United Kingdom House of Lords Decisions

The Lord Chancellor said, that however able were the arguments that bad been addressed to the House, they had failed to convince him that the judgment of the Court below was erroneous, and their Lordships felt that it was unnecessary to call upon the counsel for the respondent. The question was extremely short, and turned mainly on the construction of the 4th section of the statute referred to, which was passed in 1869. At the time that Act was passed two rival companies were about to apply each for powers to work a separate line in connection with their respective railways, but, wisely considering that a double line would be of small profit, agreed to share jointly the same line. It was impossible to look at the general aspect of the Act of Parliament which was then passed to give effect to this arrangement without seeing that the appellants were to bear a fair share in the expenses which had been incurred by the Caledonian Company in reference to the Barrhead Railway up to that time. Now, on looking at the position in which the Caledonian Company stood previously, it was obvious that when they became embarrassed in 1851, and felt themselves unable to pay the rent of £16,500 to the Barrhead Company, and when they agreed to give £82,500 stock to the shareholders in order to reduce that annual sum, this was in eneci me equivalent of the reauction which they were expending. The main difference was, that instead of the Barrhead shareholders in future receiving a fixed annual sum of £16,500, they were to receive a fixed sum of £11,437, and the rest was of variable value. The difference was a dividend on the Caledonian stock, which might be more or might be less. But such was the bargain between those two companies. The simple way to look at the arrangement was to ask at whose expense was the reduction made of the rent from £16,000 to £11,000. Plainly it was at the expense of the Caledonian Company, and this, therefore, fairly comes within the meaning of sums expended on capital account. The words used in the Act of Parliament were no doubt not the happiest that might have been chosen to express their meaning, but this was, upon the whole, fairly their result. That construction was also in entire harmony with the other provisions of the Act, which a contrary construction would not be.

Lord Chelmsford also concurred, on similar grounds, and thought the construction was plain enough.

Lord Hatherley also concurred. The words “sums expended on capital accouut” clearly excluded all sums of the nature of past rent or income, but they would have included any burden, or charge, or mortgage on the concern if it existed; and though the words wore not perhaps happily chosen, still they were fairly susceptible of the meaning put upon them by the Court below.

Lord Selborne also agreed. The contrary view which had been expressed in the Court below by Lord Kinloch was put on grounds which when examined were not reconcileable with the use of the word “expended,” and if any sum was expended, it was clearly that sum represented by the nominal stock of the Caledonian Company, as distinguished from its actual market value, either in 1851 or 1869. The judgment of the Court below was therefore right.