The Queen v. Smith

The Queen v. Smith
Collection
Supreme Court Judgments
Date
1883-06-19
Report
(1883) 10 SCR 1
Judges
Ritchie, William Johnstone; Strong, Samuel Henry; Taschereau, Henri-Elzéar; Gwynne, John Wellington; Henry, William Alexander; Fournier, Télesphore
On appeal from
Canada
Subjects
Contract
Decision Content
Supreme Court of Canada
The Queen v. Smith (1883) 10 SCR 1
Date: 1883-06-19
The Queen (Defendant)
Appellant
And
James N. Smith, et al., (Suppliants)
Respondents
1882: Dec. 2; 1883: June 19.
Present Sir W. J. Ritchie, C.J., and Strong, Fournier, Henry, Taschereau and Gwynne, JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA.
Government Contract—Clause in—Construction of—Assignment—Effect of—Damages.
On 2nd August, 1878, H. C. & F. entered into a contract with Her Majesty to do the excavation, &c., of the Georgian Bay branch of the Canadian Pacific Railway. Shortly after the date of the contract and after the commencement of the work, H. C. & F. associated with themselves several partners in the work, amongst others S. & R. (respondents,) and on 30th June, 1879, the whole contract was assigned to S. & R. Subsequently on the 25th July, 1879, the contract with H. C. & F. was cancelled by Order in Council on the ground that satisfactory progress had not been made with the work as required by the contract. On the 5th August, 1879, S. & R. notified the Minister of Railways of the transfer made to them of the contract. On the 9th August the Order in Council of July 25th was sent to H. C. & F. On the 14th August, 1879, an Order in Council was passed stating that as the government had never assented to the transfer and assignment of the contract to S. & R., the contractors should be notified that the contract was taken out of their bands and annulled. In consequence of this notification, S. & R., who were carrying on the works, ceased work, and with the consent of the then Minister of Public Works, realized their plant and presented a claim for damages, and finally H. C. & F. and S. & R. filed a petition of right claiming $250,000 damages for breach of contract. The statement in defence set up inter alia, the 17th clause of the contract which provided against the contractors assigning the contract, and in case of assignment without Her Majesty's consent, enabled Her Majesty to take the works out of the contractors' hands, and employ such means as she might see fit to complete the same; and in such case the contractors should have no claim for any further payment in respect of the works performed, but remain liable for loss by reason of non-completion by the contractor.
At the trial there was evidence that the Minister of Public Works knew that S. & R. were partners, and that he was satisfied that they were connected with the concern. There was also evidence, that the department knew S. & R. were carrying on the works, and that S. & R. had been informed by the Deputy Minister of the department that all that was necessary to be officially recognized as contractors, was to send a letter to the government from H. C. & F.
In the Exchequer, Henry, J., awarded the suppliants $171,040.77 damages. On appeal to the Supreme Court of Canada it was
Held, reversing the judgment of Henry, J. (Henry, J., dissenting,) That there was no evidence of a binding assent on the part of the Crown to assignment of the contract to S. & R., who therefore were not entitled to recover.
2. That H. C. & F., the original contractors, by assigning their contract put it in the power of the government to rescind the contract absolutely, which was done by the Order in Council of the 14th August, 1871, and the contractors under the 17th clause could not recover either for the value of work actually done, the loss of prospective damages, or the reduced value of the plant.
APPEAL from the judgment of Henry, J., in the Exchequer Court of Canada.
The petition of right, the pleadings and the facts are set out at length in the judgment of Henry, J., in the Exchequer Court and in the judgments delivered in the Supreme Court.
The suppliants were represented in the Exchequer Court by the Hon. Mr. McDougall, Q.C., and Mr. A. Ferguson, and the respondent by Mr. Lash, Q.C., and Mr. Hogg.
The following is the judgment of the Exchequer Court delivered by
HENRY, J.:
The suppliants claim to recover damages under an agreement entered into by three of the suppliants, namely, John Heney, Alphonse Charlebois and Thomas Flood, on the 2nd of August, 1878, with Her Majesty the Queen, represented by the Minister of Public Works of Canada, for "the excavation, grading, bridging, fencing, track-laying and ballasting of that portion of the Canada Pacific railway known as the Georgian Bay branch and consisting of 50 miles, extending between section O of location of 1877 on the west of South river near Nipissingan post office to the head of navigation on French river"—the works to be performed as set out or referred to in the specifications annexed to said contract and set out or referred to in the plans and drawings then prepared, and thereafter to be prepared for the purpose of the works, the contractors to execute and fully complete the respective portions of such works and deliver them to Her Majesty, on or before the 1st day of July, 1880.
The petition alleges that the total sum agreed to be paid for the performance of said work was about eight hundred and fifty thousand dollars.
From the petition and evidence it appears that the site of the railway in question was through an almost inaccessible wilderness, and that it was only accessible during a part of the year, and that in order to put on the ground the necessary supplies of plant, food and other things required the contractors were obliged to spend large sums of money in building and providing a tram railroad, steam and other boats, and other means of communication. That shortly after the contract was entered into they commenced works in that direction and carried them on in such a manner that they were enabled the following spring to proceed with the actual work contracted for. That they had procured and had on the ground in the summer of 1879 large quantities of supplies, horses, machinery and materials necessary for the works and a large number of men employed, and had made a large expenditure in the construction of steam mills, houses, steamers and boats of different descriptions, which, from the rescinding of the contract by the acting Minister of Railways in August, 1879, resulted in a heavy loss to them.
The suppliants pray to be paid for all damages arising directly or indirectly in consequence of the cancellation of the contract, as set forth and referred to in the 10th, 11th and 14th paragraphs of their petition, and also for all profits which they were thereby prevented from earning and deriving in respect of the works to be by them performed under the contract, with interest, and also all moneys payable in respect of unpaid estimates in their favor: and they claim two hundred and fifty thousand dollars.
The statement in defence put in by the Attorney-General on behalf of Her Majesty in the second paragraph admits the contract as set out in the first, second and fourth paragraphs of the petition.
The third paragraph of the statement in defence has no bearing on the case.
The fourth, fifth and sixth paragraphs of the statement have reference to the fourteenth clause of the contract, which provides that in the event of the works not being diligently continued to the satisfaction of the engineer for the time being, after six days' notice in writing, to be given by the engineer, Her Majesty might take the works out of the contractors' hands and employ such means as she might see fit to complete the work. No proof was given under the allegations in these paragraphs. In fact, it was shown that no such notice was given, and that at the time of the cancellation of the contract the engineer was fully satisfied with the progress of the works. He himself, in his evidence, says so.
The seventh and eighth paragraphs of the defence allege that the cost of the works contracted for would be about $850,000, and that they were to be completed on or before the 1st August, 1880—that for a long time previous to the 30th of June, 1879, the contractors had made default in advancing the works and up to that time had performed work upon the railway only to the amount of $24,800.90 or thereabouts, whereby it became and was impossible for the said contractors to complete the work within the time limited by the contract, and that owing to the default of the contractors in the execution and performance of their said work and the impossibility of their completing it within the time specified in the contract, and time being of the essence of the contract, Her Majesty rescinded the contract on Her part and notified the contractors that it had been cancelled and annulled, and took the work out of their hands. It further alleges that up to the time of the giving of that notice, or soon after, a certain sum was due under the engineer's certificates to the contractors on account of which payments had been made, leaving a balance due them of $13,807.94, which Her Majesty's Attorney was willing to pay and thereby tendered, provided the same should be accepted in full of all demands against Her Majesty in respect of the said contract.
The suppliants, as to the last, as also to the sixth, ninth and fourteenth statements of defence, reply that the said contract was not cancelled, or the works taken out of the contractors' hand, for the reasons stated in said paragraphs, or for any of said reasons, but that the contract was so cancelled and annulled and the works taken out of the contractors' hands because of the determination of Her Majesty, long before said cancellation took place, to abandon and proceed no further with the works contemplated and contracted to be done under and by virtue of the contract in question herein.
I am of opinion that the grounds stated in the paragraphs in question are not an answer in law to the suppliants claim in their petition, unless indeed government contracts are to be construed upon principles wholly different from those between non-governmental parties, which I cannot admit. The contract itself contains no provision for the cancelling of it for the reasons stated. All the contractors bound themselves to do was to complete the contract by a certain time; until that time elapsed there was no breach. The contractors had given security for the due performance of the contract, they had the legal possession of the roadway for the purposes of their contract, and, in the absence of any provision in it to allow of its cancellation and the taking away from them of the road bed during the running of the contract for the particular reason assigned, any person interfering with that possession, even if authorized by the government or the Minister of Railways, would be a trespasser. At the request of the learned counsel who conducted the case on behalf of the defence, and in the absence of any objection from the counsel of the suppliants, I admitted evidence to be given upon the issue raised. A large number of witnesses were examined on both sides as the possibility of the contractors being able to complete the contract within the prescribed time. Most of those for the defence had never been on the ground, or seen the works, or the preparations made to perform the balance undone, and there was hardly any of them went so far as to say that it was impossible to finish the contract by the specified time. It seemed from the language they used that they considered it not impossible with the proper means and appliances to finish the work within the prescribed time, but that it was their opinion that it was doubtful if it could be done. On the other side evidence was given by competent contractors and others who had inspected the works, who had seen the amount of work done and the means and arrangements that were apparent on the ground for the completion of it, that the work could have been fully completed by the specified time, and I feel bound to find in favor of the latter.
The ninth paragraph of the defence alleges: "that by the seventeenth section of the said contract it is provided that the contractors shall not make any assignment of the contract or any sub-contract for the execution of the works thereby contracted for, and in any event no such assignment or sub-contract, though consented to, shall exonerate the contractors from liability under the contract for the due performance of all the works thereby contracted for, and in the event of any such assignment or sub-contract being made without such consent, Her Majesty might take the work out of the contractors' hands and employ such means as she might see fit to complete the same, and in such case the contractors should have no claim for any further payment in respect of the works performed, but should nevertheless remain liable for all loss and damage which might be suffered by Her Majesty by reason of non-completion by the contractors of the works."
The tenth, eleventh, twelfth and thirteenth paragraphs of the defence allege that certain assignments of the contract and individual interests therein were made at different times, by the last of which, dated the 30th of June, 1879, the sole interest therein became vested in the suppliants, James N. Smith and Josiah D. Ripley, subject to the terms thereof and of the several preceding assignments to them.
The fourteenth paragraph of the defence alleges "that the said several assignments above recited were made without the consent of Her Majesty and in violation of the provisions of the seventeenth clause of the said contract above set out, and Her Majesty, under the powers contained in the said seventeenth clause, took the work out of the said sub-contractors hands by reason whereof the suppliants have no claim against Her Majesty in respect of the works performed, as alleged in the said petition."
The paragraphs of the defence from nine to fourteen, both inclusive, have reference to the suppliants' claim for the balance due for work done and certified by the engineer. They are, as I read them, inapplicable to the damages claimed for the cancellation of the contract.
The fourteenth paragraph is but a statement of the legal result of the statements and allegations contained in the five preceding ones. The defence embodied in the sixth paragraph in question is in substance this: that the assignments were made without the consent of Her Majesty and that for that reason Her Majesty took the work out of the contractors' hands. In construing that clause of the contract it is necessary, first, to consider its object. Any one letting a contract for work has a right to prescribe against an assignment or sub-letting of it without the consent of the party so prescribing—many reasons may actuate such a party. He may have confidence in particular persons capable and willing to perform the work contracted for, whilst at the same time he would not deal at all with others. The right to veto an assignment or sub-letting of the contract is often provided for in agreements. The contractors in this case took the contract with the condition that if they assigned or sub-let it without her consent Her Majesty should have the right to take the works off their hands, and employ such means as she might see fit to complete the same, "and in such case the contractors should have no claim for any further payment in respect of the works performed."
The suppliants reply to this fourteenth paragraph of the defence, "that the said assignments were not made without the consent of Her Majesty, but that Her Majesty had full notice and knowledge before said assignments were made and also immediately thereafter, and before said order in council of the 25th day of July, 1879, was passed, and gave her consent thereto; and after such notice and knowledge Her Majesty recognized the said assignees as contractors under the said contract and allowed them to go on with the work thereunder and to incur a large outlay and expenditure thereupon, on the faith of such assignments, and the recognition thereof by Her Majesty; and the suppliants further say that Her Majesty did not, under the powers and for the reasons alleged in the fourteenth paragraph take the said work out of the contractors' hands."
If Her Majesty, through the minister of the proper department, or those acting for him, either agreed to the assignments before they were made, or recognized and dealt with the assignees subsequently as the contractors for the completion of the works contracted for, and in that relation allowed them to go on with the work and to incur a large outlay and expenditure thereupon, in the belief that they had been recognized as the contractors instead of the original ones, there is I think no defence under the paragraph in question. If the last assignment, which vested the sole interest in the contract in the suppliants Smith and Ripley, was recognized by the Minister of Railways, or those from time to time acting for him, that virtually recognizes the previous ones, and, if agreed to before such last assignment, the defence must fail under the 17th clause of the agreement. If, however, such was not the case, but subsequently the suppliants last named were recognized by the Railway Department as the contractors instead of the original ones, and were thereby induced to spend large sums of money in the work contracted for, it would be unjust to them to set up that provision of the 17th clause of the contract, and Her Majesty would be estopped from setting up such a defence. It would in this case be inequitable. The evidence shows plainly that the cancellation of the contract was not in the slightest degree decided upon because of the alleged assignments of the contract. The route of the Canada Pacific Railway, of which the work contracted for formed a portion, was decided upon and the contract entered into by one government and the work favorably progressing when a change of government took place. After the formation of the new government it was decided by it to change the route of the railway and abandon the line contracted to be built. An order in council was passed to stop the further progress of the work and to take the same out of the hands of the contractors, and a notice, directed to the original contractors, of the order in council was served upon the agent and manager of the works of and under Messrs. Smith & Ripley, which had the effect of stopping the work on the contract. It is not a little singular that neither the notice nor the order in council should assign any reason for cancelling the contract, and it is but reasonable to assume that if any legitimate reason existed within the terms of the contract the contractors would have been notified of it. It may therefore be fairly concluded that, if at that time there existed any legal excuse for cancelling the contract, such would have been stated, and it is but reasonable therefore to conclude that none existed. I have no reason to say that the policy of the government in changing the route was not a wise one, and I am not called upon to give any opinion on the subject. Assuming, however, that the change was in the public interest, who should bear the cost? No private individual or company should be made to bear the consequences of a mere change of policy of the government; and if it became necessary to make the change solely on the question of route, independently of the position of the contractors as assignees or otherwise, common honesty and equity would call for the necessary contribution from the interests to be benefitted and not from those in no way immediately interested in the route. Whatever may be the legal questions involved and upon which the rights of the parties must be ascertained, there is little doubt that the contractors were induced to go on with the work, and but for the matter of the change of route they would no doubt have been permitted to finish it, and as far as reliable evidence goes would have made a handsome profit from it. It is, therefore, by the decision to change the route and the consequent stoppage of the work that the damage was done to and the loss occasioned to the contractors. Should they be called upon to bear it? or should not the public, who we must assume to have been benefitted by the change of route, bear the cost? Apart from questions as to the legal right of the contractors to recover, they are, in my opinion, equitably entitled to compensation for the losses sustained by the cancelling of the contract. It is therefore necessary to ascertain what under the evidence are their legal rights.
The evidence bearing upon the issue in question is chiefly that of Mr. Ripley, one of the suppliants, who says:
In September, 1878, I purchased for myself and Smith an interest in the contract from Charlebois, Flood & Co., within 30 days after I saw Mr. McKenzie, Minister of Public Works. He expressed satisfaction that we had become interested with them as he had known us previously, and that there was additional capital and experience added to the contract. I acquainted him with the fact that I had gone into the contract and he expressed pleasure.
The work on the contract was commenced after that interview, and some time afterwards he (Ripley) visited Ottawa and saw Mr. Trudeau. He came, as he states, to see the government for the purpose of "getting a larger interest so that we might make better progress with the work" He inquired for the Minister, but he was absent, and he says:
I saw the Deputy Minister, Mr. Trudeau, in his office. I stated to him my views with regard to the work and what I proposed to do at that time. He answered, that the government were very glad to add strength to any contract that they had with any party either by capital or skill. I asked the commissioner Trudeau what would be necessary for me to be recognized by the government. He stated that a simple letter from my partners, Mr. Charlebois and Mr. Flood, who were recognized by the government, would place me the same as themselves with the Government.
Witness adds:
That a simple letter from Mr. Charlebois and Mr. Flood who were recognized by the government would invest me with all the rights they had with the government. I understood him to say that distinctly. In answer to this question, what did you tell Mr. Trudeau was your specific object in coming to visit him on that occasion? the witness said, "That I had in view the buying out of these parties, I spoke more particularly of Mr. Charlebois. I do not remember the words, but he gave me the impression emphatically that it would be agreeable to the government.
The witness returned to Collingwood and bought out for himself and Smith the interest in the contract of Charlebois, Flood and others.
Before the interview with Trudeau, the witness stated that he had heard a rumor at Collingwood, and also after he came to Ottawa, that the government had some idea of stopping the works. He stated to Mr. Trudeau what he had heard and "wanted to know if the government had any thought of stopping the work? He (Trudeau) said there was no foundation for the rumor. That reply satisfied the witness and relying on it, he bought out the whole interest in the contract for himself and Smith. That was in the spring of 1879.
It appears in evidence that Messrs. Smith & Ripley had been previously very successful railway contractors, possessing capital, credit and means abundantly sufficient for the purposes of the contract, while the original contractors seem to have been wanting in that respect; and these facts being known, it is not strange that the railway authorities were, not only not opposed to the assignment of the contract, but pleased with it, as the assignees of the contract were so much better able and more likely to complete it satisfactorily than the original parties. The foregoing statements of Mr. Ripley, if not true, could have been contradicted by Mr. Trudeau, but as he was not called for that purpose I feel bound to accept them as reliable.
In that evidence there is sufficient to show the consent of the railway department to the assignments to Messrs. Smith & Ripley, and the payment subsequently to them of between $10,000 and $11,000 on account of work done was also evidence of the ratification of the assignment and the recognition of them as the substituted contractors.
I think the issue raised upon the point in question must be found in favor of the suppliants.
It appears to me, too, that the object of the provision was to assure the completion of the works by the prescribed time, and it was made to enable the government to secure that result. It is, to my mind, very questionable if the contract could be legally cancelled when the government had decided to stop the works and change the route.
The merits of the case I consider wholly with the suppliants, and the defence, to be effectual, should establish a clear, legal right to avoid the contract within its provisions, which I think it has failed to do.
The remaining statements of defence do not raise any issue of importance, and I have now only to consider the question of damages.
The evidence as to the total expenditure on account of the contract up to the date of its cancellation is not very satisfactory, but rather confused. Statements were given by the book keepers of the suppliants Smith and Ripley, and the latter also gave evidence as to the expenditure. I have endeavoured to dissect the statements made, so as if possible to obtain a satisfactory result. It appears the whole expenditure for cost of plant and everything was $120,144.04, on account of which the government paid $10,050, and for the plant sold there was got $10,053.27. That would leave a balance of $100,040.77.
It is shown that of this balance there was included the cost of the purchase of the assignments of the contract, $29,000.00.
The balance for work done and unpaid for therefore is $71,040.77. If entitled to recover at all, it seems clear to me that the suppliants are entitled to be paid this sum under any circumstances. If the government illegally ended the contract, as I think it did, I am of opinion the question of profit and loss on the whole contract does not necessarily arise and that the suppliants to recover that amount need not show how the whole contract would have resulted. It would be only necessary I think to show the balance expended above payments and receipts. That question, however, does not arise in this case, for the evidence largely preponderates to show that had the suppliants been permitted to finish the contract there would have been a profit instead of a loss. There is therefore no reason that the suppliants should not recover that amount. They however claim damages for the loss of the profit they allege they would have otherwise made, and sustained their allegations by a great many witnesses. Those witnesses were all well acquainted with the works done and to be done. They are experienced contractors, the most of them, and capable of estimating the cost of such works. They state that a profit would undoubtedly have resulted, and some estimated it as high as $220,000.
It was shown by three or more witnesses that a reliable railway firm (Messrs. Loss & McRae), after a careful inspection of the works, and shortly before the cancellation of the contract, made an offer to Messrs. Smith & Ripley, to take the works off their hands and finish them as required by the contract and pay them a profit of ten per cent. on the work to be done. This would be equal to about $75,000. That offer was refused by Smith & Ripley because, as they allege, they believed they would have made a larger profit by doing the work themselves. Evidence was, however, given on the other side by five witnesses, all of whom are engineers, but only two had been contractors, none of them but one had been on the ground, and their evidence was founded on estimates made from the working plans. Having heard the examinations of all the witnesses I feel that the evidence of the large number of witnesses capable of estimating the cost of the works, and who made the estimates referred to by them from actual and careful personal inspection, who gave evidence on the part of the suppliants, is entitled to much more weight than that of four gentlemen who had never seen the works or the appliances and means at hand for completing them. While some of the suppliants' witnesses estimated the profit on the contract would have been over $200,000, the five witnesses for the defence give it as their opinion that there would have been none. I have no doubt but that the witnesses on both sides gave their opinions on the point conscientiously. I think I could not be expected to trust to the opinion of gentlemen who never saw the locality of the works, in preference to that of double the number who had a thorough knowledge of them. It is not so much a question of credibility as of reliability in the judgment of the witnesses. The evidence taken altogether has left me impressed with the firm belief that a large profit would have resulted, and I am of opinion that the sum of $100,000 is not too high a sum at which to put it according to the weight of the evidence. That sum, added to the sum expended on the works, would amount to $171,040.77, and I assess the damages to the suppliants at the latter named sum and give judgment in their favor for that amount with costs.
From this judgment the respondent appealed to the Supreme Court of Canada.
Mr. Lash, Q.C., for appellant:
The contractors were informed of the exact effect of the order in council of the 25th July, 1879, and although the words "cancel and annul" are not to be found in the order in council, the effect of the order in council, which was enclosed in a letter, was plainly to inform the contractors that they were to stop work. Upon receipt of this notice the contractors simply stopped work and discharged their hands. The defence raised the point that one of the terms of the contract was, that if contractors made default and continued for a number of days in default, the government could take the contract out of their hands. By clause 14 of the contract this power is given to the government. True, the evidence failed to establish notice in writing, but, in addition to this, the contract provided that the work had to be completed by the 1st July, 1880, and although Smith & Ripley, after the assignment, made large preparations and went to great outlay and could have performed their contract within the delay, still, at that time, the contractors, Heney, Charlebois & Flood, had practically abandoned the contract, they had sold out and by themselves would have been unable to complete it before the time, and, therefore, I submit that the contractors having made default, the Crown had the right to rescind the contract. Then, if my proposition is correct, this contract came to an end on 9th August, 1879, when the Department of Railways notified the contractors, and if at an end, then no action can be brought upon an executory contract, and as it is only upon an executory contract that the suppliants can succeed, the judgment cannot stand. Their answer to this contention is, that the original contractors had the right to assign and did assign their contracts to Smith & Ripley, and the evidence showing that they (Smith & Ripley) had incurred large expenditure to prosecute the work, there was no default by Smith & Ripley, and, therefore, the notice of the 9th August did not cancel the contract. If their premises be correct their conclusion is correct.
[THE CHIEF JUSTICE. Do Heney, Charlebois & Flood set up that they were carrying out their contract through the instrumentality of Smith & Ripley?]
No, my lord, and if they did it could not be supported by the evidence.
This brings me to the main point of the defence, viz., the effect of the transactions which took place between the original contractors and Smith & Ripley. [The learned counsel then read clause 17 of the contract.]
Now, what the Crown says is this: "You made an assignment of this contract without the consent of the Crown, and, therefore, Her Majesty had the right to take the contract out of your hands and cancel it." Their answer is two fold:
1st. That the assignments to them of the contract were assented to by the Crown.
2nd. Even though it were assigned without having obtained the assent of the Crown, clause 17 of the contract does not give the right to Her Majesty to take the contract out of their hands, unless it is with the intention of completing the work, and that as in this case the true reason for taking the work out of the contractor's hands was not on account of the assignment, therefore clause 17 cannot be relied on.
The first question is: Did Her Majesty assent to the assignment?
The first notice which the Crown received of these assignments was by letter of the 5th August, 1879, written by Messrs. Smith & Ripley's attorney. This was answered by a letter dated August 11, 1879.
Now the order in council ordering the stoppage of the works was passed on the 25th July, and was communicated to them on the 9th August.
The evidence relied on by suppliants as proving the Crown's assent is contained in the evidence of Mr. Ripley. The first interview by Mr. Ripley with Mr. McKenzie was in September, 1878. It appears that Messrs. Smith & Ripley had tendered for this work, and, as their tender was too high, they afterwards made overtures to the successful tenderers Messrs. Heney, Charlebois & Flood and took an interest in this contract. On the 14th September, 1878, by a notarial deed a partnership was formed, comprising the original contractors and some others, for the purpose of carrying out the contract, and on the same day Mr. Ripley, one of the suppliants, and others were admitted into the partnership by notarial deed.
By this instrument there was no assignment of the contract. Under the terms of the contract there could be no objection to the contractors taking in associates for the purpose of getting capital. Mr. Ripley, therefore, having obtained this interest in the contract came to Ottawa and had this interview, and it is on this interview they rely as bearing out the contention that the government assented to the assignment. [The learned counsel then read part of the evidence which is referred to in the judgments.] Now, this conversation had only reference to the partnership agreement and not to the assignment of the contract, as provided in the 17th clause of the contract.
The next interview relied on as containing the assent of the Crown took place between Mr. Ripley and Mr. Trudeau, the Deputy Minister of Public Works, in the spring of 1879. This was when Mr. Ripley came to Ottawa, not for the purpose of taking an assignment of the whole contract, but for the purpose of getting a larger interest in it.
On the cross-examination some reference is there made to this conversation. [THE CHIEF JUSTICE; What does Mr. Trudeau say on this point?]
He was not called. There is no doubt that what Mr. Ripley states there is correct. At this interview, also, he only refers to getting a larger interest and not a total assignment. That is all the respondents can rely upon as proving an assent on the part of the Crown to the assignment upon which they now base their claim. I submit it cannot have that effect, and if it could be construed to mean an assent or a promise to give an assent, it cannot bind the Crown. Mr. Trudeau's position as Deputy Minister of Public Works did not qualify him to bind the Crown. If he had any authority at all, it was in virtue of his position, and that position, it cannot be denied, does not authorize him to alter a written contract. But it is far better to hold that Mr. Trudeau never did anything of the kind.
[THE CHIEF JUSTICE—If you rely on this, it would have been far better to have the oath of Mr. Trudeau.]
If Ripley had proved anything at variance with the contract, it might have been the duty of the Crown to call him as witness, but I submit he did not.
I now come to the titles of Messrs. Smith & Ripley whereby all interest in this contract became vested in them. The first instrument is a release by John Heney, dated 2nd August, 1878, to the other original contractors Charlebois and Flood, by which the former releases his interest to the latter gentlemen.
Then, on the 16th May, 1879, Flood, together with others, assign their interest to Smith & Ripley, and finally, on the 30th June, 1879, Charlebois and others assign their interest to Smith & Ripley. At that time the suppliants had obtained the control of all interests in the contract, but inasmuch as there might be some complications in consequence of the numerous transfers, they all joined together; and by a further instrument, made on the 30th June, 1879, the suppliants obtained a complete assignment of the contract. Now, how can it be successfully contended that the conversation which took place with the Minister of Public Works in 1878, constitute the Crown's assent by anticipation to all these transactions?
They also allege that because the government had given notice to the original contractors that the work should be stopped, they were debarred from the right of relying upon the covenant in the contract, and of refusing their assent to an assignment.
If the notice given had not the effect of cancelling the contract, then the contract remained as it was, and one of the terms of the contract is that if the contractors assigned without the consent of the Crown, it should be null and void. But in addition to this, I also rely upon evidence which, I say, disproves that the Crown knew of this arrangement.
The notice was given on the 9th August, 1879, and all payments up to that date had been made to the original contractors by cheques payable to their order, but to the bank of Montreal, who had a power of attorney to receive all moneys coming to these contractors under that contract, and which power of attorney had not been revoked. Then, on the 13th Aug., 1879, the contractors write to the government, showing that they at that time considered themselves the proper parties to be notified.
[THE CHIEF JUSTICE: —When was the notice of the assignment given to the government?]
By letter dated 5th August, 1879. But it is said Messrs. Heney, Charlebois & Flood are suppliants, also, and therefore the suppliants are still entitled to recover.
I will now deal with the petition, as a petition of the original contractors. I submit, so far as Messrs. Heney, Charlebois & Flood are concerned: (a.) That they cannot recover for balance of work done, because under the terms of the contract they forfeited their claims by assigning the contract.
(b.) That they cannot recover anything under the contract as an executory contract, because:—
1. It was rescinded on account of being assigned.
2. It was rescinded on account of the contractors' default in going on with the work and of their inability to complete the contract on their part.
3. If not rescinded, there was no breach of any of its terms by Her Majesty by the giving of the notice relied on as such breach.
Dealing as between Smith & Ripley and the Crown, I contend:
(a.) That they cannot stand in any better position than their assignors, the contractors, and that if the contractors cannot recover, neither can their assignees.
(b.) That Smith & Ripley have not any right against the Crown, because:—
The contract attempted to be assigned to them was one which could not be assigned so as to give them any rights against the Crown under it unless with the consent of the Crown.
(c.) Any executory rights (if any,) which they may have acquired through the assignment to them expired upon the cancellation of the contract.
The statute of Ontario passed in relation to choses in action is not binding upon the Crown, and cannot be relied on in a contract between the Crown and a subject.
I will now come to another branch of my argument under another clause of this contract, to wit: That the letter of August the 9th, 1879, and the order in council relied upon as being a breach of the contract, did not constitute any breach on the part of Her Majesty. This is a unilateral contract by which the contractors bind themselves to do certain work, for which, when done, they are entitled to receive certain monies. This raises practically the same point as in MacLean v. The Queen[1]. There is, I submit, no express contract on the part of the Crown that the work will be given, the contract only says there shall be certain moneys paid when work done. I admit there would have been an implied contract to give the suppliants the work, in order that they might perform the work and earn the consideration, but for clause 34 of the contract. By this clause:
It is distinctly declared that no implied contract of any kind whatever by or on behalf of Her Majesty shall arise or be implied from anything in this contract or from any position or situation of the parties at any time, it being clearly understood and agreed that the express contract, covenants and agreements herein contained and made by Her Majesty, are and shall be the only contracts, covenants and agreements upon which any rights against her are to be founded.
Now, the only contract of which the letter of the 9th August, 1879, constitutes a breach, must be an implied contract and that contract is expressly excluded by clause 84
As to the damages, the learned judge who tried the case gave judgment in favor of the suppliants for $100,040 anticipated profits, and $71,040 outlay incurred in preparing to go on with the works, in all $171,000. I do not find fault with the mode adopted for arriving at this amount, but the evidence does not sustain the amount awarded.
[The learned counsel then commented on the evidence.] Under these circumstances I submit that the judgment of the Exchequer Court is wrong in awarding to the suppliants $171,040, as the evidence does not sustain such a finding and the suppliants are not in law entitled to it. Mr. Hector Cameron, Q.C., for respondents:
I will not take up the question of damages, as Mr. McDougall, who was engaged in the case in the court below, will discuss this matter more at length.
Now, assuming this contract to have been made between a private individual and a corporation to build fifty miles of a railway, it would strike one at first view as strange to find that, on a question of assignment of the contract, the assignees, who at first had been taken in as partners in order to increase the working capital, and afterwards had been induced by the corporation to take a larger interest, and had, as in this case, expended some $70,000, should be met with this answer: "You are not entitled to any remuneration at all, and, although we gave you work to do, and induced you to put your money in this contract and buy out your co-contractors, now we have changed our minds, we will not pay." Such a defence on behalf of a corporation, I say, would almost shock one's ideas of justice, but that such a defence should be put forward by the Crown, because the Crown subsequently refused to consent to the assignment, is, to say the least, singular. Of course there is no merit in such a defence First, it is admitted that Messrs. Smith & Ripley had a perfect right to go in as partners in this contract. They did so, and afterwards, being encouraged by the officers of the Crown to take a larger interest, they brought out their co-contractors, and then they are told: "Oh! you have taken an assignment of this contract, now, because you have done so, we will not pay you one cent." If, I repeat, a corporation came into any court with a defence like that, there would be some very hard language used, and the corporation would be estopped from putting forward such a defence. However that may be, that seems also to have been the view taken by Mr. Sandford Fleming, the Chief Engineer for Government Railways, for, it appears, he advised the Government and reported that Messrs. Smith and Ripley's claim should be considered and be referred to some one in order to decide what compensation should be offered to him; but this course was not adopted, and afterwards, due to some afterthought, the Crown was advised to put in this defence, and finding it there, I must stigmatise it as a dishonest defence.
The appellant contends, that under the provisions of the seventeenth clause of the contract, and by reason of the alleged transfers of the interests of the original contractors to the suppliants Smith and Ripley by various assignments, the contract was cancelled and taken from the contractors.
By that clause it is provided that the contractors shall not assign, and, even if they assign and government consent, such assignment shall not exonerate the contractors from liability, and, if assigned without Government's assent, then Her Majesty may take the work out of the contractor's hands and employ such means as she may see fit to complete the same.
It is a mere covenant, and what is the result? The utmost power given to the appellant is that, upon certain events happening, the Crown may take the work out of the contractor's hands, provided it is "for the purpose of prosecuting it by some other means," and for no other purpose. There is no authority there given to cancel the contract, or permanently to put a stop to the work on account of an assignment. This clause must be construed strictly, and a forfeiture is never favored, and will not be assumed unless expressly declared. The object of this clause, evidently, was not to create a penalty for assignment, nor to provide an excuse for forfeiting the contract should the Government not wish to go on with it, even if it were being ably prosecuted, but to ensure its satisfactory completion by preventing the work from getting into the hands of weak or irresponsible contractors.
I submit therefore that an assignment without consent under this clause creates no forfeiture, but a mere breach of convenant at the most, for which, if the Grown could have any remedy, it would simply be by action on the covenant. See Paul v. Nurse[2]; Roe v. Harrison[3]; British Waggon Co. v. Lea[4]
Then I say the suppliants have the right to recover in the name of the original contractors.
Paragraph 5 of the petition alleges that the contractors procured Smith and Ripley to expend the amount for them. But the contract had been assigned, when the order to stop work and cancel the contract was communicated to the contractors on the 9th August. The passing of the subsequent order in council of the 14th August, 1879, alleging the assignments as a reason for the cancellation, could not validate a breach of contract already wrongfully committed. I say the second order in council was a farce. If the first reason given was right, there was no necessity for the second order in council. It was unfair, I contend, on the 14th August to set up this reason, when they had already cancelled it on the 25th July, because it was the policy of the government not to go on with the work. And inasmuch as the previous ground arose from no fault of the contractors, I say it is a technical reason which is now set up and ought not to prevail. The clause now inserted in government contracts is very differently worded, and shows that when the intention of the government to stop work is communicated to the contractor reasonable compensation is provided for. It is an equitable clause and the contractor goes in with his eyes open.
There is one case to which I wish to call the attention of the court, in which all the cases bearing on this point are thoroughly discussed, it is McIntosh, et al. v. Samo[5], and establishes clearly the principle that a clause of that kind will not be read to work a forfeiture unless expressly so provided. Then, again, this 17th clause does not provide for a consent to be in writing. It being a mere license under the contract, and not in any way a variation of the sealed instrument, a verbal sanction from the officer representing Her Majesty as Minister, or from the temporary head of the department, would be sufficient. It might be by acquiescence.
[THE CHIEF JUSTICE: Could there be a consent before there was an assignment?]
Yes, if a contractor came to the Minister of Railways and told him he was going to take an assignment of a contract, and the minister answered he was very glad, and the contractor then asked in what form should he do it, and the proper directions were given, assuming all that, would not the Crown be estopped from saying that the assignment must be treated as a forfeiture of the contract? The Deputy Minister of Public Works, who was then the departmental officer who could give the necessary information to the suppliants, told them what to do, and they complied with his directions. 31 Vic., ch. 12, secs. 2, 4 and 7, specify the powers of the Deputy Minister.
As to the contention that the Crown was under no obligation to give the contractors the work to do, because there was no express covenant to that effect in the contract, and therefore Her Majesty committed no breach in stopping the work and cancelling the contract, I submit that there is no necessity on our part to establish that there existed an express or implied covenant, because the moment Her Majesty, through her officers, put the contractors in possession of the location of the work, gave them the requisite plans and bill of works for the execution of the contract, and directed them to commence operations, Her Majesty did all that she would have been obliged to do under an express covenant by her that the contractors would be given the work.
Although there are, in the general description of the subject of the contract above set forth, several different branches or classes of work required, yet they all constitute one entire and undivided undertaking; that is to say, the construction of fifty miles of railway known as the Georgian Bay branch in such a way as to make it complete and ready for traffic
This case differs entirely from the case of McLean v The Queen, lately decided in this court, and from the authorities upon which that decision was based.
In each of these cases it was necessary to establish, in order that the plaintiff should succeed, that there was an implied covenant on the part of the defendant to give the work in question therein, or to do some other precedent act, and to continue these acts from time to time, because the subject of contract did not consist as in this case of one entire work, but of several separate and distinct undertakings. See McLean v. The Queen[6]; Churchward v. The Queen[7]; McIntyre v. Belcher[8].
If, however, it were necessary in order to make the appellants liable in this case, that an implied contract on Her Majesty's part should be established, it is submitted on behalf of the respondents, that the thirty-fourth clause relied upon by the appellants would not prevent such being done. That clause must be construed to mean only that no covenant or contract by Her Majesty should be implied inconsistent with, or further than is necessary to carry out, the intention of the parties to the written contract.
The object of the parties in making the contract must be kept in view in construing it, and as provided in the first part of the fourth clause the several parts of the contract must be taken together to explain each other: See Mallan v. May[9] and Ford v. Beach[10].
Then, as to the question of damages, the learned counsel for the appellants treated all the witnesses on behalf of the respondents as being interested. Now, not one of them had any interest left in this contract, but all of them, from their knowledge of the locality and experience in such matters, could speak with much more weight than any of the witnesses for the defence, not one of whom had been there, except Mr. Lumsden, and against his evidence we have the evidence of contractors who had examined the road and made a bonâ fide offer of ten per cent. profit on the bulk sum of the contract.
Then, as to the point whether the contract could have been completed within the time provided for in the contract, to begin with, it is in evidence that the government were themselves in default, and, under clause 29 of the contract, the contractors would have been entitled to further time, and then the evidence for the suppliants clearly proved that with the large outlay that had been made, and considering the position of the suppliants who were practical and experienced contractors with unlimited means, the work would have been completed. There is no doubt of the fact that the suppliants are out of pocket some $70,000, and that in addition to that they would have made a large sum of profits. These profits would have flown from this contract, and the evidence fully sustains the amoun awarded See Mayne on Damages[11].
Hon. Mr. McDougall, Q.C., follows:—
As I had to do with the evidence, and have been engaged in the case since the commencement, I would ask your lordships to follow me in order to understand the rationale of the case.
The case is important, not only in regard to the amount involved, which is large, but also as regards the position of contractors generally in Government contracts, and will, therefore, justify a careful consideration.
This contract was made with the authority of parliament and was for the execution by the contractors of the work described as "the excavation, bridging, grading, fencing, track-laying, and ballasting of that portion of the Canadian Pacific Railway known as the Georgian Bay branch," consisting of fifty miles. Money had been voted by parliament, and I presume it was the lowest tender which was accepted. The contractors, therefore, became entitled to perform their contract and get their pay. I deny, as is contended for by the crown, that this is an unilateral contract.
The contract in this case is under seal, signed by both parties and is reciprocal. There are express covenants and agreements by both parties. The performance of the contract by the respondents was dependent upon, and impossible without, the previous performance of certain things by the appellants—such as location of the line, staking out the work, cross-sectioning the cuttings, supplying drawings and plans for bridges, &c.
The Crown notified the respondents (9th August, 1879,) to "cease all further operations," and, thereafter, refused to perform the covenants, &c., on its part. The Crown committed a wilful breach and made it impossible for the respondents to proceed with the work under the contract. As under the circumstances they could not compel specific performance, their only remedy was an action for damages.
It is a rule of the common, as well as of the civil law, that "if one man is to pay money to another upon an act being done, and the other is ready and offers to do the act, and the party hinders him, this is tantamount to performance." Addison on Contracts[12]; Domat[13]; Tones v. Judd[14]. And the party hindered acquires a complete right to the money, as if the contract on his part had been performed. Pedan v. Hopkins[15]; Shaw v. Turnpike Co[16].
The contract contains no provision for the suspension or abandonment of the work. The two clauses referred to by the appellants (14th and 17th) provide for the completion of the works by the respondents in certain events—not abandonment—and are evidently inserted in terrorem, and not to work a forfeiture.
"The law does not favour forfeiture. Strict proof of breach of condition or covenant working forfeiture is always required"[17].
The 14th clause requires six days' notice in writing to the contractors before it can be acted upon. The Crown admits that the required notice was never given. This admission disposes, also, of all that part of the defence which alleges "default or delay in diligently continuing to execute the works."
The 17th clause restrains the assignment "of this contract," i.e., the entire contract, without consent. It does not, and was not intended to restrain the transfer of an interest to persons of means and skill, who might advance capital or supplies. The universal practice had been and still is, to admit partners to "strengthen the firm." The original contractors and their securities remained liable to the Crown up to the very moment of cancellation or abandonment. But assignment without consent does not work a forfeiture. This clause merely gives an option to the government to take the works out of the hands of the contractors and "complete the same" themselves. This is evident from the condition that the contractors shall remain liable for all loss sustained by the government in such case, and shall leave all materials, horses and plant, on the ground for the purpose of, and until, the work is so completed. The option was not availed of, nor was the work completed by the government. The 17th clause, therefore, cannot be invoked by the Crown.
The respondents proved an actual consent by the Minister of Public Works, and subsequently by the Deputy Minister, to the partnership arrangements between Smith & Ripley and the original contractors made prior to the 25th July, 1879, the date of the so called concellation.
They also proved notice to the Crown of their presence upon and interest in the work as partners of the original contractors. (Evidence of engineer Brunel, Report of Sandford Fleming, admitting that Smith & Ripley had received payments for work executed. Letter of Brunel to Fleming of June 30, 1879.
The recognition of respondents by the engineers in charge, by giving them directions as to the work, paying estimates to them instead of the original contractors, as well as the statements of Mr. McKenzie and Mr. Trudeau to Mr. Ripley when he visited Ottawa, before he had concluded negotiations with Charlebois & Co., amount in law to a waiver of the condition of clause 17, even if its breach should be held to work a forfeiture. The government misled the respondents and cannot take advantage of their own wrong. Doe v. Rowe[18]; 1 William's Saunders[19] and cases there cited.
That is the character of the contract. While work was progressing, it was discovered on the one hand that some of the contractors had not sufficient capital, on the other that the Government were in default in omitting to do certain things, and a proposal was made by the suppliants to take an interest in this contract. These gentlemen had large capital, extensive plant and machinery and were practical and extensive contractors, and in fact few men were better able to do this work than they were, and labor being cheap, they had the hope of making a handsome profit. The Minister of Public Works, and he surely was capable of binding his department in matters of this kind, knew these gentlemen, and on hearing of their intention, said without hesitation, that he was glad to have such men in the contract. It was then a matter of public policy to build this road, and we can understand how readily the Government acquiesced in having Messrs. Ripley and Smith interested in this contract.
There never was, I contend, an assignment of the contract in the sense of the seventeenth clause. First of all Mr. Ripley became a partner of the original contractors. This did not require an Order in Council, nor was it an act of state; every day parties are added to contracts, even banks become interested; in fact public works, which require large outlay and expense, could not be carried on unless this were done, yet I find the Crown in this case objects to pay money justly due. I confess this seems to me unjustifiable. There is a case which came before the Privy Council, Kirk v. The Queen[20], where it was held that the receipt of rents by the Government waived the clause of forfeiture. I refer your Lordships to that case, which shows how such a defence as the one here set up is regarded by the Privy Council. My contention is, that Messrs. Smith & Ripley became parties to this contract with the approval of the Government, and that they have never altered their character in that respect; they simply increased their interest, and that with the Government's assent, so far as was necessary, and therefore, I say, clause seventeen cannot be relied upon by the Crown. Then, if there is no ground for cancelling the contract, under clause seventeen, what is the position of the parties? The Government have assumed to cancel this contract, it may be in the public interest, but then they must pay; in matters of public policy, private individuals should not be made to suffer, the public can afford to pay: no one asks that these gentlemen should suffer, except the learned counsel representing some one behind him. Now, the contract being cancelled, what do these contractors—foreigners to us—do? They put in their claim, and finding they could not have it settled at once, but being still anxious to close up this transaction, they make a proposal to refer their claim to any one of three public officers. I happen to know there was a strong disposition in certain quarters to favor this mode of settlement, but some how or other the matter dragged along, and finally, these gentlemen had to come before the Exchequer Court and got there a verdict which I claim is in accordance with justice and right, and which I respectfully submit should be sustained by this court.
[The learned counsel then reviewed the evidence, and contended that it fully sustained the verdict.] RITCHIE, C. J.:—
The appeal in this case is on behalf of Her Majesty, from the judgment of the Exchequer Court of Canada, in the matter of the petition of right of James N. Smith and others, by which judgment the said petitioners are declared entitled to be paid by Her Majesty the sum of $171,040.00, for damages consequent upon the cancellation of a contract for the building of a portion of the Canadian Pacific Railway.
The contract in question was entered into on the day it bears date, between the petitioners, Heney, Charlebois and Flood, and Her Majesty, represented by the then Minister of Public Works of Canada, for the execution by the contractors of the work described as "the excavation, bridging, grading, fencing, track-laying and ballasting of that portion of the Canadian Pacific Railway known as the Georgian Bay Branch, and consisting of fifty miles, extending between Section O." of location 1877, on the west of South River, near Nippissigan Post Office, to the head of navigation on French River, in consideration of the covenant for payment on the part of Her Majesty set out in clause 24 of said contract.
There are numerous conditions, provisoes and powers mentioned in the contract, all of which are set out in full in the case.
The following clauses more immediately bear on this case:
17. The contractors shall not make any assignments this contract, or any sub-contract, for the execution of any of the works hereby contracted for and in any event no such assignment or sub-contract, even though consented to, shall exonerate the contractors from liability, under this contract, for the due performance of all the works hereby contracted for. In the event of any such assignment or sub-contract being made, then the contractors shall not have or make any claim or demand upon Her Majesty for any future payments under this contract for any further or greater sum or sums than the sum or sums respectively at which the work or works so assigned or sub-contracted for shall have been undertaken to be executed by the assignee or sub-contractor; and in the event of any such assignment or sub-contract being made without such consent, Her Majesty may take the work out of the contractors' hands, and employ such means as she may see fit to complete the same; and in such case the contractors shall have no claim for any further payment in respect of the works performed, but shall nevertheless remain liable for all loss and damage which may be suffered by Her Majesty by reason of the non-completion by the contractors of the works; and all materials and things whatsoever, and all horses, machinery, and other plant provided by them for the purposes of the works, shall remain and be considered as the property of Her Majesty for the purposes and accordiug to the provisions and conditions contained in the twelfth clause hereof.
18. Time shall be deemed to be of the essence of this contract.
24. It is distinctly declared that no implied contract of any kind whatsoever, by or on behalf of Her Majesty, shall arise or be implied from anything in this contract contained, or from any position or situation of the parties at any time, it being clearly understood and agreed that the express contracts, covenants and agreements herein contained and made by Her Majesty, are and shall be the only contracts, covenants and agreements upon which any rights against Her are to be founded.
25. Cash payments equal to about ninety per cent. of the value of the work done, approximately made up from returns of progress measurements and computed at the prices agreed upon or determined under the provisions of this contract, will be made to the contractors monthly on the written certificate of the engineer that the work for or on account of which the certificate is granted, has been duly mentioned; and upon approval of such certificate by the Minister of Public Works, for the time being for the Dominion of Canada, and the said certificate and such approval thereof shall be a condition precedent to the right of the contractors to be paid the said ninety per cent. or any part thereof. The remaining ten per cent. shall be retained till the final completion of the whole work to the satisfaction of the chief engineer for the time being, having control over the work, and within two months after such completion the remaining ten per cent. will be paid. And it is hereby declared that the written certificate of the said engineer certifying to the final completion of said works to his satisfaction shall be a condition precedent to the right of the contractors to receive or be paid the said remaining ten per cent., or any part thereof
26. It is intended that every allowance to which the contractors are fairly entitled, will be embraced in the engineer's monthly certificate; but should the contractors at any time have claims of any description which they consider are not included in the progress certificates, it will be necessary for them to make and report such claims in writing to the engineer within fourteen days after the date of each and every certificate in Which they allege such claims to have been omitted.
27. The contractors in presenting claims of the kind referred to in the last clause must accompany them with satisfactory evidence of their accuracy, and the reason why they think they should be allowed. Unless such claims are thus made during the progress of the work, within fourteen days, as in the preceding clause, and repeated, in writing, every month, until finally adjusted or rejected, it must be clearly understood that they shall be forever shut out, and the contractors shall have no claim on Her Majesty in respect thereof.
28. The progress measurements and progress certificates shall not in any respect be taken as an acceptance of the work or release of the contractors from responsibility in respect thereof, but they shall at the conclusion of the work deliver over the same in good order, according to the true intent and meaning of this contract.
The following are the dates respectively of the documents in evidence:
2nd August, 1878—Contract between Heney, Charlebois & Flood and The Queen.
14th September, 1878—Jas. Ripley et al obtain a third interest in the contract, Charlebois & Co. having one-third, and Flood & Cooper, the other third.
19th September, 1878—A new partnership is formed between Charlebois, Flood & Co., and Heney's interest is purchased.
16th May, 1879—Flood & Co. and Cooper assign their third interest to J. Ripley, acting for Smith & Ripley.
30th June, 1879—Charlebois & Co. assign their third interest to Smith & Ripley.
On same day, 30th June, 1879, a dissolution of the previous partnerships takes places, leaving the Messrs, Smith & Ripley the sole interested parties in the contract. On the same day, 30th June, district engineer informs engineer in chief that Ripley, one of the principal contractors, intends pushing work and buying out minor partners.
On the 25th July, 1879, Order in Council passed recommending that the contractors be notified to stop work.
On the 5th August, 1879, Smith & Ripley notify the Minister of Railways of the transfer of the contract and their readiness to substitute their security for that given by Charlebois.
On the 9th August, the Order in Council of July 25th is forwarded to the original contractors.
On the 11th August, Acting Secretary of Department of Railways and Canals acknowledges receipt of Messrs. Smith & Ripley's letter, and informs them that the Crown does not consent to the assignment, and will not consent.
On the 13th August, 1879, the original contractors acknowledge the receipt of the letter of the 9th August, enclosing copy of Order in Council of July 25th, 1879.
On the 14th August, 1879, Order in Council cancelling the contract with Heney, Charlebois & Flood.
On the 27th August, Smith & Ripley acknowledge receipt of letter of 11th August, enclosing order in Council of July 25th, 1879, and state they only received it on 26th August, 1879.
Then follow letters by Smith & Ripley to the Minister of Railways, dated respectively 20th September, 1879, 30th September, 1879, December 15th, 1879, and November 22nd, 1880.
I cannot discover a tittle of evidence to show that either before or after the contract was assigned Her Majesty ever consented to such assignments, or had any knowledge of such assignments, or in any way directly or indirectly recognized the assignees as contractors under the said contract, but, as I read the evidence, the very contrary was the case, from the commencement of the work and until the contract was put an end to, the original contractors continued to deal with the government and the government with the contractors under the contract, entirely independent of any third parties whatever. All the payments for work done under the contract before and after the alleged assignments were made to the original contractors, Heney, Charlebois & Flood, on the monthly certificates issued to them in accordance with the provisions of the contract, who, through their duly authorized attorney, received the same and gave receipts therefor, as follows:
PAYMENTS MADE ON ACCOUNT OF CONTRACT.
Official Cheque (for work done per estimate No. 1 to 31st ult., contract 37, Pacific Railway,) No. 1521, for $550, issued in favor of Heney, Charlebois & Flood and received by A. Drummond, manager of Bank of Montreat, on 20th December, 1878, under power of attorney granted to A. Drummond, manager of the branch of Bank of Montreal, Ottawa, to receive all sums due, or may hereafter become due by the Government of Canada to Messrs. Heney, Charlebois & Flood. The power of attorney is dated and signed 18th December, 1878.
Official Cheque (for work done per estimate, No. 20, contract 673, Pacific Railway,) No. 1985, for $880, in favor of Heney, Charlebois & Flood, received by Mr. Drummond on 20th December, 1878.
Official Cheque (for work done per estimate to 31st December, 1878, contract 37, Pacific Railway,) No. 2335, for $1,600, in favor of Heney, Charlebois & Flood, received by Mr. Drummond on 16th January, 1879.
Official Cheque (for work done per estimate to 31st January, Pacific Railway, contract 37, P. W. Cert. 878,) No. 2726, for $3,050, in favor of Heney, Charlebois & Flood, received by J. W. de C. O'Grady, for manager Bank of Montreal, 17th February, 1879. Official Cheque (for work done per estimate to 28th February, Georgian Bay branch, P. W. Cert. 979,) No. 3075, for $2,050, in favor of Heney, Charlebois & Flood, received by J. W. de C. O'Grady, for manager Bank of Montreal, on 15th March, 1879.
Official Cheque (for work done per estimate to 31st May, contract 37, South River to Cantin's Bay,) No. 4179, for $1,950, in favor of Heney, Charlebois & Flood, received by J. W. de C. O'Grady on the 16th June, 1879.
When notice that the contract was put an end to, such notice was by the government given to the said original contractors, and on the 13th August, 1879, these contractors (Heney, Charlebois & Flood) write to the Hon. Mr. Pope, acting Minister of Railways and Canals, as follows:—
Hon. John Pope,
Acting Minister of Railways and Canals.
SIR,—We have to acknowledge yours of the 9th instant covering a copy of an Order in Council of the 25th of July, authorizing you to cancel our contract for the construction of the Georgian Bay Branch of the Canadian Pacific Railway. Also your notice of August 9th to us to discontinue operations under said contract. In pursuance to your notice I immediately transmitted your order to discontinue operations to the parties temporarily in charge of the work by telegraph to Collingwood, the executive office of our firm. Should there be a failure of full compliance to your order by the parties temporarily in charge of the work, on account of certain efforts to negotiate with us, for the entire control of said work; we would hereby inform and notify you, that such negotiations were never completed or deemed sufficiently likely to become so, to cause us to ask your official sanction thereto. Therefore we shall only enumerate, subject to amicable settlement, such charges as have become chargeable to the work previous to the receipt of your notice to discontinue operations.
We have the honor to be, Sir,
Your obedient servants,
Heney, Charlebois & Flood.
Montreal, 13 August, 1879.
Thereby entirely repudiating by anticipation the rights of any other parties, and stating why they had never asked any official sanction.
Nor can I find in the case the slightest evidence that Heney, Charlebois & Flood ever directly or indirectly sought the consent of the crown to an assignment by them, or ever intimated to the government that they had parted or desired to part with their interest in the said contract, or that the same had been assigned to Smith & Ripley, or to any other parties. All the transactions with reference to the different assignments and transfers which now appear to have taken place, so far as they actually did take place, were between the parties themselves, without the knowledge or consent of any person whomsoever authorized or empowered by the crown to give such consent. The only evidence relied on of any such consent is that of Ripley himself, which is as follows:
Q. Did you visit Canada, and, if so, when for the purpose of taking contracts for public works? A. In September, 1878.
Q. You came to what place? A. To Montreal.
Q. Was any one associated with you as a railway contractor at that time? A. Yes, Mr. James N. Smith was my partner at that time.
Q. And had been your partner for some time previously? A. Some ten years or more.
Q. When you visited Canada did you become aware of a public contract called the Georgian Bay branch of the Pacific Railway contract? A. Yes.
Q. Did you take any steps to obtain an interest in that contract or to obtain control of it? A. I purchased an interest at that time in the contract.
Q. From whom? A. From Messrs. Charlebois, Flood & Co.
Q. Is this document, now produced and fyled as suppliants' exhibit "B," signed by them and by you, in connection with that contract? A. I recognize that as the contract.
Q. Does this instrument set out the interest which you were to acquire in the contract? As. It does.
Q. After obtaining an interest in the contract with these parties, as shown in this instrument, did you visit Ottawa? A. I did.
Q. How long after this instrument was executed? A. I should say within thirty days: I do not remember the exact time. Q. What was your object in coming to Ottawa? A. To acquaint the government with the fact of my becoming interested in this work, more particularly to ascertain if the contract was all right and properly made.
Q. What was your object in coming to Ottawa, and did you accomplish that object? A. I did. It was to look over the contract and see if it was made as they stated with the government, and also to acquaint the Government with the fact of my having become interested.
Q. What member of the government did you see? A. I saw, amongst others, Mr. McKenzie, the Premier and Minister of Pubic Works.
Q. Did you state to Mr. McKenzie what your object was and what you had done? A. I did.
Q. What did you learn from him? A. He expressed satisfaction that we had become interested with them as he had known us previously.
Q. Satisfaction that you had done what? A. That we had become interested in the work—that there was additional capital and experience added to the contract.
Q. He made no objection, did he? A. Not at all. I had made efforts previously to obtain work and had failed, and now I acquainted him with the fact that I had gone into the contract, and he expressed pleasure.
Q. You had tendered, I suppose? A. Yes.
Q. Were your tenders too high? A. in all cases.
Q. Did anything further transpire between you with reference to it? A. Nothing that I remember at that time.
The witness then stated that he had seen Mr. Trudeau, the Deputy Minister of Public Works, three or four months afterwards—a different season of the year.
Q. Then, you visited Ottawa for what purpose on that occasion? A. To see the government with regard to other changes which I proposed making with regard to my partners.
Q. What were those changes for, speaking generally? For the purpose of getting a larger interest, or what? A. Getting a larger interest so that we might make better progress with the work.
Q. Did you see the Minister of Public Works on that occasion? A. I enquired for the Minister of Public Works and they stated that he was absent.
Q. You mean absent from Ottawa? A. Yes, I took it so. I could not see him. Q. Who then did you see? A. I was recommended to see the Deputy Minister, Mr. Trudeau. I did see him. I was introduced, and had a conversation with regard to this work.
Q. Did he express any opinion or give you any answer to your inquiries on behalf of the government on that occasion? Did you see him in his office? A. I did. I stated to him my views with regard to the work and what I proposed to do at that time, and he answered me that the government always took pleasure in strengthening a contract—in adding strength to it (I think these were the exact terms that he used) and that they were always glad to see additional skill and capital contributed.
Q. (By Mr. Lash.) What was his reply? A. He answered that the government were very glad to add strength to any contract that they had with any party, either by capital or skill—that I would have no difficulty in satisfying the government with regard to that fact.
Q. Had you at that time been formally recognized by the government, in the contract, by any writing? A. Not by any writing.
Q. Were you anxious to be so recognized? A. I was. I asked Commissioner Trudeau what would be necessary for me to become recognized by the government. He stated that a simple letter from my partners, Mr. Charlebois and Mr. Flood, to the government would place me the same as themselves with the government.
Q. And that the assent of your co-partners would be sufficient to enable the government to recognize you, or that they would recognize you? A. He made that statement—yes.
Q. Did you make any further efforts to consummate t