Scottish Court of Session Decisions

In this case the Court haying found “that in virtue of the judicial factor's appointment under the 4th section of the Act 30 and 31 Victoria, c. 126, he is vested with the full and exclusive power of managing the undertaking of the Girvan and Portpatrick Junction Railway Company, under the direction of the Court,” … . the judicial factor reopened negotiations with the Glasgow and South-Western Railway Company, with the view of arranging a more satisfactory working agreement for the future carrying on of the line. He also consulted with Mr Andrew Dougall, the manager of the Highland Railway Company, as to the terms on which the line was being worked, and as to the course which should be followed in the future for the working of the line in the interests of its creditors.

On 5th May Mr Dougall made a report to the judicial factor, in which he suggested various changes which seemed to him to be calculated to introduce greater economy into the working of the line. As the result of his investigations, Mr Dougall was of opinion that there were two courses open to the judicial factor—“ First, To arrange with the Glasgow and South-Western Company to work the line at a percentage of the receipts, on the same principle as the Caledonian Company work the Portpatrick line, there being many similar cases in Scotland and England. The amount of the percentage would, of course, form the subject of negotiation. One great advantage of an arrangement of this kind would be that the Glasgow and South-Western would have an interest in developing the traffic of the Girvan Company, as a proportion of any increase would always go to them. Second, That the factor should work the line himself by appointing a traffic manager, who could also act as secretary, at a salary for both offices of £250 per annum; also a superintendent of permanent way at a salary of £150 per annum. In this way the traffic would be developed by the company's own officials, while the upholding of the line would be carried on with economy consistent with efficiency. This arrangement would involve making an agreement with either the Glasgow and South-Western or Caledonian, who have the necessary parliamentary powers, for a supply of rolling-stock at so much per train mile, and I should think either of these companies would be ready to do this.”

On 24th May the Glasgow and South-Western Company intimated that they were not prepared to enter into any other agreement for working the Girvan and Portpatrick line than a six years' arrangement on a prime cost footing—a prime cost working being much less favourable to the Girvan Company than one by which they should receive a percentage of the receipts. At that date the line was actually being worked by the Glasgow and South-Western Company under an interim agreement which expired on the 31st of July following. In these circumstances the judicial factor presented this note, in which he stated that “The only two courses which appear open to him are (1) to work the line himself with the necessary assistance for behoof of the Girvan Company, if the funds necessary for so doing can be obtained; or (2) to enter into negotiations for the sale of the line.”

The judicial factor stated that he believed that the line would be saleable, and that he had already been informally approached on the subject by a party who proposed to offer for the line.

He stated that “in order to raise money by means of preference debentures, or to sell the line, the judicial factor would require a Special Act or Acts of Parliament, and he now makes the present application for your Lordships' authority to invite and receive offers for the purchase of the line, and then to apply to Parliament for such Act as shall seem in the circumstances desirable.”

The judicial factor therefore prayed the Court “to authorise the judicial factor to enter into negotiations for the sale of the line, and to receive offers for the purchase thereof, and thereafter, upon consideration of the result of the said negotiations and the offers received by the judicial factor, as reported by him to your Lordships, to authorise him to apply to Parliament for an Act or Acts authorising the sale of the line, or otherwise for an Act or Acts authorising him to raise capital to an extent not exceeding £20,000 by the issue of debentures, which shall rank preferably, both as regards principal and interest, to the debentures already issued or authorised under the Girvan Company's existing Acts of Parliament.”

The Girvan and Portpatrick Company lodged answers, in which they craved the Court to give effect to, inter alia, the following considerations:—“First, That it is not expedient in the interests either of the shareholders, the debenture-holders, or the public that the line should be closed; Second, That as an agreement was offered by the Glasgow and South-Western Company to work the line for six years on terms which would be a great improvement in favour of the Girvan Company to that under which the line is at present wrought, and which would secure payment to the Portpatrick Company of the interest on the half of the cost of the Stranraer Section and the East Pier, and would also secure to the company any profit which might arise after payment of the working expenses, the Court should be moved to take the matter into its consideration, and instruct the factor to make such arrangements as will keep the line open until an offer of purchase is submitted to the Court; … . Fourth, That the Court has no power to make any sum of from £15,000 to £20,000, proposed to be raised by the factor for the purpose of equipping the line and enabling him to work it independent of the Glasgow and South-Western, a preferable charge to the debenture stock of the Company on the preference shares; Fifth, That the Court has no power to authorise the judicial factor to apply to Parliament to make that sum preferable, or to sell the line, to the effect of throwing the burden of the cost of such an Act either upon the company or the debenture-holders.” It was further stated at the bar by the Girvan and Portpatrick Company that the Glasgow and South-Western Company were willing to enter into another interim arrangement for six months for the working of the Girvan line similar to that then in force.