NOTES OF CASES
| Date | 01 April 1951 |
| Published date | 01 April 1951 |
| DOI | http://doi.org/10.1111/j.1468-2230.1951.tb00202.x |
NOTES
OF
CASES
PUBLIC
BODIES
AND
PRIVATE
LAW
THERE is a marked contrast in the treatment of public authorities
in two recent cases. In
William
Coy
and
Son, Ltd.
v.
City
of
London
Corporation
1.1950]
2
All
E.R.
584,
the question was
simply what was the effect of the Corporation’s legislative activity
upon its own contracts. In
1930
the Corporation had made a con-
tract with the company under which the latter was to carry refuse
away to dumps in barges answering to certain specifications. The
contract would, in the ordinary way, have run until
1969.
How-
ever,
in
1948,
the Corporation as
Port
Health Authority passed a
new bye-law, effective from November,
1950,
under which all
barges engaged in such traffic had to comply with specifications
differing from those set out in the contract. The cost of altering
the barges to the new standard was such as to render the further
performance of the contract commercially impracticable. The com-
pany therefore claimed that they could treat the contract as
repudiated by the act of adopting the bye-law and that they were
therefore entitled to damages for breach. This claim was unhesita-
tingly rejected by Lord Goddard
C.J.
His argument was simple.
The repudiation of a contract involves a wrongful act, but you
cannot class as wrongful the acts of a public health authority pass-
ing a bye-law for the very purpose for which
it
was created.
Similarly, of course, any claim to treat the frustration of this
contract as induced by one party-the corporation-must likewise
fail, since again no
‘
fault
’
can be shown.
Two
further matters
were emphasised by the Lord Chief Justice. The bye-law was not
specifically directed to the contract in question;
it
was of general
application and its effect on the contract was only incidental.
Secondly, he rejected the i,dea that the Corporation had two
personalities, the one public as a subordinate legislative body, the
other private, in which
it
had contracted. Such a dichotomy is
unreal and is likely to lead to uncertainty and confusion. Instead,
he found that
it
merely had various powers conferred
for
different
purposes, an$ which might conflict. In this conflict precedence
was given to the public powers and duties of the Corporation; the
contract could not impede the discharge of those duties and must
therefore be treated as frustrated.
In one sense it is perhaps arguable that the principle of the
case would go further than the Lord Chief Justice was apparently
willing
to
apply it. The emphasis on the incidental effect
an
the
contract has already been noticed, yet it
is
conceived that even
205
206
TEE
MODERN
LAW
REVIEW
VOL.
14
if
the contractors had been the only carriers of refuse in the port
so
that the contract had clearly been in contemplation when the
bye-law was passed, provided that
it
was passed with a genuine
health motive, the same result must follow. The result may at first
sight
seem harsh, but in effect such a solution only prevents the
private contractor from deriving a benefit from having contracted
with a public authority, since it places him in the same position
as
if
the contract had merely been between private parties, More-
over, the application of the doctrines of frustration will serve to
lessen the financial loss to the contractor while not imposing undue
burdens
or
restrictions on the Corporation. The harshness
of
that
‘
uncompensated obedience
to
the police power
’
insisted on in such
cases as
Northern
Pacific
Ry.
v.
Duluth,
208
U.S.
803,
is thus here
mitigated without impeding the power itself. The result may seem
clbvious, but at least it
shows
a
recognition that public bodies are
not in all respects like private ones.
In contrast, however, stands
Magor
and
St. Mellom
R.D.C.
v.
Neqort
Corporation
[1950] 2
All
E.R.
1226.
It
involved
a
dispute
as to payment for increased burden as a result of local government
boundary changes, a class of case now happily disappearing after
the Local Government Act,
1948.
By
a
Private Act of
1984,
Newport Borough extended its boundaries and thereby became
liable to pay compensation to two rural districts-Magor and St.
Mellons.
At
the same time a Review Order was made coming into
force on the same day as, but immediately after, the Act. Under
this Order the two rural districts were combined in one. The short
question was: could the new council claim the compensation
which had been undoubtedly due to its component parts. The
answer of the majority of the Court of Appeal was in the negative.
With respect, that answer seems surprising. The increased burden
fell upon two bodies
of
ratepayers; as
a
result of the fusion those
same ratepayers together bore the same burden and
if
the claim
were justified before the fusion
in
logic
it
seems equally justifiable
afterwards. The only change perceptible to them was that the
body carrying
out
local administration in their district now had
a
different name.
To
the lawyer perhaps the answer may not be
so
eurprising. Cohen
L.J.
(with whom Somervell L.J. concurred),
while admitting that the right to compensation was
‘
property
’
of
the old authorities, and
as
such vested in the new one, denied that
that property had any value. The new authority was to
be
treated
as
an assignee
(e12:
hypothesi
it
itself having had no
previous existence could not suffer an increase of burden);
qua
assignee, however, it could claim no greater rights than the
assignors and the assignors’ rights ceased to have value once thc
assignors ceased to exist since, under
8.
152
of
the Local Govern-
ment Act,
1933,
regard must be had to the length of time during
which the burden may be expected to continue, and they could not
be
burdened after they ceased to exist. Within the strict limits
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