GAS CONTRACT

Dominion, Volume 11, Issue 281, 16 August 1918, Page 7

GAS CONTRACT

PETONE AND HUTT TERMS OF CONTRACT CANNOT BE VARIED Yesterday afternoon His Honour Iho Chief Justico (Sir lioberl; Stout) delivered judgment in the case of the Petone Borough v. tho Lower Unit Borough, an originating summons to havo a declaratory judgment as to whether a contract for tho supply of gas from the Petone Borough to tho Lower Hutt Borough could bo varied. Tho questions submitted for decision wer3 as follow:— (1) lias tho defendant borough power and authority to alter or vary tho terms and conditions of agreement'dated'November 4, 19)3, between tlie .plaintiff and the defendant if the defendant for any reason thinks it expedient to do so, and in particular oa.ll the defendant borough increase tho amounts payable to tho plaintiff under tho agreement? (2) In tho circumstances, is the contract contained in the agreement of such a nature as to entitle tho Court, under Section 17 of the War Legislation Act, 1917, to review tho contract and exercise the powers contained in tlm section?

In the courso of his judgment His Honiur said that tho boroughs came to an agreement before the war for the supply of gas. Tho agreement was dated November 4, 1913, and tho plaintilf agreed to supply the defendant up to August 1, 1925. Last year the plaintilfs discovered that the price that was being obtained for tho gas was not sufficient to pay them for supplying tho gas, and suggested that thero should bo a conference between the parties to ascertain whether an agreement could he como to. In a letter written in June, 11)18, tho defendant council intimated that they had finally resolved that in faco of tho borough solicitor's opinion they had 110 power to agree to any variation of tho agreement so far as tho price to bo paid for gas was concerned. "I am of opinion," continued His Honour, "that tho defendant corporation cannot make a gift to tho plaintiff corporation. That has been laid down in many cases. This is a non-coumierciat statutory body. It is a statutory corporation, and as such it has only the powers that tho statute gives it. Tho statute allows it to make contracts, and it can submit matters in dispute to arbitration. and it can rescind or vary contracts that it had entered into, but that falls far short of distributing the funds of the corporation! 11s if they were funds for charitable.uses. Before it could be justified in altering the contract it must seo that it is to the advantage of.the ratepayers. 'I'ho answer te> tho first question is that unless tho council of tho corporation is of opinion that it is for the advantage of ratepayers that tho clause of thp agreement should be varied it has no right to vary it. As to_ tho second question, I am of opinion it is clear that this case does not come under Section 17 of the War Legislation Statute of 1917. This case is not like a case of a supply of coal from a foreign country, nor lias thero been in New Zealand any invasion by any foreign enemy. If this contract was held to lie affected by tho war, then all tho contracts in New Zea.lund must havo como to an end 011 tho declaration of war on August 4, 1914. Tho Court cannot hold that tho war had any effect on this contract, anil the Court cannot say that the council of the borough would be justified ill making a charitable gift of the funds of its corporation to its neighbouring corporation."

At the hearing 011 Wednesday Mr. B. C. liirk appeared for the Petone Borough and Mr. E P. Bunny for the Lower Tlutt Borough. Mr. P. S. Iv. Macassey, of the Crown Law Office, appeared for tho Attorney-General in tho public interest.