Hard Fibres Ltd. v. Tanganyika Electric Supply Comp. Ltd. Civ. Case 35-D-68, 14/2/69, Georges C. J.

Hard Fibres Ltd. v. Tanganyika Electric Supply Comp. Ltd. Civ. Case 35-D-68, 14/2/69, Georges C. J.

            The facts in this matter have been agreed and may be shortly summarized. The defendant companies have a licence under the Electricity Ordinance Cap. 131 to supply electricity in this country. They did in fact supply power to a factory operated by the plaintiff company under an agreement dated 7 March 1966. The plaintiff company failed to meet its bill and the supply was cut off on 2 October 1967. On 3 October 1968, the plaintiff company went into receivership. Mr. Nielson was appointed receiver by the National Bank of Commerce as holder of a debenture charging all the assets of the company. On 5 October 1967 Mr. Nielson on behalf of the plaintiff company signed an agreement with the defendant company for the supply of electricity. At the time of the signing of the agreement he stated that he had been appointed receiver by the Debenture Holder. Since the signing of the agreement of 5 October the defendant company has supplied power to the plaintiff company which has duly met all charges. There still remains due the sum of Shs. 9,670/- owing by the plaintiff company at the time the supply was cut off on 2 October 1967. This amount was not carried on a debit bill sent to the receiver but the defendant company is now pressing for payment of that sum and threatens to cut off the supply unless prompt payment is made. The plaintiff company threatens to cut off the supply unless prompt payment is made. The plaintiff company contends that they are not entitled to do this and in this suit seek an injunction to retrain them from so doing. Section 73(1) of the Electricity Ordinance Cap. 131 are cited by the defendant.

Held: (1) The question for determination is whether the “person” being supplied with electricity under the contract of 5^th October, 1967 is the same “person” who was being supplied under the contract of 7^th March, 1966. “I am of the opinion that it is the same person who is being supplied, and that person is the company – hard Fibres Ltd. A receiver appointed by a mortgagee under a power to that effect contained in a deed is an agent of the mortgagor. Jaffers v. Dickson (1866) LR 1 Ch. 4 p. 183 at p. 190 Lord Gronworth LC. When Mr. Nielson entered into the contract of the 5^th October, 1967 he was doing so as an agent of the company. The person being supplied under that contract was the same person, who was being supplied under the contract of 7^th June, 1967. Prima Facie, therefore, the defendant company would have the right to cut off the supply since there had been a failure to pay the sum of Shs. 9,670/- due from the company to the licence for energy supplied.”  

(2) “It was argued that the position here was somewhat different in that the defendant company must be taken to have waived its right by reason of its having entered into a fresh contract and of its having submitted bills in respect of that contract which did not carry as a debit item the Shs. 9,670/- then admittedly due. I do not think that there has been any waiver in this case. There could be no waiver because it is clear that the company was not aware it could refuse to supply electricity to the receiver unless he paid the sum then owing by the company. This misapprehension was in part due to the circular letter sent out by the receiver which stated among other things that his appointment effectively prevented creditors from taking “action against the company in persuit of your claim until my appointment is terminated following  the completion of repayment of the company’s liabilities to my appointers” ….. The position is therefore that the defendant was unaware of its legal rights on 5^th October 1967 when it entered into the contract with the receiver and never waived them. As soon as it was properly advised, it insisted that the debt be paid as early as 16^th October, 1967. In those circumstances the failure to submit bills with the arrears shown is not meaningful. I would agree that the contract of 5th October, 1967 was a valid contract. It was not entered into under any mistake of fact. The defendant company knew that it was entering into an agreement with the receiver. It did not clearly grasp that he was merely the agent of the plaintiff company. Although that contract is valid, the person to whom electricity is now being supplied is the same person who owes the defendant company Shs. 670/- and the defendant company is entitled to cut off the supply of energy unless that sum is paid”. Action dismissed.