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Nr. 12075. on the origin of the contract. || It appears that already before September, Südafrikan. 1893, the old French Company and Vorstmann (who had been its managing 9. März 1899. director) intended to make application for the agency for the carrying out of the State Monopoly that would later be brought into existence by the regulations. It appears further that the Government was willing to grant it the agency; and this willingness was most probably due to the strong wish of the Government to do away with, for good, the differences called into being by the French Government through the cancellation of the first concession. In place, however, of granting the agency to the French Company, on October 25, 1893, the contract of that date was given to Vorstmann. This sudden alteration finds its explanation when it is considered that on October 24, 1893

thus one day before the contract with Vorstmann was entered into the French Company addressed a note to the Government, whereby it withdrew all its claims against the Government arising out of the cancellation. This explanation can only be this, that, although the contract was formally entered into with Vorstmann, the French Company would thereby be practically indemnified, and that the Government assented to or concurred with this position. That the Company was certain that it would obtain the agency appears from the contract, dated August 25, 1893, between it and Lippert, wherein Lippert, presumably in consideration for certain services as its general agent, was appointed to carry out the agency under the pending regulations, and as such was to draw seven to ten per cent, of the proceeds per case. It appears to me as if these pretended services were nothing else than the withdrawal of his alleged claim against the Government for indemnification, for by this withdrawal the Government would be placed in a position to agree, free and unrestricted, with the Company with regard to the agency. I presume thus that the Government was orignally acquainted with this contract, for it knew that the difficulties with Lippert must first be removed. || On November 4, 1893, however, a supplement to this contract was signed, whereunder, as a further consideration in favour of Lippert, it was stipulated that he should get 2 s. per case of dynamite for three years, L 25,000 in cash, and 25,000 paid-up shares in the new Company which was to be formed to exploit the agency. These further terms are evidently an inseparable part of the contract of August 25, and must, although not signed, still have already been agreed to upon that date. It is difficult to comprehend why they were signed separately and at a later date. One point, however, of convincing importance holds good, namely, that on January 20, 1894, both contracts were formally handed in to the Government, and that the Government neither then nor later protested against the terms thereof. In the light of these and other facts it is almost impossible for the Government to now offer the contention that on January 20, or shortly thereafter, it was not acquainted with the terms of these contracts or acquiesced therein. || On February 26, 1894-thus after January 20, 1894-the contract was entered into, whereby really the agent

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for the carrying out of the State Monopoly-the present South African Factory Nr. 12075. for Explosive Materials-was called into being. That contract was entered Republik. into between the old French Company and the Dynamite Actiengesellschaft 9. März 1899, (Nobel and Co.), an Anglo-German Co. Therein Noble and Co. undertook to float the South African Factory for Explosives with a capital of £450,000 shares of 1 each, divided in the following manner:

a. 220,000 shares to be issued against payment. || b. 25,000 shares to be granted to Lippert (in terms of the contract of November 4, 1893, aforesaid). c. 182,000 shares to be granted to the French Co. (as indemnification for the cancellation of its contract by the Government). || d. 22,500 shares to be granted to Dr. Gobert, a German lawyer, "for services rendered." || e. Further, there must be paid to Lewis and Marks 2s. per case of dynamite, and || f. The obligation undertaken by the old Company against Lippert must be fulfilled by the South African Factory for Explosives.

Although I have not been able to ascertain when this agreement was formally brought to the notice of the Government, it is yet clear that it only gave effect to an understanding, and to obligations wherewith the Government was well acquainted, and whereto it expressly or practically agreed to. In equity it can thus be accepted that the Government was also acquainted with this agreement, and the Company has in its returns frequently referred to this agreement. After all this had happened and was agreed to, the agency was granted to Vorstmann on October 25, ultimately carried over the South African Factory for Explosives in the flotation of June, 1894. || I have set forth these facts here because they are of great importance for the decision of the question in how far the Government has reason against the Company for fraud committed at the time of its origin. It is, namely, stipulated in the contract between Vorstmann and the Government that the Government shall receive 20 per cent. of the profit on the sale of explosives, and it can now be alleged that the giving away of all the shares of the Company, besides 220,000 to third persons, greatly prejudices the Government in its right to 10 per cent. of the profits. The question arises then, in how far the Government can now object to the giving away of shares to the old French Company, to Lippert, and Dr. Gobert, and the granting of share in the profits to Lippert and Lewis and Marks. || On the facts set out I come to the conclusion that the Government had knowledge at least of the principal rights so granted to others, and expressly or silently agreed thereto. || It appears to me as if the Government, most of all, was eager to avoid, or to remove diplomatic difficulties, and that it was its intention that the old French Company should be indemnified, notwithstanding the cancellation of its concession; on this point especially is the evidence strong. Further, it appears to me that the Government at least had part knowledge of the agreements between the French Company and Lippert, whereby certain rights were granted to the latter; and it is further very possible that it was also originally

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Nr. 12075. acquainted with the obligations undertaken as regards Lewis and Marks. Südafrikan. Certain it is that when the Government later obtained knowledge thereof, it 9. März 1899. offered no objection. On these facts, taken in connection with accessory circumstances of the case, I am of opinion that Advocate Curlewis is right in his conclusion: "That, whereas the Government had knowledge of the circumstances and silently acquiesced therein, it cannot now allege that it was defrauded by its agent, and in consequence end the agency, because of the improper conduct of the agent." In any case, he who bases a claim on fraud must come to Court with a pure and clear case, and this the Government cannot do, because, as I have shown, the primâ facie impression of the facts is strongly against it. In how far the Government, apart from the question of fraud, can object to rights granted to third parties, in reckoning the 20 per cent. of the profits due to it, I shall consider when I come to the question of reckoning.

II. Delay in Completing the Factories. I now come to a much more important point, namely, the questions connected with the non-fulfilment of the contract with Vorstmann in terms of the Volksraad Regulations. || On September 1 to 5, 1893, the Volksraad passed certain regulations relating to the State monopoly for the manufacture, the sale, the dealing in, and the import and export of powder, ammunition, dynamite, and other explosives. These regulations were in the form of an instruction to the Government whereby the latter, as Executive agent of the Raad, was given the power to invest certain person or persons with the exclusive right to manufacture, &c., said explosives, and the conditions under which the Government could depute that right were narrowly defined, inter alia, there appear there three Articles in the regulations, whose correct interpretation in my opinion is decisive for the whole case. || "Art. 9. The quality and quantity of all manufactured articles must be in accordance with the needs and desires of the Government and the public of the South African Republic, and the articles must for each sort be of the best quality. || "Art. 10. The Government, with advice and consent of the Executive Council, may give instructions within the shortest possible time, but at the utmost within two and half a years, for one or more factories to be erected, to complete and to bring into working order for the manufacture of dynamite and other explosives of such nature and consistence and in such quantities as the needs and demands within the South African Republic may create or require, and that under the following regulations, &c.:|| "Art. 15G. If the above-named persons do not comply with any of the stipulations agreed with the Government, the latter can cancel such agreement.“ || Before coming the facts of this case, it will be necessary to consider and determine the real application of these three articles, because it is just upon this weighty point that I have to differ with the other legal counsel. The question then is this: Under Art. 156. it is stipulated that, in case the concessionaires do not comply with any of the stipulations agreed to with the

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Government, the Government can cancel such agreement. The word ,,can" is Nr. 12075. used in contradistinction to "shall," and in place of its being made obligatory Republik. for the Government the cancel the concession in case of non-fulfilment, a 9. März 1899. discretion is distinctly allowed thereanent. This is, however, acknowledged, and the only point upon which difference of opinion exists concerns the extent of the discretion. The legal advisers, for instance, are of opinion that the discretion does not extend to the subjects falling under the said Arts. 9 and 10 of the regulations. And this explanation they base somewhat upon the following reasoning: The Volksraad had the time wherein the factory must be completed fixed as an irrefragable condition of any contract that might be made, and the same holds good with regard to the condition that enough material must always be manufactured to meet the demands of the Government and the public. On this point the Raad has expressed its will in the most unequivocal manner, and it would be ridiculous, after the Raad has stipulated such strict conditions for the contract, that they should still be left to the caprice of the Government. Indeed, ask the lawyers what would be the use of drawing up any regulations and to give instructions to the Government were the whole or part non-fulfilment thereof left to its arbitrary discretion. They arrive thus to the conclusion that the discretion given to the Government under Art. 15G cannot touch or effect the points under Arts. 9 and 10 of the regulations. Although there is something to be said for this contention, I am still respectfully of opinion that the lawyers have been misled upon this point. My opinion I base upon the following grounds:

a. The logical consequence of their interpretation is that the discretion given to the Government under Art. 15 G is confined only to such conditions as are not stipulated for in the regulations. In other words, those that the Government on its own initiative might place in the contract, because, naturally, if its discretion cannot touch the points stipulated in the regulations, they can only have reference to points not dealt with in the regulations, though introduced by the Government into the contract. And in order to make the object in Art. 15G clear, the Raad ought to have said: "If the above-named persons do not comply with any of the stipulations, above and besides those herein dealt with, and which, although not herein set forth, nevertheless agreed to with the Government, then can the latter cancel such contract." It can be seen how unnatural such an interpretation is; it quite reverses the primâ facie signification and contention of Art. 15G, and brings therein an exception whereof there is no question. So long as a natural and reasonable interpretation can be given of Art. 15G, this unnatural explanation must be removed, in accordance with the common rules of the law interpretation. That such a natural interpretation can be given, Sub. d will show. b. Another objection weighs still heavier against the opinion of the lawyers. It was the plain and express intention of the Raad to lay down in these regulations the stipulations to be embodied by the Government in the contract to be even

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Nr. 12075. tually made. When thus in Art. 15G the Raad speaks of stipulations agreed Südafrikan. to between the concessionaire and the Government, the stipulations already 9. März 1899. contained in the regulations, inter alia, Arts. 9 and 10 thereof, are also plainly intended. If this is not so, then we come to the nonsensical conclusion that the Volksraad did not intend that these regulations should be embodied in the contract to be concluded between the Government and the concessionnaire. c. This unsound interpretation of Art. 15 G makes the said Article absolutely senseless and purposeless. The Government has naturally the right to add other terms to the contract than those stipulated by the Raad; should these terms be essential and be broken, the Government has naturally the right of cancellation, and it was unnecessary and purposeless to stipulate this in a special Article of the regulations. Now, it is an acknowledged principle of law interpretation that an explanation, where possible, must not be explained in such a way, that it becomes useless and senseless, for that assumes that the maker of the explanation (in this case the Raad) did not exercise its best sense in making or drawing up the explanation; and on this point I strongly doubt whether a Court would attach the faulty interpretation to Art. 15G. ||d. I now come to what I think to be the true meaning and intention of Art. 15G. Here it must be kept in view that, where possible, all the regulations must be taken and explained in connection with each other; they form a whole and not fifteen Articles separate from each other. And where an explanation, based on the presumption that the various Articles are mutually agreed and connected, leads to a tenable result, then must such interpretation be accepted as the correct interpretation of such Articles. Starting from this standpoint, it appears to me that in Arts. 9, 10, and 15g of the regulations, the Raad had in view, and intended that, namely, certain conditions in the contract with the future concessionaire should be embodied; that no other conditions, with regard to the points concerned should be agreed to, that the period of completion in Art. 10, and the compliance with all needs and requirements according to Art. 9 in the contract, should be embodied without any alteration. In this manner must the contract be made; but the question remains still, in what manner should that contract be carried out? Had nothing been said with regard to the last question, then everything in conflict with Arts. 9 and 10 would, ipso facto made the contract null and void, for a contract made beyond the competency of one of the contracting parties is powerless. In the regulations, Art. 15G, the Raad has, however, avoided this by making an express stipulation in regard to the performance and observance of the contract. Actually the Raad has said to the Government: "You may make a certain contract; in the contract there must be certain terms embodied; however, when these terms are embodied, but are not observed, we leave it to your discretion to cancel the contract or let it continue to exist." When this interpretation is taken in connection with the peculiar position of Raad and Government, of principal and