POWER SUPPLY

Hawke's Bay Tribune, Volume XXIII, Issue 71, 6 March 1933, Page 7

POWER SUPPLY

GUARANTEE ALLEGEDLY BROKEN HB. BOARD v. BORTHWICKS. AN ECHO OF THE BIG ’QUAKE. An alleged breach of guarantee arising out of an agreement to supply and to consume electric power formed the basis of a claim heard at the Supreme Court, Napier, to-day before His Honour Mr. Justice Blair, when the Hawke’s Bay Electric Power Board proceeded against Thomas Borthwick (Australasia), Ltd., seeking to recover the sum of £2,083 allegedly due under the guarantee. The freezing works at Paki Paki, owned by the defendant company, were extensively damaged by the earthquake on February 3, 1931,

the earthquake on February 3, 1931, and subsequently the company elected to terminate the existing agreement, which had twenty-seven months then to run, as stated by the Power Board. Mr. J. B. Callan, of Dunedin, with him Mr. H. B. Lusk, appeared for the plaintiff board, while the defendant company was represented by Mr. H. F. Johnstone, of Wellington, with him Mr. J. Macfarlane Laing, of Masterton, and Mr. A. C. Jessep, also of Wellington. Mr. Callan, in opening the case, said it would be proved that in order to give the supply under the agreement it was necessary for the board to do certain csaential work, which was very expensive. This included several miles of steel towers. Had it not been for its obligation the board could have done with a parallel system instead of the ring-feed system that had to be adopted. Towards that initial capital outlay Borthwick’s contributed nothing, the contract not imposing upon them the liability to find any of it. It was important to the board before undertaking the work that there should be some continuity of supply and a guarantee or agreement was subsequently entered into. Counsel submitted that the nature of the agreement contained alternative promises rather than a guarantee. GUARANTEE EXCEEDED. The defendant company undertook to take a certain quantum of power—to consume £lOOO worth per annum or | to pay up to that amount. The term i of the agreement was for a period of five years, it being determinable by either side with six months notice after the expiration of the five years. The guarantee tor supply commenced on January 1, 1928. Counsel pointed out that the guarantee was over annual periods, each being a separate entity. At the time of ihe earthquake the agreement had been current for 39 months out of the 06 as held by the board to exist under the agreement. It was only reasonable to add that the amount of the guarantee was greatly exceeded each year. The earthquake affected both sides, but very unequally. The works of the defendant company were damaged to such an extent as to make it impossible to use electricity for industry until they were reinstated. The plain tiff board submitted that the period necessary to reinstate would not exceed ten months. The damage to the hoard’s lines was trifling and could have been rectified in a very short time. Had the company’s premises not been damaged the Board could have furnished all the supply necessary by February 6, three days after the earthquake. Evidence would be given showing that other industrial concerns were supplied by the board with power. It was obvious that the defendant company could not Lave used the power for many months and that it matterco little whether they could be supplied with power on February 6 or February 12 or not for some months afterwards. LIABILITY DENIED.

The defendant company did promptly consider plans for reinstatement, but they were never proceeded with. The company negotiated with a competitive company for the carrying on of their industrial life. Whether it was to be a temporary arrangement at the start <>i not he could not say. Six months later the board was advised by Borthnicks that they had decided not to lemstate the works but in the meantime the board was obliged to keep its lines open. The company notified its inteniiun to cancel the agreement. Counsel submitted that it was not within the province of the company to make such a choice. On July 29 the board forwarded an account in which the agreement was resorted to. A reply was received from the defendant company through its solicitors denying any liability for the account. Notice to terminate the agreement was then given under certain clauses. Referring to the agreement, counsel said it was important to note that in clause 5 of the agreement was the provision of "force majeure” and its possible effects. It was evident that its possible effects were in contemplation u hen the agreement was drawn up. AN "ACT OF GOD.’’ Mr Callan, in referring to the statement for defence, denied that the damage to the works was not foreseen because the agreement contained the provision of force majeure. His Honour: Is au earthquake force majeure ? Counsel: I should say so. Mr Johnstone: It is an act of God. Continuing, Mr Callan said that there was some correspondence from the defendant company which was more definite even than the agreement. His Honour: There was no serious damage to the works at Waikaremoana and power was made available a very short time after the earthquake. Tho suggestion by the defence that there was no continuity of performance is based on nn unfounded supposition, as in three days the board was in th" position to supply. Further, the company undertook to take a qiiantiiin or pay tI(NN) a year, under the agreement. If they did not consume thoV had to pay a.- they had undertaken t» do. BOARD SECRETARY'S EVIDENCE. Hubert Henn Wylie secretary to the plaintiff hoard since i - formation in 1925. in evidciiK-. -i■! lull with tin board's consulting er tint r-. Messi? Vichei man .nd I.m h r of U'.'llim:fon, h< eimdneted negotiations with the defi-tidnnt f onipany. out of which the agreement was finalised. At rins stage lengthy legal argument followed a- to tin admissability of ecriaoi < oilespoudcm r between the