Attorney-General & Anor v Great Eastern Railway Company [1880] UKHL 2

House of Lords

Between

Attorney-General & AnorAppellant

Great Eastern Railway CompanyRespondent

Before

Lord Chancellor

Lord Selborne

Lord Blackburn

Lord Watson

Date 27 May 1880

The Lord Chancellor (Lord Selborne) Lord Blackburn Lord Watson.

Mr. Kay, Q.C., Mr. Bompas, Q.C., and Mr. Macnaghten, Q.C., (instructed by Hargrove & Co) for the Appellants Mr. Chitty Q.C., and Mr. Newton R. Smart. (instructed by the Capel A. Curwood.) for the Respondent

THE LORD CHANCELLOR (Lord Selborne):

My Lords,

the question in this case is whether, under the Acts of Parliament to which your Lordships' attention has been called, the Respondent company is authorized and empowered to let for hire to the Southend Company locomotive power and rolling stock. The company claims to be so entitled. The Master of the Rolls and Lord Justice Baggallay thought that it was not so authorized; but Lords Justices James and Bramwell thought otherwise, and they discharged the order for an injunction which the Master of the Rolls had made. The present appeal ta your Lordships is from that decision.

I assume that your Lordships will not now recede from anything that was determined in The Ashbury Railway Company v. Riche 7 H L 653 . It appears to me to be important that the doctrine of ultrà vires , as it was explained in that case, should be maintained. But I agree with Lord Justice James that this doctrine ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorized, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultrà vires . In the present case I think, with the Court below, that the acts which the information was filed to restrain are not ultrà vires of the Defendant company. But I come to that conclusion, not on the ground that they are such acts, on the border line between authority and no authority, as may reasonably be thought incidental to the exercise of powers expressly given, but because I think that they are expressly authorized by the 14th section of the Act of 1863. It is insisted by Appellants' counsel that the 14th section of the Act of 1863 authorizes only agreements between the Great Eastern Company and the London and Blackwall Company, inter se ; and that, relating as it does to the "extension," or Southend Railway , as well as to the railways of those two companies, they could make no such agreements until they had otherwise acquired an interest, sufficient to give effect to them, in the extension railway; and that they could only acquire such an interest by taking a lease, or a transfer of the existing lease, of that line. The Appellants, therefore, ask your Lordships to read this section as if, after the words "the two companies," with which it begins, these additional words were contained in it, "in the event of a lease or a transfer of the existing lease of the extension railway being taken by them, or either of them;" this being (as they say) necessarily implied.

It would, however, be contrary to sound principle to imply such a condition, not expressed in the clause, if the words, as they stand, would be sensible and operative without it: and it appears to me that they are so. It cannot, I think, be denied that, under the terms of that section, the two companies being authorized to "enter into agreements" with respect to the working of the extension railway, would have been empowered to make such agreements with the Southend Company , the owner of that railway, if there had been no existing lease, and nothing in the Act enabling them to become lessees of the extension line. The Southend Company and the lessees are mentioned in that part of the preamble which, in my opinion, refers by anticipation to this very power, as meant (as much as the other two companies) to be enabled to do whatever might be necessary for the purposes, of which the expediency was there declared: and their directors are also, by the 15th section, expressly empowered to "enter into any contracts or agreements for effecting all or any of the purposes of this Act." If the two companies might make agreements for the purposes of the Act which could not be made without the concurrence of the Southend Company , it appears to me to follow that the Southend Company was authorized to concur with them in such agreements. If they became transferees of the existing lease, they might, perhaps, during its continuance have exercised this power without any concurrence of the Southend Company : but I do not think it possible to confine the powers of the 14th section to that particular case. If they took a new lease, sufficient authority was already given them, by the 4th and 8th sections, to do everything which the 14th clause contemplates, under the general words "powers, provisoes, stipulations, conditions, and agreements," as incidents to such a lease. It cannot be right to cut down by any unnecessary construction the effect of the words of the 14th section, for the purpose and with the effect of confining it to a case which, in this way, had been already provided for. If it be necessary to consider why the two companies only were mentioned in the 14th section, I should say it was because the Legislature had in view the then existing arrangements, and contemplated that, under any altered arrangements, those two companies would probably continue to undertake obligations of the like character. And I am satisfied, by reference to the preamble, that the construction which I ask your Lordships to place upon that section is proper to give effect to the expressed intention of the Legislature. In the preamble the existing lease, the existing working arrangements, and the proportionate division of tolls, &c., and of deductions for expenses, are referred to as three distinct things: and then it is recited to be expedient, that the Southend Company , the lessees, and the Great Eastern and the London and Blackwall Railway Companies , should be enabled to agree upon "such alterations," in each of these three things, (viz., first, "the terms of the lease;" secondly, "the arrangements for working the railway;" and thirdly, "the apportionment of the receipts and expenses,") "as by this Act authorized." It is then farther, and as a separate and distinct purpose of the Act, recited to be expedient to empower the Great Eastern and London and Blackwall Companies, jointly or severally, to take a lease or transfer of the existing lease of the Southend Railway , "upon such terms and conditions as by this Act authorized." The plain object of the 14th section is to authorize new agreements, generally, as to working arrangements, and as to the apportionment of receipts and expenses. Such new agreements, as to "working arrangements," are nowhere else in the Act expressly authorized.

For these reasons I think that the order appealed from is right; and I move your Lordships that the appeal be dismissed.

LORD BLACKBURN :

My Lords,

I am also of opinion that the order below was right, and that the appeal should be dismissed with costs. There have been three points on which the Court below decided, and on two of them I do not think it necessary to express any opinion. By that I do not mean to be understood or supposed to say that they were wrong, but merely to mean, literally, the thing which I say, that it is not necessary to form, and not being necessary to form, it is not necessary to suggest, any opinion whether they were right or wrong. I take it that, as far as the main point to be considered is concerned, this House has no more right than any other tribunal to depart from the principle of the decisions which have been already arrived at; more particularly I allude to the last case of The Ashbury Railway Carriage and Iron Company v. Riche 7 H L 653 . That case appears to me to decide at all events this, that where there is an Act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular purpose, what it does not expressly or impliedly authorize is to be taken to be prohibited; and, consequently, that the Great Eastern Company , created by Act of Parliament for the purpose of working a line of railway, is prohibited from doing anything that would not be within that purpose.

My Lords,

I quite agree with what Lord Justice James has said on this first point as to prohibition, that those things which are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited. But the point on which I desire to say that I neither form nor express any opinion, is whether or not the Court below might be right in saying, on the question to which the injunction was directed, namely, the lending or manufacturing of rolling stock for the purpose of lending it to the Tilbury Company , that that was permitted in the particular local instance of the Tilbury Railway Company . I agree with my noble and learned friend on the woolsack in thinking, when we look at the Act of Parliament, that the Legislature in this case has, not merely impliedly, but expressly, authorized the directors of the Great Eastern Railway Company to do all that they have done, namely, to enter into arrangements with the Tilbury Company respecting the working of that line, by which they were to supply that line with all the locomotive power, carriages, and other rolling stock which were required for working that line. I think that is not merely impliedly authorized, but is expressly authorized, by the Act of Parliament in question, 26 & 27 Vict. c. 69, and particularly by the 14th section.

It must be remembered, that at the time that Act was passed the two companies (now combined as the Great Eastern Railway Company, but then known as the Eastern Counties and the London and Blackwall Railway Companies), and the Tilbury Company , were altogether separate companies. I should say, farther, that the Tilbury line had been let for a limited period, namely, twenty-one years, to Messrs. Peto & Co. , who were the lessees of the line; and there was, in fact, an agreement made, by which the Eastern Counties Company agreed with Messrs. Peto to work the line for them, in the sense that, during the existence of that agreement or lease, they were to furnish all the locomotive power and rolling stock, and do all those things which the present application is intended to prevent. That arrangement, though certainly not expressly authorized, has been impliedly sanctioned by some allusions to it in previous Acts. It is in the Act now in question recited that there was such an agreement; and, having recited that, the preamble proceeds to say what it is now desirable to do. It says:

"And whereas it is expedient that the London, Tilbury and Southend Railway Company, The Lessees, and the Great Eastern and London and Blackwall Railway Companies respectively should be enabled to agree upon such alterations in the terms of the lease, in the arrangements for working the said railway, and in the apportionment of the receipts and expenses as by this Act authorized; and that the Great Eastern and London and Blackwall Railway Companies, jointly or severally, should be empowered to take a lease or transfer of the existing lease of the London, Tilbury and Southend Railway, upon such terms and conditions as by this Act authorized."

I think that those words, "such terms and conditions as are by this Act authorized," may be properly considered to override the whole. One of the conditions is, that it is expedient that the companies should be authorized. "to agree upon such alterations in the terms of the lease, in the arrangements for working the said railway, as by this Act authorized." This is merely the preamble reciting what is desirable; then it proceeds, "And whereas the several purposes aforesaid cannot be effected without the authority of Parliament," and the Act proceeds to carry the purposes into effect.

Now, it was urged that "the arrangements for working the said railway," primâ facie and naturally, would mean the then existing arrangements between the Eastern Counties and Messrs. Peto & Co., the lessees. It would embrace that undoubtedly, but I do not think it is confined to that. I do not think it would have been at all necessary, if it had been confined to that, that the London and Blackwall Railway Company and the London, Tilbury, and Southend Railway Company should agree upon altering the terms of an arrangement between Messrs. Peto and the Eastern Counties Railway Company with which these two other companies had nothing whatever to do. It seems to me that the more natural and plain meaning of this preamble is that all the arrangements for the time being for the working of the railway are to be altered as the companies may require, in such manner as by this Act subsequently authorized.

Now, my Lords, passing from the preamble, the earlier sections down to the 13th contain nothing expressly authorizing any alteration in the arrangements. It has been attempted to be argued that the 4th section does this impliedly, but there is nothing certainly pointed to this effect. Then comes the 14th section, and it says:

"The two companies"--that is the Eastern Counties and the London and Blackwall Companies --"may enter into agreements in respect to the working, maintenance, and management of the Extension Railway , or any part thereof."

Now that seems to me distinctly to mean, following up the preamble, that it is desirable that they should be able to make such alterations in the arrangements as the two companies may agree upon. What alterations are these? That the two companies may enter into agreements with respect to the working. I will leave the other point out of the way for the moment. Enter into arrangements with whom? Certainly they cannot alter the working whilst the line is in the hands of the lessees without entering into an agreement with the lessees. If it is in the actual occupation of the Southend Railway Company itself, they cannot alter the arrangements without entering into an agreement with that company. Therefore it seems to me that the natural effect, taking the ordinary meaning of the words, would be that the two companies are authorized to enter into agreements with those who would be the necessary parties to it; and I should think, without more, that that would necessarily imply that the party with whom they were to make the agreement had authority to make it; but I must own, notwithstanding what Mr. Kay said in his reply, that it does not strike me that the Southend Company needed any authority to enter into any agreements for the purpose of working the line. I quite agree that a company cannot make a lease without the authority of Parliament. That has been expressly decided, and I quite agree that where an agreement under the shape and colour of a working agreement really amounts to a lease, so as to be a delegation of the whole concern and all its powers, that is as operative as a lease itself. But I do not think that the agreements that are here pointed to, and the agreements that were actually made, do in the slightest degree amount to a lease. I can see no reason why the Southend Company might not make an agreement with an individual, and say, Instead of our buying and making and keeping locomotive engines of our own, we will contract with you that you shall supply locomotive engines, and instead of our buying and becoming possessors of carriages of our own, we will hire them; or why they might not say, Instead of ourselves keeping up and maintaining our own railway, we will make an agreement with you, a contractor, who shall keep up the railway and maintain it. This does not amount to delegating the powers of the company; it does not amount to doing anything extraneous to the powers which the company has obtained, and I cannot see that it would need parliamentary authority to enable them to do any one of these things. I cannot help thinking that the fallacy of the argument there is, that it supposes that whilst the Eastern Counties and the London and Blackwall Railway Companies required parliamentary authority to apply their funds for the purposes of supplying locomotive engines, it follows that the Southend Company would have required parliamentary authority before they paid for the hiring of those engines.

That does not seem to me to follow at all; but probably it is not necessary to decide anything of the sort; for I think the true construction of the 14th section is that when it is said you may make an agreement for working the railway, that necessarily means you may make an agreement with those who possess and occupy the railway as to which the agreement is to be made; and if it is necessary, it would by implication follow, not only that the two companies are authorized to make that agreement, but that the other company is authorized to enter into that agreement also.

Now, taking that view of the section, it will follow that all that the Defendants, the now Respondents, have done, and all that they propose to do, and all that the Appellants have applied to enjoin them from doing, namely, letting for hire and manufacturing for the purpose of letting for hire, to the Tilbury and Southend Company, rolling stock, is expressly authorized by the terms of this Act, and, consequently, on that ground, and without anything farther, the application must fail.

I have already said that the first point is one on which I wished to express no opinion as to whether or not this particular thing does come within the ordinary powers of a company. The second point, which is whether or not the case is a proper one for the Attorney-General to interfere in, and to what extent the powers of the Attorney-General in such cases go, is one which I consider of great importance, and whenever it becomes necessary to decide that question I should desire to look into it very carefully, and to consider carefully what was the proper doctrine to be applied in such a case; but in this case, after the decision which I would advise your Lordships to come to, and which I believe the House will come to, that sect. 14 expressly authorizes the company to do all that it has done, it is quite unnecessary to decide anything on that last point, on which therefore I neither express nor form any opinion.

LORD WATSON :

My Lords,

the main question in this appeal is, whether it was ultrà vires of the Respondents to let for hire to the London, Tilbury, and Southend Railway Company, rolling stock and locomotive power upon the terms and conditions embodied in an agreement between the two companies dated the 1st day of June, 1876. If that question be decided in the affirmative, the point which has been so fully argued in regard to the power of Her Majesty's Attorney-General does not arise for decision in the case.

I cannot doubt that the principle by which this House, in the case of the Ashbury Railway Company v. Riche 7 H L 653 , tested the power of a joint stock company registered (with limited liability) under the Companies Act of 1862, applies with equal force to the case of a railway company incorporated by Act of Parliament. That principle, in its application to the present case, appears to me to be this, that when a railway company has been created for public purposes, the Legislature must be held to have prohibited every act of the company which its incorporating statutes do not warrant either expressly or by fair implication. It follows that the Great Eastern Company has exceeded its statutory powers unless it can be shewn that the company has statutory authority, express or implied, to let rolling stock and plant on hire to the Southend Railway Company .

The Great Eastern Railway Company has absorbed the undertaking and has become vested with the whole powers and privileges of the Eastern Counties and London and Blackwall Companies , both of which were in intimate relation with the Southend Railway Company. A railway was constructed by those two companies in virtue of statutory powers which proceeded upon the recital that "If such railway were constructed and worked in connection with the Eastern Counties Railway and the London and Blackwall Railway , the same would be of great public advantage." The cost of construction was met by the issue of new shares called London, Tilbury, and Southend extension shares; and the undertaking was managed by a joint committee appointed by the boards of the two companies. Had matters continued in that position until 1877 the present question as to the power of the Great Eastern Company could hardly have arisen. Indeed it was not contended for the Appellants that prior to the passing of the London, Tilbury, and Southend Extension Act, 1862, the Eastern Counties and London and Blackwall Companies , or either of them, had not the right to make an arrangement for working the Southend Railway with their own plant. But the Appellant maintained that any such implied power was necessarily brought to an end by the change which that Act operated upon the relations previously subsisting between the two companies and the Southend undertaking; inasmuch as the holders of Southend shares were thereby constituted a separate and independent corporation, in which both the undertaking and its management became thenceforth vested.

I should have had great difficulty in determining whether, and how far, any rights to make arrangements for working the Southend line, of the character of those under the consideration of the House, were impaired by the creation of the new company, having regard first to the professed purpose of the Act of 1862, which, according to the preamble, was to give the proprietors of the London, Tilbury, and Southend Extension shares, that which they had not before, "a voice or control" in the management of the railway and the appointment of directors; secondly, to the fact that two-thirds of the Southend board of directors must be nominees and also members of the respective boards of the Eastern Counties and London and Blackwall Companies ; and, thirdly, to the broad terms of that section of the Act, sect. 32, which saves the rights, powers, and privileges previously vested in these two companies.

But, my Lords, it is not necessary to decide these various questions, because I agree with your Lordships, and the majority of the Court of Appeal, in thinking that the required power is conferred upon the Respondents in express terms by the London, Tilbury, and Southend Railway Act of 1863.

The 14th section of that Act provides that the two companies now represented by the Respondents "may enter into agreements with respect to the maintenance and management of the extension railway or any part thereof." These words, according to their natural meaning, seem to me to give the two companies direct authority to agree with any person or corporation having power to contract on behalf of the Southend undertaking, to supply locomotives and rolling stock upon terms similar to those contained in the agreement of the 1st of June, 1876, between the Great Eastern and the Southend Companies .

It is contended, however, that the power conferred by sect. 14 is merely a power to the two companies to enter into mutual agreements, in the event of both or either of them becoming lessees or lessee of the Southend line under the provisions of sect. 4.

The language of the 14th section expresses no such limitation, nor does it, in my opinion, warrant the inference that any such limitation was contemplated. And the able argument for the Appellants has failed to satisfy me that the context of the Act necessitates a construction of sect. 14 limiting the powers thereby conferred upon the two companies to agreements inter se .

An examination of the preamble and enacting clauses of the Act leads me to these conclusions--that the separate head of the preamble regarding "arrangements for working the said railway," does not refer to leases or to alterations and readjustments of existing apportionments of tolls and charges, but to future arrangements similar in character to the working agreement at that time subsisting between the Great Eastern Company and Messrs. Brassey & Co., the lessees -- that the only enactments which meet that head of the preamble are to be found in sect. 14; and that these enactments, when read according to their primâ facie signification, more fully satisfy the preamble than when read according to the narrower construction now suggested.

Again it is said that if the wider construction be adopted the object of the clause would fail, because the Southend Company never possessed, and there has not been expressly conferred upon it, any power to enter into a working agreement which amounts to a delegation of its statutory powers. But I entirely agree with your Lordships that such a power on the part of the Southend Company is fairly derivable from these provisions which give authority to the Southend and London and Blackwall Companies , when taken in connection with the other provisions of the Act.

I therefore concur in the judgment which your Lordships have expressed.

Order appealed from affirmed; and appeal dismissed, with costs.