applying where excess prices obtained '"' with the prior consent of the Vendors in writing"— an expression pointing to the protection of the collieries, not of public—divides the excess in such case equally between the col lieries and the shipowners. The difficulty of explaining away the very clear language of this clause led Mr. Mitchell to rely on soi expression used by the representatives of the parties at the ference held 23rd July 1907. They are found at p. 107 of Ex X. Mr. Forsyth on the side of the collieries said :—'* We have right to increase our price to you at any time for such coal as may not require to satisfy your contracts." That was statemen number one. Then he made statement number two, which agree with Mr. Mitchell is a distinct statement, though it appe: in the same paragraph—" If you sell coal over the agreed prices are entitled to participate." Mr. Hunter on the side of the owners replied, "Mr. Forsyth is right in stating that if unde special circumstances we get higher prices, the collieries are entitl to share in the excess." Mr. Mitchell urged that an interpretati was thus placed by the parties on clause 11 which gave an enti different effect to it. He said in effect that they recognised that excess prices should be shared only in special circumstances, and argued that "special circumstances" meant only the sp matters mentioned in the agreement, wars, strikes, lockouts, that clause 11 was limited in its application to clause 10. But that suggestion cannot be accepted. The parties at the conference not directly discussing the effect of clause 11 and it does not appear that any formal interpretation contrary to its plain meaning was ever adopted. Still less did the parties ever act upon any such as is suggested. The statement by Mr. Hunter, that if an excess price is obtained the collieries are entitled to share in the excess, 14 C.L.R.] OF AUSTRALIA. 481 obviously does not apply to cases where the excess is obtained with- H.C. or A. out the consent of the Vend, because in that case the excess is not 1811. shared—it all goes to the collieries. 'Tae Kine The special circumstances referred to, I take to mean whatever sbet crs! circumstances may at any time be recognised by both parties by peri oe mutual consent as sufficiently special to warrant an increase in the monwearrn v. maximum prices fixed by the agreement. War, strikes, lockouts, Assoctatep are recognised by clause 10, but a war, from its situation and the 'oes nation involved, may be such as in the opinion of the parties not to affect the demand for Newcastle coal. In that case it would not bea special circumstance, so also a strike or a lockout wherever it takes place might or might not in the opinion of the parties appreciably affect the supply of available coal. That opinion would determine whether they consider it a special circumstance and so induce the Vend to give or withhold their consent. Again a change in the de- mand, home or foreign, a natural alteration in the supply, or acci- dents to mines or ships might induce a reconsideration of prices. Clause 17 adopts clause 11 in a very remarkable manner. In addition to war, strikes and lockouts " inevitable accidents" are referred to as possibly interfering with the carrying out of the engagements of the parties "'or any of them." Such parties are "to the extent of such interference" to be free from compliance with the engagements embodied in the agreement. The largeness of that expression would so far free the shipowners from the provisions of clauses 10 and 11 so that they might without the Vend's consent sell at an excess price and keep the excess. But then comes the concluding part of clause 17 providing that the shipowners shall not without the consent of the collieries re-sell at a higher price than already provided and " in the event of their selling at any higher price," which applies whether there is consent or not, the provisions of clause 1] are to apply to any excess. T accordingly put aside all idea of the maximum being instituted for benevolent motives, or to establish bona fides in the event of the agreement—which the parties refrained from signing—being brought to light. Also do I discard the notion that it sprang from a distrust of the business capacity or sanity of the shipowners. vou. XIV. 31 H.C. or A. 1911. Cue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw ASSOCIATED NorrHern CoLLIERIES HIGH COURT Tyrention anp Errecr or Provision ror Murua Exciusion 0 OvursipE CoMPETITION. ; Iseein it prima facie an intention that the shipowners shall not; more than a certain proportion of whatever price may be obtain for the Vend coal. Circumstances like the strike of 1909 might permit of much higher prices being obtained from the public than the fixed maximum, and the collieries were not disposed to b absolutely content with their previously fixed f.0.b. price and allow the shipowners to get all possible surplus advantage of the market. — The higher prices might be reasonable or unreasonable ; that was — immaterial for this purpose, but whatever they were the arrange- ment amounted to this, if only they were obtained by joint consent the excess should be shared equally. By constituting, as between themselves, the shipowners jointly the agents of the Vend jointly, — the Associated Collieries retained a hold upon the transactions of — sale which secured the due fulfilment of this part of the bargain. As a deterrent against its secret violation, they established a right to the whole of the excess unless their prior consent were given — ' and this right with the right of examination of the shipowners' ; books made any attempt at evasion futile. The defendants by the means built up a ring fence as I have already described it, which was high enough and close enough to shut out almost all effective — competition. It is demonstrated by tenders (see Q3), contrac and verbal evidence that, for the larger contracts, consumers quently desire several pits to draw from. Regularity and con tinuity of supply are of high importance to railways, gas and electric lighting companies and public bodies generally. To guard agains' interruption or total stoppage it is desirable to have a number pits from which supplies can be drawn. This in itself puts a power- _ ful lever into the hands of the combination and seriously detracts from the availability of the non-Association mines—Wallsend, Bur- _ wood Extended and Ebbw Main—to meet the general demand supposing all other things equal. An example of the power this confers on the combination is afforded by Learmonth's telegram to John Brown of 30th October 1909 (Ex. P8). Again, whatever chances of outlet the non-Vend mines may have, means of transport are indispensable and there is a closed door between them and the 14 C.L.R.] OF AUSTRALIA. 483 shipping companies with their allies, the Melbourne Steamship Co. H- ©. or A. and Paterson & Co. 1911. = That was the object of this ring fence so far as may be deduced tae Kine from the agreement itself. Mr. Campbell said that at most it merely Aeneas formulated a pre-existing practice. Whether that was so in fact Sas poy or not will appear presently, but it matters not, because a contract wonwrarra which imposes an obligation to continue a practice seen to be Assoctarep mers E ear NortHERN prejudicial creates a very different situation from that where any eeeeeattae, party may freely at any moment alter his practice as soon as prejudice threatens or appears, and, as already pointed out, the correspondence presents numerous occasions where both parties in turn point to the agreement existing between them as a reason why, to some step taken or desired to be taken in the circumstances, this obligation constitutes a bar, and we find when this is pointed out that the step complained of, however desirable, is either re- gretted, retraced or abandoned. There are some additional concrete instances which further indicate to my mind that but for this combination the exclusiveness which is its central vice would not have existed. In January 1906 when the South Australian Govern- ment was about to call for tenders, Mr. Colebatch, the Chief Store- keeper and Executive officer of the Supply and Tender Board for that State to make enquiries as to direct tenders, towards the end of the month saw Mr. Chilcott, of the Scottish Australian Co., with reference to altering the form of contract that had hitherto prevailed, and calling for tenders in two parts, one for freight from Newcastle to South Australia, the other for coal direct to the Government instead of as formerly to the shipping Association so as to be cheaper. Mr. Colebatch put the question to him whether he would tender to the South Australian Government direct if he had the opportunity and he said he would do so. About the same time Mr. Colebatch saw M.. Wilkins of the Hetton Coal Co. and Mr. Learmonth of the A.A. Co. and Hebburn, and Mr. Brown of J. & A. Brown. Mr. Wilkins said he was agreeable to tendering to the South Australian Govern- ment instead of to the shipping Association ; Mr. Learmonth said he considered it a good move on the part of the Government to separate the tenders in the way previously described, and he gave reasons. The account of these three interviews I have admitted 484 HIGH COURT H.C. or A. only as evidence against the following defendants resp ci Chilcott, the Hetton Co., Learmonth and the A.A. Co. Tue Krxc defendants are certainly affected by what they said. It 'Avronury. that the Government called for tenders in March and Seott F GeNERAL oF & Co, desired to tender. The Vend minutes of the 23rd April tHE Com- monweattn (F. 59 and following), already mentioned in another conne 'Associaren Tefer to the South Australian contract of 96,000 tons. Shi -AoRTHERS and collieries were both represented at this meeting, Mr. Hun - addressed the meeting and explained the position of the St Owners' Association in regard to the contract and asked for s quotation from the colliery proprietors as would enable them (tl Steamship Owners' Association) to secure the business. Ri to Ex. (2 shows that the only coal called for by the Governm was Newcastle coal. . The minute proceeds to say that Mr. Simpson for the Pacific Mr. Laidley for Rhondda informed the conference that they h already quoted for Scott Fell & Co. for a supply of a portion : this contract, but were willing to make a quotation to the Si ship Owners' Association, with the result previously adverted Several companies undertook not to supply coal for this cont except to the Steamship Owners' Association. The immedi ' outcome was the guarantee of 24th April; that is evidence all the defendants and there is nothing to countervail it. is also affirmative evidence from the resolutions of 30th March that no member of the Vend would sell to Howard Smith & Co. or to th Adelaide Steamship Co. pending the report of the Committee abo to proceed to Melbourne without consulting the Board, and on 23rd April, at the meeting of the Vend before the joint confi on that day (and this I take as against the Vend only), Mr. Chileot mentioned this resolution and asked if he were still precluded from supplying the Adelaide Steamship Co. The meeting resolved th he be allowed to execute the order given by that company. think it is idle for the defendants to ask me to assume that thes agreement had never been made. Then said Mr. Campbell fu the combination was beneficial, because it promoted concentrat supplies, in other words having the whole of the production a' 14 C.L.R.} OF AUSTRALIA. able for the service of the trade. That means as I understand if H- C- oF A- ships load whatever coal is brought to them the loading takes place 1911. — quicker and with less possibility of delays than if coal from particular Tue Kixe AND THE pits were selected for the cargo. The bare fact may be so, but that sprorney- is no guarantee of advantage from the combination, for it is little GENERAL OF THE Com- satisfaction to a consumer to know that he can be the more speedily MonweaurH supplied with coal that he would rather not have, in return for not . getting at all the coal he prefers. Mr. Campbell adds to the sup- 4 posed advantages of the arrangement, those of regularity and con- tinuity. They are only consequences of what is already said. How the inter-State consumers of coal in Australia suffered for want of some such beneficial arrangement all the years down to 1907 the defendants have not vouchsafed to explain. How the foreign trade and the purely New South Wales trade suffers at the present time is not shown. It was also claimed as a benefit from this arrangement to the smaller collieries and I suppose through them to the public that their products are more sure of earlier and regular despatch. Perhaps to the collieries this may be so, though I am not altogether convinced of that on the whole, but to consumers Ishould say certainly not. If a consumer wants the coal of a par- ticular small colliery, so far from being sure of getting it quicker, he is not, unless in some exceptional cases, sure of getting it at all. The object of the ring fence then so far as a deduction may be made from the agreement unqualified by what was done under it was to control, so far as it could be controlled, the supply to the public of what is known as Newcastle coal. Mr. Knoz said it was absurd to talk of creating a monopoly of Newcastle coal just as it would be to talk of creating a monopoly of Tasmanian apples. If the charge were that the defendants had created a monopoly in the production of Newcastle coal, there would be more force in the argument. New- castle coal, of course, can only be produced in the Newcastle district, and that fact must remain so, combination or no combination, so Jong as all the mines are worked. But the supply of Newcastle coal to the public involves other considerations. The producers of that coal, whether singly or in any form of mutual association as a Vend, might, lawfully or unlawfully, raise the price, restrict their aggregate output, and allot individual proportions of that output, vw SOCIATED RTHERN TERIES. 486 F HIGH COURT H.C. or A. and yet stand clear from the particular objection of monopoly. J ae notwithstanding all other objections they sold to any Tur Krxe Whomsoever that applied for coal, if they sold indiscriminat Avroneey. any shipping firm whatsoever that applied, and did not p Caer other persons from raising coal in that district and disposing o moxweattit they would be free from monopolizing the trade in Newcastle shall address myself later ; I am concerned at the present mi only with distinguishing between mere monopoly of production, monopoly of trade. The charge here is, that by the combined agreement a monop has been created in the trade and commerce in the coal which b with the first movement of the produced commodity on its tr to other States by limiting its course of transit to the one channel, namely, the shipping companies. The collieries undertake to their coal reach the public in no other way ; there can, consistently with the agreement, be no inter-State trade in Newcastle coal ex that which is concentrated by means of this agreement in the har of the shipping companies, which are regarded for the purposes. the agreement and in relation to the collieries as one entity. I ha previously said that that result would not have arisen if the agreement had not been made; whether that amounts in law t monopoly depends upon considerations properly dealt with later on. I have now described what in my opinion is the plan or schen contained in the agreement each part throwing light on every oth 1 part, the general intention animating the whole. If consequently, I were driven to find from the contract itst explanatory reason for the contract and the form it has taken, here was a strong probability of such misuse. I gather from the 14 C.L.R.] OF AUSTRALIA. document and the way it came into existence an intention to be guided only by self-interest, an intention to make the most of any situation which the necessities of the Australian public might present and, in utilising all such opportunities, not to be restricted by limits of price which would be measured by ordinary and reason- HH. C. or A. 1911. Tur Kine AND THE ATTORNEY- GENERAL OF THE Com- able competitive standards. Competition is killed so far as the MonwrarrtH parties by agreement could kill it. But, in favor of the defendants, J do not arrive at my conclusion against them on this point without considering their conduct during and since the latter part of 1906. I take into account their course of business and estimate their actual intention and the probability of danger to the public arising from the new combined power created by the contract from the consideration of its terms as they have been actively applied, and as they have been interpreted practically by themselves so far as words and acts have placed any definite and reliable construction upon them, and, where they have not, then from an interpretation of the document itself by the light of surrounding circumstances. These external matters, as I may style their words and conduct alluded to, fall conveniently under their appropriate classification of intent and suggested detriment. Increasep Prices To THE Pustic AcTUALLY CHARGED BY SHIPPING ComPANIES AFTER DEFENDANTS' CoMBINED AGREEMENT. The issue of excessive prices opens up evidence bearing very strongly on the question of intent, as well as detriment, but in the first instance it is, I think, desirable to show in a succinct form in figures the actual increases in price which either were coincident with the coming into operation of the combined agreement, or else were introduced as soon afterwards as current engagements permitted. The Vend on 27th September 1906 fixed the prices of coal for 1907 ata higher level than that existing at the beginning of 1906, namely, at a minimum 10s. net for large and 5s. 9d. net for small. The combined arrangements would naturally be expected therefore to operate as from Isi January 1907 ; this they did for the most part ; an expressly admitted example exists in the case of the Townsville Gas Co., see letter of 4th January 1907 (Ex. A9). In a few excep- v. AssocIATED NorrHERN CoLLIERIES. 488 HIGH COURT fat) H.C. or A. tional instances prices began to rise a little earlier, but only af UBL ihe prospect of completed combination seemed assured. Coming — Tue Krxe now to the actual advances of price I will take the States separately, — Avronwny. enumerating the respective consumers and showing the increase of Caren price in each case. 4 monwearrH Vycrorta. (1) Victorian Railways.—The price of Pelaw Main, — ea Stanford Merthyr, Abermain and Hebburn coal for 1906 (contract — CeenaERS made towards end of 1904) was 10s. 5d. and 10s. 6d.; for 1907 (contract made towards end of 1906) 14s. 1d., a rise of 3s. 7d. and _ 3s. 8d. or 34 per cent. That was under a contract for 3 years. — For 1910 the price was 15s. 5d. and 16s. 2d., that is to say an eventual rise over the 1906 price of 5s. and 5s. 8d., say 48 per cent. The quantity was about 260,000 tons per annum for the period 1907-9, _ and about 129,000 tons for 1910. (2) Footscray Gas Co.—The price of coal screened at pit from A.A., Stockton and Hetton collieries for 1906 (fixed in March 1905) was 14s. 9d. at Footscray wharf ; for 1907 (fixed in March of that year) was 18s. 6d., a rise of 3s. 9d., about 25 per cent. ; from Abermain, ; Hebburn and Aberdare pits for 1906 13s. 9d. ; for 1907 18s. 6d.,a rise of 4s. 9d. Small coal for 1906 11s. 9d.; for 1907 14s. 6d., a rise of 2s. 9d. In 1908 the price advanced to 19s. 9d. or 5s. over the 1906 price, and small coal to 15s. 3d., which was 3s. 6d. advance ; in 1909 the price was 19s. 6d. and in 1910 19s. 3d. The last quota- tion leaves the price at 4s. 6d., increase about 30 per cent. The quantity averages about 5,000 tons per annum. (3) Melbourne Glass Bottle Co.—Newcastle engine coal for 1906 was 12s. 3d. ; for 1907 was 15s. 6d., an advance of 3s. 3d. or 26 per cent. ; in 1908 the price was 17s. making the advance 4s. 9d., which receded in 1909 and 1910 to 16s. 10d. and 16s. 6d. respectively, the eventual increase being 4s. 3d. per ton or 34 per cent. The quantity used is about 12,000 tons per annum. (4) Melbourne Co-operative Brewery.—The latest date given prior to 1907 is 1904 when the price was 16s. 3d.; the earliest date after the combination is February 1908 when the price was *22s. 3d., nearly 37 per cent. In 1909 it was 22s. 3d.; in 1910 2Is. 3d.; the quantity is about 2,000 tons per annum, an eventual rise of 5s. or 80 per cent. over 1904 price. 1U4C.E.R.] OF AUSTRALIA. 489 (5) Australian Paper Mills.—The price for 1906 and up to the end H- ©. oF A. of February 1907 under a contract dated March 1905 was for New- ear castle engine coal at Melbourne 13s. 6d., and small coal 12s. 3d.; 'Tue Kine for 1907 (by contract of March that year) the price for engine coal Vv) try was 18s. 6d., being a rise of 5s. or 37 per cent. over the previous nODeeae price ; and for small 14s. 6d., being a rise of 2s. 3d. and a provision onwesvrn of Is. extra if more than 25 per cent. small. In 1908 the price for Aesoctinnts engine coal rose to 21s., a total advance of 7s. 6d., that is more than (ORTEEES. 50 per cent. on the price paid in 1906. Small was 16s. 3d., a rise of 4s, and 1s. extra if more than 25 per cent. small. In 1910, the price of engine coal, 20s. 9d., an eventual rise of 7s. 3d., that is, 53 per cent. The price of small is 4s. 6d. less, namely, 16s. 3d. The quantity supplied was about 5,750 tons large coal per annum. (6) G. Mowling & Son.—For 1906 the price of Maitland engine coal was 14s. 3d. and small 13s. 3d.(contract note December 1905) ; for 1907 (by contract note dated 18th December 1906) the price was 20s. 1d. and 17s. Id. respectively, being a rise of 5s. 10d. or 40 per cent., and 3s. 10d. or close up to 29 per cent. respectively. For 1908 a further rise takes place. The contract note bears date 30th Decem- ber 1907, and engine coal is 22s. 9d., which is 8s. 6d. rise or about 60 per cent. ; small coal is now 19s., a rise of 5s. 9d., about 40 per cent. For 1909 the last mentioned prices are maintained. The quantity supplied was about 2,000 tons per annum. (7) The Melbourne Harbour Trust.—In 1906 the price for Hebburn and Maitland coal was 11s. 6d. In 1907 Lambton, Burwood, New- castle, Hebburn, and Abermain 15s. 3d. ex steamer, a rise of 3s. 9d., within a fraction of 33 per cent. In 1908 it is 17s. 9d., which is 6s. 3d. advance, over 55 per cent. In 1909 and 1910 the highest price is retained. The quantity supplied is about 4,000 tons per year. (8) Melbourne City Council—At the Electric Light Station in 1906 Aberdare, Abermain and Hebburn were 13s. 6d. For 1907 for the same three pits and fourteen more the pits being named as "and/or" the price was 18s. 3d., an advance of 4s. 9d., that is 35 per cent. In 1908 the price for "* Newcastle coal" is 20s. 10d., an advance of 7s. 4d. In 1909 and 1910 it recedes to 20s. 4d., the final increase being 6s. 10d., a shade over 50 per cent. Small coal is :— H.C. or A. 1911. od Tue Kina AND THE ATTORNEY- BENERAL or THE Com- MONWEALTH v ASSOCIATED NorrHern CoLriertEs. HIGH COURT 1906 12s.; 1907 15s. 3d.; 1908 and 1909 16s. 7d.; 1910 1 total rise of 5s. on small coal. The quantities used are about 7, tons large, and 8,600 tons small. s (9) Melbourne and Metropolitan Board of Works.—First at Pumping Station for 1906 the price of A.A., Stockton, H and/or Newcastle was 13s., the tenders being dated 9th Janus of that year. In January of the following year the price rose | 18s. 9d. and 19s., about 46 per cent. ; and in 1908 to 22s. 6d., whe it has remained, that is an increase of 9s. 6d., over 73 per cent. The quantity per annum averaged about 6,800 tons. For Werribee Farm down to 30th June, Newcastle engine coal in bags was 19s. By contract dated 13th June 1906 based on a tender 0 28th May and covering the period from Ist July 1906 to 30th June 1908 the price was raised, but only to 21s. 5d., an advance of 2s. In 1909, the price was 27s. 9d. and in 1910 27s. 3d.; an ultimate advance of 8s. 3d. over 43 per cent. The quantity about 300 ton per annum. (10) Commonwealth Services—Forts, Port Phillip Heads.— rst as to the Point Nepean house coal the price fixed in October 19 for the year 1906 was 17s. For 1907 by tender dated 5th November 1906 the price is raised to 28s., a rise of 11s., close on 65 per cent., tolerably substantial rise. I should here state that William Rea, who is Regimental Quarter-Master Sergeant, has stated for the past 10 years the conditions of delivery have been exactly the with regard to Point Nepean and Queenscliff. In the follo year however a still further rise took place. By tender of 4th November 1907 wrongly bearing date 1908 the price reaches 32s. 3 and, in the following year, by tender of 16th November of that y wrongly dated as 1910 the price is 32s. 9d., being over 92 per cen ; increase. The amount is only about 30 tons per annum, but : circumstance would of course have been considered when the was fixed in 1906 and so the contract between the two limits is unaffected by the quantity. : Then as to Queenscliff, the price of house coal for 1906 was 18s. ; for 1907 23s. 6d., that is, 30 per cent. ; for 1908 and 1909 27s. and for 1910 27s. 9d., just over 54 per cent., the quantity about 1: tons per annum. 14 C.L.R.] OF AUSTRALIA. (11) Victorian Government Special Services.—(a) Sunbury : Hous Coal—The price for 1906, see McIlwraith's tender 17th October e H.C. or A. 1911. 1905 (V2), was 19s. for Maitland coal ; for 1907 the price is 25s. 3d., Tue Kine AND THE arise of 32 per cent. ; for 1908 the price is 27s. 3d. where it remains ; a qporney- that amounts to a total rise of 8s. 3d., over 43 per cent. The quan- © ENERAL OF THE Com- tity is about 500 tons per annum. (b) Melbourne District House moxweavrn Coal.—Price in 1906 was 14s.; in 1907 it sprang to 20s. 3d., over enonstial 44 per cent. ; in 1908 it was 22s. 3d., a total rise of 8s. 3d., over pels aan 58 percent. The quantity is 1,400 tons per annum. (c) Melbourne G.P.O. Steam Coal.—The price in 1906 was 13s. 3d. for Maitland, 13s. 9d. for Newcastle. In 1907 it was 19s. for both, that is 42 per cent. over the previous average price. By direction of the Victorian Cabinet, Jumbunna coal was taken at 19s. 5d. In 1908 the price rises to 20s. 6d., the tender of James Paterson & Co. being accepted. The rise here is 7s. 3d., over 54 per cent. beyond the previous lowest price, or 50 per cent. over the average. The quan- tity is about 600 tons per annum. (d) Lady Loch Steam Coal.— For 1906 the price of Maitland coal was 12s. 3d., Newcastle 12s. 9d., or an average of 12s. 6d. For 1907 the price was 18s. 4d., a rise of Gs. 1d. over Maitland and 5s. 10d. or 46 per cent. over the mean. By Cabinet direction Jumbunna coal was taken at 19s. 6d. In 1908 the price was 20s. which gives a total increase of 7s. 9d., which is over 63 per cent. over Maitland and 7s. 6d. or 60 per cent. over the mean. The quantity is about 950 tons per annum. (e) Yarra Bend.—Price 15s. Id. and 15s. 7d. for Maitland and Newcastle respectively for 1906, an average of 15s. dd. In 1907 21s. 6d. or 38 per cent. over the mean. In 1908 23s., a total rise of 7s. 8d., that is 50 per cent. The quantity is about 2,125 tons per annum. (12) Retail Dealers.—Mr. Ramsay is a coal and firewood dealer carrying on business at Windsor, Melbourne ; he is Secretary of the Melbourne and Suburban Firewood Dealers' Association. His trade since 1897 has been nothing less than 200 tons of Newcastle coal a year. There are about 600 members in the Association. It does not appear how much in the aggregate was sold by the 600 members, but it must be a very considerable quantity, some tens of thousands of tons, and we are not concerned here with the exact tonnage of coal sold. The defendants in 1908 estimate it at 53,607 H.C. or A. 1911. ae Tue Kine AND THE ATTORNEY- GENERAL OF tue Com- MONWEALTH v. ASSOCIATED NortHERN COLLIERIES. be HIGH COURT (911. tons, but it is more. The shipping companies also sold direct to the public. The Adelaide Steamship Co. to a very small extent indeed, the quantity so sold being negligible, the other three do sell retail in a substantial sense ; they issue lists such as those in Ex. K8 in which prices are given for dealers on the wharf, for casual dealers and for private orders. So far as Victoria is concerned the lists show that to dealers on the wharf up to Ist June 1906 the price was 14s. 9d. for screened coal ; 13s. 9d. for engine coal ; 11s. 6d. for smiths coal. Private orders on the wharf, which may be taken as the datum, were 2s. more. From Ist June 1906 dealers on the wharf were charged 16s. 9d. for screened ; 15s. 9d. for engine ; 13s. 6d. for small. From 28rd July 1906 the price to dealers on the wharf was 19s. 3d. screened, 18s. 3d. engine, 16s. small. There was a discount of 2} per cent. given to dealers taking 25 tons per month and paying by 14th of following month. If that discount were frequently operative, it would be in cases at the rate of 300 tons per annum and applying this to 600 dealers would make the total tonnage something very great, about 180,000 tons, but the total quantity sold in this way was not one half that tonnage. There is the statement that about 7 per cent. of the total trade is what is called the general trade (Ex. X. 107). This is substantially assented to by defendants (see p. 1806). But that does not give anything exact for Victoria. The total inter-State trade is certainly over 1,200,000 tons and about 7 per cent. of that is 84,000 tons of which it would not be over estimating it to say 60,000 tons were sold in Victoria. Continuing the range of prices, the October list 1906 repeated the July list, so that up to end of 1906 the price had risen for screened coal from 14s. 9d. to 19s. 3d. to dealers with 2s. extra to the public direct. I do not refer to this so far as any advance of price resulting from the combination, because of the admission that before 24th Septem- ber the Shipping companies were not acting in combination ; al- though the colliery proprietors had to a certain extent coalesced, and had determined, in conjunction with the shipping companies, to assist those companies or some or one of them, since I must take it they were acting independently, to obtain the South Australian contract. And these rises in price during 1906 are probably due to the influence of the coming change which was confidently anticipated. : 14 C.L.R.] OF AUSTRALIA. 493 However that may be, I have the undeniable fact, that the price of H- ©. or A. coal had so far mounted. From the Ist January 1907 a further rey rise—a combination rise—took place, the prices now being 21s. for Tur Kiva screened, 20s. for engine and 17s. 9d. for small, that is to say Is. 9d. yay Orniey. per ton was clapped indiscriminately on all three classes of coal, cmon 2s, additional being still retained for the public. Casual dealers wonweaurn v, special prices now disappeared. From Ist January 1908 a further Assoctarep rise took place, they were 22s., 21s. and 18s. 9d. respectively— CREE EEN corresponding prices to the public being 24s., 23s. and 20s. 9d. From Ist January 1909 a reduction of 6d. per ton on large coal was made to dealers, so that the prices stood thus :—To dealers, screened 21s. 6d., engine 21s., small 18s. 9d.; to the public prices were respectively 24s., 23s., 20s. 9d. ; that is the public did not get the benefit of the 6d. reduction and this was continued into 1910. There was now no discount—the reduction apparently taking its place. The result to the public is that the price has gone up from Lés. 9d. for ordinary household coal prior to June 1906 to 21s. 3d. to end of December 1906, but not so as to attribute this to the combined contract or combination charged in the statement of claim. Had these agreements not been in an advanced state of negotiation, it may be that the rise in prices, so far, would not have taken place. I draw no legal conclusion adverse to the defendants from the rise of price up to this point, but I take the rise as a fact, and I do not think any conclusion favourable to them can be drawn from the circumstance that by the end of 1906 or properly speaking by 24th September of that year the prices had reached the limits mentioned. But from the beginning of 1907 when the defendants were in com- bination the public have to pay for ordinary household coal at the wharf the difference between 21s. 3d. and 24s. at the time the action was commenced and for 18 months before. Now 2s. 9d. a ton extra, close upon 13 per cent., is a considerable addition to a house- holder's bill of coal especially after the recent advances, which altogether brought them to 7s. 3d. a ton or 43 per cent. (18) Metropolitan Gas Co.—The price in 1906 of large coal was 14s. 7d. ; small coal 10s. 3d., that was under a tender dated 18th September 1903 for a period of 3 years from Ist April 1904. The next contract was in May 1907 for 3 years for best screened round 494 HIGH COURT fg. H.C. or A. coal at 15s. 2d. per ton, the quantity about 150,000 tons per annum. — ae The Crown has drawn attention to the double fact that the rise 4 Tue Kixc in 1907 was only 7d., and secondly the price reached in that year Arronvny. 15s. 2d., whereas in the case of the Footscray Gas Co. the rise was Genenat oF 3s, 9d. and the total price for the same year 18s. 6d. In 1910 by _ THE Com- MoNweattH contract of the 16th May the price for the next 3 years has been nsactniein increased by Is. further, making the total cost price 16s. 2d. as paleo against 19s. 3d. in the case of the Footscray Gas Co. The case of the Metropolitan Gas Co. is pointed to by the Crown not as an instance of excess price, but as evidence that the other instances disclose exorbitancy. I may add at this point that the defendants have attempted no explanation of the conspicuous dis- crepancy between this and the other cases referred to. The dis- crepancy in the case of small coal is extremely great. In the 1910 contract small coal delivered to the Gas Company is Is. 5d. per ton. The Footscray Gas Co. paid 15s. 3d. in 1908 delivered on the wharf. The Melbourne City Council in 1910 were charged 17s. for small coal delivered at the Electric Light Station. G. Mowling & Son paid 19s. in 1908-1909 for small coal ; and private consumers as already mentioned were charged in 1909 and 1910 20s. 9d. Unless therefore some reason can be given for thinking that the price of lls. 5d. delivered on the premises in the case of the Metropolitan Gas Co. is due to some exceptional circumstance, which made it fair to lower the usual standard, and not some desire to unduly favor the particular company—any idea of which I reject—or some pressure or inducement to sell at a great loss—which is not pre- tended—the prices charged to other consumers certainly in com- parison do stand out in relief as amazingly great. We now come to SourH AUSTRALIA. (1) Retail Dealers.—I think this class of transaction properly occupies the first place, because it is apparently clear and simple and because of the only explanation, if it may be called one, which has been given regarding it. Mr. Thomas is a fuel merchant in Adelaide of many years standing—he is President of the Fuel Merchants' Association there, and he speaks as to the trade. He produced invoices of Howard Smith & Co. for the years 1904 to 1910 inclusive. He also produced some invoices of J. & A. Brown u4CLR.] OF AUSTRALIA. in 1905 and 1908 and, at the request of defendants, invoices from Bell & Co. were put in. The invoices showed that the price of screened coal to dealers in 1904 was substantially 20s. for the first half of the year, coming down to 18s. 6d. at end. In 1905 it was H. C. or A. 1911. SY Tue Kine AND THE ATTORNEY- 17s. In 1906 and for all household coal delivered to end of Decem- GENERAL OF THE Com- ber 1906, it was 17s. I omit reference to some few intervening MonweaurH exceptional cases and disregard them, taking what is clearly the v. AssOcIaTED NorTHERN governing standard price. For coal delivered in January 1907 there Gorirenis. is a sudden and startling leap in price to 24s. 6d. which I take to be the regular price for 1907. Throughout 1908 and 1909 the price advances to 26s. except at the end of that year when strike condi- tions brought it up to 46s. and kept it there till the end of January, a circumstance which of course I disregard for this purpose. For the rest of the year 1910 the price is 26s. 3d. Bell's price in January 1904 for 15 ewt. was 23s. 6d. per ton, but this may have been a moment of emergency or temporary shortness of supply which for the moment enhanced the price. However that single instance on Ist January 1904 cannot outweigh the general force of the prices charged down to end of 1906, and in addition the other invoices of Bell & Co. which are in 1907 make their prices accord with Howard Smith's. Brown's invoices in November and December 1908 are 26s., the same as Howard Smith's. The rise from 17s. to 24s. 6d., an advance of 7s. 6d. to dealers and of course passed on to their consumers, is a very substantial addition to household expenditure. A sudden rise of 44 per cent. in an article of prime necessity is severe, whether it can be justified is another question. No attempt has been made to justify that particular advance or the subsequent advances which have brought the additional cost to 9s. 3d., that is 54 per cent. over and above the 17s. pre-existing, that is before the combination arrangements came into operation. Mr. Knox said of this, while it could not be denied there was a large jump in price there ought to be borne in mind the utter insignificance of the whole of the South Australian retail trade, as compared with the rest of the trade. He said it works out something under 2,000 tons out of 2,000,000 tons and he urged it could hardly be imputed as intention to the defendants that they intended for the sake of getting a few shillings a ton more from some dealers whose total purchases 496 HIGH COURT H. C. or A. amounted to about 2,000 tons a year to get at the rest of the put aS J am not prepared to say that 2,000 tons is the full amount of Tue Kix defendants' general retail trade in South Australia. The Arvonnny. inter-State trade being over 1,200,000 tons, and the general trad eee ® portion being from 76,000 to 84,000 tons in all, according as we monweartH the percentage, at 6.38 or 7 per cent., I should think South Aus: Associaren tralia consumes a good deal more than 2,000 tons in retail purcha ee But however that may be, I cannot accept the invitation of Knor on behalf of the colliery proprietors to close my eyes to significance and seriousness of the alteration of prices to dealers. Insignificant it may be to the defendants, it is not in significant to householders to whom coal is a necessity. If so insignificant why was the advance made in 1907? Why was increased in 1908, and the increase maintained in 1909, and wh was this insignificant portion of business of 1910 weighted with another 3d. per ton? One further observation is to be made. price to dealers in Melbourne, as already appears, was 21s. in Janu ary 1907 as compared with 24s. 6d. in Adelaide, a difference 3s. 6d. ; 21s. 6d. in Melbourne from Ist January 1909 as cone with 26s. in Adelaide, a difference of 4s. 6d.; and from February 1910 it has been 21s. 6d. in Melbourne as against 26s. 3d. in Ad e a difference of 4s. 9d. The defendants have not explained whi the absence of South Australian coal mines affected their minds fixing prices there. (2) The South Australian Government ; General Supplies. Adelaide and Suburbs: In April 1905 the price cf best screen Newcastle house coal was 18s. 5d. by contract for two years. In April 1907 the price tendered was 25s. 7d. for 2 years. The rise in price was 7s. 2d., over 38 per cent., and the Government appar- ently was cautious enough to accept for 6 months only. In December | 1907 it called for tenders for the year 1908 for these and other coal 2 services, the approximate annual quantity for Adelaide and suburbs being 1,750 tons ; but the Government was unfortunate, because : the lowest price on this occasion was 27s. 2d., a rise of 8s. 9d. a ton, — and this was accepted and was the price for year 1908. For 1909 the bs price was again 27s. 2d.; in 1910 and 1911 it was 27s. 3d. under contract May 1909. The advance in price thus amounts to 8s. 10d. M4 C.L.R.] OF AUSTRALIA. 497 upon an original price of 18s. 5d., which may be taken to be 48 2 oe A. per cent. (b) Port Adelaide and Suburbs.—In 1906 (by contract Ses of 1905) the price of Newcastle house coal was 15s. 5d. In 1907, Tue Kiva Mellwraith & Co. tendered for 2 years at 20s. 9d., a rise of 34 per g\ronnpy- cent. Again the Government's caution led it to limit the time to Gua 6 months, and again ill-fortune attended it for in December fresh wonweatru tenders gave the lowest price at 23s. 3d., which the Government paid Cetcteen for 1908. In 1909 and 1910, the price is 22s. 9d., a total advance of pissed 7s. 4d., which is 47 per cent. Small coal was 14s. 3d. in 1906 ; in 1907 the price was 19s. 9d. ; in 1908, 1909, 1910, 20s. 6d., a rise of 6s. 3d., which is 43 per cent. (c) Port Pirie-—The price in 1906 for best Newcastle steam coal was I4s. ld. In 1907 20s. 9d., or an advance of 41 per cent. for 6 months, caution again bringing mis- fortune, the December tenders bringing the price to 22s. 6d. for 1908; for 1910 and 1911, 22s. 9d., being an advance of 7s. 10d., which is 52 per cent. (3) Adelaide City Council.—In 1906 down to July, screened coal was 18s. 5d.; in July it went to 23s. 5d.; in September it reverted to 18s. 5d., and so continued up to November. On 19th November by contract note the price was fixed for 1907 at 26s. 3d., a sudden advance of 7s. 10d., over 42 per cent. In November 1907, a con- tract was made fixing the price for 1908 at 27s. 9d., and in 1908 the price for the next year is again 27s. 9d., and 1909 the price was fixed for the following year at 28s., the total increase is 9s. 7d., that is, 52 per cent. The quantity is about 2,000 tons a year. Small coal was 14s. 11d. in 1906 ; 20s. 9d. in 1907 ; 21s. 9d. in 1908 and 1909 ; and 23s. in 1910, a rise of 8s. 1d., that is 54 per cent. (4) South Australian Railways.—In 1906 the price was 11s. 9d. by tenders dated April and May for 96,000 tons per annum for two years. This price was tendered by Huddart Parker and the Adelaide Steamship Co. as an all-round price for every port. This price is either a fair price or an extremely low price and unremunerative price. If it were the latter, the history of the transaction will show that the lowness of the quotation was not due to any competition among the defendants, but in order to underbid a possible freight competitor, and this phase comes in later. If, however, the view is to be taken that it was a quotation of what the defendants thought VOL. XIV. 32 498 HIGH COURT H.C. or A. was a fairly remunerative competitive price, then we may take aaa as a present starting point. In April 1908 the lowest price tend d Tae Kine by any of the defendants was an all-round price of 17s. 6d. for o fF sordanaszse year and 17s. 3d. for two years. The quantity was 133,000 Samer per annum. The tender was ultimately accepted for two years ; wonwearra 17s. per ton. In 1910 the all-round price for first grade coal mio ea 17s. 145,000 tons. Even 17s. is low if compared only with some of oes the prices I have mentioned, and one of the questions which it be material to consider is, why this considerably advanced, but s comparatively low price, was taken for the South Australian raih contract. The advance in two years and afterwards mainta was 5s. 3d., which is over 44 per cent. increase. (5) South Australian Gas Co.—The price on trucks Port Ade was by tender made March 1905 for 3 years 15s. 3d. In M 1908 the price was 19s. an advance of 3s. 9d., which is 24 per a At the Retort House, Port Adelaide, the price was 17s. in 1906, 21s. 6d. in 1908-1910, a rise of 4s. 6d., over 26 per cent. For Company's Retort House at Port Pirie, the price in 1906 was 17s. that is 6d. more than at Adelaide; in 1908-1910 the price was 23s. 4d., that is 1s. 10d. more than at Adelaide, and a rise of 5s. 10d. above the 1906 price, which is 33 per cent. The quantity of screened coal delivered to the company was about 18,000 to 19,000 tons year. . Small coal was 12s. in 1906, and 14s. 3d. in 1908, 1909 and 191 a rise of 2s. 3d., which is only 18 per cent. (6) Wallaroo and Moonta Co.—The price in 1906 was 14s. 3 tender accepted in 1905 for three years. In 1908 the price for was 18s., a rise of 3s. 9d., which is 26 per cent., and for small i 1906, the price was 11s. 9d. In 1908 it was 15s. 6d. for deliv over 6,000 tons a month, a rise of 3s. 9d., being 31 per cent. (7) Kitchen Sons & Marsh Limited.—In 1906 the price of coal was 14s. In 1907 18s. 9d., almost 34 per cent. rise. In 1908- 1910, 20s. 3d. The quantity was 375 tons per annum, a rise 0 6s. 3d., being over 44 per cent. - (8) Adelaide Electric Lighting Co.—Small coal. In 1906 the price was 11s. 10d. In 1908-1909, 17s., a rise of 43 per cent. Jn 1910, 14 C.L.R.] OF AUSTRALIA. 17s. 3d., a total rise of 5s. 5d., being 46 per cent. Average 7.400 H. ©. oF A. tons per annum. 1911. — (9) May Brothers Limited.—Small coal. Average 350 tons per Tus Kixe ES annum. In 1906 the price was 12s. 3d. In 1907, 16s. 9d., a rise of about 36 per cent. In 1908, 17s. 6d. In 1909, 17s. 3d. ex heap. G the Is., being 51 per cent. (10) Sulphide Corporation—The price of best brands, A.A., New- castle, Wickham and Hetton, free on railway trucks Port Pirie in 1906 was (by contract made in December 1903) 14s. 8d. Pelaw Main was 13s. 8d. Call that a mean price of 14s. 2d. During 1906 and 1907 the company was supplied by Scott Fell & Co. By con- tract dated 30th April 1908 two of the shipping defendants con- tracted to supply until end of February 1910 up to 1,600 tons per fortnight, coal from 18 specified pits at the company's option, but with the proviso that the contractors could obtain the coal required at the time their steamers are loading at Newcastle and deliveries were not to be made from pits disapproved provided contractors could obtain suitable coal as a substitute while loading. These provisoes, in view of what we now know to have been the relations between the contractors and the collieries are very material on the question of price. The price for this contract was 18s. per ton, a rise of 3s. 4d. on Newcastle and 4s. 4d. on Greta coals, being 22 per cent. to 31 per cent., or an average rise of about 27 per cent. (11) Lhe Broken Hill Proprietary Co.—By contract January 1906 Caledonian or Seaham coal 12s. 1d. ;* East Greta, Hebburn and Abermain 12s. 3d.; Newcastle Co., Dudley and A.A., 12s. 10d., a mean price say of 12s. 5d. The conditions were very favorable to the consumer, the contract was for two years to end of February 1908. By contract of May 1908 the price was 16s. 6d., coal from Neweastle and/or Maitland districts with a rise and fall clause. That was an advance of 3s. 8d. to 4s. 5d. or 28 per cent. to 36 per per cent., or an average of say 32 per cent. The contract was extended for a year. (12) Broken Hill Water Supply.—The price by contract note in tHE Com- In 1910, 17s. 6d. ex steamer Port Adelaide. The final rise is 5s. 3d., woNweattm v, without taking into consideration the place of delivery. If loaded Assoctarep ex heap it is 1s. per ton extra; to calculate the percentage I add Pitecarcal 500 HIGH COURT H.C. or A. February 1906 to March 1908 was 13s. 9d. for best Ne bed and/or Maitland pits including A.A., Newcastle, Hetton, Caledonian <7 Tue Kiya Hebburnand Aberdare, and free into trucks Port Pirie. By contre Arrorxey. 23rd June 1908 the price of coal from 18 named pits at the co Sena aee pany's option but with provisoes previously mentioned was 17s. 6d monweartH There have been three extensions of this contract by mutual ag Associaren ment and, as some reliance is justly placed on that fact, I pie ticularize it. 'The first occasion was on February 8th 1910, when th contract was extended by agreement to 31st August 1910. It we afterwards agreed to extend it to 28th February 1911; on third occasion undated it was extended by agreement to 2 February 1912, the price being raised to 17s. 9d., that is 27 per cen to 29 per cent., or an average of say 28 per cent. 5 (13) North Broken Hill—The price in 1906 Maitland, engin 12s. 6d. Newcastle, screened engine, 13s. for two years from 1s March. That is a mean of 12s. 9d. Quantity being 500 tons pe month. From April 1908 to October 1909 the price was 18s., tise of say 41 per cent., the quantities for that period being 1 tons, over 900 tons per month. The strike prices then intervs but from April 1910 to end of the year the price was again 18s. 8,672 tons over 960 tons per month. A rise of 5s. to 5s. 6d, b 38 per cent. to 44 per cent., or a mean of 41 per cent. (14) New South Wales Railways: For Broken Hill Trams.— price of Newcastle large coal from A.A., Newcastle, Stockton Hetton pits, delivered into trucks, from 1st July 1906 for one y was 13s. 9d., which was the same starting price as in the case of the Broken Hill Water Supply. In May 1907 the price was ra to 18s., a rise of 31 per cent., although the Broken Hill Water Suppl price was still 17s. in 1910 and has not yet gone beyond 17s. 9d. 1908 the price for twelve months was raised to 19s., and in Febru- ary 1909 it was further proposed to be raised for 12 months to June 1910 to 20s. The tender was not accepted because the Government 3 were considering the using of coke instead of coal. Supplies were continued at 19s. In November and December there was a con-— tract to supply till 30th June 1910 at 19s. on condition that West Wallsend was added to the list of pits from which coal could be supplied. The quantities delivered under the various arrangements — U4 OLR.) OF AUSTRALIA. 501 were 2,263 tons for 1907-1908 ; 1,536 tons for 1908-1909 ; 1,360 H.C. or A. tons 1909-1910. The final rise was 5s. 3d., a percentage of 38 per pees cent. Tue Kine (15) Walter Sully & Co.—The price of engine coal in 1906 from 4X?,785 February was 14s. ; small coal 13s. In June 1906 engine coal was ber ea 17s. 6d., the combination not being then formed ; small coal still monwearra 13s. In January 1908 engine coal was 20s. ; small 16s. 3d., with Tenn en Th NortHERN: © Contrrtes. quantities average per annum 1,500 tons, a rise of 2s. 6d. over the tise and fall clauses. In December 1908 it was the same. June price, that is 14 per cent of a price, enhanced by 25 per cent. over the price in January 1906 for large, and 3s. 3d., or 25 per cent. for small. (16) Neild & Hyde.—In 1906 the price was 14s. for large engine coal and 13s. for small ; in January 1907 for one year it was fixed by contract at 17s. 6d. (that is 25 per cent. advance) and 13s. 6d. respectively, a maximum monthly quantity of 500 tons not to be exceeded except at Vendor's option at any time of threatened troubles, also rise and fall clauses, the basic price being 10s. per ton large. February 1908 prices are 20s. and 16s. 3d. respectively, the basic price being 11s. per ton large. December 1908, prices again 20s. and 16s. 3d., price subject to 5 per cent. discount, with rise and fall clause, the basic price being 11s. per ton large. (17) Broken Hill Junction North Co.—In 1906 the price on trucks at Port Pirie was 12s. 6d. and 13s., a mean price of 12s. 9d., as in the case of the North Broken Hill Co. In 1908 the price was fixed as for March Ist 1908 to 28th February 1909 at 18s., a rise of 5s. 3d. or 41 per cent., on terms similar to those for the last mentioned company. In 1909 the price advanced to 19s. The final rise was 6s. and 6s. 6d. or 46 per cent. and 52 per cent. over extremes, and 49 per cent. over the mean. (18) Zine Corporation.—The prices in 1906 and 1907 under two years' contract made in May 1906 as in the previously mentioned contract was 12s. 6d. In 1908-1909, it was 19s. 6d., that is 56 per cent. rise; from Ist June 1910 to 31st May 1911, the price was fixed by contract at 18s. 6d. including wharfage. The quantity is 1,250 tons per month, the eventual rise 6s. or 48 per cent. Western Austratia.—(1) Western Australian Railways.—The H.C. or A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NortTHERN Cottier '. ment had the right to determine from which colliery or collieries the HIGH COURT price by extension in March 1905 of a current contract made in 1904 with modification of price from 15s. 10d. was 15s. 4d., it was an round price for the following ports, Fremantle with a probabl consumption of 30,000 tons, Geraldton 5,500 tons, Albany 3,500 tons, Bunbury 2,200 tons. The coal was to be from the A.A., Newcastle, Hetton, Burwood, Dudley Wallsend, Old Lambton, Stockton, Seaham, Duckenfield, Waratah or other agreed to. The Govern- coal should come. In January 1907 the price was raised to 18s. 11d. that is 23 per cent. more for all four ports for one year. The Goy- ernment right is no longer to select the pit, the contractor having the right to load coal obtainable at time of loading with a provision of mixing Seaham with other Maitland coal. The Government has the power to reject coal below a certain calorific value. The tenders of McIlwraith & Co. and the Adelaide Steamship Co., the only defendants tendering, were separate, but they were accompanied by letters which stated alike that the tenders must be accepted — for "all ports or none." In November 1908, McIlwraith's price for - Fremantle for 3 years for February 1909 as originally tendered was 2ls., but, after interviews with the Commissioner, the price was reduced to 19s. for the first year and 19s. 6d. for the second and third years. Geraldton was separately tendered for by the same firm, and was raised to 24s. for the whole 3 years. In the letter _ which revises the tenders in this respect, there are reasons given which are said to be important, and to which I shall hereafter refer, 4 the letter is dated 21st November 1908, part of Ex. El. In con- nection with this tender Howard Smith & Co. also tendered, in one — tender, for Fremantle and Geraldton at an all-round price of 22s. 4d. with this note " Conditional upon tender being accepted for both — ports or neither." The Adelaide Steamship Co. tendered Fremantle 2ls. 6d., Geraldton 26s. MclIlwraith's accepted price for Albany was 21s. The special feature of these contracts is that in 1904- — 1905 and 1907-1908, McIlwraith & Co. and the Adelaide Steamship Co. and Huddart Parker whether their tenders were for 1, 2 or 3 2 years made an all-round price for the four ports, Fremantle, Gerald- _ ton, Albany and Bunbury. Howard Smith & Co. gave an all-round price for Geraldton, Albany and Bunbury, and made Fremantle 2s. 14C.L.R.] OF AUSTRALIA. 503 less. All four defendant shipping companies tendered for the H- 0. oF A. earlier contract, that contract (McIlwraith's) was extended for a 1s further period of 2 years. In contract 1907-1908 McIlwraith and Tar Kise the Adelaide Steamship Co. were the only two of the defendants Prewedicres") that tendered. Their respective prices were all-round for the four GCEXENAT OF ports. Then for the contract 1909-1912, the tenderers were Mc- wonwraure Tlwraith & Co., Howard Smith & Co., Adelaide Steamship Co. and AssocraTED Melbourne Steamship Co. Mcllwraith had originally an all-round QO®7HE®S price for Fremantle, Albany and Bunbury, with a higher price for Geraldton. Howard Smith had a similar price for Fremantle and Geraldton with the condition "' both or neither," the quantities being for the first vear Fremantle 23,000 tons, second and third year 40,000 tons perannum. Geraldton 8,000 perannum. Howard Smith & Co.'s price for Albany was lower than for Fremantle. The Adelaide Steamship Co. had only 1d. difference between Fremantle and Albany—21s. 6d. for former, 21s. 5d. for the latter where the quantity was only 1,000 tons while their tender was 26s. for Gerald- ton. Melbourne Steamship Co. was very close for Fremantle and Albany, namely 21s. 11d. and 21s. 7d. whilst Geraldton was 25s. The eventual rise for Fremantle was 4s. 2d. and Geraldton 8s. 8d. the respective percentages of increase being 27 per cent. and 56 per cent. It is suggested that the Collie coal question accounts for the difference, and to this reference hereafter will be made (see Ex. G1). (2) Perth Gas Co.—The price from July 1905 to March 1908 for Wickham, Hetton and Stockton at 17s. 6d. Purchasers paid for wharfage and haulage, 2s. for part of the time, 2s. 6d. for the rest, besides 3d. for handling. In February 1908 the price was raised to 21s. clear to the Vendor with rise and fall clause, the purchasers as before paying wharfage and haulage 2s. 6d., and handling 3d. In April 1909 the price is fixed for 3 years at 21s. clear to Vendors with a fall clause. Purchasers continued to pay the extra charges as well as the Harbour Improvement rate ; the rise is as between 1s. 6d. and 21s., being 3s. 6d. or 20 per cent. (3) West Australian Ironworks.—In 1906 the price of large coal was 19s. ; smith's coal 17s. In 1907 large coal was 23s. 9d., a rise of exactly 25 per cent. ; small 19s. 9d., 7.e., over 11 per cent. In 1908-1909 they were respectively 24s. 9d. and 20s. 9d., and in April 504 HIGH COURT H.C. or A. 1910 small reached 22s. The prices so far appear to be free 191. trucks. I say also, merely in reference to continuation and not ; Tue Kine affecting detriment as forming part of the offence charged, the lai NDTHE . : oe . Hiss Avrorney- invoices show a further increase in price. The increase which GENERAL OF THE Com- MONWFALTH per cent. and 29 per cent. an eae (4) Perth City Council.—(a) Parkerville.—Large coal in 1906, the Ce price was 23s. delivered. In 1907 it was 26s. 8d. ex ship and 29s. 2d. ex coal vard. In 1908 it was 27s. 2d. ex ship and 29s. ex yard. In 1909 it is 28s. 2d. ex ship and 30s. ex yard. In 1910 it is 28s. 8d. ex ship, and 30s. 6d. ex yard ; an eventual rise of 7s. 6d. or 32 per cent. of which 6s. 2d., or 26 per cent took place in 1907. Small coal at this site started with 20s. 9d. in bulk in 1906, went to 26s. 5d. ex yard in 1907, but that was bagged, loose small coal not being quoted. In 1908, small coal loose ex yard 25s. The price for small _ coal bagged ex yard being 29s. 2d., an advance in bagged coal of 2s. 9d. on the year before. In 1909 loose coal ex yard is 26s., bagged 30s. 2d. In 1910, small coal loose ex yard is 26s. 6d., bagged 30s. 8d. I am not clear whether the original price of 20s. 9d. was" definite is in large coal 5s. 9d. and small 5s. respectively, being 30 loose or bagged. I assume it was loose, and, if so, and in order to estimate the rise in 1907, I take 4s. 2d. off 26s. 5d., that is 22s. 3d., which is only a very small percentage about 7 per cent. The final price if taken as loose shows a rise of 5s. 9d., or 27 per cent. (b) City — Yards.—The price of large coal was 23s. 3d. ; in 1907 it was ex yard — 25s. 9d. ; in 1908 it was 29s. 1d. ; in 1909 it was 30s. 1d. and in ~ 1910 it was 30s. 7d. That shows a rise in 1907 of 2s. 6d. or over — 10 per cent. In 1908, the rise is 5s. 10d., which brings the percentage up to 25 per cent. ; the final rise of 7s. 4d. in 1910 brings it up to 31 per cent. As to small coal—The price in 1906 was 21s. which I again take to be loose. In 1907 the price appears (with doubt) to be 23s. bagged, and deducting 4s. 2d. brings the price of loose coal be for 1907 to 18s. 10d., which makes me somewhat dubious of its accuracy. In 1908 loose small coal ex yard is 25s. 1d. In 1909 it is 26s. 1d. In 1910 it is 26s. 7d., the total rise is 5s. 7d., or 26 per : cent. after deducting the 4s. 2d. (c) Sanitary Site—Large coal in 1906 was 25s. 9d.; in 1907 it was 27s. 3d. ex yard, a rise of only Is. 6d. ; in 1908 it was 32s. 6d., a rise of 6s. 6d.; in 1909 it was — 14 C.L.R.} OF AUSTRALIA. 505 33s. 1d. and in 1910 33s. 7d., a total rise of 7s. 10d., being 30 per cent. H. C. oF A. Small coal in 1906 was 23s. 6d.; in 1907, assuming it originally ue to be fixed as loose, the price is 20s. 2d., which would be a reduction, Tux Kiva if it is not taken as loose the price in 1907 is 1s. advance, namely, 4\voneey- 24s. 6d. ; in 1908 it is 28s. ; in 1909 it was 29s. 1d.; and in 1910 GPNERAL oF THE Com- it was 29s. 7d., a total rise of 6s. 1d., being 25 per cent. after deduct- monweaurH e ing 4s. 2d. for certainty sake in defendants' favour. In making Assocrarep NorTHERN these last-mentioned calculations I have departed from the figures Co) irprips. shown in the graphs presented by the Crown. Those graphs as to these Perth City Council contracts, [ am now dealing with, show small coal brought to a higher price than large coal: this is very improbable and I think the error has arisen through not observing the words "in bulk" on the Adelaide Steamship Co.'s letter of 14th October 1905. I am not altogether clear, but on the whole this seems correct. The next State is QUEENSLAND. (1) Chillagoe Company.—Price of screened coal delivered c.i.f., Cairns, was 20s. per ton, the price being fixed in April 1905. This was a reduction from the previous contract of 3s. a ton, and was on the understanding that the purchasers did not supply other consumers from their stock. It was also arranged as part of the former contract of 10th July 1903, which provided for back cargo. On 16th February 1906 the c.i.f. price of coal was reduced to 17s. for 3 years, subject to termination on 6 months' notice. The contract bound the purchaser to take the whole of its coal from the contractor, and to ship its products solely by steamers con- trolled or nominated by them. On Ist February 1909 the price is 19s. for 2 years on similar terms, the contractors paid no wharfage. These prices are relied on by the Crown as some indication of fair prices ; the defendants claim that the back loading is a material business consideration, which does not come into play in other Queensland instances. In any event the prices may very justly be contrasted with others in order to determine whether the dis- erepancies can be wholly accounted for by possible profits on back loading. (2) Queensland Government Railways—There has been very little Newcastle coal used on the Queensland Railways. For a H.C. oF A. 1911. —— Tue Kinc AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v ASSOCIATED NortHern CoLurertes. HIGH COURT 1191 number of years they have used Queensland coal as a matter o policy. Some emergency contracts have been made from time t time in small lots, but, as far as showing excess of price of coal t the Government is concerned, I do not think I can base anything upon that. In June 1907, 103 tons was supplied at Cairns for 21s. Then at Townsville, the following deliveries : May, 1907, 100 tons — @20s. ; October, 1907, 881 tons @ 19s. ; May, 1909, 311 tons 21s. ; June, 444 tons @ 21s. ; August, 157 tons @ 21s. 9d. ; Novena 4 ber, 168 tons @ 19s. 8d. These prices, however, create difficult for the defendants ; for, if they are not excessive, they leave much | to be accounted for as to prices charged for regular and larger contracts. (3) Townsville Harbour Board.—The price fixed by tender 16th March, 1905, for one year ending 30th March 1906, was 18s. 9d. for Abermain and 19s. for Seaham. A passage in that tender (B.9. is important. It states :—" This contract is based on the following prices for coal at Port of Shipment : Seaham Newcastle screen 7s. 6d. a ton; Abermain Newcastle screened, 7s. 3d. a ton." The quotations were for delivery on purchaser's lighters ; there was rise and fall clause ; estimated quantity 100 tons a month; con-— tractor to pay all charges. By contract 2nd April 1906, the price' for Seaham and Abermain coal was 20s. 6d. ; estimated quantity — 300 tons a month. The contract was based on following prices at Port of Shipment ; Seaham, 8s. ; Abermain, 8s. In March 1907, — the price of Abermain, Seaham, Stockton, A.A., and Hetton was 23s., based on 10s. f.0.b. price, rise and fall clause included. There was a provision that when the vendors had a steamer in the Harbour _ and could deliver direct to the Board's lighters the price should be 21s. 9d. instead of 23s. That of course does not affect the ques- tion of rise. In March, 1908, the prices advanced to 25s. (with reduction in case of direct delivery to 22s. 9d.) based on Ils. f.0.b. — : price. March, 1909, prices still 25s. (with reduction for direct delivery to 24s.). April, 1910, price stands the same. The initial _ price, I take, as 20s. 6d. ; the final price is 25s., a rise of 4s. 6d., : . or nearly 22 per cent. as compared with Chillagoe of nearly 12 per — cent. ; the quantity in the latter case being 3,000 tons per annum, and in the present case 3,600 tons per annum. 14 C.L.B.] OF AUSTRALIA. 507 (4) The Queensland Meat Company.—The place of delivery here H. ©. or A. is Townsville at the wharf, and the quantities about 4,000 or 5,000 791): tons a year. The prices, which include harbour and wharfage Tur Kine dues paid by purchasers, were 1905, 21s. ; 1906, 22s. 6d. ; 1907, NG uwuy- 20s. 3d. ; 1908, 23s. 6d. ; 1909, 22s. 9d. These prices seem erratic Gane in themselves and discrepant with others. MONWEALTH (5) Townsville Gas Company.—The quantity was 1,800 tons a Assocrarep: year and the contractor paid wharfage (where payable) and harbour aa. dues. In 1906, the price, by contract of 1905, was 20s. 3d. for A.A., ae or Stockton ; 19s. 9d. for Hetton. In October 1906, A.A., Stockton or Hetton are priced at 20s. 9d., with rise and fall clause. 4th January 1907, notice was given (A.9.) that the price in future would be 1s. a ton in advance :—" As the price of coal has advanced in Newcastle ; from Ist January our contract with you will be in- creased accordingly." In January 1908, the price was 23s. 9d. ; 1909-10, the price remains the same. The final advance was 3s. 6d. ; equivalent to 17 per cent. (6) The Commonwealth Naval Depot.—These were supplies to the Gaywndah at Townsville. The price in June 1906 was 25s. ; 1907, 26s. ; 1908, 27s. ; 1909, 25s. 3d.; 1910, 30s. The supplies in this case were inconsiderable in themselves, ranging about 25 tons up to 65, but they are erratic and no explanation is given ; still I am not able to regard the contracts as material for any conclusion with respect to general excessive price. Errect or Non-propuction oF FurTHER Contracts AND DEALINGS BY DEFENDANTS. The various contracts in evidence do not compose all the inter- State transactions of the defendants. No doubt the powers of discovery in possession of the Crown are very great, though they were not so extensive when this action began as they are now. It is consequently just to put into the balance in defendants' favour the unusually wide authority of the Crown to ascertain the facts. On the other hand, powers theoretically unbounded are practically limited by want of knowledge as to the proper points of applica- tion. Therefore, though it is possible the Crown has in its pos- session information as to dealings other than those in evidence, 508 HIGH COURT H.C. or A. jt is also obvious that the defendants have them too and probal 1911. —— ; Tue Kixe probably is not cognisant, but of which the defendants or son Awronsny. of them are not ignorant. _ It was pressed upon me by defendants GEREN T ee that Mr. Wise had confessed he had every contract which the di monwearrn dant shipping companies had made, and therefore I ought to infer eS that all the coal unaccounted for by affirmative evidence should NorrHEeRN <COLLIERIES. more ; and there may be attendant circumstances of which the Cro be treated as disposed of on unexceptional terms, and as unaffected — by the combination. Personally I did not understand Mr. Wi to make so extreme a statement, though his assertion was very large. I accept the assurance of learned counsel for the Crown that so sweeping an assertion was not intended. Whatever other information the Crown has, I am quite willing to believe, would lend no additional strength to its case. On the other hand— —the defendants—at least equally competent to produce them— have abstained from doing so; and so I do not think I ought to make any inference in their favour as to the prices upon which — the residue of the coal was sold to the public. The proportion of tonnage dealt with by the contracts put in, and the extensive varied and representative character of the transactions covered — by them, leave me to infer—in the absence of evidence to the con- trary—that at all events they are not entirely exceptional. If they are entirely exceptional, the defendants whose transactions — they are might have shown it. They constitute in themselves an immense body of material, comprising also a large proportion of the whole, affecting in the past, and, if continued on the same lines, certain to affect in the future many public activities, important industrial operations, and the comfort convenience and private welfare of a large number of the inhabitants of Australia. So large — a proportion of the inter-State trade, as is covered by the contracts E before me, is in itself necessary to protect ; and if the defendants' — conduct in regard to it is open to objection their suggestion that the balance unaccounted for was on a less onerous footing would add to their difficulties of explanation. Prima Facre Errect or Ratsep Prices. In themselves and prima facie these advances have caused directly, 14 C.L.R.] OF AUSTRALIA. and must in the natural course of events have caused indirectly, a heavy detriment to the public. It is unnecessary and would be a work of supererogation even if it were in all cases possible to calcu- late the precise additional outlay occasioned to the various con- sumers by the increases in price, disclosed by the evidence. It is sufficient to say they have been very considerable. To what conclusion do these advances tend? They have on the whole been maintained for three years and a half, and there- fore cannot be due to any sudden or temporary cause. Their general steadiness and progress proves an intention to persevere in adhering to the system of higher prices. The strike of course raised the price abnormally, but when the extraordinary cause disappeared so fell the extraordinary prices ; and the cost of coal to the consumers resumed the general level it had reached before. There are no unusual circumstances of trade which can account for the rise, and the successive rises, and consequently the impres- sion received from the general and the constant increases is that they were due to the contract and the combination alone. So far then the conduct of the defendants would in itself indicate to me an intention to combine for the purpose of raising prices to a height limited only by the possibility of obtaining them, free from the protection which the public might have from the competition previously existing, and the fierce character of so many of the in- creases such as in the cases of the Adelaide retail trade, the South Australian Government Special Services, the Adelaide Electric Lighting Company, May Bros., The Broken Hill Contracts, the Melbourne & Metropolitan Board of Works, The Melbourne City Council, the Commonwealth Services, the West Australia Iron- works, the Perth City Council, to say nothing at present of the Victorian and South Australian Railway Services, impresses me with the prima facie belief, which of course other evidence might remove, that the previous free competition was not carried on at such a destructive rate as could only be met by the huge additions to the price which followed the inauguration of the combination. T use the word " huge" because not only did the advances mean much to the consumers, but the magnitude of the defendants' trade made a slight advance per ton of enormous importance to H.C. or A. 1911. ~ Tus Krxe AND THE Arrornry- GENERAL oF rie Com- MONWEALTH v. AssocrateD Norraern Conramrres. 510 HIGH COURT - H.C. or A. the suppliers. If, for instance, only one penny per ton were added es all round to the price of inter-State coal—1,500,000 tons—it would Tue Kixe give an aggregate additional return of £6,250. There is therefore eee! ide margin between the 1906 price and the subsequent prices on — Arrorney- 4 WI GENERAL OF the coal dealt with in the evidence to be accounted for by the tHE Com- MONWEALTH mere restoration of fair and reasonable competition, and the neces- Assoctarep Sity of avoiding impending ruination. F secitaconel The defendants have not given affirmative evidence to show whether the new prices were fair or unfair, nor as to the character of the competition prevailing at the time the combination was — projected. They themselves have remained entrenched behind a breastwork of silence ; and—by their counsel—have met the case of the Crown with an endeavour to extract qualifications sufficient to destroy it, and otherwise have relied on the initial presumption of their innocence; that presumption however gradually weakening under the strain of actual circumstances. It may be proper at this point to refer to the case of The King — v. Burdett (1). I shall quote some passages from the judgments of the eminent Judges who sat. Best J. at p. 121 observed -—"It has been said, that there is to be no presumption in criminal cases. Nothing is so dangerous as stating general abstract principles. We are not to presume without proof. We are not to imagine guilt, where there is no evidence to raise the presumption, But when one or more things are proved, from which our experience enables us to ascertain that another, not proved, must have hap- pened, we presume that it did happen, as well in criminal as in civil cases. Nor isit necessary that the fact not proved should be estab- lished by irrefragable inference. It is enough if its existence be highly probable, particularly if the opposite party has it in its power to rebut it by evidence, and yet offers none ; for then we have some- thing like an admission that the presumption is just." Holroyd J. used language to the same effect and said at p. 140 :—" The presumptions arising from these proofs should, no doubt, and most especially in crimes of great magnitude, be duly and carefully weighed. They stand only as proofs of facts presumed till the con- trary be proved, and these presumptions are either weaker or stronger (1) 4B. & Ald, 95, 14.C.L.R.] OF AUSTRALIA. 511 according as the party has, or is reasonably to be supposed to have H. ©. or A. it in his power to produce, other evidence to rebut or to weaken Bae them, in case the fact so presumed be not true, and according as Tux Kine i ° AND THE he does or does not produce such contrary evidence.' joaty Abbott C.J. at p. 161 said :—' In drawing an inference or conclu- GENERAL OF THE Com- sion from facts proved, regard must always be had to the nature moxwravrn of the particular case, and the facility that appears to be afforded, soncemusi either of explanation or contradiction. No person is to be required QO®THERN to explain or contradict, until enough has been proved to warrant a reasonable and just conclusion against him, in the absence of explanation or contradiction ; but when such proof has been given, and the nature of the case is such as to admit of explanation or contradiction, if the conclusion to which the proof tends be untrue, and the accused offers no explanation or contradiction, can human reason do otherwise than adopt the conclusion to which the proof tends? The premises may lead more or less strongly to the con- clusion, and care must be taken not to draw the conclusion hastily ; but in matters that regard the conduct of men, the certainty of mathematical demonstration cannot be required or expected." The learned L.C.J. added in accordance with the current of thought at the time that it was a special advantage of British Jurisprudence that the verdict should be rendered by the unanimous judgment and conscience of twelve men of the world, who know that where reasonable doubt is entertained it is their duty to acquit, rather than by lawyers whose habits conduce said the learned Judge to subtilty and refinement. Fortunately or unfortunately the law in many cases, reflecting a somewhat changed public opinion, has placed this duty upon lawyers but none the less the principle is faithfully observed to acquit whenever reasonable doubt is enter- tained. Derenpants' Sucerstion or Prior Ruinous Competition as JustiFicaTion FOR ApvANCcED Pricus, &c. Learned counsel for the defendants offered me some suggestions with respect to the evidence actually given which, if well founded in fact, would help to lay some meritorious foundation for the defen- dants' action, though certainly not capable of supporting the whole structure they sought to rest upon it. 512 HIGH COURT H.C.orA. The main suggestions were that, as matters stood before the form 1911. 'tion of the Vend, the collieries were engaged in ruinous competit Tue Kine with each other ; and that the Shipping Companies before the | Prorsek oo bined agreement were carrying coal at unremunerative and perhap, GENERAL OF Josing rates. I shall deal with them in turn. As regards the o 'THE Com- . monweatrH lieries no trace of such a reason is found in any of the records « Medora, the Vend, its minute book, and its correspondence between i 7 aera own members and with the Shipping Companies. If the fact as suggested, the omission is surprising ; nor is there any men in the evidence of such a reason having been put forward by a1 of the parties to the Vend at its formation or afterwards. with suspicion on this attempted justification, which saw the for the first time as a suggestion from the bar, foreshadowed Wheeler's cross-examination and taking definite shape in arg It is so fundamental to that argument ; so vital to the justificat suggested for the original increased charges, which the coal pr prietors deliberately set themselves to demand of the Aust people for an article of prime necessity, that it is remarkable not to find it strongly emphasised as the ground of joint action on many occasions. When those charges were increased, occasions | were not wanting when such a reason, if it could have been truly stated, would scarcely have been overlooked. The suggestion rests for support mainly on some evidence obtained from Mr. Wheel at p. 294. Mr. Knox asked him " None of the mines have over- drafts have they?" He answered "A good many of them are in the hands of the banks." Question.—A good many of them have not been able to make a living ? Answer.—Some of them were in the hands of the Banks. Question.—You knew that in 1904-5 there were many coal pro- prietors who could not make a living out of the mines ? Answer.—So public information told us. Question.—And you believed it ? Answer.—Well they could not pay dividends—a good many of them—. So that Mr. Wheeler's evidence amounted to this that some an lieries unnamed are in the hands of the banks, whatever that means. U4 C.L.R.] OF AUSTRALIA. 513 It means of course they are in debt, but to what extent or for what H. C. or A. reason, whether bad management, or want of capital, or accident, ow) or, what is not improbable, inferior coal, which the public did not Tae Kia desire, we are not told. Apparently some are even now, despite Pesca the rise in price, in debt to the banks according to Mr. Wheeler's Cumraice belief the grounds of which we do not know. As to which collieries monwratra were in that position in 1906 very little direct indication is given. 'eieaecicaiiad But the conclusion I formed from hearing Mr. Wheeler's evidence ieee Load was that it was the smaller collieries. On page 269, speaking of April 1906, he says, he said to those of the defendants who approached him on the question of allotment that he was quite willing to limit his trade "to assist the smaller collieries who could barely exist." If the defendants wanted to prove impecuniosity and the necessity of raising their prices as these have been raised in order to make their business payable, evidence of a first-hand nature and of a much more definite reliable and satisfactory nature was easily within reach. And, in the circumstances, I am not prepared to conjecture the existence of justifying facts, which could so easily have been demonstrated if they had any real existence. A tithe of the effort spent in painting the picture might have produced the living subject. Mr. Wheeler also said that in 1906 there was a good deal of undercutting. I think there was undercutting below the declared price, but that does not at all settle the - question whether the prices were ruinous or payable. The defendants also relied on Mr. Wheeler's balance sheets, in 1905 and 1908. Mr. Know analysed them substantially as follows :— In 1905, Wheeler's output was 230,000 tons sold at a profit of £4,289, which is a profit of 4.4 pence per ton. Wheeler paid no royalty, and, if he had, it would have more than absorbed his. profit. Again the hewing rate paid by him that year was 3s. 6d., the declared price being 9s. per ton. On this analysis Mr. Knox argued that other collieries less fortunately placed in 1905, inasmuch as they had in most instances to pay a royalty, and were no better equipped than Wheeler's mine, could not possibly afford to sell at 9s. The whole argument based on this balance sheet tumbles to the ground, because although the declared price was 9s. there was a rebate of ls. 6d., and, out of that Is. 6d., the You. x1¥, 33 H.C. or A. 1911. Tue Kine AND THE ATTORNEY- General OF in dealing with the several collieries separately used to obtain THE Com- monweattH rebate of 1s. 6d. off the declared price, that is the clear view I ta he of Wheeler's evidence. Part of the colliery defendants' arg NortTHERN CoLLreRIEs. HIGH COURT royalty, which Mr. Knox takes at 5}d. all round, can be pro for and leave 1s. Ofd. profit. 230,000 tons at Is. 03d. a to £12,218, which makes a vast difference in a balance sheet. have already referred to the fact that the Shipping Comp was that the Shipping Companies played off one colliery aga another, and went marketing the quotation (see page 1537) ; of course connotes a reduction of the declared price. So far as the shipping defendants are concerned it was not only admitted, b strongly urged by Mr. Mitchell, that they were getting the in State coal at 7s. 6d. in 1905 (see page 1780). The Adelaide S.S. Company in the letter of 16th March 1905, to the Townsville Har bour Board (Ex. B.9) stated in express terms that its prices quote to the Board were " based on the following prices for coal at the port of shipment :—Seaham Newcastle screened, 7s. 6d. per ton; Abermain Newcastle screened, 7s. 3d. per ton," &c. Undoubt the shipping defendants in October 1904, Huddart Parker a Howard Smith & Coy. jointly tendered to the Victorian Railways for 1905-6 at 11s. 11d. best coal, minimum 50,000, maximum 95,000 per annum. For Seaham or West Wallsend 10s. 11 ; 75,000 tons ; Hebburn, 100,000 tons at 10s. 5d. J. & A. Bro tendered Pelaw Main, 75,000 to 150,000 at 11s. 6d. and also same quantities of Pelaw Main or Hebburn at contractor's option at the same price. The Adelaide 8.8. Coy. quoted best coal 11s. 11d., Seaham and West Wallsend, 10s. 11d. ; Abermain, 10s. 8d.; Hebburn, 10s. 5d. If coal was sold at 9s. it would leave Is. 5d. as a minimum, and 2s. 11d. as a maximum for the Shipping Com- panies freight and management. This would be absurd from Newcastle to Melbourne, particularly when we recollect that in the Vend minutes (F.61) it appears that the colliery proprietors agreed that the freight from Newcastle to Sydney for the Sydney Gas Contract should be a minimum of 2s. 9d. a ton, a figure that was repeated in the following year's minutes (I. 97.). It appears too by Exhibit 7c that in January 1906, Wheeler agreed to sell to Scott Fell & Coy 50,000 to 150,000 tons of his best screened coal at 4 C.L.R.] OF AUSTRALIA. 515 4s. subject to rebates of 1s. 3d. to 1s. 6d. according to quantity taken H. ©. or A. and on small coal, which was at 5s. a ton, rebates over 20,000 tons in a year—3d. to 6d. Tue Kine AND THE Referring then to Exhibit T.8. it appears that the New South \prorney- Wales Railways obtained coal as follows :—Abermain, 1904-5, Guxnreae 20,824 tons at 6s. 6d. delivered at East Greta Junction ; in 1905-6, wonwearra 28,818 tons at 5s. 10d., and in 1906-7, 16,655 tons at 6s. 10d. ; EES. the railway freight for shipment of the coal being carried in privately Nonreen owned trucks from Abermain to Newcastle was 1s. 2d. all through, that meant an f.o.b. price of 1s. 8d., 7s. and 8s. respectively. From the Dudley mine there came 24,013 tons at 7s. 6d. in 1904-5, which with freight (10d.) made the f.o.b. price 8s. 4d. From the Newcastle Company, the railway had 28,786 tons at 6s, 9d. at Newcastle colliery siding in 1905-6, which with 9d. freight would bring the f.o.b. price to 7s. 6d. Wallsend sent 3,171 tons at 8s., which, with 9d. freight would make the f.o.b. price 8s. 9d. The smallness of the quantity apparently did not allow of the usual rebate. In 1906-7, Wallsend delivered 5,320 tons, partly at &s., and partly at 9s. Though it was still under 9s., the price changes in the year 1907-8, when Abermain rises from 6s. 10d. to 8s. 10d. and 9s. 10d., and the Newcastle from 6s. 9d. in 1905-6 to 7s. 2d. and 9s. 3d., and Wallsend from 8s. and 9s. to 9s. 3d. and 10s. 3d. at Wallsend colliery siding. According to the evidence the declared prices in 1904 were 10s. ; in 1905, 9s. ; in 1906, 10s. It is idle there- fore to ask me to believe that the collieries were selling their output at declared prices. One observation should be interposed regard- ing Wheeler's balance sheet. Even if his price were taken at 9s. net,—which I reject—there is some confusion and doubt respecting the expenditure debited ; and I am far from clear that there have not been carried against coal receipts items of debit that have no relation to coal production. The balance sheet was introduced by defendants, was built on by them, was used by them to contra- dict Wheeler's sworn testimony, and they obtained from him some further figures to enable them to complete their process of analysis of the figures in the balance sheet. The Crown did not insist on strict proof of these figures, but pursued the course most reasonable H.C. or A. 1911. er Tae Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH w. ASSOCIATED NorTHERN CoLuieriEs. HIGH COURT in this unique case and adopted generally on. both sides, | insisting in mere technicalities in such a matter. When however the Crown insisted for still further information to test the figures so obtained, learned counsel for the defenda suddenly, and, as I consider unreasonably, raised a formal objectic It was technically correct and I was forced to allow it. For th Crown to follow the strictly formal course, it would have been ne sary to bring Mr. Wheeler's books into Court and display his b ness affairs. That is a thing I would not permit in this case if at all avoidable. This he strongly objected to, and I think the Cro acted most properly in not doing it. I am therefore left in gray doubt as to the reliability of the actual debits pressed upon m by Mr. Knoz, and in any case, therefore, I could not with any d of confidence act upon them in his favor. The rebate 1s. 6d. h ever destroys the supposition on which Mr. Knox built, that in 1905 Wheeler sold at 9s. net, and so cuts away his whole position on the balance sheet namely that 9s. would plainly have been a ruinous price for other collieries. za Looked at from the rebate standpoint it is consistent with other circumstances I have related, and that have been estab lished, that other collieries of importance were selling their pro- duct at much below the declared price at that time. It is probable that those collieries would continue so long and per- — sistently to march on the road to ruin; and, more than that, the Vend minutes of 28th February, 1906 (F.13) disclose the fact that, at a meeting of the Vend, Mr. Chapman claimed the right to' sell Seaham coal at 1s. a ton under the fixed price for other Borehole coals, and Abermain at 6d. a ton under that fixed for Maitland coal. Mr. C. M. Newman likewise claimed 1s. a ton on the Caledonian Company's coal, but afterwards agreed to modil his demands, and make it 1s. for inter-State, and 6d. for foreign — trade. Mr. Chilcott, who represented the Scottish Australian Coy. ; Mr. Laidley, who represented the Co-operative claimed the right to sell Lambton B., and Co-operative coal respectively at 6d. a ton below the fixed price, and Mr. Jno. Brown, and Mr. Ear, * also considered they had a similar right to be put on a level wil the Seaham and Caledonian coals. Afterwards, Mr. Chilcott, Mr. 14C.L.R.] OF AUSTRALIA. 517 Laidley, and Mr. Earp withdrew their claims, the minutes record: H- ©. oF A. —'In order to help forward the movement for Association." a Ultimately it was resolved that "Seaham, West Wallsend, Killing- Tae Kiva AND THE worth (the two latter being Caledonian), and Duckenfield, which \yyonwey- is Brown's, be allowed to sell at 6d. a ton below the fixed price GPNPRAL OF THE Com- of the other Borehole collieries " ; that was carried with only two monweaura dissentients. AssocraTED . 7 : i ane >, NortHern These various claims arose upon a discussion of the Chairman's ¢oyrreries. suggestion that a document fixing the selling price, such as put before the last meeting should be signed that day by all present. The reference to the minutes of the previous meeting shows that the prices referred to were best 9s. ; unscreened, 8s.; small, 5s. 6d- per ton f.o.b. Newcastle. The Caledonian Seaham Companies did not then consent, and so it came on for the later discussion. Now it does seem very extraordinary to me that men should require a mutual pledge to sell at 9s., if they were already doing so; and still more extraordinary is it that two large companies, one New- castle, and the other Maitland, should hesitate to pledge themselves to do what they were already doing, or, on the other hand, should hesitate to do what is now said to have been their only means of salvation from bankruptcy. Not only so, but at the second meeting, if the defendants are right, several companies of considerable output, and of the highest grade of coal (see Ex. X, page 200), claimed the "Tight" and made the "demand" to commit what, I am now invited to believe, would have been industrial suicide. It must not be overlooked also that Lane (p. 492a) says the price he based his tender 1906-8 upon was 7s. 6d. f.o.b. Newcastle. I have said that occasions presented themselves when the colliery proprietors might have been expected to advert to their impending ruin if a f.o.b. price of 9s. were adhered to as a reason for the formation ofthe Vend. The first was on 5th January 1906, when we find the first record (F.1.) of the meeting of coal proprietors, Mr. Learmonth, who was chairman, pointed out the absolute necessity of forming an Association of all the collieries, if the present very unsatisfactory state of the coal trade was to be improved, and he asked those present to express their opinions. Mr. Alexander Brown proposed that it was desirable to form an H.C. oF A. 1911. ~ Tre Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw ASSOCIATED NortHERN COLLIERIES. HIGH COURT Association to raise and maintain the price of coal : that was unanimously. The price subsequently being fixed at 9s. is a clear indication that that was not really the price at which it was being sold in January 1906. The reference to the very unsatisfactory state of the coal trade by no means necessarily indicates that some — profits were not being made. Mr. Wheeler said that, at the invita~ tion of Mr. Learmonth, he met that gentleman, Mr. John Brown, E Mr. Keightley of the Newcastle Coal Company, and others. He is' not clear about the date, but the first minute shows he was present, and that was the first meeting he referred to Mr. Wheeler. Nowhere was it said that the prices obtained were ruinous, or that the defen- dants ever said they were. Indeed, he said that his sale of 20,000 tons of coal for the South Australian Railways at 7s., with an extra 1s. under the guarantee agreement, making 8s. over all, left him no loss, but, as I gather, returned him some profit. But for the ls., that is at a net price of 7s., he would have lost, but he could not say how much. The unsatisfactory state of the coal trade might well be accounted for by the underbidding in an article, which the — coal owners knew was limited to their own locality. Subsequent to the meetings I have referred to, namely, on lth — April, 1906, Mr. Learmonth wrote to Mr. C.M. Newman, apparently ; as the Caledonian Company (F. 45.), in which reference is made to — an arrangement '' That you would associate yourselves with us — in the object we have in view, namely that of raising the price of © coal, and working amicably for that end." No reference whatever is made to ruinous prices although the occasion was one that invited — it, if the fact were so. And without further particularizing, there were many points in the history of the Vend, where such an allusion would have been effective. Nothing has been brought before me to indicate that Mr. Learmonth, Mr. Brown, Mr. Keightley, Mr. Chilcott or the other gentlemen, representing large collieries, who met Mr. Wheeler to form the Vend took this action to avoid disaster. Perhaps the most decisive refutation of the contention that 9s. and not 7s. 6d. was the price obtained prior to the forma- tion of the Vend is found in the letter of Newman to Chapman of © 23rd November 1906 (X. page 3). Speaking of Indian coal exported — to Hong Kong during the year 1905-6 Mr. Newman states that 14 C.L.R.J OF AUSTRALIA. no less than 126,000 tons was shipped to that market. He then put this question "If India secured this volume of trade in com- petition with Newcastle coals at 7s. 6d. how much more will they take with the price of Newcastle coal ruling at 10s." The reply tacitly admits the fact and discusses the prospect. H. C. or A. 1911. —4 Tue Kina AND THE ATTORNEY- Mr. Campbell relied on Cant's evidence of the cost of production at monwravra the Abermain colliery as showing the ruinous character of the 1905 Tee, price. Cant said that in 1908, which was his only personal acquaint- ance with the mine, the cost of raising and delivering Abermain coal f.o.b. was 7s. taking it all through. But the cost in 1908 was not necessarily the cost in 1905. In the first place hewing rate in 1908 was based on a 10s. selling price : and even 3d. a ton on 200,000 tons the output for 1905 amounts to £2,500. But, besides that, the mine was really just beginning in 1905, and in 1908, though by no means an old one, they had got in about a mile. I am not able to say that the cost of engine driving, stores, pit timber, horsefeed, underground work, and wheeling, would all be the same in the two years. Probably not I should think. I cannot therefore conclude that in the Abermain mine the bare cost f.o.b. was 7s. merely because it was so in 1908 under conditions constantly altering. Still less can I assume from that fact that 7s. was then or at any time the minimum in all other mines. As against the Crown I refused to receive Cant's evidence respect- ing the one year's working at Abermain as against other mines. It was received as against Abermain only. Mr. Campbell now how- ever relies on it as in favor of all ; because Abermain he says is a favourably situated mine. It may be in some respects, but may not be in others. That is all left in doubt, and the party who wants to use the evidence affimatively for his own purposes must make it applicable. Besides the Crown's case is not confined to the one point of time or to the one price. Suppose 7s. were the cost in 1905 and made some rise of price reasonable, 8s. in 1907 would have given a hand- some fund for profits after paying the extra labour cost under the agreement in L.8. The output of Abermain that year was 236,000 tons and at Is. the extra fund is £11,800. In 1908 when 7s. cost is actually proved the declared selling NorTHERN COLLIERIES. H.C. or A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH w ASSOCIATED NorrHerRN CoLLieries. HIGH COURT price was lls. fo.b. The all round selling price of Aber in that year from January to June—the rest is not shown Ex. L.8)—was 10s. 8.77d., which includes foreign coal. Probably many instances of 29 per cent. discount for foreign coal ocew and probably too some further allowances or charges, and so average price I take at a high price namely 10s. 6d. Now that i 3s. 6d. a ton over cost relied on by Mr. Campbell and, although | is difficult to say from the agreement of 10th May 1906 exactly how much would be added to labour cost, it is easy to see that that is comparatively small. The output for 1908 was 373,00 tons returning at 3s. 6d. an extra fund of £65,275 to cover labour cost and profit. What then becomes of the argume to ruinous price both in 1907 and still more in 1908. The def Then Mr. Campbell relied on the case of the Burwood Extende Mine. Mr. Webb who has a good deal to do with the manag of the mine said that his principals started in 1905 re-working th mine, which had been unworked for years, even during high pri They worked in 1905 the Victoria Tunnel seam, and produced a C grade coal. It is therefore a third class coal, which was suggested by the defendants in cross-examination to be suitable only for bunker purposes. Mr. Webb maintained it was suitable for station-_ ary engines, and has not been used on railways, except during th strike, and then only 1,000 tons. He says it is suitable for house- hold purposes, but cannot say how much was sold for that purpose. — The total quantities were 30,000 tons in 1906, 35,000 in 1907, 46,000 in 1908, 41,000 in 1909, and 35,000 in 1910. The declared — selling prices of this grade were 1906, 6s. 6d. ; 1907, 7s. 6d. ; 1908, 8s. 6d. ; 1909, 8s. 6d. ; 1910, 8s. 6d., all f.0.b. Newcastle. Hesays — the cost of production is 7s. 1d. f.0.b. for 300 tons a day working 9 days a fortnight. A fair average would be 6 days a fortnight. He says they never made a profit except in one year he thinl He says in answer to cross-examination that " that was on account of being unable to get trade and nothing else—I should say, being unable to get sufficient trade." io They had to hire waggons. It is quite impossible that this mine with its low grade coal, the evident comparative unsuitability of MU CL.R.] OF AUSTRALIA. 521 its product for general purposes—I do not wish to say more about H- C. ov A. it—can be accepted by me as a guide to the position of the great uae Newcastle and Maitland mines. If the Burwood Extended mine Tu Krxe AND THE was not thought worth to work in war time, its character is far nme: NERAL OF from being typical. Mr. Webb says he made a profit in 1908, GENENA® © when the price was 8s. 9d., and that by no means assists the defen- monweavra v, dants' case. AssoctaTeD i 3 aga ; Norruern So far everything upon which I can rely as indicating affirmatively (octets. an answer to the question whether the pre-Vend price was so low as to be ruinous, leads me to a negative conclusion. I should not omit to notice Ex. 38c, which consists of extracts from annual reports by Mr. Atkinson and issued by the Mines Department of New South Wales. With regard to the trade for 1905, the defen- dants put in the following passage :—" During the year coal gener- ally speaking was dull and the prices realised unusually low. The latter was particularly the case in the Newcastle District, where competition from the Maitland collieries is now very severe." That is all I have in the exhibit as to the year 1905. The first observation to make upon this is that if the dulness is referable to the quantity of coal exported foreign or inter-State the state- ment is not borne out by the figures. In another of the defendants' exhibits (33c) in 1905 the total quantity exported from Newcastle to foreign, inter-State and New Zealand ports, was 3,461,438 tons, the highest it had ever reached ; the quantity going foreign 1,5! tons was the highest on record except 1903 when it was only 11 tons more. The inter-State exports were 1,577,707, and the highest record was in 1901 when there were 38,723 tons more. The New Zealand tonnage was the highest up to that time. Comparing that year with 1904, there was an excess in 1905 of 372,346 tons foreign ; 94,524 tons inter-State; and 43,267 tons to New Zealand. For home consumption, I cannot separate Newcastle from other New South Wales coal, but the total home consumption for 1905 accord- ing to Exhibit 34c was 2,914,085 tons, the highest up to that time. So far then as output is concerned, the evidence does not disclose any convincing symptoms of dulness. Next, it has to be observed that Mr. Wheeler in his evidence thinks the Maitland competition was felt somewhere about 1906 to 1907. It is true Pelaw Main H. C. or A. 1911. ——4 Tue Kino AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssociaTED NortHern CoLLIeRIEs. HIGH COURT 9 produced in 1905 311,000 tons but this did not all go inter-State the amount must have been small. In 1906, Pelaw Main produced 294,065 tons besides J. & A. Brown's Newcastle output, but y their total inter-State trade for that year including bunkers w as we have seen, under 41,000 tons. Further, the previous out- put of Pelaw Main was in 1902—95,430 tons ;.in 1903, 229, tons; and in 1904 it had reached 337,768 tons (Ex. V.8). It had therefore declined in output in 1905. Abermain, and Hebburn were pointed to by Mr. Knox as each producing 200,000 tons 1905. That is true, but it is also true as he said that in 1904 Aber- main produced 87,000 and Hebburn 155,000 tons ; and how much — of the produce of these two mines went inter-State I am not aware. There is another feature that strikes me as worth considering from — the standpoint of common sense. Besides Pelaw Main which is : Maitland, J. & A. Brown had the Minmi, Duckenfield and Back — Fe Creek collieries. These were Newcastle proper. In 1904 th put out 270,333 tons; in 1905 the output amounted to 324,000 | tons. Now, if Maitland, so largely represented by Brown, was — attempting to supplant Newcastle, what am I to believe Browns were doing with regard to Duckenfield and Back Creek? Were — they designedly losing money in Pelaw Main in order to lose more in Duckenfield? It seems to me on a rational view of the matter _ that though the competition might be severe, at all events, as under- stood by Mr. Atkinson, that is not at all the same thing as dis- astrous or suicidal. The annual report for 1906 says that the state ° of the coal trade as evidenced by the recorded figures of production — was good and prices realised have generally increased. That is true, but the price as we know was 9s. net. Mr. Campbell analysed Mr. Brown's price of 14s. in 1905 with a view of demonstrating its ruinous character. In my opinion Mr. Shand's answer was correct. FS Mr. Ford manager of the Union Bank of Australia, at Newcastle, _ said in cross examination that he was bank manager there for 14 _ years ; that at the time of the Boer War in 1900 the trade was — particularly good ; but, it was an artificial demand caused by the — war, and he thinks it lasted for 2 years. He states that he had an impression, and he thinks everyone had an impression, that MC.L.R.J OF AUSTRALIA the bad trade was brought about by excessive competition. He adds that different collieries were, it seemed to him, selling for what they could get. He goes on to say that the one result of that exces- sive competition was the want of trade. By "result"? I think he must mean " cause," for excessive competition would increase trade; but even if he does mean " cause" the figures I already quoted show that his idea was wrong. His error in this respect is further demonstrated by reference to Ex. 33c. In 1900, a war year, the total export of Newcastle coal was 3,021,912 tons. In 1901 it was 3,104,685 tons. In 1902 it was 2,966,764. In 1903 it was 3,420,197 tons, a larger output than Newcastle had ever seen, much larger than the previous year, which he regarded as a year of prosperity. In 1904 it was 2,951,301 tons almost as large as in 1902, and far above the average of 1897-8-9. In fact it was over 486,000 tons above that average then as I have shown. The next year 1905, the export tonnage rises another 510,000 tons, making the total export output of Maitland and Newcastle coal nearly a million tons more than the average for the three years immediately preceding the war year. And Wheeler, though pressed in cross- examination, persisted that serious Maitland competition was not felt till 1906. That is very probable since the total output from all the Maitland mines for 1905 was about 1,162,800 tons. Mr. Ford was J. & A. Brown's banker and he has been the banker for the Vend, but that does not qualify him to testify to the cost of production in the mines. His "impression" as to whether competition was excessive does not carry much weight with me as showing that 9s. or even 7s. 6d. was a disastrous price, particu- larly in view of more solid evidence that I have before me and still less can I build on his statement as to other people's impressions. But he may possibly be correct in thinking that some of the col- lieries were selling for what they could get, they may have been going below 7s. 6d. In fact V.8, Chamber of Commerce Reports 1910-11, p. 61, shows that in 1905 some Newcastle coal was sold as low as 7s. 3d. although the selling price was 9s. Undisclosed rebates may in some instances have still further reduced net receipts. Maitland certainly was selling as low as 7s. 1$d. in 1905; about 7s. 1d. in 1906 (Gale's reports L.8) as an average for all trade. 523. H.C. oF A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH AssociaTED NortHEerRN COLLIERIES. 524 HIGH COURT H.C. or A. Mr. Ford goes on to say that the hewing rate was very low and ey was not so good for the miners, and those with whom they Tur Kina did not do so well. Of course that is natural. He also said tl Avrouney- in 1904-5-6 there was an exodus of miners from Newcastle. Genera OF have already referred to the excellent volume of trade in 1905 monweartu and I will add that in 1906, during the whole of which year the Associaren exodus continued according to Mr. Ford, the exports rose anotl Cenmrn® 514,000 tons. It is now, that is 1906, over 1,000,000 tons than 1902, one of Mr. Ford's years of prosperity and during th year the supposed cut-throat business had stopped. But the mi in the beginning of 1907 got 3s. 10d. hewing rate instead of 3s. 6 that is to say a nearer approach to a decent wage. As to wl the miners went during the exodus Mr. Ford is unable to tell. states that whether they left the district permanently or went Maitland he cannot say. He adds "I think a great many of the went to Maitland coal field." I cannot regard this evidence at all satisfactorily establishing the crucial justification of the d dant collieries' first steps in connection with the formation of Vend. It is all hazy, indistinct, inexact, and is in importa points of contact with the issue of a hearsay and fallacious char acter. Direct and clear evidence on the point was easily within — defendants' control. Mr. Ford it must be remembered though called by the Crown and perfectly honest, was by no means a witness _ antagonistic to the defendants. f Provision tN VEND AGREEMENT FOR PENALTIES AND COMPENSATION. _ There are one or two other features that have been the subject of much discussion. One is the provision in the Vend agreement ie for penalties and compensation. As originally fixed, the penalty for selling beyond the allotment was 4s. a ton when the selling price was 10s., and 3d. less for every diminution of 6d. in the selling price. And every colliery whose trade fell below the allotment was to receive at the like rate out of the fund in compensation. It was said the penalty was a deterrent, and it was probably something considerable over the price and the question is how much ? The — compensation was no doubt likewise intended as a reward for honest adherence to the compact as well as recoupment for actual Serene es LN U4 C.L.R.] OF AUSTRALIA 525 loss to those whose trade fell off, causing a smaller output, and the H. C. or A. same question presents itself on the converse side. On 5th June 19h 1907 (Ex J. p. 1) the rates both for penalty and compensation Tus Kiya were reduced to 2s. a ton from Ist January of that year, and modi- xP One fications were made as to adjustments. On 21st November 1907, ee set the rates for 1908 were fixed at 2s. for penalty, and Is. for compensa- monweatrH tion, the surplus to be paid into the general fund (J. p. 59). On Auaiceeeas 13th February 1908 (J. p. 111) it was resolved that penalties Peete should be reduced to the compensation rate, and this left both at 1s. Finally on 22nd January 1909, the rate of both penalty and compensation was fixed at 1s. 6d. per ton. It is very hard if not impossible to arrive at any satisfactory conclusion from the penalty and compensation proceedings as to the proportionate relation the rates bore to profits. My impression so far as I have been able to form one on a review of the whole circumstances is as follows. Events had proved too strong for the Vend. In face of the insistent public requirements, the 4s. penalty—intended like the same penalty on the shipping companies in clause 6 of the combined agreement to be a complete deterrent—had to be abandoned. Some of the collieries were forced to go beyond their allotment. Being so compelled, it would natur- ally have been considered unfair and unreasonable to deprive them of all their profit, but enough must be taken as a penalty to put a substantial check upon them so as to confine the breach to cases of pressure ; otherwise the allotment system would fall altogether. Thus, as a rough working amount, 2s. was taken as a sufficient sacrifice of profit, most probably the greater part of the profit on the price ruling in June 1907, and this it was apparently thought would meet the situation. It is plain to see how the pressure arose. The telegram of Howard Smith to Cant of 21st May 1907 (X. 74) and subsequent communications exposed a serious state of affairs. On 5th June (J. p. 1), at the Vend meeting, the Chairman stated that difficulties had arisen which required to be dealt with. No doubt he referred to the public difficulties the penalties and the Vend stipulations had occasioned. He went on to say :—'' Some of the regulations, for instance, had the effect of crippling the trade of the port generally. Another thing was that the scale of penalties and H.C. oF A. 1911. THe Kine AND THE ATTORNEY- GENERAL OF gl], They have given no explanation whatever of why they cam THE Com- monweartn down from 4s. to 2s. and dated back the reduction 6 months ; cn ASSOCIATED NortTHERN COLLIERIES. HIGH COURT compensations had been fixed at too high a rate." The di took place at a critical moment. The community stood kno at the door of the Vend for coal, and the Vend evidently felt selves forced to abate some of their restrictions on supply, but not I am driven to reason it out as best I can from the probabilities the situation as read by the light of ordinary human and busin motives. Consequently I think that they would naturally to some extent to remove the prohibition against meeting public requirements without entirely abandoning their scheme, and ¥ therefore compromise opposing influences by leaving some, comparatively small, advantage to those going beyond allo ment In November 1907 they determined (J. p. 59) to meet the difficulty they were in by the danger of public outery on one hand, and risk of collieries overselling on the other, by what they called ": scientific basis of allotment for an extended period after 1908." : Jam confirmed in my impression, because, on 21st November 1907 when the Vend committee reduced compensation to 1s. and adhe to 2s. for penalties important events had taken place. On 20 August (X. 143) an impressive telegram had been sent by shipping companies to the Vend pointing out the seriousness of th shortage in three States, and the likelihood of general indignation leading to hostile legislation. There had been an effort to meet the urgency of the situation. In September (X. 158) another pressing letter was sent, and another assurance given of endeavour to meet the shortage. Then in November came the strike of 1907 which lasted about a fortnight. While the prices continued and State. services were endangered, the Premier of New South Wales was approached by the Vend to obtain relief from penalties from various State Governments for the short delivery or non-delivery of coal | under contract and it was pending receipt, and in fact one day | before receipt of the Premier's reply, that the Vend passed the resolt- tion I have just referred to, maintaining a penalty of 2s. for over-_ stepping allotment. I assume the collieries were not prepared to — go so far as to impose a direct fine for daring to supply the urgent needs of the various States especially when asking for relief for — 14 C.L.B.J OF AUSTRALIA. penalties, and at the same time human nature tells us that ordin- arily no colliery would be prepared to supply coal for no reward at all. I have a distinct prima facie impression from all the cir- sumstances connected with the penalty that 2s. was recognized as something appreciably less than the amount of profit when the declared selling price was 10s., but what I cannot tell from this branch is how much. That has to be determined by resort to other and independent evidence. The declared price was not raised to Us. until 2nd December 1907 (see Cant's letter of 9th December Ex. X. p. 198). I do not feel concerned with the reduction of com- pensation in November to half the amount of penalty. It may have been some scheme of partition of profits in an indirect way, and the fixation in February 1908 a direct partition of those profits. I am not prepared to search out possible answers to a prima facie inference when the defendants might so readily have satisfied all doubts. Even at the bar no reasonable explanation was suggested as to the penalties which, taken not so much in isolation as in con- junction with other features, impress my mind against the Vend. But even considered alone, it is not to be overlooked that, notwith- standing the liability to penalties, several of the collieries did in fact largely over-deliver. At what date these over-deliveries began Ido not know. However there is a letter of 10th December 1907 from Laidley to Learmonth (Ex. 0. 1), and in that letter reference is made to the heavy payments they may be called upon to make for excess of coal invoiced during that year. There is another letter of 6th December from Mr. E. P. Simpson of Minter, Simpson & Co., writing on behalf of the Pacific Co. to the Secretary of the Vend. He refers to the very heavy responsibilities the company will have incurred in the then present year for penalties. He suggests that some automatic process should be arranged whereby those collieries which might in any one year secure trade in excess of their Vend should receive some reasonable addition to the Vend in the following year based on a proportion of such excess. One can hardly imagine —and without some evidence cannot presume—these collieries supplied the extra coal without some little profit. I think that in actual practice that such an automatic arrangement was applied. I mean that in alloting the output for any given year, the total H.C. or A, 1911, uw Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssociaTED NortTHERN COLLIERIES. 528 HIGH COURT H.C. or A. quantity sold by each colliery, whether under penalty or not, 191. taken into account. But it is quite plain that the prices obta Tue Krxe for the coal must in any case, and putting it at the very lowest, Amonxuv. been considered sufficient to provide against loss after allowing GBNER AT .°" penalties as well as ordinary expenditure. Hither that is se monwrautH by the price already fixed for the current year or else the i Associaren for next year must be made to cover it. Probably it is the form Peal seeing that the price remained the same from 1908. Some of # penalties paid were considerable in amount. Looking at the minu of 13th February 1908, and particularly at the Chairman's stat ment that the sub-committee had devoted two days to matters relating to compensation for loss of trade during 1907, I gai that the reduction of compensation to 1s. was retrospective, a this helps to incline my mind to believe that the reduction then m was a short and direct way of dividing the profits. It may be ths penalties paid after resolution and down to the final change were all on the basis of 1s. even retrospectively, at all events future penaltie were. On 21st February 1908, eight days after the reduction that month, the Pacific Co. paid £888 1s. 3d. ; then on 29th Feb ary 1908, Hetton Co. paid £975 18s. 4d., and Laidley & ( £532 19s. 8d., and another sum of £548 2s. 5d. These sums were clearly penalties, and were apparently awaiting final adjustment. The ordinary monthly contributions of these two companies und clause 14 of the Vend agreement amounted to £58 13s. 7d. £22 Is. respectively. On 5th March 1908, Sneddon paid £1,225 1s. 6d., also obviously for penalties. On 16th May 1908, on 29th June 1908, but, although this payment was made for penal- ties, I am willing to believe the company, when they sold the coal, did not so construe the Vend agreement as to think they were liable to pay them. Apparently the Vend thought 1s. penalty not sufficient deterrent and so in January 1909 they raised it to Is. 6d. But on 13th March 1909, the same company paid in £1,297 13s. 4d. ;_ this time beyond all question with full understanding right through. On the same date, the Hetton Co. paid in £535 15s. 5d.; J. & A. Brown on 15th April 1910 paid £7,122 0s. 2d., that may have all 14. C.L.R.] OF AUSTRALIA. 529 been for penalties. It is just possible however that portion of it H.C. or A- included monthly levies. I am not satisfied that is the case, but, if 19M so, the levies would amount approximately to £3,000 at most, Tax Kiva leaving over £4,000 for penalties. The penalty then and since ,*. evry. January 1909 being 1s. 6d., Brown on this, the lowest assumption, on roma sold 53,333 tons and probably more, knowing that the declared monweaurn price recouped him the 1s. 6d. penalty as well as his regular expendi- Aeiusenateeds NorvHERN ture, and yet returned him a profit. uses The Seaham Co., on 22nd April 1910, paid in £4,147 19s. 8d. This - money may have been all penalties, but, assuming with fullest liberality that for two years they never paid levies, it leaves £1,700 net penalty. Caledonian Co., on 23rd June 1910, paid £1,324 15s. 8d., which I take to be penalties. Funps or Venp anp InFrERENCE THEREFROM. The funds of the Vend frequently mounted very high. In August 1907, there was £13,181 5s. to its credit (J. p. 27). In November same year there was £21,952 5s. 9d. (J. p. 63), and heavy sums were paid out for compensation (see J. pages 101, 109 and 147). I may quote some figures from the last-mentioned page :—East Greta received in July 1908 £3,284 14s. ; Heddon Greta £1,505 ; Newcastle Co. £4,165 4s. ; Shortland Colliery £290 ; that left a credit balance on 15th July of £15,522 1s. 6d. On 10th June 1910, when this action commenced, the credit balance was over £20,000. The common- sense question arises how could those members of the Vend who provided these huge sums afford to do it ? Derenpants' SuccEsTion as To Forrrcn Trape Prices ror Venp Coat As JUSTIFICATION. Inow come to the second additional matter debated, as throwing light on the question of whether the declared f.0.b. prices were excessive ; I allude to the foreign prices obtained for New South Wales coal. Mr. Knox placed great reliance on this contention. He urged, in what I may call his relative argument, that in 1907-1908 the foreign trade of the Northern Collieries gave them higher prices than they got inter-State, and that it could not be said to be exorbitant to charge the Australian people prices VOU, XIV. 34 H.C. or A. 1911. —S Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH w AssocIaTED NortTHERN CoLLIERIEs. HIGH COURT + | that could have been bettered if the coal were sent abroad. strikes the mind as singular that the collieries would ha voluntarily taken a lower price here, if they could have got substantially higher price elsewhere. Some allowance must course be made for merchants preferring a market at hand, that preference is on the ground of material not sentim advantages, and no mercantile or other circumstances have b pointed out to me which would outweigh the discrepancy of s gested prices. If the foreign market offered higher prices for coal sold in Australia, why was not more coal sent there? output certainly more than filled the Australian demand, and course when foreign commitments are made they must be But when the foreign demand for Australian coal is filled, foreign market is gone at the price. To gain further entry- things being equal—the price must be lowered and then we have ask by how much? Then say the defendants: We lowered t price for Australia, and lowered it appreciably and therefore it must be assumed we could certainly have got those prices abro for our coal or much of it, and so it cannot be said the prices excessive. 7 Mr. Knoz put his arguments into an effective visual form by me of a graph, showing by corresponding lines the relative prices, in State and abroad, obtained for New South Wales coal for 30 y a from 1880 to 1910. From this graph it appears that during t whole period foreign prices were unmistakeably higher. differences shown are sometimes enormous ; as in 1903, when for prices appear to reach 2s. beyond the home prices, the extt being about 10s. 3d. abroad when the inter-State price was as | as about 8s. 3d. In 1905 foreign prices are shown at their lowest at about 8s. while in Australia they never went higher than 7s. 9d. The gri average over the year would be approximately 9d. The qua of Newcastle coal exported inter-State in that year was 1,57 tons as against 1,595,654 foreign. Is it not reasonable to belie 14C.L.R.] OF AUSTRALIA. that if 9d. a ton more or anything near it could have been obtained jn 1905, when learned counsel for the defendants tell me the col- - Jieries were on the verge of ruin, they would have eagerly taken it ? From the middle of 1905, the discrepancy gradually grew wide until the middle of 1908 when it was 1s. 10d. in favor of foreign price. In 1909, the difference was about 1s. 9d., and at this time the Newcastle supply was divided inter-State and foreign as fol- Jows :—1,645,071 tons inter-State and 1,532,039 tons foreign. From the defendants' standpoint it is incomprehensible why advan- tage was not taken during the several years in which, judging by the diagram submitted, enormous profits could have been made by transferring the inter-State coal. Still, say the defendants, the graph correctly represents the prices in Exhibit 34 C, and so it is necessary to examine that Exhibit. It is an official table, which shows the quantities and average value per ton of coal exported to Australasian and other ports respectively. It also distinguishes between coal exported to Australasian ports, and coal exported to other ports. It states the value in each case at the port of ship- ment. The average prices per ton are evidently arrived at by dividing the value at the port of shipment by the number of tons. The coal dealt with by the table includes all coal, whether New- castle, Southern or Western, and whether large or small. It also includes bunker coal. The value of the coal exported is furnished to the Mines Department by the Customs, who get it from the invoices of the coal exporters. The invoice price I take to be f.0.b., because at the port of shipment." Apparently a con- the return says siderable proportion of Southern and Western coal went foreign. 'The quantities may be arrived at in this way—Exhibit 34 © shows that in 1906, 2,701,450 tons of New South Wales coal were exported abroad ; Exhibit 33 C shows that in the same year the quantity of Neweastle coal that was exported abroad was only 1,918,086 tons, therefore the difference, namely, 783,354 tons must have been South- ern and Western coal. So in 1907, the total tonnage going foreign was 3,364,483, but of this only 2,313,614 were Newcastle—there thus being 1,050,869 tons of Southern and Western coal. In 1908 the total foreign tonnage was 3,383,366. In that year Newcastle tonnage foreign was 2,446,293, leaving a balance of 937,073 tons H. C. or A. 1911. ——— Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw AssocraTED NortHERN COLLIERIES. 532 , HIGH COURT H.C. or A. Southern and Western. In 1909 the total foreign export) ne 2,192,834, Newcastle providing only 1,532,039, the balance bei Tue Krxc 660,795 for Southern and Western. In 1910, the total tonn ANP nt. foreign was 2,211,936, Newcastle providing 1,722,997. South ATTORNEY- GrneRat oF and Western coal was therefore included to the extent of 488, THE Com- monwearra tons. On reference to Exhibit T8, it is seen that some of the railw. Deca ae freights from the South coast and Western mines to Dazrli Pilea Harbour are very heavy,-even on coal for shipment. For ins' from South Clifton 2s. 5d.; Lithgow Coal Association 4s. Besides this the inter-State exports included a considerable q tity of small coal. Foreign exports were large coal or practically so. Mr. Knox admitted that far more small coal went inter-Stai than foreign (page 1,322a), and he candidly agreed that that is of the factors which accounts for the difference between the pi foreign and inter-State on which he relied. It also appears in the minutes of the conference of shipowners and coal-owners of 2 April 1909 (X. 219) that the steamship owners stated as one of reasons for deficiency in small coal that the foreign markets wei being supplied with small coal, which to their knowledge had not been the case previously. It seems to me therefore quite impossibl: e to regard the two lines on Mr. Knoz's diagram as showing respective prices obtained by Newcastle coal only, and of the san class and under similar conditions, except that in one case the destination was inter-State, and, in the other case, it was forei That line of argument therefore lacks affirmative support. there is also a strong body of evidence of a negative character. 30th March 1906 (Ex. F. pp. 33 and 41), the Vend passed a resolu- tion which was signed by all present, who represented J. & A. Brown and nine other collieries, that, until otherwise altered by t Association, the minimum price of coal for foreign trade shall be 9 for large, and 5s. for small, less a maximum of 2} per cent. allowed 9s. for large, and 5s. for small net. As against the Hetton Co. only—I may refer to Exhibit G6, by _ which it appears that on 3rd March 1906, Arch. Currie & Co. stated — to the Hetton Co that they already had a contract for 3,000 tons ~ for the East at 8s. per ton f.0.b. Newcastle—subject to the] percent. 14 C.L.R.] OF AUSTRALIA. 533 H. C. or A. . ' a, 1911. the quantity to 8,000 tons at the same price. Hetton Co. replied, wastage—but otherwise net. Arch. Currie & Co. offered to increase agreeing to accept the offer, but strictly on the understanding that Tue Kiva : - A fi aes AND THE no portion of this quantity was to be disposed of within the Aus- arrorney- tralian Commonwealth, and an option of a further 7,000 tons was Soo likewise given. So far as the Hetton Co. is concerned, this corres- MONWEALTH pondence militates strongly against the argument put forward on Associarep its behalf. It appears from the minutes (I. p. 59) that the Vend Jee allowed 1 per cent. wastage off foreign shipments for 1907, but none off inter-State or New Zealand deliveries. On 24th April 1906 a meeting of the Vend at which the shipping companies were repre- sented authorised the Seaham and Caledonian proprietors to tender for the Manilla contracts of 110,000 tons in all for United States at 7s. 6d. per ton f.o.b. Newcastle, with compensation in the event of the hewing rate increasing. After the shipping representatives retired, Mr. Simpson made a statement which, in accordance with _ the rule I have already explained, I use against the Vend only. He asked whether it would not be fair to allow compensation under the Vend agreement to collieries doing foreign trade at a lower price, while another colliery is doing inter-State trade at the full price. In December 1906, when 10s. per ton was demanded for large coal from the Metropolitan Gas Co., it is noted in the minutes (I. page 43) that that price was unobtainable for contracts to the West coast of North America and the East; see also on the same subject X. pp. 2 and 3, I. pp. 45 and 47. I refer also to I. 55, and note minute as to "Frisco trade. I refer to the Vend minutes of 10th October 1907 (J. p. 26) also the minutes of 11th March 1908 (J. p. 123) to be read with the minute of 23rd April 1908 (J. p. 135). Just at that time Laidley & Co. were in correspondence with A. Currie & Co., and, as regards those defendants only, I refer to the letters, the Exhibit is U6, and consists of two documents, 22nd and 23rd April 1908. It is sufficient to say that the clear inference to be drawn from those letters is that foreign prices were not procurable hn las Lae at higher rates than Australian prices, and therefore the defence of the Vend price rested by Mr. Know on the relative superiority of foreign prices is not sustained. 534 HIGH COURT H.C. or A. J Jeave another of his arguments over for a little later consider: 1911. os Tur KING DerENDANTs' SUGGESTION AS TO ADVANCE IN Miners' Wa tion. ATToRNEY- AS JUSTIFICATION. GENERAL oF Pisses Com Another justification to support this successive rise was yEALTH 5 v advance in miners' wages. It is admitted on both sides that AssocrateD Nortners miners were underpaid in 1906. The mine owners though not losing ComMIERIFS. were not adequately remunerated as I find, in the earlier part of year, but were most assuredly well paid in the latter part. And ye because the miners, as everybody now concedes, were justly entitle to an advance in wages, the owners provided for it, or for part at all events, but only on conditions which made the public pay the advance in full and also gave 53d. a ton to the mine own I asked for some explanation of this; I was told that it had b the custom for years at Newcastle to regulate the miners' by the selling price, that the two things went together, that is for every ls. of the selling price the miners received 4d. hewing re with a consequent rise to ancillary workers of say 24d. I can qu understand the justice of an arrangement between miners anc mine owners that after a certain minimum wage is provided, additional 1s. of profit beyond the price giving that minimum legitimately obtained from the public shall be shared in a proportions between those who jointly co-operate in producing commodity. But that assumes the Is. as being legitimately tained from the public who had had no voice in the arrangement. The agreed partition is the result of obtaining the price, and it i altogether misusing it to convert it into an instrument for measuring the price the consumer has to pay. To make the price itself fa we must not overlook the fact that the public have rights too, and long as the 1s. belongs to them it is not a sufficient reason for pelling them to pay it to say that the two other parties to industrial operation have agreed to divide it in certain proportions A price that is not excessive regards what is fair to all parties. public may justly be called upon to pay whatever price is nece: to provide an adequate remuneration to both employer and em ployed, and therefore if the 1906 price were not sufficient without ' : ' 14. C.L.R.] OF AUSTRALIA. trenching on the owners' fair remuneration to provide the extra 64d. for the miners, the public could with propriety have been called upon to bear that addition. But on the other hand, if the owners were already receiving for themselves, not only a fair, but a good profit I have to enquire whether there was still any fair business C&*' justification for demanding from the public an extra Is. and so obtaining from them both the increase of wages and also a further remuneration to the proprietors of 53d. per ton. The custom of partition of sale price is no answer. In its just application the point where the public are concerned is already passed, for reasonable competition has already fixed the price and the two sets of partners, as I may term them, are merely sharing the legitimate returns that have come in. To give effect to the defendants' argument as to this point would be to sanction a misuse of the custom by admitting the right of the collieries to decline to recognise the admittedly just claims of their employees except at the cost of working a gross injustice to the community. From that injustice the public have some sort of pro- tection while competition prevails, but by combination that pro- tection is annihilated and the colliery proprietors are then in a position in which they are able to make any increase of wages to the miners dependent on their also obtaining, however unnecessary it may be, an almost corresponding bonus for themselves. It was suggested that the custom must be well founded because it had been so long adhered to; but that might be said and has been said of many admitted abuses. It was also said that it had received the sanction of the New South Wales Industrial Court in the Hast Greta Case (1). But that case is entirely beside the present ques- tion. The Court was there considering only the relative rights of the two sets of co-operators, and the basis of the whole position was that a price—presumably fair, but at all events unquestioned—was in fact obtained, the only question being its subsequent partition. The public were not there represented, the law then (1903) made no provision for their representation, and in the particular dispute they had no interest. The Statute under which these proceedings were instituted affords the first opportunity the public have had (1) 2N.S.W, Ind. Arb, R., 311. H.C. or A. 1911. —— Tue Kine AND THE ATTORNEY- AL OF THE CoM- mote EALTH seecea ATED NortHEerN COLLIERIES. 1911. Ree Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH NorvrHERN Coximrres. HIGH COURT but for the Statute the whole scheme was perfectly legal. custom of fairly dividing a justly earned price consequently g no more sanctity to an increase of price composed of a fair advane to employees, plus an unnecessary bonus to employers, than it would to a bargain between the collieries themselves to divide extract. I was told that to reduce the prices, charged by the Vend, wou necessarily involve the lowering of the wages to their employee I do not believe that such a result would follow unless the pre f.o.b. price were fair and legitimate. If it is excessive the reduction of the price to what is reasonable would be much more likely enable other employers to pay better wages to their work peop And the law either is, or may be made, strong enough to se justice at the same time to the miners without imposing an und burden on the rest of the community, and I do not believe injustice will accrue to the miners. It is admitted that 4s. 2d. not too much for them, and therefore no f.0.b. price can be fair a to enquire, and have no materials to decide. But nothing I say prevents the colliery proprietors from demanding whatever pri is required to pay 4s. 2d. and as much more as may by agreement any competent tribunal be found to be a fair addition to the presen wage. I simply refuse to countenance as a valid reason for incre' ; ing the price of coal the plan of tacking to a justifiable advance miners' wages, which the public may reasonably be asked to prov whether there be competition or none, a further and unjustifiable bonus to the mine owners not called for on fair business grount and which therefore apart from combination would not be insi upon, but would be corrected by free and reasonable competi In other words I decline, as I stated during the argument, to permi the defendants to use the miners as a buffer between themsely and the public. The claims of all parties concerned must stand on | their own merits, or fall by reason of their own defects. ee eee 4 C.L.R.] OF AUSTRALIA. Derenpants' SuGcEstion as To RecoupMENT For Past Lossus H.C. oF A. AS JUSTIFICATION. 1911. —— Mr. Campbell sought to justify the addition of the mine owners' Tux Kine AND THE bonus by attributing it to recoupment for past losses. The sugges- \nporney- tion is that the colliery owners having for some time voluntarily }ENERAL OF THE Com- sold below payable prices, some of them designedly—ex hypothesi— monwravta to run competitors out of the market and ultimately recoup them- Associarep selves by higher prices, they are justified in demanding an otherwise ( unjustifiable accretion to the price of their coal. The persons who have to pay it may not be the same as those who previously got coal cheap; the increase may seriously affect other industrial operations ; it is not limited in time, or amount; there is no in- dication of staying the increase when collieries, that according to the argument were forced to lower their prices so as to live, shall have their losses repaired, but they, and the aggressors in this trade war, are to continue the process of recoupment indefinitely. But most singular of all, the miners, who during all this time and without any choice on their part have been receiving admittedly inadequate wages, have no fund provided for their recoupment. Miners at Newcastle sometimes remain for years even continue for generations in the same employment. Mr. Wheeler tells us that his company has been in existence over 50 years and father, son, and grandson, have been employed in the mine. Yet they received no recoupment. On the contrary they were still allowed what is now conceded to have been an insufficient wage. I reject the suggestion of the owners' idea of recoupment—for many reasons—because there was no loss to need recoupment, because, if there was, the increase should at least cease when recoupment was effected, because extra charges on the public indiscriminately is an unjust mode of recouping losses voluntarily occasioned by concessions to particular individuals, because I believe the idea of recoupment as such never entered the minds of the colliery owners, but has been the despairing suggestion of learned counsel since it has no evidence to support it, is incon- sistent with the argument that by custom the hewing rate followed increased price, and was unaccompanied by any corresponding recoupment in favor of the miners, who simply got a somewhat better future wage for future work. NorrHerN 'OLLTERIES. 538 HIGH COURT H.C.or A. Mr. Knox put in Mr. Wheeler's balance-sheets for 1907 and | hae T do not want here to say more about them than this, that, e Tue Krxc allowing for a further outlay for royalty, they show a very han Atronwey. profit, and certainly do not assist the defendants' case. Whe ble oo .o* too was fighting against difficulties of combined opposition. MONWEALTH v Conpuct oF DEFENDANTS INDICATING F.O.B. Price FOR 190% ASSOCIATED NortHern UnnecessariLy Hicu. ContieriEs. Before parting with this phase of the matter reference should be made to the minutes of the Vend of 11th December 1906 (Ex. L. 55). It is this:—' Abermain allowed to supply to 30/6/07 at 9s. and 5s. 6d. in connection with Cockatoo Dock contract, it bein agreed that Abermain do not come on the funds for compensation difference in price." This entry has obvious reference to the r proviso of clause 22 of the Vend agreement in Exhibit 8. wl says :—" That where in order to procure any particular trade any member in pursuance of authority received from the Board sell coal at a lower rate than that in force he shall be indemnified to th extent of the difference." At this time the declared prices, as p the resolution of 31st October, gave 10s. for Abermain coal for 1907. The importance of this minute is this—That the Abermain Compa were willing to supply at the lower price and agreed with the rest of the Vend that no compensation should be paid. Now, there n have been special circumstances which induced all parties to from the provision of clause 22, but no such circumstances h been suggested. I am bound to draw what conclusions I can from the circumstances apparent. If therefore, the Abermain Co. y anxious to get the trade even at 6d. less than the declared price sought permission hoping to get compensation ; and if the V thought no compensation was necessary and the Abermain Co., still desirous of doing business on those terms, I will not a in the absence of affirmative evidence that they were anxi to make a loss or to work without a fair profit. And if that were the 1907 price of 10s. was not needed to return a reasonable profit ; and the 1908 price still less necessary. In my opinion 9s. 1d. for 1907 was unquestionably extremely profitable ; and for 1908, 1909 C.L.R.] OF AUSTRALIA. 539 1910, the price of 9s. 8d. was equally so. I reckon the 64d. in each H. ©. or A 1911. cage as Td. aie Furruer Increase oF ¥.0.B. Price in' 1908. Tue King AND THE ATTORNEY- GENERAL OF price beyond 1907, with of course a rise of 6}d. for the miners, bring- Recess ing their wage to the point now conceded to be not unduly high, namely 4s. 2d. at which it still remains. The prices were fixed at the Vend meeting of 2nd December 1907 of which no record has been In and for 1908, there was a further increase of 1s. in the f.o.b. ASSOCIATED disclosed, there being only a reference to it in Cant's letter of 9th December (X. 198). Trade had greatly improved. In 1904 the total foreign export was 1,223,308 tons, and inter-State 1,483,183 tons and to New Zealand 244,810 tons, a total tonnage of 2,951,301 tons. That had mounted in 1906 to 1,918,096 foreign, 1,723,643 — inter-State, and 333,916 New Zealand, a total of 3,975,655, over a - million tons more. In 1907 there was a still further increase ; foreign 2,313,614, inter-State 1,893,913 and New Zealand 338,721, total 4,546,248, over 570,000 tons above the preceding year. So with trade more vigorous, greater output and consequently a lower- ing of the average cost of production per ton, with no untoward circumstance existing or threatening, it is decided at an unrecorded meeting for reasons wholly undisclosed, except the obvious advance of 64d. per ton being the labor cost of large first-class coal, that the _ public shall pay Is. more per ton on the best coal up to point of _ putting it on board at Newcastle. But that is not all that was done : - at that unrecorded meeting. It will be seen that its proceedings are of great importance in relation to this matter. It will be necessary to compare the Vend minutes of 31st October 1906 (Ex. I. p. 33) with Cant's letter of 9th December 1907 and enclosures (Ex. X. pp. 198, 200). From the earlier Exhibit we find that the prices of best New- castle or Maitland were fixed for 1907 at—Large, 10s.; Small 5s. 9d. By the latter Exhibit, coal of the "A" grade, which in- cluded mines that in 1908 produced 4,774,798 tons all reckoned as "A" grade, except such part of Seaham, West Wallsend and Killing- worth coal as was required for Australian railways and Sydney trade, _ was raised to 11s. large, 10s. unscreened, 6s. 3d. small. The names 540 HIGH COURT ai H.C. or A. of the collieries are set out in the latter exhibit and are to be fo 1911. in almost exactly the same order in Ex. S. schedule to Vend Tux Kine ment. In 1907 the price of West Wallsend and Seaham was—Lé Atroaxmy. 98. 3d., small 5s. 9d., without distinction, and apparently constitu Genz "pr é lier pole ed the ""B" grade for the railways and Sydney trade (see the earlier monweatrx Exhibit and the schedule in Ex. 8.). Assocratey For 1908 these mines are raised 1s. for large and 6d. for small, and eaemEN: unscreened is charged 9s. 3d. In 1907 grade "' C " (unscreened) apparently including New Lambton, Ebbw Vale, Shortland ai Waratah (upper seam) was 7s. 6d., altered for that year to 7s. b resolution of 3rd December 1906 (I. p. 43). This was raised for 1908 to 8s. Gd. The "D" grade, Pacific, Rhondda, Northern Extended and Northumberland in 1907 was best 6s. 6d., unscreened 6s., si 4s. 9d. Before stating the 1908 prices it will be well to refer to the prices for these inferior coals as fixed by the Vend on 9th May 1906 (F. p. 91). On that date, it was resolved that the prices fixed for _ the coals in classes "' C" and " D " should be as follows :—On basis of 9s. for coals in " A." class; class " C" unscreened, 6s. 6d per ton net; class ""D" best, 6s. per ton; unscreened, 5s. 6d. ;_ small, 4s. 9d., all net. So that in 1907 there was added to those prices 6d. per ton on class "C" and 6d. per ton on best and un screened in class "D." Now in 1908, an astonishing furtl advance is made, " C" grade advancing still another 1s. 6d., which makes it 2s. beyond the first fixed Vend price and "D" grad large is advanced 2s. more which makes it 2s. 6d. above the fir fixed Vend price; '"' D" unscreened is also advanced 2s., making it 2s. 6d. more than first Vend price, and "D" grade small is brought to 5s. 6d., which is 9d. above its previous price. How can these advances in price be explained? Ruination in 1905 and 1906, if it ever had any substantial existence, was ended ' when the Vend raised its price by Is. 6d., and brought it to 9s. net. A The additional 1s., or net 5$d. in 1907, poured another stream of — income into the pockets of the Vend. The Teralba coals in 1907 may not have helped so much, but the others did. And then we reach the further increases in 1908 merely announced, without a word of recorded explanation why they have been made, and made at a meeting, the importance of which cannot be denied, and yet 14C0.L.R.) OF AUSTRALIA. 54 but for a formal allusion in a letter they would have found no H.C. or A. 1911. written notice. AGREEMENT OF Novemser 19, 1909. Tue Krxe AND THE Then I was invited by Mr. Knox to regard the agreement of as 19th November 1909 (Ex. 17C) between Kethel & Co. of the one tH Com- part and Hughes and others of the other part as a guide and almost ab a convincing guide to the proper price of coal. Mr. Knox put it '\S00la™mP that it was an admission by Cant that 9s. was the sum necessary COMttERIES. to cover colliery cost f.o.b. Newcastle, and that lls. was not an unfair f.o.b. price. It was also argued that the contract had an additional significance in this case from the fact that one of the parties to the contract was now Attorney-General. This last sug- gestion I at once put aside as impossible. Under no circumstances could private transactions of any individual affect the rights of the public whom he officially represents. So far as Cant is concerned, it could only be taken at most as affecting his evidence, and it does not lead me to alter my view of his testimony in Court. On the merits, the circumstances in which the agreement is made were quite abnormal. The strike introduced elements that affected prices, employment of workmen, and the supply of coal generally ; and as will hereafter be seen the defendants in certain transactions receive the benefit of these considerations. In view of the practice prevailing to control the hewing rate by the declared selling price of coal, I can quite understand also a readiness on the part of the miners to recognise 11/- at least as the fo.b. selling price. I cannot suppose that the miners had worked out all the items going to the mine owners' cost of production, such as management, &c. ; and having regard to the unusual features of the time I do not accept the figures adopted by the parties to the agreement as sufficient to determine the limits of fair and reasonable price. GENERAL CONCLUSIONS AS TO PRE-VEND Price. Looking at the numerous circumstances I have considered, some because the Crown affirmatively advanced them, others because the defendants relied on them as negativing the Crown case, I see no reason for hesitating to believe that the prices, prevailing before 1911. w Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH P) AssoctaTED NortHErRn COLMIERIES. HIGH COURT were, to some extent, profitable prices, and that, then and since, were not lower than the foreign prices obtainable for the same They were in my opinion higher, though of course not so n higher as to attract in ordinary circumstances an influx of for coal into Australia. There was I believe in some few instan smaller collieries only—difficulty in disposing of the output ari from its comparative inferiority, and in those instances sta charges brought up the average cost per ton so as to require a la sale to pay. But this did not apply to the substantial trade in Ney castle coal and in no appreciable degree affected either the welfar of the district, or of the miners, or of the general body of min owners, or the public at large. And when the mine owners in 1906 after years of experience of fixed on 9s. net, having no one to consult but themselves and from internal competition, I must assume, having no evidence to contrary, it was at least a reasonably payable price. And if. no circumstances have appeared which make it less so, except addition of the miners' wages. But that does not end the matter by any means. Errect or ComprNation on Prices iv AusTRALIA By Exciupr CoMPETITION. T appreciate the force of the observation made by learned price. So many elements enter into a determination of that qu tion, that it can never be invested with absolute certainty. as the factors that go to its determination are not constant, bu may change from day to day, no arbitrary figure can ever be p manently adopted as the limit of reasonableness. I have be referred to the observations of Lord Bramwell in the Mojul S ship Co.'s Case (1) where the learned Lord quotes the following wor of Fry L.J., in the Court below :— To draw a line, between fé able, passes the power of the Courts." I was invited to regard dictum as a judicial admission of incapacity to ascertain whet (1) (1892) A.C., 25, at p. 49. MOLR] OF AUSTRALIA. 543 a price transcends the bounds of reasonableness ; it was certainly H.C. or A. not so intended. The sentence immediately preceding the passage ie adopting those words is this :—" I cannot think that the defendants Tx» Kine did more than they had a legal right to do," and when the judgment yi\ouvry- of Fry L.J. is referred to in which the quoted words appear it will be papel found that he is referring to the legal power, not the actual ability, wonweanrn to determine upon appropriate evidence whether a given price is presen P Ni reasonable or not. Reasonableness as to prices, wages, charges of Gone all descriptions and conduct of every kind may at any moment in ordinary litigation have to be considered and determined by some tribunal in a Court of law. I think the case of Rickett v. Midland Railway Co. (1) much nearer the point, though, of course, no rigid standard can ever be fashioned, as a test of reasonableness, it all depends on circumstances compared with which the kaleidoscope might sometimes be regarded as stability itself. Rickett's Case (1), came before the Railway and Canal Commission of which Lord Collins (then Collins J.) was the judicial member. Under the Act, the tribunal had to determine whether a rate or charge was reason- able or unreasonable. Collins J., held in eflect that the standard of reasonableness of any increase of rates depended on the circum- stances existing or apprehended before the increase was made. The learned Judge said (2) :—'' By what standard are we to try the question of reasonableness? The legislature have left us at large on the matter, except so far as we may be helped by presumptions or their absence. I think it clear, however, that in our capacity as Judges we are bound to direct ourselves adequately as to what circumstances we are to take into consideration on the question of reasonableness. We are not a Court of conciliation, or a tribunal of honour. We are not made Judges of prudence or of generosity. Rook Sao ee eee we. dt Vast interests have been committed to our keeping, and a jurisdic- tion of extreme delicacy has been conferred upon us, in virtue of which we are called upon to adjust a dispute as to the reasonableness of charges made by one set of traders to another in connection with the carriage of coals, in enormous quantities, to the centres of con- sumption. Our decision upon matters of fact is final. There is no appeal. And yet I cannot suppose that Parliament intended (1) (1896) 1 Q.B., 260. (2) (1896) 1 Q.B., 260, at p. 264, 544 HIGH COURT H.C, or A. to take the management of these trading concerns out of the hands of aa ihe practical men who work them, and to place it in the hands of th — Tux Kixe Railway Commissioners. It is of the utmost importance, therefore, AND THE ATTORNEY- PaEEAL, °F this novel jurisdiction." To some extent those observations ha' THE Com- monwnaura present application, The legislature has left the Court without a es Sec specific standard of detriment, and therefore without a specific eae standard of excessiveness of price; like the railway Commission, this Court is not a Court of conciliation nor a tribunal of honor, nor am I to determine the issues on the grounds of generosity or mere prudence. Prudence of course may be an element legitimately influencing the defendants in fixing their prices. With equal truth — also may this Court remember that vast interests have been com- mitted to its keeping. Mr. Knox told me that the coal industry is probably the vastest industry in the whole Commonwealth, and vaster still is the collective welfare of the Commonwealth itself, _ dependent in so great a degree upon the industry I am immediately _ considering. And equally with the Railway Commission do I con- — ceive it incumbent on this Court not to take the management of — that we should not travel beyond our proper province in exercis great trading concerns out of the hands of the practical men who work them. The functions of this Court are only to guard the — rest of the community from what I may shortly describe as the artificial maleficence of combination or monopoly. Lord Collins had to consider how to determine what were reasonable rates at which the carrier was bound to convey ; he said (1) :—" A main element in such determination must be the expense to the carrier." — He then cited the words of Baron Parke, who said :—" The charge is no doubt to be varied according to the trouble, expense and — responsibility attending the receipt, carriage and delivery of the different articles." Lord Collins went on to say for himself :— "The affluence or indigence of the person rendering or receiving the service is beside the question." By that last paragraph he meant, I apprehend, affluence or indigence of the person rendering the service outside the conduct or maintenance of the business — by which the service was rendered. Lord Selborne in Canada Southern Railway Co. v. International Bridge Co. (2) said :— (1) (1896) 1 Q.B., 260, at p. 265. (2) 8 App. Cas., 723. (tenella & includes the determination whether "detriment of the public arose or was intended to arise as a result of the combination. soxw Undoubtedly prices rose, and were intended to rise and to be main- Asaccumen 4CLR.] - OF AUSTRALIA. tion, not what profit it may be reasonable for a company to make but what is reasonable to charge to the person who is charged." Nowin this case the task which is set me by the Statute _ but for the combination those prices which were different at different __ stages of the combination would not have existed ; prices would have been lower. The defendants by urging ruination prices as existing before invite me into the consideration of the question, whether that increase which on its face looks like a very substantial detriment _ was really a detriment at all, having regard among other things to the cost of production. In this way some of the principles referred to in Rickett's Case (1) come into play, those principles being applied _ to the varying circumstances of the present case. In this way I am led to consider what would probably have happened had no combination been formed. I put aside the suggestion of ruination 'on inter-State prices for reasons already given and for further reasons to be stated in their appropriate place later on. What price then would have represented the reasonably com- petitive price, which the collieries would have charged f.0.b. at New- castle, and which would have allowed them a fair profit after allow- 'ing for full cost of production and transit to Newcastle. Profit, as Lord Selborne says is not the test of reasonableness, for instance a 46s. price in strike time may not be unreasonable, while a 26s. price without a strike might be highly unreasonable, and yet the profit _ would be 20s. more in the reasonable than in the unreasonable case. But incidentally it is difficult, if not impossible, in ordinary circum- _ Stances to eliminate the question of profit. Competition and profit act and react. Competition in trade, where possible, is induced by profit, and when present regulates it. Profit is therefore one prac- tical consideration that in one form or other enters into the caleu- lation of a reasonable price, but it is by no means the sole or even the governing test. It is not sufficient to ask what profit a given (1) (1896) 1 Q.B., 260. You. x1v. 35 1911. —) Tue Kr "he principle must be when reasonableness comes into ques- H- C. oF A. NG AND THE ArrorNEy- 2? GENERAL OF THE Com- Norte: tained at the higher scale by those entering into the combination ; @oriierine. vu N 546 HIGH COURT H.C. or A. price affords, when we are seeking to discover whether it is a rea able competitive rate. The nature and extent of the compet Tue Krye actual and possible, are for instance, material factors in AND THE bl Arrorney- Problem. one And here comes in Mr. Knox's second argument which I call his' monweattH absolute argument. The relative prices, foreign and inter-State, Assocrarep have found not to be as he suggests. But he has pointed out to n ACuEEE as a hard fact, the actual foreign f.0.b. price for New South Wa coal stated in 34C, which needs no question of comparison to mal us feel its force. That price is not entirely independent of th combination, because tenders for Newcastle coal were still controle by the Vend, but it must be largely so. Other New South Wale: mines compete and coals from other parts of the world compete, and the prices thus obtained must be taken as natural and real, and _ not artificial or fictitious. Now, Ex. 34C says that the price at port of shipment for New South Wales coal going foreign was in 19 8s. 3.33d.; in 1906 8s. 10.76d.; in 1907 9s. 11.57d.; in 1908 10s. 8.8d. ; in 1909 11s. .80d.; in 1910 10s. 10.38d. These are th prices stated, and are, as I understand, gross, that is before commis sion or wastage or other allowances are considered. That is ay factor—not a supreme factor, as no one factor is supreme, but it is a highly important one. If—apart altogether from combination the collieries could make more money by sending their coal abroad, there is nothing in the Act to stop them. They are not phila thropists and the law does not demand it of them. If I thought — therefore they could have got as much, and would have sold for as _ much—because that is important too—abroad, as here, their price could not be said to be excessive by reason of the combination. It would have been extremely profitable—immensely so in my opinion —but that would have been due to natural business causes—not to the combination. But, I do not believe they could or would. I believe that there are several causes which would have prevented ' that. First, material considerations making the home trade more 4 advantageous in many ways would have operated ; it is on the spot more under control and more regular, foreign commission is 24 per cent., and the danger of letting others get a footing in the Aus- tralian trade, all would have operated to keep the coal here. Be- 14. C.L.R.) OF AUSTRALIA. sides, to throw into the foreign market say 1,500,000 tons more would have undoubtedly appreciably lowered the price even if the means of transport could have been secured. The prices in 34.C are not confined to Newcastle coal as I have said and looking at Ex. L.8, Mr. Gale's prices for Hebburn, for instance 10s. 5.6d. up to 3lst December 1909, and to some extent for Abermain for in- stance 10s. 2.74d. up to June 1910, and remembering it is all or practically all large coal for abroad, and the way the 34.C prices were furnished, I am clear that 10s. in 1907 and 11s. in later years could not, and what is essential would not, have been obtained abroad. In 1909 exports foreign had fallen below 1905, and were more than 780,000 tons less than in 1907, and were 914,000 tons Jess than in 1908 (see 33C). And therefore if the competition had been more open in Aus- tralia, that is to say if the combination agreement had not been formed, and acted on, prices here would in 1907 have been sub- stantially less, at the very least 6d., and most probably 1s. less per ton for best coal and proportionately for other coal. I do not think ~ Lam at all illiberal to the Vend in taking that limit. It would unquestionably have been most highly profitable and taking this fact and all others into consideration, including the probable action of collieries controlled by shipping companies and the result of that generally, if I have to state the limits definitely I would say in 1907 the price was 6d., and in 1908 and afterwards 1s. in excess of what it would have been in Australia but for the combination. To that extent I find exorbitancy in the f.o.b. price. Small coal was practically unaffected or very slightly affected by foreign prices. I have already explained why in my opinion the formation of the Vend was a preparatory but contemplated and essential step in the formation of the combined agreement. No doubt the ship- ping companies had no desire that the f.0.b. price should be raised to them, but they knew from the very beginning that it was part of the scheme, and that when that scheme was put into operation higher f.0.b. prices would be charged and they knew it all along. That would have meant splitting the shilling as it is called. It was suggested that a split ls. would have been unusual. If it H. C, or A. 1911. — Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw AssociaTED NortHerN COLLIERIES- 548 HIGH COURT H.C. or A. were that would be no valid answer. But it was not unknown bee Mr. Wheeler could not recollect a split 1s. in the price of best ¢ Tur Kise for many, I think 25 years. But it happened all the same. In ee nny. Exhibit V.8 the Chamber of Commerce Report 1910-11 it app ATTORNEY- GENERAL OF at p, 61 that in 1903 coal, the declared price of which was THE Com- monweattH and on which 4s. 2d. was paid as hewing rate, sold also at 8 Assocratep 98. and 9s. 6d. in 1904, when the declared price was 10s. and tl ae miners received 3s. 10d. ; coal also in 1904 sold at 9s. 3d., 9s. 6d., and 9s. 9d. ; in 1905 when the declared price was 9s. and the hewing rate 3s. 6d., it was also sold at from 7s. 3d. to 8s. 6d. This I may observe was the year of Wheeler's first balance sheet, when defey dants allege coal sold at 9s. net. Then in 1906, the declared pri being 9s. coal also, says the exhibit, "sold from 7s. 6d. to 10s." That evidently refers to the beginning and the end of the yea It is plain therefore that up to the end of 1906, split shillings common for four years, evidently the result of competition. the split shillings stop. ResponsrBiuity oF Supping Companies FoR Exorpirancy Venp Prices. ultimately charged to the public by them. They carried on excess imposed by the Vend and are just as much responsib as the colliery proprietors. It was put on their behalf by of excuse that the Vend had made up its mind to raise the pri to 9s. net in 1906 even if no general combination had been formed. Perhaps it had ; and I am inclined to agree that it had. But ho would it have succeeded? Could that price have been maintain without the assistance of the Shipping Companies? And besidi the Vend clearly had not then resolved to push on to 10s. and to 11s. It must never be forgotten that, as I have observed before sea-carriage of the coal is an essential part of the inter-State trad The Shipping Companies watched the progress of the Vend's growth. they awaited its completion, they agreed to make the observan of part of its regulations a condition of their own compact, th undertook to aid the Vend by refusing to carry for public consump-— tion any other coal with negligible exceptions which were for their CLR.) OF AUSTRALIA. 549 own benefit—in short they consented to allow the Vend to raise H.C. oF A its price to any desired height, stipulating only that no Vend coal me should reach the public except through them, so that exorbitancy Tue Kina f f.0.b. price up to the limit of necessity became a matter of perfect Pewee indifference to them—it must all be refunded by the consumers. psa Se 'They in their turn undertook to decline the carriage of all competing "onwzaLTH coal, so that in short they formed a sort of marine guard for the pavers ~ Vend's coast battery. Experience showed that before the combined Sessa i agreement the Shipping Companies played off one colliery against another, and if the Vend had been forced to act independently of the Shipping Companies, the latter—or some of them—might not improbably have carried other and competitive coal for a consider- able part of the inter-State trade. This, or the fear of it, would have been a wholesome corrective to the cupidity of the Vend, - it would not have been unrestrained and so it is manifest to my mind the Shipping defendants must be held responsible, even if the detriment to the public travelled no further than the declara- _tion of the excessive f.o.b. prices, pronounced by the Vend, and executed by the Shipping Companies. Surerinc Companies' AppirionaL Excessive CHARGES AND ADVANTAGES. I have now however to inquire whether the detriment did not : proceed further and whether the Shipping Companies used the _ powers of the combination for additional advantages to themselves. A brief glance at the contracts already referred to will show incon- testably they did. _ When the Vend on 30th March 1906 (Ex. X. at pp. 33 & 41) fixed Fs '9s. as the net price for large it also fixed 5s. net for small. It has been assumed generally that small was always sold net before and I believe it was usually so, but I have found references to a _ small percentage allowance, I think about 5 per cent. ; and in favour _ of the shipping defendants I will assume that it was so. K : The progressive rise in prices f.0.b. charged to the Shipping Com- _ panies may thus be summarized. In 1906—large, Is. 6d. rise ; small, 3d. ; in 1907—large, 1s. further rise ; small, 9d. further rise ; in 1908—large, 1s. further rise ; small, 6d. further rise. With these 550 HIGH COURT H.C. or A. may now be compared the progressive rises which the Shippi bd Companies obtained from the public. Tue Kise First as to Vicrorta: (1) Victorian Railways.—In 1907 a rise AND THE Arrorxey- 28- 7d. and 3s. 8d. as against 2s. 6d. f.0.b. rise ; in 1910, 5s. and 5s. GENERAL OF 5 F ippii ies' rue Com. 2S against 3s. 6d. in other words the Shipping Companies' o MONWEALTH eventual increase is 1s. 6d. and 2s. 2d. (2) Footscray Gas Compa Associaren —In 1907 a rise of 3s. 9d. as against 2s. 6d. for Stockton and He AloneEsns: and a rise of 4s. 9d. as against 2s. 6d. for Maitland that is all la1 coal; small coal a rise of 2s. 9d. as against 1s. In 1908, coal a rise of 1s. 3d. over the previous price as against Is. f.o.b rise ; in 1909 large receded 3d. and in 1910, 6d., the latter quotati reducing the Shipping Companies' total increase to 4s. 6d. as against _ 3s. 6d. total f.o.b. rise. (3) Melbourne Glass Bottle Works.—In— 1907 a rise of 3s. 3d. as against 2s. 6d. ; in 1908 a further rise of © 1s. 6d. as against Is. ; in 1909-10 the rise is reduced to 1s. 4d. and 1s. leaving the eventual increase 4s. 3d. as against 3s. 6d. 4) : Melbourne Co-operative Brewery.—The starting point is 1904 when the declared price was 10s. If as I think was the case the net ' hand 10s. was the net price f.0.b. in 1904; then the Shipping Co panies' price in 1908 showed an advance of 6s. net. In 1909 ti rise was still 6s. in 1910 it was 5s. over the 1904 price, that is a shi ping rise of either 4s. 6d. or 5s. net. (5) Australian Paper Mill against 1s. f.0.b. rise. In 1908 large rose another 2s. 6d. as against Is, f.0.b. ; small rose Is. 9d. as against 6d. f.o.b. In 1910 —large dropped 3d. leaving the eventual rise of large at 7s. 3d. as against 1s. 6d. (6) G. Mowling & Son.—In 1907 there was a rise of 5s. 10d. for largeZcoal the f.o.b. rise being 2s. 6d. and small — coal rose 3s. 10d. on a f.0.b. rise of 1s. In 1908 there was a further rise on large of 2s. 8d. as against 1s. f.0.b. and on small a rise of 1s. 11d. as against 1s. 3d. f.0.b. In 1909 the prices were maintained. 14C.L.R.) OF AUSTRALIA. (7) Melbourne Harbour Trust.—In 1907 a rise of 3s. 9d. as against 2s. 6d. f.0.b. ; in 1908 a further rise of 2s. 6d. as against 1s. f.o.b. In 1909-10 the price is maintained. (8) Melbourne City Council. —At the Electric Light Station—In 1907 there is a rise of 4s. 9d. as against 2s. 6d. f.0.b. In 1908 there is a further rise of 2s. 7d. 5S as against 1s. f.0.b. In 1909-10 it recedes 6d. leaving the eventual shipping increase at 6s. 10d. as against 3s. 6d. f.o.b. Small coal in 1907 showed a rise of 3s. 3d. as against Is. ; in 1908-9 a further tise of 1s. 4d. as against 6d., and in 1910 a further rise of 5d. which was in fact an increase of Is. 9d. as against 6d. (9) Melbourne and Metropolitan Board of Works.—In 1907 at the Pumping Station there is a rise in large of 6s. as against 2s. 6d. f.o.b. ; and in 1908 a further rise of 3s. 6d. as against ls. f.o.b. At Werribee Farm, the price from Ist July 1906 to 30th June 1908 was fixed by con- tract, it was an advance of 2s. 5d. on previous prices as against Js. 6d. f.0.b. increase. I merely mention this as not affecting the result because it was before the combined agreement, but in order to make the next figure understood. In 1909 there was a further advance of 6s. 4d. as against 2s. f.0.b. ; and in 1910 that was reduced. by 6d. ; the eventual Shipping increase stands therefore at 5s. 10s. as against 2s. f.o.b. (10) Commonwealth Services.—For Point Nepean in 1907 the rise is lls. as against 2s. 6d. f.0.b.; in 1908 there is a further rise of 4s. 3d. as against Is. f.o.b. ; and in 1909 there is further rise of 6d. being an increase over 1907 of 4s. 9d. as against 1s. f.o.b. For Queenscliff there was a rise in 1907 of 5s. 6d. as against 2s. 6d. f.o.b. ; for 1908-9 a further rise of 3s. 9d. as against 1s. f.o.b. ; and for 1910 a further rise of 6d. being an in- crease of 4s. 3d. as against 1s. (11) Victorian Government—Special Services.—(a) Sunbury—there was a rise for house coal in 1907 of 6s. 3d. as against 2s. 6d. f.o.b. ; in 1908 a further rise of 2s. as against 1s. f.o.b. (b) For the Melbourne District, in 1907 a rise of 6s. 3d. as against 2s. 6d; in 1908 a rise of 2s. as against Is. (c) At Melbourne General Post Office in 1907 a rise of 5s. 3d. and 5s. 9d. as against 2s. 6d. ; in 1908 a further rise of 1s. 6d. as against ds. (d) Lady Loch Steam coal : In 1907 an average rise of 5s. 11d. as against 2s. 6d. ; Jumbunna Coal was however taken at a higher price. In 1908 there was a further rise of 1s. 8d. as against 1s. H.C. or A. 1911. "— Tae Kine AND THE ATTORNEY- AL OF THE Com- MONWEALTH v AssOcIATED NortHEerN CoLLIERIEs. H. C. or A, 1911. = Tue Kine AND THE G RAL 0: Com- monweattu rest of the figures. From Ist January 1907 a further rise v. é Assocrarep Place of 1s. 9d. for screened coal as against Is. ; 1s. 9d. for EB NorrTuERN COLLIERIEs. Arrorney- 2S already explained this is not considered as an advance of p HIGH COURT - (e) Yarra Bend. In 1907 a rise of 6s. 2d. as against 2s. 6d. ; in 1908 a further rise of 1s. 6d. as against 1s. (12) Retail Deal —In October 1906 there was a rise of 4s. 6d. as against Is. 6d. * resulting from the combination but is necessary to understand _ coal as against Is. ; and 1s. 9d. for Small coal as against 9d. Ist January 1908 a further rise of 1s. for engine and screened against ls. and 1s. for small as against 6d. From the 1st January 1909 a reduction of 6d. on large coal was made to dealers but not — to the public. (13) Metropolitan Gas Company.—Up to 1907 the price of large coal was 14s. 7d. and small coal 10s. 3d. under a tender given when the declared price was 10s. In May 1907 th price of large coal was raised 7d. ; the declared price again bein; 10s. ; in 1910 there was a further increase of 1s. corresponding 1 a rise of Is. f.0.b. ; this it will be remembered is the case pointed to by the Crown as strangely discrepant from the other cases. No reason appears to suggest why the Shipping Companies shou lose money for the sake of the Gas Company, and if not how a the other increases to be justified ? Then as to Sourm Austratia.—(1) Retail Dealers. The rise January 1907 was 7s. 6d. as against 2s. 6d. f.0.b. ; in 1908-9 there was a further advance of 1s. 6d. as against Is. ; in 1910 a further — advance of 3d. although there is no increase in f.o.b. price. (2) — South Australian Government General Supplies.—(a) Adelaide and Suburbs. In 1907 there was a rise over 1905 of 7s. 2d. as against 2s. 6d. f.0.b. and later in the year the rise mounted to 8s. 9d. as_ against 2s. 6d., so also 8s. 9d. in 1909 as against 3s. 6d. ; in 1910-11 there is a further 1d. rise without further f.0.b. rise. (b) Port Adelaide and Suburbs. In 1907 there was a rise in house coal of 5s. 4d. as against 2s. 6d. ; and a second tender raised the price by 7s. 10s. _ as against 3s. 6d.; in 1909-10 there is a further 6d. rise without any rise in the f.o.b. price. Small coal in 1907 was raised 5s. 6d. as against ls. f.o.b. ; in 1908-9-10 a further rise of 9d. as against 6d. (c) Port Pirie. In 1907 an advance in steam coal of 5s. 10d. as against 2s. 6d. and a later tender showing an increase of 7s. 7d. ou St oy .L.R.] OF AUSTRALIA. against, 3s. 6d., that is 1s. 9d. extra for Is. f.0.b. added in the H- ©. oF A. anwhile. Tn 1910-11 a further 3d. is added by the Shipowners ae hout any advance f,o.b. Tun Kixe (8) Adelaide City Council.—In 1907 there was a rise of 7s. 10d. y}roaxey- s against 2s. 6d. f.o.b. ; in 1908-9 a further advance takes place re hout any advance f.o.b. That was screened coal. As to small Asmuecnaale al there was in 1907 a rise of 5s. 10d. as against Is. ; another foleiete ol of Is. in 1908-9 as against 6d. ; a further rise of 1s. 3d. in 1910 ithout any further rise f.0.b. (4) South Australian Railways.—In 1908 there was an increase Adelaide an advance of 3s. 9d. as against 3s. 6d. f.o.b. At the 'etort House an advance of 4s. 6d. for 1908-10 as against 3s. 6d. Port Pirie in 1908 a rise of 5s. 10d. as against 3s. 6d. At Port ie in 1908 a rise of 5s. 10d. as against 3s. 6d ; small coal showed tise of 2s. 3d. in 1908-9-10 as against Is. 6d. (6) Wallaroo and Moonta Company.—In 1908, the price was vanced for large 3s. 9d. as against 3s. 6d. f.o.b. ; and for small 3s. 9d. as against 1s. 6d. (7) Kitchen Sons & Marsh Limited—Engine coal was advanced in 1907, 4s. 9d. as against 2s. 6d. f.0.b. ; in 1908-10, it again rose "Is. 6d. as against Is. _ (8) Adelaide Electric Lighting Company.—Small coal rose in 1907-9 by 5s. 2d. as against 2s. 6d. and 3s. 6d., and in 1910 another 3d., ere being no further f.0.b. rise. (9) May Brothers Limited.—Small coal rose in 1907 by 4s. 6d. S against 2s. 6d. ; in 1908, it rose another 9d. as against Is. f.0.b. In 1909 it receded 3d. In 1910, it is nominally altered again to the 1908 price, but the place of delivery is changed so as practically _ to add a shilling to the price, though no rise takes place in the f.0.b. (10) Sulphide Corporation.—The price before 1908 was 4s. 8d. H. C. or A. 1911. Tue Kine AND THE ATTORNEY- GeNERAL OF but not so much above 1903. THE Com- MONWEALTH v AssociaTED NortTHERN COLLIERIES. HIGH COURT and 13s. 8d. or a mean of 14s. 2d. in 1903 when the declared f.0.b. price was 10s. In 1908 the defendants' price to the corporation was above that of the 1903 price by 3s. 4d. on Newcastle and 4s. 4d. on Greta coal, the rise f.o.b. being 3s. 6d. above 19 (11) Broken Hill Proprietary Company.—In 1908 there was tise of 4s. 1d. as against 3s. 6d. This was repeated in 1909. (12) Broken Hill Water Supply.—In 1908 a rise of 3s. 9d. against 3s. 6d., extended to 1911, then rise increased to 4s. (13) North Broken Hill.—A rise for engine coal in 1908 of 5s. 3d. as against 3s. 6d. : (14) N.S.W. Trams, Broken Hill.—A rise in 1907 of 4s. 3d. as 3 against 2s. 6d. ; in 1908 a further rise of 1s. as against 1s. f.o.b., and in 1910 it was tendered at a further rise of 1s., though the f.o.b. price remained stationary. The tender was not accepted and the price was allowed to remain on a condition favourable to the defen-_ dants. (15) Walter Sully & Co.—In June 1906 a rise of 3s. 6d. took place for engine coal, the f.o.b. price being raised 1s. 6d., this being prior to the combination ; in 1908, a further rise of 2s. 6d. as against 1s. f£.0.b. Small coal rose in 1908, 3s. 3d. as against Is. 6d. (16) Nield & Hyde.—In 1907 engine coal rose 3s. 6d. as against — 2s. Gd., and small 6d. as against 3d. In 1908 engine coal rises _ another 2s. 6d. as against 1s. ; and small 2s. 9d. further as against 6d. Later in the year there is a 5 per cent. discount. (17) Broken Hill Junction North Company.—In 1908 a rise oem : 5s. 3d. as against 3s. 6d., and in 1909 a further rise of 1s. without any advance f.0.b. (18) Zinc Corporation.—In 1908 there was a rise of 7s. as against 4 3s. 6d. f.0.b. ; in 1910 it is only 6s. as against 3s. 6d. Then we come to WesTERN AusTRALIA.—(1) Western Australian Railways. In 1907 there is a rise of 3s. 7d. as against 2s. 6d. In is added for Fremantle another 1d. for one year and another 7d. for the second as against ls. f.0.b. For Geraldton there is a rise in 1907 of 8s. 8d. with no advance in f.o.b. price. iMCLR.] OF AUSTRALIA. 555 (2) Perth Gas Company.—There was a rise in 1908 of 3s. 6d. H.C. or A. against 3s. 6d. f.o.b. 1911. (3) West Australian Ironworks.—In 1907 there was a rise in large Tus Krxe coal of 4s, 9d. as against 2s. 6d., and in small of 2s. 9d. as against 4\>hy. 1s. In 1908 a further rise of 1s. in large as against 1s., and first bape ors Js. and then 2s, 3d. in small as against 6d. MONWEALTH (4) Perth City Council—(a) Parkerville In 1907 a rise in large AssocianeD coal of 6s. 2d. as against 2s. 6d. f.0.b. ; in 1908 it recedes 2d., though Pilates 1s. f.0.b. is added ; in 1909 there is an advance of Is. though no further f.0.b. price is charged ; in 1910 a further 6d. is added without any rise f.0.b. small coal in 1908. Small loose coal in 1907 rose 4s, 3d. over 1906 price, as against Is. f.0.b. Small coal bagged in 1908 rose 2s. 9d. over 1907 price 7.e. as against 6d. f.o.b. In 1909 small coal both loose and bagged rises another Is. with no advance in £0.b. price. In 1910 it rises yet another 6d. with no advance f.o.b. (b) City Yards. Large coal rose in 1907 2s. 6d. as against 2s. 6d. ; in 1908 it rises another 3s. 4d. as against 1s. ; in 1909 it rises another 1s. and in 1910 still another 6d. without in either case another tise f.0.b. Small coal; the rise in 1907 was 2s. as against at most 1s. f.0.b. In 1908, the price of loose small coal has risen 4s. 1d. as against 1s. 6d. ; in 1909 it rises another 1s. without any advance f.o.b. ; in 1910 it rises still another 6d. without any rise f.0.b. The total rise in small coal therefore is 5s. 7d. as against 1s. 6d. (c) Sanitary Site. Large coal rose in 1907, ls. 6d. as against — Is.; in 1908 it rose 5s. more as against ls. In 1909 it rose 10d. more and in 1910 a further 6d. in each case without any further tise f.0.b. Small coal in 1908 rises 3s. 6d. as against 6d. ; in 1909 it rises 1s. 1d. and in 1910 another 6d., in each case without a rise fo.b. Then as to QuEENsLAND.—(1) Chillagoe Company.—In 1909 there was a rise in large coal over 1906 price of 2s. as against 3s. 6d. rise f.o.b. This supply to the Company is impossible at all events on the materials before me to reconcile with the other Queensland transactions. (2) Townsville Harbour Board. \n 1907 the price rose 2s. 6d. above 1906 on a stated 2s. rise. In 1908 there was a further rise of 2s. as against Is. f.0.b. In 1909-10 prices remained 556 HIGH COURT 4.C.or A. the same. (3) Townsville Gas Company. In 1907 there 1911. yise of Is. over October 1906 as against Is. f.o.b. In 1908 t Tue Krxe_ was a further rise of 2s. as against 1s. f.0.b. the price still re srornev. the same for 1909-10.' (4) Commonwealth Naval Depot, To ATTORNEY- GENERAL OF yil/e, Tn 1907 there was a rise of 1s. corresponding with 1s. f.0.b, THE Com- monweatre rise. In 1908 a rise of another 1s. corresponding with the fm Associate rise of Is. f.0.b. In 1909 there was a fall of Is. 9d. In 1910 ari Norruern Cours. of 4s. 9d. Pre-ComBInaTION FREIGHTS. Before estimating the force of what I may term for conv ence of expression the shipping accretions, by which I mean with the various contracts referred to. At first blush the ti by the Shipping Companies in 1905 and the beginning of 1906 m well be taken as a fair standard of reasonable freight. were, excluding J. & A. Brown, six recognised inter-State shippin companies in effect selling nearly the whole of the inter-State coal produced by the Northern Collieries, the four defendant Shi Companies were the chief carriers. It is said however that the the defendants and the other two shipping companies were as betws themselves playing any game of cut-throat. They were accord ing to the admission acting freely and in competition, but nowh does it appear that they were acting recklessly or inharmoniously. © Their competition indeed was of a most friendly nature; this is rendered indisputable by the proceedings of 23rd and 24th Aj 1906, when the Shipping Companies arranged with the Collieries for exclusive supply for the South Australian contract. Their — friendliness was carried so far that the tender for that contract, dated Ist May 1906, was a joint one by Huddart Parker & Coy. and the Adelaide S.S. Company and was accepted. Further- more, it was carried out with even marked cordiality because, Mr. Russell, the South Australian Locomotive Inspector, stated, all four defendant Shipping Companies helped to carry the coal, and although they were as per the admission free competitors up to September 1906, there is no doubt that for some purpose, or CLR. OF AUSTRALIA. oses, compatible .with that free competition, they were, for ome time before in friendly association and were called the Steam- 'ship Owners' Association. Traders who are in actual competition with each other are not infrequently and quite consistently members the same Association for general mutual advantage. But that pposes no such antagonism as leads to ruinous or unhealthy mpetition. Looking back for a number of years, the inter-rela- tions of the shipping firms were by no means hostile ; but on the 3 contrary highly amicable. Thus for instance, on 22nd November "1397, there is a tender to the Victorian Railways signed by James aterson & Co. for self and other firms associated with them, those ms are Howard Smith & Sons Ltd., MelIlwraith McEacharn, Huddart Parker & Co., Adelaide Steamship Co. and the Melbourne mship Co. That is repeated in 1898 and 1899. On 30th ember 1902, there is another tender to the Victorian Railways jointly made by Jas. Paterson & Co. and Huddart Parker & Co. For the Victorian Railways there is another joint tender for 1905-6 R5) on this occasion Howard Smith & Co. and Huddart Parker & Co. are the tenderers. There are, in addition to the joint tender, a separate tender by the Adelaide Steamship Co. and another joint tender by James Paterson & Co. and McIlwraith McEacharn & Co., and another separate tender by J. & A. Brown. Consequently it seen that from 1897 down to 1905 there is no unfriendliness at amongst the six shipping companies, but their natural feelings of self-interest are generously mingled with threads of sympathy eeding but little effort to be woven into the firm bond of union "manifested in the combined agreement. There is no reason there- ore for imagining any cutting of freights as between the shipping _ defendants. There was some outside competition, the history and _ effect of which belongs rather to another chapter. At this point I would only say that to some extent I believe the uitside competition did influence the action of the shipping com- panies as well as of the collieries in reducing in some instances both 0.b. prices and shipping freights. For instance I would not think fair to the defendants to take the South Australian tender of Ist May 1906 as a normal tender. Roughly estimating the freight por- tion of the 11s. 9d., I should think it was about 4s. 10d. or 4s. 11d. H.C. or A. 1911. ts Tue Kine AND THE ATTORNEY- GENERAL OF 'tHE Com- MONWEALTH v ASSOCIATED NortHEeRN CoLLIERIES. H. C. or A. 1911. ——s Tue Kina AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v AssOcIATED NortTHERN COoLLierrrs. HIGH COURT Iam not prepared to say that there was any loss on this, I believe was above actual cost, but I do not think it afforded a fair busine profit for that trade. Special circumstances affecting both the f.o.b. prices and the shipping freights have been disclosed in regard to th ; contract. On the other hand, I accept the view urged by the def ants that prior to the combined agreement there was in prat a monopoly in the carriage and therefore in the public supply Newcastle coal. This is to be taken with the qualification of Sco Fell & Co.'s competition. Apart from that the sympathetic frie liness and harmonious action of the six shipping companies modifies the value to the defendants of previously existing fi In the absence of definite testimony, I can only have recourse to he business conduct of the shipping companies in transactions which, so far as appears, are not affected by special circumstances adv to the defendants, but on the contrary occur after they have entered — into combination. ; Earty ComBINATIon Frercuts. I take the Victorian Railways contract tendered for in October 1906. This seems a plain case to begin with. The quantity called for by the Railways Commissioners as appears from the Departmental letter 24th October 1906 (S5) was 200,000 tons per annum minimum, with a maximum of 300,000 tons. The matter came before the Vend on 4th October 1906 (Ex. I. p. 9) and it was agreed by the coal proprietors that proportions and prices should be as follows :—For Maitland collieries 45 per cent. of the - total quantity; from Borehole collieries 1st grade 30 per cent., — 2nd grade 15 per cent. ; Teralba (optional) 10 per cent. ; prices: 10s. Maitland and Ist grade Borehole; 9s. 3d. 2nd grade Borehole; _ 6s. 6d. Teralba. Tenders to be conditional on the whole quantity — being taken from the above collieries. The quantity to be supplied by each colliery to be a matter for arrangement later on. Period _ of contract 3 years. y On the 8th October 1906 Huddart Parker & Co. and Howard Smith & Co. jointly tender subject to certain conditions including taking the whole quantity required, the proportions being stated exactly as by the Vend and the alternative option being worked out as MCLE] OF AUSTRALIA. 559 é Maitland 50 per cent. ; No. 1 Borehole 33 per cent. and No. 2 Bore- H. C. or A. hole 17 per cent. The prices are :—Maitland and No. 1 Borehole pets 'ds. 1s. ; No. 2 Borehole 13s. 4d. and Teralba 10s. 7d. In each case Tue Krxe - 4s, 1d. has been added to the Vend's f.0.b. price, that is a clean cif. SX? AEN contract, and I see no reason for not accepting it as yielding a fair freight. I cannot refrain from quoting a passage in the letter of wonwraurn ~ tender which having regard to what we now know, respecting the te then undisclosed relations between the Vend and the shipping pote companies, and the manner in which the quantities and prices and conditions of this contract were arranged between them, must be admitted to be remarkable. The two shipping companies tender- ing say :—'' We have only offered for a 3 years supply, as we have not been able to get under offer for a shorter period any of the coals, which so far as our experience has been able to guide us, we think ~ most suitable for the requirements of the Department." The impression naturally conveyed by this statement is that a really independent negotiation had taken place with the Vend to get ~ certain coals only and for a shorter time than 3 years, and that in spite of the tenderers' efforts on the Department's behalf, they had failed, but that, with the stipulation as to time, the quality was secured. But no one would have suspected the truth, that the tenderers had already bound themselves to submit to the allotment system and knew they could not rely on getting simply the coals which their experience told them were the most suitable for the Departmental requirements, nor indeed that the collieries had ex- -pressly informed the shipping companies that the quantity to be supplied by each colliery was to be a matter for arrangement later on. I refer also to tender (R5) for 1905-6, which is lower still, but I pass that by without further comment. I come to the Metro- i politan Gas Co.'s contract and tenders (Exh. T7). It has been properly urged on the part of the Crown that this contract was the most onerous which the shipping companies entered into. The conditions from January 1898 down to, but not inclusive of the contract made in 1904 contained a provision that all coal supplied by - the contractors should be conveyed direct from Newcastle to Mel- bourne (without calling at Sydney) in steamships owned by them or 560 HIGH COURT Tue King In the contracts of 1904, 1907 and 1910, it is provided the coal 'Atronxev. to be conveyed to Melbourne in suitable steamships and in all Cree ge contracts there is a provision that the coal is to be carried in sepa: monweartH holds. Assocraren For breach of any stipulation as to their own or suitable ste Fs Gt ships as the case might be or as to carrying in separate holds or as not sub-letting without consent, there is a provision for liquidat damages £10,000; there are other provisions of comparat stringency to which I need not refer. Then there is also a pro for what is known as emergency clauses. I refer at present | freights only. The eighth clause of the 1897 contract stipulat that in the event of a strike at Newcastle the contractors will ca coal for the Gas Co. from Newcastle at 4s. 5d. per ton; that Howard Smith & Co. The Adelaide Steamship Co. tendered at the as to the emergency freight. In 1904 McIlwraith McEacharn 5s., including wharfage, which is equivalent to 4s. without. J. & A. — Brown named 4s. as emergency freight. In 1907 the emergency freight is 5s. 7d. including wharfage. Of course these prices being emergency prices must be considered as being distinctly higher than — they would be under ordinary circumstances. Some guide as to what the ordinary price would be may be gathered from clause 13 of the contract of 16th May 1910 made by MclIlwraith McEacharn & Co. The clause contains a proviso that if at any time during the currency of the contract " the Association Colliery Proprietors shall — have been dissolved, the prices for the best screened round coal shall — after such dissolution but not before 31st March 1911 be the declared selling price at Newcastle upon which the hewing rate is based in — addition to freight and wharfage calculated on the basis of 5s. 2d. per ton delivered at West Melbourne into tubs." That freight ae equivalent to 4s. 2d. independent of the 1s. for wharfage. The price of 4s. 2d. is an extraordinary piece of testimony to the effect of the OF AUSTRALIA. 561 ination. If the Vend disappeared of course the combined H- ©. or A. agreement would cease, and though nothing is said about a combined _— ent in the contract—which is natural—the effect is there. Tue Krxa THE in that view we may make a comparison with the emergency ,vronwev- v GENERAL OF freight stipulated in the very same contract, but with no dissolu- GUNEG™ © tion of the Vend, it is 4s. 7d. Why should the combined agreement monwraurn it must be that as the mere alteration of internal relations Assocrarep 'of colliery proprietors ought to make no difference to the shipowners Giorrmarne, —create a difference of 5d. a ton on freight? This anomaly has not en explained, and the fair inference to my mind is that, in the it of a dissolution, the exclusive sale to the shipping defendants vould cease, other carriers could come in, and the Gas Co. could, or ht, secure the transport of their coal at a lower price. From contracts it will appear on the whole, that 4s. 1d. without harfage as charged to the Victorian Railways or at the most 4s. 2d., vas a fair freight to Melbourne. The next is the Melbourne Glass 4 ottle Works contract, dated 3rd November 1904 (Ex. X. 7). The price of best Newcastle coal from A.A., Stockton and Hetton was 'Ws. 6d. Assuming that 7s. 6d. was paid, that would leave 5s. for t, and as delivery was ex steamer into railway trucks it neluded wharfage, making the net freight 4s. This again supports conclusion already arrived at. Iyrerences FRoM Suiprinc Derenpants' Conrracts. It is to be noted also that whatever the pressure might have een before the combined agreement was formed to reduce freights, e contracts made afterwards must be taken very strongly to ent rates which the shipping companies felt they could safely demand, because henceforth the coal needed for lways and gas companies must come through them, unless freight was extraordinarily excessive. In the absence there- of any explanation which the shipping companies might have en, which they alone could give, but which has not been ven, they cannot complain of the inference which common exper- ce, of ordinary human nature and affairs of life, prompts one to e, namely that the freights I have quoted would not have been named by the shipping companies as their prices unless they left a Yor. xtv. 36 562 HIGH COURT H.C. or A. reasonable margin of profit. With less strict and onerous - 1911. tions and less risk in the event of a breach of contract, the same Tur Krxa prices are still better for the defendants. Amonvev. The onus of proof is doubtless on the Crown in this as in ot! Caer or respects, but I repeat when conduct is proved which in normal MonweALTH cumstances means one thing, if the defendants rely on any unus ae gave disturbing factors, influencing the particular contract and a NorTHERN Couttenies, 1g the normal inference, it is they who should establish them. they assert the competition in any special instance was unhealthy, — they must indicate the nature and extent of the deviation from the — normal state, they must show why and how the ordinary instinetive and necessary desire to make a profit was suspended. The sum- maries of Victorian c.i.f. contracts 1907 to 1910 submitted on behalf of the shipping defendants and embracing the railways, Gas Co., Glass and Bottle Works and Harbour Trust were offered to show that to the end of 1909 the average freight earned per ton on 426,000. tons per annum did not reach 4s. 2d. and in 1910 it did not reach 4s. 4d. on 316,000 tons. ( Lane's Testimony As TO FREIGHTS. The inference from the defendants' own business transactions — is affirmatively supported by Lane's evidence. He says (p. 492a) _ that during 1906 a 4s. 3d. freight Newcastle to Melbourne would be a profitable freight, would give not less than 3d. and probably 6d. per ton profit, and would enable the shipowner to sell advan- — tageously at a cif. price based on that freight added to the — f.o.b. value of the coal at Newcastle. Even at 3d. per ton on the y 1907 Victorian railway supplies which were 260,000 tons, the profit would amount to £3,250. On the Metropolitan Gas Co.'s supplies, — 150,000 tons, the profit would be £1,875. On the Glass Bottle Works, 12,000 tons, the profit would be £150, and on the Harbour Trust, 4,000 tons, £50. Canr's Testimony as TO FREIGHTS. Lane also said freights remained stationary from 1906 to 1910. There is another witness, James Cant, of Kethel & Co. Ltd. Hewas Managing Director and his company (now in liquidation) carried on uUCLR.) 7 OF AUSTRALIA. the business of colliery proprietors and coal merchants, wholesale and retail, They owned the Ebbw Main colliery in the Maitland district and leased the Young Wallsend colliery in the Newcastle district. The latter was on the upper Borehole seam. The com- pany was formed on lst May 1909, operations then commenced, and prior to that Cant was about 13 or 14 months Secretary of the Ebbw Main Co., the then owners of the mine. Before the formation of Kethel & Co. Ltd., Cant was also lessee of the Young Wallsend mine. Mr. Cant gave evidence as to the rates of freight from New- eastle to Melbourne, based on his actual experience, the coal being carried by the company not in their own vessels, but in vessels they had to charter. Cant's evidence is that a fair freight would be 4s. 1d. including discharging and trimming. He also stated the actual cost to himself. The defendants have taken the figures of his actual cost, and treated them as representative charges, applic- Sk ta. aT On able to trade in general, including their own. But I cannot accept that as a correct application, the circumstances of Kethel & Co.'s business operations were quite exceptional, and necessitated ex- penditure that would not have happened under ordinary circum- stances, and that I am sure did not happen in the regular commercial transactions of the coal business carried on by the defendants either before or after the combined agreement. Some or Derenpants' FreigHt CaLcunations. For instance the yard expenses which are put down at 2s. 6d. in connection with such contracts as the Melbourne City Council, J. Kitchen & Sons, The Australian Paper Mills, form a very con- siderable addition to the suggested expenditure of the shipping defendants and the claim for allowance of that expenditure does not rest on anything more than the mere fact that Cant in his own particular business had yard expenses, which the defend- ants say amounted to 2s. 6d. Some astonishing results are brought out by this process, for instance, it is made to appear by the defendants that in supplying the Victorian Government with 1,500 tons of coal in 1906, for the Melbourne district, after paying the collieries, their f.o.b. price put down at 7s. 6d., wharfage Is., 2s. 6d. yard expenses, 1s. for screening and loss by 563, H. C. or A. 1911. ~ Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH. v ASSOCIATED NorTHERN COrLIERIES 564 HIGH COURT H.C. or A. screening, and 1s. 6d. for cartage, making a total money ou 1M: the shipping contractors of 13s. 6d. ; they charged the Govern Tae Kixe only 14s. That is to say they charged only 6d. to cover the wl ane ney. cost of sea carriage, standing charges of management and to ATTORNEY- GENERAL OF profit ; that is quite unlikely. Similarly in the same year it y THE Com- monweautH appear that they charged the Government only 4d. per ton fi Assocraen for 120 tons delivered at Parliament House and the same for oma tons delivered at Coburg, while for 1,900 tons delivered at Yi Bend and Kew they were so generous as to do it at 1d. per ton to themselves. I have taken the contract prices as stated in summaries (198) prepared by the defendants. Substantially I no doubt they represent the fact, or the defendants would not accepted them, but it is my duty to point out that in the last mentioned instances, Coburg and Yarra Bend, the materials for those contract prices were struck through at defendants' instan and are not strictly part of the Exhibit (V2) because they transactions of the Melbourne Shipping Co. before the date wh that company is proved to have joined the combination. Ta the lowest tenders of the defendants in connection with matters, the Coburg case would stand at 5d. more, which would Mcllwraith McEacharn's tender, so that their balance to pro for general expenses of company, wages, wear and tear of ship, co of bunker coal, and their own profit would be 9d. per ton, which, business proposition, is absurd. In the case of the Yarra Bend, same firm's tender was the lowest among the defendants and wou convert the debit balance of Id. a ton into a credit balance of same amount, a scarcely less conspicuous example of self-sat in the public interest. And so looking down the same summary, there appears to been provided only Id. for the same expenditure and profit in supplying the Melbourne City Council with 600 tons at the Corpor tion Quarries, and 11d. for 4,000 tons at the Refrigerating Wo ; This is a price incredible, and, more particularly, when we find 5s. 2d. provided for 70 tons to the Melbourne and Metropolitan Board Works, and 2s. 9d. for the Harbour Trust for 4,000, and 2s. 9d. a 3s. for the Australian Paper Mills for 5,750 tons. ; OF AUSTRALIA. n view of the ordinary impulses of human nature and remem- the shipping accretions already pointed out, I have no reason think that the shipping defendants would conduct their affairs yn the lines of philanthropy rather than of business. One is morally n that the surprising results exhibited by the defendants' maries must be resting on some fallacious support. RAST BETWEEN SHIPPING CoMPANIES' BUSINESS AND THAT OF Kernen & Co. the fallacy is in treating their long established and system- cally arranged methods of supply on a larger scale as exactly ar to the struggling and inexperienced efforts of Kethel & Co. to ete on a less extensive basis in the inter-State trade. It is not uted by the defendants (see page 2,316) that they would naturally oid yard expenses so far as possible by delivering from the wharf. y then should the coal supply to the Government, for the City neil, for the Paper Mills, for the Melbourne and Metropolitan d of Works, be stored in the defendants' yards before delivering n extra cost of 2s. 6d. a ton. Their huge contract business was quite easy to arrange with regard to arrival, so as to obviate the neces- of incurring this heavy expense in connection with the wharf e, and defendants have given no evidence, and have not pointed o any, that contract or any coal was delivered from the yard. If e defendants foresaw the probability of such an expenditure they turally would have increased their price by so much ; and if they did not add this to the price, it is because their years of experience al them the coal could be delivered without passing through the . Mr. Cant was under a special arrangement with his agents, sby & Co., through whom they were forced by stress of business ities to work these operations, to keep a certain amount of , about 8,000 tons always in stock. Now, as the Harbour Trust not allow anyone to stack more than 2,000 tons at the wharf, ows he always had the expense at the yard of 6,000 tons at , and at times possibly 8,000, seeing that a cargo was more than 0 tons. The defendants on the other hand were under no such ation. The trade had its facilities before the combination, they were no less afterwards. H.C. of A. 1911. — Tur Kina AND THE ATTORNEY- > GENERAL OF tHE Com- MONWEALTIL e - AssoctaTED NortTHERN CourertEs. 566 HIGH COURT H.C.or A. Arprrmative EvrpeNce From DEFENDANTS' TRANSACTIONS A 1911. Tux Kixc Besides there is affirmative evidence coming from the defen Atonsry- possession which supports the natural presumption. The dealers' Genera OF lists, issued by the shipping companies (Ex. K8) state explicitly th monweazrH the price to dealers was so much per ton "on the wharf." If ca "associaren to dealers the ' 'price on wharf is plus cartage as per cal plains schedule." So in J. & A. Brown's advertisements (V5) the p CONFERENCES AS TO YARDAGE. are "on wharf" cartage added. - By K8 the prices already detailed by me were " on the wharf." Thus from Ist June 1906 dealers " were charged 16s. 9d. for sere coal on wharf" and from 23rd July 1906 19s. 3d. I leave out tl discount for this purpose. From 21st January 1907 it is 21s., and from Ist January 1908 it is 22s., with a reduction of 6d. in 1909." Ge although there is the distinct statement in K8 that the p are "on the wharf," and an express intimation that, if cartage is required, cartage will be charged for as per scale, and although no- contract existed requiring delivery on specific terms or at all, yet the defendants wish me to believe they voluntarily incurred 2s. 6d. per ton extra expense, and made the dealer a present of it. They have put down that 2s. 6d. as an actual outlay, and yet adhered to the 14s. 9d. wharf price to the dealer. Not only so, but a discount under certain circumstances is allowed. Further, the price to the public is only 2s. more than to dealers and the same contentic applies that though the public are specifically told a price on wharf and another price for delivery at their homes being cartage added, yet 2s. 6d. yardage is said to have been paid by the shippin companies, and ignored in their price to the general public. If t 2s. 6d. is provided for in the regular price, then an overcharge p 0 tanto must be made from the wharf. There being not a particle of evidence that the repeated price lists were so strangely departed from, I prefer to accept the defendants' own statements—business statements—which are in conformity with their policy of "a tions," and with ordinary commercial motives, rather than the ingenious but erroneous suggestions made by learned counsel on the strength of adopting Cant's exceptional experience as a universal — standard. ; MCLRJ OF AUSTRALIA. 867 Ramsay's summaries, part of K8, in fact state " at wharf" except H.C. oF A. 5 ji « deli > i911. where a higher price was charged for " delivery." 'Tue Kine Drrricutties or DELIVERY. cade ArTor! Although the shipping defendants have not thought fit to give Gpxnran or the Court any information through the medium of the witness-box ene why they insist on this item of 2s. 6d. yardage as one of the reasons <a ; SSOCIATED for the increase of price to the public, it has been possible by means Norraery of the record of the conference of 23rd July 1907 to gather to some hepaeary) extent their own views on the subject, when it was to their interests to object to it. At this conference the shipping companies were complaining that they did not get sufficient coal when they needed it, and the Vend suggested that during certain months of the year, the shipowners did not take enough. Mr. Hunter then said :—" I presume your members appreciate the fact that during certain months of the year we have actually had either to lay up certain of our tonnage or send it off the coast, the whole of our wharves being blocked by coal, &e., while we could not get our customers to take a larger quantity of coal than they required." Mr. Appleton. said :—" That does not apply this year, I think we have hardly had our monthly share of our contracts. It has been a constant labour to keep anywhere near our principal customers' requirements." Mr. Hunter said later, speaking of the early months of the year, "Our outlet was not sufficient and our stocks were consequently full." Mr. Howard Smith said :—" I think we ought to accentuate the fact. The collieries are of opinion that we can stock up and subsequently supply the whole of our trade out of the stocks as easily as ex ship. Now if they knew the expense and loss entailed in putting coal ex ship into the yard and subsequently re-delivering they would appreciate the undesirability of such a course. The storing of coal during the slack months for the busy season would mean an extraordinary loss which the collieries would not ask us to bear. It would mean storing coal in the yard for 3 or 4 months." Mr. Forsyth asked would not a higher price be received for a portion of that trade. Mr. Northcote replied "Certainly not for contract general trade." It will be seen from the discussion so far that neither the shipping companies nor the collieries make any statement 568 HIGH COURT H.C. or A. that in the ordinary course of business it is necessary to yard 1911. mrs Tue Krxe and not in the busy season. In the busy season when more coal ¥ AND THE Arrorney- Tequired they even had difficulty in sending out the coal as fast as Cues arrived. The very object of the conference was to get more coal monweattH and to get it faster in the busy season, and according to the def Associaren ants this would increase the yardage. 1 infer from what Mr. Howar ae Smith said in particular that they had until then avoided as far as possible what he termed the ' extraordinary loss" of yarding co delivered ex ship, and that the collieries' proposals would lead to tl incurring of such expense. and the trouble the shipping companies have had was in the slack Mr. Northcote's statement that an increased price could not asked for the contract general trade implies that it was the contra price that prevented it, and he did not say that to meet additi expenditure an increased price could not be obtained from r dealers or the general public with whom no contract existed. Mr. Northcote went on further to say :—' The great bulk of the coal consumption is for contracts with railways, gas companies and brick companies, and they require coal ex ship and would not face the additional expense of yarding and re-delivering coal." Later on Mr. Hunter said " Our requirements have largely increased and we _ have not been able to satisfy the demands of our customers." Mr. Appleton said :—'' We are 20,000 tons behind in our big conti and 20,000 in our small contracts." This clearly shows there was no- need to yard. It could be sent away from the wharf, if wharf trade, sereened or unscreened. On the whole the impression left by conference is that the shipping companies were not in fact as a general rule yarding their coal, paying 2s. 6d. out of their own pockets and bearing the loss. They did not seem to yard it at all as a rule, and did not yard it except as presently to be mentioned. of coal which on the average might require to be dealt with on arrival at Melbourne. The Victorian inter-State tonnage for 1907 we may deduct 426,000 tons for railways, gas, Glass Bottle Works _ and Harbour Trust, and that leaves 414,248 tons for the year, roughly speaking 8,000 per week, which is the exact amount of OLR.) OF AUSTRALIA. mmodation for the four shipping companies at their own wharf ; and it must be remembered that they had the whole week for the arrival and disposal of this coal. Taking the Victorian trade , her at say 1,000,000 tons a year or 20,000 tons a week, railways gas alone absorbed 8,000, leaving 12,000 to be provided for, or 000 for each of the four shipping companies, even if we limit it to Each company has only 1,000 tons to provide for, over its permanent wharf accommodation, and has the whole week to do it in. There seems to be no reason therefore for yard expenses unless - for what was called necessary stocking up in the slack season, or on some special and exceptional occasion. An instance of the excep- tional nature of this treatment is given in the report of the con- rence of 23rd April 1909 (X. p. 218). Mr. Hunter pointed out that 'eralba coal was not suitable for general trade requirements and it as impossible to dispose of it as such. At the date of the confer- ence, there was a quantity of 3,000 to 5,000 tons lying in the Mel- _ bourne yards the greater portion of which had been there for 12 jonths or more. Then this statement is made by Mr. Hunter :— _ "Owing to being unable to dispose of this coal, it was not possible o allow it to remain on the wharf, and thus an extra cost was in- ed for carting to the yard." It is tolerably plain that if the ipping companies had been free to purchase just what they chose, - there would have been no Teralba coal in Melbourne to yard. This ultra expenditure was the result of the artificial position in which e shipping companies had placed themselves. As for stocking up during the slack season, the shipowners stated in their letter of 25th July 1907 (X. 114) that in their own interests and for their wn protection, though at a very considerable cost to themselves, y had stocked up during the slack season, though at times short f coal during the busy season. We may take the figures they give this letter as the strongest possible. In January there were 359 tons on wharves and yards in mut at some Beeepeoue some one day which I presume to be higher than any other day. n February on some one day they had 20,599 tons that is 12,599 yards. In March on some one day they had 22,225 tons in all, about 14,000 in yards. In April they had 18,829 tons in all, or H. C. or A. 1911. cw; Tue Kine AND THE ATTORNEY- ENERAL OF 12 Com- MONWEALTH v. ASSOCIATED NortTHERN COLLIERIES. H. C. oF A. 1911. ed Tue Kine AND THE ATTORNEY- GENERAL oF THE Com- MONWEALTH v. ASSOCIATED Nortuern ConniERrEs. HIGH COURT {191 : 10,929 tons in yards. In May they had 13,298 tons in all, or 5,298 tons in yards. In June they had 4,925 tons in all, and in July 6,376 tons in all. In the last-mentioned two months, the wharf afforded more than sufficient accommodation. These figures were — independent of the stocks held by the Melbourne Steamship Coe James Paterson & Co. or J. & A. Brown. 2 Dirricutties or SuppLy ARISING THROUGH THE COMBINATION. — Now when the shipping companies say in that letter that it was in their own interests and for their own protection stores had been accumulated in the yards and on the wharf, it is. necessary to enquire how that protection became essential. Would — it have been necessary but for the combined agreement and the combination ? The combined agreement in clause (2) sub-clause (c) provides for a monthly intimation of the coal required and compliance with the requisition. The provision of course is — qualified by the words " when practicable." Apparently precise — monthly requisitions were not found to be practicable ; from some — of the correspondence as 11th January 1907 (X. p. 26) it seems Mr. Hunter on 29th November 1906 sent Mr. Chapman a list of the steamship companies' requirements for 1907. That was an annual statement of requirements and its terms are not before me. — I gather from a statement of Mr. Hunter at the conference of 23rd July 1907 (X. at p. 105) that it gave "'average monthly require- " Then according to Mr. Lewington's letter of 16th January 1907 it was agreed that a joint committee should meet at Newcastle _ as often as necessary to arrange for the shipment of coal ; the letter — also states that it had been decided between the parties that full advance notice would be given of requirements. A telegram dated 15th May 1907 (X. p. 69) to the Secretary of the Vend, states that steamers were seriously delayed at Newcastle owing to the collieries declining to supply coal except for gas or railway contracts, the collieries having already oversold their Vend allotments ; and subse- quently further correspondence takes place already adverted to in — which " the seriousness of the position then created " is insisted on, — on behalf of the shipping companies. On 17th May, the Vend Secretary says :—" Although I did not exactly state in my previous ments. "14 C.L.R.] OF AUSTRALIA 571 ~ letter to you that you would be protected as regards supplies, this H- ©. oF A. A 5 aye Lae was intended, and you now have the assurance such is the case. _ This apparently is the "protection" required by the shipping Tue Kine companies. It will be observed that in the next month, June, 4'sonwny- there was no necessity for storage in yards or even for filling up the Gavaniaun wharves. At the conference of July 23rd Mr. Hunter stated that monweavrn they were not in a position to give anything more definite than the deeeer letter of estimate contained in the letter of 29th November 1906. He 2 _ said :—"* You know no reasons which prevented us." Mr. Forsyth said :—* We know that." The Court has not been furnished with those reasons. Forsyth had already referred to the fact that the Vend had no figures before them as to the shipowners' actual require- ments. Apparently then regular and definite monthly requisitions had not been made, nothing more than average monthly require- ments stated and then sudden demands in the busy season say for 58,000 tons when the whole output is 93,000 (see X. 102). Mr. Forsyth (X. p. 105) said :—'' We should get longer intimation of your requirements. For instance on Monday morning we get your requirements for that week." And on the next page the difficulties and the possible way out are discussed. Now during that con- ference the shipowners complained that they could not get coal as they wanted it. The Vend complained that during certain months the shipowners did not take the quantity of coal the Vend desired. Among other things discussed was the question of difficulty arising from allotment. Mr. Appleton says for instance, "Is a ship to wait till A.A. or Stockton is available" ? Mr. Howell says " Yes. If you ordered and were not entitled to Hetton." Mr. Appleton :— _ "The position is this: A ship is at Newcastle to load for W.A., and the only coal we can get is Hetton, we cannot get A.A. or Stockton ; is that ship to wait till A.A. or Stockton is available?' Mr. Howell replies :—" That is no concern of the collieries." Mr. Appleton says :—" Yes it is ; you cannot expect us to keep the ships there for a week waiting for coal." Later on Mr. Hunter says :—' What we want is quite apart from any Vend allotments. You supply coal in accordance with our trade requirements." " Provided it does not go over their allotment ;" and so the dispute stands. It is quite plain to me as far as can be discerned on the sur- Mr. Howell answers :— 572 HIGH COURT 1011. bined agreement, the shipping companies became entangled between ~~ Tur Kixc the Vend allotment on the one side which might be exhausted by 'rorxny. Home trade or more especially foreign trade, but which they agreed ATTORNEY- pape are to observe at all events to a great extent, and on the other side by monweatra the requirements of their own customers. Naturally for their own Assoctarep protection and in their own interest, having regard to their self- Pots created embarrassments, they mitigated the evil of their original error by stocking up in the slack season, beyond the natural require- ments of the trade; and therefore I do not see how they can rely upon what happened in the early part of 1907 as an ordinary incident _ of the business. In the letter of 25th July 1907 following the con- _ ference, the shipowners say to the Vend :— We took the oppor- tunity of specially pointing out to you that the trade of Australia is not one which can be dealt with on the basis of regular monthly supplies and deliveries, nor is it possible for the shipowners to do much more than they have done in the past in the way of storing coal in their wharves and yards during the slack season of the coal trade." Naturally, this provokes the question: " Why then persist in a system admittedly so inimical to the trade of Australia?" The answer will be made very evident a little later, and may at this point be shortly stated. It was so as to repress certain shipping competitors who were then struggling to share the inter-State trade, and so as to make other competition practically impossible. The shipping companies then still retained their system of "monthly proportions " as we see from a letter of 5th March 1908 Cant to Appleton (Ex. U. 52). So far, for convenience of treatment, I have been referring particu- larly to the Victorian yardage, but the same thing must be said of South Australia. At the July conference (X. p. 110) the trouble was the Vend allotment. Mr. Appleton on behalf of the shipping com- panies said :—"' That if the Government increased their requisitions, the Vend should see that the shipowners were protected." But Mr. Forsyth for the collieries replied :—'' The man who gets it is alright, but it costs the Vend 3s. per ton. Do you think I am entitled to ask J. & A. Brown for 3s. per ton? Asa matter of fact we made arrange- OF AUSTRALIA. 573 ents for 86,000 tons of Vend coal only. The Vend refused to supply H- ©. or A- 'any more because they had to pay 3s. or 4s. a ton over-delivered."" 1911. Mr. Howell (colliery) addressing the shipping representatives Tue Kine . ND THE d:—' You must remember you have no arrangements with the ,*ronwey- Vend, but you have arrangements with each individual for the South spelen Australian contract." This of course had reference to the special wonwrarrn 'arrangement of April 1906, so frequently referred to, for 96,000 tons Aasmies annum. Then comes an observation from Mr. Hunter which Peas oes to the root of his difficulty. In answer to Mr. Howell hesays:— = =—— "But we have our general arrangements also with the Vend." Evidently the stocking up in Adelaide was also the result of this general arrangement, and an attempt to lessen the risk it occasioned to the shipping companies, and the cost of doing it is not a fair charge 'against the general public whose interests are prejudiced by the In the result, J disallow actual yardage as claimed by the Question or Farr Freigut tr YARDAGE WERE ALLOWED. Tf, however, actual yardage were to be allowed, what would be a fair price to allow? The amount charged for freight includes the placing of the coal on the wharf; then in order to get it into the hands of the consumer certain operations are necessary. I will first enquire as to these and their cost. The coal has to be trimmed ; the Harbour Trust regulations preventing the stack rising above a 'certain height. According to Cant's evidence, which I adopt as to - this, 2d. per ton would be a full price to pay for that. Screening where necessary has to be done, which is performed on the wharf, and this occasions not only expense of screening, but involves a loss 'in respect of the small coal left after screening. If engine coal is : 'ordered, there is no screening, it is delivered straight on to the cus- tomers' carts, it is also necessary to weigh the coal and load it on to ecarts. Incidental to all this, there is supervision, and of course there is the standing charge of rent for the space. It is not easy for 'those unfamiliar with the actual outlay which the experience of _many years has shown to those engaged in the trade to be necessary for these operations to say just what is a reasonable allowance to _ cover the cost. Those who could tell us exactly what that outlay H.C. or A. 1911. "SY Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssocraTED NortHERN COLLIERIES. HIGH COURT (1911. was, and who claim to have it allowed, have remained mute. Weare left as before to thread our way as best we can through the various business transactions of the defendants that the Crown has collected. They touch various classes of supply. In K8, which covers the period from Ist March 1905 to Ist January 1910, retail dealers and the general public were charged 1s. more for screened coal than for engine coal. There is no doubt in that class of business the defend- ants fully reimbursed themselves for all outlay and loss of and occasioned by screening. Notwithstanding this consistent fixation of 1s. in their actual trade, they have claimed in their summaries 1s. 6d. for this item in respect to this very class of business. Then turning to the contract June 1906 for 2 years for the Melbourne and Metropolitan Board of Works (Ex. B8) the prices of Mellwraith McEacharn & Co. for screened coal was Is. per ton more than for engine coal. So also by Huddart Parker & Co. for same period. In the same Exhibit by tenders dated 16th May 1910 and acceptance 1st June for the period of 2 years the Melbourne Steamship Co. fixed 1s. more for screened than for engine coal. In the same Exhibit, 16th May 1910, General Stores, Jas. Paterson & Co. by contract note charged 1s. more for screened than for engine coal and by tender 17th May 1910 Mellwraith McEacharn made the same difference. Then the combined agreement itself in a proviso to clause 8 names 1s. per ton as a permissible charge additional to the c.if. price. Therefore ls. is the outside charge allowable for this item. Any Jarger expenditure must be the result of exceptionally restricted facilities or other unusual circumstances. For cartage Ex. K8 shows for 1907 the rates fer that year, but in 1908 the cartage rates were increased ; in 1909-1910-1911 lists are given. As far as cartage is necessary to any of the places mentioned in that list I adopt defendants' higher rates, not as cost but as rates to be charged, though with some hesitation, on account of the Gas Co.'s con- tract (T7). That includes of course all labour of weighing, and of loading and unloading the carts with respect to the coal actually carted. Now we come to the cost of yarding the coal where yarding is necessary. Mr. Cant (p. 801) gave some analysis of his estimated cost and one matter is fundamental. The average cost per ton of yarding coal is dependent, among other factors, upon the number of CLR.) OF AUSTRALIA, tons disposed of. The rent of the yard is constant, so is that of the wharf. Cant said that his estimate was arrived at by considering the amount he had to deliver under contract, he also took one half as representing the proportion to be taken into the yard as dis- tinguished from that left on the wharf. Reference to Ex. 168. ' (summary) shows that Kethel & Co.'s rent of yard for 8 months was 6482 13s. 4d. The total sales for that period amounted to 34,195 : tons of which 33,811 tons were ex yard. The average rent of yards and wharf was 3.38d. per ton, and the fact that so large a pro- - portion of their sales took place ex yard must be taken in conjunction with the firm's undertaking to keep 8,000 tons always in stock. The average per ton yard expenses was in this manner brought up to s. 74d. per ton. Kethel & Co.'s contracts were all delivery ex wharf. It is not difficult to see that in the defendants' trade the position t. was wholly different. The quantity turned over would in any case _ immensely reduce the average rent. I should say it would be well under Is. 3d. A yard was in fact, as I understand, provided by the defendants, and whether actual yardage took place or not I think it ~ ought to be regarded as a cautious provision against the possibility 'of requiring it, however unlikely that eventuality might be. I can well understand and agree that within limits, which experience has _ measured, that is a fair provision. And an average of about 84,000 tons a year appears to be the requirement in Melbourne. An allow- a ance of 4d. per ton would be certainly ample to satisfy rent of wharf ~ and yard and the operations to and fro between wharf and yard. If Terr in amount in this respect, I do so in favour of the defendants ; but to avoid any chance of insufficient allowance I set this down at - 4d.a ton. I am not aware of any direct evidence on the point of yardage cost so far as Melbourne is concerned. But one contract has been pointed to which is the nearest transaction to which my atten- tion has been drawn for Victoria. It is contained in Ex. N8. J. & A. Brown by contract note of 24th February 1909 charged the Aus- tralian Paper Mills 17s. 9d. per ton on trucks ex steamer in Victoria Dock, that would of course be loose. If delivered, which means at : the mill, there was an additional 1s. 6d. per ton for cartage. That cartage involved practically the same kind of work as if the coal were yarded. In the case of yardage however there are two differences ; H. C. oF A. 1911. Tur Kine AND THE ATTORNEY- MONWEALTH v. AssocIATED NortTHERN COoLLIERTES. 576 HIGH COURT H. ©. or A. the first is the yards would doubtless be in much closer proximi 1911. 'the wharf; and next the Is. 6d. charged to the Paper Mills was eo Tue Krxe each ton of coal actually delivered, whereas in estimating the av Asroneny. ost of yarding it must be borne in mind that not every ton is act Gexrral oF varded. Mr. Cant thought that about half the output wou Pie Pecans carted from the wharf to the yard, and that was rather his es t Nee applying, as I take it, to Kethel & Co.'s own trade as they would pees able to work it under improved circumstances, than a formula the trade in general. (See for instance p. 807a). I have alr stated circumstances respecting the defendants' own trade whic have convinced me that nothing like one half the wharf coal need go to the yard. Mr. Cant put down the actual cost of carting at | for every ton carted or 3d. when averaged, or his evidence on whole may be 9d. for actual carting and an average of 44d. actual average yard expenses per ton in Kethel & Co.'s business i shown by Ex. 168., these expenses include wages for trimming coal, loading and unloading carts, bagging, weighing, &c., the cost bags and sundries, and after taking all these things into account a the comparative disadvantages under which he laboured, they brought out at 1s. 74d. Taking the last item for instance, nam 3,338 tons, total sales for January 1911, they were all sold at yard, at a yardage cost of 1s. 4.69d. ; if half had been sold at the wharf, the average cost would have been much less. First of there would have to be deducted one half the rent of the yard, 3. one half loading and unloading carts, and one half wear and t in the course of the operations and this would reduce the cost very nearly one half, after allowing for bags and baggage, weig and sundries, which would have to be paid for somewhere. At events the difference would be very great. The defendants' co: if any were incurred, ought to be very much less. If the Aust Paper Mills contract be taken as a guide and 1s. 6d. be a profital charge for carting to the Mills, then 9d. would be a profitable aver charge for carting, less than one half the defendants' wharf turnov The same contract note affords some evidence of what is, in opinion, a proper charge, not rightly called yardage, but which defendants have included in their term yardage. In their charge MU4C.L.R.] OF AUSTRALIA. 577 except as to wharfage. According to their summaries they do H. ©. or A. practically no wharf trade. This is inconceivable. But at the same Rs time the whole 2s. 6d. must not be struck off. They ought to be Tue Kine allowed for wharf operations the fair cost of putting the coal on the 4 *rouwev- wharf, and on this point Brown's contract note with the Paper Mills pepeler isinformative. As we have seen loose coal on trucks ex steamer in MonweautH Victoria Docks is 17s. 9d. per ton. If bagged on Brown's wharf, dpsed ees South Melbourne (bags returnable), the price is 19s. 3d. or 1s. 6d. Roe more. Bagging with bags returned everyone agrees comes to 6d., so that the cost of placing on the wharf is charged for at 1s. This 1s. includes what we must take to be reasonable profit, the actual cost then is something less. In Tasmania, coal is charged for 1s. per ton more for both large and small when the shipping companies, instead of delivering coal ex steamer, either tranship it into a hulk beside their vessel alongside the wharf or put it ashore into customers' carts. In South Australia we find from the contract note of Mc- _ Ilwraith McEacharn & Co. and May Bros., 30th January 1909 (P7) that coal, whether steam or small, is 1s. per ton extra, if loaded ex ee ee ee heap at Port Adelaide. beyond the price on trucks ex steamer direct at Port Adeliade. That contract was for a year, and the contract, _ for the following year is to the same effect. The contract note of 29th December 1905 for year 1906 makes the extra cost for small coal only 9d. per ton. In Western Australia Howard Smith & Co. _ charged 1s. more for Steam coal loose ex coal yard for city and for _ sanitary site than if direct ex ship and so for small coal bagged. For some reason not disclosed there was 2s. 6d. difference if delivered at Parkerville Railway Station. I presume Is. 6d. is railway freight. That was in October 1906. Next year the differences are the same. In the city, steam coal ex yard is 1s. 10d. more, so also at Parkerville Railway Station, while at the sanitary site it is only 1s. 9d. more. Small coal bagged in the city is only 1d. more, so at Parkerville Railway Station, while at the sanitary site it is the same. Loose small coal in the city is 1s. 10d. more ex yard so at Parkerville, while at sanitary site it isls. 9d. In 1909 the extra cost all round is 1s. 10d. Even these extreme charges as was observed by learned counsel for the Crown do not bring the cost up to 2s. 6d. The defendants' summaries assume 5d. a ton to provide for yard management at VOL, XIV. 37 578 HIGH COURT H.C. or A. Melbourne, apart from management otherwise, and apart from ee freight, and that happens in this way. Cant, taking his evidence ; Tne Kixe a whole, say the defendants, gives 2s. 2d. as the actual cost of Amonxuy- Penses over all. Owing to what was even for him an extraordir etree expense of £100, they deduct 1d. per ton, leaving 2s. 1d. monweattH Crosby & Co.'s additional net charge for what they did in Melbourne inne was ls., making the total cost to him 3s. 1d. The defendants, y NortHERN Coutistins, Out applying any precise standard of division, strike off 7d. from Crosby's charge, leaving it at 5d., which, added to the other item 2s. 1d., produces the 2s. 6d. entered under the head of yard exp Thus 5d. is set down really as the cost of effecting and superintendin operations in Melbourne, which is taken as equivalent to yard man agement there. Of course that leaves general management to b provided for. With regard to this we have to recollect that all other exper are assumed to have been defrayed. Now, as to cost of yard ma agement, Cant's expenditure in favour of Crosby is no criterion the present purpose. Crosby & Co. were necessary to them to business, make contracts, bear a contingent liability for fulfilment, superintend Melbourne affairs and do all the incidental work a branch - office would do. It is plain therefore that in addition to the di parity between the magnitude of the defendants' business and of Kethel & Co. several special circumstances concurred, including at the profit that Crosby & Co. would naturally look for on their prime outlay, to prevent me adopting Crosby's charges against Kethel & Co. as the standard of what it would actually cost the defendants in respect of their Melbourne sales, or indeed of any of their branch office sales. It has been forcibly urged that 6d. a ton on the defend- ant's turnover would provide a fund for management alone, that s would be exorbitant. So even would 5d. a ton. According to the defendants' summaries, the average Melbourne trade for the four Z years, 1907 to 1910, is 857,330 tons. According to 33C it was much — larger, but for this purpose I assume 19S is correct. This tonnage — at 5d. per ton would give a management fund of £17,861, wh supposing it to be apportioned among the four defendant shipping companies allows £4,465 to each, and if the whole six companies — interested are to participate each would have £2,976. The coal busi- '14C.L.R.] OF AUSTRALIA. 579 is only a branch of the shipping defendants' affairs and for this H- ©. or 4. one item of management I agree that 5d. per ton on the whole ton- Toe ge is exorbitant, even for the whole of the operations of the ship- Tur Kine 5 E é of Ea AND THE _ ping companies connected with the Victorian trade and much more Gee for the yard business alone. Each of the six companies concerned GENERA" OF THE Com- would have about £1,200 from 2d. a ton which is the utmost I would onweatra aliow for this item if it be necessary for me to allocate any specific Associamay sum with regard toit. The cost of management in other States may Cee 'not unfairly or illiberally be put at the same amount per ton. There are considerations of variation, telling both ways, and I leave it at that. Summary or Surpprnc Compantes' ALLOWABLE DEDUCTIONS FOR Costs AnD EXPENSES. The matter can then be summarised thus. In order to arrive at the amount for freight and general management—which latter term covers all general expenses of direction and supervision—the ship- bs ping companies are entitled to deduct in the first instance (a) the f.o.b. price; (b) wharfage and dues where payable by them; (c) general wharf charge for labour 1s.; (¢) screening where necessary 1/-; (e) cartage where necessary according to schedule, &c. ; (f) rent of wharf and yard and also yard labour 4d., allowed for all possible eases, that is all wharf trade, and I call these standing expenses. Tallow them at this point because of their separate connection with a particular section of the business ; general management and other expenses covering the trade indiscriminately are supposed to be included in all freights alike. Crospy's GuaraNTEE To Keruen & Co. _ Thave had pressed upon me the fact that in October and Novem- ber 1909 Crosby & Co. guaranteed to Kethel & Co. that the freight for coal for the Victorian railways would not exceed 4s. 9d. per ton for the first year, and 5s. for the second year. I think however, this has been well answered. Kethel's business, and Crosby's business in relation to that coal, cannot be put on the same footing as the business of the defendants. It is said by Mr. Mitchell that Crosby & Co., proposed to carry the coal by the one vessel, the Wonga Fell. But there would have been 160,000 tons per annum to be carried H. C. or A. 1911, — Tue King AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NorrHern Cottierres, HIGH COURT {i9ll. — according to 15S or 175,000 according to Wheeler (p. 267). At all events it meant over 3,000 tons a week, and I do not adopt the view that it was intended to do it all with thatvone vessel. Besides, the terms of the letter of 20th October (Ex. 15S) indicates clearly that Crosby would have to get the carriage done, and for that reason could not state the precise terms, but were willing to guarantee a maximum. This indication is supported by the expression "the steamers provided by Messrs. Crosby & Co." in the same letter. Crosby & Co. were not therefore, in the position of the defendants, even in the best of circumstances. Coal-carrying trade was not easy to provide for, outside the defendants themselves, the business had to filter, arrangements would have had to be made with people pro hae vice, and the channels are not indicated ; probably they were not completely settled by Crosby & Co., and I have no evidence establishing the accuracy of the 4s. 9d. and 5s. Besides, Wheeler was in a difficult position, Kethel & Co. were practically dependent on Crosby & Co. and the situation of the last named firm being, as I have stated, the tentative price obtained in the way it was mentioned does not appeal to me as at all a safe guide for freight in the regular, normal, well-established course of business prevailing before the combine or that would have been a non-com- bination freight in 1909. We are now in a position to deal with the various contracts that have been challenged. Excessive Prices Cuarcep By Surpprnc ComPANIEs. Victorta.—(1) Victorian Railways.—1907 f.0.b. cost 10s., no other charges, except haulage Geelong 3d., contract price c.i-f. 14s. 1d. to Melbourne and 14s. 4d. to Geelong ; freight 4s. 1d. This is what I have said, at all events, within 1d. of a fair freight from Newcastle to Melbourne, a freight that returned a reasonable remuneration to the shipping companies without being excessive to the consumer. The quantity was 260,000 tons a year for 3 years, the f.0.b. price being 10s. was 6d. a ton in excess of the highest reasonable price. This amounts to £6,500 a year, or £19,500. The next lot of contracts in 1910 (U5) consisted of 129,000 tons at least at 15s. 5d. and 50,000 tons at 16s. 2d. deliverable either at Melbourne or Geelong. The 7 eee MCLE] OF AUSTRALIA, 581 _f.o.b. price was L1s., the shipping company's freight was therefore H- ©. or A. 4s, bd. and 5s. 2d. Although practically it would be known that 1: most of the coal would be delivered at Melbourne, yet, looking at the terms of the contract, the contractors must be taken as properly protecting themselves against Geelong, and therefore I am dis- THE Com- inclined to attribute any excess in freights of the first of this set of wonwearrH ' v contracts, but on the second there is an excess of 9d. As to the Assoctarep f0.b. price, it exceeded by 1s. what I have already found to be the poked highest price within reason for this period, namely 10s. The excess cost to the Railways may be thus calculated 129,000 tons at 1s. is £6,450 for the Vend and 50,000 tons at 9d. come to £1,875 for the shipping companies. (2). Footscray Gas Co.—In 1905 the price was 14s. 9d. at Footscray wharf for large and 11s. 9d. for small. The f.0.b. price for large was '7s. 6d. and small 5s. ; wharfage 1s., making 8s. 6d. outlay. I dis- allow lighterage, there is no evidence it was employed or necessary. It is not contended the defendants could not have delivered from their collieries. The balance for freight is 6s. 3d. for large and 5s. 9d. for small. This is only referred to as history, being before the combined agreement. In 1907 the price was 18s. 6d. for large and ds. 6d. for small, the f.0.b. price large was now 10s., for small 5s. 9d. Adding to these 1s. for wharfage, there is left 7s. 6d. as freight upon large, and 7s. 9d. small. The total quantity delivered was 4,100 tons, 25 per cent. small was guaranteed if necessary, but I do not know what proportion of small was in fact taken. The excess in f.o.b. price was 6d. per ton. The freight exceeded not merely the reasonable amount, but exceeded also the maximum amount provided in the combined agreement, namely 5s. 3d., by 2s. 3d. on large and 2s. 6d. on small. That cannot be precisely cal- culated, but taking it all at 3s. 4d. on 4,100 tons it comes to £683 13s. 4d. By "maximum amount" I mean throughout the schedule maximum ; because the first proviso to clause 8 of the combined agreement permits another 3s. per ton where the yearly contract does not exceed 10,000 tons. The next contract for this Gas Co. was in 1908 when engine coal was 19s. 9d. large and small 15s. 3d. ; the f.0.b. price large is now L1s., small is 6s. 3d., that means 7s. 9d. for freight on large and 8s. on small. The f.0.b. excess is Is. 582 HIGH COURT H.C. or A. on large and the small is proportionate. The maximum sched ie rate of freight in the combined agreement is 5s. 6d. The ex¢ Tue Kix even over that is therefore again 2s. 3d. and 2s. 6d. The e rane above reasonable freight is 3s. 7d. and 3s. 10d. The price of GENERAL oF descends to 19s. 6d. in 1909, and 19s. 3d. in 1910, there being alw THE Com- MONWEALTH a margin of excess. Ascousaten (3) Melbourne Glass Bottle Co.—In 1907 the e.i.f. contract px Piste was 15s. 6d., the f.0.b. price was 10s. and after adding wharfage this left 4s. 6d. freight, which was under the schedule maximum, 4d. beyond reasonable freight. The excess cost to the Bottle Wor! per annum on 12,000 tons after allowing 9s. 6d. f.0.b. is 6d. per which comes to £300, and in freight at 4d. excess is £200. In 1908 the price is 17s. receding however eventually to 16s. 6d. The fob. price is 11s. and with allowances 12s., the final freight is again 4d. in excess meaning £200, the f.o.b. price Is. in excess being £600, or £800 in all. a (4) Australian Paper Mills.—In 1907 engine coal 18s. 6d. a small 14s. 6d. f.0.b. price is 10s., allowances should be 1s. wharfage ; 1s. wharf expenses ; 4d. standing expenses ; 1s. 6d. cartage ; lea' 4s. 8d. for freight on large or 6d. excess. For small the f.0.b. price is 5s. 9d., which added to 3s. 10d. allowances totals 9s. 7d., leaving — 4s. 11d. for freight or 9d. excess. The total quantity for the year is 5,750 tons, the respective quantities of large and small do : appear, but taking the freight at the minimum excess it amounts to _ £143 15s. The excess f.o.b. is 6d. on large and proportionately on _ small. In 1908, the price of large is 21s.; small 16s. 3d.; f.o.b. price is now 1ls., additions the same as before, the balance for freight is 6s. 2d. or 2s. excess and 8d. above the maximum schedule amount. The f.o.b. price of small is 6s. 3d., and with additions it comes to 9s. 9d., the freight being again 6s. 2d. with the same excess. Tn 1910 large is 3d. less ; small remains the same. (5) G. Mowling & Son.—In 1907 the price was 20s. 1d. for engine coal and small 17s. 1d.; f.0.b. price for large 10s., s 5s. 9d. ; additions are wharfage 1s. ; wharf expenses Is. and 2s. 6 cartage, 4d. standing expenses. The amount for freight is 5s. mum of the combined agreement. Small coal: Making the OF AUSTRALIA. above the agreed maximum. In 1908 the f.0.b. price being Ls., the additions are wharfage 1s. ; wharf expenses Is.; cartage 2s. 9d., to lls. 4d., the contract price is 19s., leaving 7s. 8d. for freight. 3s. 6d. in advance of the reasonable rate and 2s. 2d. above the agreed maximum when the price is 6s. which is the highest schedule for small coal. The quantity was about 2,000 tons a year. The f.o.b. excess is ls. on the large and correspondingly. on the small. (6) Melbourne Harbour Trust—In 1907, 4,000 tons of coal sereened at pit at 10s. per ton f.o.b. ; the only proper addition in my ~ opinion is 9d. extra for discharging. The contract price is 15s. 3d. which leaves 4s. 6d. for freight which is 4d. in excess. The f.0.b. price however is 6d. too much which comes to £100. In 1908, 4,000 tons are 17s. 9d., the f.0.b. price is 11s. with addition of 9d. making _ Is. 9d., which leaves 6s. for freight, being 1s. 10d. above the reason- _ able rate and 6d. above the agreed maximum. The total excess cost to the Harbour Trust for this year was 1s. per ton for the collieries, being £200, and Is. 10d. per ton for the shipping companies being £366 13s. 4d., a total of £566 13s. 4d. (7) Melbourne City Council Electric Light Station.—In 1907 engine coal is 18s. 3d. ; the f.0.b. price was 10s., the addition being wharfage Js. ; wharf expenses Is. ; cartage ls. 4d., and 4d. standing expenses, _ leaving 4s. 7d. for freight or an excess of 5d. on 7,825 tons, making _ £163 0s. 5d. The f.o.b. was 6d. in excess on this quantity, making £195 12s. 6d. ; in all an overcharge of £358 12s. 11d. on the large coal. Then there were 8,600 tons of small coal, the f.o.b. price is 5s. 9d. and with the same additions it makes 9s. 5d. the cost to the contractors. The contract price was 15s. 3d., the freight being 5s. 10d. which is 1s. 8d. in excess and 7d. above the agreed maximum. 'The small coal I take at 6d. excess on f.0.b. price which is £215 for __ the collieries, and the excess freight amounted to £716 13s. 4d. for the shipping companies. The total excess for small coal for that year is £931 13s. 4d.; the combined excess for the year in respect 'additions the freight is 2s. 4d. above the reasonable rate and Is. 3d. H: C. or A. 1911. —4 Tur Kine AND THE and 4d. standing expenses. The price of large coal was 22s. 9d., ,orornny- leaving 6s. 8d. for freight, which is 2s. 6d. above the reasonable GENERAL oF THE Com- amount and Is. 2d. above the agreed maximum. The f.0.b. price MonwrantH of small is 6s. 3d. and this with the same additions of 5s. 1d. comes samipaioia NorrHern > COLLIERIES. H.C. or A. 1911. ed Tue Kiva AND THE ArrorNeY- GENERAL OF THE Com- MONWEALTH v. AssocraTED NorTHERN Courrenrss. HIGH COURT q9 of the Electric Light Station alone £1,290 6s. 3d. In 1908 for the same quantity of coal the prices are 20s. 10d. for large and 16s. 7d. for small. The f.0.b. price for large is 11s. and, adding the additions of 3s. 8d. leaving 6s. 2d. for freight, an excess of 2s. above the reasonable rate and 8d. above the agreed maximum. The over- charge for freight on large coal is £782 10s. and the excess f.0.b. — price is 1s. which comes to £391 5s. ; in all for large coal £1,173 15s. _ The small coal is 6s. 3d. f.0.b. and with 3s. 8d. additions comes to" 9s. 11d., leaving 6s. 8d. for freight being 2s. 6d. above the reasonable rate and Is. 2d. in advance of the agreed maximum. This makes the excess freight on small coal £1,075. The f.0.b. price of small is more than 6d., properly speaking about Is. in excess, but taking itat — 6d. that is £215, the total excess cost of small is £1,290 which added — to the excess on large shows on the lowest basis a combined over-_ charge for the year 1908 for the Electric Station of £2,463 15s. In — 1909-10 large coal receded 6d. ; small coal advances to 17s. in 1910. (8) Melbourne and Metropolitan Board of Works.—In 1907 the price of engine coal at Spotswood was 18s. 9d. and 19s. for 8,000 — tons ; the f.0.b. price was 10s., 1s. wharfage, and cartage claimed at E 1s. 6d., and I see no reason to cut it down, making 12s. 6d., it has to be trimmed into bunkers behind the boilers at the Pumping Station, : I think 3d. per ton is well paid for that, and should be allowed. though not pressed by defendants, making 12s. 9d. The defendants — claim 1s. 6d. discharging from lighter and 2s. for lighterage being ; an additional 3s. 6d. The Crown objects to the last two items ' : altogether ; these, if allowed, would bring the outpockets to 16s. 3d. The defendants claim 16s. for this leaving 3s. only for freight. I ' am not at all clear about the lighterage and the discharge from lighter. In the previous year the Adelaide Steamship Co. tendered for 8,000 tons, same place, same conditions, 14s. 3d. for Seaham and — Caledonian, and Howard Smith tendered 13s. A.A. and Stockton, Hetton and/or Newcastle. They did not get the contract and it may be inferred that some cheaper arrangement was adopted. But whether that was so or not the 13s. tender affords some criterion for Judging of the accuracy of the expenses claimed by defendants in _ 1907. In 1906, the f.0.b. price was 7s. 6d., the additions claimed amounted to 6s., the total outlay therefore being 13s. 6d. When OF AUSTRALIA. Howard Smith & Co. tendered at 13s. did they intend to lose 6d. per ton hard cash amounting to £200 and in addition carry the coals oversea fornothing ? If 4s. 2d. bea fair amount to charge for freight it would mean that Howard Smith were foregoing no less a sum than £1,666 13s. 4d., part of which was actual cost and part profit, a total reduced this benefaction by 1s. 3d. per ton equalling £500. I cannot _ believe the shipping companies were prepared to do business on these terms, and therefore am of opinion that there must be some fallacy either with respect to the wharfage or the amount charged in connection with the lighter and the cost of carriage. But what- ever the difficulty may be in arriving at freight with precision, I do not believe that the advance of 5s. 9d. and 6s., 7.e., a net advance of 3s. 3d. and 3s. 6d. from the standpoint of the shipping companies left them in the position of being underpaid. I will assume in their _ fayor that for this year 1907 they charged no excess freight, but the f.o.b. price was 6d. in excess, being £200. In the next year 1908, the contract price for 5,500 tons was 22s. 6d., the f.o.b. price was 11s. 'The defendants' claim additions which leave the balance for freight at 5s, 6d., the agreed maximum, even on these figures that is 1s. 4d. too much, being £366 13s. 4d., so that I need not enquire further ; _ the f.0.b. price is also 1s. too much, which is £275 making a total of - £641 13s, 4d., even granting the full charges connected with the _ lighter and the full carriage paid. It may not be out of place to observe at this point that the freight for the Metropolitan Gas Co. this year was 4s. 2d. for both large and small. (9) Victorian Government Special Services ; (a) Coburg—In 1908, 240 tons of house coal were charged 23s. 3d., the f.0.b. price was I1s., : A to that is to be added wharfage 1s. ; wharf expenses Is. ; screening Is.; cartage 3s. 9d. and standing expenses 4d., making 18s. 1d., leaving a balance of 5s. 2:1. for freight or 1s. in excess which amounts to £12. The excess f.0.b. is 1s. also equalling £12. (b) Yarra Bend and Kew.—1900 tons at 23s. in 1908 ; 3d. less is charged for cartage, - there is therefore again 1s. excess in freight amounting to £95, and Is. f.o.b. also comes to £95, a total of £190. In the previous year the balance for freight appears to be only 3s. 3d. ; cartage to Kew _ appears in Ex. K8 as 3s. 3d. for 1907, and 3s. 6d. in subsequent years. 585, H. C. or A. 1911.Tue Kine AND THE ATTORNEY- CENERAL OF THE Com- Denefaction of £1,866 13s. 4d. The Adelaide Steamship Co.'s tender monweavra v. AssociaTED NortTHERN COLLIERIES. 586 HIGH COURT H.C. or A. That is the charge made, and the amount is allowed by me as bac ear though that is probably much less. It is always difficult 1 Tue Kixc_ believe that in 1907 the shipping companies carried at a loss, Anroxny. Where so much is clear, it is unnecessary to run after less obvio Graanaincs instances. (c) Lady Loch, Hobson's Bay.—1,000 tons steam co monwearrH at 20s. ; f.0.b. price 11s. ; 2s. lighterage ; 1s. 9d. discharging Assoctarep 148. 9d., leaving 5s. 3d. for freight, excess of 1s. 1d., amounting t GORTHERN £54 3s. 4d., and Is. excess f.0.b. amounting to £50, total £104 3s. 4 — _ (d) Melbourne District.—1,500 tons house coal price 22s. 3d. f.o.b. lls.; wharfage 1s.; wharf expenses Is.; screening 1s. cartage Is. 6d.; standing expenses 4d.; being 15s. 10d. leavin 6s. 5d. for freight or 2s. 3d. excess, amounting to £168 15s. ; add to" this 1s. excess f.0.b. price, namely, £75, total excess being £243 15 2 (e) Parliament House.—120 tons house coal at 21s. 6d., the sar deductions, namely, 15s. 10d., leaving 5s. 8d., freight being Is. 6d. excess amounting to £9 and Is. excess f.o.b. equals £6, a total f £15. (10) Retail Dealers.—The price in 1907 was 21s. It is claimed by the defendants there was a discount of 6d. per ton on large coal dealers. That was confined to dealers taking 25 tons per month — and paying by the 14th of the following month, but I will assume for _ 2 convenience' sake it applied to all dealers, making the net price 20s. 6d. The f.0.b. price was 10s., to that must be added wharfage 1s.; wharf expenses 1s.; screening 1s. ; standing expenses 4d. ; total 13s. 4d., leaving 7s. 2d. for freight or an excess of 3s. per ton. The quantity for 1907 sold in Victoria to dealers and in private trade : according to the defendants' figures (in 19S) was 53,607 tons; this taken at 3s. amounts to £8,041 1s. overcharge by the shipping com- panies to the general public; it was even more because private buyers were charged 2s. more and were not given the 6d. discount. — The f.0.b. price was 6d. in excess, and on the same quantity was — £1,340 3s. 6d. overcharge by the collieries. So that between the — two, the general public, practically householders, overpaid to the combination £9,381 4s. 6d. in 1907. In stating that amount it is an — under-estimate, because according to 33C the total Victorian trade — for 1907 was 1,325,739 tons or over 84,500 tons for general trade. — OF AUSTRALIA. 14 CLR.) However, for the present purpose of calculation, it is enough to take he figures of the defendants' summary. In 1908 the price was 22s. to dealers. I will assume the discount all cases ; the price to the public was 24s. The f.o.b. price was Ex. 198 is 63,022 tons, which makes the excess freight £9,453 6s. he excess f.0.b. price is 1s. and on the quantity mentioned comes to 8,151 2s. ; a total of £12,604 8s. overcharge for the year, taking lealers' prices only, but for any sales direct to the public 2s. 6d. per ton must be added. This again is an under-estimate, because Ex. 198 takes the Victorian total trade at 987,821 tons whereas 33C shows it to be 1,477,770 tons taking 70 per cent. of the total inter-State trade. In 1909-10 prices stood the same, the quantities were differ- it, namely, 47,115 in 1909, and 55,044 in 1910 according to the entage estimates in Ex. 19S—they however being as before under-estimates. _ The prices charged for Commonwealth Services are so exorbitant _ that no comment can add to the effect of the bare figures. I then take Sourm Austratia The first thing to consider is what isa fair freight to Adelaide? Mcllwraith McKacharn by their tender of Ist May 1906 name 5s. 3d. Newcastle to Port Adelaide for 1 _ or 2 years (Ex. C2). On the same date Huddart Parker & Co. and the Adelaide Steamship Co. tendered at 11s. 9d. for Port Adelaide and the other ports in South Australia for 192,000 tons of coal. This coal they were in fact getting at about 6s. 10d. as I reckon in their wor, and after paying 4d. for haulage, would leave about 4s. 7d. for freight, or as has been reckoned on both sides 4s. 5d. I doubt if there would be any actual loss on this. Lane says that 4s. 11}d. gives a fair profit. But though I do not wholly lose sight of that statement, I am not altogether persuaded that what he says applies ally to the defendants' business. In their favor I conclude t would not yield them a fair profit, for reasons to be hereafter en. 7s. 2d.; the excess freight is therefore 3s. and the quantity as Gotrienies. H. C. or A. 1911. — Tue King AND THE ATTORNEY- and to this must be added wharfage Is. ; wharf expenses Is. ; GENERAL OF tHE Com- ing 1s. ; standing expenses 4d., making 14s. 4d. The differ- wonweavra e between that and 2ls. 6d. looking at the dealers' price only Amines NortHEeRN 588 HIGH COURT (19h H.C.or A. J think McIlwraith's tender for freight more nearly represent ai the true amount. In February 1906 (Ex. 19) Howard Smith & Tue Krxc_ sold screened coal to the Broken Hill Water Supply Co. at 13s. 9d. inp ut. free into trucks at Port Pirie. The contractors paid 9d. wharfage, ATTORNEY- cae which made the net price 13s., the cost f.0.b. was then 7s. 6d., that monwraure left 5s, 6d. freight to Port Pirie. The combined agreement recognizes Assoviarep @ difference of 3d. to 6d. more at Port Pirie than at Adelaide. This peste contract consequently represents 5s. 3d. freight to Adelaide. It — continued to March 1908. There were some deliveries at higher — prices, which were apparently anomalous and I pass them by. From : ' April 1908 to March 1910 Howard Smith & Co. and the Adelaide Steamship Co. sold to the Broken Hill Water Supply Co. under — ; contract best coal at 17s. 6d. into trucks Port Pirie. The con- — tractors paid 1s. wharfage, which reduced the price to 16s. 6d. The — f.0.b. price at this time was 11s., which again left 5s. 6d. for freight to Port Pirie, equivalent to 5s. 3d. Adelaide. In the letter of 19th February 1907, Northcote to Scott Fell (part of Ex. O1) and a portion of the correspondence forwarded by Northcote to the Vend, and already commented upon, the freight to Adelaide as quoted to" Scott Fell & Co. is 1s. 3d. more than to Melbourne. There are transparent exaggerations of price in that letter. For instance Co-operative coal which was 10s. f.0.b. is quoted to Scott Fell & Co. at 15s. 6d. Melbourne c.i.f., that is 3d. more than the agreed maxi- mum in the combined agreement, and 16s. 9d. to Adelaide which is within 3d. of the maximum ; for Port Pirie it is quoted at 17s. 9d. which is 6d. more than the agreed maximum. This last super- Dreadnought quotation, when Scott Fell's needs were for coal at Port Pirie and not at Adelaide, must surely have been conceived in the most delicate spirit of irony. The combined agreement in the various schedules is erratic with regard to the differences between Melbourne and Adelaide ; in one place it is 1s. 2d. for large coal, in the next Is. 7d., in the next Is. 6d., then Is. 9d., then Is. 8d., and lastly 1s. 3d. at the highest price large coal. For small coal it is 1s. 3d., 1s. 7d., 1s. 6d., 1s. 9d., and 1s. 6d., there are differences in maximum. No steady guidance is there obtainable as to the proper differences between Melbourne and Adelaide. Making up my mind on the materials I have, I conclude without % OLR] OF AUSTRALIA. 589 ® itation that 5s. 4d. is ample to return the shipping companies a H. ©. or A. profit, and anything beyond it would most certainly be exces- 1 ive. Resolving all doubt in their favour I allow it at that. I Tux Kine AND THE would mention in passing that the Broken Hill Water Supply con- a rorwey- tracts are specially valuable because there was no back-loading, and coe "this isa practical answer to the conjecture raised by the defendants cic "that the possibility of getting—not the contractual right to get— re ~ pack-loading was a factor in fixing such a freight for Port Pirie. aoe T have now to consider from the standpoint of freight, some of "the South Australian transactions. (1) Retail Dealers' Trade.—The price in 1907 was 24s. 6d. to dealers, the f.0.b. price was 10s., to this the following additions should be ED made—wharfage 1s. ; haulage 4d. ; railage 2s. Gd.; yard expenses T would allow at 1s. 3d: ; with 4d. standing expenses and Is. further for screening, making 16s. 5d.; this from 24s. 6d. leaves 8s. Id. for freight. The defendants bring out the balance for this year for freight and management at 6s. 5d.; if that is right, the previous year's business must have been on a purely philanthropic basis. The f.0.b. price was 7s. 6d., the additions claimed amount to 8s. 1d., that added to 7s. 6d. totals 15s. 7d. The price charged to dealers _ was 17s., so that according to defendants' contention they were con- tent with ls. 5d. to provide for freight and management. It is _ putting too severe a strain on my credulity to ask me to adopt that suggestion. Taking 8s. 1d. as the actual balance for freight in 1907, the excess is 2s. 9d. per ton; the amount of trade done is left un- fixed. The defendants suggest that it was 1,500 tons and, with Port Adelaide trade, about 2,000 tons in all, that was Mr. Knoz's suggestion and is inserted in 19S. It may be right ; but if it is, the proportion of 6.38 per cent. to total trade is not maintained in South _ Australia. In that case the Victorian quantities ought probably to be largely increased. If, following defendants' assumption in 19S as to Victorian dealers' trade, that trade were calculated on the - total Adelaide trade, it would be many thousand tons more for 1907. - Ido not know in what State proportions the dealers' trade was distributed ; there is doubt on this point, and so I do not work it out in total results, but leave it with the observation that a large _ excess in freights was obtained on the total quantity from the general H. C. or A. 1911. 'Tae Kine AND THE ATTORNEY- GENERAL OF THE Com- monweartu defendants' own summary showed a balance of 7s. 5d. for fre v. ASSOCIATED NortTHEerN CoLLIERIES HIGH COURT public by the shipping companies somewhere. The f.0.b. price y 6d. in excess and although it is impossible to say with definiten otherwise than by taking 6.38 per cent. of the tonnage for the collieries got it. The dealers' trade at Port Adelaide on and management. That is an admitted excess of 5d. over the scheduled maximum. When I use the word " admitted" as to excesses I mean only an admission that that is the effect of t evidence, not an admission that the evidence is true, nor an adn sion that no other charges could be made, though no others suggested. The real excess in this instance however is greater still. To the f.o.b. price there are to be added wharfage 1s. ; wharf penses Is. ; screening ls.; general expenses 4d.; making 13s. : excess of 3s. 1d. over the reasonable rate and Is. 5d. over the a maximum. In 1908, the Port Adelaide price is increased to 23s. 3d. the f.o.b. price is 1ls.; to this add 3s. 4d. making Ids. 4d. 1s. 1ld. above the maximum. In the Adelaide trade in 1908 price to dealers was 26s.; to the f.o.b. price 11s., additions of 6s. 5d. should be made in all 17s. 5d., which leaves a balance 8s. 7d. freight, that is 3s. 3d. excess above reasonable rate 1s. 7d. above the maximum. In 1909 the position was the same In 1910, the Adelaide price advances another 3d. making excess freight 3s. 6d. and the excess f.0.b. price 1s., altogether an over- : charge of 4s. 6d. per ton. : (2) South Australian Railways.—In 1908-9 there were 133,000 — £1,263 6s. 8d. Port Pirie, Port Augusta and Wallaroo, there is an" excess of 5d. a ton on 52,700 tons equal to £1,097 18s. 4d. The f.o.b. LR] OF AUSTRALIA. 591 i ingston and Port Lincoln there was an actual loss of Is. 6d. a ton, H.C. or A. ying coastal freight. To this I add 5s. 4d. the fair freight to 11! aide, a total set-off of 6s. 10d.a ton. This rate on 2,500 tons Tue Kixe mounts to £854 3s. 4d. Then as to Port Wakefield, the admitted Prntstccint ~ sum left for freight is 1s. 6d. which is 3s. 10d. below the reasonable ae rate and this diminution on 2,000 tons amounts to £383 6s. 8d., a monweaura ~ total debit of £1,237 10s. Deduct this from £9,011 5s. and the net 'gee - overcharge as the effect of the combination is £7,773 15s. For 8 Sere 1910-11 the only difference is in the quantity, it is 145,000 tons. (3) South Australian Government General Supplies.—In 1907 the contract price for Adelaide and suburbs was 25s. 7d. for 6 months, the annual quantity being 1,750 tons. The f.o.b. price was 10s. add 8s. 5d. for proper additions making 18s. 5d., leaving a balance of 7s. 2d. for freight, being 1s. 10d. above the reasonable rate and 2d. above the agreed maximum. For 1908-9 the price is 27s. 2d. ; the fo.b. price being 11s., adding to this 8s. 5d. and deducting the result 19s. 5d., it leaves a balance of 7s. 9d. for freight, being 2s. 5d. above the reasonable rate and 9d. in advance of the maximum. At the end of 1909, the price advanced another Id., the final excess in freight is 2s. 6d. per ton, and this added to Is. excess f.0.b. price amounts to 3s. 6d. per ton combination overcharge. (4) Adelaide City Council—tIn 1907 screened coal was 26s. 3d. ; against this is the f.o.b. price 10s.; wharfage Js.; haulage 4d. ; = tailage 2s. 6d.; wharf expenses 1s. 3d.; standing expenses 4d. ; for freight, 2s. 8d. in excess of the reasonable rate and Is. over the maximum. Engine coal was also 26s. 3d., but the cost is 1s. less as screening is omitted. The defendants admit that the balance here is 8s. 4d. or 1s. 4d. over the maximum. In reality, the balance is 9s., that is 2s, 8d. over the reasonable rate and 2s. ahead of the maximum. In 1908, the price is 27s. 9d. for screened and engine coal, the f.o.b. price being 11s. and adding 8s. 3d. as before making _ 19s. 3d., the balance for freight for screened coal is 8s. 6d., being 3s. 2d. above the reasonable rate and 1s. 6d. above the maximum. Engine coal cost them 1s. less, that is 18s. 3d., leaving 9s. 6d. for freight or 4s. 2d. excess above the reasonable rate, and 2s. 6d. above their own maximum. If we add 1s. excess f.o.b. to the excess H.C. or A. 1911. = Tae Kine AND THE ATTORNEY- GENERAL OF vHE Com- MONWEALTH v AssociaTEeD NortHERN CorrrertEs. HIGH COURT (91. freights there is in the case of screened coal a total over-charge f 4s. 2d. and in the case of engine coal 5s. 2d. a ton. The same prices prevail in the following year. In 1910 screened coal advanced 3d. and engine coal receded 1s. 6d. ; still leaving however in the case of engine coal an excess over the maximum on defendants' own admis-— sion. The price of small coal is noticeable in 1910. It is charged at 23s. per ton, the f.o.b. price is 7s.; adding 7s. 3d. for charges as in the case of engine coal the sum is 14s. 3d., the freight balance therefore is 8s. 9d., that is 3s. 5d. above the reasonable rate and 1s. 9d. above the maximum. The defendants' figures really confess to 11d. above the maximum. (5) May Brothers.—In 1907 the price of large was 19s. 9d. The f.o.b. price was 10s. to this should be added 1s. wharfage ; 1s. wharf _ expenses; 4d. haulage (with doubt), and 4d. general charges, making 12s. 8d., leaving for freight 7s. 1d., which is fourpence less than is admitted by the defendants and is Is. 9d. over the reasonable rate and 1d. above the agreed maximum. Small coal was charged at 16s. 9d.; against this there is 5s. 9d. f.0.b. and also additions — 2s. 8d., making 8s. 5d., leaving a balance of 8s. 4d. for freight which is 3s. above the reasonable rate and 1s. above the maximum. The defendants admit to the extent of 8d. above the maximum. The quantity is 400 tons. In 1908, the price of large coal is 21s. 3d. ; to the f.0.b. price 1ls., we must add wharfage 1s. ; wharf expenses 1s.; 4d. haulage and 4d. general charges, making 13s. 8d., leaving a balance of 7s. 7d., 4d. less than is admitted by the defendants. This is 2s. 3d. above the reasonable rate and 7d. over the maximum. Small coal is 17s. 6d. ; against this is 6s. 3d. f.0.b. price and 2s. 8d. additions, making 8s. 11d., a balance being left of 8s. 7d., of which 7s. 11d. is admitted. The excess above the reasonable rate is 3s. 3d. and above the maximum ls. 7d. In 1909, large coal was 20s. ex steamer, which was Is. less than ex heap. From this the deductions are 11s. f.o.b.; wharfage 1s., and 4d. haulage, in all 12s. 4d., leaving a balance of 7s. 8d., namely 2s. 4d. above the reasonable rate and 8d. above the maximum, which the defendants admit. Small coal was 16s. 3d. ex steamer f.o.b., price 6s. 3d. allowances Is. 4d., total 7s. 7d., leaving 8s. 8d. or 3s. 4d. beyond ee es SC eae '1M4C.L.R.] OF AUSTRALIA. 593 reasonable rate and Is. 8d. above maximum. Defendants admit H. ©. or A. 8d. above maximum. 1911. Tn 1910 large coal is the same ; small coal is 1s. 3d. more, namely, Tae Kine - Vs. 6d. The f.0-b. price has advanced to 7s., a rise of 9d. to the 4\vomvey- shipping companies to which they add 6d. more to the consumer. beet ee _ The final excess on large coal is 2s. 4d. freight and Is. f.0.b. cost or MonwEaurH $s. 8d. a ton; and for small coal 3s. 10d. freight, and an excess in Asenencoull - fo.b. cost proportionate to the large. I may have allowed ls. too ae much in favor of the defendants in 1910 on this contract. I believe it was pure c.if. (6) Electric Lighting Co.—In 1908 there were 6,900 tons small coal. Contract price 17s. ; the outpockets were 6s. 3d. f.0.b. price ; Js. wharfage ; 1s. wharf expenses; 4d. standing charges, leaving a balance of 8s. 5d. for freight, that is 3s. 1d. over the reasonable amount and Is. 5d. over the maximum. Taking the excess f.o.b. price at 6d., the overcharge would amount to £1,236 5s. The defendants admit up to 5d. beyond the maximum. In 1909 the quantity was 5,888 tons, the price still 17s., the excess as before. In 1910 the quantity was 13,432 tons, the price 17s. 3d. This year the _ fo.b. price is 7s., and with 2s. 4d. additions, equals 9s. 4d. for out- _ pockets, and leaves 7s. 11d. for freight, that is 2s. 7d. excess above the reasonable rate and 11d. above the maximum. The defendants admit to within 1d. of the maximum. Adding to the excess freight say Is. excess f.o.b., it totals 3s. 7d. over-charge per ton, which brings out the total over-payment to £2,406 11s. 4d. (1) Kitchen & Sons Limited.—In 1907 they used 400 tons large coal at 18s. 9d. The f.o.b. price was 10s.; wharfage 1s.; wharf expenses ls. ; 4d. general charges, making 12s. 4d., leaving 6s. 5d. for freight, being Is. 1d. excess. In 1908 the price is 20s. 3d. ; fo.b. price 11s. ; additions 2s. 4d.; freight 6s. 11d., being Is. 6d. in excess. In 1909-10 the same prices exist. The final over-charge 2s, 11d. makes £58 6s. 8d. (8) Nield & Hyde, Broken Hill.—In 1907, engine coal was charged at 17s. 6d.; f.o.b. price 10s., the only additions, 1s. wharfage ; 4d. standing charges ; the balance is 6s. 2d. freight, fair freight to Port Pirie 5s. 7d. ; the excess is 7d. in addition to ls. on the f.o.b. price ; small coal was 13s. 6d., the f.0.b. price 5s. 9d., adding wharf- VoL, XIV. a8 eee ee 59k H.C. or A. 1911. eae Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH ev. AssociATED NortHerN COLLIERIES. HIGH COURT age ls. and 4d. standing charges gives 7s. 1d. balance for fi Gs. 5d., the excess is 10d. freight and 6d. excess f.o.b. The quantity is 5,000 tons, but I do not know how it is apporti between large and small. The over-charge is certainly conside able. In 1908 the net price of large is 19s., the f.o.b. is 11s. 1s. wharfage and 4d. standing charges, leaving 6s. 8d. for fi The freight is 1s. 1d. in excess of the reasonable rate. Small is 16s. 3d., the outpockets being 6s. 3d. f.0.b., 1s. wharfage, and 4 above the agreed maximum. The excess above the reasonab rate is 3s. 1d. a ton, and taking the excess f.0.b. to be 6d. on smal it is the same thing for large coal. For small coal there is a discou of 5 per cent. which brings it to 15s. 6d. and reduces the total charge upon it to 2s. 10d. a ton. I am not quite sure if thé discount was given the year before. In 1910 it stands in thes position. # (9) Walter Sully & Co.—This is practically the same as Nield & Hyde. The quantity however is 1,500 tons. : (10) New South Wales Railways (Broken Hill).—In 1907 there we 2,300 tons of large coal charged at 18s. at Port Pirie; the outpocke were 10s. f.o.b.; 1s. wharfage, making 11s., and leaving a balance: 7s. freight or 1s. 5d. above the reasonable rate. The excess fol cost is 6d. so that the over-charge is 1s. 11d. per ton, amounting £220 8s. 4d. for the year 1907. In 1908 the price was 19s.; 0 pockets were 11s. f.o.b. and 1s. as before, making 12s., and lea' 7s. freight with same excess of ls. 5d. ; add to this, 1s. excess f. the total over-charge per ton is 2s. 5d. on 1,500 tons making £181 In the two succeeding years it is the same. (11) Sulphide Corporation.—In 1908 very large quantities taken, the contract being up to 1,600 tons a fortnight to the e of February 1910. I am told the actual quantity was 20,000 a year. Iam not able to distinguish between respective quantit of large and small, but the general result may be seen. The p of large was 18s. ; small 14s. ; the outpockets were 11s. f.0.b., rate. Small f.o.b. price 6s. 3d. and 1s. addition making 7s. R.] OF AUSTRALIA. 595 eaving 6s. 9d. or 1s. 2d. beyond the reasonable rate. The excess H.C. oF A. ite 1911. .b. was 1s. ; Ee 2) Zine Corporation Limited.—In 1908 there were 12,000 tons Tue Kie AND THE coal charged at 19s. 6d. Here the defendants admit excess of a prorney- _a ton freight above the agreed maximum, which is 1s. 11d. above fa asonable rate, and this being added to Is. excess f.o.b. amounts to MoNweavtit v, . 1d. per ton over-charged, the total over-payment being £1,750, Associarep is the same for 1909. ss (13) Broken Hill Proprietary Co.—In 1908 the price of large coal 16s. Gd., the only outpocket was f.0.b. cost 11s., making the ht 5s. 6d. This is the same as the Water Supply Company. though I have no moral doubt that 5s. 6d. was an extremely good ht, yet as I have established the extreme margin of reasonable- at 1d. more, I reckon the whole net excess at 11d. per ton, the antity being 110,000 tons per annum, and this continuing for three years the total over-payment amounted to £15,125. (14) Broken Hill Junction North.—In 1908, there were 4,500 tons e and small, price 18s. and 14s. 6d. respectively. Outpockets s. and 6s. 3d. respective f.o.b. prices; 1s. wharfage, leaving 6s. freight on large and 7s. 3d. on small, being 5d. excess on large and s. 8d. excess on small, besides 1s. excess on large and 1s. excess on f.o.b. In 1909 the same quantity; price 19s. large; 15s. ll; the outpockets are the same, making Is. 5d. excess on large d 2s, 2d. excess on small with the same excess f.o.b. In 1910 the e quantities, prices 19s. large as before and 15s. 6d. small, an advance of 6d., the f.0.b. price having risen 9d. The excess freights now stand Is. 5d. on large, and 1s. 11d. on small. (15) North Broken Hill.—In 1908, 7,500 tons of large at 18s., leav- ing 6s. as admitted for freight, that is 5d. excess freight and 1s. cess f.0.b. _ The same in 1909 and 1910. (16) Broken Hill and Suburban Gas Co.—Quantity 2,500 tons per num, price 19s. with admitted 7s. freight and excess of Is. 5d. per ton freight and Is. f.o.b. That is the same for the two following _ With regard to Western Austratan freights. Mcllwraith 'McEacharn's contract with the Railways for 1904-5 was for 15s. 4d. 596 HIGH COURT [191 H.C. or A. for all ports. I assume coal was 7s. 6d., that would leave 7s. 10d. ay freight for all ports 30,000 tons Fremantle, 5,500 tons Geraldton, — Tue Krxe 3,500 tons Albany, 2,500 tons Bunbury, the tender was for one year _ anonner. only. The Adelaide Steamship Co. tendered at 14s. 8d. but restricted ATTORNEY- GENERAL OF the collieries. Howard Smith & Co. tendered at 15s. 10d. ; Mell- 'THE Com- monwearra wraith's tender being accepted; the question is whether it w: Associarep Temunerative. That seems to be answered by the renewal on March — QOETHEEN 18th 1905 (Ex. Cl) by which the term of contract was extended for 2 years further, bringing the operation of the contract down to 22nd April 1907. In 1907 however, the combined agreement was in force, — the f.0.b. price had advanced by 2s. 6d. 3 In 1907 the tender of McIlwraith McEacharn & Co., dated 29th — January 1907, was as already stated 18s. 11d. without wharfage and for all ports. This being an average, Fremantle alone would be less. _ The f.o.b. price was 10s. except Seaham which was 9s. 3d. (see letter of 24th January 1907, Chapman to Hunter X. p. 29). The defend- ants in their summary 19S have taken the f.0.b. price at 10s., which I think is substantially right. The balance is 8s. 11d. for freight which means a little less for Fremantle. The tender of the Adelaide _ Steamship Co. is 19s. 5d. all round, which would mean less than 9s. 5d. for Fremantle. The Melbourne Steamship Co. tendered at : 19s. 10d or 9s. 10d. for Fremantle. Assuming the tenders of the Adelaide Steamship Co. and the Melbourne Steamship Co. to be genuine and honest tenders, the very highest possible freight to Fremantle would be 9s. 10d. and would average very much less. In October 1908 tenders were called, for 1, 2 and 3 years for Newcastle coal. On 24th April by letter Cant to Appleton the price f.o.b. had _ been fixed at 11s. for 1 or 2 years with 12s. for the 3rd year for the Western Australian Railways in substitution for a previous fixation - of 11s. for the first year and 12s. for the second and third years. On 29th October McIlwraith McKacharn tendered 21s. for Fremantle alone for one year and separately at the same price for two years. Verbal negotiations ensued resulting in McIlwraith & Co. tendering at 19s. for the first and 19s. 6d. for the two succeeding years. The other tenders for this contract have already been mentioned. That left McIlwraith's freight at 8s. for one year, and 8s. 6d. for the two next years. The quantity contracted for was 23,000 tons for the iW C.LRB.) OF AUSTRALIA. 597 first year and 40,000 per annum for the 2nd and 3rd years. In the H. C. or A. 'game amended tender Geraldton was contracted for at 24s. The pot Geraldton price had been separately tendered originally, while the Tur Kine Fremantle tender was 21s. es Another instance which indicates the normal and payable freight fee to Fremantle is that with the Perth Gas Co. in 1907. From July monwesaurx 1905 to March 1908, McIlwraith supplied to the Gas Co., Wickham adsbenee Hetton and Stockton large coal at 17s. 6d. The f.o.b. price is taken cee by the defendants to be 10s. I am not sure whether it was 10s. or 9s. If the former it left 7s. 6d., if the latter 8s. '6d. for freight. 'The quantity was 300 or 400 tons a month. The Perth City Council was supplied with coal in 1907 for delivery in the city which after deducting 10s. f.0.b. and proper additions claimed by defendants and conceded by the Crown left the freight at 8s. 6d. Making up my mind therefore as well as I can on the materials before me, and bear- _ ingin mind the possible competition of Collie coal, remembering also that some of the freights to which I have referred were fixed after the formation of the combined agreement, and assuming that traders _ do not ordinarily carry on such extensive operations over so length- ened a period as is covered by those freights without a sufficient recompense, I should be of opinion, if it were necessary to come toa definite conclusion on the matter, that the limit of reasonable freight from Newcastle to Fremantle is passed after 9s. In saying this I am giving a long margin to the defendants. The reasonable freight from Newcastle to Melbourne, I have stated to be 4s. 2d. at most. This provides for the two terminals as well as clear sea mileage. For additional clear sea mileage I add what I have already and otherwise found to be proper, viz., the additional 1s. 2d. to Adelaide, which is a distance of 508 miles. Now, if the further distance of 1,378 clear sea miles Adelaide to Fremantle be added at the same _ rate, it means approximately 3s. 2d. more, and adding 4s. 2d. 1s. 2d. and 3s. 2d. we get 8s. 6d. which is practically the defendants' price. _ I merely put this as a corroborative test of the accuracy of the con- clusion otherwise arrived at. It is not necessary however for me to fix the freight to Fremantle definitely as I am not really concerned with definite amounts of excess except for the purpose of determin- ing the question of substantial detriment. The Western Australian H.C. or A. 1911. ee, Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NortHERN Cotriertes. HIGH COURT contracts are more easily dealt with in this respect than th Victoria and South Australia. Before referring to their exce ayain have regard to Mr. Northcote's letter to Scott Fell t February 1907 (in Ex. Ol). He quotes for Co-operative coal Melbourne 15s. 6d., Adelaide 16s. 9d., Port Pirie 17s. 9d. and mantle 2ls.; the Melbourne quotation allows 5s. 6d. for Adelaide 6s. 9d. I pass by Port Pirie as wholly exaggerated. | mantle is lls. The Melbourne freight 5s. 6d. is 1s. 4d. beyond reasonable rate, namely 4s. 2d.; Adelaide is 1s. 5d. beyond reasonable rate, and deducting, say 1s. 4d. the Melbourne ex from 11s. charged for Fremantle there is left 9s. 8d. Even figure is beyond all reason, after allowing 4d. for standing expen Perth Gas Co. 10s. for freights, according to the way the evid stands, and that they charged the Perth City Council 10s. and Westralia Ironworks Limited 11s. They say and the Crown 1 that 8s. 11d. was the amount of freight for the large coal in' Government contract. But in the same year the Government paying 18s. for small coal. the f.o.b. price of which was 6s. 3d. : freight for small. Besides these the supplies to the City Couneil : the various sites mentioned in an earlier part of the judgment he been analysed by the Crown in Ex. E10 in which the claimed by the defendants have been adopted. I am not whether anything extra should be allowed in respect of Parker and the sanitary site. I think not, but, as I am not certain, I nothing on them in this respect, beyond believing they are at as high as the city deliveries. As to the city deliveries I need nothing more about large coal ; but as to the small coal bagged, balance for freight on 6s. 3d. f.0.b. price is taken by the Crown on basis of defendants' allowances as 16s. 8d. ex ship and 14s. yard. I allow 16s. 2d. ex ship, although it is hardly likely to been bagged and 13s. 11d. ex yard. That is not only gi exorbitant, but is far beyond the agreed maximum namely Small coal loose is very much less, being as I find 10s. 9d. ex and 9s. 9d. ex yard. OF AUSTRALIA. 599 In 1909 the defendants admit that upon the evidence for large coal H- ©. oF A- y charged the Perth Gas Co. 10s. ; the Perth Council [1s. and the nits tralia Ironworks 10s. 6d. for freight. Besides this they charged Tur Krvc the railways 11s, 9d. for small to Fremantle, and 13s. for large to x'yvouwev- Geraldton, the agreed maximum of which is only 2s. more than ee 'Fremantle. For the City Council it also appears that in respect to ee small coal bagged ex yard the amount for freight was 14s. 11d. or Associamep s. lid. over the maximum. For small coal loose ex ship 1s. 9d., poke and ex yard 10s. 9d. In 1910 the defendants admit for large coal = ——~ 10s. for the Gas Co.; 11s. for the City Council and Is. for the Tronworks. Besides this the Government was charged Ls. 9d. for ~ small coal Fremantle, and 13s. for large coal Geraldton. The City Council for small coal bagged delivered in city was charged in 1910 Us. 2d. ex yard for freight, which is 1s. 2d. above the maximum and was charged 11s. ex ship and 10s. ex yard as freight. The cost _ Price for small this year was 7s. So far I have referred only to the Western Australian freights. But the excess f.0.b. prices in themselves constitute a heavy detri- 'ment for which the whole combination is responsible ; and even _ if the freight were moderate the excess prices charged to consumers 'would render the shipping companies and the Vend alike liable or the consequences. Taking not all the tonnage of large coal, but uply the tonnage stated in defendants' summaries, viz., 35,800 for 1907 to 1910 inclusive, the f.0.b. overcharge is £895 for 1907, '£1,790 for 1908, 1909 and 1910 respectively, in all £6,265 for the period. I do not stop to reckon up the excess freights—but it is easily seen they are considerable. _ We now come to QUEENSLAND. _ So far as freights are concerned, the evidence of excess is meagre, _ the primary proofs submitted consist of two contracts with Chillagoe - Railway Co., Cairns. One contract was made 16th February 1906 : by the Adelaide Steamship Co. (G5) and the other on Ist February 1909 between the same parties. There is no doubt that the first - contract, though made before the combined agreement, and even ' " Defore the Vend was fully formed, was entered into after steps had been taken to form the Vend and being for three years with possible further continuance. There is no doubt also the Adelaide Steamship 600 HIGH COURT pon. H.C. or A. Co, would be prudent enough to make sure of the future. I think : 1911. therefore that as against the Adelaide Steamship Co. this contract Tue Krxe_ is some evidence as to freight. The defendants in 19S say and the Avrouay. Crown in E10 admits that 9s. was the balance for freight. But as Career this was before the combination, and the only precombination monweattH evidence, I ought not to act upon it as regards the other defendants. Associaten The other contract was made during the combination and all the Pitt oad defendants are affected by it ; both sides agree that the balance for freight is 8s., the contract price being 19s. and the f.o.b. cost 11s. The nature of the contract has to be carefully considered, the Chil- lagoe Co. was bound to purchase all its coal from the Adelaide Steam- ship Co, and ship all its products in "' Steamers controlled or nomi- nated by the contractors," by a fortnightly service ; the freights for the Chillagoe products were fixed and the Chillagoe Co. was to bear all harbour dues if imposed. This contract was therefore a very special contract, there was not merely a prospect, but a certainty of backloading that could be definitely counted on, and I am not prepared to say that anything over 8s. would have been an excessive freight for coal to Cairns, a distance of 1,348 miles from Newcastle. I should think it would be comparatively low, but in the absence of evidence to the contrary I cannot assume it was an actual loss. If it were a loss, not only would the ordinary presumption be reversed, but it would be strange from the standpoint of the Chillagoe Co. That company must be considered as having had a fair idea of reasonable freights for their own products to Brisbane and Sydney, namely, copper, copper matte and lead; and these products have to compete in the open market with similar commodities elsewhere produced. If a loss on coal is to be piled on to the freight of these commodities'as a recompense to the carriers, it would, at first sight, at all events, handicap the Chillagoe Co.'s products in the market. Of course all this is possibly capable of special explanation, but in the absence of that I have to judge of the meaning of defendants' acts by the light of ordinary considerations. These lead me to infer that the sum charged for freight for coal, copper and lead are neither under cost, nor excessive. Starting with this as a base, I come to some Townsville contracts. I need only say that I take the figures as admitted by the defendants. If I had to state a definite i | UCLR.) OF AUSTRALIA. conclusion as to which set of figures I thought was more correct, I should be disposed to adopt the Crown's figures in E10 rather than the defendants' figures in 198. The defendants admit upon the evidence that in 1908 the balances for freight were as follows :— Queensland Meat Export Co. 3,500 tons, 10s. 9d.; Townsville Harbour Board, 3,600 tons, 11s. ; Townsville Gas Co., 3,000 tons, ls.; Mount Morgan Co., 6,000 tons, 10s.; the Chillagoe Co. was 3,000 tons. In 1909, there is admitted freight to Townsville Gov- ernment Railway, 750 tons, 10s. ; The Queensland Meat Co., 6,500 tons, 10s.; Harbour Board, 3,600, 11s. ; Gas Co., 3,000 tons, 11s. Tn 1910 the Harbour Board, 3,600 tons, lls. ; Gas Co., 3,000 tons, lls.; Townsville is 160 miles nearer Newcastle than Cairns and therefore the face money difference in freight is not as great as the real difference. I cannot avoid coming to the conclusion that the Townsville freights were excessive. In 1907, the balance for freight on 880 tons for the railways was 9s. In 1909, it was 10s. for 750 tons. The freight to the Meat Export Co. for 5,000 tons in 1907 was admittedly 8s. 6d. Why it rose in 1908 to 10s. 9d. and stood in 1909 at 10s. is difficult to understand in the absence of explana- tion except on the basis that the latter prices were unreasonably high. I have no doubt at all that 11s. was exorbitant, so was 10s. 9d., only to a less degree, and I feel no real doubt that 10s. was excessive for Townsville. I observe in the Schedule in the com- bined agreement that 12s. 6d. is the maximum for Cairns and 17s. for Townsville, a difference of 2s. 6d. That has relation only to large coal at 7s., but no other maximum price for large coal is fixed, and none for small except for small coal at 5s., where there is a difference of 2s. If these stipulated differences afford a fair or even an approxi- mate guide as between the two places, the conclusion I have stated is immensely strengthened. The f.0.b. excess on large and small coal amounts for the period mentioned to a considerable over- charge. For this, as in the case of Western Australia, all the defend- ants are responsible. Toran YEARLY OVER-CHARGES. It is extremely difficult, if not impossible to say just how much the public have been over-charged by the combination. There are how- H. ©. or A. 1911. — Tue Kine AND THE ArroRNEY- GENERAL OF THE Com- MONWEALTH v. AssocraTED NoRTHERN COLLIERIES. H.C. or A. 1911. -- Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v ASSOCIATED NorrHern Corrinries. HIGH COURT ever some figures which satisfy the mind that the total improperly gathered in by the united efforts of the collieries and shipping companies must have reached a very high figure. not feel very much concerned as to my ultimate conclusion precise figure the excess works out to, but an attempt may be mac to get a rough idea. The year 1908 is the perhaps least distur year, and at all events appeals to me as giving the most treated material for obtaining a broad impression. Exhibit shows that in that year the total Newcastle trade inter-S amounted to 2,111,100 tons. That exceeded the estimated requ ments for 1908 which the shipping companies sent to the Ve on 15th November 1907 (Ex. X. p. 172). The total there estima' was 1,578,750 tons, composed of 1,175,000 tons of large coal, all class, and 403,750 tons small coal. The foreign exports practically no small coal, and therefore I could not say with am precision how much of the actual export was large and how was small. But the trade exceeded the estimate, and the estim separates the two classes, and so I take in the first instance quantities there stated. Now in 1908 the excess f.o.b. price on large coal was Is. a This reckoned on 1,175,000 tons amounts to £58,750. The ex the small which was then 6s. 3d. a ton, and had little or no foreigt sale was not Jess than 1s., rather more, a ton and so taking it at the amount in money on 403,750 tons comes to £20,187 10s. £78,937 10s. The balance of coal actually exported inter according to Ex. 33C was 532,350 tons. Of course a large p portion—doubtless the greater portion of it—was large coal. But — whether large or small coal it is to be reckoned at 1s. excess, and that a amounts to £26,617 13s. The sum of these over-chargeagis: £105,555 5s. ims So much for the collieries. The freight total cannot be figured ' out, but looking carefully over the broad results already stated, i can be safely asserted that the shipping companies have not fa to better their instruction. How Far Pre-Compination Prices aRE A GUIDE. A view was presented by the defendants as qualifying and pi MC.L.R.) OF AUSTRALIA. ally outweighing all the circumstances to which I have referred. I the suggestion that the prices obtained prior to 1905 indicate at the lower prices of that year must in all probability be due to ome abnormal circumstance. No doubt previous prices are a sion of the facts to be considered and weighed ; but they must taken in conjunction with all other circumstances, and the similarly or dissimilarity of surrounding conditions are important in ermining whether the defendants' suggestion should be adopted. e is evidence of prices going back many years, but of course _ the further back they go the less convincing they are, because trade conditions are certainly not constant for many years together. The world trade, and even the domestic trade, are subject to normal velopments, as well as unexpected changes. Production and 'means of transport alter, and in the later portion of the period we are to consider, new mines were brought appreciably into the sphere of competition. Ultimately, as I understood, the defend- ants placed very little or no reliance on prices before 1901 or per- haps 1900. The f.0.b. prices before 1900 would not help them very ~ much. The Chamber of Commerce Report for 1910-11 gives at p. 61 the Newcastle selling price for the various years and they vary greatly. For instance, in 1891 the first old Vend year, it was 11s. ; ~ in 1892 it was 10s. ; in 1893 it was 9s. ; in 1894 it was 8s. ; in 1895 it was 7s. ; in 1896-7-8 it was 7s. 3d. and 7s. 6d., and in 1899 it was 8s. Maitland was not yet a disturbing factor. Then came two events, the Boer war and the formation of the new coal Association. ~ In 1900 prices were 8s., 10s. and 12s. In 1901 and 1902, the declared price was Ils. and in 1903 it was 10s. I stay there a moment _ because Mr. Ford has told us that the war not only made the trade _ particularly good in 1900, but also created an artificial demand that lasted as he thinks for 2 years. The coal Association "also as T have _ pointed out still affected 1903. It appears from the Chamber of Commerce report that notwith- - standing the declared price of 10s., coal was sold in 1903 at 8s., 9s. and 9s, 6d. ; and in 1904 at 9s. 3d., 9s. 6d. and 9s. 9d. These are reductions that were announced ; there were others that were not, _ + because the evidence shows that in 1904, there were rebates of Is. 6d. 603. H. C. or A. 1911. Tur Kine AND THE AvTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NORTHERN Corzrertes. H.C. or A. 1911. ~~ Tue Kine AND THE ATTORNEY- GENERAL OF 'THE Com- MONWEALTH v AssocIaTED NortTHEeRN COLLIERIES. HIGH COURT (loll. Mr. Blacket handed in a very useful document, being extracts from — the summary of summaries, and it exhibits in a succinct form the prices of 1902, 1903, 1904, so as to compare the prices up to 1905 with those afterwards. The comparison, when considered with all the surrounding conditions, does not lead me to the conclusion the defendants desire. Take first the Metropolitan Gas Co., the first in Mr. Blacket's list. In 1902 the declared f.0.b. price was 11s., and the consumers' price 14s. 9d.; but it would be absurd to imagine that 3s. 9d. was the freight charged to compensate for everything. The next year 1903, the declared price was 10s. and still the consumers' price was 14s. 9d., in 1904, the declared price was still 10s. and the consumers' price was 14s. 7d. In 1907 when the declared price was 10s. net, the delivery price was 15s. 2d., and in 1910 the declared price being Is. the price to the consumer is 16s. 2d. The question becomes insistent :—' Did the shipping company who supplied the Gas Co. during 1902 and later years, lose money all the time?" Assuredly not. But if not, the fact that other consumers were charged more is hardly a ground for assuming the reasonableness of the higher rates. On the other hand take the - next item on the list, the Footscray Gas Co. In 1902 it was charged 21s. 3d. as against the Metropolitan Gas Co. 14s. 9d. a difference of 6s. 6d., and 19s. 9d. in 1903 as against 14s. 9d. or a difference of 5s., and 18s. 9d. in 1904 as against 14s. 7d., a difference of 4s. 2d., and so on. So that it is difficult to accept 18s. 9d. as a just criterion even for 1904. The price to the Footscray Gas Co. comes down to 14s. 9d. in 1905 which approximates it to the Metropolitan price, the two together seem to show that price is nearer the right amount, having regard to the net f.o.b. price then paid ; the balance for freight as will be seen was 6s. 3d. which is still more than is reasonable. The Metropolitan Gas Co.'s price in the absence of some explana- tion by the shipping companies is a real obstacle not in itself con- clusive, of course, but very substantial, in the way of any presump- tion in their favour, and helps to lead me as before to an inference against them. [4 C.L.R.] OF AUSTRALIA. 605 _ Then take the case of the Victorian Retail Dealers typified by 1: ©. oF 4. msay. In 1902 the price is 23s. 6d., in 1903 it is 20s., in 1904 it 1922: ops to 16s. If 16s. were a normal price in 1904 why was it raised Tue Krxe in June 1906 to 16s. 9d., and in July 1906 to 19s. 3d. even allowing Pesan ; for the discount in certain cases; and why further advanced in bere January 1907 to 21s., higher than in 1903, and still further to 22s. MonweaurH 1909? Reckoning 7s. 6d. as the net f.0.b. price, and adding Leen 2s, 4d. for additional outpockets, as explained, the total sum to be Som rovided for in 1904 is 9s. 10d., and the balance 6s. 2d. is for freight and management on a selling price of 16s., which is an excess of 2s. _ above a reasonable amount. Looking down the prices of 1904, they are decidedly lower on the _ whole than those of 1902 and 1903. On the other hand they are not _ so low as in 1905, but lower than in subsequent years. But in 1904, - Maitland was distinctly beginning to assert its influence—not a _ ruinous influence at any time, but at this time perhaps appreciable— _ through the oversea trade. Scott Fell however were a potential _ danger. It was proved in direct examination against Howard Smith _ & Co. only—and therefore I do not carry the direct examination as to this beyond this company—that in 1903 Scott Fell & Co. got a Broken Hill contract for the assignment of which Howard Smith & Co. paid a very substantial sum. Mr. Campbell was how- _ ever, told generally by Lane, in cross-examination (p. 548) that before 1906 Scott Fell had held an inter-State contract which they transferred. In 1904 Scott Fell & Co. were open to do inter-State business if they could get it (p. 444). In fact on 16th September 1903 they tendered (Ex. 5S), to the Metropolitan Gas Co., on that company's conditions, to supply delivered best large at 16s. 4d. and best small at 12s. 7d. Their fleet was large. Their balance-sheet (16C) shows the list of vessels. Their turnover was £250,000, but _ none inter-State in 1905, though they had the means of doing it EE if they got an opening. In January 1906 they succeeded in getting _ another Broken Hill contract. Their course of inter-State trade did not run smooth, and ultimately their business and effects fell into the hands of the inter-State companies (see pp. 557, 561 and 584 among __ others). This is one of the instances where the defendants and they alone 606 HIGH COURT H.C. or A. could have given clear information and assistance, beyond what] 1911. ES: pee Conc.usions as To Pusiic DerriMent witH RESPECT To Pret ee On the whole, taking into full and careful considera' tHe CoM- the contracts and prices before 1905 and weighing them in MONWEALTH . balance along with others, I arrive on the question of fact as A Peat: Nontuzey reasonableness of the prices charged to the public, at the conclusi aa CoutERIES. T have announced. Indeed the more I have examined the and the longer I have pondered over them, the more satisfied I that in 1904 the defendants were only getting down towards reaso been given. warranted, yet the ultimate prices charged to the consumer, i. when the shipping companies had added their freight charges, we on the whole nearer a reasonable standard—nearer a reason effective competitive standard—than in 1904. Certainly as freights, the shipping companies, though conceded by the admis to be free competitors, were not engaged in laying violent hands « each others' business. Therefore, unless they were in 1905 d liberately losing money in order to smother Scott Fell & Co- of course they do not admit—and people do not usually throw money unnecessarily—it is difficult,—too difficult for me at all events— to accept their suggestion on the materials they have left me. I wish to say at this point that, though I have endeavoured work out as precisely as I could the various steps contested a leading to the result, yet I have made large mental alana possible errors of excess, pul 1s TGS rege uo een in arrivi circumstances concurring in the same result, that J would ente no doubt whatever the public have borne, are bearing, and will z the combination is restrained, continue to bear, a heavy detriment" in regard to the cost of coal, attributable entirely to the evistence of 4CLRJ OF AUSTRALIA. 607 defendants' combination. The indirect pecuniary loss though H. C. or A. itably great, I leave out of consideration, and here speak only — f the direct payments, which have passed from the public—in- Tux Kiva vidually and corporately in various forms of aggregation—into the Amoeeae pockets of the shipowners, and by them partly retained and partly eT aaa distributed to those associated with them in the combined scheme. woxwrarrn The price though generally the most important detriment is how- Assooranmn: er not the only one arising from the combination. There are others ieee quite distinct and extremely important, though secondary to price. puic DETRIMENT FROM ResTRICTION UPON CHoIce oF CoAL. The stipulation that the Vend should not be called upon to deliver from any colliery that has reached the limit of output assigned to it by the Vend under any 'agreement existing between the col- lieries gave rise to a very real restriction upon the choice of coal ich the public otherwise had. Instances have presented them- selves in the evidence quoted for other reasons. The shipping anies, having once entered into the stipulation with the col- ies, were naturally compelled for self-protection to refuse to 'tract for coal specially desired in any quantity. This new practice ut in force early in the history of the combine. _ The Western Australian Government on 4th January 1907 called the tenders already referred to. The specifications named cer- _ Storekeeper should have the right to determine from which of the merated collieries the supply should come. But the Adelaide Steamship Co. in tendering said :—'* We cannot ertake to supply coal from any one pit but guarantee that the delivered shall be from one or more of the pits specified in the general specifications." _ Mellwraith McEacharn & Co. with their tender also stipulated - for the right to load coal from such of the schedule pits as it might _be obtainable from at time of steamers' loading. The Melbourne Steamship Co. did not make that stipulation _ though they knew quite well they could not ensure delivery as specified. Their prices made that event sufficiently safe. On 4th May 1907 (Ex. X. p. 64), Newman for the shipping com- 608 HIGH COURT fou. | H.C. or A. panies wrote to the Secretary of the Vend saying :—"I have to — 1911. inform you that the contract of Messrs. McIlwraith McKacharn & — Tue Krxa Co., on behalf of my Association, has been accepted by the Western Pease Australian Railways for 12 months from the 14th March 1907 on the — Guero basis of 10s. per ton cost of coal f.o.b. Newcastle." He stated the 5' MONWEALTH quantities, and quoted verbatim the clause as to pits and quantities Associarep Which had been substituted for the original clauses. This was Cae replied to on 9th May 1907 (X. p. 67) and the Vend approves of the ' — substituted clauses. The letter of 4th May is relied on by the Crown as strongly evidencing the nature of the shipping Association. Whatever else the shipping companies and the Vend were doing, they were not deceiving themselves. I have referred in the proper place to this contract in relation to prices and there I indicated there was some doubt as to the tenders of the Adelaide Steamship _ Co. and the Melbourne Steamship Co. being genuine and honest. T have now to state my definite opinion on this subject. And I need say nothing about the Melbourne Steamship Co. which is not a defendant. The tender of the Adelaide Steamship Co. at all events was undoubtedly misleading and intended to be misleading. On the face of it, it appeared to have come from a real competitor. It followed all the form of a genuine effort to obtain the contract at the lowest prices the tenderer was willing to take, it enclosed bank cheques for £2,800 as required, and undoubtedly the Western Australian Government, reading the tenders and not knowing the truth as we know it now, would inevitably be deceived in thinking that of two rival tenderers, McIlwraith McEacharn & Co. was the lowest, and in face of that competition, and the apparent unwilling- ness of the other shipping companies to engage in the business at all, the Government would be less inclined to question the advanced price. That advance was, as we have seen, no less than 3s. 7d. @ ton on 56,000 tans. And in addition to that there was the double refusal to specify pits. Yet, here we find in the correspondence I have mentioned, an admission written by Newman of Howard Smith & Co. who normally would have nothing to do with the transaction, that MelIlwraith McEacharn & Co. made the contract on behalf of the shipping Association. The apparently fraudulent nature of those OF AUSTRALIA. 609 enders induced me to specially invite some explanation. None has H. ©. or A. een offered, and I can only take the matter at its low face value. pees "The tenders to the City of Melbourne show the restriction of Tae Kr: AND hoice very distinctly. In April 1906, the Adelaide Steamship Co. giro : "Abermain, Hebburn and/or Aberdare at contractor's option," Monwravru in another tender " A.A., Stockton, Hetton, Abermain and/or perae bburn pits at contractor's option." This was a limited range, pole @ some security to the purchaser—and some elasticity to the dor. In February 1907 Howard Smith & Co. tendered " New- tle pits at our option." This was done notwithstanding the in the specification that pits were to be specified. At the same time, the Adelaide Steamship Co. named 17 Newcastle and itland pits, with "' and/or " between each two, and obtained the tract. In May 1907 the Adelaide Steamship Co. repeated that stipulation for the remainder of the year. On 31st October 1907 ward Smith & Co. tendered to the Council for a year's supply. The Council's tender form required the pits to be named with respect Newcastle coal, but the letter accompanying the tender said 'we regret we are unable to specify pits from which the coal would be drawn. _ The Adelaide S.S. Company on the same day wrote " Pits to be ecified. Owing to the altered state of the coal trade at New- tle, and the impossibility of obtaining coal from particular (which we have previously been able to do) we are unable to cify pits, but would supply the best coal obtainable with steamers' ary despatch in loading. The coal would be drawn from inines from which the port of shipment is Newcastle." The tender is from pits :—" the port of shipment of which is Newcastle." Sub- ently we find tenders are for coal drawn from " Mines, for ich the port of shipment is Newcastle." Huddart Parker on November 4th 1907, in tendering to the Victorian Government for Commonwealth and State Services, declined to do more than supply best coal they could obtain with steamers' ordinary despatch loading." No one would for a single moment imagine they had arranged with the collieries that despatch should be controlled the Vend allotment. The ostensible reason given in the letter VOL, XIV 39 " H. C. or A. 1911. ~ Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssocIATED NorrHEeRN COLLIERIES. HIGH COURT accompanying the tender (X.2) was couched in these terms "We regret however that owing to the unsettled state of of our being able to contract for our supplies of any particu class of coal." I do not for a moment accept that as an hon given reason. It said nothing whatever of the allotment diff and threw the whole of the responsibility for the restricted cl on the miners. On the same date, Howard Smith & Co. y that they had to eliminate clauses 2, 16, 17, 18, and 19, also 21 24 of the Conditions of Contract, just as Huddart Parker & had done. The reason given was " owing to the disturbed conditions no existing in the coal trade at Newcastle," and they add :-—* we find it almost impossible to obtain coal from any particular pits, we can only offer to supply your requirements with the be: coal available during the loading of our steamers at Newcastle." Again, no one would understand from this, that there had a bargain as to allotment, which was the real cause of the diffi The insincerity of the ostensible reason simultaneously advanced by these two Shipping Companies is shown by the recurrence of the stipulation in 1908 for 1909. The true cause was industriously concealed. And with what intent? I have already made repeated reference to the struggles on the part of the Shipping Companies to induce the Vend to break through the restriction and the gen persistence of the Vend in adhering to it. On occasions such the Western Australian Contract, the Vend gave an assurance to supply. But as appears from the Conference of July 1907, restriction was as a general thing adhered to, and the contra were made on that footing down to 1910 inclusive. There is an which as evidence affects the Vend only, stating that the Hetto Company had to refuse trade owing to the Vend allotment. Pusiic Derriment ARISING FROM SHORTAGE OF SUPPLY. The question of shortages is closely connected with restricti When to the limitation of the Vend allotment there is added the provision for exclusive purchase from the Vend, the danger mM C.L.R.] OF AUSTRALIA of shortage is immensely increased, the public are thus left entirely in the hands of the Vend, and this Association is free from the motive for relaxing its limitation which would spring from the - possibility of outside supplies. It has been urged on behalf of the "Shipping Companies that the allotment regulation is purely a Vend arrangement and not a creation of the combined agreement ; that the Shipping Companies found that instituted and had to acceptit, and make the best of it, and at times tried, as I have pointed out, to get rid of it, and so, say the Shipping defendants : " We "are not responsible for it." The colliery defendants say likewise among other things :—"' Whatever injury has been or is occasioned by it, is the result of our own independent Vend agreement and as that per se is not being attacked we are not assailable in this action." But that argument cannot prevail. A consumer prefers for the - purposes of his business coal from pits A. B. & C., and finds that coal from pits X. Y. & Z. are altogether unsuitable. He is told _ that he cannot rely on having all or any from the pits he desires, but may have to take some or all from the pits he disapproves of, and take them at the same price because the Vend classes them together. In such a case, if ordinary competitive shipping conditions existed, he might choose between what is for his purpose second or third rate coal, at the top price, and Southern or even Western coal at a less price. That possibility is a powerful antidote against autocratic refusals to depart from the allotment rule, such as we have seen evidenced. But where each group for its own objects makes and adheres to a compact of mutual exclusiveness, they form, so to speak, the corresponding blades of huge "commercial shears that cut off all approach to relief from despotic prices of the Vend, as well as those of the Shipping Companies. And not only are prices heightened but shortages are likely to occur. We have just partly seen how the Shipping Companies feared and felt them, and tried to some extent to provide against them. That shortages occurred in fact is undeniable. At the con- ~ ference of July 1907 (X. p. 105), Mr. Forsyth correctly points out how the difficulty arises. Mr. Northcote stated that the previous 4 week his Company had been advised that they could not get coal and were subsequently informed that as several oversea steamers 61h H. C. oF A. 1911. = Tue Kine AND THE ArroRNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NorTHERN COLLIERIES. 612 HIGH COURT | H.C. or A. had not turned up they would be able to load a large amount. 1911. 'then said what seems to me to be plain common sense, " It s Tue Kixe very hard that our clients' works should be liable to absolute s ioe page, if these oversea steamers had come in." And then he add GrNERAL or _"T venture to say there would have been a great outery if THE Com- monweatrn a thing had happened." Mr. Forsyth put his finger upon the v. Assoctaren note when he said in reply :—'' It always goes back to the initi NOSTEREE stage, you estimated." That means that at the beginning of Counterres. year or before, the Steamship Companies give to the Vend an estimate where, arrange as far as possible for all the rest to go foreign. — Sometimes a particular colliery complied unwillingly (see Earp's ; letter to Murrell 6th March 1907 (O1) and Ex. L, p. 91). Th if the inter-State actual demand happens to exceed the estim: it cannot be met if the foreign demand requires the coal. It wou not be an accurate answer to say that if the demand increasec fresh pits or shafts or adits might be opened. There is a cla in the Vend agreement to which I should refer, though not for the — purpose of affecting the Shipping Companies as part of the Com-— bined agreement. It was not part of that agreement but it material in showing the impossibility of making good any deficiency — by the means mentioned and also as affecting the members of the — Vend with regard to their knowledge of the circumstances. Clau 21 is in these terms :—'* No member shall open up any new wind shaft pit or adit on any of the Colliery properties hereinbef named nor shall any member lease or let on tribute any part of any — Colliery property on any agreement other than those disclose by such member to the Association in writing prior to the executior of these presents the intention of the parties hereto being as the pits already opened are more than sufficient to supply the existing trade no fresh pits shall be opened on any of the properti hereinbefore named. Provided however that this clause s C.L.R.] OF AUSTRALIA. 613 'unable to maintain the same owing to exhaustion of coal accident H- C. or A- or other similar cause." 1911. This contracts the possible production, and as may be gathered Tue Kiva from the conferences and correspondence no suggestion was ever aaa! GENERAL OF "mooted to open fresh pits or shafts or adits. nae Cae 'And whatever the pressure for more coal, the Shipping Association Monweatre v. 'must not go outside to get it. This is an imperative bar. AssocIATED NortHern Supprnc Compantes' Apissions or Pusiic Iysury From Suorr (Cerna Suppry. The telegram sent by Howard Smith to Cant on 20th August 1907 (Ex. X. p. 143) which is a month after the vigorous arguments of the July Conference, puts the position against the defendants as strongly on this point as any presentation the Crown has ever made. These are its terms :—" Steamers, Mintaro, Time, Cycle, Perth, Barrier, now Newcastle, and Colac, Norkoowa, Komura, Period due this week. No coal available for any. Positions very serious. Contracts Victoria, South and West Australia seriously short ; all stocks are exhausted. There is sure to be trouble unless coal is provided Newcastle immediately. There is reason to fear as soon as the general public knows present state of affairs indigna- tion meetings likely to be held, and will probably result in deputa- tions to Government seeking hostile legislation. We consider position warrants your Association deferring further supplies foreign until our immediate requirements satisfied. Publie will demand this before allowing Railway, Mines, and various indus- tries being rendered idle on account of —It is very important your advice by telegraph extent present and future relief we can depend upon in order to defend ourselves." The Shipping Companies knowing the evil, persuade, remon- strate, supplicate, warn and prophesy—they in fact take every course but the proper and effectual one, which obviously was, to break away from the bonds which fettered their own freedom of action. Like the Athenians they knew what was right; but unlike the Lacedemonians they did not practise it. The railways ~ and mines and various industries they knew would not stop if they _ carried other coal. There might in some cases be comparative 614 HIGH COURT [19 H.C. or A. inefficiency, but the dire results, apprehended by Mr. Howard Sm peu writing for his Association, could only oceur by the persistence —— Tur Kixe of the combination in maintaining the artificial restrictions in which ; Anronsev. they had confined the working life of Australia. Why this pre- Saar ee judicial course was clung to, they have not condescended to expl moxweartn One would have thought they would have considered it a mor v, Associaren duty to the community, whose industrial life they held in their fer hands, to explain how it came to that imminent condition of peril. — They must have thought otherwise, and I lay that consideration — aside. They must be left to be the final judges of that—the moral _ —aspect of the matter. But when they ask me to draw an infer-_ ence from the proved facts more favourable to them than the ordin- ary process of reasoning warrants I must regard the opportunities they have conspicuously neglected of offering whatever materi they possess to place some better interpretation on the circumstances, Venv's own Recognition or Ixsury From SHORTAGE. The Vend on 21st August recognized the seriousness of the position and offered 2,700 tons of West Wallsend which the Vend rate as second class for Railways and Sydney trade, and so the Victorian Railways thought (see $5 Oct. 31/07). They also pressed upon — the Shipping Company 5,000 or 6,000 tons of Teralba coals, that — is the fourth grade, saying that if the position was as acute as repre- i sented consumers should not hesitate to accept Teralba. This is the coal that could not be disposed of in Melbourne. In Septem-— ber, the Vend are informed by the Shipping Companies that the — shortage in Victorian Railways Supplies has reached such a climax : that the Commissioners notified the contractors they would pur-— chase against them. The Vend replied, it was due to the abnormal State of the trade for the last six months. And Mr. Cant forwarded — to the Shipping Companies a calculation of Victorian Railway | shortages showing it to be as at 31st July 1907, 32,133 tons. He — also shows that other coals were substituted to the extent of 19,498 _ tons, and even after this substitution has taken place, that is, coals — outside the Schedule altogether, there still remained a net shortage — of 12,635 tons. I imagine Mr. Cant meant that such a shortage was nothing much to complain of. The Vend promised on 12th — UCL.) OF AUSTRALIA. 615 "September to do everything possible to assist the Shippers. Not- H.C. or A. _ withstanding this assurance the allotment system is not abandoned, a and the exclusiveness continues ; the result is that the short supply Tur Kine 'continues up to the middle of January 1908, and the Railways s\younny- threaten to buy another 16,000 tons against the contractors. In G2NERAL OF tHe Com- 'the previous month as appears from Ex. 8.5 the Secretary for Vic- monwrartn torian Railways called at the office of Huddart Parker & Co. on 12th Aiba and saw Mr. Appleton, told him 28,000 tons were absolutely neces- Pass sary that month and that all that was actually in sight for December up to the 31st was 12,000 tons. He asked for an assurance to receive 28,000 tons but this Mr. Appleton could not give, nor could Mr. Appleton and Mr. Newman together obtain such an assurance from the Colliery proprietors or give any hope of more than 4,500 tons in addition to 16,500 tons in sight. Mr. Appleton assured the Commissioner that no stone was left unturned in the contractor's efforts to provide coal for the department. However as I have said notice to purchase against the contractors came in. Ex. §.5., shows that short deliveries went on to 1909 and in November of that year the Contractors were ordered to make up shortages. See the Chief Storekeeper's memo of June 9th 1908 as to the serious expense occasioned by irregularities. In January 1910 Mr. Sutton the Chief Storekeeper spoke of the personal efforts he made to obtain full deliveries. He said that the substituted coal was sometimes inferior, that he told Huddart Parker so, and that he accepted it only because of the low condition of the Railway Stocks. His evidence is that the coal he regarded as inferior would be from 45,000 to 50,000 tons out of 800,000 tons that is 5 per cent. to 6 per cent. It was suggested by defendants' counsel that the shortage was the result on the whole or in part of shortage of trucks, the evidence does not support that. Sutton's memo to Captain Bull of Huddart Parker & Co., dated 9th June 1908 (O1) is opposed to it. The witness could not give any concrete instance where substitution had made trains late, but I do not think that is necessary. He said that some of the coal such as A.A. was too soft for their pur- _ poses and as an observation applying to several cases of substitu- tion I think the consumers having the experience of their own work- ing necessities must be taken to be the best judges of what best 616 HIGH COURT H.C. or A. suits their own business. When the Victorian Railways authorities — 1911. or the S.A. Railways authorities (Evidence p. 694), or any of the : = Tur Krxe other consumers te!l me that they find a particular class of coal AND THR Avronney- the best for their purposes I believe them. I prefer to take their es GawnnaL sor actual experience to accepting the suggestion of learned counsel — woxweatta that other coal which they did not order and did not want, but — Assoviaren had to take, was something quite as good for them. pile The normal reserve of the Victorian Railways was about 30,000 — tons. In December 1907 it got as low as 10,000 tons, only about — a week's supply. It must be noted however that in the next month — the stock of coal was 33,400 tons, there were 17,256 tons over sup- plied for the month, and from that time onwards the reserves were well over 30,000 tons. Some months there was a surplus for the month, but more often a deficiency, the net shortage at the end of November 1909 being as already stated. Two observations may here be made, whatever the normal reserve might be the Railways" were entitled to have what they ordered and what the contractors undertook to give the Railways. The subsequent maintenance of stock was well beyond the normal — ; essential reserve—three weeks supply was of course a great improve- ment. But the constant shortage was complained of, and ought 5 not to have occurred, and would not have occurred in my opinion : if the Vend had not had the exclusive undertaking of the Shipping - Companies. It was this which made them feel secure as to their allotment provision—a security which nothing could disturb except dread of consequences. Up to the beginning of January 1908 there was actual detriment of a perilous kind ; after that there was real detriment, but not attended with present danger. The evil was there, its presence was felt, though not in a great degree, and if a sudden demand had arisen for foreign coal, I have no doubt, there would have been a real risk of embarrassing shortage. Since November 1909, the risk of detriment is greatly lessened by the opening up of the Powlett River field. This is undoubtedly a source of safety to the Victorian Railways, and therefore except as part of a great scheme of concert I would, in view of the proved _ policy of the Victorian Government to use local coal, be disposed CLR.) OF AUSTRALIA. 617 to disregard the future danger to the Victorian Railways from the H- ©. or A. tent risk of shortage of Newcastle coal. oe There were shortages also in connection with the South Aus- 'Tue Krxe AND THE tralian Railways. Coals that were contracted for were not delivered apes and in some cases inferior coals were substituted. There was a contract of 10th May 1906 for 2 years supply. This contract I _ have more than once referred to. It was the outcome of the guar- ante of 24th April 1906. The approved pits were specifically 'named, 70 per cent. of the deliveries was to come from the Bur- wood, Co-operative, Newcastle Wallsend and Newcastle Company, _ 15 per cent. from the Seaham, and 15 per cent. from Wallarah. Certain collieries were struck out. ; Shortages commenced in appreciable quantities about June 907. On Ist June 14,065 tons, on 6th July 13,999 tons, on 3rd gust 15,113 tons; 7th September 12,198 tons; 5th October (15,936 tons ; 26th October, 19,573 tons; 2nd November, 22,027 'tons; 16th November, 18,428 tons ; 30th November, 26,716 tons: _ 1th December, 26,136 tons ; 21st December, 24,485 tons. Then in 1908 on 4th January, 27,603 tons ; 18th January, 21,936 tons ; Ast February, 23,475 tons; 15th February, 18,542 tons; 22nd ebruary, 11,808 tons; 29th February, 5,386 tons; 14th March, 231 tons ; 21st March, 3,384 tons; 4th April, 4,280 tons; 11th pril, 1,929 tons; 2nd May, 1,654; 30th May, 201 tons; 13th une, 3,684 tons. As to substitutions, a considerable quantity f distinctly inferior coals was practically forced upon the South _ Australian Government. These commenced about July 1907, and went down to June 1908. They consisted of 10,097 tons 16 owt. of West Wallsend, and 2,992 tons 4 ewt. of Teralba coals. hese inferior coals were the subject of remonstrance by the Depart- ent. Mr. Russell, Locomotive Insyector said that he drew the - attention of Huddart Parker & Coy. to the fact that West Wallsend had been struck off the schedule in October 1904, and it was not a thing that they should have to take it to make up the requisi- tions. In October 1907, other pits were added to the schedule. Those pits were first class, the quantity from these added pits _ was 19,041 tons and no complaint can be made as to the quality this coal. H.-C. or A. 1911. == Tue Kine AND THE ATTORNEY- GENERAL or tHE Com- MONWEALTH wv AssocIATED NorrHern CoOLLIERIES. HIGH COURT Pusiic Derriment ARISING FROM INFERIORITY OF Coat. As to the detriment arising from inferior coal, Mr. Russell states - his opinion that delays were increased owing to this reason to t extent of 5 per cent. There is no doubt looking at the posi broadly, the South Australian Railways were very much hampered, é and their safeguards against interruption of traffic were reduced, and an appreciable impediment was placed in the way of the satis-_ factory conduct of that traffic. All this was the plain result of th entirely dependent upon outside sources for its coal supplies. e next tenders were called on 18th March 1908 for 1 or 2 years' supply from Ist July 1908. The tender of Huddart Parker & Co. and the Adelaide S.S. Coy. was dated 28th April, and so was Howat Smith & Co.'s separate tender. The contract was dated 18tl May for two years. There is a letter from Appieton for the Ship- 1908 (Ex. U. p. 83) which is illuminative of the position when read with the original tender. The joint tenders embraced 16 pits, including the West Wallsend and Pelaw Main. The price was lis. 6d. for one year and 17s. 3d. for 2 years. The previous con-_ tract was for 11s. 9d. a difference of 5s. 3d., on 133,000 tons a year, which meant an annual increase of £34,912 10s. and on the two years' contract an increased expenditure of £69,750. Besid this as is seen, the objectionable West Wallsend, as well as Pelaw Main, and Duckenfield were included. From the letter, it appears that the tender had been placed before the South Australian Cabine —not to be wondered at—who gave express instructions to the Supply and Tender Board to adhere to certain conditions. Whilst this was pending, the South Australian Government entered into' : negotiations for the purchase of coal property. This fact, coupled — with the further fact, which the Shipping Companies had evidently learned, that a number of members of the South Australian Govern- ment were disposed to carry this project into effect, led the tenderers to answer the request for an immediate reply by closing the con-. tract without Pelaw Main or West Wallsend, and at 17s. all round. The saving by this was about £8,300. The shortages are not com- plained of after this time, as to the South Australian Railways, MCLE] OF AUSTRALIA West Wallsend. With regard to the Broken Hill Contracts with 'Scott Fell & Co. I need not repeat the observations referriny to ott Fell & Coy.'s ineffectual eflorts to obtain coal. It may be summed up in this way that roasting coal was requisitioned for Port Pirie to the extent of 50,000 tons approximately, that was - for the Broken Hill Proprietary Mine, the only one that uses roast- _and South Greta, as it gives a good flame for roasting purposes. The _ quantity of roasting coal supplied was 5,977 tons, principally from 'Heddon Greta, but also from South Greta, Oakey Park and Bur- wood Extended. They had to use some of the other coal to make up the shortage of 44,000 tons of roasting coal. Mr. Dickenson "said that the roasters were not stopped, nor were the smelting works for want of roasting coal. Mr. Delprat had to put down 1 or 2 other boilers in April or May 1906, but that is outside the period covered by the charges, and I cannot take that as anything more than evidence of the nature of the expedient necessary, when other coal is substituted for roasting coal, the deficiencies of course _ occurred partly after the combined agreement because the Broken Hill Coy. required 25,000 tons a year. The Company also had to get Lithgow coal to mix with the Newcastle Wallsend coal for steam as better suited to their purposes. They were always short of coal, and at one time got coal from Natal. It was said by the defendants that the Broken Hill Coy. could not complain _ as it paid very large dividends notwithstanding its inability to obtain the commodity it needed through Scott Fell & Coy. As a legal proposition I simply have to say I fail to understand it. Then it was suggested that the Broken Hill Coy. might have obtained what it wanted by direct application without the intervention of Scott Fell & Co. Of course that means confining them to the single channel of supply established by the combined agreement. 'his happened with the next contract, dated 15th May 1908 (W.4) _ the price being 16s. 6d. as against Scott Fell's 12s. 11d. and 12s. 9d. ut allowing for the rise f.o.b. from 7s. 6d. to 11s. In 1911 it was 16s. 9d. The Broken Hill mines represent an important depart- "Tent of Australian Industry, employing about 7,000 men at Broken 1911, Tue Kise AND THE MONWEALTH v. ASSOCIATED 'ing coal. The Company prefers for roasting purposes, East Greta, (5. 620 HIGH COURT H.C. or A. Jill, and 1,500 at Port Pirie, and although they may be ab wes bear the substitution of less efficient roasting coal for more effi Tue Kine without greatly suffering, the detriment is real and may be further. One or two general references may still be made whi shows that shortages did not stop early in 1908. There is a rae Com- MONWEALTH vigorous struggle by Paterson & Co. through Appleton with Associaten Vend in September 1908. Paterson & Co. had taken their s NortHern COULIERIFS. of inferior coals—or what is inferior for their trade—as in dui bound, and they object to any more (Ex. U. p. 103). Then the is a letter from Appleton to Cant dated February 20th 1909 (E U. p. 118). It states "all the Companies here are very sh smalls, being unable to supply customers, and the position is s There is little or none for bunkering the small steamers, and unde the circumstances I will be very much obliged if you will do you can to facilitate the loading of some of the vessels with class of cargo." The reply is dated 22nd February and the given is that there is a great scarcity of small coal on accoun the falling off of the trade generally, but, said Mr. Cant, you may rest assured nevertheless that I will do all possible to meet requirements. Of course the serious position and the ina to supply customers might easily have been met if the Shipping panies had been free to take Southern or other coal. Orner Coats PorentTIaALLy CoMPETITIVE. There is a section of the evidence which does not raise any tinct issue, but the effect of which, on the issues I have just b discussing, is best seen by separate consideration. The stip that the Shipping Companies will carry no other coal, exclu all other coals that might otherwise be carried inter-State. Sev have been referred to some of which may be briefly disposed The following coals could not in ordinary circumstances be ee inter-State so as to compete with Newcastle coal at the price which the latter had up to the present been sold. I am no speaking of strike prices. Those coals are Collie and Powlett Riv another way. But Southern coal might be a very close competi with Newcastle coal, and at a further distance even Western C.L.R.) OF AUSTRALIA. 621 ld not be left entirely out of consideration. As to the last H. C. or A. ntioned coal as early as 21st December 1906 the Vend Secretary bites ed a wire from Newman (see X. p. 12) that Wilkins of Hetton Tux Kine npany was upsetting the market by offering Lithgow to Vic- Pesta Gas Companies and others. The fact that Wilkins denied GENERAL OF THE Com- the offer is nothing to the point, which is the recognized competitive woxw=aurit v. lue of Lithgow coal for inter-State purposes and the effect it had Assoctarep mn the Vend. The letter referred to is remarkable as showing that pastas (of Hetton) said he was not surprised that Lithgow was ¢ offered, and so, if the Vend and the Shipping Companies h thought Lithgow coal a possible competitor, that is a very d reason for my thinking the same. The quantities exported Scott Fell & Co. in 1906-08 (see Y.9) also evidence its adaptability. , the Vend in April 1908 thought it necessary to obtain from Shipping Companies a statement of the quantity of Southern, ern and other coals taken for the previous quarter. The wer was given on 29th April (Ex. U. p. 73) the quantity was 74,000 tons Southern, no mention made of Western. The average lorific value of Western coal is 11.67 as against the average thern 12.73. The highest Southern is Metropolitan 12.8; Borehole has an average of 12.9; Maitland 13.8. Southern coal is in all respects a good coal. It is very slightly inferior to the orehole in analysis, and for some purposes, it is even better. Pitman, the Under Secretary for Mines and Government Geolo- for New South Wales, said that for steam purposes and smel- s admittedly better (p. 1387). For household and gas making yurposes, Newcastle coal is undoubtedly better. For Railway urposes Mr. Pittman thought the two about equal. The effect so on. The Southern coal agency in their circular prescribe conditions for best results. Colebatch the South Australian Chief Storekeeper tells us t the commanders of vessels in South Australia prefer Southern 622 HIGH COURT - coal for bunkering purposes; Mr. Lane said that Southern are peculiarly suitable for bunkering marine engines. Mr. La considers Newcastle coal best for steaming purposes. The shi vy. owners themselves have a high opinion of Southern coal as is " by Appleton's letter of 20th January 1908 (Ex. U. p. 30). To thi monwraLtH as we have already seen, the Vend objected in their letter of 31st pe aa January (Ex. U. p. 39). On 27th January 1907, Newman wrote: ' Somat Cant with reference to an inquiry from the Mount Morgan Compan for a freight quotation for 500 to 1,500 tons of Southern coal fi Mount Kembla to Rockhampton. Southern coal was also tend for and sold by the Shipping Companies apparently within quantity permitted by the agreement (see p. 420 of proceedings). — According to the letter of the Adelaide S.S. Co. of 12th February 1907, addressed to Chapman (Ex. S.) the Melbourne City Council had used Southern small coal, but, I read that statement only as against the Adelaide 8.8. Coy. Howard Smith & Co. by letter of — 9th November 1906 decline to quote a freight on Southern cos enquired after by the Australian Paper Mills; at pp. 1903a, 1903b, 1903c, 1904 will be found what are in effect refusals. In 1908 | Howard Smith & Co., Huddart Parker & Co., and Mellwraith McEacharn & Co. declined to supply Southern, at all events exce to a limited extent, and in a very guarded way. It is plain there- fore that Southern coal could become a check upon the advancing prices of the Vend. Exh. 26C contains the Southern Coal-owners — Agency offers to the Victorian Railways in October 1909. There was first an offer of 150,000 tons of best screened Southern coal for one or two years at 15s. c.if., Melbourne,one condition insisted on, other conditions to be mutually arranged. That was informal and was followed by a more formal offer which stated the coal owners' inability to tender under the prescribed conditions of tender, _ and they made a new and independent offer. That offer was for coal the product of Mount Kembla and/or Mount Pleasant and/or Osborne-Wallsend at Mount Kembla from the shoots at the jetties —minimum quantity 125,000 tons—maximum 175,000 a year at 14s. 3d. c.i-f., Melbourne or Geelong. If that coal was not thought suitable then the offer was 60,000 tons minimum and 80,000 — maximum taken at Pyrmont cranes at Darling Harbour, the price _ L.R.] OF AUSTRALIA. 623 14s. 8d. c.if. Melbourne and Geelong. Certain conditions were H. C- or A- ipulated for. The circular enclosed mentions that the Southern oe eries had steam colliers with a carrying capacity of 2, Peer how many is not stated. The Mount Kembla colliery is 52 miles AXP 0% m Sydney, the Osborne 49 miles, and the Mount Pleasant 48 GENERAL OF ATTORNEY- THE Com- 'miles, and the freight would be along the South Coast Railway. The woxwsaura rate is not mentioned, but the Metropolitan rate is 1s. 11d. for 1 about 29 miles. Mr. Knox thought this Exhibit proved that the "ds. tender supported the reasonableness of the charge of 15s. 5d. o the railways and that of the defendants' tender in Exh. U.5, and that the railways could have been sufficiently supplied with Southern coal. With respect to the first point—the defendants consistently _ obtained the rejection of evidence as to the cost of production in other mines, because the conditions were different, or might be, and the rejection of other persons' tenders, as matters unknown to defendants, and possibly dependent on special or different con- siderations. This tender was not known to defendants so far as ppears, and is not like a known price in the open market. It _ may have been very unreasonable itself. Therefore the reason- bleness of the defendants' charge in, their own tender could not e measured by a particular and secret offer of another person. _ Where Southern coal and Newcastle coal stand on comparable _ footings, or where market prices have been proved, they may be compared, as Mr. Knox did at pp. 1379 and following, and there is mass of evidence as to this. But a party is not at liberty to appro- bate and reprobate, to procure by useful argument the rejection of _ hurtful evidence, and then swing round and press the admission _ of what may be friendly evidence on the contrary argument. But even if the tender be looked at for the purpose of testing the reason- _ ableness of the Newcastle price f.0.b. or c.i-f., it does not help the defendants in the least. As shown, the amount of 15s. was not _ attached to any particular set of conditions ; and so the point urged _ 1s not made, viz., that the railways could not be prejudiced by the price ; and the corrected tender was much lower ; and for the better _ sample, namely at Pyrmont the maximum quantity was clearly _ insufficient. Further, it would not have, and was not suggested 624 HIGH COURT H.C. or A. to have any bearing wltra the railways, that is plainly b 191. : . Tue Krxe_ is no likelihood as things stood of a regular carrying trade to suppl pests smaller consumers who desired it, either absolutely or at a comp GENeRAL OF tive price. The conditions annexed in the letter of 22nd October 1 THE CoM- : monweattH that there must be 12,000 tons a month taken shows that clearly 'asaecnend But on the other hand if the defendants had not debarred thems NorrHern CorLterrEs. even if the railways could have got it at the price mentioned t from carrying it inter-State there is no reason why this coal p chasable at Darling Harbour or Port Kembla jetties would not have formed an appreciable restraint on the growing prices of the Vend and if the Shipping Companies continued in real competiti with each other, the price 14s. 8d. c.i.f. Melbourne would if admitt at all as to price be instructive as to freights. The prices to b presently mentioned which are relied on by Mr. Knox show that to if you take the cost at the pit, and add the railway freight to Darli Harbour, you have a sum which allowed only 4s. freight, when the c.f. price is as stated. The tender consequently if looked at regard to the issues of detriment to the railways alleged to ha' arisen or to have been intended through the raising of prices in. Newcastle coal is adverse to the defendants. Though I have stated my views on the Exhibit had it been admitted as to reasonableness of defendants' prices, I do not use it against them except for th : purposes for which it was in fact admitted. I am not able to say on the materials before me that any of the other coal would in ordinary circumstances be extensively carried inter-State and be affec by the provision of exclusive purchase. calorific power than the average Borehole was purchased by New South Wales Railways at prices some of which I shall quo In 1905-6, 7s. 6d. ; the same in 1906-7 ; the same in 1907-8; th 9s. in 1908-9 ; 8s. 9d. in 1909-10 and the same in 1901-11 ; the qu tities were very large 176,844 tons in 1905-6; then 179,133 tons; 175,981 ; 187,033 tons; 129,473 ; 137,682; These prices were at the Metropolitan siding. The freight to Darling Harbour for shi ment was ls. 11d., that would make the price in 1905-6-7 and 1908 "14C.L.R.] OF AUSTRALIA. 625 9s, Bd. No reason is given for the sudden rise to 9s. in 1908-9 H. C. or A. and the partial maintenance of that rise 8s. 9d. for the next two baa years. It may be that the progressive and permanent Newcastle Tue Kine AND THE "rise furnished the opportunity. Or it may be—judging from the amorxey- headings on the letters and circulars in 26C—that the Southern Ca coal owners are also as between themselves non-competitive. It monweavrn would still at its advanced rates be much cheaper to the Govern- 'Aaageien ment at Darling Harbour than any Newcastle coal. Pelee New Sourn Wares Rattways Prevenrep From GETTING Metro- POLITAN COAL. The New South Wales Railways Commissioners as Mr. Parry tells us would have sent Metropolitan coal to Broken Hill in 1908 if they could have got the freight. At the price quoted to the Government plus fair freight for shipment it would be cheaper to send inter-State, and might, if freight existed, prove a formidable competitor to the extent of its production. Suorr Summary or Derrimenr Atreapy Deatr Witu. Summing up the question of detriment I have no hesitation in finding that the Australian public in four States have suffered great detriment in respect of excessive prices charged for Newcastle coal ; that the excess is accentuated by the restriction on choice introduced _ by the Vend and made more thoroughly effective by the Shipping Companies. There has been, and should pressure of circumstances at any time arise, there would probably again be shortage in delivery of desired coal. The enforced general enumeration of pits takes away the quality of a legal breach of contract in not delivering coal particu- larised in a requisition, but it remains a real objection. And the _ presence of a penalty on mines for delivery beyond their allotted output is a standing deterrent against meeting an emergent demand. Substitution to some extent and to a substantial extent must follow, and the substitution must be other and possibly inferior Vend coal ; and it cannot be Western or Southern except within the limited range. VOL, XIV. 40 626 HIGH COURT H.C. or A. Pusiic DETRIMENT FROM ARBITRARY DISCRIMINATION OF se Prices. Tun Krxa There is however another distinct detriment, that of arbiti AND THE os si oe lee 2 Aptorney. and capricious discrimination of prices. I do not for a mom pee assume favouritism. I think the Vend and the Shipping Companies monweartx looked to no persons' advantage but their own. And their o Sees they followed up wherever they could, and to the farthest dis Perey possible. But sometimes consumers' opportunities, or want o opportunity, made them discriminate. In one sense discrimination by reason of purchasers' special opportunities is perfectly legitimate, — but when the heavy end of discrimination owes its weight to com- bination, there is a distinct lawful cause of complaint for th who have to carry it, while their neighbours escape. The process is illustrated in various ways. A signal examp occurs in relation to the Melbourne Gas Company. I have pointed out how much lower the price of coal was to this Company tha to the Footscray Gas Company, and other consumers. The is not difficult to trace. On 4th October 1906 (Ex. I. p. 5), just that interviews had taken place with Mr. Hinde the Gas Company's Secretary, who strongly resented the extra 6d. and hinted at be forced to buy elsewhere. The Committee thought it would b ""prudent " to sell at 10s. and 5s. 9d. on a certain named ba and asked for authority. On 27th December 1906 Chapman for : the Vend wrote to Newman for the Shipping Companies asking to negotiate inter alia on the Melbourne Gas Company's contra ob (X. p. 16). Newman replies two days later that Hunter will not allow anyone but himself to deal with that matter. Mellwraitl & Co. were the contractors, but the communication so far wit teference to it each way went through Newman. The contr i was completed by 9th January 1907 as appears from a letter Chap- man to Hunter. It was at 10s. (I. p. 59). : Now a word as to the cause or the partial cause of the " prudence. As far back as May 1906 (F. p. 103) both collieries and shipowners OF AUSTRALIA. "heard tumours that the Gas Company was negotiating for the pur- hase of Cessnock land for a coal mine, and this led to action by the Vend, and communication between the Shipowners. The exact position does not appear, but evidently there was enough E - to awaken " or some other possible source of supply was at the back of these 'resentful objections, the Vend and the Shipping Companies sup- plied the Melbourne Gas Company with first class coal at a most favourably discriminative price. And even at this price the con- _ tract must have been valuable, for, besides the ordinary presump- tion from a business transaction, Hunter was specially jealous _ of any one else conducting negotiations. Indeed the mere fact of the Gas Company's representatives conferring with the Vend direct at all is singular. ~ The aberrations in prices generally have not been accounted for ; and apparently are the result of arbitrary power, restrained only by possible limits of endurance. In Western Australia, Collie : coal is very largely used on some of the railways on the South West- ern, Great Western, and Eastern Goldfields lines. Collie coal is very friable, and as far as I can see unsuitable for export. The further too it is carried inland, the more it breaks up. But the Department, naturally having general considerations of local con- éern to observe, does in fact use a considerable quantity in certain "Tocalities, about 75 per cent., and might there use more. ~ But Geraldton means 230 miles sea carriage, with two terminal handlings for Collie coal, and this appears to me to account for the tremendous disparity between the later freights of Newcastle coal - to that port and to Fremantle. It must also be remembered that Bunbury is 40 miles from Collie Mines, and is the nearest port. Geraldton took 15,000 tons of New South Wales coal in 1905; 21,000 in 1906; 12,000 in 1907; 9,700 in 1908; 9,700 in 1909, and 8,500 in 1910 up to 13th September, and I think 18,000 more to 13th December 1910 (V5). That Collie coal competition was a possibility actively contem- _ plated by the Shipping Companies is undeniable in face of their own statements. H. C. or A. 1911. cee Tue Kina AND THE ATTORNEY- prudence'? when some months later Mr. Hinde's GENERAL oF THE Com- "hints " were given to the Vend Committee. Whether a coal mine Tetv ae feat NortTHERN ContreriEs. 628 HIGH COURT nou. H.C.orA. In Appleton's letter of 7th February 1908 to Cant (U. p. 47) a this passage occurs which illustrates the position as to several Tue Kina classes of coal, and therefore may be quoted once for all. It Awronwey. indicates the straits to which consumers were driven for want of Gueion Newcastle coal, and also that after a certain limit is passed other monwearrn coals are locally of commercial advantage. The defendants' en power must not be pushed indefinitely far. Tentative advances CQOETHERN are to say the least prudent, before rushing on to the 12s. contem- plated by the combined agreement. That was attempted once in April 1908 (Exh. U. p. 68), when the Vend fixed 12s. for the second and third year's supply in connection with the Western Australian Railways, but dropped it. The passage I refer to is as follows :—"' Last year you undertook to supply us in addition to the special contracts we had with all coals we required for the general trade, but so far from this undertaking being fulfilled, Victorian coal, Collie coal, Natal coal, Westport coal, and Tas- manian coal all came into the market, which should never have — E happened at any rate to the considerable extent it did, depriving us of the carrying of whatever the quantity may have been." On the other hand in January 1908 the Vend were on the alert also against the same coal. At a Vend meeting Mr. Forsyth was asked to draw the attention of the Steamship Companies to the fact that the Collieries were advised they had been delivering Collie coal to mail steamers (J. pp. 90-93). Natal and Westport coal came of course from abroad. Tasmanian coal also came inter-State by sea carriage, but, as we know, it cannot compete at regular rates; and the Victorian and Collie coal must have been intra-~ State. This passage really does not affect the exclusive clause in the combined agreement, but it shows there are limitations of excess which must not be passed, because it proves the suitability and consequently the competitive restraint of the local coal in Victoria, Western Australia and Tasmania, beyond a certain margin of necessity. ; Appleton wrote again to Cant on 29th April 1908 (Ex. U. 72) in which this passage occurs " West Australian Railways :—We passed on the information to Fremantle in regard to your modi- fication of prices for the second year, but I am afraid owing to the OF AUSTRALIA. 629 'position of the Government there with the Collie coal people, they H- © oF A- ay not accept any contract meantime . . . we are watch- ee ing matters very closely." 'Tue Kina Victorian coal in ordinary circumstances was largely absorbed ek Es 3] . ws Rae GEN es by the railways on the ground of public policy. The limited quan- ae tity of Victorian coal left for general consumption and the compara~ Monwratrn e tive superiority of Newcastle coal presented no obstacle therefore AssoctaTED to maintaining prices beyond those of healthy competition, while Pica l) jn South Australia there was no local competition at all. The variety of circumstances prevailing throughout Australia were ; regarded by the defendants—so I judge from the facts before me— merely as more or less effective obstructions to the full use of the combined power they had artificially created. The case of Ballarat in Victoria is a very instructive one. Ex- clusive of the Gas Companies there, the volume of trade in coal held by the Shipping Companies, for Ballarat and the District, was 39,000 tons which according to Newman's letter of 10th December 1906 (X. p. 6) was sold on the basis of 7s. 6d. f.0.b. Newcastle, ds, 9d. freight to Geelong on trucks,, wharfage Is. ; in all 13s. 3d. "Maitland coal was used but owing to increased prices the competition jn wood threatened the trade. Newman said :—" We have no - desire to reduce prices unnecessarily, but we think that in the present instance the circumstances justify us in suggesting that the Vend allow the Shipping Companies to secure the Ballarat business at the best rates possible, and any reduction that it may be neces- sary to make at the end of the year be adjusted proportionately between the shipowners and the Newcastle Vend." 'There is no talk of ruination or loss—it is merely " reduction." The Vend met this on the 17th (I. p. 59) by asking the Caledonian Co. to fill orders with 75 per cent. '' D " grade and 25 per cent. Maitland or No. 1 Borehole—that is to foist inferior coals on to Ballarat. Next day they wrote (X. p. 9) to the shipowners suggesting this blend, three-fourths inferiority. Evidently they felt they had the power and intended to use it. This apparently led to some corres- pondence which is not before me, and on 9th January 1907 Chapman suggested that one group should reduce freight and the other reduce the price of coal a little, to meet the case. 630 HIGH COURT H.C.or A. Chapman's letter to Lewington (X. p. 31) establishes—as agai kde the Vend—that Hunter said the Vend price plus freight and other — Tux Kiva charges provided by the shipping agreement, made the coal cos Atsorney. 198. 9d. at Ballarat, that is cost to the consumer—whereas they GENERAL OF could only get 15s. 9d. Hunter suggested 9s. f.0.b. price and the THE Com- monweatrn shipping companies would reduce the freight so as to retain th Agere business. 7 QoRTHERN There is no suggestion in Chapman's letter that that would be an — unremunerative price, in fact it is what they had been charging since the price was made net. Yet the Vend on 18th January, having the power, refuse after consideration, (I. p. 63) and Lewington's — footnote to his letter, to make any reduction. No reason is given, and Chapman dissented, a thing he would be hardly likely to do if it meant any loss of fair return. The shipowners, though pro- testing, clung to the agreement, and so Ballarat had either to use inferior coal or to pay a higher price for Maitland coal. Intent INFERRABLE FROM PROBABLE RESULTS. Intent.—I now come to the question of intent. I need not say any more than I have already said with regard to the natural conse- quences of defendants' conduct, when considered quite apart from — any special circumstances of bad faith or industrious concealment. No one acquainted with the facts, and who thought for an instant, could have any doubt that the result of the combination and its operations would in all probability be to bring about the detri- mental consequences I have narrated. Intent INFERRABLE FROM ActUAL Errects. Besides, the injurious effects were obtruding themselves year after year. The shipowners saw the f.o.b. price raised from time to time, and the Vend must have known the way the freights were growing too. However little compunction the Vend and the shipping companies had for the general public, I assume they were honest and frank with each other. I assume also therefore that when the shipping companies charged as in several cases they admittedly did charge, more than the agreed maximum they were honest enough to observe the provisions of : i OF AUSTRALIA. 631 clause 11 of the agreement. To assume the contrary would be to H- ©. or A. convict them of the fraudulent retention of moneys for which they Bub as Agents undertook to account to the collieries, as their principals. Tun Kino This applies to general trade and to contracts not within the first Peck proviso to clause 8, as the Zine Corporation, the Melbourne City Gaxaraaien Council, &c. I may assume too, that as business men the collieries, monweaurH v. haying taken the express power of checking the shipping com- Associarep panies' charges, would be likely to do it, or get some reliable in- Feepiens formation on the matter. The nature of the correspondence and of the conferences between the two groups of defendants leave me in no doubt whatever that each of them was substantially aware of what the other was doing. This would be only natural, seeing that the object of each was to know how much the public could be safely _ asked to pay. It would be only natural too that each group would be concerned in guarding the elaborate structure they had com- _ bined to erect. Iyrent INFERRABLE FROM PrE-ComBrnation Conpvuct. The origin of the combined agreement is not difficult to ascertain. In the year 1905 six shipping companies—as I have called them—together with J. & A. Brown, enjoyed a virtual _ monopoly of the carrying trade in Newcastle coal. As appears by Ex. Y9 Table 5, the total tonnage exported inter-State, except Tasmania, in 1905 was 1,342,117, and of this, only 3,241 tons were carried by other companies. In 1906 a total tonnage of 1,444,274 was carried inter-State and of this 91,600 tons were carried other- _ wise than by the six shipping companies and Brown. This outside tonnage, as T may call it, was more than that carried by Brown, or by the Melbourne Steamship Co. or by James Paterson & Co. It was more than a third of that carried by McIlwraith McEacharn & Co. or Howard Smith & Co., or Huddart Parker & Co., and was more than a fourth of that carried by the Adelaide Steamship Co. This change had arisen principally, at all events, from the intrusion of Scott Fell & Co. into the inter-State coal trade. That firm had at the end of 1902 first endeavoured to get a footing in that trade. _ But it is unnecessary to enter into that. On 9th January 1906, they contracted with the Broken Hill Proprietary Co. to deliver coal H. C. or A. 1911. —— Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v ASSOCIATED NorTHERN COLLIERIES. HIGH COURT {i911. for 2 years from Ist March 1906 at Port Pirie. The coal was to be steam coal from approved pits, approximate quantity per annum — 70/84,000 roasting East Greta, Hebburn or Pelaw Main 25,000 — tons, in all 95/109,000 tons per annum. Under this contract, Scott — Fell delivered 167,600 tons steam coal which was Wallsend and — Lithgow. Such a contract could hardly have been unknown to the — defendants. There is no doubt that the defendant collieries refused — to supply Scott Fell to enable him to carry out this contract and Mr, — Knox very properly admitted (p. 1411) that it is perfectly clear there was an arrangement between the collieries and the shipping com- panies that the collieries would not sell inter-State to Scott Fell. In March 1906, the South Australian Railways called for tenders for — the supply of 96,000 tons Newcastle coal a year for 1, 2 or 3 years, and also separately for freight for that quantity of coal. Scott Fell & Co. were known by the defendants to be anxious to obtain the contract. Mr. Wheeler said that at the meeting early in April of the colliery proprietors at which also Mr. Hunter and Mr. Newman were present, Mr. Hunter stated with reference to those tenders, that he feared the trade would go away from the steamship owners because of some outside competition that was likely to be brought into the market. He said the outside competition was by some tramp steamers, probably, and Messrs. Scott Fell & Co. The Vend minutes of this meeting, 23rd April 1906, have been referred to in detail, Captain Webb was also there. And this was followed by a meeting the next day at which the resolution was passed that the collieries should proceed with their scheme of amalgamation and the combined agreement should be entered into. It was also resolved that any further application for coals by Scott Fell & Co., other than for bunker purposes should be referred to the Collieries' Board. In the meantime the guarantee of 24th April was given. Huddart Parker & Co. and the Adelaide Steamship Co. tendered the all-round price of 11s. 9d. previously alluded to. That guarantee, it may be repeated, expressly mentioned that it was to enable Huddart Parker and the Adelaide Steamship Co. to secure the contract and was signed for the Caledonian Co. by Howard Smith Co. by C. N. New- man, managing director. Of course no real competition with the selected tenderers was contemplated ; nevertheless we find Howard OF AUSTRALIA. ort Pirie and Port Augusta, 15s. per ton ; Port Wakefield, 17s. 6d. per ton ; Beachport and Kingston, 21s. per ton. The letter contains these words :—'' Should these prices be accepted we will be pleased diseuss conditions with you. Tn the light of the arrangements now unearthed, that letter can- not be appropriately described without a severe term. I do not ippose Howard Smith & Co. wanted to play false to their fellow ipping companies, or that they were so foolish as to imagine such letter would succeed in supplanting the tenders they had them- selves, acting for the Caledonian Co., assisted to guarantee. But, if not, why was the letter written? Plainly, to deceive the South tralian Government. And what was the intended deception ! 'The letter could have no other effect than to make the Government hink there was a genuine competition, that Howard Smith & Co. vere wholly unconnected in this transaction with Huddart Parker the Adelaide Steamship Co., that the joint tender of the two iter companies was markedly advantageous, and so by helping omduce the Government to accept that tender, to help the common, ough concealed, purpose of driving the common rival off the field. 'Mellwraith McEacharn & Co. also went through the form of tender- freight, although Mr. Hunter was the moving cause of the under- ig by the collieries on 23rd April—only 8 days before the tender _ The intent of all concerned to beat off competition is unmistake- able and this action on their part is preparatory to the definite formation of the combination. Scott Fell & Co. might have devel- oped into a formidable competitor. They had a large fleet under their control. They owned only one steamer the Wonga Fell, but j ey had several large steamers on time charter. Evidently the advent of Scott Fell & Co. into the inter-State coal trade was a disturbing element to the previously unchallenged control enjoyed by the shipping companies. Mr. Wheeler deposed—and he has not been contradicted—that at the meeting of 23rd April, Mr. Hunter -—" With competition of course they would have to have H. C. or A. 1911. —S 'THe Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v. ASSOCIATED NorTHERN ConrieRIEs. 634 HIGH COURT (1911. H.C. or A. cheap coal." Scott Fell & Co. were unable during 1906 to get Vend — Tea coal as appears from Mr. Lane's cross-examination (p. 585). This — aay Tur Kixe naturally, he said, occasions losses in his business. There was an Awronsny. incident between the Abermain colliery and Scott Fell & Co. and one — Generar or Lloyd much relied on by the Crown. The evidence was admitted THE Com- monweatta like very much more, provisionally. The final event in connection — Agee with it occurred after the formation of the Vend, and the combined NorrHern Conteries, #gteement, but its roots were long anterior, and although possibly related to the matter of April already referred to, I am unable to — judicially connect any of the other defendants with the conduct of the Abermain Co. Whatever my opinion of that conduct might be, yet as the evidence does not influence me on the issues I have to try, J abstain from expressing any view upon the matter. Iyrent INFERRABLE FROM ConDUCT DURING COMBINATION AS (a) Vicrortan Ratnways Contract 1906. The first contract after the combined agreement was with the Victorian Railways ; tenders were called for 1,2, 3 or 4 years, the estimated quantities were yearly maxima of 315,000 tons. The tenders came before a meeting of the steamship owners' representa- tives and the Vend committee on 4th October 1906 (see Ex. I. pp. 7 and 9) and the resolution I have earlier quoted was arrived at, fixing proportions and prices. This was done with the full know- _ ledge of the Vend that Wheeler was under commitment to Scott Fell & Co. for the next year to the extent of 150,000 tons which ran into February 1908 (I. p. 7). On the 8th Huddart Parker & Co. and Howard Smith & Co. offered coal on the terms dictated by the Vend. I need not repeat my comments on this letter. Alternative tenders were called for freight only, but none were offered. In the : tender an equitable arrangement re minimum and maximum of quantities was asked for and also a satisfactory interpretation re strike clause, but in other respects the conditions of tendering were adopted except in the following important respect. The condition which the Vend imposed, namely, "all or none '' was also made a condition of the tender. Brown had taken part in the arrangements, fixing the Vend price and other conditions. Notwithstanding these arrangements J. & A. Brown, on the same date, put in a tender OF AUSTRALIA. 635 ly ignoring the prices and proportions he had helped to fix. H.C. or A. some considerable time this tender, for reasons which I need not Bas il, impressed me very badly as to its genuineness and I invited Tue Kiva me explanation. Mr. Blacket, while not obliterating that impres- A.V , eflectively shook my mind sufficiently to engender grave Lien eral bt, and so I resolve the matter in the defendants' favour. The mon et result of this transaction is that the Vend and the shipping 'Ani@uasme panies so framed their tender as to exclude Scott Fell or any QORTRER ALTH ar possible competitor from participating in the supply. (b). New Zearanp Bustvess. During 1907 an arrangement was made between the Vend and the Union Steamship Co. relative to the New Zealand business of the Northern Collieries to come into operation as from April Ist. It gave e Union Steamship Co. the exclusive carriage of coal for New and with certain exceptions mentioned. One of the terms was t the collieries should not sell f.o.b. Newcastle for shipment New Zealand except to the Union Steamship Co. The Vend, bel re signing the document, consulted their solicitor, who said he was strongly of opinion that the proposed arrangement should on exactly the same footing as that existing with the inter-State : ip companies. Mr. J. Brown asked if he were not perfectly ect in saying that every member present that day fully.intended carry out the agreement to the letter " writing or no writing." was referred for further consideration. One of the exceptions in the proposed arrangement was the s.s. Inga, chartered to Craig, Auckland. On 6th May 1907 Newman wrote to the Vend etary (Ex. X. p. 66), complaining that the nga, protected under New Zealand agreement—which was evidently regarded as ipleted by this time—was in active competition with the vessels the shipping Association, then occurs this passage :—" It is, as s 'ou will recognise somewhat anomalous that the Inga should be otected under an agreement to which the members of my Associa- tion are indirectly parties, and at the same time be free to engage in petition with them in other directions." This was answered on May by Cant asking for suggestions to prevent competition. On ie 28th, Newman replies :—' The terms are not material." It 636 HIGH COURT H.C. or A. appears therefore that there was really an understanding between 1911. the Union Steamship Co., the Vend and the shipping compani Tur Kixe that the shipping companies be not interfered with by the Union Amonvev. Steamship Co. in the Australian trade, and the shipping compani pape eae should not interfere with the Union Steamship Co. in the New Zea- moxweatru land trade, and each set of carriers should be the only channel of Repivons supply for their representative localities. In each case also it was Fbasacts considered desirable for some reason that the arrangments shi not be reduced to contractual formality. See the revised agreement (J. p. 120). (c). Soura Austratian Rattway Contract 1908. During the year 1907 Scott Fell & Co. exported for their Broken Hill contract a large quantity of coal and struggled on until July — 14th 1908 when they went into liquidation. A good deal of discus- sion occurred before me as to the real cause of their failure, as to whether they had carried on business at too low rates, or were reck- less, or were crushed by defendants. Whatever other causes assisted, there cannot be any doubt that the defendants tried to — crush them, and at all events contributed to their downfall. The defendants gathered to themselves a giant's strength, and used it as a giant; they have used it not only on the public, but on all that has stood or has endeavoured to stand between them and the public. Scott Fell & Co. shortly before their liquidation sold out their business in Melbourne to one of the shipping companies, Huddart Parker & Co., as it appears for the inter-State companies; that company took over the time charter of their steamers in connection with that business, also the liabilities of the coal yard, and the ser- _ vices of their agent, and Scott Fell & Co. gave permission to run the Wonga Fell in the inter-State trade. The disappearance of Scott — Fell & Co. in the middle of 1908, left the combination for the time without a really effective competitor. The alteration of the position may to some extent be observed in the export tonnage. We have seen that with the entry of Scott Fell into the inter-State trade the "outside " exports, as I term them, had risen from 3,241 tons in 1905 to 91,600 in 1906, they mounted to 136,435 in 1907, but dropped to 37,715 in 1908. It must have been evident to the defendants at OF AUSTRALIA. 637 | events by April 1908, when they tendered for the South Aus- H. C. oF A. an Railways that Scott Fell & Co. were weak. But they took Hoe. é ) e precaution to tender for the whole quantity required and the Tue Kiva ovision in the call for tenders reserving to the Board the right of Ax? 07. ecepting a portion only of the tender was excised. The hesitation GENPRAL OF 3 HE Com- the South Australian Cabinet to accept the tender has been monweaura adyerted to, and it will be remembered that one of the reasons given pee NortHERN ConirerrEs. the requirements of the authorities was the discovery of negotiations = ——- the purchase of a coal mine. The immediate effect of this timation upon the members of the Vend is left entirely to the ination, but, there is a subsequent incident which evinces that warning had not altogether fallen on deaf ears. (d). Vexp Compricrry 1n Haynes' ARTICLES. The Vend minute book (Ex. J. 181) under date 27th November 1 (908 contains this remarkable record :—" The proposal by the South 'Australian Government to open a State mine was touched upon, and the proof of an article which it was proposed should be published in the Adelaide press was submitted. There were one or two altera- tions required in the article to make it correct, and Mr. Chapman and Mr, Doddemeade were deputed to attend to this matter and lave the article published through Mr. Hayes to whom it was agreed ' to pay £50 for his services. The Secretary was also instructed to z write to the shipping companies seeking their support in an en- deavour to restrain the Government from carrying out the proposal."" 'The name " Hayes " should be " Haynes." _ 'That gentleman, Mr. John Haynes, is the proprietor and editor of Re e Sydney journal, the Newsletter. He was called by the Crown to! 4 state what he knew of the incident. The genesis of the idea that such an article should be published in South Australia, the original source of some of the information contained in it, and the full nature of the communications between Haynes and the Vend, are all still left indefinite. I am not called upon to probe the whole narrative. Certain clear facts were proved, and the defendants did not even - challenge them by cross-examination. They are these. Haynes had an interview with Chapman at the Seaham Colliery office, when 638 HIGH COURT 1911. Tur Kine Obviously appears from the minute communicated the offer to hi AND THE ATTORNEY- Ome read the article, cut Haynes down to £50, and deputed Chapman a moxweattx Doddemeade to have it published through him. Haynes got his £50 Assocrarep and the article appeared as a telegram from Sydney in the Adelaic eS Advertiser on 30th November, and in the Adelaide Register as a le signed " Sydney," on 1st December. The contents of the arti need not be quoted, but they amount substantially to a business presentation of facts and figures relating to prices of land, depth coal, the absorption of coal trade by steamships in existing contra the cost of haulage, the cost of coal production, the existence of throat competition in former years, the absence of any real cause complaint on the part of the South Australian Government, the of the Federal Government suppressing the Vend, and finally the astonishment in commercial and colliery circles in Sydney and Newcastle at the position of the South Australian Government. _ In the way it was presented—and intended by the Vend to be presented—to the people of South Australia, it wore the appearance of a vigorous, fearless, and timely word of caution from a source independent, but well informed, friendly to the people of that State, cognisant of the main facts surrounding the question, and stating the opinion generally entertained not only among the collieries | but in the commercial circles. One would not have suspected however that the collieries had so direct a hand in the publication, any more than any specially — interested section of the commercial world. It was intended to — influence the South Australian Government, both directly, and through public opinion indirectly, to stay their hand in taking a f course of action which would interfere with the existing monopoly the defendants then enjoyed in the supply of Newcastle coal. If the representations had been made avowedly by the collieries or on their behalf, so that those to whom they were addressed could have weighed the statements, together with the contrary interests of the — persons making them, and felt the necessity of testing their accuracy — .L.R.] OF AUSTRALIA. 639 would have been less to complain of. But the inherent vice H- ©. or A. of the transaction was the concealment of the identity of the advisers. boa collieries paid Haynes £50 to fire off these statements from a Tur Kina sked battery. What effect they had I know not, and need not \vouvev- ptoinquire. But the project was not carried through. Some of GENBRAL OF statements bear a strong resemblance to contentions I have had ongareee essed to me, and which, as already appears, I have found to be AgioteaD urate. But that is comparatively immaterial. All I take QOR7#ERS notice of as important in this connection is that the Vend :—(1) took an active part in the publication of the article and revised and : approved its terms; (2) they spent Vend money to obtain that publication in the very way it was done; (3) they concealed their participation in the transaction; (4) they did this to prevent a diversion of the trade they then held into other hands—self-supply by the South Australian Government and possibly supply by that - Government to South Australian consumers ; and (5) they instructed _ their Secretary to ask the shipping companies to assist in restraining ; the Government from carrying out the proposal. _ Thave been asked to find that the shipping companies in some way were involved in the publication of the article—but there is no lence whatever to connect them with it. Whether such a letter, the Secretary was instructed to write, was ever written I do not iow, and have no evidence to tell me. So far as this incident is cerned, the shipping companies are clear. But the Vend's intent it was suggested to me by learned counsel for the defendants that the actuating motive of the Vend in paying the £50 was simply to save the South Australian Government from a blunder—a merely altruistic, and ultra-patriotic purpose—to save the people of a ighbouring State from disaster. The world has far to go before h self-sacrificing impulses will commonly sway the actions of It is a hopeful sign when learned counsel can gravely advance hese motives on behalf of clients whom modesty apparently pre- its from personally admitting them, but I fear I am cold-hearted ough to weigh the suggestion in the balance of every-day life, and find its effect imperceptible. 640 HIGH COURT (1911. H.C. or A. (e). Form of Sypney Contracts. E 1011, About May 1909 A. Kethel & Co. Limited was formed. It was Tur Kixe the incorporation of the firm of Kethel & Moore which had been in — Awrornny. the coal trade since 1905. It had theretofore done only Sydney GENERAL OF trade. Contracts were produced with various defendant companies eae (Ex. Y6). They contained a clause by which the purchaser under- Aiea took that the coal purchased would not be re-sold to, or delivered by Peete him, directly or indirectly, to any gas company, or be exported beyond New South Wales as cargo. The dates of those agreements are 14th November 1906 Seaham Co. ; 15th November 1906 Pacific Co.; blank 1906 but apparently December 1906 because it is a supply of 12 months ending 31st December 1907 Newcastle Co. ; 17th April 1907 Newcastle Co., and 10th December 1907 Abermain Co. ; they are all on a printed form and manifestly copies of the same imprint. The Vend minutes of 4th October 1906 (Ex. I. p. 11) state that authority was requested for the following sales to Kethel & Co., viz., Abermain, Seaham, Pacific, $.A.M. Co., the tonnage and price being named in each case. Authority was given to contract with the stipulation that contracts must be subject to the form to be generally adopted, such form to be prepared forthwith. The next day's minutes, 5th October 1906, show that it was left to the Vend's solicitor to prepare forms of contract, and those of 11th October contain a resolution that purchasers in Sydney be allowed to contract at current prices subject to a form to be prepared. The minutes of 24th October 1906 (Ex. I. p. 29) contain an entry showing that the contract forms for Sydney and inter-State trade were approved, and among the documents demanded by Mr. Hudson from Mr. A. R. Cant, the Secretary of the Vend, were those contract forms so approved. They were produced and are contained in Ex. 8., one for Sydney trade, and one for the export trade. The third clause of the form in Exhibit S. is precisely that in the contract mentioned in Y6. In fact the whole form in Ex. S. agrees with the whole form in Ex. Y6. There is no doubt in making those contracts the par- ticular companies were carrying out the approved course prescribed and required by the Vend for its individual members. Kethel & Co. could not, nor could any other purchaser of Vend coal, supply LR.) OF AUSTRALIA. it inter-State, however urgently it was needed. Why should such a prohibition be inserted if the only object of the colliery defendants' fend was to suppress cut-throat competition among its members. 'The sale to a purchaser at the Vend f.0.b. price at once secured the collieries from undercutting, whether sold for Sydney, Melbourne or Adelaide trade. What did it matter to them where the coal went rds if their only object in association was self-protection 'inst internal warfare? And if a Sydney purchaser could find ight and export the coal inter-State, why prevent him? Clearly n the interests of the shipping companies, and with equal clearness that would only happen as a means of guarding the stipulation in the combined agreement giving the steamship companies the lusive inter-State supply of Vend coal. _ Just as the shipping companies guarded the allotment provision, the collieries quarded the exclusive carriage provision. (f). Repression or Kerner & Co. 'a Just as the shipping companies guarded the allotment provision, so the collieries guarded the exclusive carriage provision. _ Early in 1908 the Ebbw Main colliery commenced producing coal from its mine. It is a first-class coal. During that year it was veloping and the production up to May 1909 was from 50 to 100 ms per day. The coal was sold in Newcastle and Sydney. Its le seriously affected the Vend (see Howell's letter 10th March 1909, Ol). The company was absorbed in Kethel & Co. Limited in May 1909. Mr. J. Cant also worked the Young Wallsend mine late in 1908 and in November or December put out coal 50 to 100 tons day. That also passed to Kethel & Co. Limited on its formation. out the end of 1909, Kethel & Co. Limited were putting out 230 a day from each mine. The output from Ebbw Main was tained with one shift of 8 hours and with another shift could be doubled. Kethel & Co. were now in a fair position to do inter-State de. In June 1909 through Mr. Learmonth (deputed by the Vend h. J. p. 223), with Mr. Forsyth and Mr. A. R. Cant, the Vend had interview with Mr. Kethel and Mr. Moore with a view of consider- g Kethel & Co.'s desire to join the Vend. That went off apparently because they could not come to terms. A document dated 19th VoL. x1v. 4. H.C. or A. 1911. —— Tue Kina AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v AssocrareD NortHEerN COLLIERIES. 642 HIGH COURT ca Kethel & Co. desired to enter the Vend, probably induced by Ho Cs (see his letter of 10th March 1909), that the matter was considered wonwearrn the Association, and discussion took place as to allotment and p Associate Kethel & Co. wanted 100,000 tons allotment for each mine, an Nortaeex y earmonth suggested 50,000 tons for each. Moore agreed to main- Conrierres. : tain certain prices, and I should infer from his verbal evidence th a disagreement arose about the allotment, and so Kethel & Co. remained outside the Vend. One observation should be ref to. Moore said that Learmonth indicated in the course of t negotiations that there were certain trading advantages to obtained from joining the Vend, and that Kethel & Co. would n be harassed in their trading conditions as much as they would if they were working individually. Now as to Mr. Moore's evid there were certain matters he had to admit which do not redound to his credit. Nevertheless I am not prepared to reject everything he said or consider him as generally untruthful. His a of the interviews is supported by the correspondence, and the s rounding probabilities, and is not denied by the defendants. believe it. In about October or November 1909 two trial shipments we sent to Melbourne, also 1,000 tons to the Melbourne Gas Company ; 300 tons to the Victorian Railways, and small sample p: Co. as agents. I have already referred to the trade they did there during 1909-10. They obtained contracts from various Victorian — vessels chartered by Kethel & Co., the Romford, time-chai from the British Steamship Coy. Ltd. London in March 1910, an the Five Islands chartered from the Mount Kembla Coy., in Aj 1910. Some coal also was carried for the Company by one of : defendants, three shipments in all, by Huddart Parker & to Melbourne, in November and December 1910, that is after action was begun. The whole quantity so carried was about OF AUSTRALIA. 600 or 1,700 tons,—a full cargo for the Chilloqoe and a part cargo on another ship. The circumstances under which this was done lo not appear but it is in evidence that in 1910 the A. J. S. Bank k possession and offered the Ebbw Main Colliery and plant for sale, for an account owing of about £5,000 or £6,000. At the e of the trial, liquidation proceedings were pending. conclude thel & Co. were at the end of 1910 practically moribund. The Crown pressed very strongly that the defendants' combina- had driven Kethel & Co. to ruin. Various specific acts were nted to as evidence of this. One class I may call direct, because hey were immediately between the defendants and Kethel & Co. to these the root of the matter was the difficulty in loading the omford with payable despatch. The vessel carried 4,750 tons (o and 200 tons bunker. Unfortunately for Kethel & Co. their torage capacity at Newcastle was only about 12 or 1,300 tons. The consequence was that the vessel had to be berthed and re- erthed four times for one cargo. Naturally this was not a payable method. In May 1910, they applied to several collieries for coal nd received answers expressing inability to quote. At the same me they applied to the shipping Companies for a freight quotation 1,000 tons of their own coal. Again answers were again received mating inability to quote. J have considered this evidence 'luding Earp's letter) and I must say that I am not able to come any finding upon it adverse to the defendants. The events ppened at a time when the answers given might fairly have been e, if there had been no combination at all. Stocks were still replenished to some extent after the strike, and on the whole am not prepared to regard that correspondence as evidence of ongful act or intent. Then there was another class of action, what I may call indirect prevention of Kethel's inter-State In October 1909, the Victorian Railways called for tenders nt non-Victorian coal, the conditions stated that the total yearly quirements of coal were estimated at 325,000 tons. It was also ed that the tenderer might quote rates for all or any portion ould have the option to accept for all or part with certain quali- jons unnecessary to state. The tenders required the mines H.C. or A. 1911. — Tue Kine AND THE AYTORNEY- GENERAL OF tHE Com- MONWEALTH v. AssociaTED NorTHERN COLLIERIES. 644 HIGH COURT H.C. or A. to be stated. Ebbw Main coal though first class was ins tee Newcastle-Wallsend was also excellent, but in view of other prol Tur Kixe arrangements, and the regular output of the mine under ane ny. tons a year, the deficiency could hardly be expected to be " ArrorNry- GENERAL OF good either for the first year, or the second year. Young Wall sees was third class coal. On 25th October 1909, Kethel & Co. Beeoieen Crosby & Co., and with the assistance of Wheeler of the Newea pai Wallsend Coy., tendered for the supply of 1910-11. They tend: for a portion only of the quantity for the first year namely 70,( tons Ebbw Main ; 70,000 Newcastle-Wallsend ; and 20,000 Y« Wallsend, with alternatives, also below the estimated full quant For the second year they tendered 100.000 Ebbw Main ; 150, Newcastle-Wallsend and 70,000 Young Wallsend. There alternatives unnecessary to particularise. In the meantime Vend had arranged with the Shipping Companies at an int between Cant and Capt. Webb on Wednesday 20th October Ex. V.) what the prices and terms of the tender should be. was arranged amongst other things that the tender should b far as possible on the same lines as the tender for the last contr that is about half and half Maitland and Borehole coals, plus | quotation of the other grades. On 22nd October the terms of arrangement were confirmed by letter Cant to Appleton with graded list of the coals attached. On 25th October a joint tender by Huddart Parker & Co. and Howard Smith & Co. was sent ir for "the whole of the Commissioners' requirements of New South Wales coal for two years." The list of pits is clearly taken ft Cant's letter and the prices to the railways being fixed by add 4s. 5d. to the respective prices with the exception of Lymi ) coal to which was added 4s. 11d. The first letter of that date with these words " Under and subject to conditions of contrac to be mutually agreed upon." It ended by stating "that ! tender was open for acceptance till noon November 8th." Appat to rejection because the Departmental conditions were not ace They wrote again the same day explaining the position, they a emphasised the condition that the tender was for the whole quantity They urged that they or one of them had been the Cont OF AUSTRALIA. 645 or many years, they could offer the best terms available " through H. ©. oF A. long connection with the coal trade " also an adequate supply iste uflicient tonnage. They said further that the freight was low, Tux Kina added that expenses had materially increased during the last y**Ouvey- GENERAL OF years by reason of wages, cost of wharf labour, coal labour, stores aby HE Com- (cts of Federal and State Governments. Assoctieng NortTHEeRN Tt will be convenient to say a word or two as to the reference to increased expenses. At the Conference of 16th December 1907 (Ex. J. at p. 79) clause 8 of the combined agreement was amended granting to the Steamship Companies the right to increase the ight in the schedule by 10 per cent. to cover any increased cost regards extra wages, kc. The letter however does not say what increase, if any, was and no proof has been given as to this. 'The defendants' contracts (Adelaide §.S. Co.'s) with various Victorian consumers militate against the justice of their claim inereased freight for the Railway contract. These and other con- s show either that expenses had not materially increased or even with the increase their prices needed no addition to make adequate. The Footscray Gas Contract (U.7) which had ne up from 1905 to 1908, came down 3d. in 1909, "in order to meet you " as they said to the Gas Company and this amiable dis- ition continued in March 1910, to the extent of another 3d. o with the Melbourne Glass Bottle Works (X7) the same com- ny reduced engine coal from 17s. in 1908 to 16s. 10d. in 1909, and her to 16s. 6d. in March 1910. Again with the Melbourne Co-operative Brewery (Hx. W.7) James Paterson & Co. reduced e coal from 22s. 3d. in 1908 and 1909 to 21s. 3d. in 1910. 'Then as to the Australian Paper Mills (N.8) engine coal fell from s. in 1908 to 20s. 9d. in 1910. The natural inference in the absence any explanation by the defendants is that they lowered their es in presence of Kethel's competition in some instances at , and, whatever increase there might have been in expenses, charges at all events before the lowering were excessive. in the case of the Railways why should they quote what 646 HIGH COURT H.C. or A. they call a "low" freight except to succeed against a comp 1911." Tt is not within the bounds of probability that their fellow shippi Tue Kive companies were the antagonists they feared—the circumste Aixonvny. preclude that. The joint tenderers too put in no tender for Gomee °F And no other of the shipping companies tendered for supply. THE CoM- MONWEALTH v acre But on the same date 25th October the Adelaide 8.8. Coy. does COLLIERIES. (h). Sam TENDERS. put in a tender which impresses me very unfavourably. It was from Collins Strect Melbourne and evidently with a knowl of Cant's letter of 22nd, and in any case with a knowledge of ti facts it recorded. It states that that Company's representa' —that is Capt. Webb mentioned in the letter to Appleton—visit New South Wales to secure an offer of coals on the railway con-— ditions. The collieries having declined, the Adelaide Steamship C said they themselves could not as carriers accept the conditions they proposed, as they said, to tender for freight only, and they — did solemnly offer to take delivery in the steamships at the port of Newcastle for one or two years of the total quantity of 325,000. tons for transport to Melbourne and Geelong, etc. The rates were to Melbourne 4s. 7d., to Geelong 4s. 9d. ; that is to say 2d. more to Melbourne and 4d. more to Geelong than the joint tender of the other two companies. That could be seen by deducting the declare selling price 11s. from the tender of 15s. 5d. They expres their happiness if the Commissioners favourably entertained the offer, to wait on the Commissioners, and discuss other conditions, adding that they had not time to consider the printed freightage form. Now, I believe that offer to be like some others that I have mentioned, a sham. They knew of course that Captain Webb had represented all the shipping companies. Appleton at the conference of 30th November 1909 (Ex. X. p. 221) speaking clearly on behalf — of all the shipowners, Northcote being present, said he had given Webb a letter with all information. Appleton was the medium of — written communication, and the confidence between the shipping companies was such that he of course would not keep back from them — such a letter as he received from Cant, nor the nature of the joint' tender. They knew full well that the collieries would not sell direct. OF AUSTRALIA. 647 the railways and that there was no reasonable probability of the H- C. or A. orian Railways getting coal elsewhere of suitable quality and pa ntity to make their freight tender effective. Tue Kine Mr. Northcote of the Adelaide Steamship Co. himself at the Nov- Precodinsrail ber conference referring to Mr. Forsyth having communicated Beer ae ith the Railway Commissioners asked if it were a correct thing for wonwnaurn 'any member of the Vend to approach or come in contact with any of Jace opeica the shipowners' clients. Forsyth admitted that this should not be Ls me. And what concern had Northcote with Forsyth's com- "munication ? But, on the face of it, it manifests the clear expecta- tion that no supply would come from the Vend direct to the rail- ys, and how then could the freight tender of Mr. Northcote's ompany have been any business reality? Further, that company not in their tender bind themselves to any conditions ; but the amounts they inserted for freights, unfettered by specific stipula- ' tions, showed by comparison that the freight addition in the ioint tender of the other companies was, as those companies said it was, The freightage desired by the railways was not restricted by them to Newcastle. See T5 and the call for tenders in 158, ' Which states that the coal was to be simply " non-Victorian," but Adelaide Co.'s tender was restricted to Newcastle. If they ; "were teady to act as carriers only in full and open competition, I not see why they tied the Commissioners down to Newcastle. Huddart Parker & Co. and Howard Smith & Co. had evidently either 'interpreted Cant's letter as requiring an "all or none" condition, else had inserted it on their own account. The date when they first heard of Crosby's tender for Kethel & Co. does not appear, ut probably they knew or anticipated it before their second letter of 25th October was written. At all events Learmonth knew of it on the 30th because on that day he telegraphed from Newcastle to John Brown who was then in Melbourne in the following terms :— " Am wiring Appleton re Crosby's tender Railways advise him tender all our coal or none see Appleton Monday morning and consult." 'he advice was unnecessary as the desired course had been already taken, but the intention of both parties to the combination is nmistakeable. Some of their coal was really indispensable ; but must be "all or none," therefore all; so that neither Kethel & 648 HIGH COURT H.C. or A. Co, nor Wheeler in his separate tender of 22nd October (Exh. QU 1911. could hope to succeed. ; Tux Kixe At the conference of 30th November that year (Ex. X. 21) the - Arnonvey. discussion on the subject of this contract showed how much the Caner aoe defendants were playing into each others hands with regard to this monweartH contract. I think the true inference from all these facts of what Pee T have called the indirect class is this, that Kethel & Co. and Crosby ee GORTHEEN their agent were held to be either alone or in conjunction with Wheeler possible competitors in the inter-State trade and the defendants used their combined power to overcome that competi- tion. The condition "all or none" was in the circumstances a powerful and indeed resistless weapon. Summing up this transac- tion the combination enlisted in their service both force and fraud. In a letter of 7th February 1908, written to the Vend Secretary, Mr. Appleton, when urging the right to use the Southern coal they required, referred to the possible resentment of the Southern owners - if the bunker coal supplied were altered. In doing so, he reminded the Vend of a proverb that commends itself to all, both for its justice and its humanity. He said " It is well to live and let live." No _ doubt when men embark in business they must take their chance of _ failure and success. None can demand more than a fair field, and no favor. But what the law we are considering looks to is that — there shall be a fair field. The united efforts of what Howard Smith & Co. (in Ex. X. p. 94) termed " A vast concern such as the Vend," and an equally vast concern such as the Shipping Association, hardly afford a fair chance of life to any ordinary single competitor. Mr. Appleton's excellent maxim was seemingly reserved for very special application. (7). Conpuct Towarps Non-Venp CoLLiEries. There is a line of conduct which though in accord with the sup- pression of competition, I have referred to, is more conveniently considered by itself than taken in order of time. I allude to the Vend's action, supported by the shipping companies, in relation to non-Vend collieries. Non-Vend coal was forbidden to the shipping companies both by the agreement and in the course of correspondence _ as for instance in January 1907 with regard to Wallsend coal (Ex. X 14 O.L.R.] OF AUSTRALIA. 649 pi 29). Instances will be found in quotations I have made and I H. ©. or A. not repeat them. Efforts were made by the Vend to induce pe outside collieries to join, for example, we find on 8th January 1907 Tue Kixe (Bx. I, p. 61) that the Vend committees directed Mr. Chapman to ,*vouyey. ke arrangements if possible for the Cardiff, South Wallsend, Cae wood Extended and North Lambton to join in. At the next wonwnanra meeting it was resolved on Mr. Chapman's report that the Burwood 'Aeabueaeaes Extended should be left out, the reason not being stated, and the sae North Lambton presumably was allowed in but not to be increased ibove 10,000 tons; and, as to the South Wallsend and Cardiff, there to be an extension of the collieries and a report as to their apacities &c. In October 1908 (Ex. J. p- 173) efforts were made o bring in the Wallsend Co., the Lymington Co., and the Burwood Ixtended Co., the last-mentioned company refused, the Lyming- on was admitted on terms and the Wallsend was to be further otiated with. I have referred to Howell's suggestion to bring in he Ebbw Main and to the negotiations for that purpose. The 'onclusion to be drawn from these and similar instances is that defendant collieries intended with regard to competitive con- ions in the inter-State Newcastle coal trade there should as far possible be a clean slate. And the question is why? In January 1907 the alleged mur- ous conflict between Maitland and Newcastle, if it ever existed, had been most effectually stopped ; f.0.b: prices had been lifted from s. 6d. net to 9s. net and again to 10s. net. Again in October 1908 he combination were so safe and strong that the f.o.b. price was L1s. What then was the necessity for inducing the mines to join? It was not necessity, it was not self-protection, but the desire for com- plete control. That complete control was impossible except where, as J. & A. Brown, in the letter of 25th November 1909 to the Aus- tralian Paper Mills (Ex. N8), euphemistically expressed it, the col- _ liery was one "with whom we are on friendly relations." Un- o matter how fair. To such was given the choice of the Koran or e sword, the "friendliness" of Brown's letters to the Paper Mills, or the " harrassing " of Learmonth's 'interview with Moore, for the ain guiding principle of the combination was to sweep away by H. C. or A. 1911. Tue King AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v AssociaTED NorrHern COLLIERIES. HIGH COURT artificial arrangements whatever protection the public might against the terms of price, choice, and other conditions of s which the will of the combination might at any moment think op tune to dictate. Law as to Monopoty. I have now to ask myself the question, does this amount to monopolising, or an attempt to monopolise, or combination « conspiracy to monopolise the inter-State trade or commerce in New- castle coal with intent to restrain, to the detriment of the public its supply or price. The intent is obvious—and to prevent a possible misconception I unhesitatingly find its existence as a ma of fact from the whole circumstances. The detriment I have al declared. Mr. Mitchell argued that no combination though try to get the whole of the trade into their own hands and excludin other people would contravene the Statute unless they did so b some unlawful means. He relied on some observations of Garrow ] in Wickens v. Evans (1). In that case an agreement was made between three persons carrying on the trade of trunk and box makers and travelling in various parts of England, that each would restrict — himself to trading in certain portions of the country and give up his existing trade in other parts, viz., the remaining portions where _ the other two contractors respectively worked in their trade ; they agreed to assist each other, and in case other persons sho begin to trade as box makers in any of the districts allotted to o1 of them they should all meet and devise means to promote their own views. The learned Baron said :—'* What those means may be it is unnecessary to surmise ; but we cannot presume they will illegal; and therefore this stipulation does not affect the validit of the agreement.'" On those words Mr. Mitchell hangs his argument but in my opinion they have no application to this case. The ques-_ tion was whether three box-makers out of the number to be found in - al] England made an illegal contract in agreeing to confine themselve E to certain respective districts. The learned Baron after pointing out the mischief sought to be cured, namely, the loss and incon- venience to each by exercising their trade in the same places in various parts of the country, put the question " What is the remedy (1) 8Y. &J., 318, at p. 329. CLR] OF AUSTRALIA. propose?" He answered it in this way, "Not a monopoly cept as between themselves ; because every other man may come into their districts and vend his goods ; all they propose is that they not carry on a rivalry, nor continue any longer to trade through- out the country." Now that is the part of the judgment that has F bearing on this case. Its meaning and effect are better seen by ference to the other judgments. Hullock, B., said (1) :—" But 'is said that the effect of this agreement is to create a monopoly, d that by upholding its validity, we shall lead to other combina- ns for monopolising trades. If the brewers or distillers of London vere to come to the agreement suggested, many other persons mld soon be found to prevent the result anticipated; and the in ata cheaper rate." Vaughan B., said it was, "a contract by ich the public are not injured, as they may be supplied upon easier s." So far then as the general nature of the contract was con- ned the Court had regard to the small number of persons con- cting as compared with the number of other persons who could be found in the community able and willing to provide for public wants should necessity arise. Indeed the very pith of the judgments was hat the sources of supply could not be controlled by the parties to e contract, and so, on the principles I have earlier stated it did offend against public policy on the ground of restraint of trade. the one I have mentioned, as to meeting together in the event of opposition to any one of them and consulting as to what should be But as to this it was held for the reason given by Garrow B. no illegal means was suggested they would not be presumed. 'There is nothing therefore in the case cited to support the proposi- tion contended for. Besides, if making the contract in this case 8 an offence under sec. 4 the foundation of the argument fails, ld provide the necessary illegal means. Mr. Mitchell further d that if other people in the trade were offered the opportunity coming in (p. 1233) the transaction was outside the section. stating the proposition in that way passes by the fundamental (l) 3. & J., B18, at p. 330. H. C. or A. 1911. "~ Tue Kina AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH v. ASsOcIATED NortTHEerN COLLIERIES. ause that section declares it to be illegal, and so its observance H.C. or A. 1911. pease Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED Norraern CoLLreRiEs. _ person, and forestalled from all others, to the gaine of the monopo- — HIGH COURT idea. It is the injury to the public that is to be prevented, merely giving an opportunity to an outside trader, whose mea) of communication with the public have been cut off, to relieve hi self of his own personal loss by coming into the combination ci regardless of its effect upon the public is not in my opinion a1 avenue of escape left open by the section. Such a position would nullify it; in fact it might aggravate the evil. In Cade v. Daly (1 the Master of the Rolls held, that an agreement between a num! of traders in the mineral waters and bottlers trade was not unenfore able. At p. 320 he pointed out that the covenant complained of only for a brief period between a few local bottlers and within certain limited area. He said :—" To my mind, when the sph of operations is 'cabined, cribbed confined' within such limits time and space, when there is no prohibition and can be no pro- hibition against outsiders coming in and competing against any or all of the persons named as parties to the covenant, the public, at all events, cannot suffer wrong. The public can suffer no in- — justice and in the ordinary sense of the word cannot be detrimentally - affected. Outsiders are absolutely free to compete, and if the scheduled prices are too high the public can buy elsewhere." The original use in law of the term " monopoly" was, as has been pointed out, in connection with the grant by the Crown of an exclusive right ; its signification in the Statute before us is com-— mercial and denotes the acquisition of exclusive power. It was' in that sense in which Lord Kenyon in 1800 used the word " monop- olise " in The King v. Waddington (2). And that was no innovation | ' even at that date in the sense of the word. We see in the Oxford ¥ Dictionary under the word " monopoly" 1 (b) several instances of the same meaning at very early dates. One I will quote under date 1622 :—' Monopoly is a kind of commerce in buying, selling — changing or bartering usurped by a few, and sometimes but by one list, and to the detriment of other men." There we have all the — main elements of the law, including detriment which obviously " must include excessive price. There is a looser sense in which the term is sometimes employed as meaning the mere fact of posses- (1) (1910) 1 LR., 306. (2) 1 East., 143, at pp. 156-7. i4CLR.] OF AUSTRALIA. 653 or enjoyment of practically the whole of a particular trade, H.C. or A. that is sometimes referred to as a Kea —— "practical monopoly," as for stance in United Shoe Machinery Co. of Canada vy. Brunet (1); 'THe Krxa AND THE see also Oxford Dictionary, Monopoly 1. But the legislation is jot aimed at the share or proportion of trade which any person whether individual or corporation may acquire in the ordinary » course of business. If by superiority of service or commodity, Assoctarsp by lower prices more desirable terms or any of the arts and paler inducements known to active rivalry, always consistent with ' healthy competition, and free from force or fraud, a trader attracts _ to himself the whole of the trade in any particular direction he does not offend against the law of monopoly. The field of opportunity open to all; he has fairly used it and has succeeded. He has - succeeded, not because he has silenced, but because he has out- -_ stripped his competitors, and because the public find it to their if advantage to voluntarily accept his service in preference to that of thers they might have; and shculd he abuse his opportunity by _ asking unduly high prices, or restricting facilities or otherwise, the field is as open as ever for competitors to offer and for the public to accept. At all events, up to that point, he has neither done or intended any harm to the community. But if not content with erving the public to the best of his ability, and letting consequences take care of themselves, he so acts as to purposely concentrate in _ himself the existing means of public satisfaction in such a way and ~ to such an extent as in the circumstances to prevent or destroy all reasonably effective competition, he does, within the meaning of the Statute, monopolise or attempt to monopolise. Competition itself connotes attraction of trade, and so long as it remains legitimate the law, as I read it, does not reprove it simply because it attains its necessary object. When however a trader forsakes his quality of competitor, and becomes an engrosser, when he sets himself to stifle or strike down effective competition which stands as a commercial protection between himself and the community at large, and so substantially to gather into his own hands the power of dictating the terms upon which the public needs may be satisfied he offends against the (1) (1909) A.C., 380, at pp. 338-40 ; and see p. 344. 654 HIGH COURT H.C. or A. enactment. Nor is the offence less that two or even twenty tra 1911. Tue King 'The most recent application of these principles to the correspo Atronxny. ing American enactments was in the T'obacco Company's Case abo GeNrRAL OF quoted. There the learned Chief Justice White said (1), the his HE Com- : monwearrH of the combination the Court had to deal with was " demonstrativ Assocrarep of the existence from the beginning of a purpose to acquire dominio pola ed and control of the tobacco trade, not by the mere exertion of ordinary right to contract and to trade, but by methods devised order to monopolise the trade by driving competitors out of busine combine to effect this object. upon the fears or play upon the cupidity of competitors would ma success possible." This conclusion said the learned Chief Ji was reached by certain considerations which included acts justify' "the inference that the intention existed to use the power of combination as a vantage ground to further monopolise the trad in tobacco by means of trade conflicts designed to injure others, either by driving competitors out of the business or compelling them — to become parties to a combination." « In my opinion the prevention or destruction of all reasonable and effective competition—the natural commercial safeguard of the public—is at the root of the conception of monopoly within — the meaning of the Statute. Acruat Inrenr to Monopotise. I have no doubt, and I cannot imagine any doubt existing, that the intention of the defendants was to monopolise in the sense in which I have explained that term. They intended to efface com- petition in every form—competition of production which is only material here as bearing on the inter-State trade in the Article when produced, and competition of carriage. They intended to grasp into one huge hand the whole inter-State supply of Newcastle coal. I have had some argument as to whether that was their main a intention or whether it was only an object incidental secondary — and subordinate to a scheme, the main object of which was merely to preserve a sinking industry. (1) 221 U.S., 106, at p. 181; 31 S.C.R., 632, at p. 649. OF AUSTRALIA. 655 Thave no hesitation in concluding that the elimination of com- H.C. or A. etition was the main and the central object of the whole combina- 18! tion complained of. 'Tue Kina _ Whatever might be said of isolated parts of the Vend scheme, or jes en of some detached clauses of the combined agreement, yet taken G®NBRAE OF tHE Com- a whole the conclusions as to intention which I deduced from the wonweaurn v. ASSOCIATED NorvTHERN Counreries. subordinate injurious result from a primarily innocent scheme ; Russell vy. Amalgamated Society of Carpenters (1); such conse- uences are sometimes inevitable, but there is no possibility upon he facts that such a fortuitous calamity has occurred in the present From first to last the path of the defendants has been marked yy demands as high as the public could bear, tempered only by such gleams of competition as appear from time to time, and accom- panied by determined and on the whole successful efforts to remove r nullify that competition. Errect or Derenpants' SILENCE. The evidence has now been reviewed in I think all of its important ' features. The mass of facts and figures marshalled on the various points of attack and defence show how little substance there is in "the defendants' contention that there is no evidence against them. The testimony adduced on behalf of the Crown, when arranged in - order and considered in proper sequence and relation, coheres into a id bank of proof which, unanswered by opposing facts and un- ualified by explanatory circumstances has forced my mind to the _ view that the case as presented by the plaintiffs is correct. And __why has there been neither answer or explanation by the defendants _ themselves? People, if they have a fair case in reply to an attack _ upon their pockets, especially if it be a serious attack, do not usually 'fail to prove it. Silence in such a situation can scarcely be regarded s golden; and when, as in the present instance, the attack is 'made on grounds of injury to the general community, it is still 'more difficult to understand. (1) (1910) 1 K.B., 506. 656 HIGH COURT H.C.or A. Add to that, as here, open charges of oppression and fraud mad ew incidentally but directly, backed by evidence strongly tendi Tur Krxe establish the correctness of those charges, and the question becon Awmonwey. Still more pressing why the defendants were not roused to so aera plain personal denial or explanation. Instead of that they 1 monweauru their extrication to the fertility of counsels' forensic resources. Associarey These have been great, and have required of me careful and de ormeRS examination. I cannot think that the defendants were actuat to maintain silence by mere disdain of consequences—the com parative triviality of the suggestion of not risking the expense of few days cross-examination is proof to the contrary—nor can I imagine it was simply defiance of the opinion or power of the n munity. If these were their motives, their silence would not at the matter. But if these were not their motives, I cannot but it—not of course as additional evidence—but as confirming 1 credit to be attached to the facts proved and the inferences t prima facie afford. Format Fryprves on StareMent oF CLamm. I am now in a position to deal with the statement of claim as a whole. Paragraphs 1, 2, 3 and 4 are true. Paragraph 5 is true, _ except that the Stockton Borehole Collieries Limited dates from July 1909, the Central Greta Colliery Co. Limited from 15th Febr ary 1910, and the Lymington Collieries Limited from 14th Octob 1907 to January 1910. As to paragraph 6 it is true that the busin of the colliery proprietors consists among other things of winni coal from collieries owned and worked by them respectively and in of, either direct or through agents in the ordinary sense to purchasers pe in one or more of the other States of the Commonwealth of 'Aus: tralia for transportation and for consumption in such other States, : and the defendants proceeded against, and each of them respectively, _ are now and subject to the dates specially mentioned have been at all times material to this action engaged in trade and commerce in coal among the States. s Paragraph 7 is true subject to the dates specially mentioned. — OF AUSTRALIA. 657 graphs 8, 9 and 10 are true; but as to these my findings are H- ©. or A. ly for the purpose of dealing with the questions of the combined pes ent and the combination. As to paragraph 11, for reasons Tue Kixe dy given I pass it by without any finding. Paragraph 12 is ywonvey- Paragraph 13 is true altering the word " Superintendent " to come ent." The defendant Forsyth has been and is also a director wonweacta the New Lambton Land and Coal Co. Limited. Paragraphs 14, WEE a 16, 17, 18, 19, are true. Paragraphs 20 and 21, 22 and 23 are XNO®THERN CoLurerigs, but with the qualification that Queensland is to be excepted. again must be understood of the business of each of the com- panies concerned, considered apart from the combination. Para- ph 24 is true. Paragraph 25 is true. This also is found to be e merely with reference to the combined agreement and com- tion for reasons already given. As to paragraph 26 I have not ient evidence to come to any conclusion upon it. Paragraph : "pass by as immaterial, paragraphs 28, 29, 30, 31, are true. ed the truth is much understated—see Ex. Y9. As to para- aph 34, Newcastle coal is as I have stated undoubtedly better household and gas-making purposes. For steam production not much difference ; one or the other may be superior ccording to the conditions under which it is used. For those takings equipped for Newcastle coal, it is distinctly disadvan- weous to use Southern coal ; mechanical alterations would often be y and expensive even were other coal easily procurable. , Newcastle coal may truly be said to have qualities which er it especially useful for use in the manufacture of coal gas, also for the purposes of domestic use, and under certain cir- neces for the purposes of steam production ; and in that sense possessing similar qualities is practically unobtainable in Aus- a, except from Newcastle and Maitland district, New South to paragraph 35 it is true. As to paragraph 36, it is true that defendant shipping companies with J. & A. Brown in 1906 sub- tially controlled about 80 per cent. of the whole carrying trade coal between New South Wales and the other States of the monwealth. In the same year, the Melbourne Steamship Co. and James Paterson together controlled about 12 per cent. Vou. XIV, 42 H. C. or A. 1911. Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED Norruern CoLLIERIEs. HIGH COURT The same figures apply to paragraph 37. Paragraph 38 is true What has been called an actual monopoly of the carrying trade up to the combined agreement a matter of free choice as to eve transaction. Paragraph 39 is true. It is admitted there competition but, I have indicated that, though the shipping e panies prior to 24th September 1906 were not parties to any treat of alliance, there certainly existed among themselves som in the nature of an entente cordiale. Paragraph 40 is true. As paragraphs 41 and 42 I have already stated that the allegations of the statement of claim are established so far as concerns the actual making of the contracts therein referred to, with the qualification _ that the modifications in the contract were introduced before 1909. : I now add that the rest of the allegations in those paragraphs are true and I explicitly state that I mean the contract was made and entered into by the defendants with intent to restrain trade and commerce to the detriment of the public. Paragraphs 43, 44 and — 45 are severally fully proved as to the whole of the periods respect: ively mentioned. Then as to paragraph 46. With regard to sub- paragraph 8a relating to supply and carriage of coal from New South Wales to Tasmania, I do not find that proved. With regard to sub-paragraphs 10a, 10b, 10c, 10d, except so far as prevention re-_ ferred to is included in the general stipulation expressed or implied not to carry any but Vend coal, there is no proof of the allegations. With respect to the rest of paragraph 46, I find that the defendant colliery proprietors and the Associated Northern Collieries and the shipping companies were in combination between themselves an the Melbourne Steamship Co. and James Paterson & Co. in relation to trade and commerce in coal between the State of New South Wales and the States of Victoria, South Australia, Western Australia and Queensland, and that the nature purposes and effect of the _ combination were as alleged, in various sub-paragraphs subject i) qualification I have mentioned. i I find the allegations in paragraphs 47, 48, 49, 50, 51, 52, 53, 54, : 55, 55a, to be true. I find paragraph 55a to be true to the extent : mentioned with respect to paragraph 46, In all the paragraphs up to — 55a inclusive as well as in the subsequent paragraphs, I find the intent : alleged to be proved. In relation to the dates, such as with respect _ s HCLR.) OF AUSTRALIA 659 * Stockton Borehole Collieries Limited, my finding of course takes H- ©: oF A- - effect as to the collieries that came in later only as from the dates pki previously mentioned, when they joined the Vend. I find paragraph Tue Kine 36 to be proved. Rom _ I find the following paragraphs relating to monopoly to be proved, GPNPRAL OF gee Bs THE Com- namely, 57, 58, 58a, 59, 59a, as to Newcastle Wallsend Co., A. wonwrattH ~ Kethel & Co. Limited and Lymington Collieries Limited., 60, 60a, as Auscdeeee : ee. : i ' ape NortHERN ' to the same collieries mentioned in connection with 59a. I except Go2rreares ~ from these findings the words " others to the plaintiffs unknown." _ As to paragraphs 61, 62 and 63 which relate to combination and _ eonspiracy to monopolise, these I find proved except the words "others to the plaintifis unknown." As to paragraphs 64, 65, 66, 67, 68 and 68a, so far as these may be considered a repetition of previous paragraphs they are found to be proved to the same extent, but, if they are meant, as I rather think they are, to charge a con- spiracy by the shipping companies among themselves only, as the main charge and then incidentally and in point of law superfluously ; introducing the collieries and similarly but conversely with regard to the Vend, I can only say that no such case was fought or in my _ opinion established, the contract and the combination and conspiracy _ relied on as substantive offences was the composite one of collieries on the one side and the shipping companies on the other. Of -eourse in a sense the shipping companies did combine with each _ other and the collieries did combine with each other and each did combine with the rest, but it was in the way in which I have ex- _ plained in the beginning of this judgment. If in law, contrary to _ my opinion, the paragraphs referred to should be held to have been _ proved, the facts speak for themselves, and afford the means of cor- . tection. As to paragraph 69, the defendants, who were not principals r and including the defendant the Associated Northern Collieries, did abet, counsel and procure the several contraventions which I find the principals committed. I cannot however see how the principals, _ that is the collieries, and the shipping companies themselves can be said to have aided, abetted, counselled and procured the offences _ they primarily committed. Paragraphs 71, 72, 73, 74, 75, are sub- _ stantially proved. As for paragraph 76 I have had no evidence ie directly substantiating the allegations in that paragraph. It is left 660 3 HIGH COURT H. C. or A. to inference whether the increased price of coal increases the price we of secondary production. Of course it naturally would, but whether Tur Krxq_ it did in any particular case there is nothing to show. There is some ANP THE evidence that in certain industries such as gas there was no increase ATTORNEY- GENERAL OF of price. As to paragraph 77 the averments in my opinion are cor- "eae ore rect. There has been no undertaking by the defendants or any » of them that they would abstain from pursuing the same course in 4 future. It has been rather the other way, their attitude seemed to me to be in effect one of resolve now to test the right to do what they have done in the past. Paragraph 77 is therefore correct. Dectsion on Frypives. The plaintiffs claim a declaration that the defendants and each and every of them have been guilty of the offences charged or some of them and that they be convicted accordingly. They also claim a declaration that the defendants made the contract or contracts charged and have carried out and are still carrying out such contract or contracts. They also claim a declaration that the defendants formed and entered into and engaged in the combination or com- binations. So far as such declarations are necessary I make them first as to each and every one of the offences severally which I have found to have been committed, and as to the contract made and renewed from time to time, its modifications of the same as stated, ; and as to the combination formed and continued as above stated. A! I convict the defendants, and each and every of them, of the several offences severally found against them respectively as above stated. Then comes the question of penalty. The law under which these proceedings were instituted provided that the penalty should be " Five hundred pounds." Mr. Wise has argued that there should be a penalty for every " offence," that is, for making the contract, for being a member of the combination, that is from the first day of joining it, also for con- tinuing to be a member of it, and for engaging in the combination which is rather using "' combination " in an abstract sense, the earlier Bie 3 99k use being rather in a concrete sense, the word being properly used in either sense. '' Combination" means either the abstract act of } C.L.R.] OF AUSTRALIA. 661 bining, the banding together of persons for a common object, or H.C. oF A. the concrete body or association so combined or formed. Pay Mr. Wise claimed that there might and in this case there should Tux Kixa be a penalty for every day from 25th September 1906 to the com- Fence mencement of the action. He cited White v. The King (1); The bad Apothecaries Co. v. Jones (2); Allen v. Worthy (3); R. v. Water- omy EALTH se (4), and Garrett v. Messenger (5), and City of Atlanta v. Chat- nee tanooga Foundry (6); Jackson v. The Blanche (7). eee Mr. Mitchell opposed this view and cited Milnes v. Bale (8). In my opinion that contention of the Crown cannot be sustained. Though I have convicted each of the defendants of the various veral offences, yet it must be clearly understood that that is so use what is substantially for the present purpose the one set of s in this case collected between the date of commencement f the combination and the date of the writ fits linguistically the several statutory descriptions of those offences. That does not iter the actual conduct of the defendants or multiply their con- aventions. Any one of those charges might have been selected by the Crown and prosecuted to conviction. If so, no further ceedings could have been taken on the same facts merely because hey answered another stated offence, and I must not treat the {fendants more harshly because all possible forms of contravention are set out in the same statement of claim. The substance of the matter as the Crown has charged it in the statement of claim is that in 1906 a contract in violation of the Act ~ was made and thereby or by means of conduct on the lines of its terms an illegal combination arose, which by various prolongations was continued down to the commencement of the action. Possibly each renewal of the contract might have been shaped as a new con- act entered into, the original contract being in 1906, the first 'renewal in 1907, the next in 1908 and so on. But though in technical 'ictness that might apply and probably would fit some of the words sec. 4 yet I hesitate to think it would be within its spirit, in the cumstances of this case. I can quite conceive a case where the (ACL, 152, (6) 127 Fed. Rptr., 23; 2 Fed. Anti- (2) (1893) 1 Q.B., 89. Trust Decisions, p. 299. (3) LR. 5 Q.B., '163. (7) (1908) A.U., 126, (4) LR. 7 Q.B., 545. (8) L.R. 10C.P.,, 591. (5) LR. 2CP., 583. H.C. or A. 1911. od Tue Kine AND THE ATTORNEY- GENERAL or THE Com- MONWEALTH v. AssocilaTED NorTHERN Coriierirs, HIGH COURT renewal of an expiring contract would be within both the letter and the spirit of the law and constitute a new offence as contemplated by Parliament. And the action if commenced earlier might have given — a new starting point, a new offence beginning if further continuance — of the combination were persevered in. But looking broadly at the facts here I am not satisfied that the rule of renewed contract being a distinct and separate offence was meant to apply to such a : case as the present. The contract was but the means of creating or helping to create or bring about a combination, its renewal being more like a new link in the same chain, and where there is a com- 4 bination it is that which makes the public danger, because the mere making of the contract is not so important as the action taken under it, and that in this case was by the combination. The sub- _ stantial facts were the creation and continuance of a combination, or in the abstract sense the combination of the defendants. And — Parliament appears to have so considered the subject in the amend- ing Act, because it imposes a daily penalty and in some cases im- prisonment for a continuing offence which is specially appropriate to a combination. That is the serious fact, and the Crown has rightly in my opinion, taken that view in framing the Statement of Claim. Paragraph 41 alleges the original making of the contract. Para- graph 42 speaks of another contract after January 1909 with modi- fications. I have found that, as a fact—as steps in the proof—the original contract as modified in 1907 was renewed in 1908 and 1909, and this is legitimate as evidence of conduct relating to the charge of combination ; but the idea of paragraph 42 was apparently a newly modified contract, and that did not take place, and whatever — opinion I form of the conduct of the defendants, I do not fell justi- fied in looking at the charge in paragraph 42 in a light different from that in which it was on the whole presented to them. This view is strongly supported by the next paragraph 43, which charges a com- bination—one and the same combination—between Ist October 1906 and Ist January 1910. Now if paragraph 42 were understood to mean that there was a distinct contractual break at the end of 1908, and a fresh and distinct start in 1909 of a new contract as a substantive offence, the combination would have been similarly charged in paragraph 43. So I do not think paragraph 42 was so intended. Again paragraphs 48, 50, 52 and 54 charge a continuance C.L.R.J OF AUSTRALIA. 663 m 2nd January 1907 to 31st December 1907, and again in 2nd H. C. or A. January 1908 to 31st December 1908, and again from 2nd January 1910 to 4th June 1910, of the combination mentioned in paragraph Tur Kio AND THE 1911. 46 which is there alleged to have been in existence on Ist January 1907. These considerations do not of course exclude the effect of the unlawful intent arising either at the beginning or at any other point wonwearra of time during the existence and continuance of the combination. pore 'That principle has full play and has been so treated during the case. pole in _ 'Then again in paragraph 57 it is charged that the defendants monopo- lised trade in and between October 1905 and June 1910 by making and entering into what is termed " An agreement or an arrangement _ between themselves, &c."' and then the substance of the agreement and arrangement is described as previously mentioned. The point of the matter is that that agreement or arrangement—in other words, the contract or the combination—is spoken of as if it were one continuous thing, susceptible it is true as an arrangement or a combination of the accompaniment of unlawful intent at any stage of its career. So in paragraph 58, which charges the attempt to - monopolise, and similarly in paragraphs 58a, 59, 59a, 60 and 60a. _ In paragraphs 61 to 65 and paragraphs 67 and 68a the same course _ is followed with regard to the charge of combining and conspiring, which being continuous might become unlawful at any point. A separate penalty for each year would still in my opinion be in- adequate to meet the merits or rather the demerits of this gigantic conspiracy, but justice is to be measured as Sir Edward Coke said _ by "The golden and straight metwand of the law and not the un- certain and crooked cord of discretion." And " the metwand of the __ law" here requires me to measure the offences by a fair and reason- able interpretation of the real intention of the legislature as applied to the facts of the case and the intention of those who framed the Statement of Claim, which in this instance are in my opinion sub- stantially the same. So reading it the defendants' behaviour resolves itself into one accumulated, though sometimes varying, mass of conduct, and one only, extended over a considerable period of time and in the course of that time touching the law at many points, and wearing many legal aspects ; I am therefore not justified in awarding penalties according to the number of aspects, or other- _ wise than according to the practically united mass of conduct H. C. or A. 1911. et Tue King AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v AssOcIATED NortHEern CoLuieries. HIGH COURT [191 1 charged. Still less ought I to inflict more than one penalty for contract, and only one for combination. I do not agree with the view presented by the Crown that " continuing " is to be treated for the purpose of penalties as separate from " being" and that every day of continuance is a new offence. The*case of Apothecaries Company v. Jones (1) is opposed to that view. In that case a Statute provided that any person who should act or practise as an Apothe- cary without a certificate should be liable to a penalty for every such offence. The defendant practised as an Apothecary without a certificate and treated three different persons at three different times on the same day. He was sued for three penalties. It was held that he was liable for only one penalty because the word "* practise " implied continuity. At p. 96, the Court in effect con- _ strued the Act as implying that the penalty was imposed for practising "on any day in the week." Then came the principle of continuity which applied during the whole of the day. Hawkins J. said (2), that the principle was :—" That the offence created by the Statute can alone be made the subject of conviction—the overt acts done in the commission of that offence are but so many pieces of evidence." In the present case the word " continues" cannot be restricted to one day, and therefore it must have its natural significa- tion which I have described in the earlier part of this judgment. I have dealt with the section as if it stood unaltered because Mr. Wise argued on that basis ; but it has been amended and it seems to me that Parliament has put an interpretation on the words which leaves no doubt whatever. The Act of 1910, No. 29, provides that sec. 4 of the Principal Act is amended by inserting after the words "* Five hundred pounds "' the words " or in the case of a continuing offence Five hundred pounds for each day during which the offence _ continues"; and a similar amendment is made as to sec. 7 which inter alia increases the punishment. I can only say the defendants are fortunate that the amending Statute was not in force prior to the institution of this action. - Then Mr. Mitchell argued that there could not be more than one penalty of £500 for all the defendants jointly. In other words that the defendants were not severally liable to penalties. The conse- (1) (1893) 1 Q.B., 89. (2) (1893) 1 Q,B., 89, at p. 96. C.L.R.J OF AUSTRALIA. 665 ence of such a doctrine would be alarming. Two individuals H. C. or A. ght each have to pay £250 for an injurious but comparatively 18! innoctious contract in restraint of trade, whereas 50 powerful Tae Kine 'monopolists would get: off with £10 each. I am satisfied that so .Ax>0ne unexpected and destructive an interpretation should not be adopted Nee ee ithout clear coercive authority. MONWEALTH Mr. Mitchell cited a case of great authority, Del Campo v. The eee (1). There it was held by the Judicial Committee that the Qj?t trea eiving goods on board a slave ship was the joint act of the owner and the master of the vessel, and that two penalties could not be warded, but only a joint penalty against both. But when the case carefully looked at it is seen that the ratio decidendi is against the _ board is made a joint offence; the words are, 'in every case the "persons so offending,' not every person so offending, and though, as was observed by Lord Mansfield in Rea v. Clark (2), ' where the offence 'is in its nature several, and every person concerned may be separ- ately guilty, there each offender is separately liable to the penalties,' it has been decided in Hardyman v. Whitaker (3), that where the - offence is made a joint offence by Statute, the parties concerned _ are liable to but one forfeiture ; this has been followed in Barnard -y. Gostling (4). Looking to the words of the Act, and these author- ities, their Lordships are of opinion that the separate penalties of ~ £10,000 against Del Campo and Riera must be remitted." In the present case the offence is not made a joint offence. The words pointed to by Lord Brougham as words which would have 'involved separate penalties namely "every person so offending " __are practically in the Statute, which says :—'* Any person who, &c., is guilty of an offence." That is each and every person doing the forbidden act is guilty and is liable to the penalty. I may here - quote some observations from Maawell on Statutes, 4th ed., p. 298, which seem to me entirely convincing, speaking of the case of R. Clark (5), above-mentioned, it said :—' The question whether he offence was joint or several evidently arose not from the nature (1) 2 Moore P.C.C., 15. (4) 2 East., 569. (2) Cowper, 610. (5) Cowper, 610. (3) Bull. N.P., 189. H.C. or A. 1911. eo Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v ASSOCIATED NortHERN ConLiERIEs. HIGH COURT (ou. of the offence, but from the nature of the penalty. If the penalty had been corporal instead of pecuniary, the distinction between joint and several offences could hardly have occurred ; for it would have been found difficult to apply the rule of one joint penalty to two offenders sentenced to five weeks imprisonment or twenty-five lashes. It would seem that the question whether the penalty is to be understood as separate or joint, where the Act is not explicit, would be better governed by the consideration whether the penalty was intended as compensation for a private wrong, or as a punish- ment for an offence against public justice." If on conviction for a second offence the Court under sec. 13 impose a term of imprisonment, would the defendants share it numerically ? The argument is untenable, and I hold that each and every defendant is liable to a penalty not exceeding £500. From what I have already said it will have been gathered that my opinion is that the full amount is not too much for the least of the offences proved, and accordingly I impose a penalty of £500 on each and every defendant proceeded against, except the defendant called the Associated Northern Collieries. I except this defendant be- cause though in a sense it is a separate organisation and has appeared as such, yet in effect all its members are fined to the statutory limit, and it would be unfair, and a virtual excess of Parliament's intention to fine them again indirectly through this Association. The defend- ants, Frances and Daniel Sneddon to pay one penalty jointly. Iysunction. An injunction is claimed in the Statement of Claim and is now asked for at the bar by learned counsel on behalf of the Attorney- General under sub-section 2 of section 10 of the Act which is in these terms :—" On the conviction of any person for an offence under this Part of this Act the justice before whom the trial takes place shall, upon application by or on behalf of the Attorney-General or any person thereto authorised by him, grant an injunction, restraining the convicted person and his servants and agents from the repetition or continuance of the offence of which he has been convicted." This subsection makes it a matter of right to obtain the particular ir C.L.R.) OF AUSTRALIA, 667 remedy and leaves no discretion to the Court. If it were a matter H. ©. or A. of discretion the circumstances are such that I should have no hesita- {®1- tion in granting it. I say this because it may be that subsec. 1 of Tum Kina 'sec. 10 also could be relied on to support the claim for an injunc- ,Anorxey- tion. My own view expressed on the application for discovery was oe and is that the claim for injunction was closely connected with sub- »1oNwzarra sec. 2 and the issues involved in the claim for penalties rather than ecco with subsec. 1, and I could not limit it to paragraph 56. But, Imay Corrrentrs. be mistaken, and I was then carefully guarding the defendants from discovery by what might have been regarded as a side wind. It may be that now it is to be supported under paragraph 56 alone. Consequently, I think it right to state that if the grant of an injunc- tion depends on discretion I exercise it by granting the injunction restraining the defendants, their servants and agents from the repetition or continuance of the several offences of which they have respectively been convicted. The practical importance of the matter is that if the claim falls within subsec. 1, there is no need to trouble about intent. It is _ sufficient to establish a contract or combination in actual restraint of trade or commerce to the detriment of the public. There is really no other method than injunction to protect the public, who are the complaining parties in thiscase. Ordinarily the _ Court has to consider whether in the circumstances, damages will be sufficient or whether convenience points rather to withholding than to granting the injunction. But here everything points to the _ absolute necessity of granting it if any relief is to be given at all. I need hardly say that the injunction in no way affects per se any agreement other than the combined agreement and the com- bination charged. The defendants must pay the plaintiffs' costs. Declaration accordingly. Penalties imposed and injunction granted. Solicitor, for plaintifis, Powers, Commonwealth Crown Solicitor. Solicitors, for defendants, Minter Simpson & Co., Sparke & Millard and Malleson, Stewart, Stawell & Nankivell.