Scottish Court of Session Decisions

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

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