WARDEN’S JUDGMENT.

Greymouth Evening Star, Volume XXXI, 21 November 1901, Page 4

WARDEN’S JUDGMENT.

Pactolus^old^elgi^C^,

y. John Anderson. ' n ymbim iuimrjz In the Warden’s Court atJStfeftQlh 2o,tji

- October, 19U1. i3y dated 30th Novemßer T l§99, >A e aut therein styled i'Alrtmtractor **agreed with the company therein styled em-. ployers ” in the following manner, that'is to say . jj/Jjoutf lino liutf hiudnoN (1) That the corf§r^t^T'shMion ; orbefaTci the 3rd Jtllyi 1900, kOmpleterundJmish. all the work contained and mentioned in the jpecification and conditions thereunto annexed, 'hut and if "the odhti'actof ’shall fail to eofhpleto th 6 saSdwork'a* the* date! mentioned abovb/ht‘4hall absolutely for 1 -' feit and pay to the employers by way of liquidated ing per day for en f ofe MidWieEjc #tAkmg cl ay beyond the f «d ( - ,3rd July,, 190°j j}?. r r, ing which.the swift.fork, tinfinislmt, J and s the said ’eiliplbyers may deduct the amount so forfeited out or any monies due to the contract or-onac count, of the said work.

Then follows (2) the provision for payment of the contract price. The 3rd and concluding paragraph of the agreement is as follows;

The contractor shall truly observe, perform, keep and abide by every clause, condition, specification and provision in the said specification and general conditions of contract hereto annexed respectively contained, expressed, or implied. In case of any delay in the coming to 1 and of any material which could not have been procured in the colony and provided that the contractor can show that he has taken all possible means to provide the said material in _ the most expeditious manner and provided also that the contractor can show that the said delay in the delivery of material is the sole cause of delay on his part in completing his contract, then the engineer may allow the contractor such additional time as he may deem necessary for the completion of the contract.

Then follows a provision as to progress payments. Clause 4 of the General conditions is as follows: Extra Work—No claim for extra payment will bo allowed except under the written order of the Engineer that the work claimed for is the subject of an extra charge. The engineer reserves tho right to make any alteration from the original plan, and any such alteration shall bo valued by the engineer and should the value of the alteration be greater than the original work, then the Contractor shall be paid tho difference in value, and, diflerenco of value and extension of time, if necessary, to be stated in the alteration order. Clause Bof the same conditions is as follows:

Time for completion—The whole of the work included in the contract to be completed within 8 months from the date of accepting the tender. The sum of £3 sterling will be deducted from any money due or owing to the contractors for each and every working day by which such time of eight months shall be exceeded—such deduction being as and for liquidated damages, and not in the nature of a penalty. The works referred to in the agreement and general conditions are thus stated generally in the specification as follows :

Specification for complete dredging macnine for the Pactolus Gold Dredging Coy,

This contract shall include the supply of all machinery, tools, lamps, matting, wove wire matting, erection of all machinery on pontoons, and the supply of timber and iron, and erection of housing over machinery, and all necessary plant and material for carrying out the work.

The Pactolus Gold Dredging Company (Limited) undertaking to supply to the contractor the pontoons and framing built and moored on their claim and one 12 h.p. Marshall engine delivered at Grey mouth.

In order to dispose at once of this last condition I find that the Plaintiff Company fulfilled their undertaking in ample time, and that they in no way caused any delay lor inconvenience to the contractor in respect thereof. I find that on the 3rd May, 1900, the manager of the Company wrote the Defendant, warning him that in the event of his not completing within contract time the Company would be put to considerable loss, and that the directors would enforce penalties. To that the Defendant replied on the 7th May, stating that he had been delayed by nonarrival of material from Great Britain, and asserting emphatically that he undertook the contract under penalties provided material could be imported in time. And he further stated that the whole had not then reached him, but that he hoped at an early date to ship the hulk of the machinery. . On sth July the manager wrote again, complaining of dilatory conduct of Defendant, and referring to his letter of May 3rd as to penalties, and asking Defendant to name a date when he expected to complete the dredge. The defendant replied on the 9th July again alleging that delay had been entirely caused by non-arrival of material from England, and strongly resenting the threat of penalties, and intimating that he would not pay any. To this the manager replied on the 16th July, in effect, closing the correspondence in consequence of the tone of defendant’s conclusion of his letter. I have summarised this correspondence as it bears on clause 3 of the agreement. The correspondence itself is all contained in Exhibit E. I find that the defendant’s staff of men did not arrive on the Coast till the 23rd July, 1900, when they went to work on another dredge known as the Nelson Creek Dredge. The first work on the Pactolus Dredge was laid out by defendant’s overseer on the 7th August, and his men started to work on the 9th of August. The staff consisted of four or five men with occasional labor, and this staff worked alternately on the Nelson Creek and Pactolus dredges. That from August defendant's staff was absent all September, that they worked on the Pactolus all October, 11 days in November, 9 in December, 25 in January 1901, and finished on the 13th February 1901. That the staff were from time to time idle because of non delivery of mrterial on the ground. That if from the time of starting to erect the dredge four or five men had been continuously employed on the dredge and material had been delivered in due course ten weeks would have been ample for the completion of the work.

I find that only one alteration involving extension of time was made, viz ; An alteration on the tables, order for which was given some time in July. There is some little discrepancy as to the time involved in that alteration. The plaintiff’s overseer Cowan states that the defendant’s overseer told him it would take four days for himself, a, carpenter, and a laborer. The plaintiff’s engineer states in his evidence that he would allow six men five days as a fair time for making the] alteration. The engineer gave no alteration order and no written extension of time was given during the contract either verbally or in writing till

one in April 190E#fiich I ' w|i| givehJpnl^lfe'May^: 1901, for £lO2. os 3d extras, this included ,tlm extra .labour on the but be- : f cnid;thitb was only fo'r duplicate •jiaius 1 whWh-'etMild! bj-thade at the shops and otherwise did not, the joke the ‘necessary extension fit timfc vh * )' JD4.4$ : 294B»jf| th'f wrote the following, letter to the defen- ! djajnfc e jflfdcloSe certificates on Tgctolus contract for £B3O. This con'fci'acf/ vras' 46rSLVtyl months Ibehand-j-tirfie i 'Abet ivA cannot’ reasonably time’3 i dMaji l bn arrival of material/more itfaah > 90 •‘w'brking' r days, ■leaving’ etillo some 494’: working days behind time which at £3 per day afnotoh# to £282.' The'! question' of enforcement of this penalty must he with the Company, and 'we think yon had better communicate with them direct. (Letter in'Exhibit K).” There were in all 11 certificates given ; the Ist stated 2,4th.January,; 1900, the last for extras Slsy .'hlay, 1,901. The only one of those giving extension of time being that of 24th of April, 1901, accompanying .the letter of that date givon above. The certificates are all included in Exhibit “ G.” I find that the extra work did involve a necessary extension of time, and that a certificate was given for it without extending the time, and that the certificate was given after all the work was completed. As to the certificate of allowance for time owing to the delay in arrival of material from Great Britain I find the following facts: It lay upon the contractor by the terms of the provisoes in clause (3) to show (Ist) that he had taken all possible means to provide tbc said material in the most expeditious manner; (2nd) to show that the said delay in delivery of material was the sole cause of delay on his part in completing his contract. And it was only on these conditions that the engineer could allow the contractor such additional time as he might deem necessary for the completion of his contract.

I find that there is no evidence to show that Defendant had taken all possible means to provide the said material in the most expeditious manner. And that Mr Cutten, the engineer himself, negatives the second, because in his evidence he said: —“Anderson was delayed with elevator ladder and buckets, a part of which is done by boiler-makers and the trouble arose from the difficulty in getting suitable men ” and “ after foreign material had arrived there seemed to be a shortage of men in the shops. He (Defendant) had a number of other contracts in hand.”

Mr Cutten says :—“ My brother went to Christchurch and looked into dates of arrival of material, and from information he obtained he considered 90 days a reasonable time ”; but he nowhere says that he gave either proviso of Clause 3 the least consideration, and neither his letter nor his certificate state that the conditions existed, under which alone he had authority to allow the extension. It is also in evidence I find that even when Defendant began to erect the machinery on 9th August, 1900, he employed a single staff of four or five men on two dredges instead of actively proceeding with the Pactolus that the Pactolus ought, even starting to work on the 9th August, to have been completed by the 18th October, whereas he did not complete till the 23rd February, 1901 —1G weeks beyond the 18th October, 1900. I have now to state the facts as to what took place between the parties resultant from the engineers letter and certificate of 21th April, 1901. The whole is contained in correspondence between the parties included in exhibit P.

It begins with a letter from defendant to plaintiff’s Manager dated 25th April, 1901. In this letter defendant refers to the deduction by the engineer of £282 under head of penalties, and asks the payment of the amount to him in the ordinary course. To this plaintiff’s Manager replies, 29th May, 1901: “I am instructed by my directors to inform you that the amoant of £282 deducted by Messrs Cutten Bros, from the final payment of your contract will without prejudice be accepted by this Company in full satisfaction of their claim against you for delay in completing your contract.

As this company lost £7OO or more through your delay in completing an action will be brought for this amount, failing your acceptance of the above offer which is made without prejudice. We are aware that it is a moot point whether we can deduct the £282 off your payment, but you are no doubt aware we have right of action for damages. To this the defendant replied on 3rd June: —’‘With regard to the money kept back on our contract we have- handed your letter to our solicitors who are communicating with you.”

On the 3rd Juno Messrs Wilding. Lewis and Rolleston wrote plaintiff s manager that they had been consulted by defendant and had advised him that the company could not deduct £282, and that failing payment proceeding would be taken to recover it.

On the 17th June plaintiff’s manager wrote defendant as follows :-“At a meeting of the directors held on Friday, the 15th, the following resolution was carried —viz., that the amount of £282 deducted from Mr John Anderson’s contract for penalties be paid him and that the legal manager of the company make out a claim for damages and take necessary steps to proceed for the recovery of the same. In conformity with this I have now to inform you that if you will draw for the above amount your draft will be paid on presentation,” Thereupon defendant drew on the company for the £282 and the draft was paid. The defendant’s counsel relied on the case of Anderson v. Tuapeka County Council, N.Z.L.R. Court of Appeal, Yol. XIX. p. I, and the cases therein cited as an authority that in this case the penalties had been enlarged and could not be recovered. The two grounds for penalties or liquidated damages are distinct from each other.

I am of opinion that the extras, which were certified by the engineer, and one of which he admitted required an extension of time, come within the decision in Anderson v. Tuapeka County Council and effect an “ Enlargment of Penalties.” It may be urged that the extras were so. slight and the time involved so short that consequences so serious should not result. But the question of magnitude does not govern a principle. The mischief of the failure to fix the time of extension is apparent in the fact that even now there is no really satisfactory evidence as to the exact time for which the contract ought to have been extended. Toe provision is as Mr Justice Williams points out a provision for the advantage of the company and they should have seen that it was effectually carried out. Counsel for the plaintiff suggested that there was a verbal agreement as to time between Mr Cowan representing the engineer and Mr Middleton representing the defendant but there is nothing precise in the way of any agreement between them nor was any such agreement communicated to the engineer or adopted by him.

As to the 2nd point: —The extension of time by the engineer on the non-arrival of materials, that is altogether on another footing. There it was surely impossible to fix any extension at any time during progress of the work. This provision is in the agreement alone, there is nothing imported from the general conditions.

first in clause,,(l) an absolute J unqualified defendant .plete; the woil| oja »iw|f§rJuly aw’m default Iti’ -%ayi liquidated damages. !) (Then in (3) there is a provision inserted which defendant in his letter of 7th May says be | specially relied on. Therefore jvp-’iOttst read it, not as the plaintiff comrequirement, not as something to be construed against the plaintiff company but as jfor defendant’s advantage and security'—to be construed strictly against him. It is the reverse ofj, 'the position contemplated by Mr Justice Edwards at 'p; 10,where he cites “Pollock on Con’r’ sand says “ moreover, it, (the poqfraot) wffgtpf epared by the respondents 'arid tHel WfflMß are ambiguous. _ I think that the’ Court is justified in holding that they must ba taken most strongly "against tho respondents. But here the words are not ambiguous. The Engineer might allow tho contractor additional time in respect of delay in his receipt of foreign material, provided defendant could show that the said delay in delivery of material was the sole cause of delay on his part in completing bis contract. How then could this be ascertained until the contract was completed ? By no possible reasoning can it bo hold that the extension should have been certified from time to time. Was tho Engineer to go every day to the defendant’s shop and take a, note of the delay in receipt of every item of material: and even if he did he was bound by the proviso. He could not give a certificate until the completion of the contract, because he could not possibly say until the completion that the nondelivery of the material was the sole cause of delay in completing. As a fact I find that it was not the sole cause, that there were other grave and material causes of delay. This was not a clause imposing a penalty but a separate clause, relieving tho defendant from the penalty imposed by a sepaiate substantive agreement and only under a definite state of circumstances. It may be urged that this is immaterial in view of the fact that the Engineer has certified. But the Engineer had no power to certify, and the defendant must have known it. The powers of the Engineer were strictly defined and limited by tho provisoes. He could not give a valid certificate except in accordance with the limitations annexed to his authority. The plaintiffs have never ratified that certificate and are not bound by it. I have referred at length to this point because it is weighed in my ultimate decision. It seems to me clear that the penalties being enlarged by tho extras admitted the plaintiff is entitled to recourse to open damages. That is certainly admitted by Mr Justice Williams and Mr Justice Edwards, and indeed, is in conformity with reason and justice. If the enlargement of [Jpenalties deprived the plaintiff of all remedy, if he was bound to stand on the liquidated damages or get nothing, then it would follow, that once penalties enlarged the contractor could set him at defiance, and no limit could be put to the contractor’s delay or the plaintiff’s losses.

I come to the conclusion that the penalties having been enlarged by the allowances of extras, the plaintiff has his remedy in damages. In strict construction of the contract, the delay should be reckoned from the duo date of completion as fixed in the contract less only the necessary time allowable for the execution of extras. I have now to deal with the measure of damages. The rule in Hadley and Baxendale is that “damages should be such as may fairly and reasonably be considered either rising naturally, i. e. according to the usual course of things, from such breach of contract itself or such as may reasonably be supposed to have been in contemplation of both parties at the time they made the contract as the probable result of the breach of it”. . . The plaintiffs in their evidence urged three grounds of special damage : the expen>e of employment of a dredgemaster, 2nd the loss of interest on capital idle, and 3rd the loss of profits. I know of only one case analagous to the first ground, the case of Waters v. Towers 8 Exch 401, and this case Crompton J. in the case of Smeed v. Foord, 5 Jur. N.S. 291 (1859), says was treated as overruled in Hadley v. Baxendale —the Ist ground, therefore, must be rejected nor is there any authority for the 2nd. The cases most nearly in point arc Cory v. The Thames glronwork Company L.R. 3. 11. B. 181 and The Trent-Humber Company exparte Cambrian Steam Packet Company, 3 Chancery Appeal cases, at p. 117 the Lord Chancellor says “If a profit would arise from a chattel and it is left with a tradesman to repair, and detained by him beyond, the stipulated time the measure of damages is prima facie the sum which would have been earned in the ordinary employment of the chattel in the time.”

On the “hearing in the Court of Ist instance 6 Eq. cases at p. 409 V.C. Giffard, says “ The damages as regards the first part of the claim will be the not profit, which the company might have ohtained by chartering the vessel, if she had been delivered on Ist April 1865 instead of 17th May, 1866. And in the case of Fletcher v. Tayleur 25 L.J. O,P. 65 decided by Willis J. and lowis J., it was laid down that, “as interest ifjthe measure of damages on breach of contract to pay money so in breach of a contract to deliver a chattel, the measure of damages should be the average profit made by use of such chattel.” Here there can bo no question as in Cory v. Thames Ironworks Company, as to the intended employment of the dredge, and either alternative of the rule in Hadley and Baxendalc will fi>. the case. It was suggested by Defendant’s Counsel that since the gold still remained in the ground, there was no loss to plaintiffs’ beyond interest on the value of what might have been raised—such a contention can hardly be regarded, seriously. A dredge is purchased and employed to work the auriferous ground and extract the gold, not to lie idle, ani as must have been in the knowledge of the Defendant by the Mining Law if Plaintiffs should fail actively and continuously to work the ground, they would incur forfeiture of taeir license and lose the claim.

As to the lime in respect of which a liability rests on the defendant, I have to bear in mind that this is a court of Equity and it has a wide power of adjustment of disputes—and it is I think the duty of the court to endeavour to deal equitably between the parties. Though the conditions upon which the extension of time owing to the arrival of materials were not fulfilled and in strict law extension could not have been insisted on. I hold that an injustice would be done to the defendant if no such allowance were made. The engineer at the conclusion of the works as I have stated took eomo trouble to arrive at a fair calculation of the hinderance in point of time caused to the defendant by the non-delivery of the materials from Great Britain, and he assessed it at 90 days which he held to be the maximum he could allow, I shou'd perhaps bo justified in reducing that time or in including in it the time for extras, but that course would probably only raise a new issue which it is desirably to avoid. I therefore accept the engineer’s assessment of 90 days in respect of delay of materials and the four days the time considered sufficient by Middleton, the defendant’s agent for the execution of the extra work. I think that that is a more reliable estimate than that of the engineer, given in court, whose attention was not called to the extras, who had himself no precise knowledge of the work at all equal to that of defendant’s agent, who carried it out,

I find that the plaintiffs proved (see exhibit “I ”) their actual profits from the 29th March, 1901, when they began operations to 12ch September, 1901—24 weeks—to he £835 19s sd, and they proved that since that date that scale c f profit has been considerably exceeded. Taking the above average of profits earned during 24 consecutive weeks, I assess the damages in this case at £447 15s for which amount I give judgment for the plaintiff company with costs. E. S. Hawkins, Warden. 31st October, 1901.

Court fees, £1 Gs. Pees in S.C. £5317s 9d. 3 witnesses subpamed— Hamilton, from Grey-

mouth £2 15 10 Faithful from Greymouth 2 15 10 Cutten from Dunedin (1 19 10 £12 11 G Professional Counsels fees ... 36 15 0 £50 12 6