Railway Commissioners of New South Wales v Perpetual Trustee Company Limited [1905] HCA 38

Railway Commissioners of New South Wales v Perpetual Trustee Company Limited [1905] HCA 38 - HCA 1905 case summary — Zoe

[37]

As to the main point, the claim of the respondents is not properly a claim for compensation, but for damages. It is only the lessees who are entitled to compensation. They were the only persons immediately affected by the prohibition to work, and to them only was notice given. The respondents are reversioners and are only at present concerned with rent and royalty. They can only claim damages for diminution of income owing to the resumption. The evidence does not disclose any such loss. During the whole 30 years the lessors would receive the full rent of £700, and just as much by way of royalty as if there had been no prohibition. It was therefore a matter of indifference to them which part of the mine field was worked during the term, and their claim is confined to compensation for loss during the term. But the only parties who will suffer loss or injury during that term are the lessees: Smith v. Great Western Railway Co. (2). The difference between the positions of the lessors and the lessees is plain, because it might be that the whole of the coal in a lease would be worked out during the term. A prohibition from working part of the coal would in such a case injure the lessees, but would not necessarily attect the lessors at all. It was therefore for the respondents to show that the injury to the value of the mine would continue till after the end of the term. In that event they will be entitled to damages, not com- pensation, and the damages cannot be computed until the expira- tion of the term. [They referred to Rust v. Victoria Graving Dock Co. and London and St. Katharine Dock Co. (3).] For the purpose of the present inquiry the lessees are the owners of the coal, and may take it all. There was no evidence of a satis- factory nature as to the number of years it would take to work out the coal in the leased land. It was essential to prove that in order to assess the damages: Buillfa and Merthyr Dare Steam Collieries (1891) Ltd. v. Pontypridd Waterworks Co. (4). No evidence has been given of any diminution of income since the prohibition, and it cannot be assumed that there ever will be.

[43]

The lessors are entitled to be placed in the same position as if there had been no resumption. It is no answer to say that the lessors have other land which may contain coal. That might be a good answer if all the coal in the leasehold area had been sold to the lessees, and it would have been all worked out by the end of the term. The Judge rightly dismissed from con- sideration the possibilities of the rest of the area, in respect of coal bearing. It was for the appellants to cut down the claim, and they brought no satisfactory evidence as to the relative richness of the different areas. [They referred to Bwllfa and Merthyr Dare Steam Colleries (1891) Ltd. v. Pontypridd Water- works Co. (1).] The respondents were entitled to compensation for the particular piece of coal land actually resumed, and no question of damages or diminution of income can arise. Even if it was merely a question of damages, the onus was on the appellants to satisfy the Judge that the respondents had not suffered any, and his finding that they had, being one of fact, will not be interfered with. The division of ownership can make no difference in the total amount of compensation. The lessors were entitled under the lease to compel the lessees to work the mine in a proper manner. There was evidence that to leave the prohibited area unworked would not have been working it in a proper manner. The lessees could have been com- pelled to work that area first, and thus to leave a corresponding amount of coal in the unresumed area at the end of the term. The resumption has deprived the lessors of that right, and there- fore has diminished their royalties to that extent. They have in effect been prevented from selling that particular portion of their coal. [They referred to Gowan v. Christie (2); Smith v. Great Western Railway Co. (3); and In re Barrington; Gamlen v. Iyon (4)). That is a present loss which should be assessed as at the date of the resumption, making allowance for the time which would be spent in extracting the coal. The £700 was royalty, not rent. But, if it can be deemed rent in any sense, the lessees

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be the full value of the coal left :" and again (1), referring to the particular circumstances of the case: "I have had the greatest difficulty in seeing, from the beginning to the end of this case, how (I take it on the supposition in the first instance that the rent was paid) the lessor could have any interest in the question whatever. The lessor ascertained what the value of the coal was, and entered into an agreement by which he handed over to the lessee the right to take the whole of the coal. He granted him a lease which was so caleulated in point of time as to enable him to take the whole of the coal, and he took a rent which represented the whole value of the coal, and supposing that rent had been paid to him, it passes my comprehension to see what possible interest the lessor had remaining. He got the value of his coal, the whole value of his coal had been paid in the shape of rent, and it would be absolutely immaterial to him whether the tenant had taken out the coal, and sold it, or whether the tenant had, under the 78th section of this Act, been obliged to leave the coal there, and received the value of it as compensation from the railway company. The position of the lessor in either the one event or the other would have been precisely the same. There- fore I really do not see what interest remained in the lessor." Lord O'Hagan said (2): "In the case before us the lease of Hodgkins constituted, substantially, a sale of the coal. Its value was estimated on the face of the instrument, and the payment was, as for rent, arranged with the plain understanding that the whole of it should be removed, within a term of fifteen years. As Lord Justice Mellish said : 'In the case of minerals, if a man is the lessee of minerals, and has time to take the minerals, and has the right to take the minerals, he does take the minerals, however limited his interests may be; and, when he has once taken and got the minerals and sold them, the person who has to come in after him is just as much deprived of the minerals as if the person who got them had been the owner in fee simple.' Here the lessee had the right and the time to take the minerals, and therefore a property in them over which he had full control. He sold that property and got the worth of it in the way indicated by my

[66]

interference with a present proprietary right which the plaintiffs and their lessees were about to exercise, on the one hand by selling, and on the other by purchasing and taking away, the coal in the area in question. Now, primd facie, the owner of property is entitled to do what he likes with his own, and to dispose of it at such times and on such terms as he pleases. A mining lease is, as already pointed out, in substance a sale of the minerals. In the present case the foundation of the rights of both lessors and lessees is an interference with a present right of which they were prepared to take, and intended to take, immediate advantage. The power exercised by the Commissioners, for the exercise of which they have offered to make compensation, is conferred by law. Their act is therefore not unlawful, but they must make compensation. Now, when one person is authorized to take the property of another against his will on the terms of paying the value, it is not competent for the person exercising this authority to claim that a diminution should be made in the price on the ground that, if he had not taken the property, the owner would probably not have been able to sell it for some time, and that therefore the price should be estimated at the present value of a sum payable in futuro, when another purchaser might be expected to be forthcoming. Nor is it competent to him to claim a diminution of price on the ground that the market for the particular kind of property is limited, and that by acquiring the property in ques- tion, and so taking it out of the market, the taker has conferred on the owner an opportunity, which he would not otherwise have had, of disposing of other property of the same kind. Such con- siderations are too remote. The case is dealt with as a present interference with present proprietary rights, and no allowance by way of set off or reduction of price can be rightfully claimed in respect of incidental advantages which the owner deprived of his property may acquire in respect of other property which he has an equal proprietary right to use and dispose of at his will. In some cases the legislature has by express enactment made pro- vision for reducing the price or compensation to be paid in respect of land taken for public works by an amount representing the enhancement in value of other property of the owner, but in the

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plaintiffs are to be put in the same position as if the notice not to work had not been given. In that case they would have received rent and royalties in respect of the coal in question, and also in respect of coal from other parts of the mine. To which part of the coal so taken should the fixed rent of £700 be attributed ? Having regard to the terms of the lease, the obvious answer is that it should be attributed to the coal first taken in each year, and, if coal was simultaneously being taken from different parts of the mine, should be attributed to those different parts in proportion to the quantity taken from them respectively. If all the coal would have been taken from the inhibited area, the whole should have been attributed to the coal from that area. If none would have been taken from it, then none of the £700 should be attributed to it. Now, it was assumed throughout the case that the coal which would have been taken from the inhibited area would have formed part only of the total output during the ten years adopted by the learned Judge as the basis of the assessment. It follows that the whole of the £700 cannot be deducted from the gross royalties calculated on that coal. On the other hand it cannot all be attributed to the output from the rest of the mine. The only way, therefore, to do complete justice is to divide the £700 between the output from the inhibited area and the rest of the output in proportion to their probable respective quantities, and to treat the coal represented by the proportion of the £700 attributable to each as paid for in full, and the residue as subject to royalty. It follows that a deduction should have been made from the annual instalments of £1620 of a sum bearing the same proportion to £700 as the probable output from the inhibited area would have borne to the total output from the mine. This calculation was not made by the learned Judge, nor were the necessary inferences of fact upon which it must be founded made by him. The case should therefore be remitted to him for that purpose.

At a glance

Court

Decision date

Source

Judgment (80 paragraphs)

B.C. or A. 1905.

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