PETONE AND HUTT

Evening Post, Volume XCVI, Issue 40, 15 August 1918, Page 8

PETONE AND HUTT

THE GAS CONTRACT

SUPREME COURT JUDGMENT.

This afternoon the Chief Justice (Sir Eobert Stout) delivered judgment in the case of the Borough of Petone v. the Hutt Borough, heard yesterday. It. was an originating summons which sought to have decided 1 whether a contract between the two boroughs for the supply of gas could be varied. The questions submitted for decision were:—(l) Has the defendant corporation power and authority to alter or vary the terms and conditions of the agreement dated' 14th November, 1913, between the plaintiff and defendant if the defendant for any reason thinks it expedient to do so, and, in particular, can the defendant corporation increase the amounts payable to the plaintiff under the agreement? (2) In the circumstances, is the contract contained in the .agreement of such a nature as to entitle the Court under section 17 of the War Legislation Act to review the contract and exercise powers contained in the section.

His Honoar, in the course of his judgment, said that the boroughs came to an agreement before the war for the supply of gas. This was dated 14th January, 191 a, and the plaintiffs agreed to supply defendants up to August, 1925. Last year the plaintiffs discovered that the price that was being obtained for the gas was not sufficient to pay them for supplying the gas, and suggested that there should be a conference between the parties to ascertain whether a new agreement should be come to. The defendants_ did not agree to the conference, and declined to coma to an agreement. In a letter written in June, 1918, the defendant council intimated that it had finally resolyed > that in face of tho borough solicitor's opinion it , had no power to agree to any variation of the agreement so far as the price to be paid for gas was concerned.

"I am of opinion," said his Honour, "that the. defendant-corporation cannot make a gift to the plaintiff corporation. That has been laid down in many cases. This is a non-commercial statutory body. It is a statutory corporation, and as suchit has only the powers that the statute gives it. The 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 as if it were funds for charitable uses. Before it could be justified in altering the contract, it must tee that it is to the advantage of the ratepayers. The answer to the first question is that unless the council of the corporation is of opinion that it is for the advantage of the ratepayers that the clause of the agreement should be varied, it has no right to vary it. As to the 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," his Honour further re marked, "is not like a case of a supply of coal for a foreign country, nor has there been in New Zealand any invasion .by any _foi6ig'u enemy,- If this contract was held to tie affected, by the war then all the -contracts in New Zealand must have come to an end on the declaration of war on the 4th August, 1914. The Court ca.nnot hold that the war had any effect on this contract, and the Couri cannot say that tho council of the bor ough would be justified in making a charitable gift of the- funds of its cor poration to its neighbouring corporation."

At the hearing Mr. R. C. Kit\;,af.peered for the plaintiff corporation. Mr. E. P. Bunny for the defendant boroiurh, and Mr. P. S. K. Macassey for the'-AV torney-Generai.