Scottish Court of Session Decisions

In 1873, when the Forth Bridge Railway Bill of that year, for the incorporation of the Forth Bridge Railway Company, and for authority to the company to make certain railways, one of which was to cross the Firth of Forth by a bridge, was passing through Parliament, one of the proposals of which bill was the acquisition of part of the island of Inchgarvie in the Firth of Forth, forming part of the estate of Dundas, an agreement was made between the provisional directors of the company of the first part, and James Dundas of Dundas, George Dundas, Younger of Dundas, and George Auldjo Jamieson, Chartered Accountant in Edinburgh, trustee on the Dundas estate under trust-disposition executed by George Dundas, on the second part. The second parties had opposed the progress of the bill in Parliament. By the agreement they agreed to withdraw all opposition to the bill, “on the condition that the first parties, contingent on the Act being obtained, and also contingent on the works being commenced, paid to them ‘for the right to erect the necessary piers in execution of the powers asked by the said bill, on the island of Inchgarvie,’ and ‘in full of all claims for compensation therefor, amenity, residential damage, and damage to remaining lands, and of all other claims which they have or could have by or in consequence of the execution of the said works, whether of a temporary or permanent nature, the sum of £1500, said payment to be made within twenty-one days from the date of any portion of the said works being commenced.’” The first parties undertook, within six weeks after the passing of the bill, to deliver to the second parties a formal agreement to the above effect, under the seal of the company, the first agreement to be void on the execution of the formal agreement.

The bill passed in August 1873, and became the Forth Bridge Act of that year, the railways permitted by it to be made being enumerated in section 5.

On 17th September 1878, the company, by a minute endorsed on the agreement, ratified and confirmed it in its whole articles and conditions, and agreed, contingently on the works therein referred to being commenced, to pay to the second parties in the agreement, as proprietors of Inchgarvie, “for the right to erect the necessary piers in connection with the powers contained in the said Forth Bridge Railway Act 1873, and in full of all claims for compensation therefor, amenity, residential damage, and damage to remaining lands, and of all other claims which they have or could have by or in consequence of the execution of said works, whether of a temporary or permanent nature, the sum of £1500; said payment to be made within twenty-one days from the date of any portion of the said works being commenced.”

The company commenced their works on the island on 23d September following, and paid £1500 to Mr Jamieson as trustee, who granted a discharge, inter alia, in the following terms—“Therefore I do hereby, as trustee foresaid, discharge the Forth Bridge Railway Company not only of the said sum of £1500 paid to me as aforesaid, but also of all claims for ground required, taken, or occupied, or to be taken or occupied, by the said Forth Bridge Railway Company, on the said island of Inchgarvie, for the execution of the works authorised by the said Forth Bridge Railway Act, 1873, and for compensation for the right to erect the necessary piers in execution of the powers contained in the said Forth Bridge Railway Act 1873,

Page: 161↓

amenity, residential damage, and damage to remaining lands, and of all other claims which the said James Dundas, George Dundas, or I, the said George Auldjo Jamieson, as trustee foresaid, had, have, or might have by or in consequence of the execution of said works, whether of a temporary or permanent nature … and further, I, the said George Auldjo Jamieson, bind myself and my successors, proprietors of the island, to deliver to the said Forth Bridge Railway Company such a conveyance or other writ as may be necessary to constitute a legal and sufficient title to the said company, for their erecting and maintaining the piers of the said bridge, on the said island, authorised by the said Forth Bridge Railway Act 1873, including right of access to the said island at all times, and right to use the ground adjoining the said piers and site or sites thereof when and so far as necessary for the purposes of erecting, maintaining the said piers, and right to place and deposit materials on such adjoining ground for these purposes, and that when required by the said railway company, and at their expense.”

In 1882—the works at Inchgarvie having then gone but a short way—it was found necessary to apply to Parliament for a new Act to vary somewhat the design of the bridge, to obtain additional powers, and to substitute a railway for one of those authorised in 1873. Another Act was applied for and passed (the Forth Bridge Railway Act 1882), by section 4 of which the Forth Bridge Company were authorised to make and maintain a deviation or substituted railway for that authorised by the Act of 1873, but which was also to cross the Forth by a bridge similar in position, character, and general features to that allowed by the Act of 1873. Section 19 provided—“The company shall abandon the construction of the railways and works authorised by and described in the fifth section of the Act of 1873, and the company shall, except only as is by this Act expressly provided, be absolutely freed and discharged from all obligations with respect to the making and maintaining of the aforesaid railways and works, and from all penalties and liabilities in respect of the noncompletion thereof, or any part thereof.”

Under the Act of 1882 the company required to take the whole of Inchgarvie, and in August 1883 they gave the statutory notice to the proprietors of Inchgarvie of their intention to acquire the whole of the island for the purposes of the Act. The parties having failed to agree on the amount of compensation to be paid for the whole island, entered into an arbitration. The proprietors lodged a claim in the reference for £13,000, making no allowance for the previous payment of £1500, while the company maintained that the £1500 already paid was sufficient compensation, but tendered a further sum of £600.

Mr Jamieson and Captain Adam Alexander Dun can Dundas (James Dundas and George Dundas having died in the interval) then raised the present action. They concluded for declarator that at the date of the notice served on them by the company of their proposed acquisition of Inchgarvie, “the said island was the absolute property of the pursuers, and that the defenders had and have no right or powers in or over the said island or any part thereof, and in particular that the defenders had and have no right or powers in or over the said island under the Forth Bridge Railway Act 1873; and that the sum of £1500 sterling paid to the pursuer, the said George Auldjo Jamieson, as trustee foresaid, by the Forth Bridge Railway Company in September 1878, for the causes set forth in a discharge granted by the pursuer George Auldjo Jamieson to the said Forth Bridge Railway Company, dated 23d September 1878, does not, nor does any part thereof, fall to be deducted from, or taken into account in estimating, the compensation to be made by the defenders to the pursuers for taking the said island under the powers of the said Forth Bridge Railway Act 1882.”

The pursuers pleaded—“(1) The island of Inchgarvie having been, at the date of the notice under the Act of 1882, the property of the pursuers, and subject to no right in favour of the defenders, the pursuers are entitled to compensation therefor in terms of the Lands Clauses Consolidation (Scotland) Act 1845. (2) The island of Inchgarvie having been, at the date of the notice under the Act of 1882, the property of the pursuers, and subject to no right in favour of the defenders, the pursuers are entitled to compensation therefor in terms of the Lands Clauses Consolidation (Scotland) Act 1845, without the payment of £1500 libelled being imputed to the said compensation. (3) The said sum of £1500 having been paid under an agreement which had regard to certain works authorised by the Forth Bridge Railway Act 1873, and the powers for the construction of these works having been subseqently repealed by the Act of 1882, it is incompetent and illegal for the defenders to plead said payment by way of deduction from or set-off against the amount of compensation now to be found due by them to the pursuers.”

The defenders pleaded—“(2) The pursuers' averments are irrelevant and insufficient to support the conclusions of the summons. (3) On a sound construction of the agreement come to between the proprietors of the island of Inchgarvie and the defenders, and the discharge following thereon, the said sum of £1500 paid by the defenders under the Forth Bridge Railway Act 1873 ought to be taken into account or imputed as part of the compensation payable by the defenders under the foresaid submission. (4) In any view, the fact that the said sum of £1500 was paid by the defenders is a fair element for the arbiters to take into consideration in fixing the compensation payable under the said reference, and it is incompetent to exclude it, as is proposed in the present action. (5) In the circumstances stated, the present action is unnecessary, and the defenders ought to be assoilzied, with expenses.”

The Lord Ordinary ( Kinnear) assoilzied the defenders.

“ Opinion.—The parties are not in controversy as to the facts which are material for the decision of this case.

By the Forth Bridge Railway Act 1873 the defenders' company was empowered to take and acquire a part of the island of Inchgarvie for the purposes of the Act. While the bill was passing through Parliament an agreement had been made between the pursuers and the promoters that £1500 should be paid to the pursuers, as proprietors of Inchgarvie, for the right to erect piers upon the island, and in full of all claims for compensation

Page: 162↓

which might arise to them from the execution of the powers asked by the bill, and this agreement was confirmed by the company after the Act had passed, and has in part been carried into effect. It had been stipulated that the agreement should be contingent upon the commencement of the works, but that the sum of £1500 should be paid to the pursuers within twenty-one days after any portion of the works was commenced. The company began their works on the island of Inchgarvie on 23d September 1878, and paid the £1500 in conformity with this agreement, and obtained a discharge from the pursuer Mr Jamieson, by which they are discharged ‘not only of the said sum of £1500, but also of all claims for ground required, taken, or occupied by the company for the execution of the works authorised by the Forth Bridge Railway Act 1873, and for compensation for the right to erect the necessary piers in execution of the powers of the Act, and for damage to lands, and for all other claims which the pursuers might have in consequence of the execution of the said works:’ And further, the pursuer bound himself and his successors, proprietors of the island, to deliver to the company such a conveyance or other writ as might be necessary to constitute a legal and sufficient title to the company, for the execution and maintenance of their works, and for the use of the ground which might be requisite for that purpose.

There can be no doubt as to the effect in law of these transactions. The company had not acquired a feudal title to the land. But their right as against the proprietors was complete and absolute. They had purchased the land for the purposes of their Act, paid the price, and entered into possession, and if they had thought it necessary or desirable to complete a formal title they were in a position to demand a conveyance for that purpose, which the pursuers could not have withheld.

While matters were in that position, and when very little had been done in the way of constructing works upon Inchgarvie, the Forth Bridge Railway Act 1882 was passed, authorising the company to construct a railway, varying in certain respects from the railway authorised by the Act of 1873, and in substitution for that railway. But the new railway, like that for which it was substituted, comprises a bridge across the Forth, and the new bridge, although it differs to some extent in design from that authorised by the Act of 1873, is, in like manner, to be supported by piers on the island of Inchgarvie. The company, however, say that for the execution of the new bridge they have found it necessary to take not merely a part, as before, but the whole of the island of Inchgarvie, and they have served the pursuers with notice to that effect in the exercise of their powers.

In these circumstances the pursuers maintain that in estimating the compensation to be paid for the island the company are not entitled to take into account the rights which they had already acquired under the Act of 1873, or the price of £1500 which they have paid for the acquisition of these rights, and they accordingly seek to obtain a declarator—Firstly, That at the date when the notice was served they were themselves absolute proprietors of the island, and that the defenders had no right or powers in or over the same, or any part thereof, and in particular, that they have no right in or over the island under the Act 1873; and secondly, that the £1500 which they have paid does not fall to be taken into account in estimating the compensation to be paid under the Act of 1882.

I am of opinion that this contention is altogether groundless in law.

It is founded mainly on the 19th section of the Act of 1882, by which it is enacted that ‘the company shall abandon the construction of the railways and works authorised by and described in the 5th section of the Act of 1873, and that the company shall, except only as is by this Act expressly provided, be absolutely freed and discharged from all obligations with respect to the making and maintaining the railways and works.’ The 20th section provides that the abandonment thus authorised shall not affect the right of any landlord to compensation for damage occasioned by the entry of the company upon land, or by the temporary occupation of lands for the purposes of the abandoned railways; and the 21st provides that where ‘any contract has been entered into, or notice given by the company for the purchase of land in respect of the works to be abandoned, the company shall be released from all liability to purchase or complete the purchase of such lands, but that compensation shall be made to the owners and occupiers of such land for all damage which may be sustained by reason of the purchase not being completed according to the contract or notice.’

I find nothing in these sections, or in any part of the Act, to extinguish the rights which the company may have acquired under completed contracts. If at the passing of the Act they were under contract to purchase land for the purposes of the Act of 1873 which will not be required for the Act of 1882, they are released from their obligation to carry out these contracts upon payment of compensation for non-performance. But if land which they had contracted to purchase for the purposes of the first Act may still be made available for the purposes of the second, there is nothing in the second Act to disturb such a contract, or to relieve either the company or the landowner from its obligations. And if a contract for the purchase of such land has been not only completed, but carried into execution, by the company taking possession and making payment of the price, there is nothing in the Act to extinguish the rights thus acquired, or to render them unavailable for the subsisting purposes of the undertaking.

The pursuers, however, maintain that they agreed, in giving the rights which the company acquired by the contract in question, to grant a conveyance of the land for a specific purpose, viz., the erecting and maintaining of piers for the support of the bridge authorised by the Act of 1873. They say that the performance of that contract has been rendered impossible by the Act of 1882, which requires that the works which it contemplates shall be abandoned; that they are not bound to give a conveyance to the company for any other purpose except the erection of the bridge authorised by the Act of 1873; and that they are therefore released entirely from any obligation that the contract imposed upon them, and are entitled to withhold the conveyance without being required at the same time to repay the purchase money which they have received

Page: 163↓

It appears to me that that reasoning is altogether unsound. It may be that when land has been sold for a specific purpose, the seller at any time before he has actually conveyed the land, may be entitled to avoid the contract upon discovering that his land is to be applied to another and a different purpose; but the contract is still perfectly good until he sets it aside. It is not void, but voidable; and it follows, upon a principle of universal application in the rescission of contracts, that it cannot be set aside except upon condition of restoring the other party to the position in which he was before the contract was made. The rule is illustrated by a very well-known series of decisions, of which Addie v. The Western Bank, 5 M. (H. L.) 80, and Houldsworth v. The City of Glasgow Bank, 12th March 1880, 7 R. 53, are familiar examples. But it is of no consequence whether the ground of reduction is, as in these causes, that a contract has been obtained by fraud or that the purpose has failed. There can be no reduction upon whatever ground without restitution in integrum. Assuming, therefore, that if the railway company were now demanding delivery of the conveyance contemplated by the agreement, the pursuers would be entitled to withhold the conveyance and rescind the contract, I think it clear in law that they would be bound to repay the £1500 which they have received from the company. But except for the purpose of testing the pursuers' argument I am not prepared to make that assumption. I find nothing in the record which enables me to determine that the pursuers could have withheld a conveyance if the railway company had demanded it under the contract, giving notice, under the Act of 1882, with reference to those parts of the island only to which they have not already acquired right. I do not decide that, because it does not arise under this action, and probably it could not be decided without knowing more of the facts than appears upon the record. But I do not think that the pursuers' averments are sufficient to support that conclusion. It is manifest that the merely formal substitution of the authority of the Act of 1882 for that of the Act of 1873 does not necessarily involve such a perversion of the land to purposes alien to the contract as would give the pursuers right to withhold a conveyance. And it is equally clear that no immaterial variation in the design of the bridge would give the pursuers such a right. There must be a difference in the uses of the ground so material as to enable the pursuers to say that their land is about to be applied to a purpose substantially different from that for which they agreed to sell it. Now, there is, in one respect, a material difference between the bridge now proposed and the former, because the whole island is now required, and not merely a part of it. But it does not follow that there is any substantial difference in the use which they are to make of the part they have already acquired under their contract. Therefore I am not prepared to affirm the first proposition which the pursuers must establish, viz., that they are entitled to rescind this contract; and I am prepared to negative their second proposition, viz., that they are entitled to rescind it without repaying the purchase money which they have received. The defenders are therefore entitled to absolvitor.”

The pursuers reclaimed, and argued — The power to take the island under the Act of 1882 was a thing entirely different from the power to take part of it given by the Act and agreement of 1873, and what was done under the latter could not be taken into account in estimating compensation under the former. Under the agreement of 1873 the promoters of the company, incorporated by the Act of that year, acquired from the pursuers a servitude right for the puproses of that Act. These purposes were expressly abandoned by section 19 of the Act of 1882. By the service of their notice the company had acquired a right of property for another and a distinct undertaking, sanctioned by a separate Act. The contracts were entirely distinct. The abandonment of 1882 had swept away the works of 1873, and all contracts with regard to them.

Authorities—Brice on Ultra Vires, pp. 110–125, and cases there collected; Bostock v. North Staffordshire Railway Company, May 8, 1855, 24 L. J., Q.B. 225; Edinburgh and Glasgow Railway Company v. Campbell, 4 Macq. 570.

The defenders replied — The contract under the Act of 1882 was merely supplementary of that under the agreement of 1873. They were between the same parties, and for the same purposes, namely, the building of a bridge on the same site in either case. The amount paid in 1878 was to be regarded as an instalment, corresponding to the rights then acquired, of the whole price now to be paid for the acquisition in property of the whole site.

Authority— Caledonian Railway Company v. Henderson, November 17, 1876, 4 R. 140.

At advising—