COURT OF APPEAL.

New Zealand Times, Volume XXXIV, Issue 5662, 23 May 1879, Page 5

COURT OF APPEAL.

Tuesday, May 20.

(Before their Honors the Chief Justice, Judges Richmond, and Gillies.)

PKOUDEOOT (aI'REI.L.VNT) AND THE OTAGO HARBOR BOARD (rE.SPONDUNr).

Mr. Maeasiey wag heard in reply on behalf of tho appellant, and the Court took time to consider its judgment.

Tuesday and Wednesday, May 20 and 21. (Before their Honors the Chief Justice, Judges Johnston, KiohrnonJ, Gillies, and Williams,)

HENDERSON V. THE NAPIER HARBOR HOARD. This was a rule nisi to enter a nonsuit in pursuance of leave reserved at the trial, which took place before his Honor Mr. Justice Johnston and a special jury at Christchurch at the January sittings of the Supreme Court. Tho plaintiff obtained a verdict for £6IBB 6s. 4d,, and leave was reserved to tho Board to move to enter a nonsuit, &c., upon tho ground that there was no evidence to go to tho jury in support of tho plaintiff's claim. The action was brought to recover a large sum of money claimed to be duo to tho plaintiff in respect of the construction of the Napier harbor works. The total amount claimed in the declaration was £25,777 14s. 4d. Tho amount awarded by the jury was made up as follows: —I. To amount of contract, £30,500*; less sheet piling as agreed, £lO5 16s. 3d ; £30,099 3s. 9d. By cash received from Board, £27,253 Is. 9d ; £3440 2s. To interest on balance from 10th June, 1877, to date, 7 mouths at 8 per cent., £IOO 10s. 4<1,; £3006 18s. 4d. 11. Extrastoue in western embankment in consequence of alteration, £2563 45.; spare rubble, 300 yards at 25., £30;.536 yards at Is. 6d., £4O 4s, £7O 4s. ; driving 32 piles (40 feet), at £6, £192 ; 32 iron shoes at 35s , £56; amount due fur extras as per Mr. Graham’s statement of account, £1569 13s. 7d.; £4451 Is. 7d. Cr.: By cash received, £1569 13 s. 7d.; £2BBI Bs. £3606 18s. 4d„ £2BBI 85.—£6488 6s. Id. The rule nisi obtaiued by the defendant to set aside the verdict was granted by Mr. Justice Johnston at Christchurch on the day after the trial had terminated ; and it sought, among other things, to strike out an amendment in the declaration made by the Judge at the trial, for a nonsuit or verdict for the defendant, failing which for a new trial_ or a reduction of damages. The rule nisi was removed into the Court of Appeal, by an order made at Dunedin by Mr. Justice Williams on the consent of the parties. Mr. Macassey now moved the rule absolute on behalf of the Board ; and the AttorneyGeneral (Mr. Stout) and Mr. W. L. Rees appeared on behalf of the plaintiff to new cause.

The Attorney-General raised a preliminary objection that the Supremo Court of Christchurch had no jurisdiction to grant the rule nisi. The writ was issued in the Wellington district, and the defendant (a body corporate at Napier) was withiu that district. The issues were settled at Napier, and the trial directed to be held at Auckland. Immediately on the cause being tried, the record and findings of the jury should have been returned to the Supreme Court iu the Wellington district, where alone an application for a new trial could be entertained. He quoted rules 130, 341, and others from the Reg. Gen. 1856, and from Daniels’ Chancery Practice (4th ed.) to show that where issues were directed by the Court of Chancery, an application for a new trial must be made to that Court, and not by the Judge by whom they had been tiied. Mr. Justice Johnston pointed out that in those cases the tribunals were distinct, while here there was but one Supreme Court.

The Attorney-General quoted from the Supreme Court Acts, 1860 and 1862, and from the case of Gregg v. Kruli, 1 Ntio Zealand Jurist, in order to show that while there was but one Supreme Court, there were nevertheless a number of independent judicial districts with an autonomy of their own. - He contended that it would be subversive of an existing system, and give rise to considerable inconvenience, if an action could be domiciled, so to speak, in one district, and an application for a new trial entertained in another. Mr. Rees followed on the same side.

The Chief Justice suggested the case of ao action depending in one judicial district, and a single issue out of a series of issues being seat for trial in another district. Mr. Macassey contended (1) that the rule was rightly issued out of the Supreme Court at Christchurch ; (2) That the objection taken did not go to the jurisdiction of the Court, but was a matter of procedure merely ; and (3) That the plaintiff had waived the objection by deliberately consenting to the removal of the rule into the Appeal Court. Upon the first proposition it was submitted that the real test was “Where was the record ?” Every application made to the Court or a Juch'e must be determined by what was material and relevant upon the record. Rules of the Court were relied upon to show that the record was, properly at Christchurch ; that judgment must be signed there ; leave to move for a new trial given ; and consequently an application for a new trial should be heard there. Tho convenience of the thing was against the notion of an application for a new trial being heard by Judges ignorant of the merits. On the second question the Supreme Court necessarily had jurisdiction, while an application to a wrong division of the Court could at most be only an irregularity. Thirdly, the objection had been waived by the consent of the parties to remove the rule into the Court of Appeal. The Chief Justice intimated that the Jedges were not at present agreed upon the preliminary point, and the argument of the rule on the other questions would therefore proceed. The Attorney-General took first the objection raised by the defendant to the amendment allowed by the Judge at the trial. Tho subject matter of the amendment was always on the record as a claim for extra work, and the only effect of the amendment was to put a slightly different complexion upon it. Tho correspondence put in at the trial showed that the parties were always aware of the real nature of the claim, viz., that the plans had been altered, and additional work entailed without the knowledge of the plaintiff ; that this was done by the engineer, and his acts had been adopted by the Board. The Courts never interfered with the discretion of a Judge exercised at Nisi Prius in allowing an amendment. Mr. Justice Williams : Does that hold good when the Judge expressly reserves the question for tho Court in Banco ?

The Attorney General said that there were numerous authorities to show that the discretion once exercised tho Court would not interfere ; but in the present instance the amendment was properly made. Then next as to the nonsuit point. The action was based upon the inequitable and fraudulent conduct of the engineer in refusing a certificate after he had acknowledged that the work had been satisfactorily completed, and the collusive conduct of the Board in adopting what the engineer had done, when it knew that the plaintiff was entitled to his certificate for payment. The Attorney General quoted from letters, resolutions of the Board, and an opinion given by the Board’s solicitor, in support of his contention that the Board knew that the plaintiff was entitled to his certificate, and that the engineer dishonestly withheld it. It was impossible to dive into the mind or motives of the Board, but the facts relied upon would be sufficient to suggest an indictment for conspiracy. It was difficult after the plans and works had been altered for tho engineer to give a certificate within the strict letter of the contract, and that showed the absurdity of the Board insisting upon such a certificate as a condition of payment. The sth clause in the contract, relied upon by the engineer in his correspondence, only applied to extras ordered in writing. The Board having, by its own wrongful act, altered the works, it could not possibly set up the want of the engineer’s certificate as an answer to the action. Mr. Justice Bichmond : You may take it that the engineer did not himself inform the contractor of the alteration. Had the alteration been notified to the contractor you would probably concede that the fifth condition applied, and that an order in writing would have been necessary. • The Attorney-General would not deny that if the alteration had been notified that an order in writing would have been necessary.

Mr. Justice Richmond ; Then you will have to rely, will you not, upon the concealment the active concealment of the alteration ? The Attorney-General said that was the plaintiff’s case —that the alteration had been made without his knowledge, and when he remonstrated with the engineer upon the subject ho denied the fact l.wice before it was admitted.

Mr. Justice Richmond observed that this made the knowledge of the defendant, charged in the amendment introduced into the declaration, of some importance. The Attorney-General cited and commented upon Clarke v. Watson, 18 C.B. (n.s.) 278 ; Roberts v. Bury Improvement Commissioners, Law Rep. (4 and 5 C.R) ; Kimberley v. Dick (L. 8., 13 Eq. 1) ; and Scott v. Liverpool Corporation, 25 L.J. (Oh.), decided by ViceChancellor Stuart, where it was held that “ inequitable and improper ” of an engineer entitled a contractor to relief upon the ground of fraud. It was also contended tbattbe improper conduct of the engineer in the present case disqualified him from acting as an arbitrator. Reference was also made to Daniel v. Metropolitan R. Company, L. 8., 5 E. and J.A. ; and Ranger v. Great Western R. Company, 5 H.L.O. It was contended that there was ample evidence to go to the jury of combined action between the Board and the engineer, with a knowledge that they were wrongfully depriving the plaintiff of money to which ho was entitled under his contract. If there was no Fground for nonsuit, there could be no pretence for entering a verdict for the defendant. As to the next ground, that the verdict was against evidence, he must leave that to the Court to decide upon a review of tho Judges’ notes, obseiving that the case had been tried by a special jury selected at a place far removed from any local prejudice. Then, as to the verdict being perverse. : The jury at first acquitted the defendant of “ moral fraud,” but afterwards being required to reconsider their verdict the rider had been omitted. A jury could always be required to reconsider their verdict, and if the contention of the plaintiff were to prevail it would amount either to the Court saying that a jury could not be required to reconsider their verdict, or if they altered their first finding then that the verdict was perverse. The negation of moral fraud meant nothing. The jury may not have understood the effect of their finding, and when morefully directed by the Judge they may have considered it necessary to withdraw their previous qualification. The Attorney-General cited Reg. v. Meany, 30 L.J. (M.C.), as being a case strongly in point. Mr. Justice Johnston pointed out that was a criminal case, and the only question there considered was not the perversity of the verdict, but the power of a Judge .to direct the jury to reconsider their verdict before it was finally recorded. Mr. Justice Richmond : The question here is not as to the power of the Judge. The jury expressed an opinion that there was no moral fraud. Then the Judge gave them a direction, which may amount to this, that if they thought there was no moral fraud they ought to find for the defendant.

Mr. Justice Williams was under tho impression that a verdict could only be regarded as perverse when a jury deliberately disregarded the direction of the Judge in point of law. It was a very common practice with juries in these cases to let a person accused of fraud down as easily as possible. The Attorney-General further cited Lees v. Treweek (Mac. Rep.) and Wallace v. Dewar, Supreme Court, Otago, in support of his view that it was not because the just finding of a jury was opposed to a'later finding that their verdict could be.said to be perverse. He further contended that upon the findings of the jury the plaintiff's particulars of demand should he amended by reducing the amount credited on account of the contract moneys, and applying the amount deducted in liquidation of the claim for extras. Kirkpatrick v. Glendining, N.Z. Jurist, N.S., was cited upon this point. Lastly, if any items had been allowed by the jury which were not recoverable the plaintiff would consent to a reduction of damages in order to avoid a. new trial, Mr. Rees explained to the Court an tion which had been made in the declaration, as to the sums credited in part payment, at the time of the settlement of issues before Mr. Justice Gillies.

The Court adjourned until Thursday morning. . - - Thursday, May 22. HENDERSON V. NAPIER HARBOR BOARD, The arguments in this case were continued, and occupied the whole of the day. The Attorney-General (Mr. Stout) and Mr. W. L. Rees appeared as before for the plaintiff, and Mr. Macassey for . the defendant. Mr. Macassay, in supporting the rule nisi first contended that the amendment made by Mr. Justice'Johnston at the trial should be struck out. It either left the case as it stood, or introduced a very sweeping alteration in it. The two tests ordinarily applied in deciding upon the propriety of an amendment were (1) What were the questions which the parties went down to try, and was the amendment in furtherance of the object in view ; and (2) Was the amendment in accordance with the evidence at the trial. Now.here, inasmuch as the Judge expressly reserved the propriety of the amendment for the Court in Banco, no question could arise as to the power of the Court to review the amendment. Mr. Justice Johnston : The amendment might not have been granted but for the leave reserved t» review it.

Mr. Macassey urged that if the amendment effected any object at all, it enabled tho plaintiff to prove a case of alleged fraud at the outset' of the contract, whereby through a deception practised upon him he had been induced to adopt a line of work at the western mole of the harbor, in ignorance of the alteration which had been effected. The Chief Justice asked whether supposing a deception of the kind alleged had been practised, proof of the fact would not have been admissible in support of the charge of collusion between the Board and the engineer to keep the plaintiff out of his certificate ? Mr. Macassey would not dispute the admissibility of the fact as evidence iu support of that charge, but here the question was what were the material facts in issue that the parties went down to try. Upon the declaration, in the correspondence and iu the monthly vouchers sent in by the plaintiff, the claim made in respect of the alteration was regarded as an extra, and. the plaintiff throughout treated it as something entitling him to a certificate for payment under the contract. Mr. Justice Johnston asked how the amendment shifted the burden of proof, or required the defendant to he provided with evidence which the record in its original state would not have called for.

Mr. Macassey contended that upon pleadings prior to amendment the plaintiff undertook to make a case, showing that the alteration was sanctioned by the contract, that an order in writing had been given for it, and that tho plaintiff was entitled to a certificate for payment. The charge of fraud made in the declaration was the withholding a certificate at the last stage of the contract, while the amendment introduced a charge of fraud at the outset. In another point of view, what was alleged in the amendment might betaken toestop the engineer and the Board from raising the objection that there was no previous order in writing, but the other objection still remained that there was no certificate of approval. Next tho evidence did not authorise the amendment. According to the evidence of Mr. Davies, sen., he had all along suspected that there had been an alteration in the western line of work, while the engineer denied it down to 2nd April, 1878. There was no ground, therefore, for saying that the Board had induced the plaintiff to assent to the change. Then the Board had expressly stipulated that it should not be responsible for any alteration entailing increased expense, unless it expressly sanctioned it in writing. The only evidence of an authority was contained in a statement made by the engineer hr a letter to the Board, which had been forwarded on to Mr. Davies.

Mr. Justice Gillies expressed an opinion that the Board, by sending a letter to Mr. Davies, adopted the statement of the engineer. Mr. Macassey urged that there was nothing to show the terms upon which the authority of the Board had been procured, or the representation made to it in order to induce it to recognise the change. Next, as to the nonsuit point, the several amounts awarded by the jury were analysed and discussed, in order to show that an amount had been allowed as a balance due upon the contract largely in excess of the sum claimed in the declaration. The jury had treated a sum of £1569 I3s. 7d. as paid on account of extras, whereas on the pleadings this was credited in reduction of the contract price. The effect of this was to diminish the claim for extras, and withdraw them from the control of the engineer, and correspondingly to increase the Claim undef the contract.

Mr. Justice Gillies observed that according to tho evidence of Mr. Graham the extras had

been allowed and paid for, and therefore there was an end of the question. Mr. Macassey denied that they had been paid for as extras, and the vouchers showed nothing of the kind. The evidence of Graham only proved that he had gone over the vouchers and culled from them a series of items which the plaintiff contended were not in his contract, and as they had been paid for, the amount so paid ought to be deducted from the moneys credited on account of the contract. After further discussion of the items it was contended on the main point that the case for the plaintiff stood thus at the close of bis evidence; —lst. As to the contract moneys, the plaintiff had performed his contract, and was entitled to a certificate, which the defendant and the engineer fraudulently colluded to deprive the plaintiff of; 2nd, As to extras, the work had been done, and the pbdntiff was also entitled to a certificate in respect of them ; 3rd, As to the alteration in the western mole, the plaintiff was entitled to recover either on the ground of fraud, as an extra, or on a quantum meruit. It was contended that the plaintiff was bound to give evidence of actual fraud on the part of the engineer, and collusive combination with intent to defraud on the part of the Board. In orses of misrepresentation a person might be held answerable legal fraud, when there had been no intention to deceive. Smith v, Reese Silver Mining Company (L.R. 3, H.L.C.). But conscious fraud was necessary in such a case as the present. The cases cited were ; Clark v. Watson, 18 C.B. (8.5.) 278; Batterbury v. Vyse, 2 H. and 0., 432 ; Ludbrook v. Barrett, 46 L. J., C. P. 79S ; Milner v. Field, 5 Exoh. 829 ; Stadhart v. Lee, 32 L. J., Q. B. ; Kennard v. Featherston, 1 N. Z. App. oases ; Goodyear v. Mayor of Weymouth, 35 L. J. (0. P.) N.S. Even as against the engineer, the worst that could be said was that he might have been arbitrary or capricious, but there was no ground for questioning his honesty. Then there was nothing to show any fraudulent combination between the Board and the engineer. The Board left him to act entirely on his own discretion. Mr. Justice Richmond drew attention to some of the letters in the correspondence, and asked whether they were not susceptible of the interpretation that the engineer was seeking unduly to protect the Board, while at the same time he was -endeavoring to compel the plaintiff to submit to his (engineer’s) own terms of settlement.

Mr. Macassey submitted that the correspondence told in quite an opposite direction, that the engineer had absolutely refused to certify, and suggested that the parties should by mutual consent relieve him of his duty by terminating their contract, and adjust their differences themselves. It was not the engineer who was pressing bis terms, but the contractor who was demanding a certificate. Letters and telegrams of Mr. Kinross, the Chairman of the Board, were also relied upon to show that so far as the Board was concerned it was most anxious that the engineer should devise some method of amicable adjustment. The Court adjourned at 4 o'clock.