HL Deb 14 July 1938 vol 110 cc875-89

Third Schedule, page 74, line 45, at end, insert:

("Expenses of Surface Damage Claims.

The Commission shall pay the costs and expenses reasonably incurred by any person after the vesting date in connection with a claim for compensation in respect of damage arising from the working of coal to the land, buildings or other property of such person and to which he may be entitled under the provisions of paragraphs 5 and 6 of the Second Schedule to this Act.")

The Commons disagree to the above Amendment for the following Reason:

Because the Amendment would impose on the Commission liability for costs and expenses in relation to matters over which they have no control.

LORD BALFOUR OF BURLEIGH moved, That this House doth not insist on its Amendment in the Third Schedule, page 74, line 41, but proposes in lieu thereof the following Amendment: In the Lords Amendment to page 54, line 11, at the end after "vesting date" insert "and to the payment of the costs and expenses reasonably incurred by such person.

The noble Lord said: My Lords, the subject-matter of the Amendment which we have now to consider has been before your Lordships on every previous stage of this Bill. I ventured, both in the debate on Second Reading and in the debate on my noble friend's Motion to omit Part I, to say something to your Lordships on this subject, and to point out the injustice which would result if no steps were taken to amend the Bill in this direction. On the Committee stage I moved an Amendment in the same terms as that which now appears upon the Paper and with which another place has disagreed. On the Committee stage that was withdrawn, on the promise of the Government that they would examine the case, which appeared prima facie to require examination, and on their further promise that, if they found the case proved, they would themselves insert an Amendment on the Report stage. Between Committee and Report I had discussions with the Government and their advisers and, to my great disappointment, was unable to prevail upon them to move the Amendment which they had forecast. Accordingly on the Report stage this Amendment was put down again in my name. Your Lordships found the arguments in favour of it convincing and put the Amendment into the Bill. It is true that the Amendment on Report was carried by only a small majority. That was because it was a small House. I venture to say that if the House had been a large House it would have been carried by a correspondingly larger majority.

We have now reached the stage when this Amendment has been considered in another place and has come back to us with this Reason for disagreement: Because the Amendment would impose on the Commission liability for costs and expenses in relation to matters over which they have no control. I do not admit the validity of that objection. At the same time, I appreciate the difficulties of asking your Lordships to insist upon an Amendment in the form in which it was passed by this House and which has not proved acceptable to another place. I have accordingly endeavoured to meet, and have, I hope I shall show your Lordships, sufficiently met, the objections. But it is at the cost of dropping a very substantial part of the Amendment which your Lordships saw fit to approve. I propose therefore to say a few words first on that part of my Amendment on which I am not asking your Lordships to insist; after which I will develop in more detail the Amendment which I am now asking your Lordships to accept.

The Amendment, as your Lordships see, has relation to the cost and expenses incurred in a claim for compensation. That part which I am not asking your Lordships to insist upon has relation to costs and expenses reasonably incurred in the case of a claim in respect of the surface overlying coal in lease at the valuation date. That of course, is by far the most important part of the Amendment. All that is left if we agree to drop that is something so small that I anticipate with some confidence that the Government will be able to accept it. But before leaving the part of the Amendment upon which I am not asking your Lordships to insist, I think it worth while to state once more, and quite briefly, the facts of the case. Your Lordships will remember that the global figure of compensation has been arrived at after deduction of certain factors, among which was a factor of 4.47 for management expenses. The whole issue between the Government and myself is whether that 4.47 does or does not include any expenses in respect of surface management. It is admitted that, if it does, then this deduction is unjust. On the other hand, if, as the Government maintain, it does not, then of course there is no case for this proposal. My case now is based on facts elicited during the debate on the Committee stage.

The noble Earl, Lord Munster, said this: If we had, as I said on a previous occasion, been quite certain that we were in the wrong and that the deductions for surface management had been made, then it would have been our duty to put something back in the Bill to meet noble Lords. But I have not the slightest hesitation in my own mind, from the advice given to me by those who attended the meetings between the mineral owners' representatives and the officials of the Treasury and of the Mines Department, that there was no deduction made which was for the expenses of the surface. Later on the noble Earl admitted that the deduction—this 4.47—was not a figure which was arrived at by a process of bargaining and argument but was, in fact, a figure supplied by the Treasury. The 4.47 was the figure given by the Treasury as being the average of expenses in respect of which royalty owners had claimed return of Income Tax on the score of management. That was admitted by the noble Earl opposite in the course of our debate on the Committee stage.

The question, therefore, is: What was the make-up of that 4.47? The noble Earl says that it is obvious it contained nothing in respect of surface damage. His advisers may advise that, but they are not possibly in a position to substantiate their advice, for this reason. They cannot possibly know what is in the claims of the individual royalty owners on this score of management. It was not a figure agreed after consultation, one side saying so much and the other side saying so much, but it was a figure imposed by the Treasury on the ground that it was the Income Tax recovery figure. I am a royalty owner. I have a small amount of coal being worked and for the last twenty years I have signed Income Tax claims in respect of management expenses. I know what is in that claim much better than the advisers of the Government can possibly know. A substantial part of the expenses included in that claim are fees of the mineral agents who come to inspect and who go underground

It is impossible to say what portion of a mineral agents' fees are in respect of surface damage, and what in respect of underground minerals. When coal is being worked at a shallow depth the two matters are completely indistinguishable. For the advisers of His Majesty's Government to say that there is nothing included for surface damage is therefore a rank impossibility. Even if they had examined every individual royalty owner's claim they could not say it, because they would not know what portion of the mineral agent's fees was applicable to surface damage and what to management, except in exceptional cases. I have taken the trouble to make considerable inquiries since the last stage of the Bill, and in every case save one I have had the answer that included in that claim for a return of Income Tax are such expenses as will continue even after the coal has been transferred to the Coal Commission. Your Lordships will see, therefore, that it is no longer a matter for argument. Out of the mouth of the noble Earl himself the case is proved, and proved beyond peradventure.

Therefore your Lordships may say: Why not ask the House to insist upon the whole Amendment? There are reasons, I think, for that. In the first place, even if we were to put the whole Amendment in again it is obviously quite impossible for the Government to recommend it to another place. It would be quite impossible for them to do that, in face of the opposition that they have consistently put up to this proposal. Moreover, even if the Government should think that they could bring themselves to recommend it in another place, they could not do so for this reason, that at this stage to admit the claim would be to expose the rottenness of the foundation on which the whole purchase price of £66,000,000 is founded. This question of management expenses was one which had reached the stage of agreement or rather of acceptance; this was a figure imposed upon the negotiators and therefore agreed before the matter got to the Greene Tribunal, and if that figure is wrong, then the whole structure is unsound.

For that reason I recognise that it is of no use even carrying this in a Division, and I think we have now reached a stage when we have got to remember the sort of intentions with which your Lordships started on a review of this Bill. I think it was on the Motion to omit Part I of the Bill that I said I thought it would be difficult for some of us to vote in some of the Divisions, because we were personally interested, and we must be prepared to make sacrifices if these were called for. I think we have reached the stage with regard to these expenses where we have to recognise that. We have made the injustice patent, and I think we have now to leave it to the Government to reconcile it with their own consciences to carry the matter through. It becomes distasteful, particularly when we have a personal interest in the matter, to press the matter further, and therefore I think it is wise not to insist upon the original Amendment.

With reference to the Amendment on the Paper, it is another matter. This Amendment, which I am proposing to substitute, only refers to coal which is not in lease on the valuation date. That is a very small matter. Coal which is not in lease on the valuation date is a part of the coal resources of the country which probably will not be worked for many years to come. There is already sufficient coal in lease to produce the existing output for fifty years or more, and therefore the function of the Coal Commission of granting new leases will not be extensive. Therefore it is not an important matter, and does not affect us financially to-day. This Amendment is only giving effect to the principle that where compensation is payable costs should follow the compensation.

I anticipate that the noble and learned Lord on the Woolsack, in replying to me, will say that this is unnecessary because it is inherent in the Bill, and to that I venture to offer two replies. The noble and learned Lord may postulate the case where the surface owner has to take a case to Court, and he may say that if he is successful he will be awarded costs. That will be what the lawyers call party and party costs, and anybody who has had experience of the Law Courts will know that even if successful in litigation you do not recover, in costs, more than a proportion of the expenses that you have reasonably incurred. It is important, therefore, for that reason to put my Amendment into the Bill. There is another reason. I envisage many cases in which a surface owner will not go to Court at all. He will make his claim against the lessee of the Coal Commission, for whom he will have no responsibility. The surface owner will try to come to a settlement, but there is nothing in the world to make us think that the surface owner will be able to recover, in addition to the agreed damages the costs which he has reasonably incurred.

The fact that the Government admitted the principle that the Coal Commission are responsible for damage—and if responsible for damage quite obviously the Commission ought to be responsible for the costs, and they in turn will pass on this liability to the lessee—seems a conclusive argument in favour of the Amendment. It has this additional merit, that it completely meets the objection raised in another place to the effect that the Amendment would impose on the Commission liability for costs and expenses in relation to matters over which they have no control. That objection drops because they will have complete control over these matters, seeing that this affects only coal not in lease, therefore coal which will be let by the Coal Commission to a lessee. I beg to move.

Moved, That this House doth not insist upon its Amendment in the Third Schedule, page 74, line 41, but proposes in lieu thereof the following Amendment: In the Lords Amendment to page 54, line 11, at the end after ("vesting date") insert ("and to the payment of the costs and expenses reasonably incurred by such person.").—(Lord Balfour of Burleigh.)


My Lords, as usual, the noble Lord who has just spoken has explained with the very greatest force the reasons he has for putting forward the present Amendment. He began by a statement of the argument in favour of the Amendment to which another place found it impossible to agree, and he asserts, as we have been told on previous occasions, that nothing was included for management expenses as regards surface injury in the figure of 4.43. That matter was considered here, and the Government took what they believed to be the best evidence they could obtain as to whether the noble Lord was right in his assertion in that respect. I do not think it would be right for me to take up the time of your Lordships in further discussing that matter, inasmuch as that original Amendment is not now insisted upon. But I feel bound to say on behalf of the Government that although they quite accept—naturally accept—what the noble Lord has said with regard to his own case, and they would regret it very much if those cases were common, so that in fact there has been very little included in the figure of £4,430,000 on this particular head, yet they are unable to accept the view that the statement previously made by the noble Earl, Lord Munster, was incorrect. That is all I will say on that point.

Now we come to the Amendment which stands in the name of the noble Lord, which requires a slight addition to the words which were originally on page 54, line 11, of the Bill, but which are now, in the more modern version, on page 57 at line 26 or just below. I am only calling your Lordships' attention to that because I want to ask your attention for one moment to the Bill as it would read if the noble Lord's Amendment were accepted. Paragraph 6 of Part II of the Second Schedule provides that in the case with which the paragraph deals there shall vest in the Commission a right to the extent to which the existing owners of the coal or mine were competent on the valuation date to grant such a right by virtue of their interests in that land, that is to say, a right to withdraw support from that land so far as may be reasonably requisite for the working of any coal, subject to"— an alternative obligation to which I want to draw your Lordships' attention. It is either

  1. "(a) to pay proper compensation for damage arising from such working to that land; or
  2. (b) with the consent (which shall not be unreasonably withheld) of the person who would otherwise be entitled to claim compensation for that damage, to make good that damage to the reasonable satisfaction of that person and without expense to him."
Then there is a provision with regard to buildings, of which of course we are all in favour.

The position which will arise when this right has been granted will be this, that there will be a tenant of the coal, working the colliery and liable to the extent mentioned in paragraph 6, and a surface owner, who may be one of your Lordships or some other person, who has simply a right to the surface of the land. There may be buildings on it, and he therefore finds himself called upon from time to time to face injury by a subsidence. It is a mistake to suppose that it is the Coal Commission who will be prima facie called upon to pay that damage. I will not deny that there may be a case here and there where the person working the colliery is on the verge of liquidation or insolvency, but, omitting that, it is the colliery owner who is going to be asked to do one of the two things—to pay proper compensation for the damage or, with the consent of the surface owner, to make good the damage to his satisfaction and without expense to him.

Well now, in the first case, supposing compensation is claimed, the ordinary way in which the compensation is assessed is by agreement, and when the compensation is claimed the two people who are concerned—the one who is urging the claim and the other who is cutting it down to the lowest figure, the latter being the person employed by the colliery company—are going to negotiate. There will be a question whether it is x pounds or x plus y pounds, and in considering that figure of compensation of course the person who suffers the damage will claim something of his expenses. If it is going to be settled without arbitration, the tenant of the coal will have to pay the reasonable costs which have been incurred in respect of the claim, and if it goes to arbitration the arbitrator will have complete jurisdiction under the Act, the Arbitration Act, to award all proper costs. And I can assure the noble Lord that, as a general rule, in the costs awarded by an arbitrator there is practically no difference between solicitor's and party costs. In any case it is very small. The only difference is that as a general principle in solicitor-and-client's costs you are not entitled to claim anything in the nature of a luxury. You have to prosecute your claim with reasonable economy. That is the position with regard to compensation being claimed.

Supposing the colliery owner—the person, therefore, who is performing the colliery operations—wishes to make good, which in nine cases out of ten would be clearly more economical to him than the paying of compensation, then what happens? He has got to go to the surface owner, cap in hand, and say, "Will you allow me to make good? Your wall has a crack—you have just told me so—let me make it good. I have the staff. I can do it in 48 hours," or something of that kind. Then supposing the surface owner by that time has incurred an expense of £10 or £20 or something of that kind in respect of the employment of a surveyor, all that happens then is that the owner of the colliery is asked to pay that sum. It may very well be the surface owner cannot get agreement. He will then say, "No, I will claim compensation," and the consequence will be that the colliery tenant who is particularly concerned in fighting such a case has got the strongest possible motive for seeing that any reasonable claim for costs, such as is the subject of the present Amendment, shall be paid in order that he shall have the chance of doing what he would prefer—making good instead of having to face a claim for compensation either through an arbitrator or a Court—in either case disastrous to him, for he has got to pay his own costs and the costs of the claimant.

If that were not a sufficient answer, a further answer to this particular Amendment is to be found in the words which already exist on page 57, line 26, of the Bill in its present form as it came from the other place—that there is to be a making good of the damage "to the reasonable satisfaction of that person"—that is, the surface owner—and without expense to him. I agree that these words are not very precise, and if there had been lots of time to consider them perhaps they might have been put in more precise form; but it seems to me that the arguments which I have respectfully presented to your Lordships, taken in conjunction with the words I have quoted, and the fact that, unless these words are construed in a liberal sense by the colliery tenant who has got to make good, the surface owner will say, "That for your making good; I intend to claim compensation and stick you, if necessary, for costs and expenses, your own as well as mine," are conclusive to show that the present Amendment that stands in the name of the noble Lord has got this objection to it, that it is really unnecessary, and will not help the surface owner to recover the costs which are mentioned in the Amendment. Therefore the Amendment ought not to be accepted.

Moreover, I have to add this. The noble Lord is wrong in thinking that the Commons Reason is inaccurate because the matter of costs and expenses is not a matter over which the Coal Commission have any control. It is still the case that it is the colliery tenant who has got to pay these things—it is not the Coal Commission. In every case where the tenant is solvent he has got to pay whatever expenses and damages are incurred under a successful claim for compensation, or he has got to pay such costs and expenses as will induce the surface owner to consent to a making good. For these reasons, I ask your Lordships not to assent to the Amendment in question.


My Lords, I should have liked at this late stage of the Bill to be able to express my full concurrence with the noble and learned Lord on the Woolsack. We have happened to disagree at different points of our proceedings, and it certainly would have come as a much more agreeable thing to me if I were able enthusiastically to give concurrence to what the Lord Chancellor has just said, because we are now approaching the very end of our debates. One thing that strikes me very strongly about the Reason which has been given by another place for disagreeing with the Amendment made by your Lordships is the fact that they do not say it is an inequitable claim on the part of the surface owner. They never suggest that, on merits, the argument of my noble friend Lord Balfour of Burleigh is wrong or can be upset, but they put their case on what is entirely a side issue—that is to say, that these expenses relate to matters which are outside the control of the Commission.

When I looked at it in the first place, and before I knew that my noble friend was going to make any alteration in the form of his Amendment, it would have occurred to me to say that if the claim was a good one, and nobody else was put by the Government in a position of responsibility except the Commission, then the Commission would be the only body which could remedy what was obviously an injustice. Accordingly I should have been prepared to go further than my noble friend and insert the original Amendment. He has thought fit, for reasons which seem good to him, to put forward what is a very much smaller Amendment, to the effect of making the Commission liable only for those costs and expenses which are incurred by the surface owner owing to claims for compensation which he has in the case of new leases, which really reduces the Amendment to something very small indeed.

The Lord Chancellor put forward an argument to the effect that all these costs and expenses reasonably incurred would be met by the award either of the arbitrator or of the Court in a case where a successful claim was made by the surface owner, and that he would be only reasonably entitled to these expenses if his claim was a good one. I had a very long experience of the Courts, and though I would not like for a moment to set my experience against that of the Lord Chancellor, I was repeatedly in cases in the Courts and before arbitrators where the amount of expenses which the successful litigant got at the end of the day was very much less than the amount he had quite reasonably incurred. The taxing master always applies a very strict rule in these matters, and I have no doubt it has been the unfortunate experience of every one of your Lordships who has had a case at law that he has very seldom had the good luck to get back in the way of the costs awarded to him anything like the amount he has spent.

Accordingly, I would press upon your Lordships that it is a very reasonable claim that is now being made on the part of the surface owner that the Commission should meet the costs and expenses which he has reasonably incurred in defending his property—costs and expenses which, certainly in a very large number of cases, were included in the amount for Income Tax deduction and which formed the basis of the final deduction made from the global sum to which the royalty owners were entitled. I think this is a very strong case in equity. I think the Government have behaved in a very shabby way throughout in regard to this claim, but now that it has been limited to the very small measure which my noble friend has suggested in his present Amendment there is no reason of propriety or justice upon which the Government can fail to respond to the claim which is being made.


My Lords before the Question is put I imagine I have a right of reply. In the first place, may I say how delighted I was to hear the noble and learned Lord on the Woolsack refer to the critical figure as 4.43. I have had the misfortune to fall under the displeasure of the noble Earl, Lord Munster, on two occasions for saying £4,300,000 when I meant £4,430,000. The noble and learned Lord said 4.43 when he meant 4.47.


I apologise to the House.


I am only too pleased to find myself erring in such good company. There are just two small points that I wish to mention to your Lordships. The noble and learned Lord talked as if these claims between the surface owner and the mineral lessee would go to arbitration.


To one or the other.


It makes a good deal of difference. You may get costs from an arbitrator which you will not have a chance of getting from a Court, and even from an arbitrator I do not think the successful litigant will get the full costs which he has reasonably incurred. I am quite certain he will not get them from the Court and there is nothing whatever to say that it will be arbitration and not the Court. Then the noble and learned Lord made a great point that in paragraph (b), where it is a question of making good, it has to be done without expense to the surface owner. That postulates that the damage is going to be repaired under the making-good provision. It may well be, and it will be all right, but it may well be that it will not. I do not think it is fair to say that because those words are there the surface owner is not entitled to recover those costs.

Above all, and this is the last point I would wish to press on your Lordships, this responsibility is on the Coal Commission, and it will be on their lessee provided they pass it in the lease, which of course they will. If they pass on those responsibilities in the lease they can at the same time pass on the responsibility for these costs. There is no difficulty or

trouble about it whatsoever. I want just to remind your Lordships that these mineral lessees will not in every case be able or willing to respond with alacrity to claims which will be made upon them, even reasonable claims. That is a point I have ventured to make to your Lordships before. Mineral lessees, I may say with great respect, are not always willing with the greatest alacrity to respond to the claims of the surface owner, still less will they be willing under the new dispensation when the surface owner no longer is the owner of the minerals. They will then be under less obligation still to make good damage which they will be all too inclined to dispute. The case really is one of such strength that it does surprise me that the Government do not see their way to accept it without argument. With one breath the noble and learned Lord says he will not accept it and the next breath he says it is unnecessary. I feel bound to take the sense of the House.

On Question, Whether the said Amendment shall be there inserted?

Their Lordships divided:—Contents, 32; Not-Contents, 92.

Wellington, D. Horne of Slamannan, V. Leconfield, L.
Balfour of Burleigh, L. [Teller.] Merthyr, L.
Abergavenny, M. Middleton, L.
Cornwallis, L. Mowbray, L.
Bathurst, E. Cromwell, L. O'Hagan, L.
Carnwath, E. Darey (de Knayth), L. [Teller.] Ormathwaite, L.
Grey, E. Phillimore, L.
Lindsay, E. Fairfax of Cameron, L. Redesdale, L.
Mar and Kellie, E. Gainford, L. Saltoun, L.
Wicklow, E. Gerard, L. Shute, L. (V. Barrington.)
Hastings, L. Strickland, L.
Bertie of Thame, V. Howard of Glossop, L. Teynham, L.
Wolverton, L.
Maugham, L. (L. Chancellor.) Feversham, E. Halifax, V.
Fortescue, E. Mersey, V.
Hailsham, V. (L. President.) Iddesleigh, E. Plumer, V.
De La Warr, E.. (L. Privy Seal.) Iveagh, E. Samuel, V.
Lucan, E. [Teller.] Trenchard, V.
Midleton, E. Ullswater, V.
Bath, M. Midlothian, E. (E. Rosebery.)
Camden, M. Mount Edgcumbe, E. Aberconway, L.
Crewe, M. Munster, E. Aberdare, L.
Duflerin and Ava, M. Plymouth, E. Abinger, L.
Zetland, M. Poulett, E. Addington, L.
Radnor, E. Ailwyn, L.
Airlie, E. Rothes, E. Allen of Hurtwood, L.
Albemarle, E. Sandwich, E. Alness, L.
Ancaster, E. Spencer, E. Amulree, L.
Birkenhead, E. Stanhope, E. Ashton of Hyde, L.
Bradford, E. Bayford, L.
Carlisle, E. Bridgeman, V. Bethell, L.
Denbigh, E. FitzAlan of Derwent, V. Blythswood, L.
Derby, E. Goschen, V. Cadman, L.
Camrose, L. Gage, L. (V. Gage.) [Teller.] Monck, L. (V. Monck.)
Carnock, L. Gorell, L. O'Neill, L.
Catto, L. Hare, L. (E. Listowel.) Pender, L.
Clanwilliam, L. (E. Clanwilliam.) Heneage, L. Rossmore, L.
Hesketh, L. Roundway, L.
Clwyd, L. Hutchison of Montrose, L. Snell, L.
De Saumarez, L. Jessel, L. Stanley of Alderley, L. (L. Sheffield.)
Denham, L. Joicey, L.
Elgin, L. (E. Elgin and Kincardine.) Killanin, L. Stanmore, L.
Kinnaird, L. Strabolgi, L.
Elton, L. Marks, L. strathcona and Mount Royal, L.
Fairhaven, L. Meston, L.
Fermanagh, L. (E. Erne.) Mildmay of Flete, L. Templemore, L.
Forester, L. Milne, L. Woodbridge, L.

On Question, Motion, "That this House doth not insist upon its Amendment in the Third Schedule, page 74, line 41," agreed to.

Resolved in the negative and Amendment disagreed to accordingly.

Bill again returned to the Commons.