LAW REPORTS.

Dominion, Volume 1, Issue 257, 23 July 1908, Page 2

LAW REPORTS.

COURT OF APPEAL. THE HAMILTON CAS WORKS. PURCHASE BY THE CORPORATION. QUESTION OF VALUATION.. At a sitting of the Court ot Appeal yesterday, when his Honour the Chief Justice (Sir Robert Stout) .and their Honours Justices Williams, Cooper aud Chapman werepresenty argument was heard with respect to the case of the BoroiigK of Hamilton v. the Hamilton Gas Company, Ltd. Mr. C. P. Skerrett, .K*C., with him Mr. T. Cotter (of Auckland), appeared •for the Gas Company, and Mr. H. D. Bell, K.C., with him Mr. A'. Swarbrick (of Hamilton), for the Borough Council. - - The statement of the case, as placed before tho Court by David Gbldio (the umpire in the reference), set forth that by deed dated Stt o, l9oS, the parties agreed that .John. W. Ellis and Wm. B. A. Morrison should act as arbitrators, with David Goldie as umpire, to determine the. price to be paid by the Borqugh to'tho .Company as the purchase, money for tho. gas works, and plant of the Company. .. .. ~. .. ' : At the hearing the Gas Company con-, tended that the'price,should be tho commercial Value, of tho entire plant as a going concern, taking into consideration': its pre- . sent condition, rental value, earning .power, and all "surrounding circumstances, and not merely as. on a sale of apparatus in < situ, and land and buildings, and that the arbitral tors and the umpire, in determining tho. price, were ontitled to capitalize tho not annual profit or rental which, in their opinion, the Gas Company might reasonably bo exptcted to be able to earn and-receive, by niultiplying the same by such a number, as would at the present niarket rate of interest produce, a similar annual return to tho Gas Company. .. . . " ' The Borough Council claimed that the price should be merely 'the value'of the gas works and plant.regarded as in' situ capable of earning a_ profit, arid that this value should be arrived at- (a) by taking the present value of the land and buildings and adding thereto what would'be the present l cost of tho machinery and material • of- a similar gas' works -and plant, and placing them in situ and making good the ground and deducting a sum .for depreciation; or: (b) by taking the cost of the land, buildings, etc., and of laying-down tho gas works , and plant and making: good the ground and' deducting-a sum for depreciation. Tho Gas Company claimed that in respect of-tho amount to bo added'to the price to'be p.aid to them under Sub-section 2 of Section 46 of tho Hamilton Gas Works Act, 1895, "the average annual profit of 10 per cent," mentioned in the Subsection should •be calculated on the total amount of share and premium capita! loans and'undivided profits used in the business. . The Borough Council claimed that "tho average annual profit of 10 per cent." should -be calculated oil (a) 'the'share 'and premium capital of tho Gas Company only, or ■ (b) on the share and premium capital and loans of the Gas Company only. . Tho parties requested that tho awardshould- be given in tho form of a case-stated to enable the decision of the Supreme Court to be taken on tho questions'of lafr involved. Tho arbitrators were unable to agree upon ■their award. Tho umpire found that' if the . contention of the Company was correct, and the;whole of tho net profits of the undertak-ing-were to bo considered, the amount to bo paid by the Council to the Company as tho price of the plant, etc., was £31,382 7s. Ho also found that if the Council's contention was correct that the annual profit of the undertaking was to be limited to 15 per cent, on the share'ahd premium capital, then'the Pfico tb be paid made up'by capitalising tho annual' profit wa's"'£22,ooo. '. The questions- for the decision of'the CourtwenP'W'folliftSs!*2l """ (1) Upon what; basis /or. prinoiple 'should' ■ the umpire proceed in assessing 4 tho price to :: be"paid .for the gas works? " ': '! (2)i-\Vhich contention—that of . the Com- . pany, Or that-of the Borough Council—is cor-'' , reot in-law?:<. ' • Argument had not ; concluded • 1 when: tho Court adjourned until 10.30' this morning.