Lord Wright:-

The action out of which this appeal arises, was brought by the respondents as respectively owners of property in the city of Edmonton in Alberta and their insurers; they claimed that the property had been destroyed or damaged by a fire due to an escape of gas from the gas main of the appellants for which the appellants are liable. The damages claimed amounted to $320,278,64 but all questions of amount were reserved. On the question of liability before Ford, J., the appellants succeeded, but his decision was reversed by a judgment of the Supreme Court of Alberta (Appellate Division) by a majority (Lunney and Mitchell, JJ. A. dissenting) who ordered judgment to be entered for damages to be assessed. From that judgment, the present appeal is brought. The appellants are a public Utility Company incorporated under the Dominion Companies Act: they distribute natural gas under a franchise granted to their predecessors-in-title the Northern Alberta Natural Gas Development Company Limited (hereinafter called the company) by the City of Edmonton (hereinafter called the City) in November 1915, and confirmed by statute (Alberta Statutes, 1916, c 29) The franchise was assigned to the appellants by deed dated 29th May 1923.

Under this franchise, the city granted to the company the full power to pull down, take up repair, maintain or operate its gas pipe lines along, through or under the streets and other public places within the city for the purpose of supplying natural gas to consumers, with power to break up the surface and make necessary excavations for that purpose. By Cl. 11 it was provided that the company should indemnify the city against any damages arising out of the construction and operation of its works, owing to the negligence of the company, its servants and employees, and that the city should be liable for all damage to the plant of the company caused by the negligence of the city, its workmen and employees. The company was bound to supply natural gas as required to consumers within the city limits at the property line when their land or premises were situated along the company's main line. The franchise was subject to the provisions of the Water Gas Electric and Telephone Companies Act of Alberta which by amendment made in 1924 was applied to companies incorporated or licensed under any statute of the Dominion or of Alberta. It is convenient to recite here Ss. 11 and 13 of that Act. S. 11 was in these terms:

The company shall make satisfaction to the owners or proprietor of any building or other property or to the Municipality or Minister of Public Works, as the case may be, for all damages caused in or by the execution of all or any of the said powers.

By S. 13 it was provided as follows: The company shall locate and construct its gas or water works or electric or telephone system and all apparatus and appurtenances thereto belonging or appertaining or therewith connected and wheresoever situated so as not to endanger the public health or safety.

The appellants in August 1923, laid a 12 inch intermediate pressure gas main along a lane in Edmonton, south of Jasper Avenue, and running at right angles into 107th Street; the lane was unpaved, but where the main went across and under the street an open trench could not be cut; the width of the street was 77 feet, and three excavations were made, one at each end about 7 feet from the side pavement and one in the middle, spaces of about 11 feet being left in the street for the traffic, the two intervening spaces being tunnelled. Each excavation was about 15 feet wide. The main was laid at a depth of 3 feet 6 inches: in the pipe were three welded joints, the one in the centre being in the space of the middle excavation: the pipe was pushed or pulled through the length of the tunnelled and excavated spaces, the earth being back-filled. Not far from this main and about the same level below the ground the appellants also laid a low pressure 10 inch main. There was also a wood