Duke of Portland v Wood's Trustees (No.2)
| Jurisdiction | Scotland |
| Judgment Date | 17 March 1926 |
| Date | 17 March 1926 |
| Docket Number | No. 64. |
| Court | Court of Session (Inner House - First Division) |
Lord Murray, Lord President (Clyde), Lord Sands, Lord Blackburn, Lord Ashmore.
DamagesBreach of contractMeasure of damagesMineral leaseObligation to hand over workings at end of lease without accumulation of waterWorkings left seriously floodedWhether loss of royalties the exclusive measure of damages.
ProcessAppeal to House of LordsLeave to appealConsiderations in granting leaveConsiderations for and against evenly balanced.
Mineral tenants were bound by their lease to leave the subjects at the end of their tenancy in good condition, without accumulation of water in the workings, so as to enable the landlord or incoming tenant to pursue and carry on the workings. At the termination of the tenancy the workings were left in a seriously flooded condition, and an action of damages was brought by the lessors against the tenants concluding for payment of a sum of over 70,000, being the estimated cost of putting the subjects in the condition in which they would have been if the defenders had fulfilled their obligations under the lease. The defenders pleaded that the pursuers' claim should be limited to the value of the royalties which would be lostto them if the mines were left flooded. They estimated the value of these royalties at the sum of 15,000.
The Court repelled the defenders' plea, and allowed a proof before answer on the question of the amount of the pursuers' damage, holding that the capitalised royalty value of the unwrought minerals was not the sole legal measure of the pursuers' loss.
Observations on the principles applicable to the assessment of damages for breach of an obligation to re-deliver the subjects let upon the termination of a lease.
The defenders afterwards presented a petition for leave to appeal to the House of Lords.
The Court granted leave to appeal, holding that the considerations which should guide the Court in deciding upon an application for leave to appeal were those relevant to convenience and expedition in the course of justice; that in the present case these considerations appeared to be evenly balanced; and that, in such circumstances, it was expedient that leave to appeal should be granted.
On 24th March 1925 the Duke of Portland, for his interest as an individual under the disposition and deed of trust hereinafter mentioned, and the Duke and others, as trustees acting under the disposition and deed of trust granted by the Duke in favour of the trustees in August 1918, brought an action against James Alexander Clarke and others, the testamentary trustees of the deceased Adam Wood, who died on 11th September 1917, and against John James Wood Graham and others, the testamentary trustees of the deceased Margaret Wood, who, until her death on 3rd October 1923, had been one of Adam Wood's trustees. The summons concluded, inter alia, for damages in respect of breaches of the obligations contained in the leases of certain mineral subjects, leased from the Duke of Portland by Adam Wood, who had been succeeded in the tenancies by his trustees after his death.
The only question with which this report is concerned was the question of the measure of the pursuers' damages.
The material facts of the case, so far as bearing on the question of damages, were as follows:The minerals in question were leased in two adjacent lots, known as the Gauchalland and Goatfoot Colliery and the Titehfield Colliery respectively. The lease of the Gauchalland and Goatfoot Colliery contained the following provision: And the tenant shall keep and leave secure, upredd and patent the levels, roads and air courses of all pits or seams and timeously repair any damage that may be done to the pits and works through accident, fault or neglect, and leave the said pits and works and the levels and air courses and the coal rooms and wall faces of the unwrought coal at the expiry or sooner termination hereof in a good condition, well ventilated and without any accumulation of water in the workings, and in such a situation as shall enable the landlord or incoming tenant to pursue and carry on the workings. The lease of Titchfield Colliery contained an obligation upon the tenant in the following terms: And it is hereby agreed that, in whatever way the workings may be carried on, the tenant shall be bound to keep and leave secure, upredd and patent the levels, roads, and air-courses of all pits or seams, and to repair whenever the same may occur any damage that may be done to the pits and works through accident,fault, or neglect, and to leave all the pits and works, and the roads, levels and air-courses, and all the coal workings and wall faces of the unwrought minerals at the expiry or sooner termination hereof in a good, safe, and upstanding condition without any accumulation of water in the workings, properly ventilated and in such a situation as shall enable the landlord or incoming tenant to pursue and carry on the workings. The tenant was bound under the lease of Titchfield Colliery to pay a fixed rent of 100 or, in the option of the landlord, a lordship of 31/4d. per ton of 20 cwts. of coal and dross raised by virtue of the lease, and other lordships and royalties specified in the lease. The lease of Gauchalland and Goatfoot Colliery as modified by a subsequent memorandum of agreement between the Duke of Portland and the defenders Adam Wood's trustees, dated 27th November 1920provided for payment by the tenant of a fixed rent of 600 or, in the option of the landlord, a lordship at the rate of 5d. per ton for coal and dross. The defenders were entitled to bring either lease to an end upon six months' notice prior to Whitsunday or Martinmas in any year. They gave notice of termination of the tenancy of both collieries as at Martinmas 1922, and they vacated the collieries on that date. In April 1921 a strike of coalminers, affecting all the coal pits in Great Britain, had occurred, and the pumpers and other safety men employed in the collieries tenanted by the defenders ceased work. As a result both collieries became seriously flooded.
The parties averred, inter alia:(Cond. 5) The Titchfield Colliery and the Gauchalland and Goatfoot Colliery were both flooded with water when the leases of these collieries came to an end, and both collieries were left by the first-named defenders and the said Margaret Wood in that condition. These defenders and the said Margaret Wood were thus in breach of their obligation to leave the Titchfield Colliery unwatered. In the case of the Gauchalland and Goatfoot Colliery they were found by [the arbiter to whom the question of the defenders' liability to unwater the colliery had been remitted by the Duke of Portland and by the defenders Adam Wood's trustees in July 1923], as was the fact, to be in breach of the corresponding obligation in the lease of said colliery as modified by said memorandum of agreement. Under the system of working pursued by the defenders, the Titchfield Colliery was drained of water by the defenders by means of pumps which took the water from the Gauchalland Colliery into which the water of Titchfield Colliery flowed, and the flooding of the Titchfield Colliery was due, under said method of working, to the failure of the defenders to keep the Gauchalland Colliery dry. Prior to the termination of both leases the pursuers repeatedly called upon the defenders to implement the said obligations undertaken by them, and to unwater the pits and workings. During the currency of the leases subsequent to the flooding of the collieries the defenders did nothing whatever to implement their obligations, or to get rid of the accumulation of water so as to allow the collieries to be carried on as a going concern at the defenders' waygoing. Neither at Titchfield nor at Gauchalland were the workings left free of all accumulation of water, nor were they left in such a state as to enable the pursuers or incoming tenant to carry on the workings. The defenders were thus in breach of the obligation to unwater said collieries at the date ofthe termination of the leases, and still remain in breach thereof, and the defenders are accordingly liable in damages for said breaches of obligation. (Ans. 5) As regards Gauchalland and Goatfoot minerals, the seams of coal under water ceased to be going workings from April 1921 until the termination of the said trustees' tenancy, but the minerals were subsequently let by the pursuers to new tenants, by whom large quantities of coal have been worked. The defenders deny that they are in breach of any obligation as regards Gauchalland and Goatfoot Colliery The parties are also at issue concerning the amount and the mode of estimating damages if any be due (Cond. 6) In order to free the workings of water so as to put them into the condition in which the defenders Adam Wood's Trustees, if they had implemented their said obligations, should have left them, it will be necessary to erect and instal pumping plant and other machinery. The operation of pumping will necessarily occupy a considerable period, and will involve a large amount of labour and the use of much fuel and electric power. In addition, owing to the fact that the defenders allowed said workings to become water-logged in breach of their obligations, very considerable damage has been done to said workings by said water. This damage will require to be repaired before the said workings can be used for coal mining. Said restoration will involve the use of further labour, materials, machinery, fuel, and power, and will also take a considerable time. While the operations of unwatering and restoration are in progress the output of coal from both collieries will for a considerable period be entirely stopped and for a further period will be materially interfered with, and until said operations are completed the pursuers will be deprived of rent or of lordships or royalties. They have consulted with their engineers and other...
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