Parts II. and III. of the Tramways Act, 1870, were incorporated with all the Acts herein before mentioned. On August 20, 1900, the London County Council, being the local authority within whose district the said tramways were situated, gave notice to the company under s. 43 (1) of the Tramways Act, 1870, requiring them as promoters to sell to them the whole of the tramways works and undertaking herein before first mentioned. On October 1, 1902, the council gave notice to the company under the said section requiring them as promoters to sell to them the whole of the tramways works and undertaking herein before secondly mentioned. The company and the county council differed as to the value of the said respective tramways undertakings, and the Board of Trade duly appointed Henry Graham Harris as referee to determine the value thereof, exclusive of any allowance for past or future profits of the undertakings, or any compensation for compulsory sale or other consideration whatsoever. The referee awarded that the value as aforesaid of the said tramways, and of all lands, buildings, works, material, and plant of the company suitable to and used by them for the purposes of the undertakings authorized by the said Acts, was the sum of 91,3637. 7s. 6d. At the hearing of the reference the following contention was put forward on behalf of the company: At the time of the obtaining of the parliamentary powers for the construction of the tramways, the subject of the reference, it was not the (1) By s. 43 of the Tramways Act, 1870, "Where the promoters of a tramway in any district are not the local authority, the local authority .... may within six months after the expiration of a period of twenty-one years from the time when such promoters were empowered to construct such tramway . . . . by notice in writing require such promoters to sell, and thereupon such promoters shall sell to them their undertaking, or so much of the same as is within such district, upon terms of paying the then value (exclusive of any allowance for 1904 LONDON, DEPTFORD AND TRAMWAYS บ. LONDON practice to require the promoters of tramway undertakings to widen the streets through which the tramways were intended to be run, or to make any contribution towards such widening, GREENWICH nor in fact were any such streets widened or contribution COMPANY required in the case of the tramways in question. At the date of the notices to purchase herein before referred to, in accordance with the then practice, such streets or some of them would certainly have been required to be widened, and certain costs and expenses would have been incurred in respect thereof, towards which the company would, according to the usual present practice, have been required to contribute one-third as a condition of obtaining powers to establish and work the tramways. It was contended on behalf of the company that, although such widenings had not in fact been made and no contribution had in fact been made by the company in respect thereof, nevertheless, in determining the value of the said tramways undertakings at the date of the notices to purchase, the referee must take into account the costs and expenses which would have been incurred by reason of the practice aforesaid if such tramways had been authorized and constructed at the date of the said notices, on the ground that it was the duty of the referee to determine what would be the present cost of constructing the said tramways; that such present cost would include the contributions which would now be required from the undertakers in respect of street widenings, and that therefore the probable amount of such contributions must be taken into account in determining the present value of the undertakings-in other words, that the present value of the undertakings was enhanced by reason of its being freed from the liability to contribute to such widenings; and counsel for the company tendered evidence to shew what widenings would have been necessary, and what the company's proportion of the cost thereof would have been if the said tramways had been authorized and constructed at the date of the Acts as aforesaid. Counsel for the county council objected to the reception of such evidence on the ground that it was irrelevant to any question for the referee's consideration; and, further, they contended that, as the company had not in fact been obliged to 1904 LONDON, DEPTFORD contribute to any such widenings, a hypothetical figure as to what they might have been called upon to contribute if the practice at a certain date had been different to what it was could not be taken into account at all in assessing the value of GREENWICH the tramways undertakings. The referee was of opinion that the contention of the company was bad, but admitted the evidence tendered by them subject to the council's objection, and stated his award in the form of a special case for the opinion of the Court. If the Court should be of opinion that the contention of the company should prevail, he awarded to the company, in addition to the sum of 91,3631. 7s. 6d. hereinbefore mentioned, the further sum of 22,7731. 6s. 8d., being one-third of the estimated cost of the necessary widenings of the streets. Lawson Walton, K.C., Sir E. Boyle, K.C., and Vesey Knox, for the tramways company. The referee was wrong in refusing to take into account the present practice of requiring the streets to be widened and the tramway promoters to contribute to the cost. In Edinburgh Street Tramways Co. v. Lord Provost of Edinburgh (1) and London Street Tramways Co. v. London County Council (2), where the principle of valuation of tramways under sections corresponding to s. 43 of the Tramways Act, 1870, was considered, the present precise point was not before the Court. But when the latter case was before the Court of Appeal (3), Lindley L.J. expressed himself in his judgment as follows: "The problem is thus reduced to the question, What is the value of the tramway to a purchaser entitled to use it, but who is not to be charged anything in the shape of an allowance of past or future profit of the undertaking? The arbitrator has answered this question by saying that the value is what it would cost the purchaser to lay down the tramway. After much consideration I have come to the conclusion that he is right. Excluding the value of old iron on the one side and all allowance in respect of past or future profit of the undertaking on the other, there appears to (1) [1894] A. C. 456. (2) [1894] A. C. 489. (3) [1894] 2 Q. B. 189. AND TRAMWAYS V. LONDON COUNTY COUNCIL. 1904 LONDON, AND TRAMWAYS v. LONDON COUNTY COUNCIL. me nothing left except to say that the present value is either what the tramway cost to make, less some deduction for DEPTFORD depreciation from wear and tear, or what it would cost the GREENWICH purchasers to make if they had to make it themselves. Cost COMPANY price is well known to be no real criterion of the value of an outlay on land. What the result of the outlay will fetch if sold is often much more and often much less than the outlay which has produced it, and the arbitrator was quite justified in not adopting this mode of valuation. There remains only the other which he has adopted." That dictum is no doubt only obiter, but it is directly in point in the present case in the company's favour. If the council had commenced to make the tramway themselves at the date of the notice to purchase, the cost to them of making it would have included, not merely the labour and materials, but also the contribution to the expense of widening the streets. Cripps, K.C., Freeman, K.C., and E. Morten, for the county council. The company are claiming to be compensated for something which they have not done. What is taken over by the council is a tramway in unwidened streets, and the company claim to be compensated as for a tramway in a widened street, and as if they had incurred an expenditure which has not been incurred at all. They say they are entitled to the same amount of compensation whether they have expended the money on widening the streets or not. All that they are entitled to is the original cost of the structure less a deduction in respect of the time it has been in situ. It is contrary to every principle of compensation to consider the value to the purchaser. If the value to the purchaser were what has to be considered, then if the council purchased with the object of substituting electric traction for horse traction, inasmuch as the horse plant would be worth little or nothing to the purchasers, the company ought to get no compensation for it at all. not a question of The value of the Lawson Walton, K.C., in reply. This is compensation at all; it is a case of purchase. tramway is what any one would give for it. To ascertain that you must consider what, if the tramway were not in existence, it would cost the council to make one. The fact that the 1904 LONDON, DEPTFORD AND company have not spent any money in widening the streets is immaterial. They are entitled to the benefit of any change of circumstance whereby the cost of making such a tramway has been increased since the date of its construction, whether such GREENWICH TRAMWAYS increase be in the cost of materials or labour or the conditions COMPANY of obtaining parliamentary sanction. V. LONDON Dec. 21. BRAY J. This is a special case stated by the referee in his award under the following circumstances: The London, Deptford and Greenwich Tramways Company, whom I shall call the claimants, constructed under parliamentary powers certain tramways, and the London County Council, under the powers conferred on them as the local authority by s. 43 of the Tramways Act, 1870, gave notices to the claimants to purchase their tramways. The claimants and the council differed as to the purchase price, and Mr. Henry Graham Harris was duly appointed referee by the Board of Trade. During the course of the arbitration a contention was raised by the claimants that the present value of the tramways was enhanced by their being freed from liability to contribute to the widening of some of the streets in which the tramways were laid, to which, according to the present usual practice, they would if constructed now have been required to contribute, although in fact such widenings had not been made and no contribution had been made by the claimants. The referee considered such contention to be unfounded, but, at the request of the claimants and on certain terms, heard the evidence upon the point, and stated his award in the form of a special case in order that the opinion of the Court might be obtained as to the validity of that contention; and this is the question I have now to determine. The argument of the claimants' counsel was shortly this. The House of Lords in Edinburgh Street Tramways Co. v. Lord Provost of Edinburgh (1) and London Street Tramways Co. v. London County Council (2) decided in effect that the value of the tramways must be measured by what it would (1) [1894] A. C. 456. (2) [1894] A. C. 489. COUNCIL. |