C.A. 1900-1

SLOWEY

2'.

LODDER.

as against the defendant on whose behalf the third-party notice is issued.

Paragraph 6 of the second statement of defence does appear to make an admission from which a contract by the defendant Corporation with the defendants Lodder and Murphy for the completion of the work might be inferred. The statement of claim served upon the defendant Corporation does not, however, set up any such contract. The 6th paragraph of the

defence, which is relied upon, does not make any distinct admission, and the whole course of the trial showed that all the parties were well aware that the points now raised by the defendant Corporation would have to be met. Under the circumstances I think that it is incumbent upon me to allow an amendment of both statements of defence, if necessary. I do not think that it would serve the ends of justice to hold a public body bound by a slip in pleading, which has deceived no one, in respect of a matter which was one of the main questions in controversy at the trial, and as to which the facts are undisputed and indisputable.

With respect to the fourth proposition, it appears to me to be impossible to hold that the resolution of the 15th of December was an adoption or ratification of the contract alleged to have been entered into by Mr. Ward, on behalf of the defendant Corporation, with the defendants Lodder and Murphy. I have already referred to the terms of that resolution. It was passed in consequence of a report made by Mr. Fulton prior to the negotiation of the contract between the plaintiff and the defendants Lodder and Murphy. It purports to adopt the report, and to direct that the work shall be proceeded with upon the amended scheme. It appears from the minutes that the amendment of the scheme was the sole question under the consideration of the Borough Council, and that no mention whatever was made of any contract with the defendants Lodder and Murphy, or of any contract between them and the plaintiff. This resolution in its present form might just as well have been passed before the works had been recommenced as afterwards, and there is nothing whatever to connect the resolution with the recommencement of the works. The case of Macarthy v. The Mayor, &c., of Wellington (1) shows that such a resolution cannot be looked upon as an adoption of proceedings not before the Borough Council, under circumstances far more favourable to the plaintiff than those which exist in the present case.

(1) 8 N.Z. L.R. 168.

The argument in support of the fifth proposition appears to me also to fail. Although the works, so far as the defendant Corporation was concerned, were, under the arrangements made by Mr. Ward, to be constructed at the same price as was provided by the contract with McWilliams, there were many and grave matters which should have been considered by the Borough Council in reletting the works. Not the least of these was the question of time, which in such a work is of primary importance. The result of what was done was, if there was a contract with the defendants Lodder and Murphy, to leave the time at large under that contract.

In my opinion, therefore, the plaintiff, and the defendants Lodder and Murphy, have, apart from the provisions of the statute, failed to establish a contract entered into between the defendant Corporation and the defendants Lodder and Murphy. It appears to me, moreover, that the defendant Corporation could not, even under its common seal, delegate to any person the power to make a contract binding the Corporation. It is admitted by counsel that the contract is one which, if made between private persons, could be made verbally without writing, and that it is consequently one which under the statute might be made verbally without writing by the Council, or by any two members thereof on behalf of and by direction of the Council.

The case of The Bank of Australasia v. The Manawatu Road Board(1) appears to me to establish conclusively that this power could not be delegated except in accordance with the provisions of the section itself. This case was decided upon provisions in "The Road Boards Act, 1882," which are indistinguishable from those now under consideration. It was held that the ratepayers could only be bound by the action . of the Board, as a Board, expressing its will in some proceeding regularly taken in accordance with the statute, and that, with respect to contracts which under these provisions may be made by parol, it is necessary that authority should be regularly given by the Board to its agents, and that these agents should be, as required by the statute, members of the Board.

Apart from the authority of this case, moreover, the case of Young v. The Corporation of Leamington (2) appears to me to lay down principles which must determine this question. (1) 10 N.Z. L.R. 210.

(2) 8 Q.B.D. 579; on app. 8 App.

Cas. 517.

C.A. 1900-1.

SLOWEY t.

LODDER.

C.A. 1900-1. SLOWEY

V.

LODDER.

The facts in that case were almost identical with those in the case now under consideration. The facts are stated in the judgment of Lord Justice Lindley, concurred in by Lord Justice Cotton at page 582 of the report of the case before the Court of Appeal. From this it appears that there was a duly sealed contract between the defendants and one Powis for the execution of certain works, under the direction of Jerram, who was the Engineer of the defendants, and was duly appointed under their common seal. Powis failed to perform his contract, and, under a provision contained in it, the defendants' Engineer, Jerram, became entitled to employ other persons to finish it, and to charge Powis with the expense. Jerram found that in order to finish the works it was necessary to execute additional works, not comprised in Powis's contract, as well as to complete the works which were comprised in it. Jerram reported this necessity to the defendants, and they, by their Council, approved of the report. Thereupon Jerram entered into an agreement with the plaintiffs for the execution by them of the works left unfinished by Powis, and of the additional works. This contract was not sealed by the defendants. The works agreed to be done by the plaintiffs were all done as agreed under the directions of Jerram. The defendants acted in the matter under the provisions of "The Public Health Act, 1875," which requires every contract entered into under its provisions to be under the seal of the Corporation contracting.

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The same argument was raised as in the present case. At page 583 of the report in 8 Q.B.D. Lord Justice Lindley says, "It was argued that the contract was in substance and effect under the seal of the defendants, because Jerram was appointed by the defendants under their common seal to perform certain powers and duties, which included the exercise "of the rights reserved in Powis's contract to the defendants' Engineer, and the duty of seeing to the proper execution "of the works contracted for by Powis, and because upon "Jerram's report the additional work was approved by the Council. But I am unable to accede to this argument. The answer to it is that this particular contract is not under "the common seal of the defendants, and that to hold it to "be so because Jerram was appointed under seal and his "report adopted would be to hold that the Council might

6.

lawfully delegate an important part of their duties to one "of their officers, and so deprive the ratepayers of that pro

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"tection which the Legislature intended to afford them by requiring the common seal to be affixed to contracts of this description. The object of requiring such contracts to be "under the common seal is, I apprehend, to draw the attention of the Corporation-i.e., of its managing body-to "each particular contract, and to insure, if not the examination and discussion, at all events an opportunity for the examination and discussion, of the terms of the provisions "in detail of every contract by which the Corporation is to be bound. This object would be entirely defeated if it were "to be held that a contract not under seal, entered into by an agent appointed under seal, was a contract under seal within the true meaning of the statute which governs this case. In this case, not only was there no seal in fact, but "the omission of the seal was by no means the omission of a pure form the seal was not affixed because the contract itself was never in fact approved by the Council, whose duty it was to consider the contract, and, if approved, to "authorise it to be sealed. In Story on Agency, s. 53, it "is stated that an agent by an authority under seal might bind the Corporation by his agreement not under seal. "if the agreement were within the scope of his authority. "But this passage cannot apply to cases in which a Cor"poration attempts to delegate to an agent duties which can only be properly performed, after deliberation, by the Corporation itself. In my opinion, an authority under seal to Jerram to enter into any contract he might think fit "for additional works would be ultra vires and invalid, and would not render his contract the contract of the "Corporation itself, even if that contract were sealed by him. "To render such a contract binding on the Corporation it would, in my opinion, be necessary for the Corporation distinctly to ratify it, and in effect to make his seal its own."

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So in the present case the object of the Legislature was, in my opinion, to insure that such contracts as that in question in this action should be made either by the governing body of the Corporation, or by two members of such body, acting under a special authority, and by its direction. Plainly the due observance of these conditions must involve the consideration by the governing body, in cases in which the contract is made by the governing body itself, of the terms and provisions in detail of the contract, and in cases in which the

C.A.

1900-1.

SLOWEY

V.

LODDER.

authority is delegated to two members of the governing body, then of at least the subject-matter of the contract, if not necessarily of all its details, the duty of examining into which devolves in that case upon the two members of the governing body to whom the authority is delegated. In my opinion, therefore, these powers and duties are incapable of delegation otherwise than as is provided by the statute.

I am unable also to accede to the argument that the defendant Corporation is bound by acquiescence in the contract alleged to have been made by Mr. Ward. The cases cited do not support the proposition that a Corporation of this description can be bound by acquiescence in a contract which is not in itself binding, and the case of The Bank of Australasia v. The Manawatu Road Board(1), to which I have already referred, is a direct authority to the contrary. This was an action to recover interest upon an overdraft with a bank, the principal having been repaid before action brought. It was proved that the usual practice was for the Clerk of the Road Board to wait upon the manager of the bank at the beginning of each financial year, with a memorandum of the previous year's revenue, and to arrange for an overdraft; that the Clerk usually reported what he had done; and that the bank pass-book was as a general rule laid on the table by the Clerk at the Board's meetings, to be examined by the members of the Board if they desired to do so. The Court (Prendergast, C.J., and Richmond, J.) held that "upon these facts "it is evident that there never was anything which could be "called a proceeding of the Board authorising or ratifying "the arrangements made from time to time for an overdraft. "No doubt every member of the Board in the habit of attend

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ing its meetings must have been aware of the existence of "such arrangements. This, however, in our opinion, is not sufficient to bind the ratepayers. The ratepayers can only "be bound by the action of the Board as a Board, expressing "its will in some proceeding regularly taken in accordance "with the statute; and of such a proceeding there was no "evidence at all." Accordingly it was held that the bank was properly nonsuited in the action.

In the present case it is even more plain than in the case just cited that there is no evidence of anything which could be called a proceeding of the Council authorising or ratifying the arrangements made by Mr. Ward. In the case cited the

(1) 10 N.Z. L.R. 210.