THE MIDLAND RAILWAY APPEAL.

Auckland Star, Issue 66, 19 March 1900, Page 3

THE MIDLAND RAILWAY APPEAL.

(From Our Special Correspondent.)

LONDON, February 3,

The appeal in the Midland Bailway case—or, as it is called in the record, Coa-tes v. the Queen—from the judgment of the Court of Appeal of New Zealand, of 25th May last, was heard last Wednesday by a Board of the Judicial Committee of the Privy Council, composed of the Lord Chancellor and Lords Macnaughten, Morris, Shand, Davey, and Bobertson. Mr Swinfen Eady, Q.C., and Mr A. B. Ivirby, counsel for the appellant; Mr Haldane, Q.C., Mr H. D. Bell, and Mr George R. Northcote for the respondent.

The question for the decision of the Court was whether tne debentureholders were entitled to an order for the sale of the 75 miles of the railway completed by the company, notwithstanding that the company has wholly failed to carry out its contract- for the completion of the line, ana mat the Governor has taken possession of, and assumed the management of, the railway, and is proceeding to complete the same; or, in other words, whether the charge of the debenture-holders takes priority over, or is subject to, the rights of the Crown in relation to the railway. The Court in which their Lordships' room is a square, quiet room, panelled with oak and surrounded by snuftcoloured legal tomes, a room so high as to look almost like the well in which Truth is supposed to lie. The impression left on the layman's mind after the hearing of an appeal at this seat of Imperial justice is the extremely go-as-you-please style in which a case involving thousands of pounds is argued. Counsel robed and wigged are drafted into a small square pen, at right angles to one end of which runs a long table, whera.t sit the six sages, three on each side. The counsel addressing the Court occupies a small kopje in. the barristers' laager, whence he is in a position to enfilade, as it were, the trench occupied by the law lords, but is at the same time exposed to a withering cross fire from their legal maxims. The whole argument of counsel is one long series of interruptions and interjections. The judges tire at him now a single question, now yoßeys of interrogations. One judge and counsel have a confidential colloquy which cannot be heard at the reporters' desk, while other two judges are laying their heads together, and perhaps another pair are standing warming their backs at the fire and haying a little confabulation to themselves. Or while counsel is engaged in meeting some objection raised by one judge, another breaks in upon him with the question j what has that to do with the matter under discussion? I

Mr Swinfen Eady, who led off for the appellants, stood to his position with the utmost tenacity for four hours, and pounded away with his big guns uninterruptedly, though occasionally silenced by the quick-firers of the judges, as, for instance, when asked by the Lord Chancellor if he could show any authority in the Acts for the sale by the debenture-holders of the railway in sections. Mr Eady's chief points were that the words "from time to time" in the Act of 1884 showed that successive borrowings and successive charges on the -railway were contemplated, and that it could never have been intended by the Legislature that debenture-holders advancing money for the construction of part of the line should have no security unless the money were found to complete the entire line.

By section 13, the debentures were to be a first charge on the entire assets of the company, including- the railway, and the Governor's right to seise the railway was subject to this first charge. Although the Governor had been in possession of the railway for three years, and was managing and completing it at the time Mr Coates was appointed receiver, viz., 4th July, 1898, yet, as at that time the d_ebenture-_iolders had paid all the half-yearly demands of outlay and ex-i penditure entailed, the Governor had no power to make an Order-in-Council vesting the railway in the Queen under section 126 of the Act of ISBI. By the order appointing the Beceiver the rail-way, under section 14 of the Act of 1884, ceased to be vested in the company, and became vested in the Beceiver, and could be sold either as a whole or in parts free from the right of the Crown. The company could sell or charge part of the railway, as the Governor had power by statute to purchase part. It would be inequitable to allow the Government, which had authorised the construction of the railway by money borrowed on debentures given a first charge on the assets of the company, including the railway, to take the railway and repudiate the charge. At- all events, the debenture-holders, whether they could sell the railway or not, had a continuing charge on the line which was liable to be satisfied out of the rents and profits of the railway. This first argument seemed to be Mr Eady's sheet anchor, ■ and-he clung to it for all he was worth.

Mr A.-R. Kirby, who was very brief, confined himself to contending that by section 13 of the Act of 1884 the debentures were made a first charge on the railway itself physically, whs-. ther it could be considered an asset of the company or not, and to pointing out that as section 17 of the Act of 1884 contemplated the Governor purchasing the railway subject to a charge, it might be fairly inferred that the power of forfeiture given him was also subject to a charge.

All through the arguments of both counsels questions and remarks of their lordships were frequent. So far as one could judge, they seemed to be inclined to hold that the debentures constituted a sort of floating charge on the assets of the company so longas it was a going concern, and as long as the assets belonged to the company, which they could hardly be said to do when they had been seized by the Governor. The Lora Chancellor seemed strongly of opinion that, no matter for what reason the Governor took possession of the railway in the first instance.he had an inchoate right of forfeiture, which became complete when the company ceased to pay his outlay and expenditure, and this paramount right of the Governor to vestthe railway in the Queen by an Order-in-Council could not be defeated by any charge of the debenture-holders. Lord Morris suggested that section 14 of the Act of 18-4, which gives the de-benture-holders power to get a Receiver appointed, and to get an order for the sale of the company's property, only referred to the normal state of things existing while the company was a going concern, and did not contemplate the extraordinary state of affairs which had been created bjr the company's failure to complete the line.

It seemed almost probable, there-" fore, that a decision would be given ia favour of the Government without calling on the other side.

However, their lordships listened to very brief arguments from Messrs Haldane and Bell, whose point of view, had already been set out fully ia the respondents case on appeal. Mr Haldane pointed out that if the debenture-holders' contention was correct, they would be able to sell part of the railway free from any obligation to work it, and with liberty to break it up, a state of things surely, never contemplated by the Legislature. The debenture-holders could, to satisfy their charge, only sell the undertaking as a whole, not- in fragments. In other words, the deben-ture-holders must stand in the shoes of the company. The Government never denied the right of the deben-ture-holders to sell the concession as a whole. Here Lord Morris pointed out that in selling the concession after seizure by the Government the deben-ture-holders would be selling a mere abstraction, which no one would buy. Mr Bell's remarks were few, but to the point. He directed atteution to the facts that the railway had not been constructed with the debentureholders' money only, that the Government had in the first instance given the land for the line free, had contributed 50 per cent, of the cost of the railway by giving the company lanegrants to half the value of the sections constructed, and since 1895 had actually paid out of the public .estate 100 per cent, of the cost of construction of the line. If the debenture-holders* contention were correct, the company, could simply construct and retain the part easiest to construct and easiest to manage, and by sale through the debenture-holders' Beceiver could get rid of the liability which the Legislature had imposed upon them to construct the whole line for the benefit of the colony, The question for their lordships to decide was one of prime importance: it amounted to this, whether the course which the Legislature took to protect the public estate from being squandered might be destroyed by the proceedings of the de-benture-holders. The debenture-hold-ers could sell the whole undertaking with its incidents, always subject to the right of the Crown to step in;; they could not sell a fragment of the line.

After a short reply from Mr Swinfen Eady, who certainly made a good fight for the 150 guineas marked on his brief, their lordships intimated that they would consider their judgment. There can be little doubt, I think, that it will be in the Government's favour.

I The judgment of the Privy Council ■in the Midland Railway case, is likely, I understand, to be delivered in about a fortnight. It is a singular circumstance that not a single lawbook was opened in the argument of the appeal. The "Railway Journal" gives what purports to be "a report, of the argument which shows as great a lack of taste as of knowledge. These are some sample sentences: "It was contended that the appointment of the rteceiver gave him permanent right over the Crown;" .. , "The case put forward on behalf "of the debentureholders is that the railway has permanent rights over the New Zealand Government, and that the judgment of the New Zealand Courts was ultra vires. Whilst such a stigma as that ! attaching to this case can be pointed jto we have little right to complain of jthe conduct of Bortugal in the matter i of. the Delagoa Bay railway. Both cases have many points in common." Were not its remarks so absolutely contemptible, a little process for contempt of Court might serve to remind the "Railway Journal" of the danger of commenting upon a case subjudice. The "Sheffield Telegraph" published an interesting letter to Quarter-Master Sergeant Waddington from a relative, Mr Ambrose C. Bawson, of the New Zealand Contingent, in the course of which he says:—"We here are incharge of General French, a jolly good general he is. He uses us New Zealanders more as scouts than anything else, for in his opinion we are born gcouts. He has re-named us Hie Independent 200 New Zealanders. ■ Taney, making us do a charge on horseback' with fixed bayonets, and thanking us for it afterwards. He said he would like to make us into cavalry. ."....,-. The New Zealanders have been, under fire several times. In fact, I should not be far wrong if I said that every, time they went out they were fired at.' We have on several occasions escorted the Boyal Horse Artillery into action, and they tell us this is one of the greatest honours they could give us. . . . The other day we were within 2,000 3 rards of the enemy's guns, and seeing some horses jolly close to us, but at the same time within range, I and another fellow rode out and cap« tured 15 of them and proudly took them to camp."

[The following appeared in part of our Saturday.s edition.] *