A POINT IN DREDGE CONTRACTS.

Evening Star, Issue 11673, 4 February 1902, Page 1

A POINT IN DREDGE CONTRACTS.

The judgment delivered last week by Mr Justice Williams in the case of W. and R. Baskett against the Bendigo Gold Dredging Company is rf very considerable import : a,nee as regards the gold dredging industry, in which the question of time contracts for the construction of dredges and machinery is so very frequently raised. Through long delays in the completion of these contracts,, great losses no doubt have been sustained, and it is well that companies should understand that they are liable to void the. penalty clauses against the contractors by neglecting to assert their rights at proper times, and not insisting strictly on the letter of the contract. The action was for £173, being a balance due on a contract for the erection and equipment of a dredge and for £2B in respect to certain work done at the request of the company. The case was heard and argued at great length in the early part of December. Evidently considering the principles involved as of grave moment, His Honor reserved judgment, which was delivered, as noted above, at th.; first sittings of the Court after the holiday recess. In this case, Judge Williams said, the work had been done, and the plaintiffs were entitled to be paid for it, unlees the defendant company were entitled to deduct ! penalties from the contract price. If such penalties could not be set off, no claim for unliquidated damages, nor any other reduction of the price, was before the Court. The plaintiffs contend, in the first place, that the right to the penalties was waived before the time arrived at which they Avere to begin to run ; and, secondly, that if that were not so, the right to them was subsequently waived. The plaintiffs tendered for the Avork according to specifications, the company agreeing to prepare the site for building the dredge, and the road to the same. This site, however, was not provided until October 16, 1900, whereas by the terms of the contract the pontoons had to be completed on November 16. There Avas nothing, however, the Judge’ said, in the evidence to show or suggest that the operations of the plaintiff were in any wav hindered or delayed by their not getting the site until the date mentioned ; but in that the company did not level and prepare this site (hey committed a breach of duty, and the plaintiffs were in consequence delayed in their work. Referring to certain English cases, the Judge stated that these seemed to show that if any delay is caused by the employer his right to recover pen alties is gone, even if the contractor could not have completed the Avork within the limit- time, if no delay had been caused by the employer. He thought, therefore, that the right to recover penalties Avas Avaived before the expiration of the contract Lime, and that no penalties ever accrued. If, however, the penalties were originally recoverable by reason of the contract not having been completed on the 16th November, 1900, it was contended on the parts of the plaintiffs that on two ground? the right to recover had been subsequently Avaived. One avos because payments on ae count had been made by the defendant company since that date, without deducting anv penalties, and the other that since that date extra Avork had been ordered and executed, which necessarily extended the time for completion. As to the first ground, it was to be noted that all the certificates for payment Avere given subsequently to the duto for the completion of the contract, and that the final certificate which made up the contract price, had an endorsement therein, that it Avas given “without prejudice,” the meaning apparently being without prejudice to any right the company had in respect to penalties. The fifth clause of the conditions Avas that the contract should be completed within eight calendar months from an acceptance of tender, “ failing which " the sum of £2 for every working day by “ which said time of eight calendar months “ shall be exceeded will be deducted from " any money due .to the contractor by way “ of liquidated damages, and not in the •• nature of a penalty.” It will be observed, the Judge said, that there is no agreement by the contractor to pay- penalties. “ If “ the company want to recover them, they “can only do so by deducting them.” In support of this view, His Honor cited a number of cases entirely to the point. The penalty of £2 a day, he proceeded to say, accrued due from day to day, and by the contract the penalties were to be deducted from any moneys due to the. contractor , but the whole amounts of the certificates were paid without such deduction, and therefore the conditions were not complied with. There was no power to recover penalties except by the method of deduction prescribed. “If once the contract has “ not been carried out by not deducting the “ penalties from the money due, it cannot “be reinstated so as to enable the same “penalties to be deducted from money “which may subsequently become due. T “ think that by the terms of the contract “in the present case payments on. account “ made without deducting penalties wipe “out all penalties due at the time of such “ payments.” As to the second ground, that the right to receiver the penalties was waived subsequently to the time fixed *or the completion of the contract by the ordering of extra work. His Honor, re viewing 1

the evidence, said the ordering of this work and allowing no time therefor set future penalties at large. He was of opinion, therefore, that the plaintiffs were entitle 1 to recover the balance of the contract price, and also the cost of preparing the site. The penalties not having been deducted, are not now recoverable.