Lord Macmillan:-

The main question to be determined in this appeal relates to the basis on which the appellants are entitled to be compensated on the transfer to the respondents of an electric railway constructed by the appellants on the Canadian Bank of the Niagara River. There are also subsidiary questions (1) as to whether certain items of property should be included in computing the compensation, (2) as to the allowance of interest, and (3) as to costs. The respondents, the Niagara Parks Commission, formerly known as the Commissioners for the Queen Victoria Niagara Falls Park, are a statutory body which controls for the Government of Ontario a large area of land on the bank of the Niagara River above and below the Falls which has been developed as a public park under Statutes of 1885 (48 Vict. C. 21) and 1887 (50 Vict.C.13). The appellants are the successors of the Niagara Falls Park and River Railway Company which was incorporated in 1892 by a statute of the Ontario Legislature (55 Vict. C.96). By that statute an agreement dated 4th December 1891, entered into between the promoters of the railway in question and the Parks Commissioners was ratified and confirmed.

The agreement narrated that the promotors (who, and the company thereafter to be incorporated, are designated "the company") desired to construct and operate an electric railway along the top of the west bank of the Niagara River from the village of Queenston in the County of Lincoln, to the village of Chippawa in the County of Welland; that they intended to apply to the Legislature for a charter of incorporation to enable them to construct and operate the railway; and that the Parks Commissioners had agreed to grant on terms the requisite rights of way through the park lands, and other lands belonging to them or over which they had rights. The Parks Commissioners by the first article of the agreement licensed and permitted the company to construct a first-class electric railway in and through the park and their other lands and by the second article the company undertook to construct, equip and operate the railway. By the third article the railway was required to be constructed of material and according to plans and specifications to be approved by the Parks Commissioners and by the Commissioner of Public Works of the Province. By other articles it was provided that the company should make payment to the Parks Commissioners of a sum of $10,000 for the right of way over a strip of land along the river bank known as the chain reserve and for the benefit of certain contracts made by the Parks Commissioners with various landowners; that the company should have the right to construct and operate inclined railways and elevators and to acquire those already existing on terms to be agreed or fixed by arbitration; and that the Parks Commissioners would not grant to any other persons any right to construct or operate a railway or tramway within the limits of the park and, so long as the agreement was in force, would not them, selves engage in any such construction or operation. The Parks Commissioners further agreed to assent to the company arranging with the municipal corporation of Niagara Falls for a supply of power for working the railway and, if a satisfactory arrangement could not be made with the municipality, undertook themselves to grant to the company such necessary rights as would enable them to procure the requisite power from the waters above the falls. Art. 16 of the agreement provides that the right to operate the railway shall begin on the first day of September next or so soon (before or after that date) as the said railway or any section thereof has been constructed and shall extend to a period of fort, years from the said first day of September one thousand eight hundred and ninety two and shall be renewable on the request by the company for a further period of twenty years as hereinafter provided.

By Art. 17 it was provided that if at the end of the 40 yea