AMMUNITION CONTRACT

Otago Daily Times, Issue 23463, 30 March 1938, Page 10

AMMUNITION CONTRACT

SHORT PAYMENT ALLEGED THE BASIS OF COMPUTATION AN INTERPRETATION SOUGHT (Per United Press association) WELLINGTON, Mar. 29. The true interpretation of one of the contracts entered into for the supply of small-arms service ammunition by the Colonial Ammunition Company, Ltd., of Auckland, to the New Zealand Government was sought from the Court of Appeal today. The point at issue was whether the company was entitled to £6193 2s 7d allegedly short-paid by the Crown. On December 31, 1924, the appellant company entered into a contract for the supply of small-arms ammunition to the New Zealand Government for a period of 15 years. By this contract the price payable for the ammunition was a price equal to the current War Office cost, that is, the current price for the time being paid by his Majesty’s War Office to the contractors for similar ammunition in England plus certain charges and other specified amounts. As a result of questions raised in London between representatives of the New Zealand Government and the company during the fixing of prices for the year 1936 the question of the addition of the appropriate exchange to convert the War Office price into New Zealand currency was raised by the company, and in May, 1937, the company filed a petition of right against the King seeking to recover £6193 2s 7d alleged to be short-paid by the Crown in respect of the years 1936 and 1937, The matter was heard last October before Mr Justice Reed, who pointed out that the contract was made in New Zealand pursuant to the New Zealand statute betv/een a New Zealand company and the New Zealand Government in respect of goods manufactured and delivered and paid for in New Zealand. It was held that the fixing of the price by reference to the price paid in London was merely a method of ascertaining how many pounds, shillings and pence were to be paid in New Zealand. and the correct method of ascertaining the price v/as that having first ascertained the number of pounds payable in London for the same quantity of ammunition to take the same number of New Zealand pounds. The company’s claim therefore failed. Mr H. P. Richmond, for the appellant company, said the matter in dispute was not as to the currency to be employed in discharging the obligation created by the contract, as it was common ground that the currency to be employed was New Zealand currency. The question at issue was really how that obligation was to be ascertained in terms of he contract; in effect, what was the meaning of “ cost ” as used in the document. It was submitted that the cost to be paid by the Crown meant a sum in New Zealand currency equivalent in value to the amount of money calculated in sterling which the War Office would have to pay in England, plus the additional charges. For the King, the Solicitor-gen-eral, Mr H, H. Cornish, contended that at the time the contract was entered into neither party had adverted to the question of exchange and they must take the risk if that should alter. The contract specifically provided - for payment in terms of War Office cost, but as this cost was defined in terms of price it was the notion of “price” rather than “ cost ” that was important. The court adjourned till to-mor-row.