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Tuesday, 24 July 1906

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - I am informed by the honorable member for North Sydney that both net and gross tonnage are registered tonnage.

Mr Watson - Whenever we hear a vessel of 11,000 or 12,000 tons spoken of, it nearly always means gross tonnage.

Mr Deakin - I can now answer the first question put by the honorable member for Parramatta. Sir James Laing and Sons Limited have constructed vessels for such well-known companies as the Peninsular and Oriental, Royal Mail, West India and Pacific, Union Castle, British India, British and Colonial, Ley lands, Natal Direct Line, Compagnie Havraise Peninsulaire, Toyen, Kishen Kaisha, &c.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - From what is the Prime Minister quoting?

Mr Deakin - From the West Australian newspaper of Tuesday, 10th July, which contains a long article giving dates and details of the manufactures of the firm.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - My information is from a very reliable authority, and I prefer to accept it to a newspaper report of that kind.

Mr Deakin - The newspaper report gives details.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - I am assured by gentlemen in Australia who are thoroughly familiar with shipping matters that the firm of Sir James Laing and Sons has never constructed a mail steamer of any kind - that it has not engaged in that kind of business. Hitherto, it has confined its attention to sailing vessels and tramp steamers. Up to date, ithas not undertaken the building of swift passenger and mail boats.

Mr Wilks - The quotation by the Prime Minister may apply to the cargo steamers belonging to mail companies.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Possibly.' The interjection of the honorable member for Dalley is one which the Prime Minister might perhaps take into consideration at once. Sir James Laing and Sons may have constructed cargo boats for these mail companies.

Mr Deakin - They have built ships more than 700 feet long.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - That may be true, and yet those vessels may be cargo boats.

Mr Ewing - Sir James Laing and Sons stand high amongst the ship-builders of Great Britain.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - I am aware of that. ' I am merely pointing out that up to date they have only specialized in a particular class of steam-ships, and that, consequently, we have no guarantee that they themselves will build the vessels with which to carry out this contract. Of course, there is the alternative that, upon the strength of having obtained this contract, they may be able to secure sufficient capital to enable them to embark upon this new shipbuilding enterprise. If so, the Government should have satisfied themselves as to the facts of the case in this particular regard.

Mr Ewing - If they neglect to go on with the contract they will lose , £27,500.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - That would be a mere fleabite to them. By-the-bye, I should like to make some reference to that matter at once. We have been told that the amount which will be forfeited by the contractors in case of non-fulfilment of the contract is £25,000. But I would point out that the contract itself is so drawn that under no circumstances whatever can we recover more than that sum. No matter what may be the damages in which the firm- may land the Commonwealth by any failure on their part, the full extent of their liability is £25,000. That sum is to be regarded as a liquidation of damages, and not as a penalty.

Mr Deakin - It is not a limitation. On the contrary, it strengthens our position verv much.


Mr Deakin - It does. Every legal member will recognise the force of that contention.

Mr McCay - It doss not enable the Government to recover more from the contractors.

Mr Deakin - But it enables us to get the whole of the amount with very much less difficulty.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - That is so, but I am pointing out how unfair the contract is as between one side and the other. Let us suppose that the contract is not proceeded with. Let us assume that twelve months hence Sir James Laing and Sons say, " We have not the requisite capital, and cannot fulfil the contract. We will forfeit the £25,000 which we have deposited." What will be the result to the Commonwealth? If we decided to accept the next lowest tender it would involve us in the payment pf an additional £300,000 during the currency of the contract. That tender, I understand, is £30,000 a year more than the amount demanded by Sir James Laing and Sons, so that in the event of the successful contractors being guilty of a breach of the contract we should incur a penalty of £300,000 during the currency of the contract. Seeing that Sir James Laing and Sons would forfeit only £25,000 should thev fail to complete the undertaking, and that the Commonwealth would lose at least ^700.000, the position to me seems a verv one-sided and unequal one. I admit that such a risk might safely be incurred in the case of companies which are established, and which we know would carry out the contract - companies which have carried out such contracts in times past, and upon whose experience therefore we might confidently rely. But here is a firm which, so far as we know, has not yet entered upon the business of mail contractors at all. It has not yet constructed a vessel of the calibre of those required to carry out the contract. If twelve months hence it was unable to complete the contract - seeing that the existing contract would then have only six months to run - the probabilities are that the price for the conveyance of our mails would be increased very considerably. Consequently I say that the minimum possible penalty which the Commonwealth would incur in case of a forfeiture on the part of Sir Thomas Laing and Sons is £300,000, and that it might - and probably would - amount to £500,000. But the contractors would escape by forfeiting £25.000. and in the contract itself we expressly bar ourselves from suing for any further penalty, no matter what the damages may actually be to us. I believe that in connexion, with an undertaking of this kind, where, so far as we know, the contractors are treading upon virgin ground, and where all the risks incidental to the undertaking are to be met, there ought to be some approximation as to the liability on both sides. If we are to stand to lose to the extent I have indicated the contractors should also be liable to lose similarly in the case of failure or forfeiture. If the contracting firm is a big one, that ought to increase, rather than lessen, t'he liability to penalty- I, therefore, think that this part of the contract ought to be rectified in the direction I have suggested. It is said that no deposit is required in connexion with our present contract, but the difference is that the Orient Company is a going concern, having interests in Australia. It has been contracting with Australian Governments for the last twenty, thirty, or forty years, and, therefore, the same penalties are not requirable as are necessary in connexion with a totally new company in a totally unexplored field. I hope that the Minister will tell us as much as he can - I think he ought to tell us all he knows - about the operations of the contracting company, and what guarantee the Government have that the contract will be carried out in the way provided.

Mr Fisher - Does the honorable member desire a larger deposit?

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - I am speaking not of the deposit, but of the penalty for forfeiture. Clause 10 provides that the whole amount which is enforceable as liquidated damages is £25,000. The Commonwealth will be unable to recover a. half-penny by way of penalty; the amount of the deposit represents the whole penalty to which they can be held, no matter what the consequences may be to us.

Mr FISHER (WIDE BAY, QUEENSLAND) - if the company do not proceed at once with the construction of thi steamers we can enforce the penal tv.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - No; we car. enforce no penalty; all that we can do is to liquidate the damages to the extent of the deposit of £25,000.

Mr Fisher - I think that is verv fair. Mr. JOSEPH COOK.- lt is so 'far as it goes, and I am not complaining of it. My only complaint is that by this contract we' shall specifically exempt them from any other penalty.

Mr Ewing - Will the honorable member read clause 10, and then turn to clause 38 of the General Conditions. t think that if he does so the position will be explained to him. The condition in claus* 38 relates to clause 10.

Mr Mahon - And so with clause 39. Mr. JOSEPH COOK. - Yes, but we still have the same limit.

Mr Ewing - Under clause 38 the contractors are required to" enter into a bond in a sum equal to one-fifth of the annual subsidy, and to find sureties for the due performance of the contract.

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