Scottish Court of Session Decisions

The North British Railway Company, pursuers, brought an action against the Steel Company of Scotland, Limited, defenders, for payment of £199, 0s. 6d., being charges for the detention of waggons beyond the time mentioned in a regulation of the Board of Trade dated 28th November 1918 acting in pursuance of powers conferred on them by His Majesty in Council as authorised by section 1 (1) of the Defence of the Realm Act 1914.

The defenders averred, inter alia—“Explained that in terms of the schedule to the said Railway Rates and Charges No. 25 (North British Railway) Order Confirmation Act 1892 it is provided that ‘Any difference arising under this section shall be determined by an arbiter to be appointed by the Board of Trade at the instance of either party.’ Explained that Regulation 7 B and the said Railway Waggons Disposal (Scotland) No. 2 Order 1918 purport to deprive the defenders of their statutory right to arbitration, and to give the pursuers an absolute right to exact demurrage whether reasonable or not in terms of the said schedule thereto. The said Order, or in any event the said Order in so far as the pursuers found thereon, was passed for the benefit of the railway companies and not for securing the public safety and the defence of the realm. Explained that the Defence of the Realm Consolidation Act 1914 prescribes the mode of enforcing the regulations made under it by fine (restricted to £100) or imprisonment or both, but gives no power to His Majesty in Council to grant rights of exaction to third parties. In so far as the said Order confers powers upon the pursuers beyond their statutory rights it is ultra vires.”

The pursuers pleaded—“1. The pursuers being entitled to make charges against the defenders, and the defenders being bound to pay such charges as are reasonable in amount in respect of the detention by the defenders of any waggons owned by the pursuers, or which for the time being they are entitled to use beyond the periods set forth in the schedule to the said Order, and the charges per day made by the pursuers being reasonable in amount, decree should be granted as concluded for. 2. The sum sued for being due and resting-owing by the defenders to the pursuers, decree should be granted as concluded for. 3. The defences being irrelevant, decree should be granted de plano.”

The defenders pleaded—“1. The pursuers' averments being irrelevant the action should be dismissed. 2. No title to sue in respect that it was ultra vires His Majesty in Council to confer upon the pursuers rights in excess of their statutory rights. 3. The Regulation 7 B (1) ( b) being unauthorised by the provisions of the Defence of the Realm Consolidation Act 1914 and invalid, the defenders should be assoilzied. 4. The Railway Waggons Disposal (Scotland) Order No. 2 being ultra vires and invalid, the defenders should be assoilzied.”

The facts of the case so far as material and the Order founded on appear from the opinion of the Lord Ordinary ( Sands), who on 4th June 1920 decerned in favour of the pursuers in terms of the conclusions of the summons.

Opinion.—“Under section 1 (1) of the Defence of the Realm Act 1914 His Majesty in Council is empowered to issue ‘Regulations for securing the public safety and the Defence of the Realm.’ These Regulations may be designed, inter alia, 1 (1) e, ‘to prevent the successful prosecution of the war being endangered.’

In the exercise of this authority His Majesty by Regulation 7 B authorised the Board of Trade to make Orders ‘( b) for enforcing the prompt loading or unloading of waggons by prescribing the time after which charges may be made by railway companies for the detention of waggons or trucks or the use or occupation of any accommodation whether before or after the conveyance of goods, and by making failure to load or unload in accordance with the order an offence, and for enabling waggons which are not promptly unloaded by the consignee to be unloaded and their contents to be dealt with at the risk and expense of the consignee in manner provided by the Order.’

Acting under this Regulation, the Board of Trade made a Rule and Order upon 28th November 1918 (1918 M. 1575 S. 67), which provided, inter alia—‘After the expiration of such time as is mentioned in the schedule hereto a railway company may make charges for the detention of any waggon or sheet owned by them, or which for the time being they are entitled to use, or for the use or occupation of any accommodation provided by them in connection with or arising out of such detention of any waggon or sheet.’

The present action is brought for the recovery of charges for the detention of waggons beyond the time mentioned in the schedule. Apart from the rule the defenders were entitled under the railway legislation, and in particular 51 and 52 Vict. cap. 25, section 24, Schedule I, 5 (iv) to detain the waggons for such a time as might be reasonably necessary on payment as for a service in addition to the tonnage of a reasonable sum. The period of detention allowable and the sum payable had been liquidated by the Railway and Canal Commission as arbiters acting in terms of the statute, and the period of detention covered by the sum fixed was greater than the period allowed under the Board of Trade Order here in question.

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It has been authoritatively established that there is a presumption that a Regulation made by His Majesty in virtue of the statutory powers above referred to has been found necessary for the successful prosecution of the war, and that to warrant the Court to treat the Order as ultra vires as not being designed to serve the statutory purpose it must appear clearly that it cannot serve any such purpose.

In the present case the object of the Order was undoubtedly to increase the railway transport available by securing that waggons should be detained for as short a period as possible by traders. That was undoubtedly such a purpose as was contemplated by the statute and I did not understand this to be disputed.

It may be, however, that an Order made for a necessary war reason may be ultra vires in respect that its provisions travel together beyond the necessity. Such an Order might be one which, whilst authorising the commandeering of stores, provided that no payment or consideration should be given for them. In certain circumstances, however, even such an Order might be justifiable. It might be that people were concealing and holding up stores, and that the prospect of commandeering of hoarded goods without payment might reasonably be deemed the best stimulus to bring the goods on to the market.

In the present case I understand the contention of the defenders to be, not that the curtailment of the time of the detention of waggons was unnecessary for the purposes of the war, but that the Order sought to secure that object by an interference with their rights under the Railway Act, which was not necessary to secure the end in view.

I take it that if the Board of Trade deemed it necessary to take steps to curtail the time of the detention of waggons it was imperative upon them to adopt practical and effectual steps to secure this end. It is suggested that they might have framed an Order forbidding under a statutory penalty the detention of any waggon beyond a specified time. But having regard to the variety of conditions, the exigencies of business, and the temporary labour and transport difficulties, it may very well have been deemed that it was impracticable to lay down a hard and fast rule under the sanction of a criminal prosecution for a statutory penalty. If it were sought strictly to enforce such a rule it might lead to a multitude of vexatious prosecutions. If it were not strictly enforced it would be a dead letter. The best that could be done was to give a strong stimulus to general despatch. If this was the view taken, it appears to me that it was probably sound, and that the form which the Order took was the one best calculated to secure the important national end in view, if not indeed the only practical way of doing so.

It is not suggested that there can be any inquiry into the matter, and in these circumstances I am not prepared to affirm that the order was ultra vires as not being necessary in order ‘to prevent the successful prosecution of the war being endangered.’

I shall accordingly grant decree in favour of the pursuers for the sum sued for, with expenses.”

The defenders reclaimed, and argued—The defenders were entitled to absolvitor de plano, or alternatively to a proof of their averments. The Order and the Regulation were ultra vires. (1) They were not in a reasonable sense necessary for the prosecution of the war or the safety or defence of the realm as required by the empowering Act—Defence of the Realm Consolidation Act 1914 (5 Geo. V, cap. 8), sec. 1 (1). To fall within the statute an order must be reasonably necessary for these purposes, and the Court must judge of its reasonableness by the conditions existing at the time— Rex v. Halliday, [1917] AC 260, per Lord Atkinson at p. 272, 54 S.L.R. 662; Chester v. Bateson, [1920] 1 K.B. 829; Newcastle Breweries, Limited v. The King, [1920] 1 K.B. 854; Hudson's Bay Company v. Maclay, 1920, 36 T.L.R. 469, per Greer, J., at p. 475. The mere fact that the Order in question was dated a fortnight after the Armistice raised a presumption that it was not reasonably necessary for these purposes. (2) The Order was an invasion of the civil rights of the defenders. It deprived the defenders of their statutory right to arbitration under the Railway Rates and Charges, No. 25 (North British Railway) Order Confirmation Act 1892, shortened the free time hitherto allowed by 50 per cent., and imposed a new sanction in the form of demurrage charges to be imposed by the Railway Company. This new sanction was ultra vires of the Defence of the Realm Consolidation Act 1914, which authorised the making of regulations to be enforced by certain statutory sanctions, viz., fine or imprisonment. No new sanction either in addition to or in substitution for these could be lawfully imposed. The sanction imposed by the Order was an alteration of civil rights to enforce the Order, and was not an alteration consequent on the Order. Further, the sanction so imposed was not a payment to the State, but a payment to the other party to the contract, and it was for the benefit of that party. The Regulation might be perfectly honest, but that would not render it intra vires if it did not otherwise fall within the statute. (3) Esto that the Board of Trade had power to alter civil rights in the way they had done, it was ultra vires in them to delegate that power to another party, viz., the Railway Company.

Argued for the pursuers and respondents—The pursuers were entitled to a presumption that the purpose of the Order was for the defence of the realm, and that it was honestly issued for that purpose. This presumption could only be displaced by definite averments of a very exceptional character, and the pursuers' averments fell far short of anything that would entitle them to proof. They did not say how the Order was intended to benefit the Railway Company, and how it was not for the better securing of the public safety. Demurrage could not be regarded as a contractual right of the traders— , 14 Railway and Canal Traffic Cases, 246, per Lord Mackenzie at p. 264. The free days were not a proprietary right of the trader. His duty was to discharge with all reasonable despatch. Interference with civil rights was not a test of ultra vires. As a matter of fact the majority of the cases where that plea was put forward and repelled involved interference with civil rights— Commercial and Estates Company of Egypt v. Ball, 1920, 36 T.L.R. 526; Gurney v. Houghton, 1920, 36 T.L.R. 682; Lipton Limited v. Ford, [1917] 2 K.B. 647, per Atkin, J., at p. 654; Director of Public Prosecutions v. Solomon Ford, 1918, 35 T.L.R. 206; Brightman & Company, Limited v. Tate, [1919] 1 K.B. 463. The fact that the Order dealt with railway waggons raised a prima facie presumption that it was required for the successful prosecution of the war. The fact that the Order was issued after the conclusion of the Armistice did not imply that it was ultra vires. The war might at any time have been resumed, and the emergency powers under the Defence of the Realm Consolidation Act 1914 were still required. The pursuers' contentions were in accordance with the interpretation of the statute as given by Lord Atkinson in Rex v. Halliday. The Order and the Regulation did not abrogate the defenders' right to arbitration as to the amount of charges. They only interfered with their right of appeal to an arbiter on the question of free time.