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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Glasgow Corporation v. Glasgow Tramway and Omnibus Co., Ltd [1898] ScotLR 35_967 (11 July 1898) URL: http://www.bailii.org/scot/cases/ScotCS/1898/35SLR0967.html Cite as: [1898] ScotLR 35_967, [1898] SLR 35_967 |
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Page: 967↓
Before the
(Ante, March 4th 1897, 34 S.L.R. 460, and 24 R. 628.)
By lease entered into in 1871, the Corporation of Glasgow let to the Glasgow Tramway and Omnibus Company, Limited, the sole right to use, for the sole purpose of the Glasgow Street Tramways Act 1870, carriages with flange wheels on the whole of the tramways authorised to be formed by that Act, for 23 years from 1st July 1871. The terms of this lease were (amongst others) that the Corporation should make the tramway out of moneys to be raised or borrowed by them, and that the company should pay half yearly to the Corporation the amount actually paid or payable on the money borrowed by them and expended on the tramways and on certain other expenses which were to be regarded as expenditures on capital account. The company undertook the whole cost of maintenance and repair during the
Page: 968↓
period of their tenure, and agreed to pay 3 per cent. per annum on the gross sum from time to time expended by the Corporation on capital account, which percentages were to form a sinking fund to be applied ultimately by the Corporation towards reduction or extinction of the cost of constructing the tramways. The lease contained further the following provision:—“And the company shall also pay to the Corporation the expenses of borrowing, management, &c.; and this provision shall be so construed as to keep the Corporation free from all expenses whatever in connection with the said tramway.”
Held ( rev. the judgment of the First Division), on a construction of the above clause of indemnity, that the company, and not the Corporation, were liable for the owner's share of the rates and taxes levied on the tramways.
The case is reported ante ut supra.
The Corporation of Glasgow appealed.
At delivering judgment—
The City of Glasgow agreed to construct certain tramways and leased the undertaking to the respondent company. It is clear that but for the stipulation in the agreement the respondent company would have had a right to claim indemnity against the City of Glasgow in respect of owners' assessments, rates, and taxes, whether local or imperial. But the answer to that claim is that the respondent company has undertaken to bear those burdens themselves, and the sole question is, as I have said, the construction of the particular stipulation which has thus been made.
Now, that stipulation is in these terms: “And the company shall pay to the Corporation the expenses of borrowing, managment, etc.”; and it proceeds thus: “This provision shall be so construed as to keep the Corporation free from all expenses whatever in connection with the said tramways.”
That the rates and taxes levied upon the tramways as such, and the expenses involved in making payments in respect of them, are “expenses” within the strictest meaning of those few words appears to me to be beyond doubt; and the words “free from all expenses whatever in connection with the said tramways” appear to me to be so wide in their application that I should have thought it impossible to qualify or cut them down by their being associated with other words, on the principle of their being ejusdem, generis with the previous words enumerated.
“Expenses,” I presume, is itself a very general word; but the construction which limits that word would be strange indeed which should strike out the word “all” and the word “whatever” from the sentence. Neither does it appear to me very intelligible why where the assessment is upon the tramway itself it is not an “expense in connection with the tramway.”
For these reasons I am of opinion that the judgment of the Court of Session was erroneous, and I think it ought to be reversed, and I move your Lordships accordingly.
The tenure of the respondent company being for a period exceeding 21 years, the assessor, following the provisions of section 6 of the Valuation Act 1854, entered their names in the current valuation rolls as “proprietors,” with the result that the company became primarily liable to pay, and regularly paid, the assessments yearly levied in respect of the tramways, whether for imperial or for local purposes, during the whole term of the lease, which expired in July 1894. Section 6 provides that a tenant whose name has been so entered “shall be entitled to relief from the actual proprietor thereof, and to deduction from the rent payable by him to such actual proprietor, of such proportion of all assessments laid upon the valuation of such lands and heritages made under this Act, and payable by such lessee as proprietor in the sense of this Act as shall correspond to the rent payable by such lessee to such actual proprietor as compared with the amount of such valuation.” During the currency of their lease, the company, although they intimated a claim against the Corporation, did not make any deduction from the rents which they paid to the Corporation, in compliance with the conditions of the lease.
This action was brought in January 1896, and the first, and the only, conclusion of the summons to which the present appeal relates, is for payment by the Corporation
Page: 969↓
After a proof had been led, the Lord Ordinary (Kyllachy), on 2nd December 1896, found that the Corporation were bound to relieve the company of the owners' assessments, rates, and taxes, whether local or imperial, paid by them in respect of the tramways during the period from 1st July 1871 to 1st July 1894. He made various subordinate findings bearing upon the proportion of assessments chargeable to the Corporation; and seeing that further inquiry was necessary upon one point, he directed the cause to be enrolled for further procedure. His interlocutor was, on the 1st March 1897, affirmed simpliciter by the First Division of the Court.
The first plea urged in defence by the Corporation depends upon the just construction of a single sentence in the second article of the lease of November 1871. That clause enumerates various payments which are to be made by the lessees to the lessors, and then proceeds thus—“And the company shall also pay to the Corporation the expenses of borrowing, management, &c.; and this provision shall be so construed as to keep the Corporation free from all expenses whatever in connection with the said tramways.” The question therefore comes to be, whether the proportion of assessments payable by the Corporation as owners of the tramways under section 6 of the Valuation Act are expenses of the Corporation “in connection with the said tramways,” within the meaning of the second article, and are therefore within the respondent company's obligation of indemnity.
In my opinion the conditions of the second article which I have just quoted ought to be construed in connection with the whole stipulations of the lease in so far as these relate to the considerations passing between the Corporation and the company. Viewed in that light, the general scheme of the lease is, that the obligation of constructing the tramways was to rest upon the Corporation, it being in the contemplation of both parties that the Corporation was to raise money for that purpose by borrowing upon its own credit. On the other hand, the company (article 6) undertook the whole cost of maintenance and repair during the period of their tenure; they (article 3) agreed to pay half-yearly 3 per cent. per annum on the gross sum from time to time expended by the Corporation on capital account, which percentages were to form a sinking fund to be applied “ultimately” by the Corporation towards reduction or extinction of the cost of constructing the tramways; by the first part of article 2 the company agreed to pay half-yearly during the term of their lease the whole interest falling due upon the money from time to time borrowed by the Corporation on capital account; by the second part of the same article they agreed to pay interest on the expenses incurred by the Corporation and by the Board of Police in obtaining statutory power of construction in the year 1870, or incident to the execution of the lease, it being declared that the obligation of the company for the payment of such interest was not to be affected by any payment made to the Corporation through the medium of the sinking fund.
The substance of the scheme as embodied in these stipulations appears to me to have been that no pecuniary obligation was to attach to the Corporation beyond that of borrowing funds in order to pay for the construction of the tramways, and that the company during the currency of their right were to relieve the Corporation of all other outlays connected with or incident to the performance of the obligation to construct, or incident to their position as proprietors of that which they had constructed. I have had no difficulty in coming to the conclusion that payment of assessments, whether imperial or local, levied from the owner in respect of a tramway or other erection in solo is an expense connected with such tramway or erection. But for the construction of the tramway no such liability would have arisen.
I am for these reasons of opinion that the first plea is well founded, and that the company are suing for a sum of which they were bound by their lease to relieve the Corporation. In that view it is neither expedient nor necessary to express any opinion with regard to the other pleas maintained in defence by the Corporation. I think that, in so far as they relate to the first conclusion of the summons, the interlocutors of 2nd December 1896 and 14th March 1897 ought to be reversed, and the Corporation assoilzied from that conclusion. I also think that the interlocutors of 14th March and 20th March 1897, in so far as they relate to expenses of process, ought to be reversed, and that the appellant Corporation ought to have the expenses incurred by them before the Court of Session, and their costs of this appeal.
Page: 970↓
The question turns, in my opinion, on the construction to be put on a provision in the lease granted to the respondents in November 1871. By this instrument the appellants let to the respondents the sole right to use, for the sole purposes of the Glasgow Street Tramways Act 1870, carriages with flange wheels on the whole of the tramways authorised to be formed by that Act, for twenty-three years from the 1st July 1871. The terms of this lease were (amongst others) that the appellants should make the tramways out of moneys to be raised or borrowed by them, and that the respondents should pay half-yearly to the appellants the amount actually paid or payable on the moneys borrowed by them and expended on the tramways, and on certain other expenses which were to be regarded as expenditure on capital account. It contained further the following provision:— “And the company shall also pay to the Corporation the expenses of borrowing, management, &c., and this provision shall be so construed as to keep the Corporation free from all expenses whatever in connection with the said tramways.”
The duration of the lease exceeding twenty-one years, the respondents were, pursuant to the terms of the Valuation of Lands (Scotland) Act 1854, treated as the proprietors of the heritages, and paid the assessments yearly levied in respect of the tramways, whether for imperial or local purposes, down to the termination of their lease in 1894. The 6th section of the Act referred to provides that the lessee under such a lease “shall be entitled to relief from the actual proprietor thereof, and to deduction from the rent payable by him to such actual proprietor of such proportion of all assessments laid upon the valuation of such lands and heritages made under this Act, and payable by such lessee as proprietor in the sense of this Act as shall correspond to the rent payable by such lessee to such actual proprietor as compared with the amount of such valuation.”
The respondents during the currency of their lease made no deductions in respect of the assessments for rates and taxes paid by them, but they claimed at the termination of the lease to recover from the appellants a proportion of the sums paid by them, in conformity with the provisions of the section of the Act just quoted.
I am of opinion that their claim cannot be sustained. I base this opinion solely upon the construction of the clause of the lease upon which the appellants mainly rely, read of course in the light afforded by all the provisions of the instrument. Several other points were made by the appellants, and questions of some nicety were discussed at the bar, but I do not find it necessary to express any opinion upon these. In the judgment of the Lord Ordinary and in the Inner House stress is laid upon the point that the agreement to pay “the expenses of borrowing, management, &c.,” cannot cover the sums now in question, inasmuch as the Corporation have not “expended” anything, and “the taxes paid by the owner of property in respect of his ownership are not identical or ejusdem generis with expenses of borrowing or expenses of management.” It is not requisite to consider what the proper conclusion would have been if the agreement had contained only the words “pay the expenses of borrowing, management,” & c., for the parties to the lease have not left the matter to be determined on the use of these words alone. They have gone on to indicate how the provision just alluded to is to be construed. The learned Judges have made no allusion to the words, to my mind all important, which require this construction. They have treated them as of no effect. It is, however, competent for the parties to a contract to agree that the language they use shall be so construed as to cover more than would be conveyed by it according to its strict interpretation, or, in other words, to give to it a conventional meaning. If they have done so, the Courts must give effect to their bargain. In the present case the words to which alone allusion is made in the judgment below are followed by the words “and this provision shall be so construed,” &c. Why, then, should they not be so construed as to effect the object which the parties to the bargain say they had in view, even if this be not their natural construction? I can see no sound reason for failing to give effect to the expressed intention of the parties. The provision is to be so construed “as to keep the Corporation free from all expenses whatever in connection with the said tramways.” Nothing could be wider than “all expenses whatever;” they seem to me necessarily to exclude any limitation of the expenses to those ejusdem generis with expenses of “borrowing” or “management.” If the sums sought to be recovered have to be paid by the appellants, will they be expenses “in connection with the said tramways?” I cannot doubt it. If the tramways had not been made, none of the assessments which have given rise to this controversy could have been imposed. The Corporation, so long as the site of the tramway was merely part of the road, were not liable to taxation in respect of it. That liability has arisen only because by virtue of the agreement under consideration the tramways were brought into existence by the Corporation. It seems to me therefore clear that if the contention of the respondents were to prevail, the appellants would not have been kept free from all expenses
Page: 971↓
The conclusion at which I have arrived appears to me in complete harmony with the general scheme of the lease and the other provisions contained in it. I do not think it would be giving its true effect to the contract between the parties to hold that, though the respondents would be bound to pay to the appellants all expenditure they had incurred in connection with the tramways, the respondents could claim to be repaid by the appellants expenditure they had themselves made in connection with the tramways.
The case raises no matter of general interest, but involves merely a question of construction—a question as to what is the meaning of the particular terms used in the lease between the parties. I agree in thinking that on the grounds stated by your Lordships, taking the provisions of that lease as a whole, and having regard to the special clause as to expenses, the result is that the appellants are not liable for the sums sued for. I think the word “expense” would have been a better term to be used than “expenses,” but that the effect of the word “expenses” results in the judgment which your Lordships are now about to pronounce.
Ordered that, in so far as they relate to the first conclusion of the summons, the interlocutors of 2nd December 1896 and 14th March 1897 be reversed, and the Corporation assoilzied from that conclusion, and that the interlocutors of the 14th March and 20th March 1897, in so far as they relate to the expenses of process, be reversed, and that the appellant Corporation have the expenses incurred by them before the Court of Session, and their costs of this appeal.
Counsel for the Appellants— Haldane, Q.C.— Cripps, Q.C. Agents— Martin & Leslie, for Simpson & Marwick, W.S.
Counsel for the Respondents— Balfour, Q.C.— W. Campbell. Agents— Grahames, Currey, & Spens, for Webster, Will, & Ritchie, S.S.C.
