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1916 Supreme(SC) 39
Privy Council
Lord Shaw, Earl Loreburn, Lord Buckmaster, Justice Lord Chancellor, JJ.
Toronto Corporation -Appellant
Versus
Toronto Railway -Resopndent
On appeal from the Supreme Court of Ontario
Decided On : 23-06-1916
Charles Russell and Co., Freshfields, McCarthy , John Simon , Geary , Clauson
A grant of franchise rights made "so far as [the authority] can legally grant" over areas subject to existing rights is construed to take effect upon the cessation of those prior rights, and such a grant is not an impermissible reversionary interest.
Headnote:(A) Street Railway Act, 1887 - Ontario Railway Act, 1914 - Section 250 - Confirming Statute (55 Vict. C. 99) - Grant of exclusive rights to operate street railways - Interpretation of agreement where rights are granted subject to existing franchises - Grant for a period exceeding statutory limits subsequently validated by legislation - Meaning of the phrase "so far as the corporation can legally grant the same" - Such a grant is construed to take effect upon the cessation of antecedent rights, rather than being contingent upon those rights being void ab initio.
(B) Statutory Construction - Confirming Acts - Provisions intended to explain or identify the agreement being confirmed should be read in light of the original agreement - Clumsy or obscure language in the confirming statute does not override the obvious meaning of the validated agreement.
(C) Municipal Powers - Grant of franchise - A grant that takes effect after the expiry of a prior franchise does not constitute an impermissible reversionary interest.
Facts of the case:
A municipal body granted exclusive rights to operate street railways for a term of thirty years (initially twenty, extended by statute). The grant excluded certain road portions where another entity held exclusive rights until a specific date, but included a provision granting rights over those portions "so far as the municipal body could legally grant the same." Upon the expiry of the prior entity's rights, the grantee claimed the right to operate on those portions. The municipal body contended that the grant only applied if the prior rights were void from the beginning.
Findings of Court:
The agreement was a grant that would take effect whenever the antecedent rights ceased. The confirming statute, despite obscure language, validated the agreement and its intent. The grant did not create an illegal reversionary interest.
Issues: Whether the grant of rights "so far as the corporation can legally grant the same" over areas subject to existing franchises meant the rights would vest upon the expiry of those franchises or only if the franchises were void ab initio.
Ratio Decidendi: A grant made subject to existing rights, containing a provision to grant rights "so far as [the authority] can legally grant," is interpreted as a grant that takes effect upon the termination of the prior rights. Confirming statutes should be read to give effect to the original agreement's intent, and such grants are within the legal powers of a municipal authority.
Result: Appeal dismissed.
Legal Category Hierarchy
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administrative law
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municipal law
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franchise agreements
- street railway rights
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franchise agreements
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municipal law
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statutory interpretation
- confirming statutes
Lord Buckmaster:—
This appeal has arisen out of an application by the respondent company to the Ontario Railway and Municipal Board, under section 250 of the Ontario Railway Act of 1914 , asking the approval of plans for a proposed extension of a street railway. The Board made an order in favour of the respondents upon this application on 9th September, 1915; from this order the present appellants appealed to the Appellate Division of the Supreme Court of Ontario, by whom the order of the Railway Board was confirmed, and the present appeal is against that judgment.
On the original hearing, certain technical objections were taken on behalf of the appellants, but these were summarily overruled by the Railway Board, who regarded them as devoid of substance or merit. Such objections do not admit of elaborate argument, and, although maintained before the Supreme Court and on the hearing of this appeal, it is unnecessary for their Lordships to deal with them further than by saying they are quite satisfied that the decisions of the Board and of the Supreme Court were correct.
The real substance of the dispute depends upon the construction of an agreement made on 1st September, 1891, between the appellants and the predecessors-in-title of the respondents, by which powers were granted for creating street railways over streets within the jurisdiction of the city, and of a statute by which that agreement was confirmed.
The appellants, as the governing body of the city of Toronto, have power to grant rights of running tramways or street railways over all the streets within their jurisdiction, subject to the limitations imposed on their authority by the provisions of the Street Railway Act of 1887 , a statute which provided that no municipal council shall grant to a street railway company any such privilege for a longer period than twenty years. The boundaries of the city have from time to time been altered. In 1884, and up to 1887, the northern boundary extended to a line drawn east and west through the junction of a street known as Yonge Street and the Ontario and Quebec Railway Tracks, now the Canadian Pacific Railway. The roads north of this point were, at this date, vested in the county of York, by whom the powers of granting railway rights over these portions of the roads were enjoyed and exercised. By virtue of two agreements, made respectively in 1884 and 1886, between the county of York and the Street Metropolitan Railway Co. of Toronto, the county of York, in exercise of such powers, granted to the Street Metropolitan Railway the right of constructing a street railway along Yonge Street, northwards from the northern limit of the city boundary as it was then constituted. These rights were subject to forfeiture in certain events, but, unless forfeited or otherwise extinguished, the rights continued until 25th June 1915.
No doubt whatever has arisen as to the power of the country of York to enter into these agreements, or of the extent or validity of the rights obtained by the Metropolitan Street Railway under their terms, and, indeed, the corporation of the city of Toronto would have had no direct right or interest in the streets at all but for the fact that the municipal boundaries of the city were, in 1887, extended in a northerly direction for an extent of some 1,320 feet. The effect of this was to place the portion of Yonge Street and the other streets lying within this extended area under the jurisdiction of the city, and this portion of the roads was accordingly conveyed to the appellants by the county of York, but such conveyance was expressly made subject to all existing rights of the public or any person or corporation, and, in particular, to the rights of the Metropolitan Street Railway in respect of the road known as Yonge Street.
In 1891 the appellants determined to offer for sale the right to operate street railways upon its streets; a tender made by the predecessors-in-title of the respondents for the purchase of these ri
