THE CITY COUNCIL AND NOYES BROS.

Otago Daily Times, Issue 13874, 11 April 1907, Page 8

THE CITY COUNCIL AND NOYES BROS.

PAYMENTS FOR WAIPORI WORKS. AN INCONCLUSIVE DISCUSSION. SPECIAL MEETING TO BE HELD. The City Council's position with respect to Messrs Ivoycs Bros.' commission on the Waipori works came up at last evening's meeting of tho council, and was discussed at considerable length. Writing on April 8, Messrs Noyes Eros, stated: Ko Engineering Commission—Without Prejudice,—We have tho honour to say that our Mr Edward Noyes attended a meeting of the Tramways and Electric Light and Power Committees'on Wednesday, April 3, by request. As the outcome of the desire expressed that our firm should make certain concessions in order to arrive at a final settlement of all questions relating to our engineering comrnis-, sion- on expenditure for works, and after" a full discussion, we agreed to accept 5' per cent, in lieu of 10 per cent, on tho works and items set out in the schedule hereto, the council to pay our ordinary commission of 10 per cent, on the rest of our claim for the following works:—Power station, li.t.t. line in duplicate and substation at Wakari up to-£45,672, reticulation up to £12,000, and costs of l.t.t. line, converter station and plant and street lighting and ducts. Wo wish it to bo distinctly understood iiiat 'we consider we aroin every way entitled to our full commission on all of the works, they having been authorised nntl fnithtully carried out, and at the out-Eot we had. not the slightest intention of waiving any portion of it, as our commission does not remunerate us for the work we have done for the council." Appended to tlio letter was the following schedule referred to at 5 per cent.:— Excess cost of power station, h.t.t. line, and' sub-station over £+5,672, £5042 15s 4<l; attendant's cottage at Wakari,. £423 6s; gravitation tramway, £934 15s sd; training wall, £514- 19s lid; clearing river bed, £474 15s l<1; No. 1 residence, £739 17s; No. 2 residence, £517 6s; barracks, £590 6s 8d;. outside wiring. £196 7s 2d;. roads, tracks,' and bridges, £216 16s 2d; machine tools, £22 12s Id; general sundries, £542 7e 7d; sundry buildings, £567 3s lid; eleetrie lighting of buildings, £55. , ' The Mayor said the letter was considered by a joint committee of the Tramways and -Electric Power , and Lighting Committees, at which there were 12 members present, and tho decision - they came'to was unanimous. He moved—"That the report of the combined Tramways and Electric Power and Lighting Committee, received this day, as follows, be adopted. Your committee recommends that a further sum.of £1231 15s 6d bo paid to Messrs Noyes Bros., subject to the terms and conditions contained in the resolution of the council dated March 27, 1907*" Most of the requisitions were before (lie council at the last meeting. At that meeting it was resolved that all moneys due in respect of the ' Waipori contract bo pnid to Noycs Bros. Tho sum then mentioned was, in round, figures,'£l2oo.-' ) Or Crust seconded. ' ' In reply to Cr White, the Mayor said he knew of no new developments since the resolution carried in committee. Cr Small thought they wcro exceeding the commission due. ,' Cr Brinslcy said prrgrcss payments had already been made to the total of £2046. Cr Afkle.: Ncycs Bros, arc entitled to 5 ]!or cent, progress payment; has that been exceeded? The. Mayor: At the last meeting Cr Connor moved, Cr Loudoii seconded, and it wa-3. resolved—" That subject to the solicitor's advice the sum 0f.£1234 Us 4d ho paid, provided it can be, and is, provided as part and on account'of the commission (£4572) payable under deeds dated March 5, 1902, March 1, 1905,. and July 4, 1906, and provided the payment proposed doos not prejudice the corporation in any action Noyes Bros, may take in regard to any claim they may make,beyond the £4572." Any claim made since that- was passed would bo subject to the resolution. The resolution was agreed to. The Mayor then moved—" That the terms of the letter dated April 8, 1907, from Messrs Noyes Bros, be accepted in accordance with the recommendations of the ■Special Committee in payment of engineering commission for execution of the works ?i " 10 Wa 'P or ' »nd electric installation." -the committee came to the decision (hat it was wise under tile circumstances 1o compromise with Messrs Noyes Bros., anil if. was thought that the tonus agreed to : were exceedingly satisfactory. Thoy' might force on litigation, which would be not at ail in tho interests of the eouneil-liti-ation which might even prove disastrous. Neither the council nor the public would wish any tirm that'had done gcod work for thorn to lose by it, even if, legally speaking, the position was against them. Cr Crust, seconded the motion. He thought it was perfectly fair. Ho believed that all work done had been properly authorised by the council. It was agreed to hoar ilia written opinions of the city solicitors, and these were read by the town clerk, as follows:-

p ~,. . Duiicdin, Deccmher 11, 1906. Be Waipon Works-Noyes Bros.' Statement, we.orrmg to the interview we had vestcr. d 57 with hi. Worship the Ikvor self, we have since gcine through the agreements, correspondence, and other documents bearing on the above matter. l'rom n perusal of tho-statcuient and cor-tosr-ondimce it is clear that the amount for ™ cl > A °:'es Bros, undertook' to complete the Waipnri electric scheme will he Imto'iv exceeded by them. From Messrs Koyesßros' present statement it is equally clear that they expect to be paid commission on tho larger of die two amounts above referred to J.IIO agreement between the corporation and Aoycs i>ros. provides, thai, for tho services to be rendered by A T oyee.Bros. in carrying out the works comprised in i tho AVaipori electric scheme- Aoycs Bros, are to receive a-com-mission of 10 per cent, on tie actual cost of the work,., but A'oyes lira., in .their turn undertake that such total cost shall not exceed the sum -of £15,072. As we havo already pointed out, this amount is certain to be largely esceede-J, and ttio' agreement in question goes on to provide thai-if it is exceeded no commission shall Ik navable upon the excess of such cost. lii vravr of tho fact that you have already received from Noyes Bros, a, distinct intimation that they propose to charge commission for tho excess over the sum of tb,G,2 above referred-to, wo cannot advise the council to make imy further prcnre«s or other payments on account of commission to Aoycs Bros, unless and until some understanding satisfactory to your council 'is arrived at with Aoyes Bros, relating to tho ciiarges for commission mndo in their stateaccompanying the letter froni/.thom to yon (tytod the sth day of December 19,16.

'Dunediii, Ist February, 1907.

A'oyes Bros.' Agreement. *' Ue have the honour to acknowledge receipt of_ your .letter of 31rf nit.,, enclosing the minute and statement therein referred to along with a number pf documents relativo thereto all of which have !> S en perused by us, and aro returned herewith, Ho are asked now to review this minute and statement, and to deal with the former document as we may deem necesearv. In response wo prefer to state briefly oiir own views concerning the whole matter, rather than to amend, amplify, or otherwise interfere with the clear and comprehensive languago of the mimito in questiciu. For two reasons, we do not at present propose to go minutely into details—(l) Becauso the time. allowed 113 is extremely limited, ami (2) becauso we feel that it would be more judicious at the presont juncture to present somo cif our views vivaivoce at our conference with the special committee this aitemoon. Our conclusions, then, are, slior.tlv, as follow: — j * 1. As a condition of their employment to complete the "Waipori electrical scheme Messrs Aoyes Bro 3 " undertook" that the toial cost thereof should not exceed £40000 (afterwards increased to £J5,672). 2. It is now clear that even the larger of such scnis will b 9 considerably exceeded by Messrs A'oyes Bros.—i.e.. in otbor words the corporation has been led into a large unforeseen expenditure by reason of the misleading cellmates furnished by skilled nersons employed by it. 3. It is a term of their agreement that Messrs A'oyes Bros, ore not entitled to commission on niiy excess over .the agreed sum of £b,G72. That term is binding on them, unless they cr.u prove that, by some later agreement equally binding in law on the corporation, further commission \va3 agreed to hi paid to them by the corporation. Of such an agre-?iivenl we have failed !o 'find any clear evidence in the documents placed before, us Even were tho council to admit tiiat it nod been somewhat lax in seeing that Messrs Aoycs xiros. were kont up to jho letter of Uieir contract, wo do not. quite sec how that fact would now enable Messrs Xoyes Bros, actively to enforce a claim for commission winch is not. supported (and in fact is negatived) by (ho contract itself. •I. It will readily be gathered from the foregoing paragraphs that in our opinion Messrs Aoyos 8r0.5. could not successfully maintain at low their present claim against tho corporation. Whether the corporation iu its turn may not have r. claim for heavy damages against Messrs A'oyes Bros, is a question that possibly will ultimately demand very careful consideration at tho hands, pf the council and its a'lvisers. . ■ ■

Duncdin, 10th April, 1907. Waipori—Noycs Bros. We are duly in receipt of your letter of this dale, enclosing voucher 'for £1231 l:i s 4d as therein stated. We assume (.his is the amount (or part thereof) referred to in your letter of 28th ult., and, as staled in o\ir letter of that date, we see nci legal objection to the. proposed payment b?hg nrade. Wo take this opportunity of referring yon onco' more to the terms of our letter of lebruary 1• on the subject generally. Wo see no reason to cicpart from our opinion as therein expressed. Since that letter was written, however, it has boon made tolerably clear to us- that all (or nearly all) of the extra work claimed for by JJoyes Bros, was authoriscid by the City Council more or less formally. In view of that fact we do not see that any claim for damages could now succeed as against Noycs Bros, (as hinW ill our foiincr letter, par. i). At the same time, we still remain of opinion that Moves Bros, could not nt strict law enforce th'oir presont claim for commission in respect of such "extra" work.

Cr Burnett: May! ask on whose authority the advice of tlw solicitors has becii ignored?

The Mayor said the solicitors' advice, had not been ignored in any way. A'arious matters wcro submitted to tho committee. Ihesfl matters subsequently came before tlio council, wliieli decided that the amounts should ho paid. Cr ■Arklo moved as an amendment—" In consioorction of Messrs Noyce Bros' letters ottering a. compromise "of their cairn, tho matter be considered at tho next; meeting of tho council, so hat all letters and communications between Messrs Noyce Eros, and the council lie'laid on (ho table." Ho understood that tho council was hound by lav,' not to give a contract, for over £20 unless it was under tho seal of tho corporation. In , this case tho council had distinctly entered into nn agreement with Noycs Bros. mA rins '" t,u> IK)wcr from Wa'inori for ±.46,000, and it, was provided that if tho cost exceeded that sum no commission was to bo paid. It had been held that tlio council authorised Noycs Bros, (o make sundry alterations.' If" so, the council was bound in honour, though not, in law, to pay, because, as he had eaid, if (ho amount was over £20 and was not under ecal no money was recoverable. Cr Colo asked if tho amendment could be taken, as c-n next council night a new council would have been elected.

Tho Mayor said that all tho let tors and docmncnte that Cr Arklo wanted had been fairly considered by the joint committee. did not eco the us? of the amendment, Cr Arklo: I didn'l; expect, yen would. Continuing, ho said that at tho committee meeting there were only seven councillors and tho 'Mayor present. Cr Brinsloy had said that nothing had been done that was not contained in lotos. If so, let all those letters ho produced in order to roc if they bore on .tho subject, He had ken instructed that if a matter was illegal a.nd tho money claimed was not leipi.lly recoverable, _ tho council had no right' to compromise. If they compromised fhey wcro really making.a sift, which thov had no right to do, and as trustees, if they paid nionovs that thev could not he 'loyally compelled to pay they might be hold liable for it. Cr. Small seconded the amendment He did net want to keep- hack from Noyes Bros, a single ha'penny that they wero legally entitled to. but in this matter ho recognised that he was treading on very dangerous ground. A false rtep might, land them in serious consequences. Ho did not think tho com;nittoe had gone into the matter suflmently. If they were right it was by accident. Thov had not, ho made bold to eay, examined a einpln Waipori voucher. If they had, (hoy would certainly have found some items that would have, made them halt. A<> an instance, he might mention that in going over tho items ho had found among them "a warming pan." The council had to pay commission.en that item. In all, there wore over-payments of £29 which the nommittec should have dealt with. Then there was (hie fact: The account wjk «, statement of moneys spent up to Uie 30th September. It was merely a roiieli estimate of tho cost of the woric. It mirht bo lore, yet they were agreeing to pay commission on the £80,000. They should not asree to pay commission on any sum ■until they know 'definitely v;hat that sum was. ■ It roieht turn out to bn lose than #0,000. Ho thought that if the matter was loft over for a fortnight it might bo possible to arrange it in a manner that would be satisfactory to all. Cr Connor supoorfed the amendment. Tho members of. tho council who were not. members of the Tramways Commiltce had not peon all tho documents, , and therefore could not oHtaiii a fair idea of what hn<i boon Inujpening. The agreement mado with Noycs Brcs. in tho first instanc" was an ■aErcement that had not ils equal 'in the history nf municipal enterprise. XTiife , itNoyce Brcs. really: had a free hand to do .what thov liked. Certainly thcro were penalties apiinet Noyoe Bros., but only in eases Uiat wcro not, likely to arise. It was no -womVr liiat Ilioro wiw discontent now amons , tho ratepayers. It could not iw otherwise with Budi an ngrcemont. When he was appointed a member of the Finance Committee his eyes were opened to the magnitude of the scope given to the contractors under that agreement. Accounts came in that had to ho paid—no get but of it. ■ Works were given to parties to irndcrtaito in which the committed had no eay at all. Wore they eonsuitcil in the matter of carting? Were tenders' called for that work? (Cr Scott: Yes.) Ho did not think so. There were two clauses in the report framed in such unbusinesslike terms that the council was tied hand and foot. Ho blamed the councillors who were in the council .when Iho agreement was adopted for much that had since occurred. Cr Scott asked whether elcctioncerin;; speeches should l<o allowed. Tho Mayor ruletl that the agreement could not he referred (0. The speaker must confine himself 1o the subject- before the council—engineering commission. Cr Connor said (.hie wae not. the first timo that he had been lold he was not in ord«r when ho wished to speak on this Waipori matter. ,Ho would simply nay. then, that ho supported the amendment. " Cr White said bo eavr no harm in'deferring tho matter for a forljiight. Ho would be sorry to do Noyce Bros, out of a single shilling; they wero entitled to more tliiin had been paid to them, and if tho solicitors advised that the council could compromise with them ho would'*vote for a compromise, and so end the matter. Cr Fiddis said ho would' stick to tho .iffroomont, whether it nleased Noyes Bros, or not. The people had plenty- of rates to pay without anv more. Tho Mayor said as there was still a doubt as to whether tho council would bo lia.b!e in the event, of a compromise, ho would ask Mr MacGregor to give his opinion on the matter. Mr MacGregor said ho understood the jiuestion was as to whether the council had legal power to compromise tho claiui made for commission. Ho war, of opinion that the council had that power. The Munici-pal-Corporations Act paws a corporation the riirht to compromise-. That compromise, however, must, bo mado in good faith, and it must ho mado under legal advice. As for this particular claim, ho could not advise the council to compromise or not. as he had not until that nigltt seen (he letter containing Noycs Bros.' terms. He could not say whether tho terms were reasonable. _II _ might be wise- on the part of the council, in place of facing' expensive litigation, to eft'ect a compromise. It had bocn suggested that individual councillors might be responsible if a compromise were mado. but ho thought there need be no fear of thai.

Or Burnett: Mr MacGregor, if we compromise, is tJiat not making a gift of the ratepayers' money to Noy<s Bros. ? Mr MacGrcgor'eaid ho'did, not think it was a gift. Noyos Bros, had made a claim for a largo amount. The council admitted that, a smaller amount was duo. -('bough it recognised that they might be ontillod to recover a larger sum' in. court. It therefore offered to pav a certain sum, to that a compromise was effected. That, however, was not. a gift, Cr Small: Can ivo legally pay or compromise tho 5 per cent, commission which Noyes Bros. a«k to bo paid on the £5000 excess cost of the items contained in the agreement? Mr MacGrcgor said lie was not in a position to answer the- question that nipht. Cr Arklo: Under tho old contract, if the amount exceeded £172,000, they were to get nolhing. They offered to put tin the- converter station for £8000, am) it cost £]6.000. Would we be responsible if wo paid commission on the extra £8000? .Mr MncGrepor said he did not know the fifcts sufficiently to enable him to give an opinion on i'lic point Cr Gore eaid that after listening to tho explanation of their solicitor ho would support, the amendment. A fortnight's delay could not make much difference. At present Cr Connor, for one. certainly did not understand the position. He* (Cr Gore) was one of those who consented to the agreement in the first place, and he hart done so because he considered it was a fair and just agreement. It was not correct, .as Cr Connor stated, that Noyes Bros, had called for tenders and never consulted the council about them. As far as

lie knew, it had not boon a case of falso estimates; it wns a case of additions. Theso additions the council had sanctioned, and the council would surely not now repudiate its. action. Ho would never bo a party to anything like that. Cr Brinsley thought it would bo well to allow the matter to stand over for a fortnight, though ho would have liltctl to sec the matter settled before the elections. Cr Connor had blamed those councillors who supported the agreement in the first instance; but not so very long ago Cr Connor blamed the gentleman who' drew up the agreement—the. solicitor for the corporation—a. gentleman now occupying a very high legal posit ion-for afl the trouble. As for himself, he would let his attitude- lie known before (ho elections— his position was cl«ar, and ho wanted tlio public to know it. • Ho would do what was fail- and square. He would not bring discredit on tlio city. After resolutions had been passed by the council time after time making deviations from the original contract and giving instructions to Noyce Bros, to alter the contract, ' the council should certainly pay for the work that had been done. Cr Walker said there was a good deal to ho said on both .sides. No doubt tlio legal position was us Mr MacGrosor had pointed out. They wore also aware that the work, which was absolutely necessary, had been done'in a first-class manner byNoyes Bros. It was admitted by the expert, and all who .had had an opportunity of going over tlio works, that Messrs Noycs Bros, had done (heir work well. The council .was not, perhaps, legally liable for ■more flian Iho amount set down in the deeds, but, in, equity, the matter was ono for compromise. For work done, and well done, (hey, as honourable men, were surely entitled to give fair remuneration. Ho thought it, advisable to put tlio question off for a week. In order to voto on such an important matter with a. proper appreciation of what they wore doing, all the* members of the council ought to bo in full possession of the facts. '

Cr. Scott said that,* speaking of Waipori, Ilie only tiling that astonished him was tho loud cry got up about the excess. In tlie same work they had an estimate by the council of £10,000 and a cost of over £50,000. The documents about which so much, had been said were open to tho insooction of all members of the council. At the joint committee lneorin? Mr Noycs brought with him a bundle of letters, and asked any councillor present to name any particular work, and he would produce tho letter authorising it. Had time permitted, ho would have read all tho letters.

Cr Small: I asked for somo that were not produced.

Or. Scott (continuing) said if a week or a fortnight wcro taken to settle the matter it would be lime well spent. Ho would like to; seo the matter settled and done with. Until it was settled tho meetings of tho council would he unduly protracted. The offer mado ,by Mr Noyce ho considered a very fair one. If they entered into litigation, whilst , lNayes Bros, might not got all they asked for, (he chances wcro that it. would cost the council jnora than was asked for before (hi matter was ended. Nobody denied that tho varlc had been "r.-cll done. There was simply Iho legal aspect to consider. Their experience of ligitation had not been such as to make them rush into it. » Cr Harr.'son supported the amendment. Or Shucklock cxplsi.-icd that at the meeting of I he committee ho gave his vote under tho impression that Noyes.Bim were claiming £8000 commission, and that the amount payable was £5072. In his belief, Noycs Bros.' had done hundreds'of pounds' worth of work of which the committee knew nothing. Ho favoured holding tho matter over' for a fortnight. The Mayor, before putting the amendment, pointed out the advantage of holding tho. special meeting to consider the matter in a, week's rather than in a fortnight's time, Cr Ari;le. fell in with the Mayor's suggestion, and, with the consent of his seconder, altered his amendment. Bvontually tho amendment was carried in tho following form:—"That a special meeting ho Held on 'Wednesday next for the consideration of Noyce Bros', claim."