Eden and Others v. North-Eastern Railway Co. [1907] UKHL 626

UKHL
Eden and Others v. North-Eastern Railway Co.
[1907] UKHL 626
(Before the Lord Chancellor (Loreburn) , Lords Macnaghten , James of Hereford , and Atkinson .)45 SLR 626Eden and Others v. North-Eastern Railway Company.Subject_ Mines — Compensation — Railway Company — Coal Required to be Left Unworked — Measure of Compensation — Railways Clauses Consolidation Act 1845 (8 and 9 Vict. cap. 20), sec. 78. Facts:Under the Railways Clauses Consolidation Act 1845, section 78, a railway company is entitled to prevent the owner, lessee, or occupier of a mine or minerals, from working minerals under or near the railway, provided the company makes “compensation for such mine.”An owner of land let the minerals to a coal company for a term of twenty-one years. Under section 78, a railway company laid an embargo upon the working of a portion of the minerals. Even excluding the portion in question, the land contained more minerals than the company could exhaust during the lease. Held ( reversing the Court of Appeal), that the compensation payable by the railway company was the profit which would have been made on the minerals which were by the requirement of the railway company left unworked, and not merely a sum representing the increased expenses and loss incurred by the lessors and lessees in having to work other coal.Appeal from an Order of the Court of Appeal ( Vaughan Williams, Moulton , and Buckley , L. JJ.), reported 1907, 1 K.B. 402, reversing a decision of Bigham, J., (1906) 1 KB 195 , upon a special case stated by an arbitrator.The facts appear from the considered judgments of their Lordships, infra.Lord Chancellor (Loreburn )—The appellants, Mr Eden and others, are lessors and lessees respectively of coal mines, part of which lie under the line of the North-Eastern Railway. In 1892 the lessees were desirous of working the coal lying under part of the line, and, conformably with the Railways Clauses Consolidation Act 1845, gave notice to the railway company under the 78th sec. of that Act. Thereupon the railway company required the lessees to leave certain portions of the unworked coal under their line as pillars for its support, expressing their willingness to pay such compensation as the law required. In this way the railway company became bound to pay, in accordance with the Act of Parliament, “compensation for such mines or any part thereof,” whatever that means. What it does mean is the real question here. Very few further facts need notice. The lessees in the ordinary way and regular course of working would have worked this coal immediately had they not been obliged under the statute to leave it in pillars as a support for the railway. Had they so worked it they would have made a clear profit out of it of £730, and the lessors would have received as rent in respect thereof the sum of £155. Accordingly, if the proper basis of compensation is the profit which lessor and lessee respectively would have made by working the coal as it would have been worked in the ordinary course, then the sums payable by the railway company are £730 and £155 respectively. And that is what they claim in this appeal. The arbitrator has further found that “there is left unworked in the Shield Row seam (that is, this seam) under the said lands a quantity of coal which the coal company will not in the ordinary course be able to exhaust within the term of the before-mentioned lease, which expires on the 1st January 1907.” So, if the lessees, instead of working the reserved coal, chose to work some other part of the same mine, they would be able to make their profit on the substituted coal instead of on the coal which they would have worked if they had not been obliged to leave it in pillars as

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Lord Macnaghten —It seems to me that the judgment of Bigham, J. is perfectly right. It is, I think, in accordance with the provisions of the Railways Clauses Act as to mines and minerals, and consistent with views expressed in this House on more than one occasion. I do not propose to trouble your Lordships by going through the sections of the Act which bear upon the question in debate. They have often been cited here, and your Lordships are, I am sure, familiar with them. But I will take the liberty of quoting a passage from the judgment of Lord Watson in the case of Lord Provost and Magistrates of Glasgow v. Farie ( 13 App. Cas. 657). It contains, I think, a remarkably clear and accurate exposition of the scope and effect of the provisions of the Waterworks and Railways Clauses Acts concerning mines and minerals. “The relation,” says Lord Watson, “which they establish between seller and purchaser in regard to all minerals which may be held to be excepted appears to me to be, as Lord Westbury said in Great Western Railway Co. v. Bennett, L . Rep. 2 (HL) 27 ), clearly defined, useful to the railway company or waterworks undertakers, and at the same time fair and just to the mineowner. The latter, who is forced to part with the surface of his land and all uses for which it is available, is not compelled to sell his minerals, whilst he is not in a position to ascertain their marketable value or the impediments that might be occasioned to the convenient working of his mineral field by his parting with a strip that intersects it. On the other hand, those who deprive him of the right to a portion of the surface and its uses by compulsory purchase enjoy the benefit of subjacent and adjacent support to their works without payment so long as the minerals below or adjoining these works remain undisturbed; but it is upon the condition that if they desire such support to be continued they must make full compensation for value and intersectional damage, whenever the minerals required for that purpose are approached in working and would in due course be wrought out.” So Lord Watson's opinion certainly was that if the undertakers require the use in perpetuity of part of the mine for the support of their works they must make compensation, and the compensation must be the value of the minerals left unworked. The same view was expressed in Smith v. Great Western Railway Company , 3 App. Cas. 165). That was a case where the notice to the railway company had been given by a lessee. “It is to be observed,” said Lord Penzance, “that the directors are not only to arrange with the lessee, but if he is a person who is entitled to take all the coal, the compensation for preventing him from taking the coal must be the full value of the coal left.… The full value of the coal, and nothing less than the full value of the coal, deducting of course the cost of getting it, must be the measure of the compensation which would be due to the lessee.” The same view is to found in several other cases. For intance, Lord Westbury in Great Western Railway Company v. Bennett ( ubi sup. ) and Lord Herschell in Midland Railway Company v. Robinson , 15 App. Cas. 19), both speak of the consequence of a counter-notice by the railway company as a “purchase” of the minerals comprised in the counter-notice. Having regard to the point which was raised and decided in Bwllfa Colliery Company v. Pontypridd Waterworks Company (1903) A C 426 ), the word “purchase” may not perhaps be the most accurate expression that could be applied to the transaction, but at least it shows beyond the possibility of doubt that the understanding of those two noble and learned Lords was that the coal required to be left unworked was to be bought and paid for in full. Now, when the language of the enactment is tolerably plain, and the views expressed in this House have been uniformly consistent with the ordinary meaning of the language used, I have some difficulty in understanding the judgment of the learned judges of the Court of Appeal. They seem to have ignored section 78 altogether, and to have treated the case as if it fell under section 81. Section 81 does provide for compensation for damage “by reason of the continuous working of the mines being interrupted.” But the compensation which is provided there is given for what Lord Watson calls “intersectional damage.” As the enactment says, it is meant to cover “additional” losses. It is to be in addition to, not in substitution for, the compensation to be provided by section 78. Of course, although some things are clear, there are difficulties in the construction of these sections. It is clear that the only person who can initiate proceedings by giving notice under section 78 is the person actually working the mine, whether he be owner, lessee, or occupier. And he can only give notice when he is approaching the protected area and is in a position to get the minerals within it. When the company gave their counternotice defining the minerals which they require to be left unworked, and signify their willingness to make compensation, further working is prohibited, and the obligation on the part of the railway company to make compensation arises. But then the only person who can give the notice may have merely a temporary or precarious interest. What is to happen in that case? And how is the compensation to be dealt with? But these difficulties are, I think, more apparent than real, and would probably disappear in practice. There is no difficulty in the present case. All persons interested are before the Court. There is no controversy between lessor and lessee. The lessee says:
“I am in a position to work out the whole of the coal within the protected area, and I am entitled to do so.”
The lessor says:
“That is quite true, but I must have my royalty,”
There can be no

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Lord James of Hereford —As the Lord Chancellor has stated the formal matters out of which this case has risen I do not propose to repeat them. It is found as a fact in the special case upon which these proceedings are based that if this notice had not been given and obeyed the coal in question would have been worked by the coal company in due course from the 31st December 1903, and thereby a profit of £730 would have been made, and the lessor would have received as rent a sum of £155. In answer to the claim for these two sums the railway company rely upon the facts stated in the special case. In effect this answer is that the coal company had other coal the subject of their lease which they could have worked instead of the coal which they were forbidden by the notice to work, which workable coal would last until the end of their lease in 1907; that the entire expense of working such coal, beyond that of working the notice coal, was £100; and that this was the only compensation to which the appellants were entitled. The question for determination is therefore clearly defined. Are the lessors and lessees entitled under the terms of section 78 of the Railways Clauses Act to the profit on the coal which they were prevented from working, or are they only entitled to be compensated for the increased cost of working the more distant coal? The words of the section are:
“If the company be willing to make compensation for such mines (the subject of the notice), the owner shall not work or get the same.”
The notice not to work was given under this 78th clause, and was intended as an offer to bear the liability created by it. Now it is said by Bigham, J.: What is the railway company to pay for it? It is to pay “for such mines”—that is to say, in this case for the coal which it required to be left unworked. The railway required the support of certain coal, and in justice there seems to be no reason why the actual value of such support should not be paid for. The mineowners are to be paid the net value of the coal which they are precluded from working, and I can find nothing in the statute to show that if substituted coal can be worked that coal upon which the railway company has laid an embargo, and so appropriated, shall not be paid for. Such, expressed in very plain and forcible language, is the judgment of Bigham, J. The Court of Appeal, however, throw upon the coalowners the duty of looking round in order to find some other workings which should compensate them for the loss sustained through obeying the notice of the railway company. I find nothing in the words of section 78 to justify this judgment, and, as I think that the view of Bigham, J., is correct, I submit that the decision of the Court of Appeal should be reversed.Lord Atkinson —No question was raised in this case as to the bona fide intention of the owner to work by his lessee the minerals for which compensation is claimed. Under the provisions of section 78 of the Railways Clauses Act 1845 in a case such as this, compensation is to be paid for the mines. It is quite true, as was insisted upon by counsel on behalf of the company, that there has not been here any sale or transfer of any property or of any right or interest in it; but the minerals of the owners have been dedicated, as it were, to the use of the company. The only purpose which they can subserve while the railway continues to exist is to support the superincum bent soil of the company. And the owner of the minerals, or of any interest in them, will be as effectually deprived of all use, benefit or enjoyment of them as if they had been destroyed or removed and disposed of. I do not think that any appreciable deduction can be made from the sum which the company are bound to pay as compensation by reason of the remote contingency that should the railway cease to

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Appeal sustained.Counsel for the Appellants— C. A. Russell, K.C.— MacSwinney. Solicitors— Rawle, Johnstone, Gregory, Rowcliffe and Rowcliffe.Counsel for the Respondents— Cripps. K.C.— Upjohn, K.C.— W. C. Ryde. Solicitor— R. F. Dunnell.