Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd

• Jurisdiction: South Africa
• Citation: 1915 AD 1

Victoria Falls & Transvaal Power Co Ltd Appellant v Consolidated Langlaagte Mines Ltd Respondent
1915 AD 1

1915 AD p1

Citation	1915 AD 1
Court	Appellate Division, Bloemfontein
Judge	Innes CJ, Solomon JA and De Villiers AJA
Heard	September 30, 1914; October 1-2, 1914; October 3, 1914
Judgment	February 1, 1915

Flynote : Sleutelwoorde

Contract — Waiver — Measure of damages — Loss of profits. Remoteness of damage — Interest on damages.

Headnote : Kopnota

The sufferer, by a breach of contract to supply a commodity not procurable elsewhere should be placed in the position he would have occupied h ad the contract been performed so far as that can be done by the payment of money and without undue hardship to the defaulting party, but the defaulting party is not liable for special consequences which could not have been in his contemplation when he entered into the contract.

The Consolidated Investment Company, which represents and to some extent controls a group of subsidiary gold mining companies, entered into an agreement in 1909 with the V company by which the latter undertook to supply to any of the subsidiary companies such quantity of electric power as might be fixed by contracts entered into with them, and to furnish any additional supply bona fide required upon due notification of such requirement. The contract proceeded to specify the length of notice to be given, viz.: for 300 kilowatts 6 months . . . 2,000 kilowatts 15 months, 3,000 kilowatts 18 months' notice, over 3,000 kilowatts arrangements to be mutually agreed between the C company and the V company.

1915 AD p2

In November, 1910, the Consol. Investment company ordered 300 kilowatts for the Consol. Langlaagte Company, one of the subsidiary companies. In December, 1910, the consulting engineer of the Consol. Investment Co designed a scheme for working the Consol. Langlaagte Mine. This scheme was approved in January, 1911, and on 25th February, 1911, the consulting engineer wrote to the V company referring to the terms of the 1909 agreement, and ordering a further supply of 1,400 kilowatts at 2,100 volts for operating 2 electric hoists and a further supply of 1,200 kilowatts at 525 volts for new reduction works., which were to be built. The 1,200 kilowatts were required by 1st July, 1912.

The V company wrote back saying "We have duly noted these requirements and will make the necessary arrangements."

A further 600 kilowatts was ordered on 7th December, 1911.

The 1,200 kilowatts ordered on 25th February, 1911, were not actually supplied until 29th September. 1912.

Action was brought by the Consol. Langlaagte Co. to recover damages from the V company under four heads:

1. £4,380 for loss in extraction, arising from the fact that for the months of July, August and September it was necessary for the plaintiffs to extract their gold on their old system instead of by the more efficient system for which the 1,200 kilowatts were required.

2. £27,833 for deferred profits, arising from the fact that for those three months the plaintiffs had to use their old mill instead of the new mill for which the 1,200 kilowatts were required. Less ore could be treated and less profit made, the extra profit only being reached at the end of the life of the mine i.e., 22 years hence.

3. £6,910 loss on development arising from the fact that without the 1.200 kilowatts the cost of development was greater than it would have been if the power had been supplied.

4. £3,281 loss on shaft-sinking, arising in a manner similar to No. 3

Held on appeal, affirming the decision of the trial court, that the additional 1,200 kilowatts were bona fide required in terms of the agreement of 1909.

Held further, affirming the decision of the trial court (DE VILLIERS, A.J.A, diss.), that the orders for 1,200 and for 1,400 kilowatts were separate and distinct orders and were so treated by the parties, and that the order for 1.200 kilowatts did not form part of a larger supply either of 2,600 or of more than 3,000 kilowatts, and that in any event the V company might waive its right to the period of notice fixed in the agreement of 1909, and actually had done so.

(Per DE VILLIERS, A.J.A) that the two quantities of 1,200 and 1,400 kilowatts constituted one supply of 2,600 kilowatts for which, in terms of the agreement, 18 months' notice would be required, expiring on 25th August, 1912, and that damages could only be claimed as from that date. That there was no evidence of any intention by the V company to waive its rights to notice under the 1909 agreement.

Held further, affirming the decision of the trial court, that in estimating the damage suffered the provisions of an agreement of 1910 between plaintiff and defendant whereby "in the event of failure to supply electric power," it was agreed that "the power company shall pay for interruptions, which entail a stoppage of any period, at the rate of 7s. per hour for each 100 kilowatt put out of commission. as liquidated damages," did not apply in this case.

1915 AD p3

Held further, that in respect of the defendant's breach of contract the plaintiff company had taken all reasonable steps to minimise its loss, and that the plaintiff was entitled to the following damages (DE VILLIERS, A.J.A. diss.): -

1. £4,233 for loss on extraction, less 10 per cent. profits tax thereon.

2. £25,750 for deferred profits, being the amount of actual profits lost after deducting the present value of that sum over a 22-year period. From this £2,350 is to be deducted and 10 per cent. profits tax, leaving an amount of £15,000, or £19,000 in all.

Held further, reversing the decision of the trial court, that items 3 and 4 of the damages claimed were not such consequences of the breach of contract as the parties might be taken to have contemplated, and that no damages should be awarded on these items.

Held further, reversing the decision of the trial court, that as it was not possible for the defendant company to know or ascertain what damage its breach of contract had caused, it could not be held liable for interest on the amount of damages prior to judgment.

The judgment of the Witwatersrand Local Division in Consol. Langlaagte Mines Ltd. v Victoria Falls, etc., Power Co. Ltd varied from judgment for £36,268 with interest from the close of pleadings to judgment for £19,000.

Case Information

Appeal from the decision of the Witwatersrand Local Division (WARD, J.) in an action brought by the Consolidated Langlaagte Mines. Ltd., against the Victoria Falls and Transvaal Power Co. Ltd., to recover damages for breach of a contract to supply electrical power.

The facts will appear from the following judgment of WARD, J.:

WARD, J.: On the 1st January, 1909, the Johannesburg Consolidated Investment Company Limited, entered into an agreement with the defendant company, under which the defendant company agreed "to supply the companies enumerated in the schedule to the agreement such quantities of electric power as may be from time fixed and determined under the agreements to be entered into with the contracting companies, and shall also when called upon to do so supply additional electric power to such contracting companies and electric power to such other companies situate within the Witwatersrand district for the engineering management of which the Johannesburg Consolidated Investment Company Limited, may be or become responsible (therein after called new companies), provided however, that for an additional supply to contracting companies, and a supply to new Contracting companies which is bona fide required, the following notice shall be given: for a supply not exceeding 300 kilowatts six months' notice, for a supply not exceeding 600 kilowatts nine months' notice, for a supply not exceeding 1,000 kilowatts 12 months' notice, for a supply not exceeding 2,000 kilowatts 15 months' notice, for a supply not exceeding 3.000 kilowatts 18 months' notice, for a supply exceeding 3,000 kilowatts arrangements to be mutually agreed between the Johannesburg Consolidated Investment Company. Limited, and The Victoria Falls and Transvaal Power Company Limited.

The plaintiff company is one of the subsidiary companies of the Consolidated Investment Company, for the engineering management of which such company is responsible, and is one of the companies mentioned in the said schedule.

1915 AD p4

The Johannesburg Consolidated Investment Company entered into this agreement on behalf of the plaintiff company.

On or about the 1st January, 1910, the plaintiff company entered into an agreement with the defendant company whereby the defendant company for a period mentioned therein "should supply electric power to the plaintiff company in such quantities as it might require at the prices therein mentioned."

The first requirements of the plaintiff company were fixed at 500 kilowatts at 526 volts.

On the 27th April, 1910, the defendant company's chief engineer wrote to the chief mechanical engineer of the Johannesburg Consolidated Investment Company, Limited, in reference to the demands of the various subsidiary companies of that company and said "It was agreed between us that these demands represent the, amount of load to be anticipated up to about the middle of 1911, and I hereby confirm that provision for any demand in excess of these figures will only be made upon receipt of due notice of an increase under the terms of the agreement. Will you kindly confirm this understanding on your side." This was confirmed by Mr. Newman, the chief mechanical engineer, on the 23rd May, 1910.

On the 16th November, 1910,. Professor Lawn, the consulting engineer of the Johannesburg Consolidated Investment Company, wrote to the defendant company as follows: -

"Under clause 1 of the agreement entered into between yourselves and the Johannesburg Consolidated Investment Company Limited, dated the 1st January, 1910...