Scottish Court of Session Decisions

The Portpatrick Railway Company was a company whose line extended from Castle Douglas to Stranraer and Portpatrick, a distance of 61 miles. In 1872 the Girvan and Portpatrick Junction Railway Company, which was a company incorporated in 1865 for the purpose of constructing a line from Girvan in Ayrshire to East Challoch in Wigtownshire, obtained an Act of Parliament by which they were authorised to run over and use certain portions of the Portpatrick Company's line. The section conferring this power was in these terms-“The company” (that is, the Girvan Company), “and all companies and persons lawfully working or using their railway, or any part thereof, may from time to time run over, work, and use with their engines and carriages, waggons and trucks, and with their clerks, officers, agents, carting agents, and other servants, and for the purposes of their traffic of every description, including the reception, handling, booking, invoicing,

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forwarding, and managing traffic in the same way and to the like extent and effect as if the railways or portions of railway, and works and conveniences after described, were held by the company and the Portpatrick Railway Company jointly for their joint and separate use and benefit on equal terms in every respect.” The Act then proceeded to specify the portions of the Portpatrick line to which this provision was to apply. These were, in the first place, a portion of the Stranraer section extending from East Challoch to Stranraer, a distance of about eight miles; and secondly, a part of the Portpatrick section.

As the counterpart of the running powers thus conferred, the Act provided that the Girvan Company should make payment to the Portpatrick Company for the portion of the Stranraer section (to which alone this action related, the Girvan Company never having taken advantage of their rights over the Portpatrick section) of “a yearly sum equal to the interest at and after such rate upon the principal sum forming the one-half of the cost of the purchase of lands for and the original construction of the said section, as such rate and cost may be agreed on between the said companies, or failing agreement either as regards such rate of interest or the amount of such cost, as the same may be determined by arbitration in the manner provided under the provisions of the Railways Clauses Consolidation (Scotland) Act 1845 with respect to the settlement of disputes by arbitration, which yearly sum shall commence to run and be payable from the day on which the junction between the railway of the company and the Portpatrick Railway is completed and opened for traffic.” It was also provided that these yearly sums should be paid in equal portions half-yearly on the 11th November and the 15th May in each year; that they should be in full of all demands by the Portpatrick Company against the Girvan Company in respect of the portion of line in question except as regards the expense of its future maintainance; and that the Girvan Company might, at any time within five years, and on payment of the principal sum on which they paid interest, become joint-owners of the portion of line over which the user extended.

The Girvan and Portpatrick Junction Railway Company was opened for traffic on 5th October 1877. It was from the first worked by the Glasgow and South-Western Railway Company, and that company exercised the Girvan Company's running powers over the Stranraer section of the Portpatrick Railway. The Girvan and the Portpatrick Companies did not agree as to the amount to be paid in respect of these powers, and the matter was, in terms of the provision above-quoted, referred to Sir Thomas Bouch, C.E., who, after a variety of procedure, issued his award on 20th July 1880, finding that the sum which the Girvan Company was due to the Portpatrick Company up to that date amounted to £7012, 6s. 11d.

The Girvan Company was never able to pay its way, as appears more fully from the reports of the case of Haldane v. Girvan and Portpatrick Railway and Others, March 18, 1881, ante, vol. xviii. p. 451, 8 R. 669; July 19, 1881, ante, vol. xviii. p. 711, 8 R. 1003; Dec. 10, 1881, ante, p. 192; and eventually, having become hopelessly insolvent, it was, on 3d July 1879, placed under the management of James Haldane, C.A., as judicial factor appointed in terms of the 4th section of the Railway Companies Act 1867 (30 and 31 Vict. c. 126). The working agreement between the Girvan and the Glasgow and Southwestern Companies expired on 31st January 1881, but was continued temporarily by the judicial factor, in order, if possible, to admit of arrangements being made for the permanent working or the disposal of the Girvan Company's line— [see the reports of the former case].

The pursuers of the present action were the Portpatrick Railway Company, with the consent and concurrence of the Caledonian Railway Company, by whom the Portpatrick line was worked. The defenders were the Girvan Company and the judicial factor on the undertaking thereof; the Glasgow and South — Western Company were also called for their interest. The pursuers sought to have the defenders, the Girvan Company and the judicial factor, ordained to make payment of the sum of £9765, 17s. 9d., being the sum of £7012, 6s. 11d. found due by Sir Thomas Bouch, together with the subsequent additions in respect of the exercise of the running powers down to the date of the action. They further asked for declarator that “failing the defenders making payment of the said sums and interest, as concluded for, and so long as the said sums or any part thereof remain unpaid, that the pursuers are entitled to the sole and exclusive possession, use, and enjoyment of that portion of the Portpatrick Railway lying between the junction of the Girvan and Portpatrick Railway therewith at East Challoch, and a point on the Portpatrick Railway;” and also that “the defenders” ( i.e., the Girvan Company and the judicial factor), “or anyone claiming right under them, ought and should be interdicted, prohibited, and discharged, by decree foresaid, from using the said Stranraer section and East Pier or works connected therewith by themselves, their officers or their servants, aye and until the said sums shall have been paid to the pursuers;” and for declarator that the said defenders were not entitled to use the Stranraer section henceforward except on the due and regular payment to the pursuers of the sums found due under the award by Sir Thomas Bouch, or on payment of a capital sum as the price of the user in terms of the Girvan Company's Act. None of these conclusions were directed against the Glasgow and South-Western Company.

The pursuers pleaded, inter alia—“(2) Payment by the defenders of the sums payable by them under the said Act of Parliament and decreet-arbitral being the condition and counterpart of their right to use the Stranraer section and East Pier, they are not entitled to such use except upon payment of these sums, and the pursuers are therefore entitled to decree of declarator and interdict as concluded for.”

The Girvan Company alone lodged defences, in which they pleaded, inter alia—“(3) In any view, the pursuers are not entitled to interdict as concluded for; and the defenders, upon paying or giving security for payment of the sum due for the current half-year, are entitled to use the pursuers' line in terms of the statutes.”

The Glasgow and South-Western Company lodged a minute in which they stated “that subject to the consent of the Girvan and Portpatrick

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Junction Railway Company, the Glasgow and South-Western Railway Company were prepared, and hereby undertake, so long as the working of the Girvan and Portpatrick line is in their hands, to guarantee and pay to the Portpatrick Company, from and after 1st September 1881, the interest payable to the Portpatrick Company by the Girvan and Portpatrick Company, under the award of the late Sir Thomas Bouch, for the joint user of the Stranraer section and the East Pier at Stranraer.” And the Girvan and Portpatrick Company “consented to the said payment, and to the South-Western Company retaining the amount thereof out of the revenue accruing to the Girvan and Portpatrick Company under the working agreement between the companies dated 18th and 27th March 1879.”

The Lord Ordinary (Rutherfurd Clark) pronounced this interlocutor:—“Decerns and ordains the defenders, the Girvan and Portpatrick Junction Railway Company, and James Haldane, chartered accountant, Edinburgh, as judicial factor upon the undertaking of the said Girvan and Portpatrick Junction Railway Company, jointly and severally to make payment to the pursuers of the sum of £9765, 17s. 9d., with interest, &c.;.. and finds, declares, interdicts, and decerns in terms of the conclusions of the summons.”

He added this opinion:—“The leading question in this case is, Whether the pursuers are entitled to prevent the defenders from using the Stranraer section of the pursuers' line until the consideration payable for the use is paid by the defenders? That the defenders have hitherto failed to pay the consideration is clear, and that they are unable to pay it from their own resources—at least in the immediate future-is as evident. The defenders, however, produce an undertaking on the part of the Glasgow and South-Western Railway Company, by which that company undertakes to pay the consideration for the future so long as they shall work the defenders' line, which at present they do.

The power to use the Stranraer section is given by the Act of 1872. But by the same statute an annual consideration is payable for the use. Payment is in arrear for the last three years or thereabouts, and the only guarantee for the future is the undertaking given by the Glasgow and South-Western Railway Company. The defenders themselves seem to be in a hopeless condition of insolvency.

The defenders maintain that the arrears form a simple debt, and that they are entitled to continue to exercise their statutory powers, leaving any debt which has been incurred, or which may yet be incurred, to be recovered by the pursuers as best they may. I cannot assent to that view. No doubt the right to use the pursuers' line is given to the defenders by statute; but they are under an equal obligation to pay the statutory consideration. I cannot see that they can claim the benefit of the Act unless they implement the corresponding obligations. In this respect it seems to me that the statute is to be construed as an agreement, and the case of the Great Eastern Company, 30th November 1880 and 4th April 1881, is in point.

But the defenders urge that the arrears must be regarded as a mere debt, and that they have made satisfactory arrangements for the payment of the consideration in future. I cannot say that they have, for the undertaking of the Glasgow and South-Western Railway Company is limited to the time during which they may work the line, and they may cease to do so at any moment. But further, in my opinion the arrears are nothing else than a part of the consideration which is unpaid, and so long as a material part of the consideration remains unpaid, without any offer of or prospect of payment, I am of opinion that the defenders have failed to implement the conditions on which alone they are entitled to use the pursuers' line, and that I must give decree accordingly.”

The Girvan Company reclaimed, and argued—This was a statutory enactment in which not merely the two companies but the public were interested. It was intended that the public should have the benefit of these running powers. The interest of the public demanded that the undertaking of the company as a living and going concern should not be interfered with at the instance of creditors— Gardner v. London, Chatham, and Dover Railway (per Lord-Justice Cairns); and these running powers were part of the Girvan Company's undertaking. Consequently the Girvan Company were entitled to continue to exercise the powers, provided they paid the rent due for the future, which the agreement with the Glasgow and South-Western Company enabled them to do, and also on payment of the arrears; but for the last the defenders were liable simply as an ordinary debt.

Counsel for the Girvan Company, though not appearing for the judicial factor, stated that the decree as granted against the factor was incompetent, seeing that he had not lodged defences, and the only competent form of decree in such circumstances was a decree in absence.

Argued for the pursuers-Though embodied in an Act of Parliament, there was here nothing more than a private agreement between the two companies. Consequently the Girvan Company were not entitled to take advantage of the agreement unless they implemented the counterpart, which in the present case as regards arrears they did not propose to do. The only interest which the public had in the matter was to avoid a change of carriages at East Challoch, for, of course, the pursuers had a service of trains of their own over this portion of their line.

Authorities— Attorney-General v. Mid-Kent Railway Company, Nov. 12, 1867, L.R. ( 3 Chan. App. 100); Great Eastern Railway Company v. East London Railway Company, April 5, 1881, 44 Law Times 903; Caledonian Railway Company v. North British Railway Company, July 16, 1880, 7 R. 1147; Gardner v. London, Chatham, and Dover Railway Company, Jan. 26, 1867, L.R. 2 Chan. App. 201.

At advising—