ON THE MATTAGAMI - By Gordon R. MacKenzie
When the icy waters of the Mattagami River dwindled during the winter
of 1920/21, the Northern Canada Power Company found it could not
meet its main customer's power demands and supply all its other
customers. While it could have allotted their entire supply to Hollinger
Consolidated Gold Mines to keep their mine and smelting operation
running at full capacity, they decided not to leave their other
customers in the dark.
With less power, production at the Hollinger Mine declined. Hollinger
lost close to $2 million and sued Northern Canada Power for breach
In its defence, the power company relied on the law of frustration.
A court might let you out of a contract if the subject matter of
the contract ceases to exist for reasons beyond your control. The
power company could not control the rainfall or resulting water
levels and power supply, so, they should not be held to their contract
to supply the Hollinger Mine all the power it needed. (Hollinger
Consolidated Gold Mines v. Northern Canada Power, 1922).
The court of appeal found the power company liable anyway. It decided
that there was enough power to supply the mine, so, the contract
was not frustrated. The power they had should have been given to
the Hollinger Mine and the other customers, who they were not obliged
to serve, should have been cut off.
All this happened before the Power Corporation Act. Now a utility
cannot be held responsible for power outages or for sharing its
existing power supply with all its customers, spreading the cost
of power outages and shortages among all customers.
This article is presented as general information only and is
not to be relied on as legal advice. You should contact your lawyer
to see how the law applies to your circumstances before any action